Half Moon Bay City Council
December 5, 2023

CITY COUNCIL AGENDA

REGULAR MEETING

CITY OF HALF MOON BAY
TUESDAY, DECEMBER 5, 2023

HYBRID MEETING (SEE NEXT PAGE)

ADCOCK COMMUNITY CENTER
535 KELLY AVENUE
HALF MOON BAY, CA 94019
Deborah Penrose, Mayor
Joaquin Jimenez, Vice Mayor
Robert Brownstone, Councilmember
Harvey Rarback, Councilmember
Debbie Ruddock, 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.

Comments on Consent Calendar items should be made during the Public Forum section of the agenda. Those wishing to speak on a Business or Public Hearing matter will be called forward at the appropriate time during that item’s 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 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/
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1 HYBRID MEETING PARTICIPATION PROTOCOLS
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ROLL CALL / PLEDGE OF ALLEGIANCE

APPROVAL OF AGENDA

PROCLAMATIONS AND PRESENTATIONS

NATIONAL OCEANIC ATMOSPHERIC ADMINISTRATION PRESENTATION

PENINSULA CLEAN ENERGY PRESENTATION

MAYOR'S ANNOUNCEMENTS OF COMMUNITY ACTIVITIES AND COMMUNITY SERVICE

REPORT OUT FROM RECENT CLOSED SESSION MEETINGS

CITY MANAGER UPDATES TO COUNCIL
880 STONE PINE HOUSING PROJECT UPDATE

PUBLIC FORUM

1. CONSENT CALENDAR

1.A WAIVE READING OF RESOLUTIONS AND ORDINANCES

1.B MAYOR’S AMENDED LIST OF CITY COUNCIL REPRESENTATIVES AND DESIGNATED ASSIGNMENTS FOR 2023
Staff Recommendation: Accept Mayor Penrose’s Amended List of City Council Representatives and Designated Assignments for 2023, to appoint Councilmember Rarback to the Finance Subcommittee.

STAFF REPORT

ATTACHMENT
2 1.C 2024 RESIDENTIAL DWELLING UNIT ALLOCATION PURSUANT TO HALF MOON BAY MUNICIPAL CODE CHAPTER 17.06 (MEASURE D)
Staff Recommendation: Adopt a resolution setting the 2024 Residential Dwelling Unit Allocation and Administration System pursuant to Half Moon Bay Municipal Code Chapter

17.06 for 63 residential dwelling units, 42 units for the Downtown (21 base units and 21 bonus units), and 21 units outside of the Downtown.

STAFF REPORT
ATTACHMENT 1
ATTACHMENT 2

1.D OCEAN COLONY SEWER STATION BACKUP PUMP PURCHASE
Staff Recommendation: Adopt a resolution waiving the requirement for solicitation of multiple bids and authorizing the purchase of a backup sanitary sewer pump for the Ocean Colony Pump Station.

STAFF REPORT

RESOLUTION
ATTACHMENT 2

1.E FINAL ACCEPTANCE OF THE SEYMOUR OUTFALL EMERGENCY REPAIRS Staff Recommendation: Adopt a Resolution:

1. Authorizing Administrative Services to transfer $17,924.80 from the Green Infrastructure and Storm Water Program (CIP No. 563) to the Seymour Watercourse Erosion and Coastal Stabilization Project (CIP No. 608); and

2. Authorizing the City Manager to approve a contract change order in the amount of $56,697.80 to the construction contract with Cazadoro Construction Inc. for the Seymour Outfall Emergency Repair Project (Project); and

3. Authorizing the City Manager or his designee to file a Notice of Completion for the Project and release the Project Retention Funds and Project Performance Bond and Labor and Materials Bond thirty (30) days after recordation of the Notice of Completion.

STAFF REPORT

RESOLUTION
3 1.F CALRECYCLE GRANT AND PAYMENT PROGRAMS
Staff Recommendation: Adopt a resolution authorizing submittal of applications for CalRecycle grant programs and related authorizations.

STAFF REPORT

RESOLUTION

1.G SMITH FIELD PARK IMPROVEMENT PROJECT - AMENDMENT NO. 3 TO PROFESSIONAL SERVICES AGREEMENT WITH FREYER AND LAURETA, INC. FOR ADDITIONAL

DESIGN SUPPORT
Staff Recommendation: Adopt a resolution:

1. Authorizing the Administrative Service Director to transfer $20,000 from the Park Facilities/Development Fund (Fund 125) to the Capital Improvement Project No. 1008 (Smith Field Improvement Project – Phase I); and

2. Authorizing the City Manager to execute Amendment No. 3 to the Professional Services Agreement (PSA) with Freyer and Laureta, Inc. (F&L) for hydromodification services for the Smith Field Park Improvement Project (Project), increasing the contract amount by $19,332, totaling a contract amount not to exceed $235,767.

STAFF REPORT
ATTACHMENT 1
ATTACHMENT 2

2. ORDINANCES AND PUBLIC HEARINGS

3. RESOLUTIONS AND STAFF REPORTS

3.A CLIMATE ACTION AND ADAPTATION PLAN (PHASE ONE) ADOPTION Staff Recommendation: By resolution, adopt the Half Moon Bay Climate Action and Adaptation Plan (Phase One).

STAFF REPORT

RESOLUTION

3.B BLACK LIVES MATTER CITY HALL MURAL
Staff Recommendation: Discuss the potential removal or replacement of the temporary Black Lives Matter mural located in the City Hall parking lot and provide direction to staff.

STAFF REPORT

ATTACHMENT
4 3.C ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR) FOR THE FISCAL YEAR ENDED JUNE 30, 2023
Staff Recommendation: Adopt a resolution receiving the City of Half Moon Bay Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2023.

STAFF REPORT
ATTACHMENT 1
ATTACHMENT 2

3.D AMENDMENT TO EMPLOYMENT CONTRACT FOR CITY MANAGER
Staff Recommendation: By motion, approve Amendment No. 1 to the August 20, 2022 City Manager Employment Agreement with Matthew Chidester to increase the annual base salary from $265,000 to $272,950, effective July 1, 2023, and provide a one-time, additional allocation of 117 hours of administrative leave.

STAFF REPORT
ATTACHMENT 1
ATTACHMENT 2

COMMISSION / COMMITTEE UPDATES

FOR FUTURE DISCUSSION / POSSIBLE AGENDA ITEMS

ADJOURNMENT
5 BUSINESS OF THE COUNCIL OF THE CITY OF HALF MOON BAY

AGENDA REPORT
For meeting of: December 5, 2023
TO: Honorable Mayor and City Council
VIA: Matthew Chidester, City Manager
FROM: Jessica Blair, Communications Director / City Clerk TITLE: MAYOR’S AMENDED LIST OF CITY COUNCIL REPRESENTATIVES AND DESIGNATED ASSIGNMENTS FOR 2023
______________________________________________________________________________ RECOMMENDATION:

Accept Mayor Penrose’s Amended List of City Council Representatives and Designated Assignments for 2023, to appoint Councilmember Rarback to the Finance Subcommittee.

FISCAL IMPACT:

There is no fiscal impact associated with this action.

STRATEGIC ELEMENT:

This recommendation supports the Inclusive Governance Element of the Strategic Plan.

ATTACHMENTS:

Mayor’s Amended List of City Council Representatives and Designated Assignments for 2023 6 Updated December 5, 2023

CITY COUNCIL ASSIGNMENTS
2023
A. Council Subcommittees
Subcommittee Designated Representative Meeting Schedule CSFA Grant Selection Penrose/Brownstone As designated
Education Jimenez/Ruddock As designated
Emergency Preparedness Penrose /Rarback As designated
Finance Rarback/Brownstone As designated
Human Resources Brownstone/Jimenez As designated
Legislative Affairs Penrose/Ruddock As designated
Mobility Penrose/Brownstone As designated
Public Safety Penrose/Jimenez As designated
B. City and Interagency
Organization Designated Representative Meeting Schedule ABAG (Association of Bay Area
Governments)
Penrose/Brownstone Annual, 1 day
C/CAG (County/City Assoc. of
Governments)
Ruddock/Brownstone 2nd Thursday evenings
Chamber Government Affairs
Committee
Rarback/Penrose 3rd Thursdays 4:00 p.m.

Council of Cities Selection Committee Penrose/Rarback 4th Friday evenings League of CA Cities – Coastal Cities
Issue Group
Rarback/Brownstone Quarterly, as designated
League of CA Cities – Coastal Cities
Group – Leadership Committee
Penrose/Rarback As designated
League of CA Cities – Peninsula Division Brownstone /Penrose Quarterly, as designated Peninsula Clean Energy Authority Rarback/Jimenez 4th Thursday Peninsula Congestion Relief Alliance Brownstone/Rarback Quarterly, as designated 7 Updated December 5, 2023
SAM (Sewer Authority Mid-Coastside) Penrose / Ruddock
Alt: Rarback
4th Monday 7pm
SMCo Airport Community Roundtable Jimenez/ Brownstone 1st alt Wednesday 7 p.m.

SMCo Airport Land Use Committee Brownstone/ Jimenez Quarterly, 4th Wednesday 4:00 pm
SMCo Council of Cities All 4th Friday evenings
SMCo Library JPA Penrose/ Rarback Quarterly, Monday
evening
SMCo Office of Emergency Services Penrose/Jimenez Quarterly, 4th Thursday evening
C. Council Liaisons
Organization / Ad Hoc Committee Designated Representative Meeting Schedule Arts, Culture, and Events Penrose/Jimenez As designated Beaches, Trails, and Parks Jimenez/Penrose As designated Board of Supervisors Rarback/Jimenez 2nd/4th Tuesdays, 9:00 am Cannabis Rarback/Brownstone As designated
Chamber of Commerce / BID Penrose/Ruddock As designated Homeless Jimenez/Penrose As designated
Housing and Human Services Penrose/Rarback As designated Mid-Coast Community Council Rarback/Brownstone 2nd/4th Wednesdays Permit Streamline Process Penrose/Rarback As designated Schools, Boys & Girls Club Jimenez/Brownstone As designated Technology and Economic Develop. Rarback/Brownstone As designated 8

BUSINESS OF THE CITY OF HALF MOON BAY CITY COUNCIL

AGENDA REPORT
For the Meeting of: December 5, 2023
TO: Honorable Mayor and City Council
VIA: Mathew Chidester, City Manager
FROM: Jill Ekas, Community Development Director
Scott Phillips, Senior Planner
TITLE: 2024 RESIDENTIAL DWELLING UNIT ALLOCATION PURSUANT TO HALF MOON BAY MUNICIPAL CODE CHAPTER 17.06 (MEASURE D)
RECOMMENDATION:

Adopt a resolution setting the 2024 Residential Dwelling Unit Allocation and Administration System pursuant to Half Moon Bay Municipal Code Chapter 17.06 for 63 residential dwelling units, 42 units for the Downtown (21 base units and 21 bonus units), and 21 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 impact of development associated with these allocations will be approximately $38,000 annually. The analysis does not take into account onetime revenue generated from permitting, which can be quite significant.

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% annual growth limit. In 1999, Measure D amended the Residential Growth Limitation Ordinance reducing the allowable percentage increase of residential population from 3% to 1%, with an additional 0.5% 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 system.” Measure D allocations are reviewed and 9

authorized annually by the City Council per the Municipal Code.

This report provides an update on Measure D allocations and recommends 63 total allowable residential unit allocations for 2024.

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 (PPH).

The 2020 U.S. Census provides the most recent Census data for a baseline to add 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
Population
(1)
New
Units
(2) PPH
Calculated
Additional
Population
(3)
New
Projected
Population
(1)
Base
Allocations
(4)
Allocation Distribution
Total
Annual
Allocations
Downtown
(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
2023 11,946 41 2.86 117 12,063 42 42 21 63
2024
(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 (2.86) multiplied by the number of new units that were issued building permits during the calendar year.
(4) One percent of New Projected Population divided by 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 current calendar year by the average PPH (2.86 from the 2023 census data), then adding the result to the projected population from the previous year.
10

An updated PPH was calculated at 2.86 as compared to 2.67 from last year’s allocation request.

The increase in PPH continues an upward trend in PPH since the 2020 census. The increase in PPH results in a decrease of 4 new dwelling unit allocations (2 outside of Downtown and 4 Downtown) for 2024 compared to the number of new dwelling allocations in 2023.

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 63 new dwelling unit allocations for 2024, reserving 42 dwelling unit allocations for the Downtown Area, and 21 dwelling unit allocations outside Downtown.

Table 2: Dwelling Unit Allocations – 2024
Total Allocations Downtown Allocations Outside Downtown Allocations 63 42 (1%) 21 (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.A states the following: “In determining the number of permissible units, the City shall use the most recent U.S. Census figures for Half Moon Bay to calculate the average number of persons per household.” Consistent with previous years, the most recent U.S. Census figure for PPH was used when calculating the permissible units.

Given the upward trend in PPH Census data, staff looked into other data sources for comparison purposes. For example, the California Department of Finance tracks demographics for each California city and county separately from the U.S. Census Bureau. Department of Finance estimates the 2023 PPH in Half Moon Bay to be 2.45. Methodologies used by the Department of Finance for estimating population include a combination of data supplied by local jurisdictions and the US Census Bureau. This factor may be more accurate than Census data, however, per code, it cannot be used. A lower PPH would provide for more allocations.

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. 11

Residential Dwelling Units Allocated in Current and Proceeding Years and Building Permits Issued: Table 3 presents the number of Measure D certificates and building permits issued each year from 2017 through 2023. 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 previous 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 and the City’s Coastal Commission-certified ADU ordinance, as well as amplified local interest in ADU construction. In 2021, 2022, and 2023, all allocations were issued, including within and outside Downtown. Note that building permit issuance lags Measure D allocation.

Projects currently under Coastal Development Permit review include Hilltop Mobile Home Park, 555 Kelly Avenue affordable housing project, Creekside, as well as individual new homes and ADUs. Table 3 indicates the number of building permits issued compared to allocations available and issued. Total building permits issued in 2023 include two separate projects downtown totaling 16 new residential units. Staff anticipates that building permit issuance will increase within the upcoming 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
2023 67 67 31
Average 68 47 26
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 12

allocations, Sections 17.06.120 and 17.06.275 – “Review of Points awarded and residential units allocated” establish 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 on competitive rating criteria (Sections 17.06.120 and 17.06.275).

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 2024 was prepared by Economic & Planning Systems, Inc. and a table summarizing the analysis is included in Attachment 2. The fiscal impact analysis indicates that the new units and residents would generate approximately $41,000 per year in General Fund revenues and require about $79,000 in General Fund expenditures, for an annual estimated deficit of $38,000 in 2024 dollars. The anticipated deficit is similar to anticipated deficits from the previous two years. However, 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 analysis given that one-time permit revenues are excluded from the analysis.

ATTACHMENTS:

1. Resolution Establishing the Residential Dwelling Unit Allocation for 2024

2. Fiscal Impact Analysis Spreadsheet of New Residential Development, prepared by Economic & Planning Systems, Inc, November 2023
13 RESOLUTION NO. C-23-___

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HALF MOON BAY ESTABLISHING THE RESIDENTIAL DWELLING UNIT ALLOCATIONS FOR 2024 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 (2023), a total of 67 Measure D allocations were issued; while 31 new residential Building Permits were issued.

B. Preceding Year Allocations: In the preceding year (2022), a total of 69 Measure D allocations were issued; while 23 new residential Building Permit units were issued. 14 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 Economic & Planning Systems Inc.

Section 2: Total Allocation for Calendar Year 2024
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 2024 calendar year shall be 63 units.

A. Assignment of Allocation to “Downtown” and “Outside Downtown” Areas: The total allocation of 63 residential units shall be distributed as follows: twenty-one (21) units to the projects outside the Downtown area, and forty-two (42) units to projects within the Downtown area.
***************************************************************** I, the undersigned, hereby certify that the foregoing Resolution was duly passed and adopted on the 5th day of December, 2023 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 Deborah Penrose, Mayor
15 Table 2
Half Moon Bay Measure D
Annual Fiscal Impact Analysis 2023
Fiscal Impact Results (2023$)
Item
Annual General Fund Revenues
Property Tax $9,700
VLF Prop Tax Swap $7,400
Sales and Use Tax $10,400
Transient Occupancy Tax $0
Franchise Taxes $4,300
Business License Tax $1,200
Permits $0
Intergovernmental $0
Planning and Engineering Fees $0
Police Services $100
Recreations Services Fees $700
Other Revenues $7,200
Subtotal General Fund Revenues $41,000
Annual General Fund Expenditures
General Government $17,700
Non-Departmental $5,300
Police $22,100
Public Works $12,900
Recreation $4,600
Community Development $5,300
Capital Exp. & Transfers $11,100
Subtotal General Fund Expenditures $79,000
Annual General Fund Surplus/(Deficit) ($38,000)
detsum
Source: EPS.
[1] Values rounded to the nearest $100.

Annual Fiscal
Impacts at
Buildout [1]
Prepared by EPS 11/15/2023 Z:\Shared\Projects\SAC\232000\232087 Half Moon Bay Annual Fiscal\Model\232087 Fiscal m1 11-09-23 3 ATTACHMENT 2
16

BUSINESS OF THE COUNCIL OF THE CITY OF HALF MOON BAY

AGENDA REPORT
For meeting of: December 5, 2023
TO: Honorable Mayor and City Council
VIA: Matthew Chidester, City Manager
FROM: Maz Bozorginia, Public Works Director/City Engineer Denice Hutten, Associate Civil Engineer
TITLE: OCEAN COLONY SEWER STATION BACKUP PUMP PURCHASE
______________________________________________________________________________ RECOMMENDATION:

Adopt a resolution waiving the requirement for solicitation of bids pursuant to Chapter 3.98 of the Municipal Code (Purchasing of Supplies, Equipment and Services) and authorizing the purchase of a backup sanitary sewer pump for the Ocean Colony Pump Station.

FISCAL IMPACT:

The cost for the purchase of this equipment is approximately $49,000. Adequate sewer enterprise funds are available as part of the adopted FY 2023-24 Capital Improvement Sewer Maintenance Program (CIP No. 506) to cover the purchase of the spare pump.

STRATEGIC ELEMENT:

This action supports the Infrastructure and Environment and Healthy Communities and Public Safety Elements of the adopted Strategic Plan.

BACKGROUND:

The Ocean Colony Pump Station (OCPS) is located at 202 Fairway Drive in the Ocean Colony subdivision. The pump station serves residents of Ocean Colony, Ocean Corners and Moonridge as well as the Ritz-Carlton, Golf Links, and other businesses along southwest Highway 1.

While there are two pumps in the OCPS wet well, the station typically operates only one pump at a time. Each one of the two pumps is large enough to handle all of the pump station demand; the two pumps are in the wet well as a failure-redundancy system. This pump redundancy is called FIRM capacity, which is a requirement of the State Water Quality Control Board as a step toward reducing Sanitary Sewer Overflows in the case of pump failure at lift stations.
17

DISCUSSION:

Even with the redundant system, a spare pump is necessary in case one of the operating pumps needs to be removed for maintenance. Servicing of a pump can take several weeks to complete. The purpose of this request is to buy a third (spare) pump for future pump maintenance needs.

For efficiency of maintenance and operations, the swing pump is preferred to be the same make and model as the existing pumps. The existing pumps are Flyght brand pumps, a highly regarded pump manufacturer in the industry and recommended by SAM operations staff. City staff reached out to the West Coast Flyght distributor and got a quote for $48,931.09 to purchase the pump model currently in use at OCPS.

Pursuant to Chapter 3.98, Purchasing of Supplies, Equipment and Services, purchase of equipment over $40,000 generally requires a formal competitive bid. Given that this specific equipment is necessary and the limited number of authorized suppliers in our region, staff recommends the City Council to authorize the backup sanitary sewer pump purchase of the Flyght wet well sanitary sewer pump as a sole source purchase from the West Coast Distributor and waive the requirement for solicitation of multiple bids.

ATTACHMENT:

1. Resolution

2. Quote
18 Resolution No. C-2023-____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HALF MOON BAY WAIVING THE REQUIREMENT FOR SOLICITATION OF BIDS PURSUANT TO CHAPTER 3.98 PURCHASING OF

SUPPLIES, EQUIPMENT AND SERVICES OF THE MUNICIPAL CODE AND AUTHORIZING THE SOLE

SOURCE PURCHASE OF A BACKUP SANITARY SEWER PUMP FOR THE OCEAN COLONY PUMP

STATION
WHEREAS, it is necessary to have a spare pump at the Ocean Colony Sewer Pump Station in the event that existing sewer pumps fail or need to be serviced; and WHEREAS, for maintenance and operating efficiency, the spare pump should match the specifications, configuration and model number of the existing operating pumps which are manufactured by Flyght, Inc.; and
WHEREAS, City staff reached out to the Flyght West Coast Distributor and have received an estimate for purchase of a new matching model Flyght pump in the amount of $48,931.09, which staff finds to be reasonable cost for the equipment; and WHEREAS, adequate funds are available as part of the adopted FY 2023-24 Capital Improvement Sewer Maintenance Program (CIP No. 506) to cover the purchase of the spare pump.

NOW, THEREFORE, BE IT RESOLVED THAT the City Council of the City of Half Moon Bay does hereby waive the requirement for bids pursuant to Chapter 3.98 Purchasing of Supplies, Equipment and Services of the Municipal Code and authorizes the purchase of a backup sanitary sewer pump for the Ocean Colony Pump Station.
***************************************************************** I, the undersigned, hereby certify that the foregoing Resolution was duly passed and adopted on the 5th day of December 2023 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 Deborah Penrose, Mayor
19 11/29/23, 8:32 AM Print Quote
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PLEASANTON SACRAMENTO STOCKTON
3825 Hopyard Road #195
Pleasanton, CA 94588
Phone (925) 485-9720
2356 Gold Meadow Way #270
Gold River, CA 95670
Phone (916) 309-4132
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Stockton, CA 95206
Phone (209) 234-5909
QUOTATION Page 1 of 3
TO: City of Half Moon Bay
501 Main St
Half Moon Bay, 94019
DATE: 11-29-2023
QUOTE #: 113341
DESC: Replacement 3171
JOB: Sewer Authority MidCoast Replacement
LOCATION:

ATTN: Denice Hutten PHONE:

EMAIL:

WE ARE PLEASED TO QUOTE ON THE FOLLOWING EQUIPMENT SUBJECT TO CONDITIONS PRINTED

ON LAST PAGE HEREOF, THESE CONDITIONS MAY BE CHANGED ONLY BY A WRITTEN STATEMENT SIGNED BY AN OFFICER OF SHAPE, INCORPORATED.
☐ F.O.B. FACTORY
☒ F.F.A. TO FIRST DESTINATION
Line
#
Qty Item Price
01 1 0031718300001 - 3171.830 - NP433 Impeller, 34hp/460v/3ph, FM Rated, FLS Leakage Sensor, 50' Cable
$44,737.00
Total for Above Equipment: $44,737.00
Notes and Clarifications:
(Tax Rate 9.375%) Total Tax: $4,194.09
Grand Total: $48,931.09
Notes:

1. QUOTE IS VALID FOR 45 DAYS, See attached TOCs for details

2. Price DOES NOT INCLUDE ANY APPLICABLE TAXES

3. Price INCLUDES Freight: F.F.A.

4. Price does not include: installation, equipment unloading, pipe, conduit, anchor bolts, guide bars/rails or any other items not listed.

5. ESTIMATED EQUIPMENT LEAD TIME: A) Pumps 12-14 WEEKS B) ACCESSORIES 10-12 WEEKS
SHAPE, INC.

Danielle Peterson - [email protected]
QUOTATION DOES NOT INCLUDE ANY SALES OR USE TAX PAYABLE UNDER ANY STATE OR FEDERAL STATURE. THIS QUOTATION PRICE IS FOR MATERIAL LISTED ABOVE. ANY

ADDITIONS OR MODIFICATIONS THAT BECOME NECESSARY FOR APPROVED SUBMITTALS, UPON AWARDING OF THIS CONTRACT, MAY RESULT IN NECESSARY PRICE CHANGES.

NOTE: ITEMS NOT SPECIFIED ON THIS QUOTATION ARE NOT INCLUDED IN OUR PRICE AND ARE TO BE SUPPLIED BY OTHERS. PRICES ARE FOR IMMEDIATE ACCEPTANCE AND SUBJECT TO CHANGE WITHOUT NOTICE. SALE SUBJECT TO MANUFACTURERS STANDARD TERMS AND CONDITIONS. 30% RESTOCKING FEE. 20 11/29/23, 8:32 AM Print Quote
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SHAPE STANDARD TERMS AND CONDITIONS 1

ACCEPTANCE
The following Terms and Conditions are an integral part of the offer to sell the equipment and/or services offered in this proposal. When the BUYER signifies acceptance of this quotation by submission of a Purchase Order or signed SELLER Quotation, it shall become a binding contract when accepted and signed by an authorized signer of the SELLER. Any changes or amendments to this proposal made by the BUYER must have SELLER’s approval in writing to become a part of this contract. These Terms and Conditions and the accompanying Purchase Order or signed SELLER Quotation shall comprise the entire agreement between the parties and no course of prior dealings between the parties and no usage of the trade shall be relevant to supplement or explain any terms used in this contract. Unless stated otherwise, the terms and conditions of the manufacturers listed herein will apply to this quotation Any attachments or listed documents are considered a part of this quotation and are made part of the agreement. Quote is firm for thirty (30) days unless otherwise stated on the face of the attached quotation.

APPROVAL DRAWINGS
All items listed are based on SELLER’S interpretation of the requirements in accordance with the plans and specifications. Any preliminary drawings or literature attached to our quotation are for illustration purposes only to show approximate arrangements. Specific drawings and submittal data will be furnished for approval as required after receipt and acceptance of the BUYER’S order. Any submittal or manuals when provided by SELLER will be in the form of a PDF electronic file only. Any form of media beyond the electronic file would be the responsibility of BUYER. Fabrication of products or equipment ordered will not begin until approval and direction to proceed is received in writing. No warranty is made regarding quantities, materials of construction or type of materials quoted. Operation, installation, and maintenance of materials quoted are the responsibility of the OWNER or CONTRACTOR.

DELIVERY
Any shipment or delivery date recited represents our best estimate, but no liability, direct or indirect, is assumed by SELLER for failure to ship or deliver on such dates.

Unless otherwise directed, SELLER shall have the right to make early or partial shipments and invoices covering the same to BUYER shall be due and payable in accordance with payment terms hereof. FOB shall be origin unless stated otherwise on the front of these Terms and Conditions. Delivery schedule(s) will be contingent on supply-chain availability and variability for material components, therefore, lead-times are subject to change without notice. Published weights are careful estimates but are not guaranteed. SELLER will endeavor, insofar, as it is possible, to comply with shipping instructions specified by the Purchaser. However, SELLER reserves the right to ship merchandise by such means of transportation as it may select. The manufacturer will ship the equipment via best way. Demurrage shall be billed to the account of the Purchaser. DAMAGE CLAIMS: Care is taken in packaging all shipments. After BUYER has been given the receipt by the transportation company, all claims for breakage or shortages, whether concealed or obvious, must be made in writing by the BUYER to the carrier and SELLER within seven (7) days after receipt of shipment.

When damage or shortages are obvious, written comments on the bill of lading are required within two (2) days . RETURNED PRODUCTS: In no instance is equipment to be returned without first obtaining SELLERS written approval and returned materials authorization. If shipment is postponed at the request of the purchaser after manufacturing has been commenced, payment will be due on notice from us that the equipment is ready for shipment. Pro rata payments shall be made for partial shipments.

STORAGE
Any item of the product on which shipment is delayed by BUYER may be placed in storage by SELLER at BUYER’S expense and risk. If a delay in shipment is requested by BUYER after an order has been entered and accepted:
a. No charge will be made if the request for delay is made more than six (6) weeks before acknowledged shipping date and the requested delay is for a period not in excess of thirty (30) days.
b. A charge will be made if the requested delay exceeds a period of thirty (30) days or if the request is made within six (6) weeks of the acknowledged shipping date. SELLER will advise BUYER of the charge within ten (10) days of receiving BUYER’S request for delay. c. If the product is within six (6) weeks of the acknowledged shipping date, then SELLER has the option of completing, invoicing and storing the product and charging one and one-half percent (1.5%) per month, or the maximum percentage permitted by law, whichever is lesser, of the established price for such product, plus storage cost.

PAYMENT
Payment terms, upon credit approval, are of net thirty (30) days from the date of each invoice for material shipped (or when ready for shipment if shipment is deferred by BUYER) unless stated otherwise on the face of the attached quotation. Flow down provisions are not accepted and shall not be enforceable against SELLER.

Retention is not allowed. In the event any payment becomes past due, a charge of one-half percent (1.5%) will be assessed monthly. These terms are completely independent from, and not contingent upon, when BUYER receives payment from the OWNER. A processing fee of up to four percent (4%) will be added for credit card payments. All merchandise sold is subject to lien laws. Partial or final payment shall constitute acceptance of delivered materials, products, or equipment.

FORCE MAJEURE
Neither Party will be liable for any failure or delay in performing an obligation under these Terms and Conditions that is due to any of the following causes, to the extent beyond its reasonable control: acts of God, accident, riots, war, terrorist act, epidemic, pandemic, quarantine, civil commotion, breakdown of communication facilities, breakdown of web host, breakdown of internet service provider, natural catastrophes, governmental acts or omissions, changes in laws or regulations, national strikes, fire, explosion, generalized lack of availability of raw materials or energy. For the avoidance of doubt, Force Majeure shall not include (a) financial distress nor the inability of either party to make a profit or avoid a financial loss, (b) changes in market prices or conditions, or (c) a party’s financial inability to perform its obligations hereunder.

TAXES AND BONDS
Taxes and bonds are NOT included in our pricing. Any applicable taxes or bonds will be added to the price and shown separately on each invoice. All prices exclude sales, use, duties, excise, and other taxes in respect to manufacture, sale, or delivery, all of which are to be paid by the buyer unless a proper exemption certificate is furnished.

BUYER agrees to reimburse our company for taxes SELLER must pay on BUYER’S behalf.

CLAIMS AND BACKCHARGES
BUYER agrees to examine all materials immediately upon delivery and report to SELLER in writing any defects or shortages noted no later than ten (10) days following the date of receipt. The parties agree that if no such claim is made within said time, it shall be considered acceptable and in good order with respect to any defect or shortage which would have been revealed by such an inspection. In no event will SELLER be responsible for any charge for modification, servicing, adjustment or for any other expense without written authorization from SELLER prior to the performance of any such work. IN NO EVENT SHALL SELLER BE LIABLE TO BUYER OR ANY

THIRD PARTY FOR ANY LOSS OF USE, REVENUE OR PROFIT, OR FOR CONSEQUENTIAL, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, OR PUNITIVE

DAMAGES, FOR ANY REASON, INCLUDING WITHOUT LIMITATION, DAMAGES ARISING OUT OF A DELAY IN OR FAILURE OF DELIVERY, DEFECTS IN MATERIAL

AND WORKMANSHIP AND/OR FAILURE OF GOODS TO PERFORM TO APPLICABLE SPECIFICATIONS, DRAWINGS, BLUEPRINTS OR SAMPLES AS SET FORTH OR DESCRIBED HEREIN, IF ANY, OF A BREACH BY SELLER OF ANY OTHER TERM OR OBLIGATION OF SELLER UNDER THE CONTRACT. 21 11/29/23, 8:32 AM Print Quote
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SHAPE STANDARD TERMS AND CONDITIONS 2
No penalty clauses of any description will be effective unless approved in writing over the signature of a principal of SELLER. Under no circumstances shall SELLER be liable for any consequential, special or incidental damages, including liquidated damages, arising from any breach by it in this transaction, AND ALL SUCH

CONSEQUENTIAL, SPECIAL AND INCIDENTAL DAMAGES, INCLUDING LIQUIDATED DAMAGES, ARE EXCLUDED FROM ANY REMEDIES AVAILABLE TO THE BUYER.

SECURITY INTEREST & TITLE
Until all amounts due SELLER have been paid in full, SELLER shall retain a security interest in the product and have all rights of a secured party under the Uniform Commercial Code and applicable law, including the right to repossess the product or equipment without legal process and the right to require the BUYER to assemble the equipment and make it available to SELLER at a place reasonably convenient to both parties.

WARRANTY
Equipment and parts not manufactured by the SELLER carry only the warranty of the manufacturer of said parts. SELLER does not make any express or implied warranty for equipment and/or parts it did not manufacture. Credits for defective material and workmanship in said equipment and/or parts are only in accordance with the underlying company policy of the manufacturer. SELLER makes no warranty whatsoever with respect to any equipment and/or parts as to their merchantability or fitness for a particular purpose. It is further agreed that the SELLER assumes no liability whatsoever for failure of equipment due to normal usage and wear.

INDEMNIFICATION
To the fullest extent permitted by the law in which the project is located, BUYER and SELLER shall indemnify and hold one another and their respective employees and agents harmless from and against all claims, damages, losses, liabilities, actions, causes of action, demands, fines, penalties, judgments, costs, and expenses, including but not limited to attorneys’ fees, court costs, expert fees and costs, arising out of or resulting from BUYER’s or SELLER’s own negligent acts, omissions or misconduct, to the extent such negligence is covered by BUYER’s and SELLER’s respective insurance policies. In the event any third party asserts against SELLER a claim for patent infringement, royalties or licensing fees with respect to BUYER’s use of the products, materials, or equipment provided hereunder, BUYER agrees to indemnity SELLER for all liability damages, costs and expenses in connection therewith.

CANCELLATION
Buyer may cancel this contract only in writing signed by BUYER’s duly authorized agent and acknowledged in writing by SELLER’s duly authorized agent. Should this order be cancelled, BUYER shall be obligated to pay for the level of work performed and products shipped. Work performed includes any engineering, calculations, preparation of submittals, drawings, and/or travel to job site in relation to this order. In addition to any other remedies provided under these Terms and Conditions, SELLER may terminate this contract with immediate effect by providing signed, written notice to BUYER, if BUYER: (i) fails to pay any amount when due under the contract and such failure continues for 30 days after BUYER’s receipt of written notice of nonpayment; (ii) has not otherwise performed or complied with any of these Terms and Conditions; or (iii) becomes insolvent, files a petition for bankruptcy or commences or has commenced against it proceedings in bankruptcy, receivership, reorganization or assignment for the benefit of creditors.

FIELD WORK
Unless specifically stated on our quotation, installation, start-up service, field testing, supervision, operation, and training are not included in our pricing of product. In the event that SELLER or any of its employees or agents do perform work or services on-site at the project’s location, BUYER agrees to hold SELLER and its employees or agents harmless for any injuries or damage to property caused by their acts or omission, except to the extent said injuries or property damage arise from gross negligence or intentional misconduct.

MODIFICATIONS
This contract can be modified only in writing which specifically states that it amends these Terms and Conditions and is signed by both parties and their duly authorized agents. It is further agreed that this contract shall not be modified in any respect except in writing signed by the party and their duly authorized agent against whom the modification is sought to be enforced.

AUTHORITY OF SELLER’S AGENTS
No agent, employee or representative of the SELLER has any authority to bind the SELLER to any affirmation, representation or warranty concerning the goods sold under this Contract, and unless an affirmation, representation or warranty made by an agent, employee, or representative is specifically included within this written contract, it shall not be enforceable by the BUYER.

NO THIRD-PARTY BENEFICIARIES
This contract is for the sole benefit of BUYER and SELLER and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of these Terms and Conditions.

GOVERNING LAW
All matters arising of or relating to the contract or the Terms and Conditions shall be governed by and construed in accordance with the laws of the state in which the project is located.

DISPUTE RESOLUTION
In the event of any dispute between BUYER and SELLER arising out of the terms of the contract and these Terms and Conditions, such dispute shall be decided by arbitration administered by the American Arbitration Association in accordance with the then-prevailing Commercial Arbitration Rules and Mediation Procedures of the American Arbitration Association. BUYER and SELLER mutually agree that any dispute involving claims valued at or above $1,000,000.00 shall be heard by a panel of three (3) arbitrators. The venue for all arbitration proceedings shall be the State of California. The foregoing agreement to arbitrate shall be specifically enforceable in any court of competent jurisdiction. The award rendered by the arbitrators shall be final and judgment may be entered upon it in accordance with applicable law in any court of competent jurisdiction.

SEVERABILITY
The partial or complete invalidity of any one or more provisions of these Terms and Conditions shall not affect the validity or continuing force and effect of any other provision. If any provision is invalid, in whole or in part, the provision shall be considered reformed to reflect the intent thereof to the greatest extent possible consistent with applicable law.

ASSIGNMENT – DELEGATION
No right or interest in this Contract shall be assigned by the BUYER without the written permission of the SELLER, and no delegation of any obligation owed, or of the performance of any obligation by the BUYER shall be made without the written permission of the SELLER. Any attempted assignment or delegation shall be wholly void and totally ineffective for all purposes unless made in conformity with this paragraph. 22

BUSINESS OF THE COUNCIL OF THE CITY OF HALF MOON BAY

AGENDA REPORT
For meeting of: December 5, 2023
TO: Honorable Mayor and City Council
VIA: Matthew Chidester, City Manager
FROM: Maz Bozorginia, Public Works Director/City Engineer Denice Hutten, Associate Civil Engineer
TITLE: FINAL ACCEPTANCE OF THE SEYMOUR OUTFALL EMERGENCY REPAIRS ______________________________________________________________________________ RECOMMENDATION:

Adopt a Resolution:

1. Authorizing Administrative Services to transfer $17,924.80 from the Green Infrastructure and Storm Water Program (CIP No. 563) to the Seymour Watercourse Erosion and Coastal Stabilization Project (CIP No. 608); and

2. Authorizing the City Manager to approve a contract change order in the amount of $56,697.80 to the construction contract with Cazadoro Construction Inc. for the Seymour Outfall Emergency Repair Project (Project); and

3. Authorizing the City Manager or his designee to file a Notice of Completion for the Project and release the Project Retention Funds and Project Performance Bond and Labor and Materials Bond thirty (30) days after recordation of the Notice of Completion.

FISCAL IMPACT:

The FY 2023-24 Capital Improvement Program includes $400,000 in programmed funding for the CIP No. 608, Seymour Watercourse Erosion and Coastal Stabilization Project. These funds were utilized to address the Seymour Outfall Emergency Repairs. The total repair cost is $417,924.80, requiring a transfer of $17,924.80 from the Green Infrastructure and Storm Water Program to CIP No. 608. With this transfer, there are adequate funds to close out the emergency repair. This emergency work is on the City’s disaster recovery list with FEMA and CalOES. Staff continues to seek reimbursement for storm related costs including restoration funding.

STRATEGIC ELEMENT:

This action supports the Infrastructure and Environment and Healthy Communities and Public Safety Elements of the adopted Strategic Plan.
23

BACKGROUND:

A field assessment of conditions at the Seymour Outfall in Spring 2023 found significantly accelerated erosion in the form of channel incision, resuscitated and rapidly migrating channel headcut, destabilized banks in the upper channel and new toppling of block failures in the vertical walls of the lower channel. The rapidly advancing erosion was found to threaten public safety and private and public infrastructure including a significant section of the California Coastal Trail, the Seymour Pedestrian Bridge, and the closed San Mateo County Landfill.

On October 3, 2023, by Resolution 23-92, the City Council made findings that the damage to the Seymour Watercourse was an emergency condition and awarded a construction contract to Cazadoro Construction Inc. in the amount of $223,215 for the Seymour Outfall Emergency Repair Project. The construction contract award included approval of a contingency in the amount of 10%, or $22,000, for a total emergency construction budget of $245,215.

The Seymour Outfall Emergency Repair Project consisted of installation of 2 rock check dams in the upper channel, adding rock protection below and around the pedestrian bridge abutments, and stabilizing the channel headcut and the area below the headcut, with a bioengineered structure of highly compacted base rock, logs, root wads, and large boulders.

DISCUSSION:

During the repair work, additional damage was identified which required an increase in the quantity of base rock and recompaction, bringing the total cost of construction to $279,912.80 which is approximately 25% over the original contract. The total project costs are as follows:

Description
Original
Amounts Final Amounts Difference
%
change
Nichols Consulting Engineers (NCE) $124.800.00 $124,800.00 0 0 Cazadoro Construction Inc $223,215.00 $279,912.80 $56,697.80 25.4% SWCA Environmental Consultants $9,978.00 $10,478.00 $500.00 5% State Water Board NOI Permit $2,734.00 $2,734.00 0 0
Totals $360,727.00 $417,924.80 $57,197.80 15%
The work has been completed to the satisfaction of the City Engineer and in compliance with the contract documents and subsequent necessary changes. Cazadoro Construction has provided a one-year warranty bond, which is adequate to ensure the work products perform as expected. Staff and the design engineer are currently transmitting final close-out reports to the jurisdictional agencies.

Staff recommends City Council approve the additional fund transfer and authorize the City Manager or their designee to file a Notice of Completion for the Seymour Outfall Emergency Repair (Project) and release the Retention Funds and Performance Bond and Labor and Materials Bond thirty (30) days after recordation of the Notice of Completion.

ATTACHMENT:

Resolution
24 Resolution No. C-2023-____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HALF MOON BAY AUTHORIZING THE TRANSFER OF $17,924.80 TO THE SEYMOUR WATERCOURSE EROSION AND COASTAL STABILIZATION PROJECT (CIP NO. 608); AUTHORIZING THE CITY MANAGER TO APPROVE A CONTRACT CHANGE ORDER IN THE AMOUNT OF $56,697.80 TO THE CONTRACT WITH CAZADORO CONSTRUCTION INC. FOR THE SEYMOUR OUTFALL EMERGENCY REPAIR (PROJECT); AND AUTHORIZING THE CITY MANAGER TO FILE A NOTICE OF COMPLETION FOR THE PROJECT AND RELEASE THE PROJECT RETENTION AND BONDS THIRTY (30) DAYS AFTER

RECORDATION OF THE NOTICE OF COMPLETION
WHEREAS, on October 3, 2023, the City Council adopted Resolution C-2023-92 to award a construction contract for CIP No. 0608, the Seymour Outfall Emergency Repair Project (Project) to Cazadoro Construction Inc. (Contractor) in the amount of $223,215; and WHEREAS, Resolution C-2023-92 also authorized contingency funding in the amount of 10% of the contract award, or $22,000, for a Project total of $245,215; and WHEREAS, field conditions for the emergency project required additional quantities of base rock material to fill, compact and stabilize the area below the head cut; and WHEREAS, the Contractor has completed all improvements to the satisfaction of the City Engineer and in compliance with the contract documents and subsequent revisions for a total amount of $279,912.80; and
WHEREAS, the Contractor has provided a one-year maintenance bond for the work executed under the construction contract; and
WHEREAS, the change order for the additional emergency work requires additional funds to be transferred from the Green Infrastructure and Storm Water Program (CIP No. 563) to the Seymour Watercourse Erosion and Coastal Stabilization Project (CIP No. 608) to close out the emergency Project; and,
WHEREAS, there are adequate funds in CIP No. 563 to accommodate the transfer.

NOW, THEREFORE, BE IT RESOLVED THAT the City Council of the City of Half Moon Bay hereby:

1. Authorizes Administrative Services to transfer $17,924.80 from the Green Infrastructure and Storm Water Program (CIP No. 563) to the Seymour Watercourse Erosion and Coastal Stabilization Project (CIP No. 608); and

2. Authorizes the City Manager to approve a contract change order in the amount of $56,697.80 to the construction contract with Cazadoro Construction Inc. for the Seymour Outfall Emergency Repair Project (Project); and

3. Authorizes the City Manager or their designee to file a Notice of Completion for the Seymour Outfall Emergency Repair Project (Project) and release the Project Retention Funds and Project Performance Bond and Labor and Materials Bond thirty (30) days after recordation of the Notice of Completion.
25 ***************************************************************** I, the undersigned, hereby certify that the foregoing Resolution was duly passed and adopted on the 5th day of December, 2023 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 Deborah Penrose, Mayor
26

BUSINESS OF THE COUNCIL OF THE CITY OF HALF MOON BAY

AGENDA REPORT
For meeting of: December 5, 2023
TO: Honorable Mayor and City Council
VIA: Matthew Chidester, City Manager
FROM: Maz Bozorginia, Public Works Director/City Engineer Matt Nichols, Management Analyst
TITLE: CALRECYCLE GRANT AND PAYMENT PROGRAMS
______________________________________________________________________________ RECOMMENDATION:

Adopt a resolution authorizing submittal of applications for CalRecycle grant programs and related authorizations.

FISCAL IMPACT:

There is no fiscal impact associated with this action. The recommended action to adopt a resolution of support is required to submit the grant applications for the CalRecycle funding programs.

STRATEGIC ELEMENT:

This recommendation supports the Infrastructure and Environment, Healthy Communities and Public Safety, and Fiscal Sustainability Elements of the Strategic Plan.

BACKGROUND:

Pursuant to Public Resources Code Sections 48000 et seq., 14581, and 42023.1(g), the Department of Resources Recycling and Recovery (CalRecycle) established various payment programs (grants) to make payments (return a portion of recycle proceeds) to qualifying jurisdictions (cities and counties in California).

To participate in their payment programs, CalRecycle requires agencies to pass and upload a resolution (no older than five years) from their governing body authorizing specific payment program-related matters. The City last passed a resolution to submit at the regular City Council meeting of April 18, 2017. Noncompliance with this requirement will result in applications being deemed incomplete and disqualified.

DISCUSSION:

The City of Half Moon Bay has participated in and benefitted from a number of CalRecycle payment programs over the years, including but not limited to multiple rounds of the Beverage Container Recycling City / County Payment Program as well as the SB 1383 Local Assistance 27

Grant Program. These funds have been spent on recycling programs such as the SB 1383- compliant three-stream recycling stations located throughout the City and helping Half Moon Bay meet its state-mandated SB 1383 requirements for the purchase of compost.

With approval of the attached resolution, staff will file an application for the SB 1383 Local Assistance Grant Program 2022-23 to continue participating in the countywide San Mateo County Resource Conservation District (RCD) Compost Broker Program as well as procuring additional compost in various forms for landscaping, mulch, and other applicable uses to support current public works maintenance and projects. This will help the City meet its statemandated recovered organic material procurement target of over 900 tons.

CalRecycle’s deadline for submittal of the resolution is December 20, 2023. If approved, the City will be notified by email in March 2024 and funds would be available to the awarded parties through April 1, 2026. This resolution will also be applicable for future CalRecycle funding opportunities until December 2028.

ATTACHMENT:

CalRecycle Grant And Payment Programs Resolution
28 Resolution No. C-2023-

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HALF MOON BAY AUTHORIZING THE

SUBMITTAL OF INDIVIDUAL GRANT APPLICATIONS FOR ALL CALRECYCLE GRANT PROGRAMS

FOR WHICH THE CITY OF HALF MOON BAY IS ELIGIBLE
WHEREAS, Public Resources Code sections 48000 et seq. authorizes the Department of Resources Recycling and Recovery (CalRecycle) to administer various grant programs (grants) in furtherance of the State of California’s (state) efforts to reduce, recycle, and reuse solid waste generated in the state thereby preserving landfill capacity and protecting public health and safety and the environment; and
WHEREAS, in furtherance of this authority, CalRecycle is required to establish procedures governing the application, awarding, and management of the grants; and WHEREAS, CalRecycle grant application procedures require, among other things, an applicant’s governing body to declare by resolution certain authorizations related to the administration of CalRecycle grants; and
WHEREAS, CalRecycle requires the City Council to reaffirm this authorization no less than every five (5) years to remain eligible to receive grant funding; and WHEREAS, in order for the City to apply for grants aimed at helping the City of Half Moon Bay’s efforts to reduce, recycle, and reuse solid waste generated in the City thereby preserving landfill capacity and protecting public health and safety and the environment, including meeting its SB 1383 mandated requirements, the City of Half Moon Bay must submit a resolution no older than five years authorizing the submittal of grant applications to CalRecycle.

WHEREAS, in 2017, the City Council of the City of Half Moon Bay authorized by Resolution No. C-2017-20, the City of Half Moon Bay to submit applications to CalRecycle for any and all payment programs offered, thus being older than the 5-year requirement and requiring this new resolution.

NOW, THEREFORE, MAY IT BE RESOLVED, that the City Council of the City of Half Moon Bay hereby authorizes the submittal of applications to CalRecycle for all grants for which the City of Half Moon Bay is eligible; and
BE IT FURTHER RESOLVED that the City Manager, or their designee, is hereby authorized and empowered to execute in the name of the City of Half Moon Bay all grant documents, including but not limited to, applications, agreements, amendments, and requests for payment, necessary to secure grant funds and implement the approved grant project; and 29 BE IT FURTHER RESOLVED THAT this authorization is effective for all CalRecycle grant applications submitted within five years from the date of adoption.

I, the undersigned, hereby certify that the foregoing Resolution was duly passed and adopted on the 5th day of December 2023 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 Deborah Penrose, Mayor
30

BUSINESS OF THE COUNCIL OF THE CITY OF HALF MOON BAY

AGENDA REPORT
For meeting of: December 5, 2023
TO: Honorable Mayor and City Council
VIA: Matthew Chidester, City Manager
FROM: Maz Bozorginia, Public Works Director/City Engineer Jonathan Woo, Assistant Engineer
TITLE: SMITH FIELD PARK IMPROVEMENT PROJECT – AMENDMENT NO. 3 TO PROFESSIONAL SERVICES AGREEMENT WITH FREYER AND LAURETA, INC. FOR

HYDROMODIFICATION DESIGN SERVICES
_____________________________________________________________________________ RECOMMENDATION:

Adopt a resolution:
1) Authorizing the Administrative Service Director to transfer $20,000 from the Park Facilities/Development Fund (Fund 125) to the Capital Improvement Project No. 1008 (Smith Field Improvement Project – Phase I); and
2) Authorizing the City Manager to execute Amendment No. 3 to the Professional Services Agreement (PSA) with Freyer and Laureta, Inc. (F&L) for hydromodification services for the Smith Field Park Improvement Project (Project), increasing the contract amount by $19,332, totaling a contract amount not to exceed $235,767.

FISCAL IMPACT:

The transfer of $20,000 from the Park Facilities/Development Fund (Fund 125) to the Capital Improvement Project No. 1008 (Smith Field Improvement Project – Phase I) will fully fund the remaining aspects of the project design in order to proceed with presenting the 35% design to the Planning Commission to approve the Coastal Development Permit (CDP) for the improvements at Smith Field.

STRATEGIC ELEMENT:

This action supports the Infrastructure and Environment, Healthy Communities, and Public Safety Elements of the Strategic Plan.

BACKGROUND:

The Parks Master Plan, adopted in January 2019, identified additional improvements to enhance Smith Field as the City’s primary active sports park. In late June of 2020, the City was approached regarding a potential donor’s desire to fund significant improvements at the Park, notably, to construct paved access and parking to serve the Park, as well as potentially other improvements, 31

depending on the cost and timing of construction. Wanting to be responsive to opportunities to collaborate and utilize outside funding sources as they become available, and in support of Parks Master Plan recommendations, staff has been working with the donor representative on a plan to explore the mutually desired improvements, which include the initial development of a master plan for Smith Field Park. Subsequently, the donor has indicated a willingness to fund up to 50% of the parking lot, access and drainage improvements identified as the Initial Phase in the Plan.

On September 17, 2021, the City Council authorized staff to commence developing scopes of work and solicit cost proposal(s) for preparation of a Facilities Master Plan for Smith Field Park.

Soon after, on October 19, 2021, the City Council adopted Resolution No. C-2021-89 that authorized the City Manager to enter into a PSA with Freyer & Laureta, Inc. (F&L) at an amount not-to-exceed $66,300. Through the same resolution, the City Council authorized the City Manager to enter into a PSA with Gates + Associates (Gates) at an amount not-to-exceed $79,750 for the preparation of a facilities master plan.

On August 3, 2022, the City Council accepted the Smith Field Park Facilities Master Plan. Given community and donor interest in improvements at Smith Field Park, the City Council authorized staff to pursue a CDP to entitle the existing park and provide a means to pursue phased improvements at Smith Field Park. The City Council authorized staff to solicit proposals from the existing engaged firms and to pursue a consolidated project (including both Smith Field Park and Wavecrest Water Main Projects).

On September 20, 2022, the City Council adopted Resolution No. C-2022-101 authorizing the City Manager to execute Amendment No. 1 to the PSA with F&L in the amount of $68,590 for 35- percent civil engineering design. Through the same resolution, the City Council authorized the City Manager to execute Amendment No. 1 to the PSA with Gates + Associates in the amount of $35,420 for 35-percent architectural design drawings.

On April 18, 2023, the City Council adopted Resolution C-2023-21 authorizing the City Manager to execute Amendment No. 2 to the PSA with F&L for additional services related to electrical engineering design and surveying services in the amount of $81,545.

On September 9, 2023, Staff presented updated conceptual plans to the Planning Commission to provide comments and concerns regarding the layout of the proposed improvements for the park. It was noted in the meeting that the concepts presented to the Commission and the Public are specific to long term improvements and that the intentions for City Staff to pursue the CDP are for the following reasons:

1. Retrofitted CDP for the existing Smith Field Park.

2. CDP for the new proposed conceptual improvements.

3. Upgrading the water line to the park from a 2” main to an 8” main. 32

It was also noted in the meeting that future phasing for the project would be brought back to the Planning Commission for approval. The intentions of Staff are to pursue the construction Phase I of this project in the near future, which include:
• Paving the parking lot,
• Upgrading the existing water main line,
• Installing stormwater improvements, and
• Relocating the irrigation to the existing fields.

Additional comments from the Planning Commission include potential adjustments to the amenities presented in the conceptual plan.

On September 27, 2023, Staff presented the same conceptual plan to the Parks and Recreation Commission and attending members of the public. Similar information was provided, and Staff received support from the Parks and Recreation Commission to proceed.

DISCUSSION:

During the Planning Commission meeting, drainage concerns were brought up. The Commissioners were concerned regarding the increase in impervious surfaces resulting in installing an asphalt pavement parking lot. Staff understood the concerns and revisited the square footage of how much pervious surface area would be replaced with impervious surfaces.

After calculating the area of the replacement, staff determined that Phase I of the Smith Field Improvements is subject to hydromodification requirements, which is a detailed hydraulic analysis of stormwater runoff scenarios comparing existing and proposed conditions.

Hydromodification best practicesinclude retention, detention, and infiltration of runoff. Staff will continue to work with consultants to ensure that an adequate amount of stormwater is retained and detained on site.

Since the public update meetings, staff requested F&L to provide a proposal for additional services for hydromodification calculations and BMP implementation specific to the first phase of the Project, to which, they’ve proposed to complete the work for the amount of $19,332.

Approval of this Amendment request is crucial to proceed with the 35% design to present to the Planning Commission. With the draft 35% design plans, the City’s environmental consulting firm, SWCA, could draft the necessary Initial Study/Mitigated Negative Declaration (IS/MND). During this time, staff would provide technical comments in order to finalize the 35% design. With the finalized 35% design plans, and the draft IS/MND, staff would be able to present the Smith Field Improvement Project and request to approve the CDP and adopt the IS/MND in accordance with the California Environmental Quality Act (CEQA).

ATTACHMENTS:

1. Resolution

2. Freyer and Laureta, Inc. Scope, and Cost Proposal
33 RESOLUTION NO. C-2023-__

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HALF MOON BAY AUTHORIZING THE CITY MANAGER TO EXECUTE AMENDMENT NO. 3 TO THE PROFESSIONAL SERVICES AGREEMENT WITH FREYER AND LAURETA, INC. (F&L) FOR HYDROMODIFICATION SERVICES FOR THE SMITH FIELD PARK IMPROVEMENT PROJECT, INCREASING THE CONTRACT AMOUNT BY $19,332, TOTALING A CONTRACT AMOUNT NOT TO EXCEED $235,767.

WHEREAS, in June of 2020, the City was approached regarding a potential donor’s desire to fund significant improvements at Smith Field Park, including a paved parking lot; and WHEREAS, on September 17, 2021, the City Council authorized staff to commence developing scopes of work and solicit cost proposal(s) for preparation of a Facilities Master Plan for Smith Field Park; and
WHEREAS, on October 19, 2021, the City Council adopted Resolution No. C-2021-89, which authorized the City Manager to enter into a Professional Services Agreement with Freyer & Laureta, Inc. (F&L) at a not-to-exceed amount of $66,300, for topographic survey and civil engineering support of facilities master plan; and
WHEREAS, through the same resolution, the City Council authorized the City Manager to enter into a PSA with Gates + Associates (Gates) at an amount not-to-exceed $79,750, for the preparation of a facilities master plan; and
WHEREAS, on August 3, 2022, following extensive community engagement efforts and upon the recommendation of the Parks and Recreation Commission, the City Council accepted the Smith Field Park Facilities Master Plan and authorized staff to proceed with steps to apply for a local Coastal Development Permit for Smith Field Park Improvement Park Project and the related Wavecrest Water Main Extension; and
WHEREAS, on September 20, 2022, the City Council adopted Resolution No. C-2022-101 which authorized the City Manager to execute Amendment No. 1 to the Professional Services Agreement with F&L in the amount of $68,590 for 35-percent civil engineering and cost estimate needed to file and pursue a Coastal Development Permit for the Smith Field Park Improvement Project; and
WHEREAS, through the same resolution, the City Council authorized the City Manager to execute Amendment No. 1 to the Professional Services Agreement with Gates + Associates at an amount not-to-exceed $35,420 for 35-percent architectural design drawings; and WHEREAS, on April 18, 2023, the City Council adopted Resolution C-2023-21 authorizing the City manager to execute Amendment No. 2 to the PSA with F&L in the amount of $81,545 for additional services related to electrical engineering design and surveying services, WHEREAS, on September 9, 2023, staff presented the updated conceptual plans to the Planning Commission and received feedback and concerns for staff to address; and 34 WHEREAS, on September 27, 2023, staff presented the same conceptual plans to the Parks and Recreation Commission and received support to proceed with design; and WHEREAS, first phase of the Smith Field Improvement Project is subjected to hydromodification; and
WHEREAS, a $20,000 transfer from the Park Facilities/Development Fund (Fund 125) to the Capital Improvement Project No. 1008 (Smith Field Improvements Project – Phase I) is needed to fully fund the necessary design services in order to present the 35-design and the IS/MND to the Planning Commission for approval for the Coastal Development Permit; and NOW, THEREFORE, BE IT RESOLVED THAT the City Council of the City of Half Moon Bay hereby:
1) Authorizes the Administrative Service Director to transfer $20,000 from the Park Facilities/Development Fund (Fund 125) to the Capital Improvement Project No. 1008 (Smith Field Improvement Project – Phase I); and,
2) Authorize the City Manager to execute Amendment No. 3 to the Professional Services Agreement (PSA) with Freyer and Laureta, Inc. for hydromodification services for the Smith Field Park Improvement Project, increasing the contract amount by $19,332, totaling a contract amount not to exceed $235,767.
***************************************************************** I, the undersigned, hereby certify that the forgoing Resolution was duly passed and adopted on the 5th day of December 2023 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 Deborah Penrose, Mayor
35 Headquarters North Bay Office East Bay Office South Bay Office 150 Executive Park Blvd, Ste 4200 505 San Marin Dr, Ste A220 825 Washington Street, Ste 237 20863 Stevens Creek Blvd, Ste 400 San Francisco, CA 94134 Novato, CA 94945 Oakland, CA 94607 Cupertino, CA 95014 (415) 534-7070 (415) 534-7070 (510) 937-2310 (408) 516-1090 October 25, 2023
Mr. Jonathan Woo
Assistant Engineer
City of Half Moon Bay
501 Main Street
Half Moon Bay, CA 94019
(650) 726-8265
RE: City of Half Moon Bay – Smith Field Add Service Request Dear Mr. Woo,
We are pleased to present this proposal to you for providing additional services for the Smith Field Project. Thank you for this opportunity. We propose the following Scope of Services and Fee for your consideration.

Understanding
Smith Field is located in a non-exempt location (see Image 1 below). The Smith Field Project which replaces and creates more than one acre of impervious surface area. Due to the increase in impervious area, Smith Field is subject to releasing stormwater offsite at a faster rate and greater volume. As such, hydromodification, a process by which the timing and volume from a site is changed, will be required for this project as part of its storm water management.

Image 1. Hydromodification Map (source: C.3 Regulated Projects Guide) 36 FREYER & LAURETA, INC. Civil Engineers · Surveyors · Construction Managers 2 Description of Services
The proposed scope of work is detailed below:

Task 1. Stormwater Management Plan - Hydromodification Management • Complete the Hydromodification Management (HM) Applicability Worksheet. • Utilize the Bay Area Hydrology Model (BAHM) to aid in the design of facilities to meet a certain Flow Duration Control Standard for the project.
• Provide a BAHM report with input and output data files in software format and PDF format. • Provide a stormwater management plan sheet showing proposed HM. • Complete the C.3 checklist summary of items confirmed by the City to be submitted for HM. • Provide preliminary maintenance plan for HM facility. • Meetings with City to discuss findings (two total).

Assumptions:

This proposal has the following assumptions:
• The City will provide relevant information on any watershed-based land use planning or modeling they are currently working on relevant to our project site. • The City will provide any special permitting provisions for project design and review, if available. • The City will provide any specific plans for regional hydromodification measures relevant to the project site.

Proposed Fee Schedule
We propose to perform these services for you for a fee of $ 19,332 on a time and materials basis. Please review the Fee Breakdown matrix for breakdown of design services/labor costs attached.

Thank you again for the opportunity of submitting this proposal to you. We look forward to working with you on another successful project. If you have any questions, please feel free to call us.

Very truly yours,
Richard J. Laureta, P.E., President Lorraine A. Htoo, P.E., Associate Principal FREYER & LAURETA, INC.

Enclosure: Fee Proposal
37 FEE PROPOSAL: Smith Field Additional Fee Proposal
Table 1. Estimate Budget for Professional Services
Principal Project Staff Total Cost
Manager Engineer IV per Task
Tasks 250 235 152
(hours) (hours) (hours)
Task 1 -
Complete the HM Applicability Worksheet and C.3 Checklist 1 2 $ 539 Utilize the Bay Area Hydrology Model 2 40 $ 6,550
Provide a BAHM report 6 20 $ 4,450
Provide a Stormwater Management Plan 2 16 $ 2,902
Provide Preliminary Maintenance Plan 1 8 $ 1,451
QA/QC 6 $ 1,500
Meetings 4 4 $ 1,940
Task 1 Fee 10 16 86 $ 19,332
Total Labor Hours 10 16 86 $ 19,332
10/25/2023 1 of 1 38

BUSINESS OF THE COUNCIL OF THE CITY OF HALF MOON BAY

AGENDA REPORT
For meeting of: December 5, 2023
TO: Honorable Mayor and City Council
VIA: Matthew Chidester, City Manager
FROM: Maz Bozorginia, Public Works Director/City Engineer Veronika Vostinak, Public Works and Sustainability Programs Manager TITLE: CLIMATE ACTION AND ADAPTATION PLAN (PHASE ONE) ADOPTION ______________________________________________________________________________ RECOMMENDATION:

By Resolution, adopt Phase One of the Half Moon Bay Climate Action and Adaptation Plan.

FISCAL IMPACT:

There is no fiscal impact associated with receiving this update. Currently, outreach is focused on staff led efforts, events and social media awareness and considered part of the sustainability operating budget. Associated minor costs of efforts will also be programed as part of the upcoming Fiscal Year 2024-25 Budget for consideration.

STRATEGIC ELEMENT:

This action supports the Infrastructure and Environment and Healthy Communities and Public Safety Elements of the Strategic Plan.

BACKGROUND:

California continues to lead the fight against climate change at the State, county, and local levels. The State passed the following legislation establishing ambitious statewide greenhouse gas (GHG) reduction goals:
• Senate Bill 32 (SB 32), 2016 - established the goal of reducing GHG emissions 40% below 1990 levels by 2030
• Assembly Bill 1279 (AB 1279), 2022 - established the goal of achieving carbon neutrality by 2045 at the latest and maintaining net negative emissions from that point forward.

The City Council has identified environmental sustainability as one of its top five priorities since FY 2019-20. In response to this commitment, the City Council adopted the City’s first Sustainability Implementation Plan (SIP) in November 2019 to prioritize staff projects for FY 2019-20 and 2020-21. In September 2020, the City Council adopted an updated SIP, prioritizing sustainability-related projects and programs through FY 2023-24. 39

Between October 2019 and January 2020, staff completed the Climate Action and Adaptation Plan (CAAP) Outreach Pilot Project, funded by a $60,000 grant from the San Mateo County Office of Sustainability (OOS) as part of the SB-1 Caltrans Adaptation Planning Grant. Staff worked with local community-based organizations (CBOs) to conduct climate change outreach events to youth, senior, and Latinx populations. Building on this momentum and continuing to foster relationships with the community, staff and outreach partners have conducted over 35 events with 15 CBO partners to continue gathering input throughout the development of the plan.

Drafting the City’s first CAAP was identified as a priority in the Sustainability Implementation Plan for FY 2020-21. Due to economic hardships related to the COVID-19 pandemic, staff postponed executing a contract for a technical consultant to prepare the CAAP. Instead, staff leveraged the resources available through the City’s participation in the Regional Integrated Climate Action Planning Suite (RICAPS), including technical assistance from consultants (DNV and Rincon) to update the City’s community greenhouse gas emission inventory and identify impactful GHG mitigation measures. Due to limited technical assistance available through this program, it was decided the CAAP would be broken into two phases. Phase One of the CAAP is focused on GHG emission reduction and mitigation measures and Phase Two will be focused on identifying strategies to adapt to the impacts of climate change.

The first draft of CAAP Phase One was published on the City’s website on December 22, 2022.

Additional drafts with minor refinements to the plan were published in March and August 2023.

The August 2023 draft was presented to the City Council for feedback and direction at their October 17, 2023, meeting.

DISCUSSION:

Half Moon Bay understands the importance of laying out a framework for enhancing Half Moon Bay’s resilience to climate change impacts. The adoption of this CAAP signifies the City Council's dedication to act and support the community in reducing Half Moon Bay's GHG emissions. The document demonstrates a path to match the State's objective of achieving a minimum 40% reduction in emissions below 1990 levels by 2030, which is an interim step towards achieving carbon neutrality before 2045. For a summary of the measures included in the CAAP, please reference the October 17, 2023 Staff Report.

At the October 17, 2023, meeting, the City Council expressed their support for the plan with some minor edits. The climate mitigation measures outlined in the August 2023 document have not been significantly altered. The final CAAP has been revised to place greater emphasis on ensuring that the measures are accompanied by robust outreach and educational efforts by staff and outreach partners. Additionally, the revised document focuses on identifying and advocating for even more opportunities to provide financial assistance to lower and middle-income communities. Overall, the final document includes minor revisions from the August 2023 draft to better ensure the successful implementation of the identified measures. The final draft is available for review on the City’s Website. Final CAAP Phase One Draft (December 2023).

Attachments:

Resolution
40 Resolution No. C-2023-XX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HALF MOON BAY ADOPTING PHASE

ONE OF THE CLIMATE ACTION AND ADAPTATION PLAN
WHEREAS, the City of Half Moon Bay recognizes the urgent need to address climate change and its impacts on the community, environment, and the economy; and WHEREAS, in 2019 the City Council identified Environmental Sustainability as one of its five priorities and continued to reaffirm that commitment through at least FY 2023-24; and WHEREAS, the City Council identified drafting and adopting a Climate Action and Adaptation Plan as a key action associated with achieving goals related to environmental sustainability outlined in the Sustainability Implementation Plan; and WHEREAS, the City has engaged in a comprehensive and inclusive planning process to develop Phase One of the Climate Action and Adaptation Plan, recognizing the importance of engaging traditionally underrepresented communities and partnered with over 15 communitybased organizations to hold over 35 events and to reach over 1000 community participants; and
WHEREAS, in 2016 the State of California passed Senate Bill 32, establishing the goal of reducing greenhouse gas emissions 40% below 1990 levels by 2030; and WHEREAS, in 2022, the State of California passed Assembly Bill 1279 establishing the goal of achieving carbon neutrality by 2045 at the latest and maintaining net negative emissions from that point forward; and
WHEREAS, the Climate Action and Adaptation Plan Phase One identifies a set of goals, strategies, and actions aimed at achieving measurable progress towards reducing the City’s greenhouse gas emissions to at least meet the goals identified by the State; and WHEREAS, the Climate Action and Adaptation Plan Phase One aligns with the City’s commitment to environmental stewardship, sustainability, and well-being of its residents.

NOW, THEREFORE, MAY IT BE RESOLVED, that the City Council of The City of Half Moon Bay adopts the Climate Action and Adaptation Plan Phase One which demonstrates a commitment to allocate the necessary resources and collaborate with the necessary community stakeholders to implement the measures and goals identified in this Climate Action Plan; and
BE IT FURTHER RESOLVED THAT, the City Council expresses its commitment to review the Climate Action and Adaptation Plan annually and update the plan every five years to ensure 41 its continued relevance, effectiveness and alignment with evolving climate impacts and best practices.

I, the undersigned, hereby certify that the foregoing Resolution was duly passed and adopted on the 5th day of December 2023 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 Deborah Penrose, Mayor
42 BUSINESS OF THE COUNCIL OF THE CITY OF HALF MOON BAY

AGENDA REPORT
For meeting of: December 5, 2023
TO: Honorable Mayor and City Council
VIA: Matthew Chidester, City Manager

TITLE: BLACK LIVES MATTER CITY HALL MURAL
______________________________________________________________________________ RECOMMENDATION:

Discuss the potential removal or replacement of the temporary Black Lives Matter mural located in the City Hall parking lot and provide direction to staff.

FISCAL IMPACT:

There is no fiscal Impact related to this item, but future costs for removal or replacement of the mural may be required depending on the direction of Council.

STRATEGIC ELEMENTS:

This recommendation supports the Inclusive Governance and Healthy Communities and Public Safety elements of the Strategic Plan.

BACKGROUND:

In summer 2020, America experienced a widespread social justice movement focused on police reforms. This movement resonated with the Half Moon Bay community, who had locally witnessed the tragic loss of two individuals at the hands of law enforcement: Sandra Harmon in spring of 2020 and Yanira Serrano-Garcia in summer 2014. The City Council prioritized community outreach and research related to public safety and law enforcement in Half Moon Bay to support these discussions. They also created a subcommittee to discuss the City’s existing contract with the Sheriff, law enforcement in general, and identify recommendations for reforms to be proposed in Half Moon Bay. The information gathered through these efforts informed subcommittee and Council discussions, public safety response alternatives, and negotiations with the Sheriff, including the 2022 renewal of the contract to include additional community policing work, the adoption of the Yanira Serrano Presente Program, and the launch of the Crisis Assistance Response and Evaluation Services (CARES) mental health response program.

During the 2020 social justice movement, the community came together to demonstrate on several occasions in support of the Black Lives Matter movement, which began in 2013 in response to the acquittal of George Zimmerman in Trayvon Martin’s death. Since then, the movement has become an affirmation of Black humanity and a denouncement of 43 discrimination and racially motivated violence against Black people. The movement has been associated with organized Black Lives Matter organizations, including local chapters throughout the United States and internationally, the Black Lives Matter Global Network Foundation, and the Black Lives Matter Political Action Committee.

During the Public Forum portion of the June 21, 2020 City Council meeting, several members of the community spoke in support of painting a Black Lives Matter mural in the City Hall parking lot, which was a common practice to show support to the movement during that time. At its July 29, 2020 meeting, the Council directed staff to prepare a resolution supporting the Black Lives Matter movement, which was adopted on August 18, 2020, along with direction to install a temporary mural in the City Hall parking lot.

DISCUSSION:

The August 2020 resolution expressed the City of Half Moon Bay’s support for the Black Lives Matter movement. Among other things, the Resolution states that the City Council:
• Joins Half Moon Bay residents and neighbors in affirming Black Lives Matter and stands in solidarity with communities of color,
• Affirms the inherent dignity of all community members and holds ourselves to the highest standards of equity and justice, and
• Seeks to honor the Black Lives Matter movement through the installation of a temporary public mural in the City Hall parking lot as an expression of the City Council’s support for Black lives, systemic change, and racial justice.

The resolution also clarified that the mural is government speech and represents the City Council’s own viewpoint.

The mural was originally intended to be installed on the pavement in the parking lot, to the south of City Hall, making it temporary in nature given the need to resurface the parking lot every 2-3 years. After further consideration, it was determined that the upper wall of City Hall facing south would provide a more visible and appropriate surface for the mural, although the temporary intent was retained in the final placement and installation.

Over the last three years since its installation, the mural has been viewed and photographed by many excited residents and visitors to Half Moon Bay. Requests for the mural’s removal have also been made, including most recently during public comment at the October 17, 2023 Council meeting. Based on that feedback and the fact that the mural has now been in place for three years, the Council has agendized a discussion about the future of the mural.

If the City decides to remove the mural, other steps may be taken to continue to honor the spirit of the mural and support all members of our community, especially historically marginalized groups including Black Americans. Future public art can be commissioned in celebration of the history and culture of the Coastside, including all the diverse groups that have helped shape its character and values. It could include a reference to the community’s 44 support for the Black Lives Matter movement, including the demonstrations that took place in the summer of 2020. The details and location of such a mural can be incorporated into existing capital improvements including the redesign of a portion of City Hall’s parking lot in service of a new “pocket park” and the broader downtown streetscape revitalization effort, which has received broad support for more public art. Staff believes the most inclusive and meaningful ideas for public art moving forward will likely come from the community itself – in all its layers of history and experience.

ATTACHMENT:

Resolution in Support of Black Lives Matter – adopted August 18, 2020 45 RESOLUTION NO. C-2020-__

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HALF MOON BAY

IN SUPPORT OF BLACK LIVES MATTER
WHEREAS, the City Council of Half Moon Bay joins our residents and neighbors in affirming that Black Lives Matter. The City Council is appalled by the murders of George Floyd, Ahmaud Arbery, Jordan Edwards, Akai Gurley, Botham Jean, Atatiana Jefferson, Elijah McClain, Jean Pedro Pierre, Tamir Rice, Walter Scott, Breonna Taylor, and countless more; and
WHEREAS, the systemic killing of Black men, women, and children by police are unacceptable violations of human rights and a betrayal of the ideals to which our community and country aspire; and
WHEREAS, the City Council fully supports, and stands in solidarity with, the protests against police brutality and racial injustice that have taken place both in our community and across the nation and globe; and
WHEREAS, the City Council values the richness and strength that come from fostering a diverse, inclusive, and welcoming community for people of all races and socioeconomic backgrounds, including those who live, work, and visit Half Moon Bay; and WHEREAS, public art provides a vehicle for community engagement and the expression of community values; and
WHEREAS, the City Council seeks to honor the Black Lives Matter movement through the installation of a public mural in the City Hall parking lot as an expression of the City Council’s support for Black lives, systemic change, and racial justice.

NOW, THEREFORE, BE IT RESOLVED, that Black lives matter and that the City Council forever stands against racism, discrimination, and police violence. The City Council commits to act and encourage community action towards eliminating racial disparities in both the government and the community.

BE IT FURTHER RESOLVED, that the City recognizes that realizing racial justice and equity in our community will take long-term commitment, and that the City Council pledges itself to this ongoing work.
46 BE IT FURTHER RESOLVED, that the City Council hereby authorizes the installation of a temporary mural in parking lot as an expression of the City Council’s support for the Black Lives Matter movement and visions of a more just and equitable society.

BE IT FURTHER RESOLVED, that the City may seek assistance from private groups and artists in the design and production of the mural, but will retain full and final authority over its content.
***************************************************************** I, the undersigned, hereby certify that the foregoing Resolution was duly passed and adopted on the 18th day of August 2020 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 Adam Eisen, Mayor
47 BUSINESS OF THE COUNCIL OF THE CITY OF HALF MOON BAY

AGENDA REPORT
For meeting of: December 5, 2023
TO: Honorable Mayor and City Council
VIA: Matthew Chidester, City Manager
FROM: Lisa Rossi, Administrative Services Director
Kenneth Stiles, Finance Manager
TITLE: ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR) FOR THE FISCAL YEAR ENDED JUNE 30, 2023
______________________________________________________________________________ RECOMMENDATION:

Adopt a resolution receiving the City of Half Moon Bay Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2023.

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 acceptance.

The ACFR document (Attachment 2) is composed of the following parts:
• Introductory Section including letter of transmittal
• Independent Auditors’ Report
48 • 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, 2023, was $16 million, of which $9.8 million was committed for reserves and the balance of $6.3 million was unassigned. The fund balance on June 30, 2023, shows an increase of $642 thousand, or 4%, 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, 2023, 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 2021-22 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 2023-24, the City estimated that the fund balance on June 30, 2023, would be $14.9 million. With the audit complete, an updated fund balance summary is detailed below:
49 The City initially planned for unassigned balances through FY 2023-24 to be $185 thousand. With the audited beginning fund balance of $16.2 million, the City anticipates unassigned balances to be $1.4 million on June 30, 2024. This gain in unassigned balances is primarily due to the City having less operational spending than initially anticipated during the prior fiscal year. More information on the budget to actual performance of the General Fund can be found on pages 18 and 79 of the ACFR.

Unassigned balances represent funds that have not yet been programmed for a particular purpose. Although higher than anticipated, staff recommends deployment of such funds to be discussed during the formal budget process, where all options available are presented to Council in May of 2024.

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, 2023 FY 2023-24
Adopted
with Estimated Beg. Balance
FY 2023-24
Adopted with
Audited Beg. Balance
Beginning Fund Balance (1) 14,963,555 16,227,904
Revenues 21,259,541 21,259,541
Expenditures (24,946,173) (24,946,173)
Net Change to Fund Balance (3,686,632) (3,686,632)
Ending Fund Balance 11,276,923 12,541,272
General Fund Reserve 6,654,952 6,654,952
Economic Uncertainty 4,436,635 4,436,635
Unassigned 185,336 1,449,685
General Fund Balance Summary
(1) At time of budget adoption, the beginning fund balance was unavailable. With the completion of the audit that number has been finalized
50 Resolution No. C-2023-

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, 2023
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, 2023 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, 2023. ***************************************************************** I, the undersigned, hereby certify that the foregoing Resolution was duly passed and adopted on the 5th day of December, 2023 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 Deborah Penrose, Mayor
51 ANNUAL COMPREHENSIVE FINANCIAL REPORT
FISCAL YEAR ENDED JUNE 30, 2023
Review Draft
52 Review Draft
53 CITY OF HALF MOON BAY, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT
Fiscal year ended June 30, 2023
Prepared by
Finance Department
Review Draft
54 Review Draft
55 CITY OF HALF MOON BAY, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FISCAL YEAR ENDED JUNE 30, 2023
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 ........................................................................................................... 23 Statement of Activities ............................................................................................................... 24 Fund Financial Statements:

Governmental Funds:

Balance Sheet ......................................................................................................................... 26 Reconciliation of the Governmental Funds-Balance Sheet with the Statement of Net Position ................................................................................................... 28 Statement of Revenues, Expenditures and Changes in Fund Balance .................................... 30 Reconciliation of the Net Change in Fund Balances – Total Governmental Funds with the Statement of Activities.......................................................................................... 32 Proprietary Funds:

Statement of Net Position ....................................................................................................... 33 Statement of Revenues, Expenses and Changes in Fund Net Position ................................... 34 Statement of Cash Flows ........................................................................................................ 35 Notes to the Basic Financial Statements ........................................................................................... 37 Review Draft
56 CITY OF HALF MOON BAY, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FISCAL YEAR ENDED JUNE 30, 2023
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 ................................. 73 Schedule of the Plan’s Proportionate Share of the Net Pension Liability and Related Ratios as of the Measurement Date – Safety Plan .............................................. 74 Schedule of Contributions – Miscellaneous Plan ....................................................................... 75 Schedule of Contributions – Safety Plan .................................................................................... 76 Other Post-Employment Benefits Plan (OPEB)
Schedule of Changes in the Net OPEB Liability and Related Ration ........................................ 77 Schedule of Employer Contributions ......................................................................................... 78 Schedule of Revenues and Expenditures and Changes in Fund Balance – Budget and Actual:

General Fund .............................................................................................................................. 79 Streets and Roads Special Revenue Fund .................................................................................. 80 Lot Acquisition and Retirement Special Revenue Fund ............................................................ 81 Note to Required Supplementary Information .................................................................................. 82 Supplementary Information:

Judgment Obligations Bonds – Debt Service Fund.................................................................... 84 Library - Capital Projects Fund .................................................................................................. 85 Capital Projects Fund ................................................................................................................. 86 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:

Traffic Mitigation .......................................................................................................... 94 Police Grants .................................................................................................................. 95 Storm Drain Operating .................................................................................................. 96 Parks Development ........................................................................................................ 97 Affordable Housing ....................................................................................................... 98 CZI Grant ....................................................................................................................... 99 ARPA ........................................................................................................................... 100 Review Draft
57 CITY OF HALF MOON BAY, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FISCAL YEAR ENDED JUNE 30, 2023
Table of Contents
Page
FINANCIAL SECTION (Continued):

Capital Project Funds:

Public Facilities ........................................................................................................... 101 Storm Drain Improvements ......................................................................................... 102 Internal Service Funds:

Combining Statement of Net Position ...................................................................................... 104 Combining Statement of Revenues, Expenses and Changes in Fund Net Position ................. 105 Combining Statement of Cash Flows ....................................................................................... 106 STATISTICAL SECTION:

Financial Trends:

Net Position by Component ............................................................................................................ 111 Changes in Net Position .................................................................................................................. 112 Fund Balances of Governmental Funds .......................................................................................... 114 Changes in Fund Balances of Governmental Funds ....................................................................... 115 Revenue Capacity:

Transient Occupancy Tax (TOT) Rate............................................................................................ 116 Transient Occupancy Tax (TOT) by Lodging Type (BASE) ......................................................... 117 Transient Occupancy Taxpayers by Type of Establishment ........................................................... 118 Debt Capacity:

Ratios of Outstanding Debt by Type .............................................................................................. 119 Ratio of General Bonded Debt Outstanding ................................................................................... 120 Direct and Overlapping Debt .......................................................................................................... 121 Legal Debt Margin Information. ..................................................................................................... 122 Demographic and Economic Information:

Principal Employers. ....................................................................................................................... 123 Operating Information:

Full-Time Equivalent City Employees by Function. ...................................................................... 124 Operating Indicators by Function. .................................................................................................. 125 Capital Asset Statistics by Function. .............................................................................................. 126

Review Draft
58 CITY OF HALF MOON BAY, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FISCAL YEAR ENDED JUNE 30, 2023
Table of Contents
Page
STATISTICAL SECTION (Continued):

Property Tax Information:
2022/23 Use Category Summary .................................................................................................... 127 Property Tax Dollar Breakdown ..................................................................................................... 128 2022/23 Roll Summary ................................................................................................................... 129 Net Taxable Assessed Value History .............................................................................................. 130 Assessed Value of Taxable Property .............................................................................................. 131 2022/23 Top Ten Property Taxpayers ............................................................................................ 132 2013/14 Top Ten Property Taxpayers ............................................................................................ 133 Direct & Overlapping Property Tax Rates ...................................................................................... 134 Demographic and Economic Statistics ........................................................................................... 135 Sales Value History......................................................................................................................... 136 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 ......................................................................... 137 Review Draft
59 INTRODUCTORY SECTION
Review Draft
60 Review Draft
61 December 5, 2023
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, 2023. 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 forthe preparation of financialstatementsin 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 isreported 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, 2023.

CITY OF HALF MOON BAY
507‐B Purissima Street
Half Moon Bay, CA 94019
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62 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 financialsection. Thisletter 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 isthe oldestsettlement in San Mateo County.  Considered a rural coastal community, the City is home to approximately 13,000 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 wasincorporated 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 drainmaintenance; code and parking enforcement; engineering; sanitary sewer utility treatment and distribution; and general DocuSign Envelope ID: 3A19425A-E5BD-44A1-9644-2E0C8A1DF472 Review ii Draft
63 administrative services. Fire protection services are provided by a special district that is not a part of the City’s reporting entity.

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 forthe preparation of financialstatementsin 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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64 MAJOR INITIATIVES AND ACCOMPLISHMENTS
Several important initiatives were delivered in the past year. These projects included increased engagement with the community, continued work on affordable housing, and improvement of infrastructure. Accomplishments include:

1. City Operations:
 Submitted the draft Cycle 6 (2023‐2031) Housing Element to the State Department of Housing and Community Development, following extensive public review and comment.
 Entered into a predevelopment funding agreement with Mercy Housing to develop 40 very affordable housing units on City‐owned property at 555 Kelly Avenue and initiated work on a potential 40‐to‐50‐unit affordable housing project at 880 Stone Pine Road in collaboration with San Mateo County.
 Obtained Coastal Commission approval and certification of the City’s Short‐Term Rental Ordinance.
 Made significant progress on implementation of several of the Coastside Recovery Initiative’s recommendations, including securing $400,000 in philanthropic funding for a farmworker cooperative and digital equity programming, $2.5 million in funding for a new Opportunity Center of the Coastside that will serve job seekers, small businesses, and entrepreneurs, and launched a nonprofit cohort which provided technical assistance to City grant recipients in support of a more coordinated and integrated approach to safety net services.
 Completed the draft Climate Action Plan, which included several public outreach events to engage with underrepresented groups and circulated the draft to the general public for input prior to formal adoption.
 Completed the pilot phase of the Crisis Assistance Response & Evaluation Services (CARES) mental health response program; applied for and awarded a $150,000 grant as well as applied for an additional $360,000 in grant assistance for the coming fiscal year.
 Initiated construction of the Carter Park Improvement Project, including securing of temporary access and permanent maintenance/operation access to the park and revision of designs to be more flood resilient.
 Conducted the November 2022 General Municipal Election for three district seats including public outreach campaigns around the new 503B district map, how to run for city council, how to vote, and hosted the first Elections Night Out event since the pandemic began.
 Initiated work on a cost allocation study and user fee analysis to ensure the city receives fair cost recovery on services provided to the public and other agencies.

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65  Continued work on a major upgrade and modernization of the City Corporation Yard facility at 880 Stone Pine Road.
 Conducted the first N.E.T. Citizens Academy since the pandemic began, graduating 18 new cohort members.
 Responded to the catastrophic winter storms that impacted the entire Coastside community, including 24/7 staffing of the Emergency Operations Center, coordinating multi‐agency communications to ensure accurate and timely information to the public, and converting the community center into a temporary evacuation point for displaced residents.
 Responded to the tragic mass shootings including coordinating press requests, visits and press conferences with state and federal elected officials, coordinating vigil and memorial services, and a community remembrance dinner for the victims, partnered with the County and other agencies to address code violations at the two farms involved in the shooting and to establish a program for inspecting other farms to ensure farmworker safety, collaborated in intensive case management including coordination of housing for 20 displaced families, and established the Coastside Victims Fund for survivors of the incident.
 Hosted a historic mobile visit from the Consulate of Mexico resulting in 220 residents receiving critical services.

2. Major Capital Projects in Progress:
 Carter Park Improvements Project
 Smith Field Master Plan
 Frenchman’s Creek Park Improvements
 Main Street Safety Improvements
 Corporate Yard Improvements
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 2022‐23 through 2026‐27 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 2022‐23, the City experienced a shortfall in economically sensitive revenues such as Transient Occupancy Tax and Sales & Use Tax. Although the City ended the year in a surplus despite underperforming revenues, economic uncertainty remains as expenditures for existing services have greatly increased. The City is anticipating a structural deficit in future fiscal years and is actively taking measures to evaluate options to increase revenues and decrease expenditures in future years.

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66 Local Economy
Employment in Half Moon Bay is concentrated in three major sectors: professional services; farm and agriculture; and retail/food services. The 2022 average unemploymentrate for California was

4.2%, San Mateo County was 2.4%, and Half Moon Bay was 2.1%. 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 near to 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’stotal assessed value for 2022‐ 23 is $3.7 billion, which is a 6.5% increase over 2021‐22. Although housing prices continue to remain strong, the economy appears to be stagnating.

Two of the most pressing concerns of the City include the over reliance on Transient Occupancy Tax (TOT)revenues and rising costs of existing services.  During the fiscal year ending June 30, 2023, TOT revenues made up 40% of all General Fund revenues.  In addition to being the City’s largest revenue source, these revenues are also the most vulnerable in an economic downturn as seen when these revenues experienced a year‐over‐year decrease of 6%.

Additionally, during the budget process for fiscal year 2023‐24, the City experienced a sudden rise in the cost for existing services. Budgeted operating expenditures increased by $2.5 million or 12% primarily due to public safety. Due to this the City is anticipating a structural deficit in future fiscal years and is currently working on mitigation measures.

Existing obligations that are still 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, will 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. Due to rising obligations, The City is anticipating a revision on cost containment strategies and the implementation with other strategies to address a potential structural deficit in future years.

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 anticipated this measure to generate more revenues to maintain existing City services after the sunset of American Rescue Plan Act (ARPA) funds. While TOT revenues are currently down year‐over‐year, this measure will generate more revenue in the long‐term.

DocuSign Envelope ID: 3A19425A-E5BD-44A1-9644-2E0C8A1DF472 Review vi Draft
67 With the City’s long‐term financial outlook showing deficits, the City is reviewing all pathways to return to a balance budget. Strategies include a comprehensive cost and fee study, scaling back expenditures, revenue enhancements and identifying one‐time funds. The deficit is structural in nature and the City is in search of structural solutions to return to a positive financial outlook.

Additionally in FY 2019‐20, the City Council created a new 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 long‐term 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, 2023, both reserves are fully funded.

The City’s long term strategic plan, adopted on March 15, 2018, addresses the following four Strategic Elements:
 Fiscal Sustainability
 Healthy Communities and Public Safety
 Inclusive Governance
 Infrastructure and Environment
Based on these Strategic Elements, the City Council annually adopts strategic initiatives to guide the City’s actions, work plans, and efforts on addressing the City’s priorities. 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. The City continues to maintain a balance between ongoing revenues and ongoing costs as part of its overall long‐range strategic financial planning.

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‐Oakland 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’slimit 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, claimadjuster and provides otherriskmanagementservices asrequired by State law. Eachmember 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.

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68 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, 2022. To be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized annual comprehensive financialreport. Thisreportmustsatisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe that our current annual comprehensive financialreport continuestomeetthe 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 this 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; and Whitney Rescino, 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 DocuSign Envelope ID: 3A19425A-E5BD-44A1-9644-2E0C8A1DF472 Review viii Draft
69 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, 2022
Executive Director/CEO
Review ix Draft
70 Half Moon Bay City Limits
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I W:
• I
1 0
Unincorporated
San Mateo County
City of
Half Moon Bay
Map not 1D Scale
NORTH
Unincorporated
San Mateo County
Unincorporated
San Mateo County
x
Review Draft
71 Mayor
Deborah Penrose
Vice Mayor
Joaquin Jimenez
Council Member
Robert Brownstone
Council Member
Debbie Ruddock
Council Member
Harvey Rarback
Review xi Draft
72 City Manager
Matthew Chidester
Communications/City Clerk
Director Jessica Blair
City Attorney
Catherine Engberg
Public Works Director
Maz Bozorginia
Assistant City Manager
John Doughty
Community Development
Director Jill Ekas
Captain Rebecca Albin
San Mateo County Sheriff
Administrative Services
Director Lisa Lopez Rossi
xii Review Draft
73 Community
City
Council
City
Committees
City
Commissions
City
Attorney
City
Manager
Assistant City
Manager
Public
Safety
Community
Development
Public
Works
Communications
& City Clerk
Administrative
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
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Resources
Information
Technology
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Preparedness
City of Half Moon Bay Organizational Chart
Economic &
Community
Vitality
Review
xiii Draft
74 Review Draft
75 FINANCIAL SECTION
Review Draft
76 Review Draft
77 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, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the Table of Contents.

In our opinion, based on our audit and the report of the other auditors, 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, 2023, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

We did not audit the financial statements of Sewer Authority Mid-Coastside (SAM), in which the investment in SAM represents 45% and 46% respectively, of the assets and net position of the City’s business-type activities. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the investment in SAM, is based solely on the report of the other auditors.

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.

Review 1 Draft
78 In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

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

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

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

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79 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.

Review 3 Draft
80 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 16, 2023 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
October 16, 2023
Review 4 Draft
81 MANAGEMENT’S DISCUSSION AND ANALYSIS
Review Draft
82 Review Draft
83 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, 2023. 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, 2023, by $157.9 million, which is a 5.3% or $7.8 million increase from the prior year. Of this amount, $46.5 million may be used to meet the City’s ongoing obligations to citizens and creditors, which is a 6% increase over the prior year’s unrestricted net position of $43.9 million.  The City’s cash and investments on June 30, 2023, totaled $50 million, of which $45 million is classified as government activities and $5 million as Business-type activity. The City’s cash and investments increased by $2.1 million, or 4.4% compared to the prior year.  At June 30, 2023, the City had outstanding long-term obligations of $21.9 million, of which $21.4 million is classified as governmental activities and $541 thousand as business activities.

Obligations have increased by $6.4 million or 41% compared to the prior year. This increase is primarily due to an increase 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 $13.8 million on the FY 2022-23 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 increased by $6.1 million from the $7.6 million recorded last year. This increase is due to a decrease in the market value of pension assets held at CalPERS on the measurement date of June 30, 2022.  City-wide revenues were $33.7 million, of which $27 million was generated by governmental activities and $6.7 million by Business-type activities. Revenues increased by 11% from the prior year primarily due to an increase in charges for services, operating grants, and investment income.  City-wide expenditures were $25.8 million, of which $19.8 million was incurred by governmental activities and $6 million by Business-type activities. Expenditures increased by 2% from the prior year mostly due to increases in community and economic development expenditures.  The City’s General Fund balance as of June 30, 2023, was $16.2 million, an increase of roughly $642 thousand as compared to the prior year’s amount of $15.6 million. This increase is due to revenues exceeding expenditures and transfers.
 For the fiscal year ended June 30, 2023, Governmental Funds revenues exceeded expenditures and net transfers by $2.4 million, primarily attributed to increased operating grants and expenditures falling under budget. The governmental funds’ combined ending fund balance as of June 30, 2023, is $68.5 million, a 4% increase from the prior year.

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84 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, an optional section that presents combining statements for non-major governmental funds and internal service funds, and a 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.

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85 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 sixteen 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 79.

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.

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86 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 39-70 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 72-82 of this report.

The combining statements for non-major governmental funds and internal service funds are presented on pages 90-106, and the Statistical Section follows on page 107.

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87 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, 2023 and 2022:

Note: Total assets + deferred outflows – total liabilities – deferred inflows = total net position 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 $157.9 million on June 30, 2023, with invested capital assets of $78.8 million, $32.6 million restricted and an unrestricted net position of $46.5 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.
2023 2022 2023 2022 2023 2022
Current and other a s se ts 50,091,872           46,736,879 15,252,242 15,586,270    65,344,114    62,323,149 Land held for resale 26,823,920            ‐               26,823,920 ‐                  26,823,920    26,823,920 Capi tal As se ts       78,346,957    74,694,444    6,981,850    6,948,434    85,328,807    81,642,878 Total assets     155,262,749 148,255,243 22,234,092 22,534,704 177,496,841 170,789,947 Rela ted to OPEB              60,710           83,400           4,634 ‐                         65,344           83,400 Rela ted to pension         5,593,021      2,531,578       232,715       120,224      5,825,736      2,651,802 Total deferred outflows of
resources         5,653,731      2,614,978      237,349       120,224      5,891,080      2,735,202 Long‐term liabili ties
outs tanding       19,654,785    13,683,818       541,207       283,237    20,195,992    13,967,055 Othe r liabili ties         3,837,847      3,097,292       134,964         63,680      3,972,811      3,160,972 Total liabilities       23,492,632    16,781,110       676,171       346,917    24,168,803    17,128,027 Rela ted to OPEB            113,746         127,266           9,009           9,969         122,755         137,235 Rela ted to pension         1,043,360      5,874,487         74,781       292,668      1,118,141      6,167,155 Total deferred inflows of
resources         1,157,106      6,001,753        83,790       302,637      1,240,896      6,304,390 Net Position:

Net i nves tment in capi tal
a s se ts       71,854,949    68,275,626    6,981,850    6,948,434    78,836,799    75,224,060 Res tricted       22,502,708    21,340,221 10,092,582    9,554,843    32,595,290    30,895,064 Unres tricted       41,909,085    38,471,511    4,637,048    5,502,097    46,546,133    43,973,608 Total Net Position     136,266,742 128,087,358 21,711,480 22,005,374 157,978,222 150,092,732 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, 2023
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88 CITY OF HALF MOON BAY, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
The net investment in capital assets reflecting the investment in capital assets (e.g. land, buildings, facilities, vehicles, equipment, and infrastructure) is $78.8 million and represents 50% percent of the City’s net position. This portion has increased by $3.6 million or 4.8%. 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 $32.6 million, or 21% percent, of the City’s total net position. The restricted net position increased by $1.7 million or 6% percent in fiscal year 2022-23. 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 $46.5 million, or 29% percent of the City’s total net position, increased by $2.5 million or 6% percent. The increase is primarily from the City completing the fiscal year with expenditures under budget. 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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89 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, 2023, as compared to June 30, 2022:

Governmental Activities
The City’s Governmental net position increased by $8.1 million or 6% in fiscal year 2023, primarily due to revenues exceeding expenditures.

Variance
2023 2022 2023 2022 2023 2022
Program revenues:

Cha rges for se rvi ces 2,882,242            2,809,193    5,994,167    5,005,399      8,876,409      7,814,592 14% Ope ra ting gra nts and
contributions 3,628,574             ‐               2,544,520 ‐                    3,628,574      2,544,520 43% Ca pi tal gra nts and
contributions 1,677,758             ‐               1,647,350 ‐                    1,677,758      1,647,350 2% Subtotal      8,188,574      7,001,063    5,994,167    5,005,399    14,182,741    12,006,462 18% Gene ral revenues:

Property taxes 4,129,317             ‐               4,592,317 ‐                    4,129,317      4,592,317 ‐10% Sales and use taxes 3,315,341             ‐               3,358,759 ‐                    3,315,341      3,358,759 ‐1% Tra nsient occupa ncy taxes 8,852,640             ‐               9,442,518 ‐                    8,852,640      9,442,518 ‐6% Othe r taxes 1,276,299             ‐               1,341,327 ‐                    1,276,299      1,341,327 ‐5% Othe r gene ral revenues 1,289,743              (398,433)       667,604         21,492      1,957,347        (376,941) 619% Subtotal    18,863,340    18,336,488       667,604         21,492    19,530,944    18,357,980 6% Total revenues 27,051,914        25,337,551    6,661,771    5,026,891    33,713,685    30,364,442 11% Expenses
Gene ral government      6,018,989      6,008,499 ‐               ‐                    6,018,989      6,008,499 0% Public sa fe ty 5,275,682             ‐               5,017,087 ‐                    5,275,682      5,017,087 5% Public works 4,129,117             ‐               2,765,717 ‐                    4,129,117      2,765,717 49% Recrea ti on Services 597,127                ‐               2,823,410 ‐                       597,127      2,823,410 ‐79% Pla nni ng      2,965,787      2,779,608 ‐               ‐                    2,965,787      2,779,608 7% Communi ty and Economi c
Development         843,267 ‐                 ‐               ‐                       843,267 ‐                 0% Sewer Utili ty                  ‐                 ‐    5,998,227    6,042,199      5,998,227      6,042,199 ‐1% ‐
Total expenses    19,829,968    19,394,321    5,998,227    6,042,199    25,828,195    25,436,520 2% Increase (Decrea se ) in net
posi ti on be fore tra ns fe rs 7,221,946            5,943,230       663,544   (1,015,308)      7,885,490      4,927,922 60% Tra ns fe rs         957,438      1,018,047      (957,438)   (1,018,047) ‐                 ‐                 0% Increase (Decrea se ) in net
posi ti on 8,179,384            6,961,277      (293,894)   (2,033,355)      7,885,490      4,927,922 60% Net posi ti on ‐ As of July 1 128,087,358 121,126,081 22,005,374 24,038,729 150,092,732 145,164,810 3% Pri or Pe ri od Adjus tment                  ‐               ‐ ‐               ‐                 ‐ Net posi ti on ‐ As of July 1, as
res ta ted 128,087,358 121,126,081 22,005,374 24,038,729 150,092,732 145,164,810 3% Net position ‐ As of June 30 136,266,742 128,087,358 21,711,480 22,005,374 157,978,222 150,092,732 5% Governmental Activities Business‐type Activities Total

CITY OF HALF MOON BAY
Compa ra tive Sta tement
Statement of Activities
Yea r Ended on June 30, 2023
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90 CITY OF HALF MOON BAY, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
Revenues Highlights:
 Total general revenues increased by $1.7 million or 7% from the prior year, primarily due to increases in operating grants, contributions, and investment income. o Program revenues increased by $1.2 million or 17%. This increase is primarily from increases in operating grants and contributions. These receipts are generally project specific and/or one-time funds. During the fiscal year, the City was awarded two operating grants totaling $1.1 million. These funds are designated for specific services that support economic and community vitality.
o Transient Occupancy Tax (TOT), the City’s largest source of general revenue, decreased by $589 thousand or 6% from the prior year. From January to June 2023, the City received less of these revenues than years prior with an average decrease of 13%. This is primarily due to a decrease in tourism to the coast. o Sales Tax, the second largest source of general revenue, decreased by $43 thousand or 1% from the prior year. This decrease is due to a slowdown of economic activity on the coast.
o Property Tax, the third largest source of general revenue, decreased by $463 thousand or 10% from the prior year. This decrease is primarily due to a large one-time receipt of vehicle in-lieu (VLF) taxes that occurred in the prior year. o Other General Revenues include investment income and other miscellaneous revenues.

The amount from government activities increased by $1.6 million or 424% from the prior year. This is primarily due to $865 thousand in interest and unrealized gains on investments.

Expenses for Government Activities increased by $435 thousand from the prior year, mostly due to increases in community vitality and economic development.

Business-type Activities
The City’s sole Business-type activity is the sewer fund. The City’s total Business-type net position decreased by $293 thousand, less of a loss compared to the prior year’s decrease of $2 million. This is primarily due to the following factors:
 Charges for Services revenues increased by $988 thousand or 20% from the prior year. This increase is primarily due to the sewer rate changes as adopted by voters in fiscal year 2019-2020.

Rates are scheduled to increase year over year through fiscal year 2024-25.  Other revenues increased by $646 thousand. This is primarily due to interest and unrealized gains on investments. Additionally, 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 2022-23 the City recognized a gain on this investment of $537 thousand.
 Expenses from Business-type Activities decreased by $43 thousand as compared to fiscal year 2021-22. This is primarily due to decreases in sewer treatment and utility. Although expenses have decreased, expenses still exceeded total revenues.

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91 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, 2023, the City’s governmental funds reported combined fund balances of $68 million, an increase of $2.4 million in comparison with June 30, 2022. This is primarily attributed to revenues exceeding expenditures. The governmental funds expenditures were $23.7 million in fiscal year 2022-23, a $4.3 million increase from the prior year which is primarily due to increased spending for capital projects. 2023 2022 Variance
Revenues $    26,942,159 $ 25,457,670 6%
Expendi tures (23,706,716) (19,374,704) 22%
Trans fe rs (ne t) (747,982) (951,154) ‐21%
Net Change in Fund Balances 2,487,461               5,131,812 ‐52% Fund bala nces at beginning of
yea r       66,037,469    60,905,657 8%
Fund bala nces at end of yea r 68,524,930           66,037,469 4% Non‐s penda ble       26,823,920    26,823,920
Res tricted       22,258,032    21,340,221 4%
Commi tted         9,841,012      8,999,117 9%
As signed         3,215,073      2,288,175 41%
Una s signed         6,386,892      6,586,036 ‐3%
Total fund bala nces       68,524,929    66,037,469 4%

CITY OF HALF MOON BAY
Comparative Statement
Governmental Funds Statement of Revenues, Expenditures and Fund Balance Yea r Ended on June 30, 2023
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92 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 (39.1% 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 $22.2 million (32.5% 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 $9.8 million (14.4% 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 $3.2 million (4.7% 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 $6.3 million (9.3% 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, Economic Vitality and Public Safety. In addition, the General Fund expenditures include transfers to fund capital projects and reserve funding.

As of June 30, 2023, the total General Fund balance was $16.2 million, which includes an unassigned portion of 6.3 million. The General Fund fund balances increased by $642 thousand for the fiscal year ended June 30, 2023.

The following table compares General Fund revenues and expenditures by category:

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93 CITY OF HALF MOON BAY, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS
General Fund Revenues
General Fund revenues for the year ended June 30, 2023, decreased by $766 thousand or 3%, over the prior year. The preceding chart summarizes revenues into major categories for comparative purposes across two fiscal years.

Total tax revenues decreased by $1.1 million or 6% from the prior year primarily from a decrease in transient occupancy taxes. Net transfers increased by $1.5 million primarily due to an increase in capital projects being funded directly.
2023 2022 Variance
Revenues
Ta xes 17,500,650              ‐ 18,670,447 6%
License and pe rmi ts 452,763                       365,491 24% Fines and forfei tures 32,232                            ‐ 70,383 54% Cha rges for se rvices         1,419,473        1,544,174 ‐8% Impa ct Fees                    ‐ ‐
Rents and Lea ses              63,728 ‐
Inves tment Income            353,945         (197,019) ‐280% Inte rgovernmental revenues 1,552,805                 1,574,015 ‐1% Mi s cella neous            970,404        1,085,110 ‐11% Total       22,346,000      23,112,601 ‐3%
Expenditures
General gove rnment         2,272,314        1,949,450 17% General admi ni s tra tion         1,977,351        1,584,239 25% Public sa fety         4,914,582        4,527,692 9%
Public works         2,176,714        1,780,363 22%
Recrea tion Services            524,211        1,040,867 ‐50% Pla nni ng         2,873,331        2,628,557 9%
Communi ty and Economic
Development            843,267 ‐
Ca pi tal Outlay                    ‐ ‐
Debt Se rvice            675,302        1,260,001 ‐46%
Total       16,257,072      14,771,169 10%
Net Trans fe rs        (5,446,177) (3,896,979) 40%
Net Change in Fund Balances            642,751        4,444,453 26% Fund Balances at beginning of year       15,585,153 11,140,700 40% Fund Balances at end of year       16,227,904 $   15,585,153 4%

CITY OF HALF MOON BAY
Comparative Statement
General Fund Statement of Revenues, Expenditures and Fund Balance Yea r Ended on June 30, 2023
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MANAGEMENT’S DISCUSSION AND ANALYSIS
General Fund Expenditures
General Fund expenditures for the 2022-23 fiscal year increased by $1.4 million or 10%. This increase is primarily due to general increases in existing city functions and the creation of a new division focused on economic development.

General Fund Budgetary Highlights
The final budget for the General Fund planned for a net decrease of fund balance by $621 thousand, however the ending fund balance increased by $642 thousand. This is primarily due to the City finishing the fiscal year under budget by $1.4 million. The City experienced decreased operational spending than initially anticipated. These excess funds have been appropriated in the following budget for fiscal year 2023-24.

Final Budget Actual Variance
Revenues $   22,551,667 $   22,346,000 $       (205,667) Expendi tures (17,727,090) (16,257,072) 1,470,018
Tra ns fers (ne t) (5,446,177) (5,446,177)                     (0) Net Cha nge in Fund Bala nce          (621,600)           642,751         1,264,351 Fund bala nces at beginning of yea r 15,585,153            15,585,153 ‐ Fund bala nces at end of yea r      14,963,553      16,227,904         1,264,351

CITY OF HALF MOON BAY
Budget to Actual Statement
General Fund Statement of Revenues, Expenditures and Fund Balance Yea r Ended on June 30, 2023
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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, 2023, the Street and Road Funds had a fund balance of $6.4 million, a $169 thousand 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, 2023, the fund had a fund balance of $1.3 million, a $499 thousand decrease from the prior year.

Judgment Obligation Bond (JOB) Fund
The JOB funds account for debt service on the judgment obligation bonds. As of June 30, 2023, the fund balance was $6 thousand, which is a small increase from the prior year. This is due to an unrealized gain 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 increased by $9 thousand, primarily through interest income. As of June 30, 2023, the fund balance was $426 thousand.

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 2023 2022 Variance
Major Governmental Funds:

General Fund 16,227,904 15,585,153 4%
Stree ts and Roa d 6,427,224 6,257,602 3%
Lot Acqui si tion / Reti rement 1,348,210 1,848,079 ‐27% Judgement Obliga tion Bonds 6,268 6,132 2%
Libra ry Ca pi tal 426,155 416,574 2%
La nd As set 26,823,920 26,823,920 0%
Capi tal Project Fund 2,788,918 1,871,601 49%
Non‐Major Governmental Funds 14,476,330 13,228,408 9%
Total Fund Bala nces $   68,524,929 $ 66,037,469 4%

CITY OF HALF MOON BAY
Comparative Statement
Governmental Funds Statement of Revenues, Expenditures and Fund Balance Yea r Ended on June 30, 2023
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MANAGEMENT’S DISCUSSION AND ANALYSIS
improvements. As of June 30, 2023, the fund balance was $2.7 million, a $917 thousand increase from the prior year, primarily due to transfer-ins 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, 2023 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 2022-23.

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, 2023, the Non-Major Funds had a fund balance of $14.4 million, a $1.2 million increase over the prior year. This increase is primarily due to receipt of restricted operating grants totaling $1.1 million. The purpose of these funds is for community vitality and economic development.

Proprietary Fund Financial Statement Analysis
As of June 30, 2023, the City’s Proprietary Fund net position was $27 million ($7.3 million invested in capital assets; $10.1 million restricted for investment in Sewer Authority; $9.6 million in unrestricted net position). Additional information on this investment can be found in Note 6 of the financial statements.

Unrestricted net position of $4.9 million in the Internal Service Funds is primarily reserved for vehicle and equipment replacement, risk management and general liability claims, and pension cost stabilization.

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, 2023, was $85.3 million, an increase of $3.6 million as compared to June 30, 2022.

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MANAGEMENT’S DISCUSSION AND ANALYSIS
Capital assets include land, buildings, equipment, vehicles and infrastructure. The following table presents summarized information on capital assets net of depreciation for fiscal years 2023 and 2022:

Construction in progress increased by $4 million primarily due to the improvements to the Corporation Yard, Carter Park Improvements, and other capital 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, 2023, the City’s long-term obligations totaled $21.9 million, primarily comprised of net pension liability and loans related to the library and the corporation yard.

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. In fiscal year 2022-23 the City made its annual scheduled payment of $572 thousand.
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 2023 2022 2023 2022 2023 2022 Variance
Land $     4,756,385 $     5,022,855 $                   ‐ $                   ‐ $     4,756,385 $     5,022,855 ‐5% Rights of Way         6,990,396         6,723,926 ‐                       ‐                               6,990,396         6,723,926 4% Construction in progress 9,669,548                  5,556,654 ‐                                    43,832         9,669,548         5,600,486 73% Buildings and improvements 29,731,961            30,682,040      6,942,251      6,869,331      36,674,212      37,551,371 ‐2% Machinery and equipment 405,419                          434,248              39,599              35,271             445,018             469,519 ‐5% Infrastructure      26,793,248      26,274,721 ‐                       ‐                            26,793,248      26,274,721 2% Total $  78,346,957 $  74,694,444 $  6,981,850 $  6,948,434 $  85,328,807 $  81,642,878 5% Activities Activities Total

CITY OF HALF MOONBAY
Comparative Statement
Capital Assets(net of depreciation)
Year Ended on June 30, 2023
Governmental Business Type
2023 2022 2023 2022 2023 2022 Variance
Libra ry Loa n 3,436,112               ‐            4,008,798 ‐                  3,436,112       4,008,798 ‐14% 880 Stone Pi ne Loan 3,055,896              2,410,020 ‐            ‐                  3,055,896       2,410,020 27% Claims lia bili ty       1,064,830          919,647 ‐            ‐                  1,064,830          919,647 16% Employee compensa ted
a bsences          550,966          535,967 ‐            ‐                     550,966          535,967 3% Net Pensi on Lia bili ty 13,296,353            7,376,028    541,207    283,237     13,837,560       7,659,265 81% Total $  21,404,157 $  15,250,460 $ 541,207 $ 283,237 $  21,945,364 $  15,533,697 41% Activities Activities Total

CITY OF HALF MOON BAY
Comparative Statement
Long Term Obligations
Year Ended on June 30, 2023
Governmental Business‐type
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MANAGEMENT’S DISCUSSION AND ANALYSIS
property and land. The City plans to upgrade and restore the Corporation yard to store vehicles, equipment and supplies. In fiscal year 2022-23, the City made its scheduled payment of $102 thousand.

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, 2023, the City’s share of the pension liability was measured to be $13.8 million. This is an increase of $6.1 million or 81%.

This increase in net pension liability is from a decrease 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 limit for the City is approximately $141 million. At June 30, 2023, 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.

During the budget process for Fiscal Year 2023-24, staff projected an estimated structural deficit of $4 million going into Fiscal Year 2024-25. The deficit is primarily due to stagnating Transient Occupancy Tax revenues and increased costs in City services, including but not limited to existing public safety services.

In response, staff has initiated a cost allocation and fee study, is exploring revenue enhancement opportunities, and reviewing all operating expenditures, capital projects and programs, and staff vacancies to identify opportunities to realize short- and long-term savings.

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 the financial challenges that 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.

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 Review 22 Draft
99 CITY OF HALF MOON BAY

STATEMENT OF NET POSITION
Governmental Business-Type
Activities Activities Total
Assets
Cash and investments (Note 2) $44,999,387 $5,085,432 $50,084,819 Accounts receivable, net 4,250,189 19,135 4,269,324
Interest receivable 325,314 43,301 368,615
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) 10,092,582 10,092,582
Net OPEB Asset (Note 9) 244,676 11,792 256,468
Capital assets, not depreciated (Note 4) 21,416,329 21,416,329 Capital assets, depreciated, net (Note 4) 56,930,628 6,981,850 63,912,478 Total assets 155,262,749 22,234,092 177,496,841
Deferred outflows of resources
Related to OPEB (Note 9) 60,710 4,634 65,344
Related to pensions (Note 8) 5,593,021 232,715 5,825,736 Total deferred outflows of resources 5,653,731 237,349 5,891,080 Liabilities
Accounts payable 49,247 134,964 184,211
Accrued liabilities 1,417,925 1,417,925
Deposits payable 546,303 546,303
Unearned revenue 75,000 75,000
Claims liability, due within one year (Note 10) 1,064,830 1,064,830 Compensated absences (Note 1j):

Due within one year 33,930 33,930
Due in more than one year 517,036 517,036
Long-term debt (Note 5):

Due within one year 650,612 650,612
Due in more than one year 5,841,396 5,841,396
Net pension liability, due in more than one year (Note 8) 13,296,353 541,207 13,837,560 Total liabilities 23,492,632 676,171 24,168,803
Deferred inflows of resources
Related to OPEB (Note 9) 113,746 9,009 122,755
Related to pensions (Note 8) 1,043,360 74,781 1,118,141 Total deferred inflows of resources 1,157,106 83,790 1,240,896 Net position (Note 7)
Net investment in capital assets 71,854,949 6,981,850 78,836,799 Restricted for:

Investment in Sewer Authority 10,092,582 10,092,582
Other post-employment benefits 244,676 244,676
Capital Projects 10,503,106 10,503,106
Debt Service 6,268 6,268
Housing and Economic Development 3,101,369 3,101,369
Special Revenues 2,220,065 2,220,065
Streets and Roads 6,427,224 6,427,224
Total restricted net position 22,502,708 10,092,582 32,595,290 Unrestricted 41,909,085 4,637,048 46,546,133
Total net position $136,266,742 $21,711,480 $157,978,222 See accompanying notes to financial statements
JUNE 30, 2023
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CITY OF HALF MOON BAY

STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2023
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 $6,018,989 $687,941 $2,702,805 ($2,628,243) ($2,628,243) Public safety 5,275,682 79,661 165,271 (5,030,750) (5,030,750) Public works 4,129,117 442,582 760,498 $1,677,758 (1,248,279) (1,248,279) Recreation 597,127 1,113,689 516,562 516,562
Planning 2,965,787 558,369 (2,407,418) (2,407,418)
Community and economic development 843,267 (843,267) (843,267) Total governmental activities 19,829,968 2,882,242 3,628,574 1,677,758 (11,641,394) (11,641,394) Business-type Activities:

Sewer 5,998,227 5,994,167 ($4,060) (4,060)
Total $25,828,195 $8,876,409 $3,628,574 $1,677,758 (11,641,394) (4,060) (11,645,454) Taxes:
4,129,317 4,129,317
3,315,341 3,315,341
8,852,640 8,852,640
Franchise 945,755 945,755
330,544 330,544
Investment income 865,654 129,865 995,519
Miscellaneous 424,089 424,089
Gain on investment in Sewer Authority Mid-Coastside (Note 6) 537,739 537,739 Transfers (Note 3) 957,438 (957,438)
Total general revenues and transfers 19,820,778 (289,834) 19,530,944 Change in Net Position 8,179,384 (293,894) 7,885,490
Net Position at beginning of year 128,087,358 22,005,374 150,092,732 Net Position at end of year $136,266,742 $21,711,480 $157,978,222 See accompanying notes to financial statements
Business License Tax
Program Revenues
General revenues:

Property
Sales and Use
Transient occupancy
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CITY OF HALF MOON BAY

GOVERNMENTAL FUNDS

BALANCE SHEET
JUNE 30, 2023
Special Revenue Funds Judgment
General Streets and Lot Acquisition Obligation
Fund Road and Retirement Bonds
Assets
Cash and investments (Note 2) $14,377,688 $6,567,402 $1,423,282 $6,223 Receivables:

Accounts, net 2,947,714 187,469
Interest 103,204 46,795 10,752 45
Land held for resale (Note 1i)
Due from other funds (Note 3a)
Prepaids
Total assets $17,428,606 $6,801,666 $1,434,034 $6,268
Liabilities and Fund Balances
Liabilities:
$654,399 $299,442 $85,824
546,303
Due to others funds (Note 3a)
75,000
Total Liabilities 1,200,702 374,442 85,824
Fund balances (Note 7):

Nonspendable
Restricted 6,427,224 1,348,210 $6,268
Committed 9,841,012
Assigned
Unassigned 6,386,892
Total fund balances 16,227,904 6,427,224 1,348,210 6,268 Total liabilities and fund balances $17,428,606 $6,801,666 $1,434,034 $6,268 See accompanying notes to financial statements
Unearned revenue
Deposits payable
Accounts payable
Accrued liabilities
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Capital Projects Funds Non-major
Capital Projects Governmental
Library Land Asset Fund Funds Total
$422,984 $2,602,469 $13,547,086 $38,947,134
1,113,794 4,248,977
3,171 19,371 98,846 282,184
$26,823,920 26,823,920
272,306 272,306
$426,155 $26,823,920 $2,894,146 $14,759,726 $70,574,521 $10,364 $10,364
94,864 $283,396 1,417,925
546,303
75,000
105,228 283,396 2,049,592
$26,823,920 272,306 27,096,226
14,476,330 22,258,032
9,841,012
$426,155 2,516,612 2,942,767
6,386,892
426,155 26,823,920 2,788,918 14,476,330 68,524,929
$426,155 $26,823,920 $2,894,146 $14,759,726 $70,574,521 Review 27 Draft
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CITY OF HALF MOON BAY
Reconciliation of the

GOVERNMENTAL FUNDS - BALANCE SHEET
with the

STATEMENT OF NET POSITION
JUNE 30, 2023
Fund balances of governmental funds $68,524,929
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 21,416,329
Capital assets, depreciated, net 56,542,360
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 5,652,755
Deferred inflows of resources (1,156,152)

Long-Term Notes Payable (6,492,008)
Compensated absences (550,966)
Net pension liability (13,296,353)
Net OPEB asset 241,627
5,384,221
Net position of governmental activities $136,266,742
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.

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 Review 28 Draft
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CITY OF HALF MOON BAY

GOVERNMENTAL FUNDS

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2023
Judgment
Special Revenue Funds Obligation Bonds
General Streets and Lot Acquisition Debt Service
Fund Road and Retirement Fund

REVENUES
Taxes $17,500,650
License and Permits 452,763 $609,303
Fines and forfeitures 32,232
Charges for services 1,419,473
Impact fees/recreation fees
Rents and leases 63,728
Investment income 353,945 144,104 $36,645 $136
Intergovernmental revenues 1,552,805 743,017
Miscellaneous 970,404
Total Revenues 22,346,000 1,496,424 36,645 136

EXPENDITURES
Current:

General government 2,272,314 569 505,389
General administration 1,977,351
Public Safety 4,914,582
Public works 2,176,714 199,458
Recreation services 524,211
Planning 2,873,331
Community and economic development 843,267
Capital outlay 691,148 31,125
Debt service:

Principal 620,197
Interest & fees 55,105
Total Expenditures 16,257,072 891,175 536,514
Excess (deficiency) of revenues
over (under) expenditures 6,088,928 605,249 (499,869) 136 Other financing sources (uses):

Transfers in (Note 3) 524,180 40,000
Transfers (out) (Note 3) (5,970,357) (475,627)
Proceeds from the issuance of debt
Total other financing
sources (uses) (5,446,177) (435,627)
Net change in fund balances 642,751 169,622 (499,869) 136 Fund balances at beginning of year 15,585,153 6,257,602 1,848,079 6,132 Fund balances at end of year $16,227,904 $6,427,224 $1,348,210 $6,268 See accompanying notes to financial statements
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Capital Projects Funds Non-Major
Capital Projects Governmental
Library Land Asset Fund Funds Total
$17,500,650
1,062,066
32,232
$12,831 1,432,304
296,256 296,256
63,728
$9,581 $42,330 283,041 869,782
2,418,915 4,714,737
970,404
9,581 42,330 3,011,043 26,942,159
221,300 2,999,572
1,977,351
6,413 4,920,995
73,660 2,449,832
524,211
2,873,331
843,267
895,813 4,824,769 6,442,855
620,197
55,105
895,813 5,126,142 23,706,716
9,581 (853,483) (2,115,099) 3,235,443
1,770,800 2,912,546 5,247,526
(242,912) (6,688,896)
693,387 693,387
1,770,800 3,363,021 (747,983)
9,581 917,317 1,247,922 2,487,460
416,574 $26,823,920 1,871,601 13,228,408 66,037,469
$426,155 $26,823,920 $2,788,918 $14,476,330 $68,524,929 Review 31 Draft
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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, 2023
Changes in fund balances of governmental funds $2,487,460 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 5,734,937
(2,036,444)
Debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Position.

Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position.

Financing lease proceeds (693,387)
Repayment of principals 620,197
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 7,346
Compensated absences (14,999)
Pension expense 1,972,245
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. 102,029
Changes in net position of governmental activities $8,179,384 See accompanying notes to financial statements
depreciation expense charged for the year.

Capital asset additions
Depreciation expense
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CITY OF HALF MOON BAY

PROPRIETARY FUNDS

STATEMENT OF NET POSITION
JUNE 30, 2023
Sewer Internal
Enterprise Service
Fund Funds
Assets:

Current Assets:

Cash and investments (Note 2) $5,085,432 $6,052,253
Accounts receivable 19,135 1,212
Interest receivable 43,301 43,130
Total Current Assets 5,147,868 6,096,595
Noncurrent Assets:

Investment in Sewer Authority Mid-Coastside (Note 6) 10,092,582 Net OPEB Asset (Note 9) 11,792 3,049
Non-depreciable capital assets (Note 4)
Depreciable capital assets, net of accumulated depreciation (Note 4) 6,981,850 388,268 Total non-current assets 17,086,224 391,317
Total Assets 22,234,092 6,487,912
Deferred Outflows of Resources
Related to OPEB (Note 9) 4,634 976
Related to pensions (Note 8) 232,715
Total deferred outflows of resources 237,349 976
Current Liabilities:

Accounts payable 134,964 38,883
Claims liability (Note 10) 1,064,830
Total current liabilities 134,964 1,103,713
Noncurrent liabilities:

Net pension liability (Note 8) 541,207
Total Liabilities 676,171 1,103,713
Deferred Inflows of Resources
Related to OPEB (Note 9) 9,009 954
Related to pensions (Note 8) 74,781
Total deferred inflows of resources 83,790 954
Net Position:

Net investment in capital assets 6,981,850 388,268
Restricted for investment in Sewer Authority 10,092,582 Unrestricted 4,637,048 4,995,953
Total Net Position $21,711,480 $5,384,221
See accompanying notes to financial statements
Liabilities:

Review 33 Draft
110

CITY OF HALF MOON BAY

PROPRIETARY FUNDS

STATEMENT OF REVENUES, EXPENSES AND CHANGES

IN FUND NET POSITION
FOR THE YEAR ENDED JUNE 30, 2023
Sewer Internal
Enterprise Service
Fund Funds
Operating revenues:

Charges for services $5,994,167
Impact fees $22,415
Total operating revenues 5,994,167 22,415
Operating expenses:

Salaries and wages 352,995 727,873
5,498,956 42,163
Supplies 1,570 413,484
Repairs and maintenance 8,275 (807)
Insurance 508,617
Pensions 660,198
Depreciation 136,431 77,121
Other charges 300
Total operating expenses 5,998,227 2,428,949
Total operation income (4,060) (2,406,534)
Non-operating revenues:

Gain on investment in Sewer Authority Mid-Coastside (Note 6) 537,739 Investment income 129,865 109,755
Total non-operating revenues 667,604 109,755
Income before transfers 663,544 (2,296,779)
Transfers:

Transfers in (Note 3) 2,398,808
Transfers (out) (Note 3) (957,438)
Total transfers (957,438) 2,398,808
Change in net position (293,894) 102,029
Net position at beginning of year 22,005,374 5,282,192
Net position at end of year $21,711,480 $5,384,221
See accompanying notes to financial statements
Contract services
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111

CITY OF HALF MOON BAY

PROPRIETARY FUNDS

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2023
Sewer Internal
Enterprise Service
Fund Funds
Cash flows from operating activities:

Cash received from department users $5,952,049 $21,203
Cash payments to suppliers for goods and services (5,437,517) (1,649,285) Cash payments to employee services (432,175) (582,777)
Net cash provided by operating activities 82,357 (2,210,859) Cash flows from non-capital and related financing activities:

Cash collected from other funds 2,398,808
Cash paid to other funds (957,438)
Net cash (used for) non capital and related financing activities (957,438) 2,398,808 Cash flows form capital and related financing activities:

Acquisition of capital assets (169,847) (31,141)
Net cash provided by (used for) capital and related financing activities (169,847) (31,141) Cash flows from investing activities:

Interest received on investments 129,865 109,755
Net cash provided by investing activities 129,865 109,755 Net increase in cash and cash equivalents (915,063) 266,563 Cash and cash equivalents at beginning of year 6,000,495 5,785,690 Cash and cash equivalents at end of year $5,085,432 $6,052,253 Reconciliation of operating income (loss) to net cash provided by (used for) Provided by (used for) operating activities:

Operating income (loss) ($4,060) ($2,406,534)
Adjustments to reconcile operating income (loss) to net cash provided by operating activities:

Depreciation 136,431 77,121
Change in assets and liabilities:

Interest receivable, net (27,524) (29,372)
Accounts receivable (14,594) (1,212)
Accounts payable 71,284 4,042
Deferred outflows of resources (117,125)
Deferred inflows of resources (218,847) (87)
Claims liability 145,183
Net OPEB asset (1,178)
Net pension liability 257,970
Net cash provided by operating activities $82,357 ($2,210,859) Non-cash transactions:

Gain on investment in Sewer Authority Mid-Coastside $537,739 See accompanying notes to financial statements
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Review Draft
113

CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

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 (Agency), which is controlled by and dependent on the City. The Agency is a separate government entity created in 1986 whose purpose is to prepare and implement plans for improvement, rehabilitation, and development of certain areas within the City. The Agency has the same governing board as the City, which also performs all accounting and administrative functions for the Agency, and has a financial relationship with the City. The financial activities of the Agency have been aggregated and merged (termed “blending”) with those of the City. The Agency is currently inactive for the fiscal year ended June 30, 2023. 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.

Review 37 Draft
114

CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

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 Lot Acquisition and Retirement Special Revenue 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 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 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 and Vehicle Replacement Fund, a Risk Management Fund, and Pension Stabilization Fund.

Review 38 Draft
115

CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

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.

Review 39 Draft
116

CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

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.

Review 40 Draft
117

CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

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, 2023 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.

Review 41 Draft
118

CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

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, 2023 is as follows:

Beginning Balance $535,968
Additions 532,974
Payments (517,976)
Ending Balance $550,966
Current Portion $33,930
Non-current Portion $517,036
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.

Review 42 Draft
119

CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

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.

Review 43 Draft
120

CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

1. Significant Accounting Policies, continued
q) Subscription-Based Information Technology Arrangements (SBITAs) Accounting As clarified by the Government Accounting Standards Board (GASB) Statement No. 96, a Subscription-Based Information Technology Arrangement (SBITA) is a contract that conveys control of the right to use another party’s (a SBITA vendor’s) IT software, alone or in combination with tangible capital assets (the underlying IT assets), as specified in the contract for a period of time in an exchange or exchange-like transaction.

At the commencement of a SBITA, the City initially measures the subscription liability at the present value of payments expected to be made during the contract term. Subsequently, the subscription liability is reduced by the principal portion of payments made. The subscription asset is initially measured as the initial amount of the subscription liability, adjusted for payments made at or before the SBITA commencement date, plus certain initial direct costs.

Subsequently, the subscription asset is amortized on a straight‐line basis over the shorter of the subscription term or the useful life of the underlying IT assets. The City recognizes SBITA liabilities with an initial, individual value of $200,000 or more for all funds, based on the future SBITA payments remaining at the start of the contract.

Key estimates and judgments related to SBITAs include how the City determines (1) the discount rate it uses to discount the expected subscription payments to present value, (2) subscription term, and (3) subscription payments as follows:
• The City uses the interest rate charged by the IT vendor as the discount rate. When the interest rate charged by the IT vendor is not provided, the City uses its estimated incremental borrowing rate as the discount rate for subscription liabilities. • The subscription term includes the noncancellable period of the subscription. • Subscription payments included in the measurement of the subscription liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise.

The City monitors changes in circumstances that would require a remeasurement of its subscription and will remeasure the subscription asset and liability if certain changes occur that are expected to significantly affect the amount of the subscription liability. Subscription assets are reported with other capital assets and subscription liabilities are reported with liabilities on the statement of net position.

The City has no SBITA subject to GASB #96 for the fiscal year 2023.

Review 44 Draft
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 2023. 121

CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

1. Significant Accounting Policies, continued
r) 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, 2023.

Effect of New Governmental Accounting Standards Board (GASB) Pronouncements GASB 96 – Subscription-Based Information Technology Arrangements (SBITAs) In June 2020, the GASB issued Statement No. 96, SBITAs. This Statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. To the extent relevant, the standards for SBITAs are based on the standards established in Statement No. 87, Leases, as amended.

The requirements of this Statement are effective for reporting periods beginning after June 15, 2022, and all reporting periods thereafter. The City has no leases subject to GASB #96 for the fiscal year 2023.

2. Cash, Cash Equivalents, and Investments
Cash and investments as of June 30, 2022 consist of the following:

Cash on hand $321
Deposits with financial institutions 3,357,113
Investments 46,727,385
Total City cash and investments $50,084,819
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, 2023, the carrying amount of the City's deposits was $3,357,113 and the bank balance was $4,301,037. 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 fair value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies.

California law also allows financial institutions to secure 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.

Review 45 Draft
122

CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

2. Cash, Cash Equivalents, and Investments, continued
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 Type Maturity 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%
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

Review 46 Draft
123

CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

2. Cash, Cash Equivalents, and Investments, continued
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 2023. 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 $38,947,180
California Local Agency Investment Fund 7,780,205
Total Investments 46,727,385
Cash in Bank and on hand 3,357,434
Total Cash and Investments $50,084,819
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 $7,780,205 $7,780,205 San Mateo County Investment Pool 38,947,180 38,947,180
Total Investments $46,727,385 46,727,385
Demand Deposits and Cash on Hand 3,357,434
$50,084,819
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.

Review 47 Draft
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CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

2. Cash, Cash Equivalents, and Investments, continued
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 (S&P).

Investment Type AA Not Rated Total
Held by City
California Local Agency Investment Fund $7,780,205 $7,780,205 San Mateo County Investment Pool $38,947,180 38,947,180 Cash in banks and on hand 3,357,434 3,357,434
Total Cash & Investments $38,947,180 $11,137,639 $50,084,819 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, 2023, these investments matured in an average of 1.65 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, 2023, these investments matured in an average of 260 days.

Review 48 Draft
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CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

3. Interfund Transactions
a) Transfers
Transfers between funds during the fiscal year ended June 30, 2023, were as follows:

Transfer To Transfer From Amount
General Fund Sewer Enterprise Fund $524,180 (e)
Streets and Road Special Revenue Fund General Fund 40,000 (d) Capital Projects Capital Project Fund General Fund 1,530,800 (d) Non-Major Governmental Funds 240,000 (d)
Non-Major Governmental Funds General Fund 2,444,620 (d) Streets and Roads Special Revenue Fund 467,926 (d)
Internal Service Funds General Fund 1,954,937 (e)
Streets and Roads Special Revenue Fund 7,701 (e)
Non-Major Governmental Funds 2,912 (e)
Sewer Enterprise Fund 433,258 (e)
$7,646,334
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

4. Capital Assets
a) Capital Assets Activity
A Summary of changes in capital assets for the year ended June 30, 2023, is as follows:

Balance Balance
June 30, 2022 Additions Transfers June 30, 2023
Governmental activities:

Capital assets not being depreciated:

Land $5,022,855 ($266,470) $4,756,385
Rights of way 6,723,926 266,470 6,990,396
Construction in progress 5,556,654 $5,717,786 ($1,604,892) 9,669,548 Total capital assets not being depreciated 17,303,435 5,717,786 (1,604,892) 21,416,329 Capital assets being depreciated:

Buildings & improvements 38,456,364 38,456,364
Machinery & equipment 1,413,586 48,292 1,461,878
Infrastructure 43,814,284 1,604,892 45,419,176
Total capital assets being depreciated 83,684,234 48,292 1,604,892 85,337,418 Less accumulated depreciation for:

Buildings & improvements 7,774,324 950,079 8,724,403
Machinery & equipment 979,338 77,121 1,056,459
Infrastructure 17,539,563 1,086,365 18,625,928
Total accumulated depreciation 26,293,225 2,113,565 28,406,790 Net depreciable assets 57,391,009 (2,065,273) 1,604,892 56,930,628 Governmental activity capital assets, net $74,694,444 $3,652,513 $78,346,957 Review 49 Draft
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CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

4. Capital Assets, continued
a) Capital Assets Activity, continued
Balance Balance
June 30, 2022 Additions Transfers June 30, 2023
Business-type activities:

Capital assets not being depreciated:

Construction in progress $43,832 ($43,832)
Total capital assets not being depreciated 43,832 (43,832) Capital assets being depreciated:

Buildings & improvements 8,886,090 $169,847 43,832 $9,099,769 Machinery & equipment 763,646 763,646
Total capital assets being depreciated 9,649,736 169,847 43,832 9,863,415 Less accumulated depreciation for:

Buildings & improvements 2,016,759 132,103 2,148,862
Machinery & equipment 728,375 4,328 732,703
Total accumulated depreciation 2,745,134 136,431 2,881,565 Net depreciable assets 6,904,602 33,416 43,832 6,981,850 Business-type activity capital assets, net $6,948,434 $33,416 $6,981,850 b) Depreciation
Depreciation expense was charged to governmental functions as follows:

Governmental Activities:

General government $104,417
Recreation 829,784
Public safety 15,878
Public works 1,086,365
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 77,121
Total Governmental Activities $2,113,565
Business-Type Activities:

Sewer Fund $136,431

Review 50 Draft
127

CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

5. Long-Term Debt
The following is a summary of long-term debt transactions for the year ended June 30, 2023:

Original Issue Balance Balance Current
Amount June 30, 2022 Additions Retirements June 30, 2023 Portion Governmental Activity Debt
Direct borrowings:

San Mateo County Advance $5,726,855 $4,008,798 $572,686 $3,436,112 $572,686 Lease:
iBank Financing Lease A & B 3,200,000 2,410,020 $693,387 47,511 3,055,896 77,926 Total Governmental Activity $6,418,818 $693,387 $620,197 $6,492,008 $650,612 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, 2023, 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 in August 2022. As of June 30, 2023, the City had drawn down a total of $3,103,407.

Review 51 Draft
128

CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

5. Long-Term Debt, continued
c) Debt Service
As of June 30, 2023, annual debt service to maturity for the private placements is as follows:

Governmental Activities
Year ending Direct Borrowings
June 30 Principal Interest Total
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 658,703 936,370 1,595,073
2028-2032 1,036,115 3,849,030 4,885,145
2033-2037 1,114,988 2,117,689 3,232,677
2038-2042 370,733 297,070 667,803
2043-2047 419,450 61,443 480,893
2048-2052 277,683 10,527 288,210
Total $6,492,008 $11,294,788 $17,786,796

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, 2022, the City recorded its investment in SAM in the amount of $10,092,582 at June 30, 2023.

Review 52 Draft
129

CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

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.

Review 53 Draft
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CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

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.

Review 54 Draft
131

CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

7. Net Position/Fund Balances, continued
d) Policies, continued
Fund balances for all the major and non-major governmental funds as of June 30, 2023, 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 $272,306 $27,096,226
Total nonspendable 26,823,920 272,306 27,096,226
Restricted:

Streets & roads $6,427,224 6,427,224
Community development $1,348,210 1,348,210
Economic/Community Grants $936,748 936,748
Park development improvements 2,589,695 2,589,695
Debt service $6,268 6,268
Police grants 871,855 871,855
Storm drain
maintenance improvements 1,478,355 1,478,355
Traffic mitigation 4,365,486 4,365,486
Affordable housing 2,164,621 2,164,621
Public facilities 2,069,570 2,069,570
Total restricted 6,427,224 6,268 1,348,210 14,476,330 22,258,032 Committed:

Contingency reserve $9,841,012 9,841,012
Total committed 9,841,012 9,841,012
Assigned:

San Mateo County Library $426,155 426,155
Capital projects $2,516,612 2,516,612
Total assigned 426,155 2,516,612 2,942,767
Unassigned: 6,386,892 6,386,892
Total Fund Balances $16,227,904 $6,427,224 $6,268 $426,155 $26,823,920 $1,348,210 $2,788,918 $14,476,330 $68,524,929 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.

Review 55 Draft
132

CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

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, 2023:

Governmental Business-Type
Activities Activities Total
Capital Asset, net of accumulated depreciation: $78,346,957 $6,981,850 $85,328,807 Less: Capital debt: (6,492,008) (6,492,008)
$71,854,949 $6,981,850 $78,836,799

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.

Review 56 Draft
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CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

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, 2023, 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 $491,897 in fiscal year 2023.

Review 57 Draft
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CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

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, 2023, the contributions recognized as part of pension expense for each Plan were as follows:

Miscellaneous Safety
Contributions - employer $905,657 $660,198
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, 2023, 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 $6,769,868
Safety 7,067,692
Total Net Pension Liability $13,837,560
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.

Review 58 Draft
135

CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

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, 2022, and 2023 was as follows:

Miscellaneous Safety
Proportion - June 30, 2022 0.18148% 0.12006%
Proportion - June 30, 2023 0.14468% 0.10285%
Change - Increase (Decrease) (0.03680%) (0.01720%)
For the year ended June 30, 2023, the City recognized pension expense of $2,302,612 for Miscellaneous Plan and $376,309 for Safety Plan, with a total pension expense of $2,678,921. At June 30, 2023, 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 $905,657 $660,198 $1,565,855 Changes in assumptions 693,714 712,637 1,406,351
Differences between actual and expected experience 135,952 ($91,055) 292,506 ($76,750) 428,458 ($167,805) Net change in Proportion DIDO and Net Pension Liability 36,357 (246,212) 32,568 (94,588) 68,925 (340,800) Net difference in actual contribution and proportion
contributions 1,240,060 (118,783) 1,116,087 (490,753) 2,356,147 (609,536) Net differences between projected and actual earnings on plan investments
Total $3,011,740 ($456,050) $2,813,996 ($662,091) $5,825,736 ($1,118,141) $1,565,855 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the 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
2024 $404,631 $323,307 $727,938
2025 321,182 300,712 621,894
2026 165,757 186,861 352,618
2027 758,463 680,827 1,439,290
Total $1,650,033 $1,491,707 $3,141,740

Review 59 Draft
136

CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

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, 2022, the total pension liability was determined by rolling forward the June 30, 2021 total pension liability. The June 30, 2022 total pension liability was based on the following actuarial methods and assumptions:

Miscellaneous & Safety
Valuation Date June 30, 2021
Measurement Date June 30, 2022
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:

Discount Rate 6.90%
Inflation 2.30%
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 2.30% until Purchasing Power applies, 2.30% 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 2020. For more details on this table, please refer to the November 2021 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 6.90%. 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.

Review 60 Draft
137

CITY OF HALF MOON BAY, CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

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-cap-weighted 30.0% 4.54% 4.54%
Global Equity-Non-cap-weighted 12.0% 3.84% 3.84%
Private Equity 13.0% 7.28% 7.28%
Treasury 5.0% 0.27% 0.27%
Mortgage-backed security 5.0% 0.50% 0.50%
Investment grade Corporates 10.0% 1.56% 1.56%
High Yield 5.0% 2.27% 2.27%
Emerging Market debt 5.0% 2.48% 2.48%
Private debt 5.0% 3.57% 3.57%
Real Assets 15.0% 3.21% 3.21%
Leverage -5.0% -0.59% -0.59%
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.

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NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

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 5.90% 5.90%
Net Pension Liability $10,166,103 $10,143,192 $20,309,295 Current Discount Rate 6.90% 6.90% 6.90%
Net Pension Liability $6,769,868 $7,067,692 $13,837,560 1% Increase 7.90% 7.90% 7.90%
Net Pension Liability $3,975,609 $4,553,577 $8,529,186
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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NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

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, 2023, membership in the plan consisted of the following:

Number of
members
Active employees 42
Inactive employees, spouses, or beneficiaries
currently receiving benefit payments 11
Inactive employees entitled to
but not yet receiving benefit payments 27
Total 80
c) Net OPEB Liability(Asset)
The components of the net OPEB liability of the City at June 30, 2023, were as follows:

Total OPEB Plan Fiduciary Net Net OPEB
Liability Position Liability/(Asset)
(a) (b) (c) = (a) - (b)
$469,198 $707,885 ($238,687)
Changes Recognized for the Measurement Period:

Service Cost 35,261 - 35,261
Interest 26,723 - 26,723
Expected investment income -
Contributions:

Employer - City's contribution - 37,336 (37,336)
Employer - Implicit subsidy - - -
Net investment income - 44,412 (44,412)
Benefit payments (37,150) (37,150) -
Actual vs. expected experience -
Changes of assumptions -
Administrative expenses* - (1,983) 1,983
Net Changes during Fiscal Year 2023 24,834 42,615 (17,781) $494,032 $750,500 ($256,468)
Increase (Decrease)
Balance at Fiscal Year Ending 6/30/2023:

Balance at Fiscal Year Ending 6/30/2022:

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NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

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, 2023, 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%)
($193,462) ($256,468) ($308,661)
Net OPEB Liability/(Asset)
1% Decrease Healthcare Cost 1% Increase
Trend Rates
($326,343) ($256,468) ($167,811)
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, 2021
Measurement Date June 30, 2023
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 2.75%
Mortality Rate CalPERS 2000-2019 Experience Study
Healthcare participation for future retirees 50% covered; 30% if waived coverage PEMHCA Minimum Increases 4.00% annually

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NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

9. Other Post Employment Healthcare Benefits, continued f) OPEB Expense and Deferred Inflows and Outflows of Resources Related to OPEB For the fiscal year ended June 30, 2023, the City recognized OPEB expense of $23,131. At June 30, 2023, 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 $3,391 $99,263 on OPEB plan investments
Changes in assumptions 20,429 23,492
Differences between actual and expected experience 41,524 Total $65,344 $122,755
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
2024 ($1,172)
2025 (3,437)
2026 15,446
2027 (11,705)
2028 (10,598)
Thereafter (45,945)
Total ($57,411)
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, 2023
Plan Type Single Employer
OPEB Trust Yes
Special Funding Situation No
Nonemployer Contributing Entity No

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FISCAL YEAR ENDED JUNE 30, 2023

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 2023.

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, 2023:

Long-Term
Target Expected Real
Asset Class Allocation Rate of Return
Global Equity 50.00% 4.56%
Fixed Income 45.00% 0.78%
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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FISCAL YEAR ENDED JUNE 30, 2023

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.

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FISCAL YEAR ENDED JUNE 30, 2023

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, 2023, the City has no leases over the threshold subject to GASB 87 as a lessee. b) Leases Receivable (City as Lessor)
As of June 30, 2023, 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 included 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, 2023

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, 2023, the City paid premiums of $36,581 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, 2023, the City paid premiums of $72,301 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, 2023 June 30, 2022
Beginning balance of claims payable $919,647 $947,234
Increase in estimated liability 445,208 370,710
Claims paid (300,025) (398,297)
Ending balance of claims payable $1,064,830 $919,647
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NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

12. Subsequent Events
In October 2023, the City refinance iBank Loan, in the amount of $3.2 million with the County of San Mateo. The proceeds will be used to pay off the iBank loan to remove financing restrictions and continue affordable housing efforts at the location.

The Loan bears an interest rate of 3.13%. Interest and Principal on the Loan is payable semiannually December 30 and April 30 through 2033.

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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.

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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 6/30/2022 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% 0.14468% 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 $6,769,868 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 $4,318,701 Plan's Proportionate Share of the Net
Pension Liability/(Asset) as a Percentage of
its Covered Payroll 211.13% 150.74% 204.72% 199.79% 150.18% 153.83% 145.24% 86.69% 156.76% 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% 72.83% * Fiscal year 2015 was the 1st year of implementation.

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REQUIRED SUPPLEMENTARY INFORMATION
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 6/30/22 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% 0.10285% 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 $7,067,692 Covered Payroll N/A 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 Covered Payroll N/A 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% 68.27% * Fiscal year 2015 was the 1st year of implementation.

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REQUIRED SUPPLEMENTARY INFORMATION
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 2023 Actuarially determined contribution $168,511 $344,215 $435,299 $525,289 $649,405 $728,503 $819,301 $905,657 Contributions in relation to the actuarially
determined contributions (344,215) (168,511) (435,299) (525,289) (649,405) (728,503) (819,301) (905,657) Contribution deficiency (excess) $0 $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 $4,671,261 Contributions as a percentage of covered payroll 8.4% 14.2% 13.7% 15.4% 16.5% 18.3% 19.0% 19.4% 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 6/30/2021 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 fair value
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 2023 Actuarially determined contribution $414,500 $249,322 $445,240 $551,942 $555,649 $594,797 $612,617 $660,198 Contributions in relation to the actuarially
determined contributions (414,500) (249,322) (445,240) (551,942) (555,649) (594,797) (612,617) (660,198) Contribution deficiency (excess) $0 $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 covered
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 6/30/2021 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 fair value
Inflation 2.30%
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 2.30% until Purchasing Power Protection Allowance Floor on Purchasing Power applies, 2.30% thereafter.

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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 6/30/23 Total OPEB Liability (1)
Service Cost $25,533 $27,065 $27,877 $28,713 $30,749 $31,671 $35,261 Interest 24,624 26,373 28,268 30,256 32,113 32,877 26,723 Differences between expected and actual experience - - - - - - - Benefit payments (22,522) (22,553) (22,788) (24,885) (29,523) (33,272) (37,150) 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) 24,834 Total OPEB liability - beginning 396,126 423,761 454,646 488,003 519,226 582,723 469,198 Total OPEB liability - ending (a) $423,761 $454,646 $488,003 $519,226 $582,723 $469,198 $494,032 OPEB fiduciary net position
Net investment income $48,425 $32,087 $41,937 $29,170 $136,486 ($91,716) $44,412 Contributions:

Employer - City's contribution 22,522 39,261 22,928 26,083 (5,366) 33,410 37,336 Employer - Implicit subsidy - - - - - - -
Administrative expense (2,071) (1,552) (1,745) (2,911) (2,934) (2,117) (1,983) Actual vs. expected experience - - - - - - -
Benefit payments (22,522) (22,553) (22,788) (24,885) (29,523) (33,272) (37,150) Net change in plan fiduciary net position 46,354 47,243 40,332 27,457 98,663 (93,695) 42,615 Plan fiduciary net position - beginning 541,531 587,885 635,128 675,460 702,917 801,580 707,885 Plan fiduciary net position - ending (b) $587,885 $635,128 $675,460 $702,917 $801,580 $707,885 $750,500 Net OPEB liability - ending (a)-(b) ($164,124) ($180,482) ($187,457) ($183,691) ($218,857) ($238,687) ($256,468) Plan fiduciary net position as a percentage of the total OPEB liability 138.73% 139.70% 138.41% 135.38% 137.56% 150.87% 151.91% Covered-employee payroll (A) N/A ** $3,009,829 $4,157,271 $4,976,211 $4,806,006 $5,072,966 $6,658,959 Total OPEB liability as a percentage of covered-employee payroll N/A ** -6.00% -4.51% -3.69% -4.55% -4.71% -3.85% * 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 Review 77 Draft
154

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 2023 Actuarially Determined Contribution (ADC) $16,708 $17,251 $15,539 $16,054 $15,992 $16,392 $3,915 Less: Contributions in Relation to the ADC (22,522) (39,261) (22,928) (26,083) (5,366) (37,336) (37,336) Contribution deficiency (excess) ($5,814) ($22,010) ($7,389) ($10,029) $10,626 ($20,944) ($33,421) Covered-employee payroll N/A ** $3,009,829 4,157,271 $ 4,976,211 $ $4,806,006 $5,072,966 $6,658,959 Contributions as a percentage of
Covered-employee payroll N/A ** 1.30% 0.55% 0.52% 0.11% 0.74% 0.56% 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 4.00% annual increases
Mortality CalPERS 2000-2019 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 - 6.50% for 2021, decreasing to an ultimate rate of 3.75% in 2076
Medicare - 5.65% for 2023, decreasing to an ultimate rate of

3.75% in 2076
Mortality projected fully generational with Society of
Actuaries Scale MP-2021

5.50%
June 30, 2021

2.75%
Investment gains and losses spread
over 5-year rolling period
10 year fixed period for 2022/23
Entry Age Normal, level percentage of payroll
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CITY OF HALF MOON BAY

GENERAL FUND

SCHEDULE OF REVENUES AND EXPENDITURES

BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2023
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual Amounts (Negative)
Revenues:

Taxes $16,462,505 $18,320,989 $17,500,650 ($820,339)
Licenses and permits 209,739 220,789 452,763 231,974
Fines and forfeitures 76,428 27,936 32,232 4,296
1,337,937 1,256,364 1,419,473 163,109
88,071 127,428 353,945 226,517
Rents and leases 77,000 77,000 63,728 (13,272)
Intergovernmental revenues 1,551,805 1,551,805 1,552,805 1,000 Miscellaneous 969,356 969,356 970,404 1,048
Total revenues 20,772,841 22,551,667 22,346,000 (205,667) Expenditures:

Current Operations:

General Government 2,394,486 2,547,086 2,272,314 274,772 General administration 1,949,021 1,949,021 1,977,351 (28,330) Public Safety 5,086,551 5,086,551 4,914,582 171,969
Public Works 2,103,137 2,182,137 2,176,714 5,423
Recreation services 606,721 606,721 524,211 82,510
3,443,278 3,443,278 2,873,331 569,947
Community and economic development 1,207,886 1,207,886 843,267 364,619 Debt service:

Principal 620,197 620,197 620,197
Interest and fiscal charges 84,213 55,105 29,108
Total expenditures 17,411,277 17,727,090 16,257,072 1,470,018 3,361,564 4,824,577 6,088,928 1,264,351
Other financing sources (uses):

Transfers in 524,180 524,180 524,180
Transfers out (5,970,357) (5,970,357) (5,970,357)
Total Other Financing Sources (Uses) (5,446,177) (5,446,177) (5,446,177) Net change in fund balance ($2,084,613) ($621,600) 642,751 $1,264,351 Fund balance at beginning of year 15,585,153
Fund balance at end of year $16,227,904

AND CHANGES IN FUND BALANCE
Planning
Excess of revenues over
expenditures
Charges for services
Investment income
Review 79 Draft
156

Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:

Taxes
Licenses and permits $576,200 $569,317 $609,303 $39,986 Investment income 29,100 61,111 144,104 82,993
Intergovernmental revenue 617,200 577,183 743,017 165,834 Miscellaneous
Total revenues 1,222,500 1,207,611 1,496,424 288,813
Expenditures:

Current:

General government 569 (569)
Public works 245,972 245,972 199,458 46,514
Capital Outlay 1,098,200 1,133,200 691,148 442,052
Total expenditures 1,344,172 1,379,172 891,175 487,997
Excess (deficiency) of revenues
over (under) expenditures (121,672) (171,561) 605,249 776,810 40,000 40,000 40,000
Transfer out (497,000) (475,627) (475,627)
sources (uses) (457,000) (435,627) (435,627)
Net change in fund balance ($578,672) ($607,188) 169,622 $776,810 Fund balance at beginning of year 6,257,602
Fund balance at end of year $6,427,224
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, 2023
Review 80 Draft
157
Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:

Investment income $18,800 $36,645 $17,845
Total revenues 18,800 36,645 17,845
Expenditures:

Current:

General government 430,000 505,389 (75,389)
Capital Projects 31,125 (31,125)
Total expenditures 430,000 536,514 (106,514)
Excess (deficiency) of revenues
over (under) expenditures (411,200) (499,869) (88,669)
Net change in fund balance ($411,200) (499,869) ($88,669) Fund balance at beginning of year 1,848,079
Fund balance at end of year $1,348,210

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, 2023
Review 81 Draft
158

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, except that there is no budget adopted for the Land Asset Capital Projects Fund.

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.

Review 82 Draft
159

SUPPLEMENTARY INFORMATION
Review Draft
160

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, 2023

Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:

Investment income $136 $136
Total revenues 136 136
Net change in fund balance 136 $136
Fund balance at beginning of year 6,132
Fund balance at end of year $6,268
Review 84 Draft
161

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, 2023
Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:

Investment income $3,500 $9,581 $6,081
Intergovernmental revenues
Total Revenues 3,500 9,581 6,081
Other financing sources:

Transfers (out)
Total expenditures
Excess of revenues over expenditures 3,500 9,581 6,081
Net change in fund balance $3,500 9,581 $6,081
Fund balance at beginning of year 416,574
Fund balance at end of year $426,155
Review 85 Draft
162

CITY OF HALF MOON BAY

CAPITAL PROJECTS

SCHEDULE OF REVENUES AND EXPENDITURES

BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2023
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual Amounts (Negative)
Revenues:
$14,396 $14,396 $42,330 $27,934
Intergovernmental revenues
Total revenues 14,396 14,396 42,330 27,934
Expenditures:

Current Operations:
738,686 3,056,900 895,813 2,161,087
Total expenditures 738,686 3,056,900 895,813 2,161,087
(724,290) (3,042,504) (853,483) 2,189,021
Other financing sources (uses):

Transfers in 1,770,800 1,770,800
Total Other Financing Sources (Uses) 1,770,800 1,770,800 Net change in fund balance ($724,290) ($1,271,704) 917,317 $2,189,021 Fund balance at beginning of year 1,871,601
Fund balance at end of year $2,788,918

AND CHANGES IN FUND BALANCE
Investment income
Capital Outlay
Excess of revenues over
expenditures
Review 86 Draft
163

CITY OF HALF MOON BAY, CALIFORNIA

NON-MAJOR GOVERNMENTAL FUNDS
FISCAL YEAR ENDED JUNE 30, 2023
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.

The CZI Grant Fund (Fund 134) was established to account for proceeds relating to the CZI Grant. These funds can be used to support learning and evaluation activities for groups currently engaged in the operation and implementation of economic advancement centers.

The ARPA Fund (Fund 135) was established to account for proceeds from the American Rescue Plan Act funds where the City is a subrecipient. These funds may only be used to address the negative economic impacts from the COVID-19 public health emergency.

Review 87 Draft
164

CITY OF HALF MOON BAY, CALIFORNIA

NON-MAJOR GOVERNMENTAL FUNDS
FISCAL YEAR ENDED JUNE 30, 2023
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.

Review 88 Draft
165
Review Draft
166

SPECIAL REVENUE FUNDS
Police Storm Drain Traffic Affordable Parks
Grants Operating Mitigation Housing Development
Assets
Cash and investments $865,612 $348,950 $4,326,521 $2,149,058 $1,574,119 Accounts receivable 7,899 1,105,040
Interest receivable 6,243 2,527 31,066 15,563 15,642
$871,855 $351,477 $4,365,486 $2,164,621 $2,694,801
Accrued expenses $60,493
Accrued liabilities 44,613
105,106
Restricted $871,855 $351,477 $4,365,486 $2,164,621 2,589,695

871,855 351,477 4,365,486 2,164,621 2,589,695
$871,855 $351,477 $4,365,486 $2,164,621 $2,694,801

CITY OF HALF MOON BAY

NON-MAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEET
JUNE 30, 2023
Total fund balances
Total liabilities and fund balances
Total assets
Total liabilities
Liabilities:

Fund Balances:

Review 90 Draft
167

SPECIAL REVENUE FUNDS
CZI Public Storm Drain
Grant ARPA Facilities Improvements Total

$283,136 $650,198 $2,177,844 $1,171,648 $13,547,086
855 1,113,794
2,266 1,148 15,785 8,606 98,846
$285,402 $651,346 $2,193,629 $1,181,109 $14,759,726
$115,594 $54,231 $230,318
8,465 53,078
124,059 54,231 283,396
$285,402 $651,346 2,069,570 1,126,878 14,476,330
285,402 651,346 2,069,570 1,126,878 14,476,330
$285,402 $651,346 $2,193,629 $1,181,109 $14,759,726

CAPITAL PROJECTS FUNDS
Review 91 Draft
168

SPECIAL REVENUE FUNDS
Police Storm Drain Traffic Affordable Parks
Grants Operating Mitigation Housing Development
Revenues:

Charges for services
Impact fees/recreation fees $133,043 $163,213
Investment income $17,964 $7,638 93,265 $47,035 54,224
Intergovernmental revenues 165,271 1,103,644
Total Revenues 183,235 7,638 226,308 47,035 1,321,081
Expenditures:

Current:

General Government
Public Safety 6,413
Public Works 31,233
Recreation Services
Capital outlay 2,046,725
Total Expenditures 6,413 31,233 2,046,725
Excess (deficiency) of revenues
over (under) expenditures 176,822 7,638 195,075 47,035 (725,644) Other financing sources:

Transfers in 250,000
Transfer (out) (240,000)
Proceeds from long-term debt
Total Other Financing Sources 10,000
Net change in fund balances 176,822 7,638 195,075 47,035 (715,644) Fund balances at beginning of year 695,033 343,839 4,170,411 2,117,586 3,305,339 Fund balances at end of year $871,855 $351,477 $4,365,486 $2,164,621 $2,589,695

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, 2023
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169

SPECIAL REVENUE FUNDS

CZI Public Storm Drain
Grant ARPA Facilities Improvements Total
$12,831 $12,831
296,256
$6,702 $1,346 $31,862 23,005 283,041
500,000 650,000 2,418,915
506,702 651,346 31,862 35,836 3,011,043
221,300 221,300
6,413
42,427 73,660
2,554,303 223,741 4,824,769
221,300 2,554,303 266,168 5,126,142
285,402 651,346 (2,522,441) (230,332) (2,115,099)
2,287,546 375,000 2,912,546
(2,912) (242,912)
693,387 693,387
2,980,933 372,088 3,363,021
285,402 651,346 458,492 141,756 1,247,922
1,611,078 985,122 13,228,408
$285,402 $651,346 $2,069,570 $1,126,878 $14,476,330

CAPITAL PROJECTS FUNDS
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170

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, 2023

Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:

Impact fees/recreation fees $60,700 $133,043 $72,343
Investment income 53,283 93,265 39,982
Total revenues 113,983 226,308 112,325
Expenditures:

Current:

Public works 35,888 31,233 4,655
Total expenditures 35,888 31,233 4,655
Excess (deficiency) of revenues
over (under) expenditures 78,095 195,075 116,980
Net change in fund balance $78,095 195,075 $116,980
Fund balance at beginning of year 4,170,411
Fund balance at end of year $4,365,486
Review 94 Draft
171

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, 2023
Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:

Investment income $4,300 $17,964 $13,664
Intergovernmental 173,729 165,271 (8,458)
Total Revenues 178,029 183,235 5,206
Expenditures:

Current:

Public Safety 200,000 6,413 193,587
Total expenditures 200,000 6,413 193,587
Excess (deficiency) of revenues
over ( under) expenditures (21,971) 176,822 198,793
Net change in fund balance ($21,971) 176,822 $198,793
Fund Balance at beginning of year 695,033
Fund balance at end of year $871,855
Review 95 Draft
172

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, 2023

Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:

Investment income $2,500 $7,638 $5,138
Total revenues 2,500 7,638 5,138
Net change in fund balance $2,500 7,638 $5,138
Fund balance at beginning of year 343,839
Fund balance at end of year $351,477
Review 96 Draft
173

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, 2023

Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:

Impact fees/recreation fees $100,000 $163,213 $63,213
Investment income 39,524 54,224 14,700
Intergovernmental revenues 4,750,000 1,103,644 (3,646,356) Total Revenues 4,889,524 1,321,081 (3,568,443)
Expenditures:

Current:

Capital outlay 7,393,900 2,046,725 5,347,175
Total expenditures 7,393,900 2,046,725 5,347,175
Excess of revenues over expenditures (2,504,376) (725,644) 1,778,732 Other financing sources:

Transfers in 250,000 250,000
Transfers out (240,000) (240,000)
Total other financing sources 10,000 10,000
Net change in fund balance ($2,494,376) (715,644) $1,778,732 Fund balance at beginning of year 3,305,339
Fund balance at end of year $2,589,695
Review 97 Draft
174

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, 2023
Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:

Recreation fees/impact fees
Investment income $27,184 $47,035 $19,851
Total revenues 27,184 47,035 19,851
Expenditures:

Current:

Planning 1,000,000 1,000,000
Total expenditures 1,000,000 1,000,000
Excess of revenues over expenditures 27,184 47,035 1,019,851 Net change in fund balance $27,184 47,035 $1,019,851
Fund balance at beginning of year 2,117,586
Fund balance at end of year $2,164,621
Review 98 Draft
175

CITY OF HALF MOON BAY

CZI GRANT SPECIAL REVENUE FUND

SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2023

Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:

Investment income $6,702 $6,702
Intergovernmental revenues $500,000 500,000
Total Revenues 500,000 506,702 6,702
Expenditures:

Current:

General Government 500,000 221,300 278,700
Total expenditures 500,000 221,300 278,700
Excess of revenues over expenditures 285,402 285,402
Net change in fund balance 285,402 $285,402
Fund balance at beginning of year
Fund balance at end of year $285,402
Review 99 Draft
176

CITY OF HALF MOON BAY

ARPA SPECIAL REVENUE FUND

SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2023

Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:

Investment income $1,346 $1,346
Intergovernmental revenues 650,000 650,000
Total Revenues 651,346 651,346
Net change in fund balance 651,346 $651,346
Fund balance at beginning of year
Fund balance at end of year $651,346
Review 100 Draft
177

Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:

Investment income $9,700 $31,862 $22,162
Total revenues 9,700 31,862 22,162
Expenditures:

Capital Outlay 3,619,781 2,554,303 1,065,478
Total expenditures 3,619,781 2,554,303 1,065,478
Excess (deficiency) of revenues
over (under) expenditures (3,610,081) (2,522,441) 1,087,640 Other financing sources (uses):

Transfers in 2,287,546 2,287,546
Proceeds from long-term debt 700,000 693,387 (6,613)
Total Other Financing Sources (uses) 2,987,546 2,980,933 (6,613) Net change in fund balance ($622,535) 458,492 $1,081,027 Fund balance at beginning of year 1,611,078
Fund balance at end of year $2,069,570

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, 2023
Review 101 Draft
178

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, 2023
Variance with
Final Budget
Final Positive
Budget Actual (Negative)
Revenues:

Charges for services $10,000 $12,831 $2,831
Investment income 7,500 23,005 15,505
Total Revenues 17,500 35,836 18,336
Expenditures:

Public works 40,846 42,427 (1,581)
Capital outlay 1,172,300 223,741 948,559
Total expenditures 1,213,146 266,168 946,978
Excess of revenues over expenditures (1,195,646) (230,332) 965,314 Other financing sources:

Transfers in 375,000 375,000
Transfers out (2,912) (2,912)
Total other financing sources 372,088 372,088
Net change in fund balance ($823,558) 141,756 $965,314
Fund balance at beginning of year 985,122
Fund balance at end of year $1,126,878
Review 102 Draft
179

CITY OF HALF MOON BAY, CALIFORNIA

INTERNAL SERVICE FUNDS
FISCAL YEAR ENDED JUNE 30, 2023
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, 2023
Equipment and
Vehicle Risk Pension
Replacement Management Stabilization Total
Assets
Current Assets:

Cash and investments $951,587 $3,652,277 $1,448,389 $6,052,253 Accounts receivable 1,212 1,212
Interest receivable 6,123 26,585 10,422 43,130
Total Current Assets 958,922 3,678,862 1,458,811 6,096,595 Non-current assets:

Net OPEB asset 3,049 3,049
Capital assets, net of
Accumulated depreciation 388,268 388,268
Total Assets 1,347,190 3,681,911 1,458,811 6,487,912
Deferred outflow of resources
Related to OPEB 976 976
Total deferred outflows of resources 976 976
Liabilities
Current Liabilities:

Accounts payable 31,497 7,386 38,883
Claims liability 1,064,830 1,064,830
Total Liabilities 31,497 1,072,216 1,103,713
Deferred inflow of resources
Related to OPEB 954 954
Total deferred inflows of resources 954 954
Net Position
Net position:

Invested in capital assets 388,268 388,268
Unrestricted 927,425 2,609,717 1,458,811 4,995,953
Total net position $1,315,693 $2,609,717 $1,458,811 $5,384,221 Review 104 Draft
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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, 2023
Equipment and
Vehicle Risk Pension
Replacement Management Stabilization Total
Operating revenues:

Impact fees $22,415 $22,415
Total operating revenues 22,415 22,415
Operating expenses:

Salaries and wages 98,720 $137,257 $491,896 727,873
Contract services 20,388 21,775 42,163
Services and supplies 413,450 34 413,484
Repairs and maintenance (807) (807)
Insurance expense 508,617 508,617
Pension 660,198 660,198
Depreciation 77,121 77,121
Other charges 300 300
Total operating expenses 608,872 667,983 1,152,094 2,428,949 Operating income (loss) (586,457) (667,983) (1,152,094) (2,406,534) Non-operating revenues (expenses):

Investment income 17,391 73,764 18,600 109,755
Total non-operating revenues 17,391 73,764 18,600 109,755 Transfers in 589,549 657,164 1,152,095 2,398,808
Change in net position 20,483 62,945 18,601 102,029
Net position at beginning of year 1,295,210 2,546,772 1,440,210 5,282,192 Net position at end of year $1,315,693 $2,609,717 $1,458,811 $5,384,221 Review 105 Draft
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CITY OF HALF MOON BAY

INTERNAL SERVICE FUNDS

COMBINING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2023
Equipment and
Vehicle Risk Pension
Replacement Management Stabilization Total
Cash flows from operating activities:

Cash received from department users $21,203 $21,203
Cash payments to suppliers of goods and services (431,159) ($551,136) ($666,990) (1,649,285) Cash payments to employees for services (98,720) 7,839 (491,896) (582,777) Net cash provided by (used for) operating activities (508,676) (543,297) (1,158,886) (2,210,859) Cash flows from non-capital financing activities:

Transfer in 589,549 657,164 1,152,095 2,398,808
Net cash provided by (used for) non-capital
financing activities 589,549 657,164 1,152,095 2,398,808 Cash flows form capital and related financing activities:

Acquisition of capital assets (31,141) (31,141)
Net cash provided by (used for) capital and
related financing activities (31,141) (31,141)
Cash flows from investing activities:

Interest received on investments 17,391 73,764 18,600 109,755 Net cash provided by investing activities 17,391 73,764 18,600 109,755 Net increase (decreased) in cash and cash equivalents 67,123 187,631 11,809 266,563 Cash and cash equivalents at beginning of year 884,464 3,464,646 1,436,580 5,785,690 Cash and cash equivalents at end of year $951,587 $3,652,277 $1,448,389 $6,052,253 Reconciliation of operating income to net cash flows
provided by operating activities:

Operating income (loss) ($586,457) ($667,983) ($1,152,094) ($2,406,534) Adjustments to reconcile operating income
to net cash provided by operating activities:

Depreciation 77,121 77,121
(Increase) in accounts receivable (1,212) (1,212)
(Increase) in interest receivable (4,881) (17,699) (6,792) (29,372) Increase (Decreased) in accounts payable 6,753 (2,711) 4,042 Increase (Decreased) in employees benefits (87) (87)
Increase (Decreased) in claims liability 145,183 145,183 Net cash provided by (used for) operating activities ($508,676) ($543,297) ($1,158,886) ($2,210,859) Review 106 Draft
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STATISTICAL SECTION
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CITY OF HALF MOON BAY, CALIFORNIA

STATISTICAL SECTION
FISCAL YEAR ENDED JUNE 30, 2023
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.

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2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Governmental activities:

Invested in capital assets,
net of related debt $ 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 $ 71,854,949 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 22,502,708 Unrestricted 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 41,909,085 Total governmental activities net position 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 $ 136,266,742 Business-type activities:

Invested in capital assets,
net of related debt $ 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 $ 6,981,850 Restricted - - 5,946,230 6,385,095 8,692,609 9,377,687 9,554,843 10,092,582Unrestricted 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 4,637,048 Total business-type activities net position 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 $ 21,711,480 Primary government:

Invested in capital assets, net of related debt $ 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 $ 78,836,799 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 32,595,290 Unrestricted 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 46,546,133 Total primary government net position (1) $ 105,167,756 104,517,551 $ 119,170,825 $ 122,447,401 $ 130,591,036 $ 138,649,465 $ 139,931,732 $ 145,164,810 $ 150,092,732 $ 157,978,222 $ (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 forthe 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 revenuesThe $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 revenuesThe $7.8 million increase in primary government net position is primarily due to increased operating grants and contributions, other revenues and the sewer charges as approved through the Prop 218 process in fiscal year 2019-20The $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.

CITY OF HALF MOON BAY
Net Position by Component
Last Ten Fiscal Years
(Accrual Basis of Accounting)
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Expenses:

Governmental activities:

General government $ 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 $ 6,018,989 Public safety 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 5,275,682Public works 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 4,129,117Recreation services 221,703 282,251 337,331 348,604 926,730 1,167,467 1,808,657 1,942,872 2,823,410 597,127 Planning 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 2,965,787Community and Economic Development 843,267Interest and fiscal charges 1,155,865 1,053,237 937,704 937,704 937,704 937,704 468,852 - - - Total governmental activities expenses 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 19,829,968 Business-type activities:

Sewer 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 5,998,227 Total business-type activities expenses 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 5,998,227 Total primary government expenses 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 25,828,195 Program revenues:

Governmental activities:

Charges for services:

General government $ 211,108 $ 105,737 $ 98,171 $ 20,738 $ 29,879 $ 97,755 $ 94,986 $ 17,962 $ 646,363 $ 687,941 Public safety 117,737 107,738 118,204 95,883 961,407 64,011 159,631 138,299 105,983 79,661 Public works 632,607 423,449 407,342 452,260 672,979 392,876 332,903 383,211 360,649 442,582 Recreation services 534,225 550,144 588,890 624,771 841,581 630,725 494,433 987,511 1,176,088 1,113,689 Planning 558,424 457,237 560,073 505,373 213,701 293,316 165,686 314,178 520,110 558,369 Operating grants and contributions 1,512,220 1,903,151 390,970 1,166,559 932,873 1,390,373 786,552 4,123,613 2,544,520 3,628,574 Capital grants and contributions 775,559 596,856 7,915,220 607,526 6,940,211 5,090,594 627,168 3,145,690 1,647,350 1,677,758 Total governmental activities program revenues 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 8,188,574 Business-type activities:

Charges for services:

Sewer 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 5,994,167 Operating grants and contributions 4,074 45,628 - - - - - - - - Capital grants and contributions - - - - - - - - - -
Total business-type activities - - - - - - - - - -
program revenues 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 5,994,167 Total primary government program revenues 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 14,182,741 Net revenues (expenses):

Governmental activities $ (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) $ (11,641,394) Business-type activities 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) (4,060) Total net revenues (expenses) (2) (5,896,294) (5,994,787) (1,221,143) (11,121,294) (7,081,570) (9,163,195) (17,679,028) (9,525,899) (13,430,058) (11,645,454)

CITY OF HALF MOON BAY
Changes in Net Position
Last Ten Fiscal Years
(Accrual Basis of Accounting)
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CITY OF HALF MOON BAY
Changes in Net Position
Last Ten Fiscal Years
(Accrual Basis of Accounting)
General revenues and other changes in net position:

Governmental activities:

Taxes:

Property taxes 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 $ 4,129,317 $ Sales and use taxes 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 3,315,341 Transient occupancy taxes 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 8,852,640 Other taxes 814,840 832,390 808,224 919,666 1,038,546 1,242,286 1,346,187 1,304,943 1,341,327 1,276,299 Investment income 291,224 798,406 811,191 583,497 703,351 1,188,804 2,257,971 (96,482) (702,830) 865,654 Other general revenues 929,562 779,392 783,472 1,575,312 1,386,752 1,446,593 1,362,594 2,207,101 1,322,444 1,381,527 Total governmental activities 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 19,820,778 Business-type activities:

Investment income 25,446 63,696 93,088 135,003 195,743 332,868 382,491 (49,678) (155,664) 129,865 Miscellaneous (250,000) (250,000) (392,817) (482,199) (857,213) (235,565) 1,610,101 63,814 (840,891) (419,699) Total business-type activities (224,554) (186,304) (299,729) (347,196) (661,470) 97,303 1,992,592 14,136 (996,555) (289,834) Total primary government 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 19,530,944 Changes in net position:

Governmental activities $ 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 $ 8,179,384 Business-type activities 2,400,611 886,823 1,473,177 1,210,549 (1,157,400) 68,636 582,229 (1,178,919) (2,033,355) (293,894) Total primary government (1) $ 8,494,438 6,961,059 $ 14,003,069 $ 3,276,576 $ 8,036,688 $ 8,058,429 $ 1,282,269 $ 5,233,078 $ 4,927,922 $ 7,885,490 $ (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 recovery 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 taxesFY 2022-23 increase in net position of $7.8 million is primarily due to increased operating grants and contributions, other revenues and the sewer charges as approved through the Prop 218 process in fiscal year 2019-20 (2) 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 Review
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General fund:

Nonspendable $ 8,917,500 $ - $ - $ - $ - $ - $ - $ - $ - - Committed 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 9,841,012 Assigned 2,609,294 - - - - - - - - -
Unassigned 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 6,386,892 Total general fund (1) $ 9,542,557 19,760,453 $ 10,739,444 $ 11,057,160 $ 9,962,452 $ 10,956,264 $ 10,634,152 $ 11,140,700 $ 15,585,153 $ 16,227,904 $ All other governmental funds:

Nonspendable 17,906,420 $ 26,823,920 $ - $ - $ - $ 26,823,920 $ 26,823,920 $ 26,823,920 $ 26,823,920 $ 26,823,920 $ Restricted 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 22,258,032 Committed - - 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 3,215,073 Unassigned - - - - - 2,364,020 - - - -
Total all other governmental funds (2) $ 50,111,937 39,075,661 $ 58,426,370 $ 55,723,621 $ 54,829,639 $ 58,171,257 $ 46,046,155 $ 49,764,957 $ 50,452,316 $ 52,297,025 $ $ 59,654,494 58,836,114 $
(1) General Fund:

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 feesFY 2022-23 Unassigned fund balance decreased primarily due to a shortfall in Transient Occupancy tax revenues and more funds assigned to committed reverses per the City's Reserve Policy (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 FY 2022-23 $1.8 million increase is primarily due to operating grants and funding for future capital expenditures

CITY OF HALF MOON BAY
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
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2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Revenues:

Taxes $ 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 $ 17,500,650 Licenses and permits 537,634 394,931 379,749 444,388 370,269 377,873 521,121 597,590 543,965 1,062,066 Fines and forfeitures 93,737 83,812 102,202 79,132 171,873 189,415 140,238 108,937 70,383 32,232 Charges for services 940,320 765,457 806,642 701,163 1,255,479 1,165,640 1,173,171 1,306,842 1,552,251 1,432,304 Recreation fees/ Impact fees 821,973 625,166 717,469 1,173,275 1,065,005 2,700,943 304,827 2,988,507 188,114 296,256Investment income 291,227 798,408 772,575 549,489 703,354 1,225,128 1,164,650 (75,704) (722,249) 869,782 Rents and leases 11,518 - 20,000 10,080 87,536 75,603 - - - 63,728 Intergovernmental revenues 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 4,714,737 Administrative fees 1,633 65 - - - - - - - -
Miscellaneous 587,731 519,595 400,376 1,089,034 908,337 1,325,476 779,514 1,877,238 1,146,003 970,404 Total revenues 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 26,942,159 Expenditures
Current:

General government 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 4,976,923 Public safety 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 4,920,995 Public works 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 2,449,832 Recreation services 1,780,847 1,987,691 1,347,508 176,497 701,405 896,854 976,977 1,109,425 1,876,093 524,211 Planning services 77,155 142,020 183,328 2,353,980 2,505,066 2,686,651 3,156,081 2,662,112 2,628,557 2,873,331 Community and Economic Development 843,267
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 6,442,855 Debt service:

Principal retirement (1) 290,000 4,655,000 - - - 11,487,686 - - 1,191,724 620,197 Interest and fiscal charges 1,161,844 1,053,237 937,704 937,704 937,704 937,704 468,852 - 68,277 55,105 Total expenditures 14,859,450 (2) 14,780,165 17,347,258 19,628,211 32,567,019 18,868,565 29,866,615 19,776,033 19,374,704 23,706,716 Excess (deficiency) of revenues over (under) expenditures 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 3,235,443 Other financing sources (uses):

Advanced Proceeds from San Mateo County 5,726,855 - - - - - Proceeds from issuance of debt 2,035,000 421,373 693,387 Capital grants 5,726,855 726,000
Transfers in (2) 35,780,529 3,368,987 5,285,654 5,059,687 5,024,534 3,216,998 7,026,829 2,107,524 5,334,717 5,247,526 Transfers out (2) (36,062,453) (3,118,987) (6,181,245) (5,518,484) (6,010,554) (4,322,638) (8,378,076) (3,400,661) (6,707,244) (6,688,896) Total other financing sources (uses) 250,000 (281,924) (895,591) (458,797) 10,467,690 (379,640) (1,351,247) 741,863 (951,154) (747,983) Net change in fund balances (3) $ 818,380 2,662,247 $ $ 9,511,320 $ (2,385,033) $ (1,988,690) $ 4,335,430 $ (12,447,214) $ 4,225,350 $ 5,131,812 $ 2,487,460 Debt service as a percentage of noncapital expenditures 11.5% 39.1% 9.1% 7.9% 6.9% 6.8% 46.4% 0.0% 7.7% 3.9% (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 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 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 change in fund balance of $2.7 million in FY 2013-14 is higher tax 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 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 $2.4 million in FY 2022-23 is primarily due to increased investment income and intergovernmental revenues.The 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 bond 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 expenditures The 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 increase in fund balance of $4.2 million in FY 2020-21 is primarily due to higher revenues than anticipated Review
115 Draft
192
Fiscal TOT
Year Ended Tax
June 30 Rate
2014 12%
2015 12%
2016 12%
2017 12%
2018 12%
2019 12%
2020 12%
2021 12%
2022 14%
2023 15%
Source: City of Half Moon Bay Finance Department

CITY OF HALF MOON BAY
Transient Occupancy Tax (TOT) Rate
Last Ten Fiscal Years
Review 116 Draft
193
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
LODGING TYPEHotels/Motels 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 $ 7,988,272 $ B&Bs/ Inns / Cottages 114,610 101,393 99,062 60,671 68,729 66,079 104,715 105,823 441,900 169,545 RV Parks/Camps 243,467 281,880 148,191 150,019 170,855 159,065 164,658 241,705 233,898 224,713 Vacation Rentals 35,392 45,105 44,230 43,790 115,398 218,561 170,178 308,664 456,731 470,110 $ 5,430,543 4,977,439 $ 5,934,558 $ 6,040,468 $ 6,433,114 $ 6,853,237 $ 5,291,821 $ 4,817,532 $ 9,442,518 $ 8,852,640 $ (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
Totals

CITY OF HALF MOON BAY
Transient Occupancy Tax (TOT) by Lodging Type (BASE) (1) Last Ten Fiscal Years
As of June 30th
June 30,
Review
117 Draft
194
Percent of Percent of
TOT Total TOT TOT Total TOT
TOT Taxpayer Type Collected Revenues Collected Revenues Hotels/Motels/Lodges $ 7,988,272 90.24% $ 4,302,932 95.10% Bed & Breakfasts and Inns $169,545 1.92% 104,057 2.30%
RV Parks & Campgrounds $224,713 2.54% 96,187 2.13%
Vacation Rentals $470,110 5.31% 21,470 0.47%
$ 8,852,640 100.00% $ 4,524,646 100.00%
Source: City of Half Moon Bay Finance Department

CITY OF HALF MOON BAY
2022-23 2012-13
Current Year and Ten Years Prior
Transient Occupancy Taxpayers by Type of Establishment
Review 118 Draft
195
Fiscal Year Judgment Total Total Percentage Debt
Ended San Mateo Obligation Governmental Primary of Personal Per June 30 Capital Leases County Advance Bonds Activities (2) Government Income (4) Capita (3) 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% 9312016 - 10,915,000 - 10,915,000 10,915,000 21.33% 9312017 - 10,915,000 - 10,915,000 10,915,000 21.35% 8712018 - 10,915,000 - 10,915,000 10,915,000 20.29% 8672019 - 10,915,000 - 10,915,000 10,915,000 17.32% 8642020 - 5,154,170 - 5,154,170 5,154,170 8.03% 408 2021 2,035,000 5,154,170 - 7,189,170 7,189,170 11.35% 556 2022 2,410,020 4,008,798 - 6,418,818 6,418,818 9.17% 521 2023 3,055,896 3,436,112 - 6,492,008 6,492,008 9.55% 581 (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
Review
119 Draft
196
Fiscal Year Lease Judgment Percent of Debt
Ended Revenue Obligation Assessed Per
June 30 Bonds Bonds Total Value (1) Capita
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% -
2023 - - - 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)
Review 120 Draft
197
2022-23 Assessed Value $ 3,771,479,639
Percentage Total Debt City's Share of
Applicable (1) 6/30/2023 Debt 06/30/23
Overlapping Tax and Assessment Debt:

San Mateo Community College District 1.308% 708,837,622 $ 9,271,596 $ Cabrillo Unified School District 46.030% 143,760,000 66,172,728 Midpeninsula Regional Open Space District 0.990% 82,680,000 818,532 Total Overlapping Tax and Assessment Debt 935,277,622 $ 76,262,856 $ Ratio to Assessed Valuation:

Total Overlapping Tax and Assessment Debt 2.02%
Direct and Overlapping General Fund Debt:

San Mateo County General Fund Obligations 1.308% $ 589,931,687 $ 7,716,306 San Mateo County Board of Education Certificates of Participation 1.308% 6,120,000 80,050 Midpeninsula Regional Open Space District General Fund Obligations 0.990% 91,570,600 906,549 San Mateo County Mosquito and Vector Control District General Fund O 1.308% 3,617,831 47,321 Direct: City of Half Moon Bay Loan Agreement 100% 3,436,112 3,436,112 Direct: iBank Financing Lease A & B 100% 3,055,896 3,055,896 Total Direct Debt $ 6,492,008
Total Overlapping Debt 85,013,082
Combined Total Debt $ 91,505,090 (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 2022-23 Assessed Valuation:

Total Overlapping Tax and Assessment Debt 2.02%
Total Direct Debt ($6,492,008) 0.17%
Combined Total Debt 2.43%
Source: California Municipal Statistics, Inc. (Austin Busch - [email protected])

CITY OF HALF MOON BAY
Direct and Overlapping Debt
June 30, 2023
Review 121 Draft
198
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Assessed valuation $ 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 $ 3,771,479,639 Conversion percentage 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% Adjusted assessed valuation 590,252,714 638,339,406 683,310,545 688,942,100 723,273,483 780,768,759 825,980,616 856,660,113 885,347,725 942,869,910 Debt limit percentage 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% Debt limit 88,537,907 95,750,911 102,496,582 103,341,315 108,491,022 117,115,314 123,897,092 128,499,017 132,802,159 141,430,486 Total net debt applicable to limit:

General obligation bonds 15,570,000 10,915,000 10,915,000 10,915,000 10,915,000 10,915,000 - - - - Legal debt margin $ 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 $ 141,430,486 Total debt applicable to the limit
as a percentage of debt limit 17.6% 11.4% 10.6% 10.6% 10.1% 9.3% 0.0% 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
Review
122 Draft
199
Percent of Percent of
Number of Total Number of Total
Employer Employees Employment Employees Employment
Ritz Carlton Hotel 150 5.26% 100 2.95%
New Leaf Community Market 105 3.68% 99 2.92%
Sam's Chowder House 98 3.44% 195 5.76%
Safeway Store 65 2.28% 110 3.25%
Rocket Farms Inc. 62 2.18% 136 4.02%
SP Plus 50 1.75%
San Benito House 49 1.72%
Pasta Moon Inc 48 1.68%
McMahon Floral 47 1.65%
Beach House LLC 45 1.58% 47 1.39%
Half Moon Bay Golf Links 87 2.57%
Hassett Hardware 49 1.45%
Mullins Bar and Grill 49 1.45%
CVS Pharmacy 45 1.33%
Sea Crest School
Verdura Construction, LLC
Subtotal Top Ten Employers 719 25.23% 917 27.07%

Total Employment 2,850 100.00% 3,387 100.00%
Source: Employer information from City of Half Moon Bay HdL Business License System.
2013

CITY OF HALF MOON BAY
Principal Employers
6/30/2023 and Ten Years Prior
2023
"Total Employment" as used above represents the total employment of all employers with business licenses located within City limits.

Review 123 Draft
200
Function 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 General Government 15 17 18 19 19 19 21 17 20 20
Public Safety - - - - - - - - - -
Public Works/Maintenance 5 7 9 10 10 13 16 14 16 16
Community/Recreation Services 0 0 0 2 2 4 5 4 5 6
Planning 2 1 3 5 5 6 7 7 8 8
Total 22 26 31 36 36 42 48 42 48 50
Note: General government includes five City Council members as well as Administration and Finance staff.Source: City of Half Moon Bay Finance Department

CITY OF HALF MOON BAY
Full-time Equivalent City Employees By Function
Last Ten Fiscal Years
June 30
Review
124 Draft
201
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Police: (1)
Arrests - Part 1 crimes 50 30 44 38 48 54 71 56 78 19
Traffic citations 1,067 527 436 489 921 2,128 2,517 1,664 1,819 636 Parking citations 1,152 1,065 1,598 1,212 3,994 3,465 2,444 1,698 872 553 Parks and Recreation: (2)
Number of recreation classes 155 87 88 75 159 105 123 41 112 407 Number of facility rentals (3) 24 42 110 88 324 397 389 200 459 99 Building and Code Enforcement: (4)
Number of permits issued (est.) 500 487 413 460 413 473 450 352 456 441 Number of plan checks (est.) 100 110 105 220 166 205 237 185 157 200 Number of inspections (est.) 2,000 2,355 2,820 2,216 2,520 2,442 2,057 1,839 1654 1,538 Planning: (3)
Planning Commission Meetings 22 20 15 12 20 23 20 23 22 13 Number of permits processed 75 70 111 47 43 102 145 89 94 154 (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

CITY OF HALF MOON BAY
Operating Indicators By Function
Last Ten Fiscal Years
June 30
Review
125 Draft
202
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Police:

Sheriff Substation/EOC 1 1 1 1 1 1 1 1 1 1
Public Works:

Streets (miles) 35 35 35 29 29 29 28 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 38 38 38 38 Library 1 1 1 1 1
Facilities/Buildings 6 6 6 6 6 6 6 6 6 6
Bike Trails (miles) 6 6 7 7 7 7 7 7 7 7
Land (acres) 176 176 176 176 176 100 176 197 199 199
Administration:

Facilities/Buildings 1 1 1 1 1 1 1 1 1 1
Source: City of Half Moon Bay Finance Department
June 30

CITY OF HALF MOON BAY
Capital Asset Statistics By Function
Last Ten Fiscal Years
Review
126 Draft
203
2022/23 USE CATEGORY SUMMARY

THE CITY OF HALF MOON BAY

BASIC PROPERTY VALUE TABLE
Category Parcels Assessed Value Net Taxable Value
Residential 3,822 $3,130,021,010 (80.6%) $3,075,165,815 (81.5%) Commercial 219 $517,622,622 (13.3%) $505,408,881 (13.4%) Industrial 16 $10,958,701 (0.3%) $10,958,701 (0.3%)
Agricultural 40 $31,850,361 (0.8%) $16,197,166 (0.4%)
Govt. Owned 97 $76,410 (0.0%) $0 (0.0%)
Institutional 20 $18,643,808 (0.5%) $314,217 (0.0%)
Miscellaneous 12 $14,050,543 (0.4%) $14,050,543 (0.4%)
Recreational 24 $34,188,912 (0.9%) $33,842,367 (0.9%)
Vacant 1,773 $77,722,173 (2.0%) $66,260,807 (1.8%)
Unsecured [228] $50,200,370 (1.3%) $49,344,505 (1.3%)
TOTALS 6,023 $3,885,334,910 $3,771,543,002

81.5%
Residential

13.4%
Commercial

5.1%
Others

NET TAXABLE VALUE

80.6%
Residential

13.3%
Commercial

2.0%
Vacant

4.1%
Others

ASSESSED VALUE
This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone
Data Source: San Mateo County Assessor 2022/23 Combined Tax Rolls Prepared On 8/21/2023 By MV 127 Review Draft
204

PROPERTY TAX DOLLAR BREAKDOWN

THE CITY OF HALF MOON BAY
$ 0.00330 County Harbor District
$ 0.00195 Bay Area, Air Pollution
$ 0.00041 Resource Conservation
$ 1.0000
$ 0.3591 Cabrillo Unified General Purpose
$ 0.09738 ERAF Share of San Mateo County
$ 0.1242 San Mateo County
$ 0.1869 Coastside Fire
$ 0.01123 ERAF Share of Half Moon Bay General Fund
$ 0.0553 Half Moon Bay General Fund
$ 0.0634 San Mateo Junior College General Purpose
$ 0.0330 County Education Tax
$ 0.0323 County Library
$ 0.0317 Coastside County Water
ATI (Annual Tax Increment) Ratios for Tax Rate Area 017-005, Excluding Redevelopment Factors & Additional Debt Service This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone Data Source: San Mateo County Assessor 2022/23 Annual Tax Increment Tables Prepared On 8/21/2023 By MV 128 Review Draft
205
2022/23 ROLL SUMMARY

THE CITY OF HALF MOON BAY
Taxable Property Values
Secured Nonunitary Utilities Unsecured
1,818,343,707
2,000,078,319
14,590,100
2,122,414
Aircraft
Fixtures
Personal Property
Improvements
Land
TRAs
Parcels
Values
Total Value $3,835,134,540
0 $50,158,805
0 $0
0 41,565
10,094,537
35,550,004
4,419,483
94,781
7 228
0 0
0 0
6,023 0
8 Total Net Value $3,722,198,497
Total Exemptions* $112,936,043
Homeowners* 15,444,800
Aircraft
Fixtures 32,728
Personal Property 1,053,284
Real Estate 111,850,031
Exemptions
0 $855,865
$49,302,940
0 0
$0
0 $0
7,000
0 151,174
399,312
305,379
0 0
Combined Values Total
Total Values $3,885,293,345
Net Total Values
Total Exemptions
$3,771,501,437
$113,791,908
Net Aircraft Values $41,565
* Note: Homeowner Exemptions are not included in Total Exemptions Totals do not Include Aircraft Values or Exemptions
This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone
Data Source: San Mateo County Assessor 2022/23 Combined Tax Rolls Prepared On 8/21/2023 By MV 129 Review Draft
206

NET TAXABLE ASSESSED VALUE HISTORY

THE CITY OF HALF MOON BAY
2013/14 - 2022/23 Taxable Property Values
Lien Year Secured Unsecured SBE Nonunitary Net Total AV % Change 2013/14 $2,336,930,963 $40,818,124 $0 2,377,749,087
2014/15 $2,454,848,902 $42,658,908 $0 2,497,507,810 5.04% 2015/16 $2,609,284,214 $53,103,728 $0 2,662,387,942 6.60% 2016/17 $2,716,280,909 $39,462,822 $0 2,755,743,731 3.51% 2017/18 $2,868,900,977 $40,418,385 $0 2,909,319,362 5.57% 2018/19 $3,095,123,190 $44,156,277 $0 3,139,279,467 7.90% 2019/20 $3,261,227,148 $40,695,317 $0 3,301,922,465 5.18% 2020/21 $3,386,815,056 $39,825,394 $0 3,426,640,450 3.78% 2021/22 $3,495,494,766 $45,896,134 $0 3,541,390,900 3.35% 2022/23 $3,722,198,497 $49,344,505 $0 3,771,543,002 6.50% Average % Change 5.99%
$0
$500,000,000
$1,000,000,000
$1,500,000,000
$2,000,000,000
$2,500,000,000
$3,000,000,000
$3,500,000,000
$4,000,000,000
2013/142014/152015/162016/172017/182018/192019/202020/212021/222022/23 SBE Nonunitary Unsecured Secured
* Net AV changes less than two percent are in purple font. Negative Net AV percent changes are in red.

This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone Data Source: San Mateo County Assessor 0/ - 2022/23 Combined Tax Rolls Prepared On 8/21/2023 By MV 130 Review Draft
207

ASSESSED VALUE OF TAXABLE PROPERTY

THE CITY OF HALF MOON BAY
2013/14 - 2022/23 Taxable Property Values
2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 Residential 1,871,838,949 1,986,554,631 2,128,750,156 2,238,878,627 2,365,335,848 2,496,961,916 2,652,141,529 2,769,600,677 2,887,213,237 3,075,165,815 Commercial 344,198,890 346,707,418 356,041,843 363,813,823 372,002,147 457,418,903 467,790,599 476,253,451 476,165,638 505,408,881 Industrial 6,133,649 6,172,772 6,292,015 6,801,114 7,185,938 8,419,613 9,374,259 9,561,139 9,740,069 10,958,701 Agricultural 17,322,251 16,208,520 15,605,023 15,866,702 16,197,166 Dry Farm 3,720,127 3,496,499 3,786,377 4,241,537 4,358,514 Govt. Owned 0 0 0 0 0
Institutional 293,694 272,021 277,456 281,685 309,882 315,819 298,922 1,689,318 1,938,117 314,217 Irrigated 3,423,600 4,862,761 5,333,856 4,324,786 4,411,271 Miscellaneous 12,075,286 22,681,808 23,460,537 14,211,644 17,677,501 16,786,985 15,398,633 16,274,069 13,822,133 14,050,543 Recreational 38,699,751 38,874,879 39,568,823 40,290,547 41,062,725 42,118,338 43,356,325 35,379,201 31,885,243 33,842,367 Vacant 50,679,666 45,226,113 45,773,151 43,437,146 56,557,151 55,779,365 56,658,361 62,452,178 58,863,627 66,260,807 Unsecured 40,818,124 42,658,908 53,103,728 39,462,822 40,418,385 44,156,277 40,695,317 39,825,394 45,896,134 49,344,505 Unknown 5,867,351 0
TOTALS 2,377,749,087 2,497,507,810 2,662,387,942 2,755,743,731 2,909,319,362 3,139,279,467 3,301,922,465 3,426,640,450 3,541,390,900 3,771,543,002 Total Direct Rate 0.05452 0.05818 0.05818 0.05819 0.05819 0.05821 0.05821 0.05821 0.05819 0.05818 Category
Notes:

Exempt values are not included in Total.

In 1978 the voters of the State of California passed Proposition 13 which limited taxes to a total maximum rate of 1%, based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum of 2%). With few exceptions, property is only reassessed as a result of new construction activity or at the time it is sold to a new owner. At that point, the property is reassessed based upon the added value of the construction or at the purchase price (market value) or economic value of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above.

This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone Data Source: San Mateo County Assessor 2013/14 - 2022/23 Combined Tax Rolls Prepared On 8/21/2023 By MV 131
Review Draft
208
Top Property Owners Based On Net Values

THE CITY OF HALF MOON BAY
2022/23 TOP TEN PROPERTY TAXPAYERS
Owner Secured Unsecured Combined Primary Use &
Parcels Value Parcels Value Value Primary Agency % of
Net AV
% of
Net AV
% of
Net AV
1) 2 $217,187,641 1 $6,000 $217,193,641
Commercial

5.83% 0.01% 5.76%
Half Moon Bay General Fund (Pending Appeals On Parcels)

SHC HALF MOON BAY LLC
2) 18 $32,636,456 $32,636,456
Recreational

0.88% 0.87%
Half Moon Bay General Fund

OCEAN COLONY PARTNERS LP
3) 3 $31,093,857 $31,093,857
Commercial

0.84% 0.82%
Half Moon Bay General Fund

HMB MUSICH LLC
4) 1 $23,058,000 $23,058,000
Commercial

0.62% 0.61%
Half Moon Bay General Fund

HALF MOON BAY LODGE LLC
5) 29 $21,202,128 1 $35,542 $21,237,670
Commercial

0.57% 0.07% 0.56%
Half Moon Bay General Fund

KEET NERHAN
6) 1 $17,191,086 $17,191,086
Unsecured

34.84% 0.46%
Half Moon Bay General Fund

ROCKET FARMS INC
7) 8 $12,761,803 $12,761,803
Commercial

0.34% 0.34%
Half Moon Bay General Fund

PROFESSIONAL PENINSULA PROPERTIES LLC
8) 1 $9,287,666 $9,287,666
Commercial

0.25% 0.25%
Half Moon Bay General Fund

LONGS DRUG STORE INC
9) 11 $8,548,099 $8,548,099
Residential

0.23% 0.23%
Half Moon Bay General Fund

CARNOUSTIE LLC
10) 3 $7,752,905 $7,752,905
Commercial

0.21% 0.21%
Half Moon Bay General Fund

CASTRO PARTNERS LLC
Top Ten Total 76 $363,528,555 9.77% 3 $17,232,628 34.92% $380,761,183 10.10% City Total $3,722,198,497 $49,344,505 $3,771,543,002
Top Owners last edited on 8/21/23 by maheav using sales through 06/30/23 (Version r.1) This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone Data Source: San Mateo County Assessor 2022/23 Combined Tax Rolls and the SBE Non Unitary Tax Roll Prepared On 8/21/2023 By MV 132
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Top Property Owners Based On Net Values

THE CITY OF HALF MOON BAY
2013/14 TOP TEN PROPERTY TAXPAYERS
Owner Secured Unsecured Combined Primary Use &
Parcels Value Parcels Value Value Primary Agency % of
Net AV
% of
Net AV
% of
Net AV
1) 2 $139,093,997 1 $6,000 $139,099,997
Commercial

5.95% 0.01% 5.85%
Half Moon Bay General Fund (Pending Appeals On Parcels)

SHC HALF MOON BAY LLC
2) 41 $43,744,533 $43,744,533
Recreational

1.87% 1.84%
Half Moon Bay General Fund

OCEAN COLONY PARTNERS L P
3) 32 $22,523,880 2 $78,462 $22,602,342
Commercial

0.96% 0.19% 0.95%
Half Moon Bay General Fund

KEET NERHAN
4) 3 $14,536,266 $14,536,266
Commercial

0.62% 0.61%
Half Moon Bay General Fund

REGENCY CENTERS LP
5) 1 $9,546,973 $9,546,973
Commercial

0.41% 0.40%
Half Moon Bay General Fund

IWF HALF MOON BAY LLC
6) 1 $8,492,178 $8,492,178
Unsecured

20.80% 0.36%
Half Moon Bay General Fund

COMCAST OF CALIFORNIA COMPANY WA
7) 1 $8,244,554 $8,244,554
Commercial

0.35% 0.35%
Half Moon Bay General Fund

LONGS DRUG STORE INC
8) 3 $8,206,282 $8,206,282
Commercial

0.35% 0.35%
Half Moon Bay General Fund

FRANCESCO CARRUBBA
9) 1 $6,477,000 $6,477,000
Commercial

0.28% 0.27%
Half Moon Bay General Fund

NETREIT INC
10) 1 $5,800,000 $5,800,000
Commercial

0.25% 0.24%
Half Moon Bay General Fund

CHUNYI CHEN TRUST
Top Ten Total 85 $258,173,485 11.05% 4 $8,576,640 21.01% $266,750,125 11.22% City Total $2,336,930,963 $40,818,124 $2,377,749,087
Top Owners last edited on 7/9/14 by maheav using sales through 06/15/14 (Version r.1) This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone Data Source: San Mateo County Assessor 2013/14 Combined Tax Rolls and the SBE Non Unitary Tax Roll Prepared On 8/21/2023 By MV 133
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DIRECT & OVERLAPPING PROPERTY TAX RATES
(RATE PER $100 OF TAXABLE VALUE)

THE CITY OF HALF MOON BAY
Last 10 Fiscal Years
Agency 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 Basic Levy¹ 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 Cabrillo Unified Bond 0.07190 0.07040 0.07260 0.08320 0.07510 0.07110 0.11510 0.08950 0.07670 0.07910 Mid-Penninsula Regional Open Space 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00160 0.00150 0.00150 0.00130 San Mateo Community College 2005 Series B 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00350 0.00370 0.00000 0.00000 San Mateo Junior College 0.01940 0.01900 0.02500 0.02470 0.02350 0.01750 0.02310 0.01760 0.00000 0.00000 San Mateo Junior Comm College 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.02270 0.01930 Total Direct & Overlapping² Tax Rates 1.09130 1.08940 1.09760 1.10790 1.09860 1.08860 1.14330 1.11230 1.10090 1.09970 City's Share of 1% Levy Per Prop 13³ 0.05463 0.05525 0.05525 0.05525 0.05525 0.05526 0.05526 0.05526 0.05525 0.05525 Voter Approved City Debt Rate
Redevelopment Rate⁴
Total Direct Rate⁵ 0.05452 0.05818 0.05818 0.05819 0.05819 0.05821 0.05821 0.05821 0.05819 0.05818 Notes:
¹In 1978, California voters passed Proposition 13 which set the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of any voter approved bonds. ²Overlapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates apply to all property owners. ³City's Share of 1% Levy is based on the City's share of the general fund tax rate area with the largest net taxable value within the City. The ERAF portion of the City's Levy has been subtracted where known.
⁴Redevelopment Rate is based on the largest RDA tax rate area and only includes rate(s) from indebtedness adopted prior to 1989 per California State statute. RDA direct and overlapping rates are applied only to the incremental property values. The approval of ABX1 26 eliminated Redevelopment from the State of California for the fiscal year 2012/13 and years thereafter. ⁵Total Direct Rate is the weighted average of all individual direct rates applied by the City/Agency preparing the statistical section information and excludes revenues derived from aircraft. Beginning in 2013/14 the Total Direct Rate no longer includes revenue generated from the former redevelopment tax rate areas. Challenges to recognized enforceable obligations are assumed to have been resolved during 2012/13. For the purposes of this report, residual revenue is assumed to be distributed to the City/Agency in the same proportions as general fund revenue.

This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone Data Source: San Mateo County Assessor 2013/14 - 2022/23 Tax Rate Table Prepared On 8/21/2023 By MV 134
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DEMOGRAPHIC AND ECONOMIC STATISTICS

THE CITY OF HALF MOON BAY
Median Age
% of Pop 25+ with
High School Degree
% of Pop 25+ with
Bachelor's Degree
Personal Income
(In Thousands)
Calendar
Year Population
Unemployment
Rate
Per Capita
Personal Income
2013 11,721 $569,699 $48,605 4.3% 43.2 82.5% 44.2%
2014 11,727 $600,059 $51,169 4.1% 44.8 82.4% 45.3%
2015 12,528 $640,547 $51,129 3.3% 44.7 84.0% 47.3%
2016 12,591 $677,251 $53,788 2.9% 45.8 83.8% 46.7%
2017 12,639 $796,455 $63,015 2.3% 47.1 85.8% 48.3%
2018 12,631 $810,881 $64,197 1.6% 47.3 84.9% 45.5%
2019 12,431 $804,495 $64,716 1.6% 45.3 87.1% 47.5%
2020 12,309 $898,800 $73,019 5.6% 46.8 86.2% 50.3%
2021 11,308 $881,941 $77,992 1.5% 47.8 88.3% 53.3%
2022 11,226 $801,565 $71,402 1.1% 44.9 87.9% 50.4%
48,000
52,000
56,000
60,000
64,000
68,000
72,000
76,000
80,000
0 1
2 3
4 5
6 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Per Capita Pers Income Unemployment Rate
Per Capita Personal Income
Unemployment Rate
Personal Income and Unemployment
0 2,000
4,000
6,000
8,000
10,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Less Than High School High School Graduate College Graduate Population
Education Level Attained for Population 25
and Over
Notes and Data Sources:

Population: California State Department of Finance. Unemployment Data: California Employment Development Department 2000-2009 Income, Age, and Education Data: ESRI - Demographic Estimates are based on the last available Census. Projections are developed by incorporating all of the prior census data released to date. Demographic Data is totaled from Census Block Groups that overlap the City's boundaries 2010 and later - Income, Age and Education Data - US Census Bureau, most recent American Community Survey This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone Prepared On 8/21/2023 By MV 135
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SALES VALUE HISTORY

THE CITY OF HALF MOON BAY
Single Family Residential Full Value Sales 01/01/2021 - 6/30/2023) Year Full Value Sales Average Price Median Price Median % Change 2021 146 $1,576,154 $1,526,000
2022 118 $1,717,725 $1,521,500 -0.29%
2023 47 $1,546,217 $1,505,000 -1.08%
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
202120222023
Median Price Avg Price
Year
Sales Price
* Multiparcel transfers, quitclaim deeds, trust transfers, timeshares, and partial sales are excluded from this analysis.

This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone
Data Source: San Mateo County Recorder Prepared On 8/21/2023 By MV 136 Review Draft
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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 Half Moon Bay (City), California, as of and for the year ended June 30, 2023, and have issued our report thereon dated October 16, 2023. 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
October 16, 2023
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