CITY COUNCIL AGENDA
REGULAR MEETING
CITY OF HALF MOON BAY
TUESDAY, DECEMBER 20, 2022
REMOTE PARTICIPATION (SEE NEXT PAGE) Debbie Ruddock, Mayor Deborah Penrose, Vice Mayor
Robert Brownstone, Councilmember
Joaquin Jimenez, Councilmember
Harvey Rarback, Councilmember
7:00 PM
This agenda contains a brief description of each item to be considered. Those wishing to address the City Council on any matter not listed on the Agenda, but within the jurisdiction of the City Council to resolve, may come forward to the podium during the Public Forum portion of the Agenda and will have a maximum of three minutes to discuss their item.
Those wishing to speak on a Public Hearing matter will be called forward at the appropriate time during the Public Hearing consideration.
Please Note: Anyone wishing to present materials to the City Council, please submit seven copies to the City Clerk.
Copies of written documentation relating to each item of business on the Agenda are on file in the Office of the City Clerk at City Hall and the Half Moon Bay Library where they are available for public inspection. If requested, the agenda shall be available in appropriate alternative formats to persons with a disability, as required by Section 202 of the Americans with Disabilities Act of 1990 (42 U.S.C. Sec. 12132.) Information may be obtained by calling 650-726- 8271.
In compliance with the Americans with Disabilities Act, special assistance for participation in this meeting can be obtained by contacting the City Clerk’s Office at 650-726-8271. A 48-hour notification will enable the City to make reasonable accommodations to ensure accessibility to this meeting (28 CFR 35.102-35.104 ADA Title II). http://hmbcity.com/
1 SPECIAL REMOTE PARTICIPATION PROTOCOLS
This meeting will be held entirely by teleconference. All Councilmembers and staff will only participate via the Zoom platform using the process described below. The meeting is being conducted pursuant to recent amendments to the teleconference rules required by the Ralph M. Brown Act allowing teleconferencing during a proclaimed state of emergency when local officials have recommended social distancing (AB 361). The purpose of AB 361 is to provide the safest environment for the public, elected officials, and staff while allowing for continued operation of the government and public participation during the COVID‐19 pandemic.
This meeting will be conducted via Zoom Webinar and live Spanish interpretation will be available within the Zoom platform. Members of the public are welcome to login into the webinar as Attendees. During any public comment portions, attendees may use the “raise your hand” feature and will be called upon and unmuted when it is their turn to speak. The meeting will also be streamed on Channel 27, on pacificcoast.tv, and on Facebook at www.facebook.com/cityofhalfmoonbay. Please click to join the webinar: https://us06web.zoom.us/j/95535614263 or join by phone at 669-900-9128, using Webinar ID 955-3561-4263. If joining by phone, use *9 to raise your hand, *6 to mute and unmute.
CALL TO ORDER / ROLL CALL
APPROVAL OF AGENDA
PUBLIC FORUM
2022 STATE OF THE CITY ADDRESS
1. CONSENT CALENDAR
1.A WAIVE READING OF RESOLUTIONS AND ORDINANCES
1.B FINAL RESULTS OF THE NOVEMBER 8, 2022 GENERAL MUNICIPAL ELECTION Staff Recommendation: Adopt a resolution declaring the final results of the November 8, 2022 General Municipal Election.
STAFF REPORT
RESOLUTION
ADMINISTRATION OF OATH OF OFFICE TO NEWLY-ELECTED COUNCILMEMBERS
REMARKS BY OUTGOING MAYOR
SELECTION OF MAYOR AND VICE MAYOR FOR 2023
REMARKS BY INCOMING MAYOR
2 2. CONSENT CALENDAR
2.A WAIVE READING OF RESOLUTIONS AND ORDINANCES
2.B 2023 RESIDENTIAL DWELLING UNIT ALLOCATION PURSUANT TO HALF MOON BAY MUNICIPAL CODE CHAPTER 17.06 (MEASURE D)
Staff Recommendation: Adopt a resolution setting the 2023 Residential Dwelling Unit Allocation and Administration System pursuant to Half Moon Bay Municipal Code Chapter
17.06 for 67 residential dwelling units, 45 units for the Downtown (23 base units, and 22 bonus units) and 22 units outside of the Downtown.
STAFF REPORT
RESOLUTION
ATTACHMENT 2
2.C ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR) FOR THE FISCAL YEAR ENDED JUNE 30, 2022
Staff Recommendation: Adopt a resolution receiving the City of Half Moon Bay Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2022
STAFF REPORT
RESOLUTION
ATTACHMENT 2
2.D RE-RATIFICATION OF RESOLUTION TO CONTINUE HOLDING PUBLIC MEETINGS REMOTELY (AB 361)
Staff Recommendation: By motion, in accordance with Assembly Bill 361, re-ratify the findings in Resolution No. 2021-80 to continue conducting the City’s Council, Commission, and Committee meetings remotely due to health and safety concerns to the public due to COVID-19.
STAFF REPORT
2.E 2023 CALENDAR OF CITY COUNCIL MEETINGS
Staff Recommendation: By motion, adopt the City Council Calendar for 2023.
STAFF REPORT
ATTACHMENT
3 2.F AB1600 REPORT ON DEVELOPMENT IMPACT FEES FOR FISCAL YEAR ENDED JUNE 30, 2022 Staff Recommendation: Accept the AB 1600 Report on Development Impact Fees for fiscal year ended June 30, 2022.
STAFF REPORT
2.G WARRANTS FOR THE MONTH OF NOVEMBER 2022
Staff Recommendation: Accept the warrants list for the month of November 2022
STAFF REPORT
ATTACHMENT 1
2.H CONSOLIDATED COASTAL DEVELOPMENT PERMIT--CALIFORNIA BROADBAND MIDDLE
MILE NETWORK PROJECT
Staff Recommendation: Adopt a resolution authorizing the City Manager to submit a letter to the California Coastal Commission in support of a consolidated Coastal Development Permit (CDP) application for the Broadband Middle Mile Network (BMMN) project and further authorizing the California Coastal Commission assume the lead agency role.
STAFF REPORT
RESOLUTION
2.I ORDINANCE ADOPTING THE 2022 EDITIONS OF THE CALIFORNIA BUILDING STANDARDS
CODE - SECOND READING
Staff Recommendation: Waive second reading and adopt an ordinance amending Chapter
14.04 of the Half Moon Bay Municipal Code, adopting by reference the 2022 Edition of the California Building Standards Code, with local amendments, and finding the amendments to be exempt from environmental review under the California Environmental Quality Act (CEQA).
STAFF REPORT
ORDINANCE
RESOLUTION
4 2.J DISPOSABLE FOODWARE ORDINANCE UPDATE - SECOND READING Staff Recommendation: Waive second reading and adopt an ordinance amending Chapter
7.30 of the Half Moon Bay Municipal Code entitled “Disposable Foodware” regarding food facilities’ provision of single-use foodware accessories, the removal of language surrounding fluorinated chemicals, the removal of language surrounding BPI certified compostable plastics, and, beginning on June 1, 2023, requiring reusable foodware for On-premises dining, and finding the amendments to be exempt under the California Environmental Quality Act (CEQA).
STAFF REPORT
ORDINANCE
2.K RENEWAL OF SURF SCHOOL LICENSE AGREEMENTS
Staff Recommendation: Adopt a resolution authorizing the City Manager to execute one-year license agreements with up to two one-year mutual extensions, with Pillar Point Surf School, Blue Swell Surf School, Sea, Surf & Fun, and Tommy Tsunami.
STAFF REPORT
RESOLUTION
ADJOURNMENT
5 BUSINESS OF THE COUNCIL OF THE CITY OF HALF MOON BAY
AGENDA REPORT
For meeting of: December 20, 2022
TO: Honorable Mayor and City Council
VIA: Matthew Chidester, City Manager
FROM: Jessica Blair, Communications Director / City Clerk TITLE: FINAL RESULTS OF THE NOVEMBER 8, 2022 GENERAL MUNICIPAL ELECTION ______________________________________________________________________________ RECOMMENDATION:
Adopt a resolution declaring the final results of the November 8, 2022 General Municipal Election.
FISCAL IMPACT:
None associated with this action.
STRATEGIC ELEMENT:
This recommendation supports the Inclusive Governance Element.
BACKGROUND:
A General Municipal Election was held in Half Moon Bay on November 8, 2022 for the purpose of electing one councilmember for District 4 to a four-year term.
Councilmembers for Districts 1 and 5 were appointed at the August 19, 2022 City Council meeting due to lack of sufficient candidates resulting in only one candidate per district.
The County of San Mateo Elections Department has canvassed the votes and certified the elections results. The City is also required to certify the election results.
ATTACHMENT:
Resolution Declaring the Final Results of the November 8, 2022 General Municipal Election 6 RESOLUTION NO. C-2022-____
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HALF MOON BAY RECITING THE FACT OF THE GENERAL MUNICIPAL ELECTION HELD ON NOVEMBER 8, 2022
DECLARING THE RESULT AND SUCH OTHER MATTERS AS PROVIDED BY LAW WHEREAS, a Municipal Election was held and conducted in the city of Half Moon Bay on Tuesday, November 8, 2022, as required by law; and
WHEREAS, notice of the election was given in time, form, and manner as provided by law; voting precincts were properly established; election officers were appointed; and in all respects the election was held and conducted and the votes were cast, received, and canvassed, and the returns made and declared in time, form, and manner as required by the provisions of the Elections Code of the State of California for the holding of elections in General Law Cities; and WHEREAS, the County Elections Department canvassed the returns of the Election and has certified the results, the results are received, and made a part hereof as Exhibit A.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF HALF MOON BAY, CALIFORNIA DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS:
Section 1. That the whole number of ballots cast in District 4 was 1,385.
Section 2. That the names of persons voted for at the election for Members of the City Council are as follows:
Bill Balson, District 4
Debbie Ruddock, District 4
David C. Eblovi, District 4
Section 3. That the number of votes given at each precinct and the number of votes given in the city to each of the persons above named for the respective offices for which the persons were candidates were as listed in Exhibit A.
Section 4. That the City Council does declare and determine that:
Debbie Ruddock was elected as District 4 Member of the City Council for the full term of four years.
Section 5. That the City Clerk shall enter on the records of the City Council of the City a statement of the result of the election showing: (1) the whole number of votes (ballots) cast in the city; (2) the names of the persons voted for; (3) the measure voted upon; (4) for what office each person was voted for; and (5) the total number of votes given to each person and for and against each measure.
Section 6. That the City Clerk shall immediately make and deliver to each of the persons so elected a Certificate of Election signed by the City Clerk and authenticated; that the City Clerk shall also administer to each person elected the Oath of Office prescribed in the Constitution of the State of California and shall have them subscribe to it and file it in the office of the City 7 Clerk. Each and all of the persons so elected shall then be inducted into the respective office to which they have been elected.
Section 7. That the City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.
***************************************************************** I, the undersigned, hereby certify that the foregoing resolution was duly passed and adopted on the 20th day of December, 2022 by the City Council of Half Moon Bay by the following vote:
AYES, Councilmembers:
NOES, Councilmembers:
ABSENT, Councilmembers:
ABSTAIN, Councilmembers:
ATTEST: APPROVED:
___________________________ _____________________________ Jessica Blair, City Clerk Debbie Ruddock, Mayor
8 9
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16
BUSINESS OF THE CITY OF HALF MOON BAY CITY COUNCIL
AGENDA REPORT
For the Meeting of: December 20, 2022
TO: Honorable Mayor and City Council
VIA: Mathew Chidester, City Manager
FROM: Jill Ekas, Community Development Director
Scott Phillips, Senior Planner
TITLE: 2023 RESIDENTIAL DWELLING UNIT ALLOCATION PURSUANT TO HALF MOON BAY MUNICIPAL CODE CHAPTER 17.06 (MEASURE D)
RECOMMENDATION:
Adopt a resolution setting the 2023 Residential Dwelling Unit Allocation and Administration System pursuant to Half Moon Bay Municipal Code Chapter 17.06 for 67 residential dwelling units, 45 units for the Downtown (23 base units, and 22 bonus units) and 22 units outside of the Downtown.
FISCAL IMPACT:
There is limited fiscal impact associated with setting the annual residential dwelling unit allocations as the Measure D allocation application fees cover some of the costs of administering the program. A fiscal impact analysis is also required as part of this process, which is described further in this report. It concludes that the development associated with these allocations will also have a limited fiscal impact.
STRATEGIC ELEMENT:
This action supports all Elements of the Strategic Plan (Infrastructure and Environment, Healthy Communities and Public Safety, Fiscal Sustainability, and Inclusive Governance).
BACKGROUND:
In 1991, Measure A was adopted by City voters establishing a 3 percent annual growth limit. In 1999, Measure D amended the Residential Growth Limitation Ordinance reducing the allowable percentage increase of residential population from 3 percent to 1 percent, with an additional 0.5 percent allowed at the discretion of City Council for residential development in the “Downtown Area.” On December 1, 2010, the City Council adopted an ordinance amending Chapter 17.06 of the Half Moon Bay Municipal Code entitled “Residential Dwelling Unit Allocation System.” Measure D mandates that “the City shall allocate permissible dwelling units among applications on the basis of the existing allocation system or a subsequently modified 17 system.” Measure D allocations are reviewed and authorized annually by the City Council per the Municipal Code.
This report provides an update on the annual Measure D allocations and recommends 67 total allowable residential unit allocations for 2023.
DISCUSSION:
Chapter 17.06 of the Municipal Code establishes the methodology for determining the annual maximum number of residential dwelling unit allocations, or “Measure D Certificates.” The ordinance specifies that the most recent U.S. Census data must be used for determining the average number of persons per household.
The 2020 U.S. Census provides the most recent Census data for a baseline to add the additional population to annually. Table 1 presents the methodology and calculations for determining the annual allocation from the 2020 Census baseline.
Table 1 – Allocation Calculations
Year
Base
Population1
New
Units2
Persons
Per
Household
Calculated
Additional
Population3
New
Projected
Population1
Base
Allocation4
Allocation Distribution
Total
Annual
Downtown Allocation 5
Outside
Downtown
2021 11,795 35 2.58 90 11,885 46 46 23 69
2022 11,885 23 2.67 61 11,946 45 45 22 67
1 2020 U.S. Census Population was utilized for the 2021 baseline from which the calculated additional population is added to each year. 2
Number of new units that were issued building permits during the prior calendar year. 3 Most current US Census PPH data (2.67) multiplied by the number of new units that were issued building permits during the calendar yea
4 1% of New Projected Population divided by average PPH. 5 Includes an additional 0.5% in the downtown area per Section 17.06.020(B).
The “new projected population” estimate is used to calculate the total number of units within the City at year-end. The equation for establishing the “new projected population” involves multiplying the number of new units issued building permits during the calendar year by the average PPH (2.67 from the 2021 Census data, used for the 2022 baseline), then adding the result to the projected population from the previous year.
With the estimated population count and occupied households count from the 2021 Census data, an updated persons per household count was calculated at 2.67 as compared to 2.58 from last year’s allocation, which was based on 2020 Census data. The increase in persons per households 18 results in a modest decrease in the number of new dwelling units allowed for 2023 compared to the number of new dwelling units allowed in 2022.
The base allocation of 1% is split evenly between Downtown and outside of the Downtown. As discussed earlier in “Background,” Measure D allows for a 0.5% increase in residential allocations for Downtown, which consists of the City’s former Redevelopment Area. As summarized in Table 2, this provides for a maximum of 67 new dwelling unit allocations for 2023, reserving 45 dwelling unit allocations for the Downtown Area, and 22 dwelling unit allocations outside Downtown.
Table 2: Dwelling Unit Allocations – 2023
Total Allocations Downtown Allocations Outside Downtown Allocations 67 45 (1.0%) 22 (0.5%)
Municipal Code Section 17.06.020 – “Establishment of number of residential dwelling unit allocations to be authorized annually” sets forth the procedures for establishing the residential allocations. In particular, Section 17.06.020.G specifies that the City Council shall consider the following when establishing the number of Dwelling Unit Allocations in the upcoming year:
1. The number of residential dwelling units allocated in the current year;
2. The number of residential dwelling units allocated in the preceding year, but not necessarily issued building permits;
3. The number of future residential dwelling unit allocations awarded in accordance with a development phasing plan and agreement as provided for in Section 17.06.055;
4. The information and data contained in the annual fiscal impact analysis as provided for in Section 17.06.045 Fiscal Impact Analysis Required.
The following discussion presents information pertinent to the above four considerations.
Residential Dwelling Units Allocated in Current and Proceeding Year and Building Permits Issued: Table 3 presents the number of Measure D certificates and building permits issued each year from 2017 through 2021. Since amending the Measure D allocation system in 2010, new residential development from 2010 through 2013 was especially slow as the City recovered from the great recession. Starting in 2014, growth increased modestly, but remained low due to a lack of larger-scale developments other than phase one of Pacific Ridge. Recent years (2019 and on) have seen a distinct increase in applications for both Measure D allocations and building permits.
Accessory dwelling units (ADUs) account for much of this increase due to the series of State law amendments that further relaxed ADU development requirements and amplified local interest in ADU construction. In 2021 and 2022, all allocations were issued, including within and outside Downtown.
Building permit issuance lags Measure D allocation. Some developments, such as the Hilltop Mobile Home Park proposal which received 32 allocations over a two-year period, take up a significant number of Measure D allocations, but are just starting the CDP review process. Others 19 move through quickly, such as ADUs for which the CDP process is expedited. Staff anticipates that building permit issuance will increase within the next few years reflecting the higher number of allocations issued in recent years.
Table 3: Residential Building Permits Issued
Year
Available
Allocations
Measure D
Allocations Issued
Residential Building
Permits Issued
2017 66 22 28
2018 66 25 16
2019 71 34 24
2020 69 48 26
2021 66 66 35
2022 69 69 23
Average 68 44 25
Development Phasing Plans and Unit Prioritization: The City has not received applications for development phasing plans for Measure D allocations for several years. Before applying for a Coastal Development Permit (CDP) for new residential development, an applicant is required to obtain one Measure D allocation for each unit (per Section 17.06.010.B – Applicability). Measure D certificates are valid for one year (per Section 17.06.050.A. - Timing of building permits issued pursuant to this chapter), but may be extended if other approvals such as a CDP are required (per Section 17.06.050.F). There is a more detailed comparative process for evaluating and ranking subdivisions (Section 17.06.215 – Evaluation procedures for subdivisions for residential development based upon design and amenity criteria and contribution to public facilities), but that process has not been triggered for phased development or subdivisions.
In the case that there is an increase in residential development activity beyond available allocations, Sections 17.06.120 and 17.06.275 – “Review of Points awarded and residential units allocated” establishes the criteria to evaluate applications and distribute residential dwelling unit allocations. The Measure D Allocation System is structured to prioritize projects in January of each year to evaluate and prioritize applications based upon competitive rating criteria (Sections
17.06.120 and 17.06.275). A detailed staff report to the Planning Commission in March 2020 outlined this process and presented that certain aspects of the rating system, as codified in 2010, are no longer especially relevant. Staff prepared an interpretation document for Planning Commission concurrence that has guided rating when there are more applications received during the annual January application window than available allocations, as occurred in 2021 and 2022.
Fiscal Impact Analysis: Section 17.06.045 requires the City to prepare an annual report identifying the effects of new residential development on City finances and the City’s ability to provide services to the residents. The fiscal impact analysis for 2023 was prepared by Applied Development Economics and the summary of the analysis is included as Attachment 2. The fiscal impact analysis indicates the new units and residents would generate approximately $35,752 per year in General Fund revenues and require about $45,246 in General Fund expenditures, for an annual estimated deficit of $9,494 in 2023. This is similar to the 2022 estimated deficit of $7,458. 20 Notably, the 2021 fiscal impact analysis indicated an estimated net surplus of $21,118. All of these amounts are close to breaking even for this type of fiscal impact analysis.
ATTACHMENTS:
1. Resolution Establishing the Residential Dwelling Unit Allocation for 2023
2. Fiscal Impact Analysis Spreadsheet of New Residential Development, prepared by Applied Development Economics, November 2022
21 RESOLUTION NO. C-22-___
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HALF MOON BAY ESTABLISHING THE RESIDENTIAL DWELLING UNIT ALLOCATIONS FOR 2023 WHEREAS, in November of 1999, the electorate of the City of Half Moon Bay adopted a new Residential Growth Initiative (Measure D) establishing that the number of residential dwelling units for which the City may authorize allocations each calendar year shall not exceed the number of units that would result in a growth of 1% of the City’s population, plus an additional 0.5% for additional dwelling units in the area defined by Measure D as the “Downtown Area;” and
WHEREAS, Measure D has been adopted into the Local Coastal Program and certified by the California Coastal Commission; and
WHEREAS, in December of 2010, to implement Measure D, the City Council adopted the Residential Dwelling Unit Permit Allocation System Ordinance, Chapter 17.06 of the Half Moon Bay Municipal Code; and
WHEREAS, Section 17.06.020 of the Municipal Code requires the City Council to adopt the annual residential dwelling unit allocation for the upcoming year by December 31st of each year; and
WHEREAS, Section 17.06.020.G of the Municipal Code describes factors the Council may take into account in establishing the annual allocation, including the number of Residential Dwelling Units allocated in the current year; the number of Residential Dwelling Units allocated in the preceding year but not necessarily issued, the number of future Residential Dwelling Unit allocations awarded in accordance with a Development Phasing Plan and Agreement, and the information and data contained in the Annual Fiscal Impact analysis as provided for in Section
17.06.045.
NOW, THEREFORE BE IT RESOLVED THAT the City Council of the City of Half Moon Bay hereby finds and determines as follows:
Section 1: Findings
In accordance with HMBMC Section 17.06.020.G:
A. Current Year Allocations: In the current year (2022), a total of 69 Measure D allocations were issued; while 23 new residential Building Permits were issued.
B. Preceding Year Allocations: In the preceding year (2021), a total of 66 Measure D allocations were issued; while 35 new residential Building Permit units were issued. 22 C. Future Residential Dwelling Unit Allocations: There are no future residential unit allocations awarded in previous years from this year’s allocation as the result of a Development Phasing Plan and Agreement provided for in Section 17.06.055.
D. Annual Fiscal Impact Analysis: Costs for administering the Measure D program are substantially covered by Measure D application fees. Development Impact Fees, Residential Impact Fees for Affordable Housing, and Measure D application fees have been evaluated in an updated Fiscal Impact Analysis prepared by Applied Development Economics.
Section 2: Total Allocation for Calendar Year 2023
Based on the methodology established in Chapter 17.06 of the Half Moon Bay Municipal Code and the findings set forth in Section 1 above, and in order to ensure that the annual population growth in the City does not exceed 1%, plus an additional 0.5% in the Downtown Area, the total allocations for residential dwelling units for the 2023 calendar year shall be 67 units.
A. Assignment of Allocation to “Downtown” and “Outside Downtown” Areas: The total allocation of 6 residential units shall be distributed as follows: twenty-two (22) units to the projects outside the Downtown area, and forty-five (45) units to projects within the Downtown area.
***************************************************************** I, the undersigned, hereby certify that the foregoing Resolution was duly passed and adopted on the 20th day of December, 2022 by the City Council of Half Moon Bay by the following vote:
AYES, Councilmembers:
NOES, Councilmembers:
ABSTAIN, Councilmembers:
ABSENT, Councilmembers
ATTEST: APPROVED:
_____________________ ___________________
Jessica Blair, City Clerk Debbie Ruddock, Mayor
23 Fiscal Impact of New Residential Units (2022)
GENERAL FUND REVENUES 2022 Project Residents
Property Tax (City Share) $10,960
VLF Prop Tax Swap $8,412
Real Prop Transfer tax $0
Sales & Use Tax $5,605
Transient Occupancy Tax $0
Franchise Taxes $1,911
Other Taxes $0
Permits $0
Intergovernmental Subventions $3,566
Planning and Engineering Fees $0
Fines and Police Services $189
Recreations Services Fees $429
Other Revenues $4,679
SUBTOTAL $35,752
GENERAL FUND EXPENDITURES
General Government $7,823
Police $11,009
Public Works $7,932
Recreation $3,528
Community Development $3,064
Subtotal Direct General Fund Expenditures $33,357
Capital Improvements $11,803
TOTAL $45,246
Net Surplus/(Deficit) ($9,494)
Source: ADE, Inc., based on City of Half Moon Bay, Fiscal year 2022-23 Budget ATTACHMENT 2
24 BUSINESS OF THE COUNCIL OF THE CITY OF HALF MOON BAY
AGENDA REPORT
For meeting of: December 20, 2022
TO: Honorable Mayor and City Council
VIA: Matthew Chidester, City Manager
FROM: Lisa Lopez, Administrative Services Director
Kenneth Stiles, Finance Manager
TITLE: ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR) FOR THE FISCAL YEAR ENDED JUNE 30, 2022
______________________________________________________________________________ RECOMMENDATION:
Adopt a resolution receiving the City of Half Moon Bay Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2022
FISCAL IMPACT:
There is no fiscal impact associated with the adoption of these resolutions.
STRATEGIC ELEMENT:
This recommendation supports the Fiscal Sustainability and Inclusive Governance Elements of the Strategic Plan.
BACKGROUND:
The City of Half Moon Bay annually conducts an independent audit of financial transactions and issues the Annual Comprehensive Financial Report (ACFR). The ACFR Report has been prepared in conformity with the Governmental Accounting and Financial Reporting Standards.
An independent audit was conducted by the auditing firm Maze & Associates (Maze) in conformity with General Accepted Auditing Standards. The City received a clean audit opinion on the financial statements.
The City’s ACFR presents an easily readable and organized report of the City’s financial transactions and provides users of government financial statements with a wide variety of information needed to help them evaluate the financial condition of the City. The final step in preparing these financial statements is to present them to the City Council for its acceptance.
The ACFR document (Attachment 2) is composed of the following parts:
• Introductory Section including letter of transmittal
• Independent Auditors’ Report
25 • Management Discussion and Analysis
• Basic City-wide and fund-level financial statements
• Explanatory notes to financial statements and supplemental schedules • Supplementary information
• Statistical section
The transmittal letter included in the ACFR provides information on the City’s profile, financial planning and budgeting, and the local economy.
DISCUSSION:
The General Fund is the City’s primary operating fund. It receives unrestricted revenues and provides general administrative services, law enforcement and animal control services, and land development-related activities such as planning, building, and engineering. The City’s General Fund balance on June 30, 2022, was $15.5 million, of which $8.9 million was committed for reserves and the balance of $6.5 million was unassigned. The fund balance on June 30, 2022 shows an increase of $4.4 million, or 40%, from the prior year.
The Management Discussion & Analysis (MD&A) section of the ACFR summarizes the financial results for the fiscal year ended June 30, 2022 and provides additional explanations for changes from the prior fiscal year.
The City of Half Moon Bay was the honored recipient of the “Certificate of Achievement for Excellence in Financial Reporting” award presented by the Government Finance Officers Association (GFOA) of the United States and Canada in recognition for the City’s FY 2020-21 ACFR.
The City believes that this year’s ACFR document continues to conform to the highest standards in government accounting and financial reporting requirements and will qualify for another Certificate of Achievement. Following acceptance by the Council, the document will be submitted to the GFOA for consideration for the award this year.
Looking Forward
During the budget development for Fiscal Year 2022-23, the City estimated that the fund balance on June 30, 2022 would be $12.2 million. With the audit complete, an updated fund balance summary is detailed below:
26 The City initially planned for unassigned balances through FY 2022-23 to be $364K. With the audited beginning fund balance of $15.1 million, the City anticipates unassigned balances to be $3.6 million on June 30, 2023. This gain in unassigned balances is primarily due to the City receiving more tax revenues than budgeted for fiscal year 2021-22, specifically transient occupancy and vehicle in lieu taxes. More information on the budget to actual performance of the General Fund can be found on pages 18 and 81 of the ACFR.
Unassigned balances represent funds that have not yet been programmed for a particular purpose. Although much higher than anticipated, staff recommends deployment of such funds to be discussed during the mid-year process, where all options available are presented to Council in March of 2023.
ATTACHMENTS:
1. Resolution accepting the City of Half Moon Bay Annual Comprehensive Financial Report
2. Draft Annual Comprehensive Financial Report (ACFR) Fiscal Year Ended June 30, 2022 FY 2022-23
Adopted with
Estimated Beg. Balance
FY 2022-23
Adopted with
Audited Beg. Balance
Beginning Fund Balance (1) 12,258,600 15,585,153
Revenues 21,297,021 21,297,021
Expenditures (23,465,844) (23,465,844)
Net Change to Fund Balance (2,168,823) (2,168,823)
Ending Fund Balance 10,089,777 13,416,330
Operating Contingency (5,835,127) (5,835,127)
Economic Uncertainty (3,890,085) (3,890,085)
Unassigned 364,565 3,691,118
(1) At time of budget adoption, the beginning fund balance was unavailable. With the completion of the audit that number has been finalized
General Fund Balance Summary
27 Resolution No. C-2022-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HALF MOON BAY TO ACCEPT THE CITY’S ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR) FOR THE FISCAL YEAR ENDING JUNE 30, 2022
WHEREAS, the City of Half Moon Bay contracted with the audit firm of Maze & Associates to conduct an audit of the City’s financial records in accordance with Governmental Accounting Standards Board (GASB) Statement 34; and
WHEREAS, the financial statements for the Fiscal Year ending June 30, 2022 as prepared by said firm have been completed; and
WHEREAS, it is recommended that the City Council accept the financial statements, known as the Annual Comprehensive Financial Report (ACFR);
NOW, THEREFORE, BE IT RESOLVED THAT the City Council of the City of Half Moon Bay hereby adopts a resolution to accept the City’s Annual Comprehensive Financial Report (ACFR) as prepared by Maze & Associates for the Fiscal Year ending June 30, 2022. ***************************************************************** I, the undersigned, hereby certify that the foregoing Resolution was duly passed and adopted on the 20th day of December, 2022 by the City Council of Half Moon Bay by the following vote:
AYES, Councilmembers:
NOES, Councilmembers:
ABSENT, Councilmembers:
ABSTAIN, Councilmembers:
ATTEST: APPROVED:
___________________________ _____________________________ Jessica Blair, City Clerk Debbie Ruddock, Mayor
28 ANNUAL COMPREHENSIVE FINANCIAL REPORf
FISCAL YEAR ENDED JUNE 30, 2022
DRAFT 12/15/2022
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30 CITY OF HALF MOON BAY, CALIFORNIA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
Fiscal year ended June 30, 2022
Prepared by
Finance Department
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32 CITY OF HALF MOON BAY, CALIFORNIA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FISCAL YEAR ENDED JUNE 30, 2022
Table of Contents
Page
INTRODUCTORY SECTION:
Letter of Transmittal ...................................................................................................................................... i GFOA Certificate of Achievement .............................................................................................................. ix City Limits of Half Moon Bay ...................................................................................................................... x City Council ................................................................................................................................................. xi Executive Team .......................................................................................................................................... xii Organizational Chart .................................................................................................................................. xiii FINANCIAL SECTION:
Independent Auditors’ Report ................................................................................................................... 1 Management’s Discussion and Analysis ................................................................................................... 7 Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Position ........................................................................................................... 25 Statement of Activities ............................................................................................................... 26 Fund Financial Statements:
Governmental Funds:
Balance Sheet ......................................................................................................................... 28 Reconciliation of the Governmental Funds-Balance Sheet with the Statement of Net Position ................................................................................................... 30 Statement of Revenues, Expenditures and Changes in Fund Balance .................................... 32 Reconciliation of the Net Change in Fund Balances – Total Governmental Funds with the Statement of Activities.......................................................................................... 34 Proprietary Funds:
Statement of Net Position ....................................................................................................... 35 Statement of Revenues, Expenses and Changes in Fund Net Position ................................... 36 Statement of Cash Flows ........................................................................................................ 37 Notes to the Basic Financial Statements ........................................................................................... 39 DRAFT 12/15/2022
33 CITY OF HALF MOON BAY, CALIFORNIA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FISCAL YEAR ENDED JUNE 30, 2022
Table of Contents
Page
FINANCIAL SECTION (Continued):
Required Supplementary Information:
Cost-Sharing Employer-Defined Pension Plan
Schedule of the Plan’s Proportionate Share of the Net Pension Liability and Related Ratios as of the Measurement Date – Miscellaneous Plan ................................. 75 Schedule of the Plan’s Proportionate Share of the Net Pension Liability and Related Ratios as of the Measurement Date – Safety Plan .............................................. 76 Schedule of Contributions – Miscellaneous Plan ....................................................................... 77 Schedule of Contributions – Safety Plan .................................................................................... 78 Other Post-Employment Benefits Plan (OPEB)
Schedule of Changes in the Net OPEB Liability and Related Ration ........................................ 79 Schedule of Employer Contributions ......................................................................................... 80 Schedule of Revenues and Expenditures and Changes in Fund Balance – Budget and Actual:
General Fund .............................................................................................................................. 81 Streets and Roads Special Revenue Fund .................................................................................. 82 Lot and Acquisition and Retirement Special Revenue Fund ..................................................... 83 Note to Required Supplementary Information .................................................................................. 84 Supplementary Information:
Judgment Obligations Bonds – Debt Service Fund.................................................................... 86 Library - Capital Projects Fund .................................................................................................. 87 Capital Projects Fund ................................................................................................................. 88 Non-major Governmental Funds:
Combining Balance Sheet .................................................................................................... 90 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ............. 92 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual:
Special Revenue Funds:
Police Grants .................................................................................................................. 94 Storm Drain Operating .................................................................................................. 95 Traffic Mitigation .......................................................................................................... 96 Affordable Housing ....................................................................................................... 97 Parks Development ........................................................................................................ 98
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34 CITY OF HALF MOON BAY, CALIFORNIA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FISCAL YEAR ENDED JUNE 30, 2022
Table of Contents
Page
FINANCIAL SECTION (Continued):
Capital Project Funds:
Public Facilities ............................................................................................................. 99 Storm Drain Improvements ......................................................................................... 100 Internal Service Funds:
Combining Statement of Net Position ...................................................................................... 102 Combining Statement of Revenues, Expenses and Changes in Fund Net Position ................. 103 Combining Statement of Cash Flows ....................................................................................... 104 STATISTICAL SECTION:
Financial Trends:
Net Position by Component ............................................................................................................ 109 Changes in Net Position .................................................................................................................. 110 Fund Balances of Governmental Funds .......................................................................................... 112 Changes in Fund Balances of Governmental Funds ....................................................................... 113 Revenue Capacity:
Transient Occupancy Tax (TOT) by Lodging Type (BASE) ......................................................... 114 Transient Occupancy Tax (TOT) Rate............................................................................................ 115 Transient Occupancy Taxpayers by Type of Establishment ........................................................... 116 Debt Capacity:
Ratios of Outstanding Debt by Type .............................................................................................. 117 Ratio of General Bonded Debt Outstanding ................................................................................... 118 Direct and Overlapping Debt .......................................................................................................... 119 Legal Debt Margin Information. ..................................................................................................... 120 Demographic and Economic Information:
Principal Employers. ....................................................................................................................... 121 Operating Information:
Full-Time and Part-Time City Employees by Function. ................................................................. 122 Operating Indicators by Function. .................................................................................................. 123 Capital Asset Statistics by Function. .............................................................................................. 124
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35 CITY OF HALF MOON BAY, CALIFORNIA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FISCAL YEAR ENDED JUNE 30, 2022
Table of Contents
Page
STATISTICAL SECTION (Continued):
Property Tax Information:
2021/22 Use Category Summary .................................................................................................... 125 Property Tax Dollar Breakdown ..................................................................................................... 126 2021/22 Roll Summary ................................................................................................................... 127 Net Taxable Assessed Value History .............................................................................................. 128 Assessed Value of Taxable Property .............................................................................................. 129 2021/22 Top Ten Property Taxpayers ............................................................................................ 130 2012/13 Top Ten Property Taxpayers ............................................................................................ 131 Direct & Overlapping Property Tax Rates ...................................................................................... 132 Demographic and Economic Statistics ........................................................................................... 133 Sales Value History......................................................................................................................... 134 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ......................................................................... 135 DRAFT 12/15/2022
36 INTRODUCTORY SECTION
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38 December 20, 2022
Honorable Mayor,
Members of the City Council,
And Citizens of Half Moon Bay
It is a pleasure to submit the Annual Comprehensive Financial Report (ACFR) of the City of Half Moon Bay (the City) for the fiscal year ended June 30, 2022. The intent of this report is to provide a full and transparent understanding of the City’s financial activities. The report is prepared in compliance with California Government Sections 25250 and 25253, in accordance with Generally Accepted Accounting Principles (GAAP) set by the Governmental Accounting Standards Board (GASB), and continuing disclosure requirements of the Securities and Exchange Commission (SEC) related to the City’s debt.
This report consists of management’s representations concerning the finances of the City of Half Moon Bay. Consequently, responsibility for both the accuracy of the data and the fairness of this presentation, including all disclosures, rests with the City’s management. To present a reasonable basis for making these representations, management personnel of the City have established and maintained a comprehensive internal control structure designed to ensure that the assets of the City are protected from loss, theft, or misuse; and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with GAAP. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived and that the valuation of costs and benefits requires estimates and judgment by management. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to represent fairly the financial position and results of operation of the various funds of the City. All disclosures necessary to enable the reader to gain an understanding of the City’s financial activities have been included.
State statutes require an annual audit by independent certified public accountants. The City’s financial statements have been audited by Maze & Associates, a firm of licensed certified public accountants in Pleasant Hill, California. The independent auditor has issued an unmodified (or “clean”) opinion on the City’s financial statements for the year ended June 30, 2022.
CITY OF HALF MOON BAY
507-B Purissima Street
Half Moon Bay, CA 94019
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39 GAAP requires that management provide a narrative of introductions, overview, and analysis to accompany the basic financial statement in the form of Management’s Discussion and Analysis (MD&A). The MD&A can be found immediately following the report of the independent auditors in the financial section. This letter complements the MD&A and should be read in conjunction with it.
PROFILE OF THE CITY
Named San Benito in the 1840’s and later Spanishtown, Half Moon Bay received its current name in 1874 and is the oldest settlement in San Mateo County. Considered a rural coastal community, the City is home to approximately 12,000 people. There is a rich culture of different traditions and multi-generational families who have lived in Half Moon Bay for well over 100 years. In any given neighborhood you will find farmers, high tech entrepreneurs, and artists living together. At the crossroads of Highway 1 and Highway 92, Half Moon Bay is approximately 25 miles south of San Francisco and a 45-minute drive from almost anywhere in the Bay Area.
The City and Coastside are a thriving agricultural, fishing and tourism destination. The local and growing organic agricultural community hosts a Saturday farmers’ market and many rural roadside stands sell the bounty of the local farms and nurseries. About 3,000 tons of pumpkins are grown on the Coastside every year and the ripening pumpkins are featured in the Art and Pumpkin Festival held each October on the downtown historic Main Street. The annual festival draws more than 200,000 visitors for the two-day event.
As a popular tourist destination, Half Moon Bay offers a wide variety of public and private attractions. Main Street is home to shops, art galleries, and fine dining. The Coastal Trail provides recreation for biking, pedestrian, and equestrian users. Golf can be enjoyed at two acclaimed golf courses. Half Moon Bay boasts truly unique lodging with breathtaking ocean views, world-class hotels, and quaint cottages. And the enduring natural beauty of the beaches is enjoyed by all.
The City of Half Moon Bay was incorporated in 1959 and operates under a Council-Manager form of government. Policy-making and legislative authority are vested in the governing City Council, which consists of five Councilmembers. Councilmembers are elected to overlapping four-year terms and, from amongst themselves, select a Mayor and Vice Mayor each December. The Council is responsible for passing ordinances, adopting the budget, appointing Planning Commission and Volunteer Committee members, and hiring the City Manager and City Attorney.
The City Manager is responsible for carrying out the policies and ordinances of the City Council, providing leadership to the City’s programs, overseeing the day-to-day operations of the City, and appointing City staff.
By means of its own employees and through other shared or contract services, the City provides a variety of municipal services including law enforcement; library; disaster preparedness; recreation programs; maintenance of streets, parks and buildings; sanitary sewer utility collection and maintenance; planning, zoning and building inspection; storm drain maintenance; code and parking enforcement; engineering; and general administrative services. Fire protection services are provided by a special district that is not a part of the City’s reporting entity. ii DRAFT 12/15/2022
40 FINANCIAL OPERATIONS
BUDGET PROCESS
The annual budget serves as the foundation for the City’s financial planning and control of expenditures. The City’s budget document also reflects the One-Year and Five-Year Capital Improvement Program and the Five-Year Forecast.
The City prepares and adopts its budget in accordance with California Government Sections 29000 and 29143. The Council holds a public hearing on the proposed budget and adopts a final budget by the end of June, the close of the City’s fiscal year.
A program budget is used to plan, prioritize, and guide municipal operations. The City uses the modified accrual basis of accounting for all Governmental Funds and the accrual basis of accounting for Propriety Funds and Fiduciary Funds. Budgetary controls ensure compliance with the annual appropriated budget approved by the City Council. The City Council may amend the annual budget by resolution. Transfers of appropriations between departments or programs within the same fund can be approved administratively by the City Manager and Finance Director. Transfers between funds require the approval of the City Council. Accordingly, the lowest level of budgetary control established by the City Council is at the department level.
Budget-to-actual comparisons are presented in the supplementary section of the accompanying financial statements for each individual governmental fund for which an appropriated annual budget has been adopted.
FINANCIAL CONTROL
The Finance Department of the City is responsible for establishing and maintaining an appropriate internal control structure. The internal control system is designed to ensure that the assets of the City are protected from loss, theft, or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with GAAP. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. We believe the City’s systems of internal accounting controls adequately safeguard assets and provide reasonable assurance that financial transactions are properly recorded.
The City’s Reserve Policy per Resolution C-2020-60 states that a reserve equal to 50% of General Fund annual operating expenditures is to be set aside to reduce the risk of financial impacts from catastrophic disasters; respond to the challenges of changing economic environment, including prolonged downturns in the local, state, and national economy; and demonstrate continued prudent fiscal management and creditworthiness.
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41 MAJOR INITIATIVES AND ACCOMPLISHMENTS
Several important initiatives were delivered in the past fiscal year. These projects included increased engagement with the community, continued work on affordable housing, and improvement of infrastructure. Accomplishments include:
1. City Operations:
• Accepted a proposal from Mercy Housing and ALAS to develop 40 very affordable housing units at property owned by the City at 555 Kelly Avenue. • Completed the Accessory Dwelling Unit Ordinance and the Short-Term Rental Ordinance.
• Continued work on the Public Safety Community Engagement project, including a community survey, mental health workgroups, and several council study sessions, resulting in a Public Safety Workplan.
• Completed the update of the Local Hazard Mitigation Plan. • Negotiated a five-year Memorandum Of Understanding with City’s labor groups that establishes employee compensation, benefits, and work conditions. • Completed construction of the Ocean Colony Pump station ($2.5 million) • Completed the Highway 1 South Gateway Project ($4.4 million) • Adopted an Electrification Ordinance which requires all-electric new construction and the phasing out of natural gas use in buildings by 2045. • Completed a classification and compensation study for all non-executive positions. • In collaboration with the County of San Mateo and a local non-profit service provider, launched the Crisis Assistance Response & Evaluation Services (CARES) program that is an alternative response approach to individuals experiencing a mental health crisis.
• Adopted the Coastside Recovery Initiative final report: “Building a more Equitable, Vibrant, and Resilient Coastside Economy”, and began implementation of several recommendations.
• Continued preparations for construction of the Carter Park Amphitheater Project ($6.4 million projected)
• Completed acquisition of 9 properties west of Railroad Avenue as a part of the City’s Lot Retirement Program.
• Completed the 2021 Redistricting Process and adopted District Map 503B, including creation and management of a seven-member advisory committee, numerous public workshops, multiple public outreach campaigns and materials, and management of the demographer consultant contract.
• Adopted a Public Art Policy and deaccessioning process. • Commissioned a “50th Annual Pumpkin Festival Commemorative Mural” to be painted in downtown prior to the festival in October 2022. iv DRAFT 12/15/2022
42 2. Major Capital Projects Completed or in Progress:
x Carter Park Redevelopment Project
x Highway 1 North Safety Project
x Poplar Beach Gateways Plan
x Main Street Safety Improvements
x Poplar Street Traffic Calming and Safety Project
x Corporate Yard Improvements
x Sheriff Substation Renovation Project
x New Magnolia Park Development Project
x Ocean View Park Accessibility Improvements Projects
Much of the work focuses on enhancing and improving infrastructure, as well as creating processes and organizational improvements which allow Staff to better carry out their core functions in serving the public. The 2021-22 through 2025-26 Five-Year Capital Improvement Program (CIP) provides in depth project-by-project information and how it aligns with the City’s Strategic Plan.
FACTORS AFFECTING FINANCIAL CONDITION
The information presented in the financial statements is best understood when it is considered from the perspective of the environment in which the City operates. During Fiscal Year 2021-22, the City experienced the recovery of Transient Occupancy Tax revenues and the return of programmatic services previously limited due to the pandemic. Although the City ended the year in a surplus, economic uncertainty remains with excessive inflation.
Local Economy
Employment in Half Moon Bay is concentrated in three major sectors: professional services; farm and agriculture; and retail/food services. The 2021 average unemployment rate for California was
7.3%, San Mateo County was 4.6%, and Half Moon Bay was 1.5%. Due to the COVID-19 pandemic, the unemployment rate peaked as high as 11.4% for San Mateo County during the month of April 2020. Since then, the unemployment rate has decreased below pre-pandemic levels of 1.6% for Half Moon Bay.
A significant driver of the economy has continued to be the local real estate market, which saw another year-over-year increase in assessed value. Half Moon Bay’s total assessed value for 2021- 22 is $3.5 billion, which is a 3.3% increase over 2020-21. Housing prices continue to remain strong, though future performance appears uncertain as the country is experiencing historically high inflation and rising interest rates. Additional challenges for the City include a volatile equities market and uncertainty related to this monetary environment.
Two of the most pressing concerns of the City includes the over reliance on Transient Occupancy Tax (TOT) revenues and rising existing costs due to excessive inflation. During the fiscal year ending June 30, 2022, TOT revenues made up 41% of all General Fund revenues. In addition to being the v DRAFT 12/15/2022
43 City’s largest revenue source, these revenues can be vulnerable in certain types of economic downturn.
Additionally, for the one-year period ending on May 2022, the Consumer Price Index (CPI) was recorded at a high of 8.6%, the largest 12-month increase since 1981. This index is the most widely used measure of inflation and tracks changes in the prices of consumer goods and services. The City has experienced rising costs of existing obligations and anticipates further increases as inflation continues.
Existing obligations that are likely to increase in future years include public safety, sewer treatment, and pension costs. These costs coupled with increased demand for essential City services and enhanced infrastructure investment, to maintain and enhance City assets, may strain City finances.
Staff will continue to monitor these conditions moving forward, and make budgetary adjustments as necessary, to ensure the City can sustain long-term financial health.
Long-Term Financial Planning
The long-term financial plan of the City continues to include cost containment strategies and a comprehensive cost recovery program, both designed to ensure the long-term financial health of the City. Although the City’s long-term financial outlook shows stability, this is achieved through the use of one-time funds and general fund reserves while economic uncertainty remains. Through the City sponsored Coastside Recovery Initiative, the community is pursuing additional industries to help diversify the economy of the City, which would help bring in new revenues and mitigate the City’s current dependance on tourist driven TOT and sales taxes.
In response to the COVID-19 pandemic, the federal government signed the American Rescue Plan Act (ARPA) which provided funding for cities to replace lost revenue resulting from the pandemic.
The City was allocated $3 million in funding to be paid in two installments, in fiscal year 2021-22 and fiscal year 2022-23. The city has opted to use these funds to reinstate various City services originally lost during the pandemic, such as recreation programs and economic recovery efforts.
To combat against rising costs and using reserves in future years, in November 2020 voters passed Measure U effectively raising the Transient Occupancy Tax rate to 14% effective July 1, 2021, and 15% effective July 1, 2022. The City anticipates this measure to generate more revenues to maintain existing City services after the sunset of ARPA funds.
Additionally in FY 2019-20, the City Council created a new reserve, an Economic Uncertainty Reserve, to smooth the effects of dramatic downturn in the economy that may negatively impact revenues. The goal of this new reserve is to retain 20% of budgeted annual operating expenditures. While the use of this reserve is anticipated in future fiscal years, the City’s longterm goals include fully funding both the economic uncertainty and the operating reserve to be a total of 50% of annual operating expenditures. As of June 30, 2022, both reserves are fully funded.
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44 The City’s long term strategic plan, adopted on March 15, 2018, addresses the following four Strategic Elements:
x Fiscal Sustainability
x Healthy Communities and Public Safety
x Inclusive Governance
x Infrastructure and Environment
Based on these Strategic Elements, the City Council annually adopts strategic priorities to help guide the City’s actions, work plans, and efforts on addressing the community’s needs. The Council addresses the City’s long-term fiscal sustainability by retiring debt early, improving reserves, investing in infrastructure, and marketing the City to visitors to improve key revenue sources, such as Transient Occupancy and Sales Tax.
Risk Management
Comprehensive general liability coverage is provided through the Pooled Liability Assurance Network Joint Powers Authority (PLAN JPA). The plan consists of a self-insurance pool involving a number of cities in the San Francisco Bay Area. The cities contract with the Plan through a liability coverage agreement that is very similar to a comprehensive general liability, commercial auto, and public officials’ errors and omissions policy. The City’s limit in the pool is $5,000,000 with a $50,000 per occurrence deductible for which it self-insures.
For Workers' Compensation coverage, the City participates in the Cities Group, created by a joint powers agreement to provide workers compensation coverage of up to $10,000,000 per occurrence in excess of $1,000,000 for miscellaneous employees. The Group acts as administrator and claim adjuster, and provides other risk management services as required by State law. Each member of the Group pays a premium commensurate with the level of coverage requested and shares surpluses and deficits proportionate to its participation in the Group. Additional information concerning the City's participation in risk pools for liability and workers' compensation is provided in Note 10 to the financial statements.
The City focuses on identification of hazards and dangerous conditions and provides on-going training in an effort to reduce exposure and ensure public safety and welfare.
AWARDS AND ACKNOWLEDGEMENTS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Half Moon Bay for its annual comprehensive financial report for the fiscal year ended June 30, 2021. To be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized annual comprehensive financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.
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45 A Certificate of Achievement is valid for a period of one year only. We believe that our current annual comprehensive financial report continues to meet the Certificate of Achievement Program’s requirements and we are pleased to submit it to the GFOA to determine its eligibility.
We would like to take an opportunity to thank the Administrative Services Department staff.
Special thanks to Kenneth Stiles, Finance Manager; Bryan Lopez, Senior Management Analyst; Ernest Azevedo, Management Analyst; Raymond Cruz, Payroll Technician; Carol Kim, Accounting Technician and Mary Huerta, Administrative Assistant for their efforts during the annual audit process and contribution to this report. We also would like to express deep appreciation to the audit team from Maze and Associates for their professional work and assistance during the audit process and throughout the year.
Finally, we would like to express our appreciation to the City Council, the operating departments, and the Council Finance Committee for their interest and support toward conducting the financial operations of the City in a responsible manner with emphasis on transparency, ethics, and fiscal responsibility.
Respectfully submitted,
Signed: _______________________ __________________________ Matthew Chidester Lisa Lopez Rossi
City Manager Administrative Services Director
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46 Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Half Moon Bay
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2021
Executive Director/CEO
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47 x
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48 City of Half Moon Bay
City Council
Mayor Debbie Ruddock Vice Mayor
Deborah Penrose
Council member
Joaquin Jimenez
Council member
Robert Brownstone
Council member
Harvey Rarback
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49 City of Half Moon Bay
Executive Team
City Manager City Attorney
Catherine Engberg
Communications Director/ Public Works Director
City Clerk Jessica Blair
City Manager
John Doughty
Community Development
Director Jill Ekas
xii
VACANT
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50 Community City Council City Committees City Commissions City Attorney City Manager Deputy City Manager Public Safety Community Development Public Works Communications & City Clerk Administrative Services Community Services Law Enforcement Dispatch Animal Control Planning Building Code Enforcement Housing Engineering Sewer Capital Projects Maintenance Sustainability Elections Communications Legislative Affairs Community & Employee Engagement Contracts & Records Management Commissions & Committees Financial Services Risk Management Human Resources Information Technology Recreation Special Events Emergency Preparedness City of Half Moon Bay Organizational Chart xiii DRAFT 12/15/2022
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52 FINANCIAL SECTION
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54 INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and City Council
City of Half Moon Bay, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Half Moon Bay, California (City), as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the Table of Contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining funds information of the City as of June 30, 2022, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparisons listed in the Table of Contents as part of the basic financial statements for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirement 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.
Responsibility of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the 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. 1 DRAFT 12/15/2022
55 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 opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Change in Accounting Principles
Management adopted the provisions of the Governmental Accounting Standards Board Statement No. 87 – Leases, which became effective during the year ended June 30, 2022.
The implementation of GASB 87 does not have material effects on the financial statements.
The emphasis of this matter does not constitute a modification to our opinions. 2 DRAFT 12/15/2022
56 Required Supplementary Information
Accounting principles generally accepted in the United States of America require that Management’s Discussion and Analysis and other Required Supplementary Information as listed in the Table of Contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying Supplementary Information, as listed in the Table of Contents, is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the 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 Supplementary Information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the annual report. The other information comprises the Introductory Section and Statistical Section listed in the Table of Contents, but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.
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57 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 28, 2022 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.
The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.
Pleasant Hill, California
November 28, 2022
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58 MANAGEMENT’S DISCUSSION AND ANALYSIS
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60 CITY OF HALF MOON BAY, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
As management of the City of Half Moon Bay (the City), we offer readers of the City of Half Moon Bay’s financial statements this overview of the financial activities of the City for the fiscal year ended June 30, 2022. We encourage readers to consider the information presented here in conjunction with additional information that we have provided in our letter of transmittal and the City’s basic financial statements.
Financial Highlights
The City’s government-wide assets exceed its liabilities at June 30, 2022, by $150 million, which is a 3.4% or $4.9 million increase from the prior year. Of this amount, $43.9 million may be used to meet the City’s ongoing obligations to citizens and creditors, which is a 3% increase over the prior year’s unrestricted net position of $42.5 million. The City’s cash and investments at June 30, 2022 totaled $47.9 million, of which $41.9 million is classified as government activities and $6 million as Business-type activity. The City’s cash and investments increased by $3.2 million, or 7% compared to the prior year. At June 30, 2022, the City had outstanding long-term obligations of $15.5 million, of which $15.2 million is classified as governmental activities and $283 thousand as business activities.
Obligations have decreased by $5.4 million or 26% compared to the prior year. This decrease is primarily due to a decrease in net pension liability.
During the 2014-15 fiscal year, the City implemented the Government Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pension Plans, an amendment of GASB Statement No. 27, which resulted in adjustments to pension expenses and reporting the City’s long-term net pension liability of $7.6 million on the FY 2021-22 Statement of Net Position.
GASB No. 68 is intended to improve accounting and financial reporting by state and local governments that provide pension benefits. The Net Pension Liability decreased by $4.6 million from the $12.3 million recorded last year.
City-wide revenues were $30.3 million, of which $25.3 million was generated by governmental activities and $5 million by Business-type activities. Revenues increased by 7% from the prior year primarily due to an increase in transient occupancy taxes. City-wide expenditures were $25.4 million, of which $19.4 million was incurred by governmental activities and $6 million by Business-type activities. Expenditures increased by 10% from the prior year mostly due to increases in recreation services, general government, and sewer utility expenditures.
The City’s General Fund balance as of June 30, 2022, was $15.6 million, an increase of roughly $4.4 million as compared to the prior year’s amount of $11 million. This increase is primarily due to increases in tax revenue and the receipt of federal funding from the American Rescue Plan Act. For the fiscal year ended June 30, 2022, Governmental Funds revenues exceeded expenditures and net transfers by $5.1 million, primarily attributed to an overperformance of taxes revenue overperformance. The governmental funds’ combined ending fund balance as of June 30, 2022, is $66 million, an 8% increase from the prior year.
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61 CITY OF HALF MOON BAY, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
OVERVIEW OF THE FINANCIAL STATEMENTS
This management discussion and analysis section is intended to serve as an introduction to the City’s basic financial statements, which are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains a transmittal letter, other required supplementary information, optional section that presents combining statements for non-major governmental funds and internal service funds, and statistical section.
Government-wide Financial Statements
The government-wide financial statements include the statement of net position and the statement of activities. Both are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business.
The statement of net position presents information on all of the City’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of the City’s financial condition.
The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation and sick leave).
These two statements that comprise the government-wide financial statements both distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (Business-type activities). The governmental activities of the City include its general government, public safety, public works and building regulation, parks and recreation, and planning programs. The sole Business-type activity of the City is the City’s sewer utility.
The government-wide financial statements normally include, not only the City of Half Moon Bay itself (known as the primary government), but also a legally separate Community Development Agency of the City of Half Moon Bay for which the City of Half Moon Bay is financially accountable. Although the Agency is an integral part of the primary government, no financial information has been included for this component unit since it has been inactive for over ten years.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Half Moon Bay uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. 8 DRAFT 12/15/2022
62 CITY OF HALF MOON BAY, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
Governmental Funds
Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.
The City of Half Moon Bay maintains fourteen individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, the Streets and Roads Fund, and the Judgment Obligation Bond Fund, all of which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the non-major governmental funds is provided in the form of combining statements in the Combining Balance Sheet and Individual Fund Statements of Revenues, Expenditures and Changes in Fund Balances sections of the report.
The City of Half Moon Bay adopts an annual appropriated budget for each of its governmental funds. A budgetary comparison schedule has been provided for each governmental fund to demonstrate compliance with this budget.
The basic governmental fund financial statements can be found on pages 26-32 of this report. The budgetary comparison schedule for the General Fund can be found on page 85.
Proprietary Funds
The City of Half Moon Bay maintains two types of proprietary funds: Internal Service funds and Enterprise (Proprietary) funds.
Internal Service Funds
Internal Service funds are used to accumulate resources and allocate costs internally among the City’s various functions. The City uses internal service funds to account and reserve for the purchase and maintenance of City vehicles and equipment, to account and reserve for risk management activities, and to stabilize for fluctuations in pension costs. Because these services exclusively benefit the governmental functions, they have been included within governmental activities in the government-wide financial statements.
Enterprise Funds
Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises. The intent is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily by user charges. The City uses an enterprise fund to account for the financial activity of the City’s sewer operation. 9 DRAFT 12/15/2022
63 CITY OF HALF MOON BAY, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. The enterprise funds are also combined into a single, aggregated presentation in the proprietary fund financial statements that can be found on pages 33-35 of this report.
Notes to the Basic Financial Statements
The notes provide additional information essential to the full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 39-74 of this report.
Other Information.
In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information including schedule of proportionate share of the net pension liability, contributions, funding progress for the City’s obligation to provide other post-employment benefits to its employees and budgetary comparison schedules for the General Fund and the other funds. Required supplementary information can be found on pages 77-87 of this report.
The combining statements for non-major governmental funds and internal service funds are presented on pages 94-108, and the Statistical Section follows on page 115. 10 DRAFT 12/15/2022
64 CITY OF HALF MOON BAY, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Statement of Net Position
The following table provides a condensed statement of net position as of June 30, 2022 and 2021:
Note: Total assets + deferred outflows – total liabilities – deferred inflows = total net position 2022 2021 2022 2021 2022 2021
Current and othe r a s se ts 46,736,879 42,031,973 15,586,270 18,745,924 62,323,149 60,777,897 La nd held for resale 26,823,920 ‐ 26,823,920 ‐ 26,823,920 26,823,920 Ca pi tal As se ts 74,694,444 72,919,857 6,948,434 6,199,508 81,642,878 79,119,365 Total assets 148,255,243 141,775,750 22,534,704 24,945,432 170,789,947 166,721,182 Rela ted to OPEB 83,400 31,584 ‐ ‐ 83,400 31,584 Rela ted to pensi on 2,531,578 2,540,337 120,224 126,059 2,651,802 2,666,396 Total deferred outflows of
resources 2,614,978 2,571,921 120,224 126,059 2,735,202 2,697,980 Long‐term liabili ties
outs tanding 13,683,818 18,290,476 283,237 500,223 13,967,055 18,790,699 Other liabili ties 3,097,292 4,261,666 63,680 510,827 3,160,972 4,772,493 Total liabilities 16,781,110 22,552,142 346,917 1,011,050 17,128,027 23,563,192 Rela ted to OPEB 127,266 71,024 9,969 5,459 137,235 76,483 Rela ted to pensi on 5,874,487 598,424 292,668 16,253 6,167,155 614,677 Total deferred inflows of
resources 6,001,753 669,448 302,637 21,712 6,304,390 691,160 Net Position:
Net i nves tment in capi tal
a s se ts 68,275,626 67,193,002 6,948,434 6,199,508 75,224,060 73,392,510 Res tricted 21,340,221 19,871,245 9,554,843 9,377,687 30,895,064 29,248,932 Unres tricted 38,471,511 34,061,834 5,502,097 8,461,534 43,973,608 42,523,368 Total Net Position 128,087,358 121,126,081 22,005,374 24,038,729 150,092,732 145,164,810 Governmental
Activities
Business Type
Activities
Total
CITY OF HALF MOON BAY
Compa ra tive Sta tement
Statement of Net Position
Yea r Ended on June 30, 2022
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65 CITY OF HALF MOON BAY, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
Net Position reflects the difference between assets and liabilities. Net position may serve over time as a useful indicator of a government’s financial position. In the case of the City of Half Moon Bay, assets exceeded liabilities by $150 million on June 30, 2022, with invested capital assets of $75.2 million, $30.9 million restricted and an unrestricted net position of $43.9 million. Portions of the unrestricted net position may by law or contract be used only for specified purposes and may not necessarily be used for any general governmental purpose.
The net investment in capital assets reflecting the investment in capital assets (e.g. land, buildings, facilities, vehicles, equipment, and infrastructure) is $75.2 million and represents 50% percent of the City’s net position. This portion has increased by $1.8 million or 2.5%. The City uses capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the net investments in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources since the capital assets themselves cannot be used to liquidate these liabilities.
The restricted net position accounts for $30.9 million, or 21% percent, of the City’s total net position. The restricted net position increased by $1.6 million or 6% percent in fiscal year 2021-22. This portion of the net position can only be spent for specific purposes stipulated by external resource providers or legislation.
This increase is from restricted revenues exceeding allowed expenditures in the governmental funds.
Restricted revenues generally include grants, project specific capital contributions and other intergovernmental funding.
The unrestricted net position of $43.9 million, or 29% percent of the City’s total net position, increased by $1.4 million or 3% percent. The increase is primarily from unrestricted revenues such as transient occupancy taxes exceeding expenditures. This portion of the net position may be used to meet the government’s ongoing obligations to residents and creditors, although portions of the unrestricted net position may by law or contract be only used for specified purposes and may not necessarily be used for any general governmental purpose.
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66 CITY OF HALF MOON BAY, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
Statement of Activities
The following table provides a condensed statement of activities for the fiscal year ended June 30, 2022, as compared to June 30, 2021:
Variance
2022 2021 2022 2021 2022 2021
Program revenues:
Cha rges for services 2,809,193 1,841,161 5,005,399 4,477,159 7,814,592 6,318,320 24% Opera ting grants and contri butions 2,544,520 ‐ 4,123,613 ‐ 2,544,520 4,123,613 ‐38% Capi tal grants and contributi ons 1,647,350 ‐ 3,145,690 ‐ 1,647,350 3,145,690 ‐48% Subtotal 7,001,063 9,110,464 5,005,399 4,477,159 12,006,462 13,587,623 ‐12% General revenues:
Property taxes 4,592,317 3,582,161 ‐ ‐ 4,592,317 3,582,161 28% Sales and use taxes 3,358,759 ‐ 2,929,586 ‐ 3,358,759 2,929,586 15% Transient occupancy taxes 9,442,518 ‐ 4,817,532 ‐ 9,442,518 4,817,532 96% Other taxes 1,341,327 ‐ 1,304,943 ‐ 1,341,327 1,304,943 3% Other general revenues (398,433) 1,489,353 21,492 635,402 (376,941) 2,124,755 ‐118% Subtotal 18,336,488 14,123,575 21,492 635,402 18,357,980 14,758,977 24% Total revenues 25,337,551 23,234,039 5,026,891 5,112,561 30,364,442 28,346,600 7% Expenses
General government 6,008,499 ‐ 5,175,257 ‐ 6,008,499 5,175,257 16% Public sa fe ty 5,017,087 ‐ 4,743,620 ‐ 5,017,087 4,743,620 6% Public works 2,765,717 ‐ 2,817,305 ‐ 2,765,717 2,817,305 ‐2% Recrea tion Services 2,823,410 ‐ 1,942,872 ‐ 2,823,410 1,942,872 45% Planning 2,779,608 2,764,254 ‐ ‐ 2,779,608 2,764,254 1% Interes t and fi s cal cha rges ‐ ‐ ‐ ‐ ‐ ‐ 0% Sewer Utili ty ‐ ‐ 6,042,199 5,670,214 6,042,199 5,670,214 7% ‐
Total expenses 19,394,321 17,443,308 6,042,199 5,670,214 25,436,520 23,113,522 10% Increa se (Decrea se ) in net posi ti on
be fore trans fers 5,943,230 5,790,731 (1,015,308) (557,653) 4,927,922 5,233,078 ‐6% Trans fers 1,018,047 621,266 (1,018,047) (621,266) ‐ ‐ 0% Increa se (Decrea se ) in net posi ti on 6,961,277 6,411,997 (2,033,355) (1,178,919) 4,927,922 5,233,078 ‐6% Net posi tion ‐ As of July 1 121,126,081 114,714,084 24,038,729 25,217,648 145,164,810 139,931,732 4% Prior Peri od Adjus tment ‐ ‐ ‐ ‐ ‐ Net posi tion ‐ As of July 1, as res ta ted 121,126,081 114,714,084 24,038,729 25,217,648 145,164,810 139,931,732 4% Net position ‐ As of June 30 128,087,358 121,126,081 22,005,374 24,038,729 150,092,732 145,164,810 3% Governmental Activities Total Business‐type Activities
CITY OF HALF MOON BAY
Compa ra tive Sta tement
Statement of Activities
Yea r Ended on June 30, 2022
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67 CITY OF HALF MOON BAY, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
Governmental Activities
The City’s Governmental net position increased by $6.9 million or 6% in fiscal year 2022, primarily due to revenues exceeding expenditures.
Revenues Highlights:
Total general revenues increased by $4.2 million or 30% from the prior year, primarily due to increases in transient occupancy taxes and property taxes. o Program revenues decreased by $2.1 million or 23%. This decrease is primarily from decreases in operating and capital grants. These receipts are generally project specific and/or one-time funds. In the prior year, the City received a one-time $2 million inlieu fee and $2.8 million for the Highway 1 Project. o Transient Occupancy Tax (TOT), the City’s largest source of general revenue increased by $4.6 million or 96% from prior year. This is primarily due to the return of tourism to the Coast and a recently adopted tax rate increase to 14%. o Sales Tax, the second largest source of general revenue increased by of $429K or 15% from prior year.
o Property Tax, the third largest source of general revenue, increased by $1 million or 28% from prior year. This increase is primarily due to the receipt of vehicle in-lieu (VLF) taxes.
o Other General Revenues include investment income and other miscellaneous revenues.
The amount from government activities decreased by $1.8 million or 27% from prior year. This is primarily due to a 700 thousand unrealized loss on investments and the receipt of a one-time $1.1 million from the Sheriff balancing account from the prior year.
Expenses for Government Activities increased by $1.9 million from the prior year, mostly due to increases in recreation services and general government.
Business-type Activities
The City’s sole Business-type activity is the sewer fund. The City’s total Business-type net position decreased by $2.0 million, primarily due to the following factors:
Total revenues decreased by $85 thousand or 2% from the prior year. However, charges for services increased by 528 thousand or 12%. In the prior year, the City recognized a gain in the Sewer Authority Mid-Coastside (SAM) investment in the amount of $635 thousand. In fiscal year 2021- 22, the City did not recognize a gain of such size.
The City is a member of the SAM joint power authority and exercises significant influence over SAM’s operations; therefore, the share of the City’s investment in SAM’s net position is reflected in the City’s financial statements. In 2021-22 the City recognized a gain on this investment of $21 thousand.
Expenses from Business-type Activities increased by $371 thousand as compared to fiscal year 2021-22. This is primarily due to increases in sewer treatment and utility. 14 DRAFT 12/15/2022
68 CITY OF HALF MOON BAY, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FUND FINANCIAL ANALYSIS
As noted above, the City uses fund accounting to ensure and demonstrate compliance with governmental finance-related legal requirements.
Governmental Funds
The Governmental Funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows and balance of resources that are available for spending.
Such information is useful in assessing the City’s financial requirements. In particular, the unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. Consequently, the governmental fund financial statements provide a detailed short-term view that helps the readers determine whether there are more or fewer financial resources that can be spent in the near future to finance the City’s programs.
The following is a schedule of revenues, expenditures, and changes in fund balances for each of the major governmental and aggregate non-major governmental funds recorded on the modified accrual basis of accounting:
As of June 30, 2022, the City’s governmental funds reported combined fund balances of $66 million, an increase of $5.1 million in comparison with June 30, 2021, which is primarily attributed to an increase in revenues. The governmental funds expenditures were $19.3 million in fiscal year 2021-22, a $401 thousand decrease from the prior year.
2022 2021 Variance
Revenues $ 25,457,670 $ 23,259,520 9%
Expendi tures (19,374,704) (19,776,033) ‐2%
Trans fers (ne t) (951,154) 741,863 ‐228%
Net Change in Fund Balances 5,131,812 4,225,350 21% Fund balances at beginning of
yea r 60,905,657 56,680,307 7%
Fund balances at end of yea r 66,037,469 60,905,657 8% Non‐s pendable 26,823,920 26,823,920
Res tricted 21,340,221 19,871,245 7%
Commi tted 8,999,117 7,271,604 24%
As signed 2,288,175 3,069,792 ‐25%
Una s signed 6,586,036 3,869,096 70%
Total fund balances 66,037,469 60,905,657 8%
CITY OF HALF MOON BAY
Comparative Statement
Governmental Funds Statement of Revenues, Expenditures and Fund Balance Yea r Ended June 30, 2022
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69 CITY OF HALF MOON BAY, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
The governmental funds’ fund balance is comprised of the following:
Non-spendable is $26.8 million (40.6% of total balance) which represents the value of land held by the City. There has been no change in this amount from the prior year. Restricted is $21.3 million (32.2% of the total balance), which can only be spent for specific purposes, set by external resource providers, or enabling legislation. The balance is primarily for restricted street funds, development fees, and reserves required by debt covenants. Committed balance is $8.9 million (13.6% of the total balance), which can only be spent for specific purposes as determined by formal action of the City Council. This amount is to satisfy the City’s general fund reserve policy, which states that 50 percent of budgeted operating expenditures for the year to be committed for contingencies and economic uncertainty. Assigned balance is $2.2 million (3.5% of the total balance), which indicates City Council’s intent to use these funds toward capital improvements in the future. This balance represents funds remaining in the capital project funds for future capital expenditures. Unassigned is $6.5 million (10% of the total balance), which is available for any use.
FINANCIAL ANALYSIS OF CITY’S FUNDS
General Fund
The General Fund is the primary operating fund of the City of Half Moon Bay. All unrestricted revenues such as general taxes, fees and other revenues that are not allocated by law or contractual agreement to some other funds are accounted for in this fund. The General Fund provides for the cost of operating City government and includes the services of the City Attorney, City Clerk, City Council, City Manager, Citywide costs (such as debt service), Finance and Risk Management, Human Resources and Information Technology, Recreation, Building and Planning, Public Works, and Public Safety. In addition, the General Fund expenditures include transfers to fund capital projects and reserve funding.
As of June 30, 2022, the total General Fund balance was $15.5 million, which includes an unassigned portion of 6.5 million. The General Fund fund balances increased by $4.4 million for the fiscal year ended June 30, 2022.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
The following table compares General Fund revenues and expenditures by category:
General Fund Revenues
General Fund revenues for the year ended June 30, 2022, increased by $7 million or 44%, over the prior year. The preceding chart summarizes revenues into major categories for comparative purposes across two fiscal years.
Total tax revenues increased by $6.4 million or 53% from the prior year primarily from an increase in transient occupancy taxes, sales taxes and vehicle in-lieu taxes. Net transfers increased by $1 million primarily due to an increase in capital projects being funded directly. 2022 2021 Variance
Revenues
Taxes 18,670,447 12,223,462 53%
License and permi ts 365,491 ‐ 405,491 10% Fines and forfei tures 70,383 ‐ 108,937 35% Cha rges for services 1,544,174 1,302,597 19% Rents and Lea ses ‐ ‐
Inves tment Income (197,019) 2,054 ‐9692% Intergovernmental revenues 1,574,015 169,487 829% Mi s cellaneous 1,085,110 1,860,851 ‐42% Total 23,112,601 16,072,879 44%
Expenditures
General government 1,949,450 2,190,316 ‐11%
General admini s tra tion 1,584,239 1,251,447 27% Public sa fe ty 4,527,692 4,308,681 5%
Public works 1,780,363 1,650,155 8%
Recrea tion Services 1,040,867 864,764 20%
Planning 2,628,557 2,462,112 7%
Capi tal Outlay ‐ ‐
Debt Service 1,260,001 ‐
Total 14,771,169 12,727,475 16%
Net Trans fers (3,896,979) (2,838,856) 37%
Net Change in Fund Balances 4,444,453 506,548 65% Fund Balances at beginning of year 11,140,700 10,634,152 5% Fund Balances at end of year 15,585,153 $ 11,140,700 40%
CITY OF HALF MOON BAY
Comparative Statement
General Fund Statement of Revenues, Expenditures and Fund Balance Yea r Ended June 30, 2022
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MANAGEMENT’S DISCUSSION AND ANALYSIS
General Fund Expenditures
General Fund expenditures for the 2021-22 fiscal year increased by $2 million or 16%. This increase is primarily due to the City resuming debt service payments after one year of deferral and general increases in public safety and general administration expenditures.
General Fund Budgetary Highlights
The final budget for the General Fund planned for a net decrease of fund balance by $978 thousand, however the ending fund balance increased by $4.4 million. This is primarily due to revenues exceeding initial projections by $4 million with most of the overperformance coming from transient occupancy taxes and vehicle in-lieu revenues. The City also finished the fiscal year under budget by $1.3 million, this is primarily due to decreased operational spending then initially anticipated. A portion of these excess funds have been appropriated in the following budget for fiscal year 2022-23.
Final Budget Actual Variance
Revenues $ 19,045,189 $ 23,112,601 $ 4,067,412
Expendi tures (16,126,696) (14,771,169) 1,355,527
Trans fers (ne t) (3,896,979) (3,896,979) ‐
Net Change in Fund Balance (978,486) 4,444,453 5,422,939 Fund balances at beginning of yea r 11,140,700 11,140,700 ‐ Fund balances at end of yea r 10,162,214 15,585,153 5,422,939
CITY OF HALF MOON BAY
Budget to Actual Statement
General Fund Statement of Revenues, Expenditures and Fund Balance Yea r Ended June 30, 2022
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MANAGEMENT’S DISCUSSION AND ANALYSIS
Other Major Governmental Funds
The following table compares governmental fund balances:
Streets and Roads Funds
The Streets and Roads Special Revenue funds provide for all proceeds of Gas Tax funds, Measure A/W Local Transportation Ordinance Tax funds and other grants. These funds are restricted for the purpose of these taxes and mainly used for streets and road maintenance and improvements. As of June 30, 2022, the Street and Road Funds had a fund balance of $6.2 million, a $1.5 million increase from the prior year, primarily due revenues exceeding expenditures.
Lot Acquisition / Retirement Fund
The Lot Acquisition and Retirement fund is a fund used to account for in-lieu fees and expenses within the purpose of acquiring and retiring development rights on existing legal parcels. As of June 30, 2022, the fund had a fund balance of $1.8 million, a 738 thousand decrease from the prior year. This is primarily due to the City acquiring nine parcels during the fiscal year.
Judgment Obligation Bond (JOB) Fund
The JOB funds account for debt service on the judgment obligation bonds. As of June 30, 2022, the fund balance was $6 thousand, which is small decrease from the prior year. This is due to an unrealized loss on investments.
Library Fund
The Library Capital Projects fund is used to account for the design, development, and construction of the new library and the maintenance thereafter. This fund decreased by $916 thousand, primarily through a transfer out to reimburse the General Fund for debt service payments on the library loan. 2022 2021 Variance
Major Governmental Funds:
General Fund 15,585,153 11,140,700 40%
Stree ts and Road 6,257,602 4,683,338 34%
Lot Acqui si tion / Re ti rement 1,848,079 2,586,094 ‐29% Judgement Obliga tion Bonds 6,132 6,311 ‐3%
Libra ry Capi tal 416,574 1,332,744 ‐69%
Land As se t 26,823,920 26,823,920 0%
Capi tal Project Fund 1,871,601 1,737,048 8%
Non‐Major Governmental Fund 13,228,408 12,595,502 5%
Total Fund Balances $ 66,037,469 $ 60,905,657 8%
CITY OF HALF MOON BAY
Comparative Statement
Governmental Funds Statement of Revenues, Expenditures and Fund Balance Yea r Ended June 30, 2022
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MANAGEMENT’S DISCUSSION AND ANALYSIS
Capital Project Funds
Capital Projects Funds include the Public Facilities Fund that accounts for expenditures related to public facilities improvements and the Storm Drain Improvements Fund that accounts for all proceeds from storm drainage improvement fees assessed against new and remodeled construction and used for drainage improvements. As of June 30, 2022, the fund balance was $1.8 million, a 134 thousand increase from the prior year, primarily due to a transfer in from the General Fund to fund future capital expenditures.
Land Asset Fund
This is a restricted fund which was created in Fiscal Year 2014-15 for the purposes of recording land assets held for resale. The fund balance as of June 30, 2022 is $26.8 million, which consists of transfers of land assets for Glencree and Beechwood properties from the General Fund and the Judgment Obligation Bond Funds. The Glencree property was donated to the City. The Beechwood property was acquired by the City as part of the settlement of the Yamagiwa litigation in 2007. With the receipt of the insurance settlement payments, the Beechwood properties are no longer required for the Judgement Obligation Bonds. There was no activity in this fund in fiscal year 2021-22.
Non-Major Funds
Non-Major funds are comprised of Special Revenue and Capital Project funds.
Special Revenue funds include:
Police Grants Fund that accounts for revenues received and expenditures made for police services, Storm Drain Operating Fund that accounts for the maintenance of the existing storm drain system, Traffic Mitigation Fund that provides for all proceeds from traffic mitigation fees imposed on new development and restricted to defray the cost of constructing improvements to mitigate traffic, Affordable Housing Fund that accounts for proceeds of construction and development fees, including in lieu fees with the restricted purpose of the development of affordable housing, Parks Development Fund, which accounts for development impact fees, Federal, State and County grants, and is restricted for acquisition, development and capital improvements of the City’s parks and trails.
As of June 30, 2022, the Non-Major Funds had a fund balance of $13.2 million, a $632 thousand increase over the prior year. This increase in primarily due to transfers in to fund future capital expenditures.
Proprietary Fund Financial Statement Analysis
As of June 30, 2022, the City’s Proprietary Fund net position was $27.2 million ($7.3 million invested in capital assets; $9.5 million restricted for investment in Sewer Authority; $10.3 million in unrestricted net position). Additional information on this investment can be found in Note 6 of the financial statements.
Unrestricted net position of $4.8 million in the Internal Service Funds is primarily reserved for vehicle and equipment replacement, risk management and general liability claims, and pension cost stabilization. 20 DRAFT 12/15/2022
74 CITY OF HALF MOON BAY, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
The City’s total net investment in capital assets for its Governmental and Business-type activities (net of accumulated depreciation) as of June 30, 2022, was $81.6 million, an increase of $2.5 million as compared to June 30, 2021.
Capital assets include land, buildings, equipment, vehicles and infrastructure. The following table presents summarized information on capital assets net of depreciation for fiscal years 2022 and 2021:
Construction in progress decreased by $3.8 million and Infrastructure has increased by $4.2 million primarily due to completion of the Ocean Colony Pump Station and other projects. Additional information regarding the City’s capital assets can be found in Note 4 in Notes to the Basic Financial Statements.
Long-term Obligations
As of June 30, 2022, the City’s long-term obligations totaled $15.5 million, primarily comprised of net pension liability and a loan from the County of San Mateo for the library.
2022 2021 2022 2021 2022 2021 Variance
Land $ 5,022,855 4,756,385 $ ‐ $ ‐ $ 5,022,855 $ 4,756,385 6% Rights of Way 6,723,926 6,723,926 ‐ ‐ 6,723,926 6,723,926 0% Construction in progress 5,556,654 7,838,052 43,832 1,584,587 5,600,486 9,422,639 ‐41% Buildings and improvements 30,682,040 31,225,826 6,869,331 4,567,572 37,551,371 35,793,398 5% Machinery and equipment 434,248 355,898 35,271 47,349 469,519 403,247 16% Infrastructure 26,274,721 22,019,770 ‐ ‐ 26,274,721 22,019,770 19% Total $ 74,694,444 $ 72,919,857 $ 6,948,434 $ 6,199,508 $ 81,642,878 $ 79,119,365 3% Activities Activities Total
CITY OF HALF MOONBAY
Comparative Statement
Capital Assets(net of depreciation)
Year Ended June 30, 2022
Governmental Business Type
2022 2021 2022 2021 2022 2021 Variance
Li bra ry Loa n 4,008,798 5,154,169 4,008,798 ‐ 5,154,169 22% 880 Stone Pine Loan 2,410,020 2,035,000 2,410,020 2,035,000 18% Claims lia bili ty 919,647 947,234 919,647 ‐ 947,234 3% Employee compensa ted
a bsences 535,967 539,463 535,967 ‐ 539,463 1% Net Pension Lia bili ty 7,376,028 11,780,541 283,237 500,223 7,659,265 ‐ 12,280,764 38% Total 15,250,460 $ $ 20,456,407 $ 283,237 $ 500,223 $ 15,533,697 $ ‐ 20,956,630 26% Activities Activities Total
CITY OF HALF MOON BAY
Comparative Statement
Long Term Obligations
Yea r Ended June 30, 2022
Governmental Business‐type
21 DRAFT 12/15/2022
75 CITY OF HALF MOON BAY, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
Library Loan: During the fiscal year ending June 30, 2017, the City entered into a $6 million interest-free loan agreement with the County of San Mateo to ensure completion of the Library Project. The City began repayment in fiscal year 2020. In fiscal year 2021, due to budgetary constraints caused by the Covid-19 pandemic, the loan was amended so the City would not be required to make the two loans payments due in that fiscal year. The City resumed loan repayments in fiscal year 2021-2022, including the additional amount that was deferred.
880 Stone Pine Loan: Since 2009, the City has leased a 21-acre property for its corporation yard facility.
During fiscal year 2020-21, the City entered into a $3.2 million financing agreement for purchase of the property and land. The City plans to upgrade and restore the Corporation yard to store vehicles, equipment and supplies. The City began repayments during the fiscal year and continues to draw down on the loan as needed to secure and improve the site.
Pension Liability: The City participates in one retirement plan through the California Public Employees' Retirement System (CalPERS). The measured net pension liability is measured as a proportionate share of the total net pension liability as reported by the CalPERS Financial Office. As of June 30, 2022, the City’s share of the pension liability was measured to be $7.3 million. This is a decrease of $4.6 million or 38%.
This decrease in net pension liability is from an increase in the market value of plan assets held at CalPERS.
Additional information about the City’s pension liability can be found in Note 8 to the Notes to the Basic Financial Statements.
State statutes limit the amount of general obligation debt a governmental entity may issue to 15 percent of its total assessed valuation. The current debt limitation for the City is approximately $132 million. At June 30, 2022 the City had no debt applicable to this limit. Additional information about the City’s long-term obligations can be found in Note 5 to the Notes to the Basic Financial Statements.
Currently Known Facts, Conditions, and Decisions
Outlined below is key information that is expected to have a significant effect on financial position or results of operations at the time of this report.
In December 2019, the world saw the appearance of a new novel coronavirus, COVID-19, that quickly developed into a global pandemic. On March 16, 2020, San Mateo County along with five other Bay Area counties announced a “shelter-in-place” orders for all residents, directing everyone to stay inside their homes except for essential activities. With Transient Occupancy Tax and Sales Tax revenues being the most vulnerable, the shelter in place orders immediately impacted the financial outlook of the City. In response, the City defunded various capital projects, halted many expenditures, and went into a temporary furlough. Although initially impacted, fiscal year 2020-21 saw the initial recovery of tourism to the Coast and during fiscal year 2021-22, revenues returned to pre-pandemic levels. However, the impact of the pandemic remains in the result of excessive inflation and concerns of another economic downturn.
Fiscal sustainability remains a high priority for Half Moon Bay. To that end, staff will continue to monitor these conditions and seek the most efficient ways to provide services to the public. Staff looks forward to continuing to work with the City Council and the community to address any potential financial challenges that may lay ahead. In addition, staff will continue to identify operational efficiencies, appropriate economic development opportunities and alternative revenue options available to the community to continue delivering services that provide a high quality of life for the residents and visitors of Half Moon Bay. 22 DRAFT 12/15/2022
76 CITY OF HALF MOON BAY, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
Requests for Information
This financial report is designed to provide all those with an interest in the government’s finances with a general overview of the City of Half Moon Bay financial position and to show the City's accountability for the money it receives. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to:
City of Half Moon Bay
Finance Department
507-B Purissima Street
Half Moon Bay, CA 94019.
An electronic version of this report is available at the City’s website, found at www.hmbcity.com 23 DRAFT 12/15/2022
77 DRAFT 12/15/2022
78 CITY OF HALF MOON BAY
STATEMENT OF NET POSITION
Governmental Business-Type
Activities Activities Total
Assets
Cash and investments (Note 2) $41,977,276 $6,000,495 $47,977,771 Accounts receivable, net 4,154,728 4,541 4,159,269
Interest receivable 104,496 15,777 120,273
Prepaids 272,306 272,306
Land held for resale (Note 1i) 26,823,920 26,823,920
Investment in Sewer Authority
Mid-Coastside (Note 6) 9,554,843 9,554,843
Net OPEB Asset (Note 9) 228,073 10,614 238,687
Capital assets, not depreciated (Note 4) 17,303,435 43,832 17,347,267 Capital assets, depreciated, net (Note 4) 57,391,009 6,904,602 64,295,611 Total assets 148,255,243 22,534,704 170,789,947
Deferred outflows of resources
Related to OPEB (Note 9) 83,400 83,400
Related to pensions (Note 8) 2,531,578 120,224 2,651,802 Total deferred outflows of resources 2,614,978 120,224 2,735,202 Liabilities
Accounts payable 34,841 63,680 98,521
Accrued liabilities 953,152 953,152
Deposits payable 467,657 467,657
Unearned revenue 75,000 75,000
Claims liability, due within one year (Note 10) 919,647 919,647 Compensated absences (Note 1j):
Due within one year 26,798 26,798
Due in more than one year 509,169 509,169
Long-term debt (Note 5):
Due within one year 620,197 620,197
Due in more than one year 5,798,621 5,798,621
Net pension liability, due in more than one year (Note 8) 7,376,028 283,237 7,659,265 Total liabilities 16,781,110 346,917 17,128,027
Deferred inflows of resources
Related to OPEB (Note 9) 127,266 9,969 137,235
Related to pensions (Note 8) 5,874,487 292,668 6,167,155 Total deferred inflows of resources 6,001,753 302,637 6,304,390 Net position (Note 7)
Net investment in capital assets 68,275,626 6,948,434 75,224,060 Restricted for:
Investment in Sewer Authority 9,554,843 9,554,843
Debt Service 6,132 6,132
Streets and roads 9,562,941 9,562,941
Affordable housing 2,117,586 2,117,586
Capital projects 2,596,200 2,596,200
Other City projects 7,057,362 7,057,362
Total restricted net position 21,340,221 9,554,843 30,895,064 Unrestricted 38,471,511 5,502,097 43,973,608
Total net position $128,087,358 $22,005,374 $150,092,732 See accompanying notes to financial statements
JUNE 30, 2022
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79 CITY OF HALF MOON BAY
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2022
Net (Expense) Revenue and
Changes in Net Position
Operating Capital
Charges for Grants and Contributions Governmental Business-type Functions/Programs Expenses Services Contributions and Grants Activities Activities Total Governmental Activities:
General government $6,008,499 $646,363 $1,574,015 $15,000 ($3,773,121) ($3,773,121) Public safety 5,017,087 105,983 161,285 (4,749,819) (4,749,819) Public works 2,765,717 360,649 809,220 1,632,350 36,502 36,502 Recreation 2,823,410 1,176,088 (1,647,322) (1,647,322)
Planning 2,779,608 520,110 (2,259,498) (2,259,498)
Total governmental activities 19,394,321 2,809,193 2,544,520 1,647,350 (12,393,258) (12,393,258) Business-type Activities:
Sewer 6,042,199 5,005,399 ($1,036,800) (1,036,800)
Total $25,436,520 $7,814,592 $2,544,520 $1,647,350 (12,393,258) (1,036,800) (13,430,058) Taxes:
4,592,317 $4,592,317
3,358,759 3,358,759
9,442,518 9,442,518
Franchise 1,028,719 1,028,719
312,608 312,608
Investment income (702,830) (155,664) (858,494)
Miscellaneous 304,397 304,397
Gain on investment in Sewer Authority Mid-Coastside (Note 6) 177,156 177,156 Transfers (Note 3) 1,018,047 (1,018,047)
Total general revenues and transfers 19,354,535 (996,555) 18,357,980 Change in Net Position 6,961,277 (2,033,355) 4,927,922
Net Position at beginning of year 121,126,081 24,038,729 145,164,810 Net Position at end of year $128,087,358 $22,005,374 $150,092,732 See accompanying notes to financial statements
Business License Tax
Program Revenues
General revenues:
Property
Sales and Use
Transient occupancy
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81 CITY OF HALF MOON BAY
GOVERNMENTAL FUNDS
BALANCE SHEET
JUNE 30, 2022
Special Revenue Funds Judgment
General Streets and Lot Acquisition Obligation
Fund Road and Retirement Bonds
Assets
Cash and investments (Note 2) $12,892,851 $6,137,208 $1,926,816 $6,116 Receivables:
Accounts, net 3,717,080 218,330 25
Interest 29,220 16,474 5,263 16
Land held for resale (Note 1i)
Prepaids
Total assets $16,639,151 $6,372,012 $1,932,104 $6,132
Liabilities and Fund Balances
Liabilities:
$586,341 $39,410 $84,025
467,657
75,000
Total Liabilities 1,053,998 114,410 84,025
Fund balances (Note 7):
Nonspendable
Restricted 6,257,602 1,848,079 $6,132
Committed 8,999,117
Assigned
Unassigned 6,586,036
Total fund balances 15,585,153 6,257,602 1,848,079 6,132 Total liabilities and fund balances $16,639,151 $6,372,012 $1,932,104 $6,132 See accompanying notes to financial statements
Unearned revenue
Deposits payable
Accrued liabilities
28 DRAFT 12/15/2022
82 Capital Projects Funds Non-major
Capital Projects Governmental
Library Land Asset Fund Funds Total
$413,791 $1,630,203 $13,184,601 $36,191,586
219,293 4,154,728
2,783 4,013 32,969 90,738
$26,823,920 26,823,920
272,306 272,306
$416,574 $26,823,920 $1,906,522 $13,436,863 $67,533,278 $34,921 $208,455 $953,152
467,657
75,000
34,921 208,455 1,495,809
$26,823,920 26,823,920
13,228,408 21,340,221
8,999,117
$416,574 1,871,601 2,288,175
6,586,036
416,574 26,823,920 1,871,601 13,228,408 66,037,469
$416,574 $26,823,920 $1,906,522 $13,436,863 $67,533,278 29 DRAFT 12/15/2022
83 Reconciliation of the
GOVERNMENTAL FUNDS - BALANCE SHEET
with the
STATEMENT OF NET POSITION
JUNE 30, 2022
Fund balances of governmental funds $66,037,469
Amounts reported for governmental activities in the statement of net position are different because:
Capital assets have not been included as financial resources in governmental fund activity:
Capital assets, non depreciable 17,303,435
Capital assets, depreciated, net 56,956,761
Deferred outflows below are not current assets of financial resources and the deferred inflows are not due and payable in the current period and therefore are not reported in the Governmental Funds.
Deferred outflows of resources 2,613,892
Deferred inflows of resources (6,000,710)
Long-Term Notes Payable (6,418,818)
Compensated absences (535,967)
Net pension liability (7,376,028)
Net OPEB asset 225,132
5,282,192
Net position of governmental activities $128,087,358
See accompanying notes to financial statements
funds. The assets and liabilities of the internal service funds must be added to the statement of net position.
CITY OF HALF MOON BAY
Long-term asset and liabilities that have not been
included in governmental fund activity
Internal service funds are used by management to charge the costs of certain activities, such as equipment management, to individual 30 DRAFT 12/15/2022
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85 CITY OF HALF MOON BAY
GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2022
Judgment
Special Revenue Funds Obligation Bonds
General Streets and Lot Acquisition Debt Service
Fund Road and Retirement Fund
REVENUES
Taxes $18,670,447
License and Permits 365,491 $178,474
Fines and forfeitures 70,383
Charges for services 1,544,174
Impact fees/recreation fees
Investment income (197,019) (128,057) ($50,840) ($179)
Intergovernmental revenues 1,574,015 2,132,222
Miscellaneous 1,085,110 60,893
Total Revenues 23,112,601 2,243,532 (50,840) (179)
EXPENDITURES
Current:
General government 1,949,450 420,791
General administration 1,584,239
Public Safety 4,527,692
Public works 1,780,363 209,629
Recreation services 1,040,867
Planning 2,628,557
Capital outlay 1,619,718 266,384
Debt service:
Principal 1,191,724
Interest & fees 68,277
Total Expenditures 14,771,169 1,829,347 687,175
Excess (deficiency) of revenues
over (under) expenditures 8,341,432 414,185 (738,015) (179) Other financing sources (uses):
Transfers in (Note 3) 1,422,140 1,434,077
Transfers (out) (Note 3) (5,319,119) (273,998)
Proceeds from the issuance of debt
Total other financing
sources (uses) (3,896,979) 1,160,079
Net change in fund balances 4,444,453 1,574,264 (738,015) (179) Fund balances at beginning of year 11,140,700 4,683,338 2,586,094 6,311 Fund balances at end of year $15,585,153 $6,257,602 $1,848,079 $6,132 See accompanying notes to financial statements
32 DRAFT 12/15/2022
86 Capital Projects Funds Non-Major
Capital Projects Governmental
Library Land Asset Fund Funds Total
$18,670,447
543,965
70,383
$8,077 1,552,251
188,114 188,114
($20,425) ($38,263) (287,466) (722,249)
15,000 8,000 279,519 4,008,756
1,146,003
(5,425) (30,263) 188,244 25,457,670
2,370,241
1,584,239
11,707 4,539,399
87,246 2,077,238
835,226 1,876,093
2,628,557
388,684 764,150 3,038,936
1,191,724
68,277
388,684 1,698,329 19,374,704
(5,425) (418,947) (1,510,085) 6,082,966
553,500 1,925,000 5,334,717
(910,745) (203,382) (6,707,244)
421,373 421,373
(910,745) 553,500 2,142,991 (951,154)
(916,170) 134,553 632,906 5,131,812
1,332,744 $26,823,920 1,737,048 12,595,502 60,905,657
$416,574 $26,823,920 $1,871,601 $13,228,408 $66,037,469 33 DRAFT 12/15/2022
87 CITY OF HALF MOON BAY
Reconciliation of the
NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS
with the
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2022
Changes in fund balances of governmental funds $5,131,812 Amounts reported for governmental activities in the statement of activities are different because:
When capital assets that are to be used in governmental activities are purchased or constructed, the resources expended for those assets are reported as expenditures in governmental funds. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. As a result, fund balance decreases by the amount of financial resources expenses, whereas net position decrease by the amount of 3,038,936
Transfer of capital asset to internal service fund (Note 4) 0 511,069
(1,853,768)
The amounts below included in the Statement of Activities do not provide or require the use of current financial resources and therefore are not reported as revenue of expenditures in governmental funds (net change).
OPEB expenses 13,852
Compensated absences 3,496
Pension expense (880,309)
Internal service funds are used by management to charge the costs of certain activities, such as equipment management, to individual funds. The net revenues (expenses) of the internal services funds is reported with governmental activities. 225,838
Changes in net position of governmental activities $6,961,277 See accompanying notes to financial statements
depreciation expense charged for the year.
Capital outlay
Depreciation expense
Uncapitalized capital outlay
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88 CITY OF HALF MOON BAY
PROPRIETARY FUNDS
STATEMENT OF NET POSITION
JUNE 30, 2022
Sewer Internal
Enterprise Service
Fund Funds
Assets:
Current Assets:
Cash and investments (Note 2) $6,000,495 $5,785,690
Accounts receivable 4,541
Interest receivable 15,777 13,758
Total Current Assets 6,020,813 5,799,448
Noncurrent Assets:
Investment in Sewer Authority Mid-Coastside (Note 6) 9,554,843 Net OPEB Asset (Note 9) 10,614 2,941
Non-depreciable capital assets (Note 4) 43,832
Depreciable capital assets, net of accumulated depreciation (Note 4) 6,904,602 434,248 Total non-current assets 16,513,891 437,189
Total Assets 22,534,704 6,236,637
Deferred Outflows of Resources
Related to OPEB (Note 9) 1,086
Related to pensions (Note 8) 120,224
Total deferred outflows of resources 120,224 1,086
Current Liabilities:
Accounts payable 63,680 34,841
Claims liability (Note 10) 919,647
Total current liabilities 63,680 954,488
Noncurrent liabilities:
Net pension liability (Note 8) 283,237
Total Liabilities 346,917 954,488
Deferred Inflows of Resources
Related to OPEB (Note 9) 9,969 1,043
Related to pensions (Note 8) 292,668
Total deferred inflows of resources 302,637 1,043
Net Position:
Net investment in capital assets 6,948,434 434,248
Restricted for investment in Sewer Authority 9,554,843
Unrestricted 5,502,097 4,847,944
Total Net Position $22,005,374 $5,282,192
See accompanying notes to financial statements
Liabilities:
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89 CITY OF HALF MOON BAY
PROPRIETARY FUNDS
STATEMENT OF REVENUES, EXPENSES AND CHANGES
IN FUND NET POSITION
FOR THE YEAR ENDED JUNE 30, 2022
Sewer Internal
Enterprise Service
Fund Funds
Operating revenues:
Charges for services $5,005,399
Impact fees $12,075
Total operating revenues 5,005,399 12,075
Operating expenses:
Salaries and wages 549,910 658,974
5,095,186 30,180
Supplies 31,850 352,730
Repairs and maintenance 207,163 17,526
Insurance 308,042
Pensions 612,617
Depreciation 158,090 76,623
Total operating expenses 6,042,199 2,056,692
Total operation income (1,036,800) (2,044,617)
Non-operating revenues:
Gain on investment in Sewer Authority Mid-Coastside (Note 6) 177,156 Investment income (155,664) (120,119)
Total non-operating revenues 21,492 (120,119)
Income before transfers (1,015,308) (2,164,736)
Transfers:
Transfers in (Note 3) 2,390,574
Transfers (out) (Note 3) (1,018,047)
Total transfers (1,018,047) 2,390,574
Change in net position (2,033,355) 225,838
Net position at beginning of year 24,038,729 5,056,354
Net position at end of year $22,005,374 $5,282,192
See accompanying notes to financial statements
Contract services
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90 CITY OF HALF MOON BAY
PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2022
Sewer Internal
Enterprise Service
Fund Funds
Cash flows from operating activities:
Cash received from department users $5,127,166 $12,075
Cash payments to suppliers for goods and services (5,781,346) (1,310,170) Cash payments to employee services (481,609) (686,640)
Net cash provided by operating activities (1,135,789) (1,984,735) Cash flows from non-capital and related financing activities:
Cash collected from other funds 2,390,574
Cash paid to other funds (1,018,047)
Net cash (used for) non capital and related financing activities (1,018,047) 2,390,574 Cash flows form capital and related financing activities:
Acquisition of capital assets (907,016) (154,973)
Net cash provided by (used for) capital and related financing activities (907,016) (154,973) Cash flows from investing activities:
Interest received on investments (155,664) (120,119)
Net cash provided by investing activities (155,664) (120,119) Net increase in cash and cash equivalents (3,216,516) 130,747 Cash and cash equivalents at beginning of year 9,217,011 5,654,943 Cash and cash equivalents at end of year $6,000,495 $5,785,690 Reconciliation of operating income (loss) to net cash provided by (used for) Provided by (used for) operating activities:
Operating income (loss) ($1,036,800) ($2,044,617)
Adjustments to reconcile operating income (loss) to net cash provided by operating activities:
Depreciation 158,090 76,623
Change in assets and liabilities:
Interest receivable, net 2,864 (3,548)
Accounts receivable 118,903
Accounts payable (447,147) 14,473
Deferred outflows of resources 5,835
Deferred inflows of resources 280,925 (79)
Claims liability (27,587)
Net OPEB asset (1,473)
Net pension liability (216,986)
Net cash provided by operating activities ($1,135,789) ($1,984,735) Non-cash transactions:
Gain on investment in Sewer Authority Mid-Coastside $177,156 See accompanying notes to financial statements
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92 CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
1. Significant Accounting Policies
The City of Half Moon Bay (the City) is located next to the Pacific Ocean in San Mateo County, approximately twenty-five miles south of San Francisco. The City and coast side area is a thriving agricultural, fishing and tourism destination. In addition, about 3,000 tons of pumpkins are grown on the coast side each year and the ripening pumpkin heralds the Annual Arts and Pumpkin Festival held in October on the downtown historic Main Street. The annual festival draws more than 200,000 visitors for the two-day event.
The City is a general law city operating under the Council-Manager form of government, with a five-member City Council elected for four-year overlapping terms. The City Manager is appointed by the City Council to serve as administrator of the staff and to carry out the Council's policies.
Fire, water, library and certain sewer services are provided by separate districts or authorities which are not controlled by the City.
a) Blended Component Unit
The financial statements of the City include the financial activities of the City, as well as the Community Development Agency of the City of Half Moon Bay, which is controlled by and dependent on the City.
b) Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the primary government. The effect of interfund activity has been eliminated from these statements to minimize the double counting of internal activities. 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 is 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.
Fund financial statements for the primary government's governmental and proprietary funds are presented after the government-wide financial statements. These statements display information about major funds individually and non-major funds in aggregate for governmental and proprietary funds.
39 DRAFT 12/15/2022
93 CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
1. Significant Accounting Policies, continued
b) Government-wide and Fund Financial Statements, continued The City reports the following major governmental funds:
The General Fund (Fund 101) is the general operating fund of the City. All general tax revenues and other receipts that are not allocated by law or contractual agreement to some other fund are accounted for in this fund. The major revenue sources for this fund are transient occupancy tax, property taxes, sales taxes, unrestricted revenues from the State, and interest income. Expenditures are made for public safety, planning, building, engineering, and other general government services.
The Streets and Roads Special Revenue Fund was established to account for all proceeds of Gas Tax funds (Fund 122), Measure A Local Transportation Ordinance Tax funds (Fund 124), Main Street Bridge fund (Fund 121) and other grants (Fund 123) that are restricted to purposes of these taxes.
The Judgment Obligation Bonds – Debt Service Fund (Fund 77 Series A; Fund 78 Series B) was established to account for the Judgment Obligation Bond Series 2009A and the Judgment Obligation Bond Series 2009B issued on July 14, 2009.
The Library Capital Projects Fund (Fund 153) is used to account for the construction and facilities maintenance of the library.
The Land Asset Capital Projects Fund (Fund 154) was established to account for the two land parcels held for resale.
The Lot Acquisition and Retirement Fund (Fund 133) is used to account for in-lieu fees and expenses within the purpose of acquiring and retiring development rights on existing legal parcels.
The Capital Projects Fund (Fund 151) is used to fund Capital Improvement Program projects, including construction, technology, and other infrastructure improvements.
The City reports the following major enterprise fund:
The Sewer Enterprise Fund is used to account for the financial activity of the City's sewer utility. The costs of providing these services to the general public are financed or recovered primarily through user charges (Fund 201 is Sewer Operating Fund; Fund 202 is Sewer Capital Fund.)
The City also reports the following fund types:
Internal Service Funds:
Internal Service Funds are used to account for financing of goods or services provided by one department or agency to other departments or agencies of the City on a costreimbursement basis. The City operates an Equipment Replacement Fund (Fund 302), Vehicle Replacement Fund (Fund 301), a Risk Management Fund (Fund 303), and Pension Stabilization Fund (Fund 304).
40 DRAFT 12/15/2022
94 CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
1. Significant Accounting Policies, continued
c) Basis of Accounting and Financial Statement Presentation The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when the liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements 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. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal year.
Expenditures generally are recorded when a liability is incurred, as under accrual accounting.
However, debt service expenditures, as well as expenditures related to compensated absences, claims and judgments are not recognized until due. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other charges between the government's sewer functions and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.
Property taxes, sales taxes, transient occupancy taxes, and charges for services and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the government.
Amounts reported as program revenues include: 1) charges to members, customers or applicants for goods, services, or privileges provided; 2) operating grants and contributions; and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from non-operating items.
Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations.
The principal operating revenues of the Sewer Fund and of the government's Internal Service Funds are charges to customers for services. Operating expenses for the Sewer Fund and Internal Service Funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, and then use unrestricted resources as needed. 41 DRAFT 12/15/2022
95 CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
1. Significant Accounting Policies, continued
d) Cash and Investments
Investments are reported in the accompanying statement of net position at fair value. Changes in fair value that occur during a fiscal year are recognized as investment income reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation, maturity, or sale of investments.
The City pools cash and investments of all funds, except for assets held by fiscal agents. Each fund's share in this pool is displayed in the accompanying financial statements as cash and investments. Investment income, earned by the pooled investments, is allocated to the various funds based on each fund's average cash and investment balance.
For purposes of the statement of cash flows, the City considers all highly liquid investments (including restricted assets) with a maturity of three months or less when purchased to be cash equivalents. Cash invested in the City's investment pools is also considered to be cash equivalents.
e) Cash and Investments with Fiscal Agents
The City has monies held by trustees or fiscal agents pledged to 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, may be invested in accordance with the ordinance, resolutions or indentures specifying the types of investments its trustees or fiscal agents may make.
f) Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into three levels based on the extent to which inputs used in measuring fair value are observable in the market.
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 inputs are inputs – other than quoted prices included within level 1 – that are observable for an asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for an asset or liability.
If the fair value of an asset or liability is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement.
42 DRAFT 12/15/2022
96 CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
1. Significant Accounting Policies, continued
g) Interfund Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year is referred to "due to/from other funds" (i.e., the current portion of interfund loans).
h) Capital Assets
Capital assets, which include property, plant, equipment and infrastructure assets, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement is reported at acquisition value rather than fair value. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not capitalized. In addition, the City does not capitalize the allocation of capital costs related segments of projects maintained by other entities. The City utilizes a capitalization threshold of $5,000.
Depreciation is charged to operations using the straight-line method over the estimated useful lives of the assets as follows:
Building and Improvements 40 years
Sewer Mains and Laterals 60 years
Infrastructure 20 to 50 years
Vehicles 5 to 10 years
Equipment 5 to 20 years
i) Land Held for Resale
Lands held for resale are recorded in the Land Asset Capital Projects Fund at the lower of acquisition cost or estimated resale value. Fund balances are reserved in amounts equal to the carrying value of land held for resale since such assets are not available to finance the City's current operations.
Land held for resale of $26,823,920 at June 30, 2022 is stated at the lower of historical cost or net realizable value.
j) Compensated Absences
Depending upon length of employment, City employees earn 12 to 27 vacation days a year.
Sick leave is accrued at the rate of 12 days per year. Employees can carry forward two to three years-worth of earned but unused vacation leave benefits to subsequent years depending on employee group. Upon termination, the City is obligated to compensate employees for all earned but unused vacation days. The earned but unused sick leave benefits are payable for some employees, when vested, in the event of employee termination. 43 DRAFT 12/15/2022
97 CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
1. Significant Accounting Policies, continued
j) Compensated Absences, continued
In the government-wide financial statements, a liability is accrued for all earned but unused vacation leave benefits, as well as vested amounts of sick leave relating to the operations of the funds. General Fund is typically used to liquidate the liability for compensated absences.
This liability will be liquidated as either additional cash payments in the event of employee termination or as part of budgeted salary expenditures if used by employees as compensated leave time while still employed by the City. In the fund financial statements, governmental funds report compensated absences only if they have matured, i.e. unused reimbursable leave still outstanding at fiscal year-end following an employee's resignation or retirement. Noncurrent amounts will be recorded as fund expenditures in the year in which they are paid or become due on demand to terminated employees.
The changes in compensated absences for the year ended June 30, 2022 is as follows:
Beginning Balance $539,463
Additions 471,777
Payments (475,273)
Ending Balance $535,967
Current Portion $26,798
Non-current Portion $509,169
k) Long-term Obligations
In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources, while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as service expenditures.
l) Claims and Judgments
The City records a liability for litigation, judgments and claims when it is probable that an asset has been impaired, or a liability has been incurred prior to year-end and the probable amount of loss (net of any insurance coverage) can be reasonably estimated. This liability is recorded in the Internal Service Funds, which account for the City's risk management activities.
44 DRAFT 12/15/2022
98 CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
1. Significant Accounting Policies, continued
m) Property Taxes
State of California (State) Constitution Article XIIIA provides that the combined maximum property tax rate on any given property may not exceed 1% of its assessed value ($1 per $100 of assessed value) plus an additional amount for general obligation debt approved by voters.
Assessed value is calculated at 100% of market value as defined by Article XIIIA and may be adjusted by no more than 2% per year unless the property is sold or transferred. The state legislature has determined the method of distribution of receipts from the $1.00 tax levy among the counties, cities, school districts and other districts.
The County of San Mateo assesses properties and bills for and collects property taxes as follows:
Secured Unsecured
Valuation/lien dates January 1 January 1
Levy dates On or before November 1 July 1
Due dates (delinquent after) 50% on November 1 (December 10) July 1 (August 31) 50% on February 1 (April 10)
The term "unsecured" refers to taxes on personal property other than land and buildings.
These "unsecured" taxes are secured by liens on the personal property being taxed. The County of San Mateo distributes to the City the entire amount of each year's levy and in return receives all penalties and interest on delinquent payments. n) Estimates
The preparation of basic financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
o) Pensions and OPEB (Other Post-Employment Benefits)
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 California Public Employees’ Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
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 OPEB Plan and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis as they are reported in the OPEB Trust Fund. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.
45 DRAFT 12/15/2022
99 CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
1. Significant Accounting Policies, continued
p) Leases
As clarified by the Government Accounting Standards Board (GASB) Statement No. 87, a lease is defined as a contract that conveys control of the right to use another entity’s nonfinancial asset (the underlying asset) as specified in the contract for a period of time in an exchange or exchange-like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. The City recognizes lease receivables or liabilities with an initial, individual value of $200,000 or more, based on the future lease payments remaining at the start of the lease.
The City has no leases subject to GASB#87 for the fiscal year 2022. q) New GASB Pronouncements
Management adopted the provisions of the following Governmental Accounting Standards Board (GASB) Statement, which became effective during the year ended June 30, 2022.
Effect of New Governmental Accounting Standards Board (GASB) Pronouncements GASB 87 – Leases
In June 2017, the GASB issued Statement No. 87, Leases. The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities. The requirements of this Statement are effective for reporting periods beginning after December 15, 2020. The City has no leases subject to GASB#87 for the fiscal year 2022.
46 DRAFT 12/15/2022
100
CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
2. Cash, Cash Equivalents, and Investments
Cash and investments as of June 30, 2022 consist of the following:
Cash on hand $832
Deposits with financial institutions 1,798,652
Investments 46,178,287
Total City cash and investments $47,977,771
a) Custodial Credit Risk - Deposits
Custodial credit risk is the risk that in the event of a bank failure, the City's deposits may not be returned. The City does not have a policy for custodial credit risk on deposits. As of June 30, 2022, the carrying amount of the City's deposits was $1,798,644 and the bank balance was $2,065,658. The difference between the bank balance and the carrying amount represents outstanding checks and deposits in transit. Of the bank balance, $250,000 was covered by federal depository insurance and the balance was collateralized by the pledging financial institutions as required by Section 53652 of the California Government Code.
Under the California Government Code, a financial institution is required to secure deposits in excess of $250,000 made by state or local governmental units by pledging securities held in the form of an undivided collateral pool. The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies.
California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. Such collateral is considered to be held in the name of the City.
b) Investments Authorized by the City's Investment Policy The City maintains a cash and investment pool that is available for use by all funds. The table below identifies the investment types that are authorized for the City by the California Government Code (or the City's investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City's investment policy.
Minimum Maximum Maximum
Maximum Credit Percentage Investment
Authorized Investment TypeMaturity Quality Allowed In One Issuer U.S. Treasury Obligations 5 Years None None None
U.S. Agency Securities 5 Years None None None
Bankers' Acceptances 180 Days None 20% 5%
Commercial Paper 180 Days A2/A 15% 2%
Negotiable Certificates of Deposit 2 Years None 30% None Repurchase Agreements 1 year None 10% 5%
California Local Agency Investment Fund None None None $75 million San Mateo County Investment Pool None None None None
Time Deposits 2 years None 10% None
Medium-Term Notes 5 Years Aa2/AA 10% 10%
Money Market Mutual Funds None Aaa/AAA 20% 5%
47 DRAFT 12/15/2022
101
CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
2. Cash, Cash Equivalents, and Investments, continued
c) Investments Authorized by Debt Agreements
Investments of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City's investment policy. The table below identifies the investment types that are authorized for investments held by bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.
Minimum Maximum Maximum
Maximum Credit Percentage Investment
Authorized Investment Type Maturity Quality Allowed In One U.S. Treasury Obligations None None No Limit No Limit
U.S. Agency Securities None None No Limit No Limit
State Obligations None AAA No Limit No Limit
Municipal Obligations None AAA No Limit No Limit
Bankers' Acceptances 360 Days A1 No Limit No Limit
Commercial Paper 270 Days A1+ No Limit No Limit
Money Market Mutual Funds None Aam No Limit No Limit
California Local Agency Investment Fund None None No Limit No Limit Repurchase Agreements None None No Limit No Limit
d) Fair Value Hierarchy
The City adopted GASB Statement No. 72, Fair Value Measurement and Applications, which required governmental entities to measure investments at fair value in fiscal year 2022. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation input used to measure the fair value of asset. 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.
Total
Investments exempt from Fair Value Hierarchy:
San Mateo County Investment Pool $38,512,882
California Local Agency Investment Fund 7,665,405
Total Investments 46,178,287
Cash in Bank and on hand 1,799,484
Total Cash and Investments $47,977,771
48 DRAFT 12/15/2022
102
CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
2. Cash, Cash Equivalents, and Investments, continued
e) Interest Rate Risk
Interest Rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The City monitors the interest rate risk inherent in its portfolio by measuring the weighted average maturity of its portfolio.
The City has no specific limitations with respect to this metric. 12 Months
Investment Type Or Less Total
Available for Operations
California Local Agency Investment Fund $7,665,405 $7,665,405 San Mateo County Investment Pool 38,512,882 38,512,882
Total Investments $46,178,287 46,178,287
Demand Deposits and Cash on Hand 1,799,484
$47,977,771
Remaining Maturity (in Months)
f) Custodial Credit Risk - Investment
The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party.
The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for investments. All of the City’s investments in securities are held in the name of the City. The City’s custody agreement policy prohibits counterparties holding securities not in the City’s name. g) Credit Risk – Investments
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 ratings by nationally recognized statistical rating organization.
Investment Type AA Not Rated Total
Held by City
California Local Agency Investment Fund $7,665,405 $7,665,405 San Mateo County Investment Pool $38,512,882 38,512,882 Cash in banks and on hand 1,799,484 1,799,484
Total Cash & Investments $38,512,882 $9,464,889 $47,977,771 49 DRAFT 12/15/2022
103
CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
2. Cash, Cash Equivalents, and Investments, continued
h) Investments in San Mateo County Investment Pool
The City is also a voluntary participant in the San Mateo County Investment Fund (County Pool) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the County of San Mateo. The City reports its investment in the County Pool at the fair value amount provided by the County. The balance available for withdrawal is based on the accounting records maintained by the County Pool which are recorded on an amortized cost basis. Included in the County Pool's investment portfolio are U.S. Treasury Notes, Obligations issued by agencies of the United States Government, LAIF, Corporate Notes, Commercial Paper, collateralized mortgage obligations, mortgage-backed securities, repurchase agreements, other asset-backed securities, and floating rate securities issued by federal agencies, government-sponsored enterprises, and corporations. At June 30, 2022, these investments matured in an average of 1.45 years.
i) Investments in State Treasurer’s Local Agency Investment Pool The City is also a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the City's investment in this pool is reported in the accompanying financial statements at amounts based upon the City's pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. At June 30, 2022 these investments matured in an average of 311 days.
3. Interfund Transactions
a) Transfers
Transfers between funds during the fiscal year ended June 30, 2022 were as follows:
Transfer To Transfer From Amount
General Fund Library Fund $910,745 (e)
Sewer Enterprise Fund 511,395 (a)
Streets and Road Special Revenue Fund General Fund 1,434,077 (d) Capital Projects Capital Project Fund General Fund 88,500 (d) Streets and Roads Special Revenue Fund 265,000 (d)
Parks Development Fund 200,000 (d)
Non-Major Governmental Funds General Fund 1,925,000 (d) Internal Service Funds General Fund 1,871,542 (e)
Streets and Roads Special Revenue Fund 8,998 (e)
Non-Major Governmental Funds 3,382 (e)
Sewer Enterprise Fund 506,652 (e)
$7,725,291
Interfund transfers were principally used for the following purposes:
(a) Sewer Management expenditures
(b) Streets and Roads expenditures
(c) Debt Service expenditures
(d) Capital Program expenditures
(e) Program Expenditures
50 DRAFT 12/15/2022
104
CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
4. Capital Assets
a) Capital Assets Activity
A Summary of changes in capital assets for the year ended June 30, 2022 is as follows:
Balance Balance
June 30, 2021 Additions Transfers Retirements June 30, 2022 Governmental activities:
Capital assets not being depreciated:
Land $4,756,385 $266,470 $5,022,855
Rights of way 6,723,926 6,723,926
Construction in progress 7,838,052 3,497,733 ($5,564,933) ($214,198) 5,556,654 Total capital assets not being depreciated 19,318,363 3,764,203 (5,564,933) (214,198) 17,303,435 Capital assets being depreciated:
Buildings & improvements 38,074,817 381,547 38,456,364
Machinery & equipment 1,258,613 154,973 1,413,586
Infrastructure 38,630,898 5,183,386 43,814,284
Total capital assets being depreciated 77,964,328 154,973 5,564,933 83,684,234 Less accumulated depreciation for:
Buildings & improvements 6,848,991 925,333 7,774,324
Machinery & equipment 902,715 76,623 979,338
Infrastructure 16,611,128 928,435 17,539,563
Total accumulated depreciation 24,362,834 1,930,391 26,293,225 Net depreciable assets 53,601,494 (1,775,418) 5,564,933 57,391,009 Governmental activity capital assets, net $72,919,857 $1,988,785 ($214,198) $74,694,444 51 DRAFT 12/15/2022
105
CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
4. Capital Assets, continued
a) Capital Assets Activity, continued
Balance Balance
June 30, 2021 Additions Transfers June 30, 2022
Business-type activities:
Capital assets not being depreciated:
Construction in progress $1,584,587 $907,016 ($2,447,771) $43,832 Total capital assets not being depreciated 1,584,587 907,016 (2,447,771) 43,832 Capital assets being depreciated:
Buildings & improvements 6,438,319 2,447,771 8,886,090
Machinery & equipment 763,646 763,646
Total capital assets being depreciated 7,201,965 2,447,771 9,649,736 Less accumulated depreciation for:
Buildings & improvements 1,870,747 146,012 2,016,759
Machinery & equipment 716,297 12,078 728,375
Total accumulated depreciation 2,587,044 158,090 2,745,134 Net depreciable assets 4,614,921 (158,090) 2,447,771 6,904,602 Business-type activity capital assets, net $6,199,508 $748,926 $6,948,434 b) Depreciation
Depreciation expense was charged to governmental functions as follows:
Governmental Activities:
General government $94,528
Recreation 823,660
Public safety 15,878
Public works 919,702
Depreciation on capital assets held by the City's
Internal Service Funds is charged to the various
functions based on their usage of the assets 76,623
Total Governmental Activities $1,930,391
Business-Type Activities:
Sewer Fund $158,090
52 DRAFT 12/15/2022
106
CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
5. Long-Term Debt
The following is a summary of long-term debt transactions for the year ended June 30, 2022.
Original Issue Balance Balance Current
Amount June 30, 2021 Additions Retirements June 30, 2022 Portion Governmental Activity Debt
Direct borrowings:
San Mateo County advancement $5,726,855 $5,154,169 $1,145,371 $4,008,798 $572,686 Capital Lease:
iBank Financing Lease A & B 3,200,000 2,035,000 $421,373 46,353 2,410,020 47,511 Total Governmental Activity $7,189,169 $421,373 $1,191,724 $6,418,818 $620,197 a) Library Loan – Advance Agreement with the County of San Mateo During the fiscal year ended June 30, 2017, the City entered into a $6 million Interest-free loan agreement with the County of San Mateo to ensure completion of the Library Project.
The Project includes design, environmental review, demolition of existing library, construction, and construction management. The terms of repayment are directly from the property tax apportionments in two installments on December 15 and April 15 per fiscal year for a ten-year period beginning no later than December 15, 2019 and final payment would be made no later than April 15, 2030. As of June 30, 2022, the City had drawn down $5,726,855. Repayments began in fiscal year 2020.
b) Financing Lease – Financing Agreement with the California Infrastructure and Economic Development Bank
During fiscal year ended June 30, 2021, the City entered into a $3.2 million lease agreement with the California Infrastructure and Economic Development Bank (iBank) for the 880 Stone Pine Road property purchase and related construction costs. The City plans to upgrade and restore the Corporation yard. This will then be used to store the City’s vehicles, equipment, and supplies. The terms of repayment are directly from the rental income with two interest payments due on August 1 and February 1 every fiscal year with one annual principal payment due on August 1 of each year. The first principal payment is due on August 2022. As of June 30, 2022, the City had drawn down a total of $2,456,373. 53 DRAFT 12/15/2022
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CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
5. Long-Term Debt, continued
c) Debt Service
As of June 30, 2022, annual debt service to maturity for the private placements is as follows:
Governmental Activities
Year ending Direct Borrowings
June 30 Principal Interest Total
2023 $620,197 $1,015,952 $1,636,149
2024 650,612 1,014,384 1,664,996
2025 652,561 1,012,412 1,664,973
2026 654,558 1,010,390 1,664,948
2027 656,605 985,473 1,642,078
2028-2032 1,597,499 4,136,394 5,733,893
2033-2037 450,109 2,513,380 2,963,489
2038-2042 361,691 531,984 893,675
2043-2047 409,220 71,801 481,021
2048-2052 365,766 18,570 384,336
Total $6,418,818 $12,310,740 $18,729,558
6. Investment in Sewer Authority Mid-Coast side
The City, along with the Montara Water and Sanitary District and El Granada Sanitary District, established the Sewer Authority Mid-Coastside (SAM) in 1976 to build and operate a sewage treatment facility for its members. SAM is controlled by a six-member board consisting of two representatives from each member. The board appoints management and employees of SAM and is responsible for SAM's budget, operations and finances. As one of SAM's member agencies, the City makes contributions to SAM in the form of collections assessments and operations and maintenance assessments. The City exercises significant influence over SAM's operations; therefore, the City's share of SAM's net position has been recorded as an investment in the City's financial statements. The City's share of SAM's net position is calculated annually, based on the proportion of SAM's total assessed valuation within the City limits. Complete financial statements for SAM can be obtained from the SAM at 1000 North Cabrillo Highway, Half Moon Bay, California 94019-1466. Based on SAM’s audited financial statements for June 30, 2021, the City recorded its investment in SAM in the amount of $9,554,843 at June 30, 2022. 54 DRAFT 12/15/2022
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CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
7. Net Position/Fund Balances
a) Fund Balances
In the fund financial statements, governmental funds report the following fund balance classifications: non-spendable, restricted, committed, assigned, and unassigned. The City Council, as the highest level of decision-making authority for the City, has the ability to commit fund balances through the adoption of a formal resolution. The same action must be taken to modify or rescind the commitment. The City Council has approved a policy (Resolution No. C44-11) authorizing the City Manager to assign fund balances for specific purposes up to $8,000,000. Assignments of amounts over $8,000,000 require the approval of City Council. b) Stabilization Arrangement
City Council adopted a resolution (No. C-44-11) to establish a contingency reserve in the amount of 30% of the following fiscal year’s budgeted operating expenditures. Changes to the reserve amount require City Council approval. Appropriations from the General Fund reserve commitment can only be made for the following specific circumstances:
1) Budgeted revenue taken by another government entity; 2) Drop in projected/actual revenue of more than 3% of the General Fund adopted revenue budget;
3) One-time costs exceeding $250,000 used to secure long-term cost savings; 4) In the event of actual or threatened existence of conditions of disaster or of extreme peril to the safety of persons and property within this City caused by such conditions as air pollution, fire, flood, storm, epidemic, riot, earthquake, nuclear disaster, tornado, tsunami, or terrorism.
c) Classifications
As prescribed by GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, governmental funds report fund balance in classifications based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the funds can be spent. As of June 30, 2022, fund balances for government funds are made up of the following:
• Non-spendable Fund Balance – includes amounts that are (a) not in spendable form, or (b) legally or contractually required to be maintained intact. The "not in spendable form" criterion includes items that are not expected to be converted to cash, for example:
inventories, prepaid amounts, long-term notes receivable and land. • Restricted Fund Balance – includes amounts that can be spent only for the specific purposes stipulated by external resource providers, constitutionally or through enabling legislation.
Restrictions may effectively be changed or lifted only with the consent of resource providers.
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CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
7. Net Position/Fund Balances, continued
c) Classifications, continued
Committed Fund Balance – includes amounts that can only be used for the specific purposes determined by a formal action (resolution) of the City's highest level of decision-making authority, the City Council. Commitments may be changed or lifted only by the City taking the same formal action that imposed the constraint originally. Assigned Fund Balance – comprises amounts intended to be used by the City for specific purposes that are neither restricted nor committed. Intent is expressed by (a) the City Council or (b) the City Manager. The City Council has delegated the authority for the City Manager to assign amounts of up to $8 million to be used for specific purposes (Resolution C-44-11). Unassigned Fund Balance – is the residual classification and includes all amounts not contained in the other classifications. Unassigned amounts are technically available for any purpose. General Fund is the only fund that reports a positive unassigned fund balance. d) Policies
The standard also requires governments to disclose the accounting policies that indicate the order in which restricted, committed, assigned and unassigned amounts are spent.
The City considers restricted amounts to have been spent first when an expenditure is incurred for purposes of which both restricted and unrestricted fund balance is available. Additionally, the City considers committed amounts to have been spent first, assigned amounts to have been spent second, and unassigned amounts to have been spent last when an expenditure is incurred for purposes of which committed, assigned, and unassigned fund balance is available.
In circumstances when an expenditure is made for a purpose for which amounts are available in multiple fund balance classifications, fund balance is generally depleted in the order of restricted, committed, assigned, and unassigned.
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CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
7. Net Position/Fund Balances, continued
d) Policies, continued
Fund balances for all the major and non-major governmental funds as of June 30, 2022 were distributed as follows:
Judgment Non-major
General Streets and Obligation Land Lot Acquisition Capital Governmental Fund Roads Bonds Library Asset and Retirement Projects Funds Total Nonspendable:
Land held for resale $26,823,920 $26,823,920
Total nonspendable 26,823,920 26,823,920
Restricted:
Streets & roads $6,257,602 6,257,602
Community development $1,848,079 1,848,079
Park development
improvements $3,305,339 3,305,339
Debt service $6,132 6,132
Police grants 695,033 695,033
Storm drain
maintenance improvements 1,328,961 1,328,961
Traffic mitigation 4,170,411 4,170,411
Affordable housing 2,117,586 2,117,586
Public facilities 1,611,078 1,611,078
Total restricted 6,257,602 6,132 1,848,079 13,228,408 21,340,221 Committed:
Contingency reserve $8,999,117 8,999,117
Total committed 8,999,117 8,999,117
Assigned:
San Mateo County Library $416,574 416,574
Capital projects $1,871,601 1,871,601
Total assigned 416,574 1,871,601 2,288,175
Unassigned: 6,586,036 6,586,036
Total Fund Balances $15,585,153 $6,257,602 $6,132 $416,574 $26,823,920 $1,848,079 $1,871,601 $13,228,408 $66,037,469 e) Net Position
Net Position is the excess of all assets and deferred outflows of resources over all liabilities and deferred inflows of resources. Net Position is divided into three categories. These categories apply only to Net Position, which is determined only at the Government-wide level, and are described below:
Net Investment in Capital Assets describes the portion of Net Position which is represented by the current net book value of the City's capital assets, less the outstanding balance of any debt issued to finance these assets.
Restricted describes the portion of Net Position which is restricted as to use by the terms and conditions of agreements with outside parties, governmental regulations, laws, or other restrictions which the City cannot unilaterally alter. These principally include developer fees received for use on capital projects, debt service requirements, and successor agency assets.
Unrestricted describes the portion of Net Position which is not restricted as to use.
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CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
7. Net Position/Fund Balances, continued
f) Net Investment in Capital Assets
The balances related to Net Investment in Capital Assets are comprised of the following as of June 30, 2022:
Governmental Business-Type
Activities Activities Total
Capital Asset, net of accumulated depreciation: $74,694,444 $6,948,434 $81,642,878 Less: Capital debt: (6,418,818) (6,418,818)
$68,275,626 $6,948,434 $75,224,060
8. Pension Plan
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 Plan and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by the CalPERS Financial Office. For this purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value. a) General Information about the Pension Plans
Plan Descriptions – All qualified permanent and probationary employees are eligible to participate in the City’s separate Safety and Miscellaneous Employee Pension Rate Plans.
Benefit provisions under the Plan are established by State statute and Board resolution. The City’s Safety and Miscellaneous Plan is part of the public agency cost-sharing multipleemployer defined benefit pension plan (PERF C), which is administered by the California Public Employees’ Retirement System (CalPERS). PERF C consists of a miscellaneous pool and a safety pool (also referred to as “risk pools”), which are comprised of individual employer miscellaneous and safety rate plans, respectively. Individual employers may sponsor more than one miscellaneous and safety rate plan. The employer participates in one cost-sharing multiple-employer defined benefit pension plan regardless of the number of rate plans the employer sponsors. The City sponsors three miscellaneous rate plans. 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.
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CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
8. Pension Plans, continued
a) General Information about the Pension Plans, continued 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, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.
The Plan’s provisions and benefits in effect at June 30, 2022, are summarized as follows:
Miscellaneous
Hire date
Prior to
January 1, 2013
On or after
January 1, 2013
Benefit formula 2% @ 55 2% @ 62
Benefit vesting schedule 5 years service 5 years service Benefit payments monthly for life monthly for life
Retirement age 50 - 63 52 - 67
Monthly benefits, as a % of eligible compensation 1.426% to 2.418% 1.000% to 2.500% Required employee contribution rates 7% 7.25%
Required employer contribution rates 11.60% 7.73%
Safety
Hire date
Prior to
January 1, 2013
Benefit formula 3% @ 50
Benefit vesting schedule 5 years service
Benefit payments monthly for life
Retirement age 50
Monthly benefits, as a % of eligible compensation 3%
Required employee contribution rates 0%
Required employer contribution rates 0%
Beginning in fiscal year 2016, CalPERS collects employer contributions for the Plan as a percentage of payroll for the normal cost portion as noted in the rates above and as a dollar amount for contributions toward the unfunded liability and side fund. The dollar amounts are billed on a monthly basis. The City’s required contribution for the unfunded liability and side fund was $429,131 in fiscal year 2022.
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CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
8. Pension Plans, continued
b) General Information about the Pension Plans
Contributions – Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plan are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.
For the year ended June 30, 2022, the contributions recognized as part of pension expense for each Plan were as follows:
Miscellaneous Safety
Contributions - employer $819,301 $612,617
c) Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Plan and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by the CalPERS Financial Office. For this purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value. The long-term portion of governmental activities of pension liabilities are liquidated primarily by the General Fund.
As of June 30, 2022, the City reported net pension liabilities for its proportionate shares of the net pension liability of each Plan as follows:
Proportionate Share
of Net Pension Liability
Miscellaneous $3,445,863
Safety 4,213,402
Total Net Pension Liability $7,659,265
The City’s net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability of the Plan is measured as of June 30, 2021, and the total pension liability for the Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2020 rolled forward to June 30, 2021 using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. 60 DRAFT 12/15/2022
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CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
8. Pension Plans, continued
c) 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, 2020 and 2021 was as follows:
Miscellaneous Safety
Proportion - June 30, 2020 0.13584% 0.09833%
Proportion - June 30, 2021 0.18148% 0.12006%
Change - Increase (Decrease) 0.04564% 0.02173%
For the year ended June 30, 2022, the City recognized pension expense of $1,379,955 for Miscellaneous Plan and $830,730 for Safety Plan, with a total pension expense of $2,210,685. At June 30, 2022, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Miscellaneous Safety Total
Deferred Outflows Deferred Inflows Deferred Outflows Deferred Inflows Deferred Outflows Deferred Inflows of Resources of Resources of Resources of Resources of Resources of Resources Pension contributions subsequent to measurement date $819,301 $612,617 $1,431,918 Changes in assumptions
Differences between actual and expected experience 386,417 719,856 1,106,273 Net change in Proportion DIDO and Net Pension Liability 113,611 ($4,016) ($203,903) 113,611 ($207,919) Net difference in actual contribution and proportion contributions (83,718) (359,678) (443,396) Net differences between projected and actual earnings on plan investments (3,008,056) (2,507,784) (5,515,840)
Total $1,319,329 ($3,095,790) $1,332,473 ($3,071,365) $2,651,802 ($6,167,155) $1,431,918 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 following fiscal year. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Year Ended
June 30 Miscellaneous Safety Total
2022 ($520,247) ($524,920) ($1,045,167)
2023 (572,276) (545,581) (1,117,857)
2024 (671,969) (590,900) (1,262,869)
2025 (831,270) (690,108) (1,521,378)
Total ($2,595,762) ($2,351,509) ($4,947,271)
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CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
8. Pension Plans, continued
c) Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions, continued
Actuarial Assumptions – For the measurement period ended June 30, 2021, the total pension liability was determined by rolling forward the June 30, 2020 total pension liability. The June 30, 2021 total pension liability was based on the following actuarial methods and assumptions:
Miscellaneous & Safety
Valuation Date June 30, 2020
Measurement Date June 30, 2021
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:
Discount Rate 7.15%
Inflation 2.50%
Projected Salary Increases Varies by Entry Age and Service Investment Rate of Return 7.15% Net of Pensions Plan Investment Expenses, includes Inflation
Mortality Derived using CalPERS Membership Data for all Funds (1) Post Retirement Benefit Increase Lessor of the contract COLA up to 2.50% until Purchasing Power applies, 2.50% thereafter
(1) The mortality table used was developed based on CalPERS-specific data. The table includes 15 years of mortality improvements using Society of Actuaries Scale 90% of scale MP 2016. For more details on this table, please refer to the December 2017 experience study report available on the CalPERS' website under Forms and Publications.
Discount Rate – The discount rate used to measure the total pension liability was 7.15%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. 62 DRAFT 12/15/2022
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CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
8. Pension Plans, continued
c) Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions, continued
In determining the long-term expected rate of return, CalPERS took into account both shortterm and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns and forecasted information for all of the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.
The table below reflects the long-term expected real rate of return by asset class.
Asset Class(a)
New
Strategic
Allocation
Real Return
Years 1 - 10(b)
Real Return
Years 11+(c)
Global Equity 50.0% 4.80% 5.98%
Fixed income 28.0% 1.00% 2.62%
Inflation assets 0.0% 0.77% 1.81%
Private Equity 8.0% 6.30% 7.23%
Real Assets 13.0% 3.75% 4.93%
Liquidity 1.0% 0.00% -0.92%
Total 100%
(a) In the System's Annual Comprehensive Financial Report, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-term Investments; Inflation Assets are included in both Global Equity
(b) An expected inflation of 2.00% used for this period. (c) An expected inflation of 2.92% used for this period. 63 DRAFT 12/15/2022
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CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
8. Pension Plans, continued
c) Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions, continued
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in 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:
Miscellaneous Safety Total
1% Decrease 6.15% 6.15% 6.15%
Net Pension Liability $6,466,391 $7,130,114 $13,596,505 Current Discount Rate 7.15% 7.15% 7.15%
Net Pension Liability $3,445,863 $4,213,402 $7,659,265
1% Increase 8.15% 8.15% 8.15%
Net Pension Liability $948,836 $1,817,683 $2,766,519
Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.
9. Other Post Employment Healthcare Benefits
a) Post-Employment Benefits Plan
Plan Description: The City administers a single-employer defined benefit plan which provides medical insurance benefits to eligible retirees and their spouses in accordance with various labor agreements. The City pays the minimum amount provided under Government Code Section 22892 of the Public Employees Medical and Hospital Care Act. The City currently pays $115 to $119 per month for any health coverage. the City joined the Public Agencies Post- Retirement Health Care Plan, a multiple employer trust administered by Public Agency Retirement Services (PARS). The City established an irrevocable trust with PARS, managed by an appointed board not under the control of City Council. This trust is not considered a component unit by the City and has been excluded from these financial statements. Separately issued financial statements for PARS may be obtained from PARS at 4350 Von Karman Ave., Suite 200, Newport Beach, CA 92660.
City's Funding Policy: The contribution requirements of plan members and the City are established and may be amended by City Council. The contribution required to be made under City Council and labor agreement requirements. The City has previously setup an irrevocable retiree benefit trust with the Public Agency Retirement Services (PARS). The City continued with the same funding policy payment to a full ARC contribution. The longterm portion of governmental activities of OPEB liabilities are liquidated primarily by the General Fund.
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CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
9. Other Post Employment Healthcare Benefits, continued b) Employees covered by benefit terms
Plan membership varies based on different employee bargaining groups. As of June 30, 2022, membership in the plan consisted of the following:
Number of
Covered Employees
Active employees 41
Inactive employees, spouses, or beneficiaries 11
currently receiving benefit payments
Inactive employees entitled to 28
but not yet receiving benefit payments
Total 80
c) Net OPEB Liability
The components of the net OPEB liability of the City at June 30, 2022, were as follows:
Total OPEB Plan Fiduciary Net Net OPEB
Liability Position Liability/(Asset)
(a) (b) (c) = (a) - (b)
$582,723 $801,580 ($218,857)
Changes Recognized for the Measurement Period:
Service Cost 31,671 - 31,671
Interest 32,877 - 32,877
Expected investment income - - -
Contributions:
Employer - City's contribution - 33,410 (33,410)
Employer - Implicit subsidy - - -
Net investment income - (91,716) 91,716
Benefit payments (33,272) (33,272) -
Actual vs. expected experience (122,083) - (122,083)
Changes of assumptions (22,718) - (22,718)
Administrative expenses* - (2,117) 2,117
Net Changes during Fiscal Year 2022 (93,695) (113,525) (19,830) $469,198 $707,885 ($238,687)
Increase (Decrease)
Balance at Fiscal Year Ending 6/30/2022:
Balance at Fiscal Year Ending 6/30/2021:
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CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
9. Other Post Employment Healthcare Benefits, continued d) Sensitivity of the Net OPEB Liability to Changes in the Discount Rate and Healthcare Cost Trend Rates
In accordance with GASB 74, regarding the disclosure of the sensitivity of the net OPEB liability to changes in the discount rate, the following table presents the net OPEB liability of the Plan as of June 30, 2022, calculated using the discount rate of 5.50%, as well as what the Plan’s net OPEB liability would be if it were calculated using a discount rate that is 1- percentage-point lower or 1- percentage point higher than the current rate:
Net OPEB Liability/(Asset)
Discount Rate -1% Discount Rate Discount Rate +1%
(4.50%) (5.50%) (6.50%)
($181,717) ($238,687) ($286,049)
Net OPEB Liability/(Asset)
1% Decrease Healthcare Cost 1% Increase
Trend Rates
($297,480) ($238,687) ($164,823)
e) Actuarial Assumptions
The total OPEB liability was determined by an actuarial valuation as of June 30, 2019, using the following actuarial assumptions:
Actuarial Assumptions
Valuation Date June 30, 2020
Measurement Date 6/30/2022
Contribution Policy City contributes full ADC
Actuarial Cost Method Entry Age Normal. Level percentage of payroll Actuarial Assumptions:
Discount Rate 5.50%
Long Term Expected Rate 5.50%
Rate of Return on Assets 6.00%
Inflation 2.50%
Payroll Growth 3.00%
Mortality Rate CalPERS 2000-2019 Experience Study
Healthcare participation for future retirees 50% covered; 30% if waived coverage PEMHCA Minimum Increases 4.25% annually
f) Change in Assumptions
During fiscal year 2022, the discount rate was changed from 6.00% in fiscal year 2021 to
5.50%.
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CITY OF HALF MOON BAY, CALIFORNIA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
9. Other Post Employment Healthcare Benefits, continued g) OPEB Expense and Deferred Inflows and Outflows of Resources Related to OPEB For the fiscal year ended June 30, 2022, the City recognized OPEB expense of $147,783. At June 30, 2022, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Net difference between projected and actual earnings $4,030 $110,673 on OPEB plan investments
Changes in assumptions 23,672 26,562
Differences between actual and expected experience 55,698 Total $83,400 $137,235
Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:
Year Annual
Ended June 30 Amortization
2022 ($846)
2023 (67)
2024 (2,332)
2025 16,551
2026 (10,598)
Thereafter (56,543)
Total ($53,835)
Plan Administration
The City is the plan administrator. The Public Agency Retirement Services (PARS) administers the trust for the City’s retiree healthcare benefit plan – a single-employer defined benefit OPEB plan that provides healthcare benefits for eligible general and public safety employees of the City.
Fiscal Year ended
June 30, 2022
Plan Type Single Employer
OPEB Trust Yes
Special Funding Situation No
Nonemployer Contributing Entity No
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NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
9. Other Post Employment Healthcare Benefits, continued Contribution Information
PARS established rates for each employer based on an actuarially determined rate for each employer. Plan members are not required to contribute to the plan. The City did not make any contribution to the Trust in fiscal year 2022.
Investment Policy
PARS offers different investment portfolios as part of the investment vehicle. The City invests in “Capital Appreciation” portfolio; the primary goal of the Capital Appreciation objective is growth of principal. The major portions of the assets are invested in the equity securities and market fluctuations are expected. The portfolio is constructed to control risk through four layers of diversification – asset classes (cash, fixed income, equity), investment styles (large cap, small cap, international, value, growth), managers and securities.
Disciplined mutual fund selections and monitoring helps to drive return potential while reducing portfolio risk.
The following is the City adopted asset allocation policy as of June 30, 2022:
Long-Term
Target Expected Real
Asset Class Allocation Rate of Return
Global Equity 48.00% 4.56%
Fixed Income 45.00% 0.78%
REITs 2.00% 4.06%
Cash 5.00% -0.50%
Total 100.00%
10. LEASES
a) Policies
A lease is defined as a contract that conveys control of the right to use another entity’s nonfinancial asset (the underlying asset) as specified in the contract for a period of time in an exchange or exchange-like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. The City recognizes lease receivable or liabilities with an initial, individual value of $300,000 or more for all funds, based on the future lease payments remaining at the start of the lease.
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NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
10. LEASES, continued
Lessor
The City is a lessor for noncancellable leases of buildings and facilities. The City recognizes a lease receivable and a deferred inflow of resources in the government‐wide and fund financial statements.
At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term.
Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts as follows:
The City uses bond interest rate as the discount rate for leases. The lease term includes the noncancellable period of the lease. Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee.
The City monitors changes in circumstances that would require a remeasurement of its lease, and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.
Lessee
The City is a lessee for miscellaneous leases. If the lease is over the threshold, the City will recognize a lease liability and an intangible right‐to‐use lease asset (lease asset) in the government‐wide financial statements.
At the commencement of a lease, City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs.
Subsequently, the lease asset is amortized on a straight‐line basis over its useful life.
Key estimates and judgments related to leases include how City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments as follows:
The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, City generally uses bond interest rate as the discount rate for leases.
The lease term includes the noncancellable period of the lease. 69 DRAFT 12/15/2022
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NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
10. LEASES, continued
Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that City is reasonably certain to exercise.
The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability.
Lease assets are reported with other capital assets and lease liabilities are reported with longterm debt on the Statement of Net Position.
As of June 30, 2022, the City has no leases over the threshold subject to GASB 87 as a lessee. b) Leases Receivable (City as Lessor)
The provisions of GASB Statement 87 were implemented during fiscal year 2022.
As of June 30, 2022, the City has no leases over the threshold subject to GASB 87 as a lessor.
11. Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees and others; and natural disasters. The Pooled Liability Assurance Network Joint Powers Authority covers general liability claims in an amount up to $5,000,000. The City has a deductible or uninsured liability of up to $50,000 per claim.
Once the City's deductible is met The Plan becomes responsible for payment of all claims up to the limit. The Cities Group covers workers compensation claims up to $2,500,000 in primary payment ($1,000,000 for miscellaneous employees and $1,500,000 for safety employees) and has coverage above that limit to a maximum of $10,000,000 per incident in excess. The City has no deductible for these claims. The City also belongs to the California Sanitation Risk Management Authority, which insures the City up to $500,000 per property against sewer backup damages.
The City is liable for only one claim per property and is not liable for any future damages, as the property owner is then required to install a back flow valve on their line, with the exception of properties in certain low lying areas.
The City provides for the uninsured portion of claims and judgments in the General Fund and Risk Management Internal Service Fund. Claims and judgments, including a provision for claims incurred but not reported, are recorded when a loss is deemed probable of assertion and the amount of the loss is reasonably determinable.
Settled claims have not exceeded the City's excess coverage in any of the past three fiscal years.
Claims expenses and liabilities are reported for self-insured deductibles when it is probable that a loss has occurred, the amount of that loss can be reasonably estimated and includes incremental claim expenses. Allocated and unallocated claims adjustment expenses are 1included in the claims liability balance. These losses include an estimate of claims that have been incurred but not reported. The liability for general liability self-insurance claims is the City's best estimate based on available information.
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NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2022
11. Risk Management, continued
a) The Cities Group
The City, along with five other governments located within San Mateo County, is a member of The Cities Group, a public entity risk pool and a provider of workers' compensation insurance coverage, claims management, risk management services and legal defense to each participating member. The Cities Group is governed by a Board of Directors, which comprises officials appointed by each participating member. Premiums paid to The Cities Group may be modified by Board decision according to the loss experience of each member.
This loss experience mechanism will operate to ensure that each member returns over a period of time to The Cities Group the funds paid out on its behalf as paid losses. In the opinion of City management, premiums paid represent the best available estimate of the ultimate cost of the City's participation in The Cities Group and, accordingly, the accompanying basic financial statements of the City includes no provisions for possible refunds or additional assessments. For the year ended June 30, 2022, the City paid premiums of $35,991 to The Cities Group. Financial statements may be obtained from The Cities Group at P.O. Box 111, Burlingame, CA 94011-0111.
b) Plan JPA
Prior to January 2018 the City participated in ABAG Plan Corporation, a non-profit public benefit corporation established to provide liability insurance coverage, claims and risk management, and legal defense to its participating members. On January 16, 2018, ABAG Plan Corporation transitioned to Pooled Liability Assurance Network Joint Powers Authority (PLAN JPA), a self-funded pooled insurance corporation established by a joint powers authority in which the City is one of 28 members. The rights and responsibilities of the member agencies are governed by the bylaws of the PLAN JPA, the risk coverage agreement, and a related memorandum of coverage. Each member chooses its self-insured liability retention at a level between $25,000 and $250,000. Each member has a vote in approving the pool’s self-insured retention level, in setting the coverage limit, in establishing the level of pool reserves, approving the premium allocation methodology for setting premiums for each member, and in approving the methodology for returning disbursable equity to members.
PLAN JPA is responsible for administering the insurance program. PLAN JPA provides claims administration and risk management services to the members. Audited financial information may be obtained from PLAN JPA at 1750 Creekside Oaks Drive, Suite 200, Sacramento, CA 95833.
For the year ended June 30, 2022, the City paid premiums of $293,622 Financial statements may be obtained from Plan JPA at 1750 Creekside Oaks Drive, Suite 200, Sacramento, CA 95833.
The City's liability for uninsured claims was estimated by management based on prior year claims experience as follows:
June 30, 2022 June 30, 2021
Beginning balance of claims payable $947,234 $938,250
Increase in estimated liability 370,710 391,310
Claims paid (398,297) (382,326)
Ending balance of claims payable $919,647 $947,234
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REQUIRED SUPPLEMENTARY INFORMATION
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REQUIRED SUPPLEMENTARY INFORMATION
COST-SHARING EMPLOYER DEFINED PENSION PLAN:
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY This schedule reports the proportion (percentage) of the collective net pension liability, the proportionate share (amount) of the collective net pension liability, the employer’s covered employee payroll, the proportionate share (amount of the collective net pension liability as a percentage of the employer’s covered employee payroll and the pension plan’s fiduciary net position as a percentage of the total pension liability.
SCHEDULE OF CONTRIBUTIONS
This schedule reports the cost sharing employer’s contributions to the plan which are actuarially determined, the employer’s actual contributions, the difference between the actual and actuarially determined contributions, and a ratio of the actual contributions divided by covered employee payroll.
SCHEDULE OF FUNDING PROGRESS – OTHER POST-EMPLOYMENT BENEFITS PLAN
This schedule presents trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. 74 DRAFT 12/15/2022
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REQUIRED SUPPLEMENTARY INFORMATION
Miscellaneous Plan
Cost-Sharing Multiple-Employer Defined Pension Plan
Last 10 Years*
SCHEDULE OF THE PLAN'S PROPORTIONATE SHARE OF THE
NET PENSION LIABILITY AND RELATED RATIOS AS OF
THE MEASUREMENT DATE
Measurement date: 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 Plan's proportion of the Net Pension Liability
(Asset) 0.04792% 0.10917% 0.11869% 0.12281% 0.12663% 0.13120% 0.13584% 0.18148% Plan's proportionate share of the Net Pension
Liability (Asset) $2,981,768 $2,994,972 $4,123,054 $4,841,079 $4,772,172 $5,254,057 $5,729,928 $3,445,863 Covered Payroll $1,412,295 $1,986,876 $2,014,025 $2,423,106 $3,177,604 $3,415,448 $3,945,078 $3,974,973 Plan's Proportionate Share of the Net Pension
Liability/(Asset) as a Percentage of its CoveredEmployee Payroll 211.13% 150.74% 204.72% 199.79% 150.18% 153.83% 145.24% 86.69% Plan's Proportionate Share of the Fiduciary Net
Position as a Percentage of the Plan's Total
Pension Liability 83.22% 83.28% 77.87% 76.18% 77.02% 75.07% 278.58% 84.94% * Fiscal year 2015 was the 1st year of implementation.
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Safety Plan
Cost-Sharing Multiple-Employer Defined Pension Plan
Last 10 Years*
SCHEDULE OF THE PLAN'S PROPORTIONATE SHARE OF THE
NET PENSION LIABILITY AND RELATED RATIOS AS OF
THE MEASUREMENT DATE
Measurement date: 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 Plan's proportion of the Net Pension Liability
(Asset) 0.06033% 0.10493% 0.10385% 0.10143% 0.10417% 0.10123% 0.03615% 0.12006% Plan's proportionate share of the Net Pension
Liability (Asset) $3,754,036 $4,323,582 $5,378,768 $6,060,745 $6,112,200 $6,319,361 $6,550,836 $4,213,402 Covered Payroll N/A N/A N/A N/A N/A N/A N/A N/A
Plan's Proportionate Share of the Net Pension
Liability/(Asset) as a Percentage of its CoveredEmployee Payroll N/A N/A N/A N/A N/A N/A N/A N/A Plan's Proportionate Share of the Fiduciary Net
Position as a Percentage of the Plan's Total
Pension Liability 80.10% 76.97% 71.33% 69.65% 69.70% 73.37% 223.00% 80.55% * Fiscal year 2015 was the 1st year of implementation.
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Miscellaneous Plan
Cost-Sharing Multiple Employer Defined Pension Plan
As of fiscal year ending June 30, 2022
Last 10 Years*
SCHEDULE OF CONTRIBUTIONS
Fiscal year ended June 30: 2016 2017 2018 2019 2020 2021 2022 Actuarially determined contribution $168,511 $344,215 $435,299 $525,289 $649,405 $728,503 $819,301 Contributions in relation to the actuarially
determined contributions (168,511) (344,215) (435,299) (525,289) (649,405) (728,503) (819,301) Contribution deficiency (excess) $0 $0 $0 $0 $0 $0 $0
Covered payroll $2,014,025 $2,423,106 $3,177,604 $3,415,448 $3,945,078 $3,974,973 $4,318,701 Contributions as a percentage of coveredemployee payroll 8.4% 14.2% 13.7% 15.4% 16.5% 18.3% 19.0% Notes to Schedule
Valuation date: 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry age
Amortization method Level dollar amount
Remaining amortization period 20 years
Asset valuation method 5-year smoothed market
Inflation 2.50%
Salary increases (1)
Investment rate of return
Mortality Derived using CalPERS Membership Data for all funds Post Retirement Benefit Increase
(1) Depending on age, service and type of employment
(2) Net of pension plan investment expenses, including inflation * Fiscal year 2015 was the 1st year of implementation.
Contract COLA up to 2.50%
7.15% (2)
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REQUIRED SUPPLEMENTARY INFORMATION
Safety Plan
Cost-Sharing Multiple Employer Defined Pension Plan
As of fiscal year ending June 30, 2022
Last 10 Years*
SCHEDULE OF CONTRIBUTIONS
Fiscal year ended June 30: 2016 2017 2018 2019 2020 2021 2022 Actuarially determined contribution $414,500 $249,322 $445,240 $551,942 $555,649 $594,797 $612,617 Contributions in relation to the actuarially
determined contributions (249,322) (414,500) (445,240) (551,942) (555,649) (594,797) (612,617) Contribution deficiency (excess) $0 $0 $0 $0 $0 $0 $0
Covered payroll N/A N/A N/A N/A N/A N/A N/A
Contributions as a percentage of coveredemployee payroll N/A N/A N/A N/A N/A N/A N/A Notes to Schedule
Valuation date: 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry age
Amortization method Level percentage of payroll, closed Remaining amortization period 20 years
Asset valuation method 5-year smoothed market
Inflation 2.50%
Salary increases (1)
Investment rate of return
Mortality Derived using CalPERS Membership Data for all funds Post Retirement Benefit Increase
(1) Depending on age, service and type of employment
(2) Net of pension plan investment expenses, including inflation * Fiscal year 2015 was the 1st year of implementation.
7.15% (2)
Contract COLA up to 2.50%
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SCHEDULE OF CHANGES
IN THE NET OPEB LIABILITY AND RELATED RATIOS
A Single Employer OPEB Plan
Last 10 fiscal years*
Measurement Date 6/30/2017 6/30/18 6/30/2019 6/30/20 6/30/21 6/30/22 Total OPEB Liability (1)
Service Cost $25,533 $27,065 $27,877 $28,713 $30,749 $31,671 Interest 24,624 26,373 28,268 30,256 32,113 32,877
Differences between expected and actual experience - - - - - - Benefit payments (22,522) (22,553) (22,788) (24,885) (29,523) (33,272) Actual vs. expected experience - - - - 5,947 (122,083)
Changes of assumptions - - - (8,808) 30,158 (22,718)
Net change in total OPEB liability 27,635 30,885 33,357 31,223 63,497 (113,525) Total OPEB liability - beginning 396,126 423,761 454,646 488,003 519,226 582,723 Total OPEB liability - ending (a) $423,761 $454,646 $488,003 $519,226 $582,723 $469,198 OPEB fiduciary net position
Net investment income $48,425 $32,087 $41,937 $29,170 $136,486 ($91,716) Contributions:
Employer - City's contribution 22,522 39,261 22,928 26,083 (5,366) 33,410 Employer - Implicit subsidy - - - - - -
Administrative expense (2,071) (1,552) (1,745) (2,911) (2,934) (2,117) Actual vs. expected experience - - - - - -
Benefit payments (22,522) (22,553) (22,788) (24,885) (29,523) (33,272) Net change in plan fiduciary net position 46,354 47,243 40,332 27,457 98,663 (93,695) Plan fiduciary net position - beginning 541,531 587,885 635,128 675,460 702,917 801,580 Plan fiduciary net position - ending (b) $587,885 $635,128 $675,460 $702,917 $801,580 $707,885 Net OPEB liability - ending (a)-(b) ($164,124) ($180,482) ($187,457) ($183,691) ($218,857) ($238,687) Plan fiduciary net position as a percentage of the total OPEB liability 138.73% 139.70% 138.41% 135.38% 137.56% 150.87% Covered-employee payroll (A) N/A ** $3,009,829 $4,157,271 $4,976,211 $4,806,006 $5,072,966 Total OPEB liability as a percentage of covered-employee payroll N/A ** -6.00% -4.51% -3.69% -4.55% -4.71% * Fiscal year 2018 was the first year of implementation of GASB 75 Administrative expenses are included in investment expenses. **Fiscal year 2017 was the first year of GASB 74 implementation. (A) City's contributions to OPEB plan are not based on a measure of pay 79 DRAFT 12/15/2022
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REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CONTRIBUTIONS
A Single Employer OPEB Plan
Last 10 fiscal years*
Fiscal Year Ended June 30, 2017 2018 2019 2020 2021 2022 Actuarially Determined Contribution (ADC) $16,708 $17,251 $15,539 $16,054 $15,992 $16,392 Less: Contributions in Relation to the ADC (22,522) (39,261) (22,928) (26,083) (5,366) 33,410 Contribution deficiency (excess) ($5,814) ($22,010) ($7,389) ($10,029) $10,626 $49,802 Covered-employee payroll N/A ** $3,009,829 4,157,271 $ 4,976,211 $ $4,806,006 $4,806,006 Contributions as a percentage of
Covered-employee payroll N/A ** 1.30% 0.55% 0.52% 0.11% -0.70% Notes to Schedule:
* Fiscal year 2018 was the first year of implementation.
Valuation Date
Actuarial Cost Method
Amortization Period
Asset Valuation Method
Actuarial Assumptions:
Discount Rate
Inflation
Medical Trend
PEMHCA Minimum 4.25% annual increases
Mortality CalPERS 1997-2015 experience study
Mortality Improvement
* Fiscal year 2018 was the first year of implementation of GASB 75. **Fiscal year 2017 was the first year of GASB 74 implementation.
Non-Medicare - 7.25% for 2021, decreasing to an
ultimate rate of 4.0% in 2076
Medicare - 6.3% for 2021, decreasing to an ultimate rate of 4.0% in 2076
Mortality projected fully generational with Society of
Actuaries Scale MP-2019
5.50%
June 30, 2020
2.75%
Investment gains and losses spread
over 5-year rolling period
13.2-year fixed period for 2020/21
Entry Age Normal, level percentage of payroll
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GENERAL FUND
SCHEDULE OF REVENUES AND EXPENDITURES
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual Amounts (Negative)
Revenues:
Taxes $13,996,217 $14,757,514 $18,670,447 $3,912,933
Licenses and permits 227,000 212,000 365,491 153,491
Fines and forfeitures 133,644 100,000 70,383 (29,617)
1,067,546 1,242,485 1,544,174 301,689
180,499 148,183 (197,019) (345,202)
Intergovernmental revenues 1,209,000 1,571,805 1,574,015 2,210 Miscellaneous 1,013,202 1,013,202 1,085,110 71,908
Total revenues 17,827,108 19,045,189 23,112,601 4,067,412 Expenditures:
Current Operations:
General Government 2,080,473 2,121,684 1,949,450 172,234 General administration 1,470,189 1,658,071 1,584,239 73,832 Public Safety 4,662,617 4,667,476 4,527,692 139,784
Public Works 1,923,738 2,007,687 1,780,363 227,324
Recreation services 1,033,697 1,096,419 1,040,867 55,552 2,870,742 3,203,673 2,628,557 575,116
Debt service:
Principal 1,371,686 1,329,276 1,191,724 137,552
Interest and fiscal charges 42,410 68,277 (25,867)
Total expenditures 15,413,142 16,126,696 14,771,169 1,355,527 2,413,966 2,918,493 8,341,432 5,422,939
Other financing sources (uses):
Transfers in 511,395 1,422,140 1,422,140
Transfers out (3,474,742) (5,319,119) (5,319,119)
Total Other Financing Sources (Uses) (2,963,347) (3,896,979) (3,896,979) Net change in fund balance ($549,381) ($978,486) 4,444,453 $5,422,939 Fund balance at beginning of year 11,140,700
Fund balance at end of year $15,585,153
AND CHANGES IN FUND BALANCE
Planning
Excess of revenues over
expenditures
Charges for services
Investment income
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Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Taxes
Licenses and permits $125,000 $125,000 $178,474 $53,474 Investment income 46,825 46,825 (128,057) (174,882)
Intergovernmental revenue 3,060,000 1,945,000 2,132,222 187,222 Miscellaneous 60,893 60,893
Total revenues 3,231,825 2,116,825 2,243,532 126,707
Expenditures:
Current:
Public works 255,964 262,541 209,629 52,912
Capital Outlay 3,298,612 3,394,489 1,619,718 1,774,771
Total expenditures 3,554,576 3,657,030 1,829,347 1,827,683 Excess (deficiency) of revenues
over (under) expenditures (322,751) (1,540,205) 414,185 1,954,390 1,363,200 1,732,545 1,434,077 (298,468)
Transfer out (288,998) (572,466) (273,998) 298,468
sources (uses) 1,074,202 1,160,079 1,160,079
Net change in fund balance $751,451 ($380,126) 1,574,264 $1,954,390 Fund balance at beginning of year 4,683,338
Fund balance at end of year $6,257,602
Other financing sources (uses):
Transfer in
Total other financing
Budget
CITY OF HALF MOON BAY
STREETS AND ROADS SPECIAL REVENUE FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
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Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Investment income $19,700 ($50,840) ($70,540)
Total revenues 19,700 (50,840) (70,540)
Expenditures:
Current:
General government 270,000 420,791 (150,791)
Capital Projects 266,384 (266,384)
Total expenditures 270,000 687,175 (417,175)
Excess (deficiency) of revenues
over (under) expenditures (250,300) (738,015) (487,715) Net change in fund balance ($250,300) (738,015) ($487,715) Fund balance at beginning of year 2,586,094
Fund balance at end of year $1,848,079
Budget
CITY OF HALF MOON BAY
LOT ACQUISITION AND RETIREMENT SPECIAL REVENUE FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
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REQUIRED SUPPLEMENTARY INFORMATION
Budget and Budgetary Accounting
The City Council adopts an Annual Budget no later than the second meeting of June of each year for the fiscal year commencing the following July 1. The Annual Budget is adopted on a basis consistent with generally accepted accounting principles. The Capital Projects Funds are budgeted annually, with major capital improvement projects details in a separate Five Year Capital Improvement Program budget document.
The City follows these procedures in establishing the budgetary data reflected in the financial statements.
1. The City Manager submits to the City Council a proposed operating budget for the following fiscal year. The operating budget includes proposed revenues and expenditures.
2. After a review by the City Council, a public hearing is conducted and further comment is received from the City Council and the general public.
3. Upon completion of the hearings and modifications, if any, to the proposed budget, it is adopted by the City Council through passage of an appropriate resolution.
4. Generally, the budget is amended in the middle of the year and at the end of the year. All approved additional appropriations are added to the adopted budget and an amended budget is presented to the City Council, which adopts it after due review.
5. The City Manager is authorized to transfer from time to time budget amounts of operational expenditure categories within divisions as deemed necessary in order to meet the City's needs.
6. City Council approval is required for all fund to fund transfers, fund reserve to appropriations transfers, for new revenue sources with offsetting appropriations, and for transfers to/from the capital expenditure category. The legal level of budgetary control of the City Council is at the fund level. This is the level that management cannot overspend the budget without approval of the City Council.
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SUPPLEMENTARY INFORMATION
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CITY OF HALF MOON BAY
JUDGMENT OBLIGATION BONDS DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:
Investment income ($179) ($179)
Total revenues (179) (179)
Other financing sources:
Transfers (out)
Total other financing sources
Net change in fund balance (179) ($179)
Fund balance at beginning of year 6,311
Fund balance at end of year $6,132
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CITY OF HALF MOON BAY
LIBRARY CAPITAL PROJECTS FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:
Investment income $29,771 ($20,425) ($50,196)
Intergovernmental revenues 15,000 15,000
Total Revenues 29,771 (5,425) (35,196)
Other financing sources:
Transfers (out) (910,745) (910,745)
Total expenditures (910,745) (910,745)
Excess of revenues over expenditures (880,974) (916,170) (35,196) Net change in fund balance ($880,974) (916,170) ($35,196) Fund balance at beginning of year 1,332,744
Fund balance at end of year $416,574
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CITY OF HALF MOON BAY
CAPITAL PROJECTS
SCHEDULE OF REVENUES AND EXPENDITURES
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual Amounts (Negative)
Revenues:
$14,396 $14,396 ($38,263) ($52,659)
Intergovernmental revenues 8,000 8,000
Total revenues 14,396 14,396 (30,263) (44,659)
Expenditures:
Current Operations:
738,686 1,320,686 388,684 932,002
Total expenditures 738,686 1,320,686 388,684 932,002
(724,290) (1,306,290) (418,947) 887,343
Other financing sources (uses):
Transfers in 553,500 553,500
Total Other Financing Sources (Uses) 553,500 553,500
Net change in fund balance ($724,290) ($752,790) 134,553 $887,343 Fund balance at beginning of year 1,737,048
Fund balance at end of year $1,871,601
AND CHANGES IN FUND BALANCE
Investment income
Capital Outlay
Excess of revenues over
expenditures
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CITY OF HALF MOON BAY, CALIFORNIA
NON-MAJOR GOVERNMENTAL FUNDS
FISCAL YEAR ENDED JUNE 30, 2022
Special Revenue Funds
Special Revenue Funds are established to account for revenue derived from specific taxes or other earmarked revenue sources (other than for major capital projects that are restricted by law or administrative action to expenditures for specified purposes).
The Police Grants Fund (Fund 128) was established to account for revenues received and expenditures made for police services. The City receives funds for police services from Federal, State, County and local governmental agencies. These funds are designated for specific police services, activities, and capital equipment.
The Storm Drain Operating Fund (Fund 111) accounts for the maintenance of the existing storm drain system.
The Traffic Mitigation Fund (Fund 112) was established to account for all proceeds from traffic mitigation fees, whose purpose is to defray the actual costs of constructing improvements to mitigate traffic and circulation impacts resulting from proposed new development.
The Affordable Housing Fund (Fund 126) was established to account for proceeds of construction and development fees, including in lieu fees, whose purpose is for the development of affordable housing for very low, low, and moderate income households to rent or buy.
The Parks Development Fund (Fund 125) was established to account for proceeds of construction and development fees, whose purpose is for the acquisition, development, improvement, and expansion of parks and recreational areas, including equipment for recreation purposes and for capital expenditures such as infrastructure construction projects. In addition, this fund also includes the Library Fund (Fund 113) which accounts for the operations of the public library and is funded by contributions from the City and the San Mateo County Library Joint Powers Authority.
Capital Projects Funds
Capital Projects Funds are utilized to account for resources used for the acquisition and construction of capital facilities and infrastructure by the City, with the exception of those assets financed by proprietary funds.
The Public Facilities Fund (Fund 127) accounts for expenditures related to public facilities improvements that are needed - police facilities, the library, the public works yard, etc. The funds are received from various contractual agreements that are one-time in nature and which are not specifically dedicated, as well as grants.
The Storm Drain Improvements Fund (Fund 152) is used to account for all proceeds from storm drainage improvement fees which are assessed against new or remodeled construction and are used for drainage improvements.
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Police Storm Drain Traffic Affordable Parks
Grants Operating Mitigation Housing Development
Assets
Cash and investments $704,959 $342,966 $4,159,832 $2,112,207 $3,348,785 Accounts receivable 94,070
Interest receivable 1,782 873 10,579 5,379 8,048
$706,741 $343,839 $4,170,411 $2,117,586 $3,450,903
Accrued expenses $11,708
Accrued liabilities $145,564
11,708 145,564
Restricted 695,033 $343,839 $4,170,411 $2,117,586 3,305,339 695,033 343,839 4,170,411 2,117,586 3,305,339
$706,741 $343,839 $4,170,411 $2,117,586 $3,450,903
Total fund balances
Total liabilities and fund balances
Total assets
Total liabilities
Liabilities:
Fund Balances:
CITY OF HALF MOON BAY
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
JUNE 30, 2022
SPECIAL REVENUE FUNDS
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Public Storm Drain
Facilities Improvements Total
$1,506,140 $1,009,712 $13,184,601
125,223 219,293
3,714 2,594 32,969
$1,635,077 $1,012,306 $13,436,863
$27,184 $38,892
$23,999 169,563
23,999 27,184 208,455
1,611,078 985,122 13,228,408
1,611,078 985,122 13,228,408
$1,635,077 $1,012,306 $13,436,863
CAPITAL PROJECTS FUNDS
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Police Storm Drain Traffic Affordable Parks
Grants Operating Mitigation Housing Development
Revenues:
Charges for services
Impact fees/recreation fees $86,784 $101,330
Investment income ($15,257) ($7,862) (94,814) ($48,691) (66,026) Intergovernmental revenues 161,285 98,234
Total Revenues 146,028 (7,862) (8,030) (48,691) 133,538 Expenditures:
Current:
Public Safety 11,707
Public Works 46,945
Recreation Services 835,226
Capital outlay
Total Expenditures 11,707 46,945 835,226
Excess (deficiency) of revenues
over (under) expenditures 134,321 (7,862) (54,975) (48,691) (701,688) Other financing sources:
Transfers in 1,385,000
Transfer (out) (200,000)
Proceeds from long-term debt
Total Other Financing Sources 1,185,000
Net change in fund balances 134,321 (7,862) (54,975) (48,691) 483,312 Fund balances at beginning of year 560,712 351,701 4,225,386 2,166,277 2,822,027 Fund balances at end of year $695,033 $343,839 $4,170,411 $2,117,586 $3,305,339
CITY OF HALF MOON BAY
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2022
SPECIAL REVENUE FUNDS
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Public Storm Drain
Facilities Improvements Total
$8,077 $8,077
188,114
($31,608) (23,208) (287,466)
20,000 279,519
(11,608) (15,131) 188,244
11,707
40,301 87,246
835,226
723,854 40,296 764,150
723,854 80,597 1,698,329
(735,462) (95,728) (1,510,085)
520,000 20,000 1,925,000
(3,382) (203,382)
421,373 421,373
941,373 16,618 2,142,991
205,911 (79,110) 632,906
1,405,167 1,064,232 12,595,502
$1,611,078 $985,122 $13,228,408
CAPITAL PROJECTS FUNDS
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CITY OF HALF MOON BAY
POLICE GRANTS SPECIAL REVENUE FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:
Investment income $6,094 ($15,257) ($21,351)
Intergovernmental 156,000 161,285 5,285
Total Revenues 162,094 146,028 (16,066)
Expenditures:
Current:
Public Safety 200,000 11,707 188,293
Total expenditures 200,000 11,707 172,227
Excess (deficiency) of revenues
over ( under) expenditures (37,906) 134,321 172,227
Net change in fund balance ($37,906) 134,321 $172,227
Fund Balance at beginning of year 560,712
Fund balance at end of year $695,033
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CITY OF HALF MOON BAY
STORM DRAIN OPERATING SPECIAL REVENUE FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:
Investment income $3,962 ($7,862) ($11,824)
Total revenues 3,962 (7,862) (11,824)
Net change in fund balance $3,962 (7,862) ($11,824)
Fund balance at beginning of year 351,701
Fund balance at end of year $343,839
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CITY OF HALF MOON BAY
TRAFFIC MITIGATION SPECIAL REVENUE FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:
Impact fees/recreation fees $55,426 $86,784 $31,358
Investment income 31,300 (94,814) (126,114)
Total revenues 86,726 (8,030) (94,756)
Expenditures:
Current:
Public works 46,944 46,945 (1)
Total expenditures 46,944 46,945 (1)
Excess (deficiency) of revenues
over (under) expenditures 39,782 (54,975) (94,757)
Net change in fund balance $39,782 (54,975) ($94,757)
Fund balance at beginning of year 4,225,386
Fund balance at end of year $4,170,411
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CITY OF HALF MOON BAY
AFFORDABLE HOUSING SPECIAL REVENUE FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:
Recreation fees/impact fees
Investment income $25,385 ($48,691) ($74,076)
Total revenues 25,385 (48,691) (74,076)
Net change in fund balance $25,385 (48,691) ($74,076)
Fund balance at beginning of year 2,166,277
Fund balance at end of year $2,117,586
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CITY OF HALF MOON BAY
PARKS DEVELOPMENT SPECIAL REVENUE FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:
Impact fees/recreation fees $60,000 $101,330 $41,330
Investment income 28,256 (66,026) (94,282)
Intergovernmental revenues 4,775,000 98,234 (4,676,766) Total Revenues 4,863,256 133,538 (4,729,718)
Expenditures:
Current:
Recreation services 7,975,496 835,226 7,140,270
Total expenditures 7,975,496 835,226 7,140,270
Excess of revenues over expenditures (3,112,240) (701,688) 2,410,552 Other financing sources:
Transfers in 1,385,000 1,385,000
Transfers out (200,000) (200,000)
Total other financing sources 1,185,000 1,185,000
Net change in fund balance ($1,927,240) 483,312 $2,410,552 Fund balance at beginning of year 2,822,027
Fund balance at end of year $3,305,339
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Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:
Investment income $14,169 ($31,608) ($45,777)
Intergovernmental revenue 20,000 20,000
Total revenues 34,169 (11,608) (45,777)
Expenditures:
Capital Outlay 1,912,035 723,854 1,188,181
Total expenditures 1,912,035 723,854 1,188,181
Excess (deficiency) of revenues
over (under) expenditures (1,877,866) (735,462) 1,142,404 Other financing sources (uses):
Transfers in 520,000 520,000
1,000,000 421,373 (578,627)
Total Other Financing Sources (uses) 1,520,000 941,373 (578,627) Net change in fund balance ($357,866) 205,911 $563,777
Fund balance at beginning of year 1,405,167
Fund balance at end of year $1,611,078
CITY OF HALF MOON BAY
PUBLIC FACILITIES CAPITAL PROJECT FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
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CITY OF HALF MOON BAY
STORM DRAIN IMPROVEMENTS CAPITAL PROJECT FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:
Charges for services $9,879 $8,077 ($1,802)
Investment income 10,816 (23,208) (34,024)
Total Revenues 20,695 (15,131) (35,826)
Expenditures:
Public works 40,846 40,301 545
Capital outlay 575,000 40,296 534,704
Total expenditures 615,846 80,597 535,249
Excess of revenues over expenditures (595,151) (95,728) 499,423 Other financing sources:
Transfers in 20,000 20,000
Transfers out (3,382) (3,382)
Total other financing sources 16,618 16,618
Net change in fund balance ($578,533) (79,110) $499,423 Fund balance at beginning of year 1,064,232
Fund balance at end of year $985,122
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CITY OF HALF MOON BAY, CALIFORNIA
INTERNAL SERVICE FUNDS
FISCAL YEAR ENDED JUNE 30, 2022
Internal Service Funds are used to account for the financing of goods and services provided by one City department or agency to other departments or agencies of the City, or to other government units on a cost- reimbursement basis (including depreciation).
The Equipment (Fund 302) and Vehicle Replacement (Fund 301) Fund is used to account for replacement of furniture, fixtures, equipment, and vehicles. These funds cover the cost of repair, maintenance and replacement of City vehicles and provide for the service, maintenance of the management information systems, leased copiers and leased postage meter. Revenues are derived from charges to user departments (al funds) based on usage.
The Risk Management Fund (Fund 303) administers the City's general insurance and workers compensation programs with the goals of reducing insurance-related costs, maintain appropriate levels of coverage and to build for contingent legal reserves.
The Pension Stabilization Fund (Fund 304) stabilizes major fluctuations in annual pension costs driven by market factors and actuarial changes.
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CITY OF HALF MOON BAY
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF NET POSITION
JUNE 30, 2022
Equipment and
Vehicle Risk Pension
Replacement Management Stabilization Total
Assets
Current Assets:
Cash and investments $884,464 $3,464,646 $1,436,580 $5,785,690 Interest receivable 1,242 8,886 3,630 13,758
Total Current Assets 885,706 3,473,532 1,440,210 5,799,448 Non-current assets:
Net OPEB asset 2,941 2,941
Capital assets, net of
Accumulated depreciation 434,248 434,248
Total Assets 1,319,954 3,476,473 1,440,210 6,236,637
Deferred outflow of resources
Related to OPEB 1,086 1,086
Total deferred outflows of resources 1,086 1,086
Liabilities
Current Liabilities:
Accounts payable 24,744 10,097 34,841
Claims liability 919,647 919,647
Total Liabilities 24,744 929,744 954,488
Deferred inflow of resources
Related to OPEB 1,043 1,043
Total deferred inflows of resources 1,043 1,043
Net Position
Net position:
Invested in capital assets 434,248 434,248
Unrestricted 860,962 2,546,772 1,440,210 4,847,944
Total net position $1,295,210 $2,546,772 $1,440,210 $5,282,192 102 DRAFT 12/15/2022
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CITY OF HALF MOON BAY
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN FUND NET POSITION
FOR THE YEAR ENDED JUNE 30, 2022
Equipment and
Vehicle Risk Pension
Replacement Management Stabilization Total
Operating revenues:
Impact fees $12,075 $12,075
Total operating revenues 12,075 12,075
Operating expenses:
Salaries and wages 93,517 $136,326 $429,131 658,974
Contract services 19,182 10,998 30,180
Services and supplies 352,730 352,730
Repairs and maintenance 17,526 17,526
Insurance expense 308,042 308,042
Pension 612,617 612,617
Depreciation 76,623 76,623
Total operating expenses 559,578 455,366 1,041,748 2,056,692 Operating income (loss) (547,503) (455,366) (1,041,748) (2,044,617) Non-operating revenues (expenses):
Investment income (18,537) (75,737) (25,845) (120,119)
Total non-operating revenues (18,537) (75,737) (25,845) (120,119) Transfers in 720,296 628,530 1,041,748 2,390,574
Change in net position 154,256 97,427 (25,845) 225,838
Net position at beginning of year 1,140,954 2,449,345 1,466,055 5,056,354 Net position at end of year $1,295,210 $2,546,772 $1,440,210 $5,282,192 103 DRAFT 12/15/2022
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CITY OF HALF MOON BAY
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2022
Equipment and
Vehicle Risk Pension
Replacement Management Stabilization Total
Cash flows from operating activities:
Cash received from department users $12,075 $12,075
Cash payments to suppliers of goods and services (374,008) ($322,777) ($613,385) (1,310,170) Cash payments to employees for services (93,517) (163,992) (429,131) (686,640) Net cash provided by (used for) operating activities (455,450) (486,769) (1,042,516) (1,984,735) Cash flows from non-capital financing activities:
Transfer in 720,296 628,530 1,041,748 2,390,574
Net cash provided by (used for) non-capital
financing activities 720,296 628,530 1,041,748 2,390,574 Cash flows from investing activities:
Interest received on investments (18,537) (75,737) (25,845) (120,119) Net cash provided by investing activities (18,537) (75,737) (25,845) (120,119) Net increase (decreased) in cash and cash equivalents 91,336 66,024 (26,613) 130,747 Cash and cash equivalents at beginning of year 793,128 3,398,622 1,463,193 5,654,943 Cash and cash equivalents at end of year $884,464 $3,464,646 $1,436,580 $5,785,690 Reconciliation of operating income to net cash flows
provided by operating activities:
Operating income (loss) ($547,503) ($455,366) ($1,041,748) ($2,044,617) Adjustments to reconcile operating income
to net cash provided by operating activities:
Depreciation 76,623 76,623
(Increase) in interest receivable (730) (2,050) (768) (3,548) Increase (Decreased) in accounts payable 16,160 (1,687) 14,473 Increase (Decreased) in employees benefits (79) (79)
Increase (Decreased) in claims liability (27,587) (27,587) Net cash provided by (used for) operating activities ($455,450) ($486,769) ($1,042,516) ($1,984,735) 104 DRAFT 12/15/2022
158
STATISTICAL SECTION
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160
CITY OF HALF MOON BAY, CALIFORNIA
STATISTICAL SECTION
FISCAL YEAR ENDED JUNE 30, 2022
This part of the City's annual comprehensive financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health.
Financial Trends
These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time.
Debt Capacity
These schedules present information to help the reader assess the affordability of the City's current level of outstanding debt and the ability to issue additional debt in the future.
Revenue Capacity
These schedules contain information to help the reader assess the City's most significant local revenue sources.
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place.
Operating Information
These schedules contain service data to help the reader understand how the information in the City's financial report relates to the services the City's provides and the activities it performs.
Property Tax Information
These schedules contain information to help the reader assess the City's property tax sources and changes.
Note: Unless otherwise noted, the information in these schedules is derived from the annual comprehensive financial reports for the relevant years. 107 DRAFT 12/15/2022
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2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Governmental activities:
Invested in capital assets,
net of related debt 34,516,084 $ 36,067,826 $ 37,550,877 $ 40,513,950 $ 46,399,149 $ 63,168,981 $ 60,800,162 $ 62,744,013 $ 67,193,002 $ 68,275,626 $ Restricted - 38,078,982 18,540,842 19,779,956 22,157,470 25,844,530 27,738,822 16,416,110 19,871,245 21,340,221 Unrestricted 43,069,044 7,998,768 26,042,003 34,369,708 28,173,022 17,010,742 25,475,062 35,553,961 34,061,834 38,471,511 Total governmental activities net position 77,585,128 $ 82,145,576 $ 82,133,722 $ 94,663,614 $ 96,729,641 $ 106,024,253 $ 114,014,046 $ 114,714,084 $ 121,126,081 $ 128,087,358 $ Business-type activities:
Invested in capital assets,
net of related debt 4,089,787 $ 4,024,768 $ 3,970,876 $ 3,871,356 $ 3,816,994 $ 4,490,973 $ 4,566,718 $ 4,587,090 $ 6,199,508 $ 6,948,434 $ Restricted - - - - - 5,946,230 6,385,095 8,692,609 9,377,687 9,554,843 Unrestricted 15,881,577 18,347,207 19,063,158 20,635,855 21,900,766 14,129,580 13,683,606 11,937,949 8,461,534 5,502,097 Total business-type activities net position 19,971,364 $ 22,371,975 $ 23,034,034 $ 24,507,211 $ 25,717,760 $ 24,566,783 $ 24,635,419 $ 25,217,648 $ 24,038,729 $ 22,005,374 $ Primary government:
Invested in capital assets, net of related debt 38,605,871 $ 40,092,594 $ 41,521,753 $ 44,385,306 $ 50,216,143 $ 67,659,954 $ 65,366,880 $ 67,331,103 $ 73,392,510 $ 75,224,060 $ Restricted - 38,078,982 18,540,842 19,779,956 22,157,470 31,790,760 34,123,917 25,108,719 29,248,932 30,895,064 Unrestricted 58,950,621 26,345,975 45,105,161 55,005,563 50,073,788 31,140,322 39,158,668 47,491,910 42,523,368 43,973,608 Total primary government net position (1) 97,556,492 $ 104,517,551 $ 105,167,756 $ 119,170,825 $ 122,447,401 $ 130,591,036 $ 138,649,465 $ 139,931,732 $ 145,164,810 $ 150,092,732 $ (1)
The $12.5 million increase in primary government net position in FY 2015-16 is primarily attributable to higher tax revenues and a contribution of $6.0 million from the County of San Mateo for the library construction capital project that is scheduled to commence during fiscal year 2016-17.The $3.5 million increase in primary government net position in FY 2016-17 is primarily attributable to investment in infrastructure and capital projects.The $8.4 million increase in primary government net position in FY 2017-18 is primarily attributable to investment in capital projects. The $8.0 million increase in primary government net position in FY 2018-19 is primarily attributable to higher tax and general revenues The $700 thousand increase in primary government net position in FY 2019-20 is primarily attributable to increased investments in capital assetsThe $5.2 million increase in primary government net position in FY 2020-21 is primarily attributable to a higher than expected revenues and lower expenditures budgetedThe $4.9 million increase in primary government net position in FY 2021-22 is primarily attributable to a higher than expected tax revenues Net Position by Component
CITY OF HALF MOON BAY
The $19.7 million increase in primary government net position in FY 2012-13 is primarily attributable to higher tax revenues, receipt of insurance proceeds, increase in sewer usage rates, and timing of program and capital spending. Of the $19.7 million, $13.2 million is attributable to the one-time insurance proceeds received in the current year.
The $7.0 million increase in primary government net position in FY 2013-14 is primarily attributable to higher tax revenues and timing of sewer-related capital spending.
Last Ten Fiscal Years
(Accrual Basis of Accounting)
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2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Expenses:
Governmental activities:
General government 2,410,384 $ 4,845,145 $ 2,190,464 $ 3,725,642 $ 3,940,242 $ 5,030,648 $ 4,722,479 $ 4,981,025 $ 5,175,257 $ 6,008,499 $ Public safety 4,020,875 3,209,351 3,901,511 3,449,122 5,183,033 3,878,176 3,975,865 4,631,203 4,743,620 5,017,087 Public works 2,122,350 2,316,147 2,605,015 2,670,228 3,314,879 3,801,624 3,506,195 3,754,258 2,817,305 2,765,717 Recreation services 208,152 221,703 282,251 337,331 348,604 926,730 1,167,467 1,808,657 1,942,872 2,823,410 Planning 687,847 1,213,621 1,081,255 1,952,892 2,427,687 2,603,389 2,784,468 3,286,029 2,764,254 2,779,608 Interest and fiscal charges 1,172,672 1,155,865 1,053,237 937,704 937,704 937,704 937,704 468,852 - - Total governmental activities expenses 10,622,280 12,961,832 11,113,733 13,072,919 16,152,149 17,178,271 17,094,178 18,930,024 17,443,308 19,394,321 Business-type activities:
Sewer 3,224,026 2,881,315 4,078,003 2,943,013 2,966,613 4,757,056 4,562,513 5,950,383 5,670,214 6,042,199 Total business-type activities expenses 3,224,026 2,881,315 4,078,003 2,943,013 2,966,613 4,757,056 4,562,513 5,950,383 5,670,214 6,042,199Total primary government expenses 13,846,306 15,843,147 15,191,736 16,015,932 19,118,762 21,935,327 21,656,691 24,880,407 23,113,522 25,436,520 Program revenues:
Governmental activities:
Charges for services:
General government 29,752 $ 211,108 $ 105,737 $ 98,171 $ 20,738 $ 29,879 $ 97,755 $ 94,986 $ 17,962 $ 646,363 $ Public safety 153,154 117,737 107,738 118,204 95,883 961,407 64,011 159,631 138,299 105,983 Public works 549,671 632,607 423,449 407,342 452,260 672,979 392,876 332,903 383,211 360,649 Recreation services 457,531 534,225 550,144 588,890 624,771 841,581 630,725 494,433 987,511 1,176,088 Planning 292,340 558,424 457,237 560,073 505,373 213,701 293,316 165,686 314,178 520,110 Operating grants and contributions 1,182,936 1,512,220 1,903,151 390,970 1,166,559 932,873 1,390,373 786,552 4,123,613 2,544,520 Capital grants and contributions 571,140 775,559 596,856 7,915,220 607,526 6,940,211 5,090,594 627,168 3,145,690 1,647,350 Total governmental activities program revenues 3,236,524 4,341,880 4,144,312 10,078,870 3,473,110 10,592,631 7,959,650 2,661,359 9,110,464 7,001,063 Business-type activities:
Charges for services:
Sewer 5,279,838 5,502,406 5,105,502 4,715,919 4,524,358 4,261,126 4,533,846 4,540,020 4,477,159 5,005,399 Operating grants and contributions 1,540 4,074 45,628 - - - - - - - Capital grants and contributions - - - - - - - - - -
Total business-type activities - - - - - - - - - -
program revenues 5,281,378 5,506,480 5,151,130 4,715,919 4,524,358 4,261,126 4,533,846 4,540,020 4,477,159 5,005,399 Total primary government program revenues 8,517,902 9,848,360 9,295,442 14,794,789 7,997,468 14,853,757 12,493,496 7,201,379 13,587,623 12,006,462 Net revenues (expenses):
Governmental activities (7,385,756) $ (8,619,952) $ (6,969,421) $ (2,994,049) $ (12,679,039) $ (6,585,640) $ (9,134,528) $ (16,268,665) $ (8,332,844) $ (12,393,258) $ Business-type activities 2,057,352 2,625,165 1,073,127 1,772,906 1,557,745 (495,930) (28,667) (1,410,363) (1,193,055) (1,036,800) Total net revenues (expenses) (3) (5,328,404) (5,994,787) (5,896,294) (1,221,143) (11,121,294) (7,081,570) (9,163,195) (17,679,028) (9,525,899) (13,430,058) (Accrual Basis of Accounting)
Changes in Net Position
Last Ten Fiscal Years
CITY OF HALF MOON BAY
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2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
(Accrual Basis of Accounting)
Changes in Net Position
Last Ten Fiscal Years
CITY OF HALF MOON BAY
General revenues and other changes in net position:
Governmental activities:
Taxes:
Property taxes 2,829,102 $ 2,613,407 $ 2,871,413 $ 3,116,710 $ 3,126,884 $ 3,379,657 $ 3,613,782 $ 3,667,867 $ 3,582,161 $ 4,592,317 $ Sales and use taxes 2,584,599 3,556,753 3,862,041 4,068,786 2,514,852 2,836,614 2,804,748 3,042,265 2,929,586 3,358,759 Transient occupancy taxes 4,524,646 4,974,614 5,433,394 5,935,558 6,024,855 6,434,808 6,828,108 5,291,821 4,817,532 9,442,518 Other taxes 787,952 814,840 832,390 808,224 919,666 1,038,546 1,242,286 1,346,187 1,304,943 1,341,327 Investment income 385,353 291,224 798,406 811,191 583,497 703,351 1,188,804 2,257,971 (96,482) (702,830) Other general revenues 962,353 929,562 779,392 783,472 1,575,312 1,386,752 1,446,593 1,362,594 2,207,101 1,322,444 Special Item: Insurance proceeds (2) 13,150,000 - - - - - - - - - Total governmental activities 25,224,005 13,180,400 14,577,036 15,523,941 14,745,066 15,779,728 17,124,321 16,968,705 14,744,841 19,354,535 Business-type activities:
Investment income 48,182 25,446 63,696 93,088 135,003 195,743 332,868 382,491 (49,678) (155,664) Miscellaneous (250,000) (250,000) (250,000) (392,817) (482,199) (857,213) (235,565) 1,610,101 63,814 (840,891) Total business-type activities (201,818) (224,554) (186,304) (299,729) (347,196) (661,470) 97,303 1,992,592 14,136 (996,555)Total primary government 25,022,187 12,955,846 14,390,732 15,224,212 14,397,870 15,118,258 17,221,624 18,961,297 14,758,977 18,357,980 Changes in net position:
Governmental activities 17,838,249 $ 4,560,448 $ 7,607,615 $ 12,529,892 $ 2,066,027 $ 9,194,088 $ 7,989,793 $ 700,040 $ 6,411,997 $ 6,961,277 $ Business-type activities 1,855,534 2,400,611 886,823 1,473,177 1,210,549 (1,157,400) 68,636 582,229 (1,178,919) (2,033,355) Total primary government (1) 19,693,783 $ 6,961,059 $ 8,494,438 $ 14,003,069 $ 3,276,576 $ 8,036,688 $ 8,058,429 $ 1,282,269 $ 5,233,078 $ 4,927,922 $ (1) Change in Net Assets in Primary Government:
FY 2012-13 increase in net position of $19.7 million is primarily due to receipt of insurance rocovery associated with the Yamagiwa claim.
FY 2013-14 increase in net position of $7.0 million is primarily due to higher tax revenues and timing of sewer-related capital spending. FY 2014-15 increase in net position of $8.5 million is primarily due to higher tax revenues and timing of sewer-related capital spending. FY 2015-16 increase in net position of $14 million is primarily due to higher tax revenues and timing of sewer-related capital spending. FY 2016-17 increase in net position of $3.2 million is primarily due to investment in infrastructure and capital projects.FY 2017-18 increase in net position of $8 million is primarily due to investment in capital projects.The $8.0 million increase in primary government net position in FY 2018-19 is primarily attributable to higher tax and general revenuesFY 2020-21 increase in net position of $5.2 million is primarily due to higher revenues from capital and operating grants/contributionsFY 2021-22 increase in net position of $4.9 million is primarily due to higher revenues from transient occupancy taxes (2) Special Items:
FY 2012-13 is the receipt of insurance proceeds received for coverage on the Yamagiwa case. (3) Total net expenses in FY 2019-20 increased by $8.5 million primarily for the final $10.9 million payment of the judgement obligation bond 111 DRAFT 12/15/2022
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2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
General fund:
Nonspendable 8,917,500 $ 8,917,500 $ - $ - $ - $ - $ - $ - $ - $ - $ Committed 3,800,352 4,255,283 3,012,735 2,909,550 5,070,257 5,070,257 5,146,354 7,300,642 7,271,604 8,999,117 Assigned 1,825,000 2,609,294 - - - - - - - -
Unassigned 3,143,252 3,978,376 6,529,822 7,829,894 5,986,903 4,892,195 5,809,910 3,333,510 3,869,096 6,586,036 Total general fund (1) 17,686,104 $ 19,760,453 $ 9,542,557 $ 10,739,444 $ 11,057,160 $ 9,962,452 $ 10,956,264 $ 10,634,152 $ 11,140,700 $ 15,585,153 $ All other governmental funds:
Nonspendable 17,906,420 $ 17,906,420 $ 26,823,920 $ - $ - $ - $ 26,823,920 $ 26,823,920 $ 26,823,920 $ 26,823,920 $ Restricted 7,431,343 21,169,241 23,288,017 31,602,450 23,288,663 25,844,530 27,738,822 16,416,110 19,871,245 21,340,221 Committed 13,150,000 - - 26,823,920 26,823,920 26,823,920 - - - - Assigned - - - - 5,611,038 2,161,189 1,244,495 2,806,125 3,069,792 2,288,175 Unassigned - - - - - - 2,364,020 - - -
Total all other governmental funds (2) 38,487,763 $ 39,075,661 $ 50,111,937 $ 58,426,370 $ 55,723,621 $ 54,829,639 $ 58,171,257 $ 46,046,155 $ 49,764,957 $ 50,452,316 $ 58,836,114 $ 59,654,494 $
(1) General Fund:
FY 2011-12 and FY 2012-13 Assigned General fund balance is planned for future years' capital expenditures; Committed General fund balance reflects the 30% General fund reserve policy.
The Nonspendable fund balance is primarily land held for resale.
FY 2014-15 Nonspendable fund balance decrease is due to the land held for resale transfer from the General Fund to the newly created Land Asset Fund.
FY 2015-16 Unassigned fund balance increase is primarily due to increase in tax revenue.FY 2016-17 Unassigned fund balance decrease is primarily due to increased investment in capital projects.FY 2017-18 Unassigned fund balance decrease is primarily due to investment in capital projects. FY 2018-19 Unassigned fund balance increase is primarily due to in tax and general revenuesFY 2019-20 Unassigned fund balance decrease is primarily due to lower revenues from TOTFY 2020-21 Unassigned fund balance increased primarily due to unexcepted revenue overperformance in TOTFY 2021-22 Unassigned fund balance increased primarily due to unexcepted revenue overperformance in TOT and vehicle in-lieu fees (2) Other Governmental Funds:
FY 2013-14 Restricted fund balance increase is due to the reclass of the Committed balance in the Judgement Obligation Bond fund.
FY 2014-15 Nonspendable fund balance increase is due to the land held for resale transfer from the General Fund to the newly created Land Asset Fund.FY 2015-16 Restricted fund balance increase is primarily due to a contribution of $6.0 million from the County of San Mateo for the library construction project.FY 2016-17 $2.7 million decrease is primarily due to progress on the Library Capital project.FY 2017-18 $890,000 decrease is primarily due to progress on the Library Capital project.
FY 2018-19 $3.0 M increase is primarily due to progress in capital projects FY 2019-20 $12.1 M decrease is primarily due to the final $10.9 million payment of the Judgement Obligation Bond FY 2020-21 $3.7 M increase is primarily due to the receipt of an one-time $2.6 million in-lieu fee FY 2021-22 $1 million increase is primarily due to capital contributions and funding for future capital expenditures (3) GASB 54 was implemented in FY 2010-11. See Notes to Financial Statements for definitions of fund balance. The Nonspendable balance primarily represents Cabrillo Highway and Glencree land.
CITY OF HALF MOON BAY
FY 2012-13 Nonspendable fund balance is land held for resale. The increase in the Committed balance is for the monies to be used for the debt reduction program on the Judgment Obligation Bonds. (Modified Accrual Basis of Accounting)
Last Ten Fiscal Years
Fund Balances of Governmental Funds
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2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Revenues:
Taxes 10,726,299 $ 12,060,866 $ 12,999,238 $ 13,929,278 $ 12,586,257 $ 13,638,171 $ 14,448,702 $ 13,180,918 $ 12,223,462 $ 18,670,447 $ Licenses and permits 482,488 537,634 394,931 379,749 444,388 370,269 377,873 521,121 597,590 543,965 Fines and forfeitures 116,060 93,737 83,812 102,202 79,132 171,873 189,415 140,238 108,937 70,383 Charges for services 636,772 940,320 765,457 806,642 701,163 1,255,479 1,165,640 1,173,171 1,306,842 1,552,251 Recreation fees/ Impact fees 556,402 821,973 625,166 717,469 1,173,275 1,065,005 2,700,943 304,827 2,988,507 188,114 Investment income 385,353 291,227 798,408 772,575 549,489 703,354 1,225,128 1,164,650 (75,704) (722,249) Rents and leases 12,250 11,518 - 20,000 10,080 87,536 75,603 - - - Intergovernmental revenues 1,312,202 1,925,058 2,260,890 8,058,785 1,069,157 1,910,615 2,074,855 1,506,209 4,232,648 4,008,756 Administrative fees 249 1,633 65 - - - - - - -
Miscellaneous 13,875,666 587,731 519,595 400,376 1,089,034 908,337 1,325,476 779,514 1,877,238 1,146,003 Total revenues 28,103,741 17,271,697 18,447,562 25,187,076 17,701,975 20,110,639 23,583,635 18,770,648 23,259,520 25,457,670 Expenditures
Current:
General government 3,295,081 3,316,520 2,727,404 3,582,831 3,143,214 3,968,569 3,445,355 3,281,719 3,543,362 3,954,480 Public safety 4,005,358 2,744,812 946,395 1,083,666 3,610,736 3,689,490 3,727,302 4,104,603 4,394,717 4,539,399 Public works 3,110,738 3,233,403 3,089,741 3,208,099 1,639,299 1,768,330 2,147,231 2,301,920 2,110,852 2,077,238 Recreation services 62,803 1,780,847 1,987,691 1,347,508 176,497 701,405 896,854 976,977 1,109,425 1,876,093 Planning services 687,726 77,155 142,020 183,328 2,353,980 2,505,066 2,686,651 3,156,081 2,662,112 2,628,557 Capital outlay - 2,254,869 2,745,770 4,437,029 7,766,781 18,996,455 5,027,468 4,088,777 5,955,565 3,038,936 Debt service:
Principal retirement (1) 395,000 290,000 4,655,000 - - - - 11,487,686 - 1,191,724 Interest and fiscal charges 1,176,352 1,161,844 1,053,237 937,704 937,704 937,704 937,704 468,852 - 68,277 Total expenditures 12,733,058 14,859,450 (2) 17,347,258 14,780,165 19,628,211 32,567,019 18,868,565 29,866,615 19,776,033 19,374,704 Excess (deficiency) of revenues over (under) expenditures 15,370,683 2,412,247 1,100,304 10,406,911 (1,926,236) (12,456,380) 4,715,070 (11,095,967) 3,483,487 6,082,966 Other financing sources (uses):
Advanced Proceeds from San Mateo County - - - - - 5,726,855 - - - - Proceeds from issuance of debt - - - - - - - - 2,035,000 421,373 Capital grants - - - - - 5,726,855 726,000 - - -
Transfers in (2) 3,279,711 3,368,987 35,780,529 5,285,654 5,059,687 5,024,534 3,216,998 7,026,829 2,107,524 5,334,717 Transfers out (2) (3,029,711) (3,118,987) (36,062,453) (6,181,245) (5,518,484) (6,010,554) (4,322,638) (8,378,076) (3,400,661) (6,707,244) Total other financing sources (uses) 250,000 250,000 (281,924) (895,591) (458,797) 10,467,690 (379,640) (1,351,247) 741,863 (951,154) Net change in fund balances (3) 15,620,683 $ 2,662,247 $ 818,380 $ 9,511,320 $ (2,385,033) $ (1,988,690) $ 4,335,430 $ (12,447,214) $ 4,225,350 $ 5,131,812 $ Debt service as a percentage of noncapital expenditures 12.3% 11.5% 39.1% 9.1% 7.9% 6.9% 6.8% 46.4% 0.0% 7.7% (1) In FY 2014-15 the City elected to completely pay off the 2009A Judgement Obligation Bonds. In FY 2019-20 the city paid off the 2009B Judgement Obligation Bond(2)(3)
CITY OF HALF MOON BAY
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
The net increase in fund balance of $5.1 million in FY 2021-22 is primarily due to higher tax revenuesThe net decrease in fund balance of $12.4 million in FY 2019-20 is primarily due to the final $10.9 million payoff the judgement obligation bondThe net change in fund balance of $15.6 million in FY 2012-13 is primarily due to receipt of one time insurance payment ($13.2 million), increase in general taxes, and revenue from the law enforcement services contract amendment that was negotiated in FY 2012-13.The net increase in fund balance of $4.3 million in FY 2018-19 is primarily due to increase in revenues and decrease in library project expendituresThe net decrease in fund balance of $1.9 million in FY 2017-18 is primarily due to progress on the Library Capital project.The net change in fund balance of $2.7 million in FY 2013-14 is higher tax revenues and The increase in transfers in FY 2014-15 is primarily due to the creation of and transfers to the Land Asset Capital Project Fund ($26.8 million) and the Library Capital Fund ($ The net change in fund balance of $9.5 million in FY 2015-16 is primarily due to higher tax revenues and a contribution of $6.0 million from the County of San Mateo for the library construction capital project that is scheduled to commence during fiscal year 2016-17.The net decrease in fund balance of $2.4 million in FY 2016-17 is primarily due to progress on the Library Capital project.The net increase in fund balance of $4.2 million in FY 2020-21 is primarily due to higher revenues than anticipated 113 DRAFT 12/15/2022
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Fiscal TOT
Year Ended Tax
June 30 Rate
2013 12%
2014 12%
2015 12%
2016 12%
2017 12%
2018 12%
2019 12%
2020 12%
2021 12%
2022 14%
Source: City of Half Moon Bay Finance Department
CITY OF HALF MOON BAY
Transient Occupancy Tax (TOT) Rate
Last Ten Fiscal Years
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CITY OF HALF MOON BAY
Transient Occupancy Tax (TOT) by Lodging Type (BASE) (1) Last Ten Fiscal Years
As of June 30th
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
LODGING TYPEHotels/Motels 4,302,932 $ 4,583,970 $ 5,002,165 $ 5,643,075 $ 5,785,989 $ 6,078,131 $ 6,409,533 $ 4,852,270 $ 4,161,340 $ 8,309,989 $ B&Bs/ Inns / Cottages 104,057 114,610 101,393 99,062 60,671 68,729 66,079 104,715 $105,823 $441,900RV Parks/Camps 96,187 243,467 281,880 148,191 150,019 170,855 159,065 164,658 $241,705 $233,898Vacation Rentals 21,470 35,392 45,105 44,230 43,790 115,398 218,561 170,178 $308,664 $456,731 Totals 4,524,646 $ 4,977,439 $ 5,430,543 $ 5,934,558 $ 6,040,468 $ 6,433,114 $ 6,853,237 $ 5,291,821 $ 4,817,532 $ 9,442,518 $ (1) TOT information by individual establishment is confidential and therefore is not available to the public. TOT is the City's largest "own-source" revenue, as defined by GASB Statement No. 44.
Source: City of Half Moon Bay Finance Department
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Percent of Percent of
TOT Total TOT TOT Total TOT
TOT Taxpayer Type Collected Revenues Collected Revenues Hotels/Motels/Lodges $ 8,309,989 88.01% $ 4,032,596 95.31% Bed & Breakfasts and Inns 441,900 4.68% 95,678 2.26%
RV Parks & Campgrounds 233,898 2.48% 97,244 2.30%
Vacation Rentals 456,731 4.84% 5,401 0.13%
$ 9,442,518 100.00% $ 4,230,920 100.00%
Source: City of Half Moon Bay Finance Department
CITY OF HALF MOON BAY
2021-22 2011-12
Current Year and Ten Years Prior
Transient Occupancy Taxpayers by Type of Establishment
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Fiscal Year Lease Judgment Total Total Percentage Debt
Ended Revenue Long-Term Obligation Governmental Primary of Personal Per June 30 Bonds Notes Leases Bonds Activities (2) Government Income (4) Capita (3) 2013 - $ -$ - $ 15,860,000 $ 15,860,000 $ 15,860,000 $ 36.55% 1,382 $ 2014 - - - 15,570,000 15,570,000 15,570,000 33.52% 1,344 2015 - - - 10,915,000 10,915,000 10,915,000 22.46% 931
2016 - - - 10,915,000 10,915,000 10,915,000 21.33% 931
2017 - - - 10,915,000 10,915,000 10,915,000 21.35% 871
2018 - - - 10,915,000 10,915,000 10,915,000 20.29% 867
2019 - - - 10,915,000 10,915,000 10,915,000 17.32% 864
2020 - 5,154,170 - - 5,154,170 5,154,170 8.03% 408
2021 - 7,189,170 - - 7,189,170 7,189,170 11.35% 556
2022 - 6,418,818 - - 6,418,818 6,418,818 9.17% 521
(1) Details regarding the City's outstanding debt can be found in the notes to the financial statements.(2) The City has no outstanding debt from Business-Type Activities.(3) Census data changed in 2010 and Half Moon Bay population decreased, thereby resulting in an increase in debt per capita.(4) Population information was obtained from California State Department of Finance; Per Capita income from the United States Census Bureau
Governmental Activities
CITY OF HALF MOON BAY
Ratios of Outstanding Debt by Type (1)
Last Ten Fiscal Years
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Fiscal Year Lease Judgment Percent of Debt
Ended Revenue Obligation Assessed Per
June 30 Bonds Bonds Total Value (1) Capita
2013 - $ $ 15,860 $ 15,860 0.0007% $ 1,186
2014 - 15,570 15,570 0.0007% 1,357
2015 - 10,915 10,915 0.0005% 942
2016 - 10,915 10,915 0.0004% 931
2017 - 10,915 10,915 0.0004% 931
2018 - 10,915 10,915 0.0004% 871
2019 - 10,915 10,915 0.0004% 867
2020 - - - 0.0000% -
2021 - - - 0.0000% -
2022 - - - 0.0000% -
General bonded debt is debt payable with governmental fund resources and general obligation bonds recorded in enterprise funds (of which, the City has none). (1) Assessed value has been used because the actual value of taxable property is not readily available in the State of California. Percentages less than 0.0000% are not shown.
Outstanding General Bonded Debt
CITY OF HALF MOON BAY
Ratio of General Bonded Debt Outstanding
Last Ten Fiscal Years
(In Thousands, except Per Capita)
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2021-22 Assessed Value $ 3,541,390,900
Percentage Total Debt City's Share of
Applicable (1) 6/30/2022 Debt 06/30/22
Overlapping Tax and Assessment Debt:
San Mateo Community College District 1.338% 733,897,184 $ 9,760,833 $ Cabrillo Unified School District 46.239% 115,675,000 53,183,895 Midpeninsula Regional Open Space District 1.018% 84,575,000 847,442 Granada Sanitary District 1915 Act Bonds 18.015% 490,000 90,341 Total Overlapping Tax and Assessment Debt 934,637,184 $ 63,882,511 $ Ratio to Assessed Valuation:
Total Overlapping Tax and Assessment Debt 1.80%
Direct and Overlapping General Fund Debt:
San Mateo County General Fund Obligations 1.338% $ 612,605,687 $ 8,147,656 San Mateo County Board of Education Certificates of Participation 1.338% 6,490,000 86,317 Midpeninsula Regional Open Space Disctrict General Fund Obligations 1.018% 99,705,600 999,050 Direct: City of Half Moon Bay Loan Agreement 100% 4,008,798 4,008,798 Direct: iBank Financing Lease A & B 100% 2,410,020 2,410,020 Total Direct Debt $ 6,418,818
Total Overlapping Debt 73,115,534
Combined Total Debt $ 79,534,352 (2)
(1) The percentage of overlapping debt applicable to the City is estimated using taxable assessed property value.
Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.
Ratios to 2021-22 Assessed Valuation:
Total Overlapping Tax and Assessment Debt 1.80%
Total Direct Debt ($6,418,818) 0.18%
Combined Total Debt 2.25%
Source: California Municipal Statistics, Inc. (Austin Busch - [email protected])
CITY OF HALF MOON BAY
Direct and Overlapping Debt
June 30, 2022
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2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Assessed valuation 2,347,639,088 $ 2,361,010,857 $ 2,553,357,622 $ 2,733,242,180 $ 2,755,768,400 $ 2,893,093,932 $ 3,123,075,037 $ 3,303,922,465 $ 3,426,640,450 $ 3,541,390,900 $ Conversion percentage 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% Adjusted assessed valuation 586,909,772 590,252,714 638,339,406 683,310,545 688,942,100 723,273,483 780,768,759 825,980,616 856,660,113 885,347,725 Debt limit percentage 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% Debt limit 88,036,466 88,537,907 95,750,911 102,496,582 103,341,315 108,491,022 117,115,314 123,897,092 128,499,017 132,802,159 Total net debt applicable to limit:
General obligation bonds 15,860,000 15,570,000 10,915,000 10,915,000 10,915,000 10,915,000 10,915,000 - - - Legal debt margin 72,176,466 $ 72,967,907 $ 84,835,911 $ 91,581,582 $ 92,426,315 $ 97,576,022 $ 106,200,314 $ 123,897,092 $ 128,499,017 $ 132,802,159 $ Total debt applicable to the limit
as a percentage of debt limit 18.0% 17.6% 11.4% 10.6% 10.6% 10.1% 9.3% 0.0% 0.0% 0.0% Sources: City Finance Department
San Mateo County Tax Assessor Combined Tax Roll 650-363-4777 The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was based upon 25% of market value. Effective 1981-82 fiscal year, each parcel is now assessed at 100% of market value (as of the most recent change in ownership for the parcel). The computations shown above reflect a conversion of assessed valuation data for each fiscal year from the current full valuation perspective to the 25 % level that was in effect at the time that the legal debt margin was enacted by the State of California for local governments located within the state.
CITY OF HALF MOON BAY
Legal Debt Margin Information
Last Ten Fiscal Years
June 30
120 DRAFT 12/15/2022
174
Percent of Percent of
Number of Total Number of Total
Employer Employees Employment Employees Employment
New Leaf Community Market 117 4.14% 80 0.74%
Safeway Store 102 3.61% 111 1.02%
Ritz Carlton Hotel 100 3.54% 100 0.92%
Sam's Chowder House 98 3.47% 165 1.52%
Rocket Farms Inc. 72 2.55%
Hassett Hardware 45 1.59%
Beach House LLC 45 1.59%
McMahon Floral 43 1.52%
Sea Crest School 40 1.42%
Verdura Construction, LLC 33 1.17%
San Benito House 32 1.13%
Nursery Exchange 140 1.29%
CVS Pharmacy 57 0.53%
Woodman Labs 83 0.77%
MV Transportation 68 0.63%
Half Moon Bay Golf Links 79 0.73%
Subtotal Top Ten Employers 727 25.75% 944 8.71%
Total Employment 2,823 100.00% 10,844 100.00%
Source for 2021: Employer information from City of Half Moon Bay HdL Business License System.
2012
CITY OF HALF MOON BAY
Principal Employers
6/30/2022 and Ten Years Prior
2022
"Total Employment" as used above represents the total employment of all employers with business licenses located within City limits.
121 DRAFT 12/15/2022
175
Function 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 General Government 16 20 23 20 26 31 24 30 27 29Public Safety - - - - - - - - - - Public Works/Maintenance 3 4 4 4 3 4668 7
Recreation Services - - - - - 5525 6
Planning 3 1 1 2 2 6977 6
Total 22 25 28 26 31 46 44 45 47 48
Note: General government includes five City Council members as well as Administration and Finance staff.Source: City of Half Moon Bay Finance Department Payroll
June 30
CITY OF HALF MOON BAY
Full-time and Part-time City Employees By Function
Last Ten Fiscal Years
122 DRAFT 12/15/2022
176
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Police: (1)
Arrests - Part 1 crimes 41 50 30 44 38 48 54 71 56 78
Traffic citations 1,175 1,067 436 527 489 921 2,128 2,517 1,664 1,819 Parking citations 1,222 1,152 1,065 1,598 1,212 3,994 3,465 2,444 1,698 872 Parks and Recreation: (2)
Number of recreation classes 60 155 87 88 75 159 105 123 41 112 Number of facility rentals (3) 101 24 42 110 88 324 397 389 200 459 Building and Code Enforcement: (4)
Number of permits issued (est.) 457 500 487 413 460 413 473 450 352 456Number of plan checks (est.) 104 100 110 105 220 166 205 237 185 157 Number of inspections (est.) 2,009 2,000 2,355 2,820 2,216 2,520 2,442 2,057 1,839 1654 Planning: (3)
Planning Commission Meetings 20 22 20 15 12 20 23 20 23 22 Number of permits processed 80 75 70 111 47 43 102 145 89 94 (1) The City started contracting with the San Mateo County Sheriff Office in June 2011. Traffic and parking citation counts for FY 2011-12 are from June 2011 to April 2012.(2) In FY 2011-12, the City contracted out Recreation services to the City of San Carlos. In FY 2014-15, it changed to the Boys & Girls Club. All programs are provided directly to the public by the contractors.
(3) In FY 2016-17, the City re-assumed responsibility for the Parks and Recreation program. The facility rentals count for FY 2016-17 is estimated based on rental revenue received.
(4) Information will continue to be added as made available.
Sources: City of Half Moon Bay Departments
June 30
CITY OF HALF MOON BAY
Operating Indicators By Function
Last Ten Fiscal Years
123 DRAFT 12/15/2022
177
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Police:
Sheriff Substation/EOC 1 1 1 1 1 1 1 1 1 1
Public Works:
Streets (miles) 35 35 35 35 29 29 29 28 28 28 Parks
9 9 9 9 9 9 9 9 9 9
Community Centers 1 1 1 1 1 1 1 1 1 1
Sewer lines (miles) 37 37 37 37 37 37 37 38 38 38 Library - - - - - - 1 1 1 1 Facilities/Buildings
6 6 6 6 6 6 6 6 6 6
Bike Trails (miles) 3 6 6 7 7 7 7 7 7 7
Land (acres) 100 100 176 176 176 176 176 176 197 199
Administration:
Facilities/Buildings 1 1 1 1 1 1 1 1 1 1
Source: City of Half Moon Bay Finance Department
CITY OF HALF MOON BAY
Capital Asset Statistics By Function
Last Ten Fiscal Years
June 30
124 DRAFT 12/15/2022
178
125 DRAFT 12/15/2022
179
126 DRAFT 12/15/2022
180
127 DRAFT 12/15/2022
181
128 DRAFT 12/15/2022
182
129 DRAFT 12/15/2022
183
130 DRAFT 12/15/2022
184
131 DRAFT 12/15/2022
185
132 DRAFT 12/15/2022
186
133 DRAFT 12/15/2022
187
134 DRAFT 12/15/2022
188
INDEPENDENT AUDITOR REPORT ON
INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN
AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Members of the City of Council
City of Half Moon Bay, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the basic financial statements of the City of Example, California, as of and for the year ended June 30, 2022, and have issued our report thereon dated November 28, 2022. Our report included an paragraph disclosing the implementation of new accounting principles.
Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control.
Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that have not been identified.
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 that are required to be reported under Government Auditing Standards.
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We have also issued a separate Memorandum on Internal Control dated November 28, 2022 which is an integral part of our audit and should be read in conjunction with this report.
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 City’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.
Pleasant Hill, California
November 28, 2022
136 DRAFT 12/15/2022
190