Hanford City Council
April 4, 2023

City Council Meeting
Agenda
April 4, 2023
7:00 PM – Regular Meeting
Council Chambers
400 N. Douty St.

Council Members will meet in-person in the Council
Chambers. The meeting will also be lived streamed on the City’s website: http://livestream.hanford.city/

4:00 PM CALL TO ORDER STUDY SESSION AND CLOSED SESSION:

ROLL CALL BY THE CITY CLERK:

PUBLIC COMMENT:

Study Sessions are considered Special Meetings under the Bown Act. Accordingly, comments from the public are limited to items listed on the agenda (GC 54954.3a). Public Comment will be accepted during each agenda item. A maximum of three minutes is allowed for each speaker. Please begin your comments by stating your name and providing your city of residence.

STUDY SESSION:

A. Finance: Presentation of Report on the City of Hanford's Audit of the Financial Statements for the year ending June 30, 2022 (Fiscal Year 2022) CLOSED SESSION FOR DISCUSSION OF THE FOLLOWING:

A. CONFERENCE WITH LEGAL COUNSEL – REAL PROPERTY NEGOTIATIONS (GC 54956.8):

Property: 426 W. Lacey Blvd.

APN: 010-253-001-000
Agency Negotiators: Mario Cifuentez and Ty Mizote
Negotiating Party: Nick Warner for MSI Hanford

APN: 014-230-030
Agency Negotiators: Mario Cifuentez, Ty Mizote, and Brad Albert Negotiation Party:Thomas G. Loogman, Robert A. Loogman, Colette M. Quinn, John M.

Loogman, Jr., Lisa M. Askins, and Trudy N. Simas

CALL TO ORDER REGULAR SESSION:

ROLL CALL:

INVOCATION:

Pastor Lori Niles
FLAG SALUTE:

COUNCIL REPORTS/GENERAL REPORTS:

Brief information-only reports from City Council and/or Staff, including committee reports and reports by City Council related to meetings attended at City expenses (AB1234).

PUBLIC COMMENT:

This is the time for citizens to comment on subject matters within the jurisdiction of the Hanford City Council. This is also the public’s opportunity to request an item from the Consent Calendar be pulled for discussion purposes or to comment on any item on the agenda. State law does not allow the Council to discuss or take action on issues not on the agenda, except that members of the Council or staff may briefly respond to statements made or questions posed by persons exercising their public testimony rights (Gov. Code sec. 54954.2). A maximum of three minutes is allowed for each speaker. Please begin your comments by stating your name and providing your city of residence.

CONSENT CALENDAR:

Consent Calendar items are considered routine and will be enacted in one motion. There will be no separate discussion of these matters unless a request is made and then the item will be removed from the Consent Calendar to be discussed and voted upon by a separate motion.

A. Procedural Waiver: Waive reading in full of resolutions and ordinances and approval and adoption of same by reading title the only.

B. City Clerk: Approval of the Minutes of the February 7, 2023 Meeting C. City Clerk: Approval of the Minutes of the February 21, 2023 Meeting D. Community Development: Acceptance of the mandated General Plan Annual Progress Report for Calendar Year 2022 and authorization for the submittal to the Governor’s Office of Planning and Research
E. Community Development: Authorization to award a contract for GIS On-Call Services to GEOinovo at a cost not to exceed $25,000 per fiscal year.

F. Parks and Community Services: Authorization to award a contract to Alta Transportation in the amount of $253,000 to create an Active Transportation Plan (ATP) and appropriate $284,811 from the Transportation Fund, which includes $32,668 of the required 11.47% local cash match.

G. Public Works: Acceptance of Grant of Easement for property from Forebay Farms, LLC for right of way purposes for the installation of a traffic signal system at the intersection of 12th Avenue and Hume Avenue.

H. Public Works: Authorization to advertise for bids the FY 23 Pavement Resurfacing Treatment Project and the concurrent Manhole Project: Raise and Adjust to Grade, and Pre-Authorize the City Manager to award and execute the contracts on behalf of the City to the lowest responsible bidders; providing the project bid is within current budget appropriation.

I. Public Works: Authorization to advertise for bids for the FY 23 Manhole Repair and Coating Project, and Pre-Authorize the City Manager to award and execute the contract on behalf of the City to the lowest responsible bidder; providing the project bid is within current budget appropriation.

J. Public Works: Authorization to award a contract to Lechowicz & Tsenh (L&T), at a cost of $96,420, for the purpose of performing a Utility Rate Study, pursuant to the scope of work identified in RFP 2023-02. The cost of the study will be split evenly between the Water, Wastewater, and Stormwater enterprise funds.

K. Public Works: Authorization enter into a five year, sole source contract with Univar for the supply and delivery of sodium hypochlorite to be used as a disinfecting agent in the City's water system. As part of the contract, Univar will supply four 750 gallon tanks at no charge to City, which will facilitate more efficient deliveries.

L. Public Works: Approval of the Notice of Completion for Tract No. 865 Live Oak East Unit No. 1, Located at Houston Avenue and Alpine Avenue, and Authorization for the Mayor to Execute and the City Clerk to attest and file said Notice with the Kings County Recorder's office.

M. Police: Appropriation and authorization to purchase up to $32,000 in Gym Equipment to be paid from an Officer Wellness Grant in the City's Police Trust Fund GENERAL BUSINESS:

A. City Attorney: Approval of a Purchase and Sale Agreement and Escrow Instructions for the purchase of forty (40) acres of Land for the future development of Heroes Park, a new fire station, and a new water tank site.

COUNCIL COMMENTS AND COMMUNICATIONS::

At this time, any Council Member may ask a question for clarification, make an announcement, or report briefly on their activities. In addition, subject to Council Policies and Procedures, they may request staff to report back to the Council at a subsequent meeting concerning any matter or take action to direct staff to place a matter of business on a future agenda. (GOV. CODE SEC. 54954.2)
A. Council Future Agenda Items
B. Upcoming Events and Important Dates:

April 7: Easter Egg Hunt in Civic Park 10:00 am - 11:30 am $5.00 Get tickets here April 8: Helping Hands Volunteer Program at Centennial Park Sign up here April 15: Walk with a Doc at Centennial Park 9:00 am - 10:00 am April 18: Regular City Council Meeting
April 21: Mother/Son Dance at the Civic Auditorium 6:30 pm - 9:00 pm Get tickets here April 22: Father/Daughter Dance at the Civic Auditorium 6:30 pm - 9:00 pm Get tickets here
April 29: Coffee with a Cop at Starbucks at 11th & Lacey 9:00 am - 11 am ADJOURNMENT:

Materials related to an item on this Agenda submitted to the City Council after distribution of the agenda packet are available to public inspection in the City Clerk’s Office located at 319 N. Douty Street, Hanford, California 93230, during normal business hours. Such agendas are also available at the city’s website, www.cityofhanfordca.com subject to staff’s ability to post the agenda before the meeting.

If you need a disability-related modification or accommodation, including auxiliary aids or services, to participate in this meeting, please contact the City Clerk’s office, 559-585-2515, 319 N. Douty Street, Hanford, California 93230, at least 2

days prior to the meeting {28 CFR 35.102.35.104 ADA Title II}

4.A.

AGENDA

STAFF REPORT

MEETING DATE: 4/4/2023 AGENDA SECTION: STUDY SESSION

SUBJECT:

Presentation of Report on the City of Hanford's Audit of the Financial Statements for the year ending June 30, 2022 (Fiscal Year 2022)

RECOMMENDATION:

Recommendation: Staff recommends that City Council receive a Report on Audit of Financial Statements from Hudson, Henderson & Company, Inc., for the year ended June 30, 2022 (Fiscal Year 2022).

Recommended Motion: This is an informational item, no action is required.

BACKGROUND:

State law requires the City of Hanford to prepare audited financial statements for each fiscal year.

The City is engaged in year five of its agreement with Hudson, Henderson & Company, Inc. for preparation of these statements. The City received an unqualified opinion (clean) in relation to the 2021/2022 financial statements for the fiscal year ending June 30, 2022 by its' independent auditors Hudson, Henderson & Company, Inc.

The audit can be summarized as follows:
- Auditors have issued an unqualified opinion (clean)
- Financial condition of the City had positive trends overall - Extraordinary item of $12.5 million settlement was recognized and impacts General Fund - General Fund Reserve at approximately 5% as of June 30, 2022

Over the last few years, the City Council (Council) has established financial policies to improve the financial condition of the City. The policies as memorialized in Resolution 2020-29-R and 2022-20-R look to:
- Adopt a balanced budget
- Establish General Fund Reserve of 35% for operating reserves and contingency reserve for fiscal emergencies
- Minimum 15% reserves in proprietary and internal service funds unless other requirements exist

For the fiscal year (FY) 2021/2022 (22) the City Council did pass a balanced budget. The General Fund last year was near a 30% reserve and generally fund balances were positive in FY22. Potential issues that an audit may show are outlined below:

Material Weakness - Deficiency or a combination of deficiencies in internal control such that there is

a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis.

Significant Deficiency - 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.

The City had no weaknesses or deficiencies identified in FY22.

Table A "Governmental Fund Financial Results" below, summarizes how these funds performed and a snapshot of their conditions as of June 30, 2022. The General Fund shows just over $3 million in fund balance, most of which is unrestricted and available for Council's use. This represents an approximate 5% reserve, based on General Fund expenditures for FY22. Staff recommends focusing on building this reserve back up in earnest, which may mean restricting spending and limiting any special projects in the General Fund.

The City has four major proprietary (business like) funds summarized in Table B. These funds provide essential services for customers for water, sewer, storm drain and refuse. In addition, some minor funds are included as follows; airport, courthouse and intermodal facility operations.

The City should continue to pursue cost reductions, operational efficiencies, cost recovery, and minimize staffing additions. In order to maintain long-term planning goals, financial resources must be accounted for and set aside in order to fulfill Council goals.

Staff will be working in the upcoming two-year budget to adequately address the financial needs of the City and work with the Council on adoption of a balanced and sustainable budget.

City Council has in place a comprehensive Reserve and Pension Funding Policy (Resolution 2022- 20-R) which will continue to help the City year by year improve its financial standing. It is important to keep in mind, there are significant demands on the General Fund and costs to operate the City continue to increase. As recently shown to Council in March 2023, General Fund revenues are projected to plateau over the next couple of years, which may limit efforts of the City to build up reserves, take care of deferred needs or increase services. This will be addressed more during the upcoming budget discussions with Council.

FISCAL IMPACT:

This item is informational, there is no fiscal impact from this report. In accordance with adopted Reserve Policy in Resolution 2022-20-R no additional funds will be transferred to capital funds or internal service funds as the General Fund is not at its 35% reserve. Based on the FY23 updated budget, the General Fund reserve will be at approximately 6%. Council's adopted goal is 35% (15% in operating reserve and 20% in Contingency Reserve), of which the City lost progress in FY22 primarily due to a $12.5 million settlement.

ATTACHMENTS:

1. City of Hanford Financial Statements 2022-Final

CITY OF HANFORD

FINANCIAL STATEMENTS
WITH
INDEPENDENT AUDITORS’ REPORT

FOR THE YEAR ENDED
JUNE 30, 2022

TABLE OF CONTENTS

Principal City Officials ..................................................................................................................................................... i

Independent Auditors’ Report ...................................................................................................................................... 1

Management’s Discussion and Analysis ........................................................................................................................ 4

Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Position ........................................................................................................................................ 13 Statement of Activities ............................................................................................................................................. 14

Fund Financial Statements:

Balance Sheet – Governmental Funds ...................................................................................................................... 16 Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position – Governmental Activities ................................................................................ 17 Statement of Revenues, Expenditures and Changes in
Fund Balances – Governmental Funds................................................................................................................... 18 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds to
the Statement of Activities – Governmental Activities .......................................................................................... 19 Statement of Net Position – Proprietary Funds ....................................................................................................... 20 Statement of Revenues, Expenses and Changes in Net
Position – Proprietary Funds.................................................................................................................................. 22 Statement of Cash Flows – Proprietary Funds ......................................................................................................... 24 Statement of Fiduciary Net Position – Fiduciary Funds ............................................................................................ 28 Statement of Changes in Fiduciary Net Position – Fiduciary Funds ......................................................................... 29

Notes to the Financial Statements .............................................................................................................................. 30

Required Supplementary Information:

Schedule of Changes in the Net Pension Liability and Related Ratios ........................................................................ 67 Schedule of the City’s Proportionate Share of the Net Pension Liability .................................................................... 68 Schedule of Plan Contributions ................................................................................................................................... 69 Schedule of Changes in Net OPEB Liability and Related Ratios................................................................................... 70 Schedule of Contributions - OPEB ............................................................................................................................... 71 Schedule of Revenues, Expenditures and Changes in Fund Balances:

Budget to Actual (GAAP Basis) General Fund ........................................................................................................... 72 Budget to Actual (GAAP Basis) CDBG Home/Housing Fund ..................................................................................... 73 Budget to Actual (GAAP Basis) Transportation Impact Fees .................................................................................... 74 Budget to Actual (GAAP Basis) Transportation Development Act Fund ................................................................... 75

Supplementary Information Section:

Schedule of Revenues, Expenditures and Changes in Fund Balances:

Budget to Actual (GAAP Basis) Capital Projects Fund ............................................................................................... 76

Non-Major Special Revenue Governmental Funds:

Combining Balance Sheet ......................................................................................................................................... 77 Combining Statement of Revenues, Expenditures and
Changes in Fund Balances ...................................................................................................................................... 81

Internal Service Funds:

Combining Statement of Net Position ...................................................................................................................... 85 Combining Statement of Revenues, Expenses and Changes in Net Position ........................................................... 87 Combining Statement of Cash Flows ........................................................................................................................ 89

Trust and Custodial Funds:

Combining Statement of Fiduciary Net Position ...................................................................................................... 93 Combining Statement of Changes in Fiduciary Net Position .................................................................................... 94

Single Audit Reports:

Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ......................................................... 95

Independent Auditors’ Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance .................................................................................................................................................... 97

Schedule of Expenditures of Federal Awards .............................................................................................................. 99 Notes to the Schedule of Expenditures of Federal Awards ....................................................................................... 100 Schedule of Findings and Questioned Costs ............................................................................................................. 101 Summary Schedule of Prior Year Findings and Questioned Costs ............................................................................ 103

Appropriations Limit Report:

Independent Accountants’ Report on Applying Agreed Upon Procedures Related to the Article XIII-B Appropriations Limit .................................................................................................. 104 Appropriations Limit Schedule .................................................................................................................................. 106

i

CITY OF HANFORD

PRINCIPAL CITY OFFICIALS
JUNE 30, 2022

CITY COUNCIL

NAME POSITION

Kalish Morrow Mayor
Diane Sharp Vice Mayor
Amanda Sultray Council Member
Francisco Ramirez Council Member
Art Brieno Council Member

ADMINISTRATION

Mario Cifuentez City Manager
Griswold, LaSalle, Cobb, Dowd & Ginn, LLP City Attorneys Natalie Corral City Clerk
Christopher Tavarez Treasurer/Finance Director
Steve Pendergrass Fire Chief
Darlene Mata Community Development Director
Parker Sever Police Chief
John Doyel Public Works Director
Bradley Albert Parks and Community Services Director
Sarah Cardoza Human Resources Manager

7473 N. INGRAM AVE., SUITE 102 ⬧ FRESNO, CA 93711
_______________________________________________________________________________________________

P (559) 412-7576 ⬧ F (559) 493-5325 ⬧ WWW.HHCCPAS.COM

INDEPENDENT AUDITORS’ REPORT

The Honorable Mayor and Members of the City Council
City of Hanford
Hanford, 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 Hanford, California (the City) as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2022, and the respective changes in financial pos ition, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United Sta tes. Our responsibilities under those standards are further described in the Auditors’ 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 responsibil ities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Change in Accounting Principle
As described in Note 1 to the financial statements, in 2022, the City adopted new accounting guidance, GASB Statement No. 87, Leases. Our opinion is not modified with respect to this matter.

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

In preparing the financial statements, management is required to evaluate whether there are conditions or eve nts, 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.

2 Auditors’ 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.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, schedule of changes in the net pension liability and related ratios, schedule of the City’s proportionate share of the net pension liability, schedule of plan contributions, schedule of changes in net OPEB liability and related ratios, schedule of contributions – OPEB, and budgetary comparison informat ion on pages 4-12 and 67-75 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 Boa rd 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 informati on 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.

3 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 capital projects budgetary schedule, accompanying combining and individual nonmajor fund financial statements, and schedule of expenditures of federal awards, as required by T itle 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards , are presented for purposes of additional analysis and are not a required part of the basic financial statemen ts. 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 capital projects budgetary schedule, combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards are 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 principal city officials but does not include the basic financial statements and our auditors ’ 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 misstate ment of the other information exists, we are required to describe it in our report.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards , we have also issued our report dated March 30, 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 solely 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 int egral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

HUDSON HENDERSON & COMPANY, INC.

Fresno, California
March 30, 2023

4 CITY OF HANFORD
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2022

This discussion and analysis of the City of Hanford’s (the City) financial performance provides an overview of the City’s financial activities for the fiscal year ended June 30, 2022. We encourage readers to consider the information presented here in conjunction with the accompanying basic financial statements and the accompanying notes to those financial statements.

FINANCIAL HIGHLIGHTS

• Assets and deferred outflows of the City exceed its liabilities and deferred inflows at the close of the most recent fiscal year 2022 by $328.1 million. Of this amount, about $25.6 million in unrestricted net position may be used to meet the City’s ongoing obligations to citizens and creditors.

• As of June 30, 2022, the City’s governmental funds reported combined ending fund balances of $ 47.1 million.

• Approximately 5.3% of the combined governmental fund balances is considered available for spending at the City’s discretion.

• As of June 30, 2022, unassigned fund bal ance in the General Fund was $ 3.1 million, or 5.2% of total General Fund Expenditures.

• The City’s total debt increased by $28.1 million during fiscal year 2022, which is due to the issuance of a $30.9 million private Pension Obligation Bond in order to mitigate increases to unfunded accrued liability payments to CalPERS, offset by the normal maturity of debt in the water system, the wastewater system, and the citywide solar energy system.

• The following pension liabilities (assets) totaling $22,829,601 are included in the financial statements as required by GASB 68: General Government $21,186,904; Water System Enterprise $2 75,475; Wastewater Enterprise $314,176; Storm Drainage $(277,973); Refuse Enterprise $858,088; Computer Maintenance $60,432; Building $216,504; and Fleet Management $195,995.

THE FINANCIAL STATEMENTS

The financial statements presented herein include all of the activities of the City of Hanford, California (the City) and its component units, using the integrated approach as prescribed by Government Accounting Standards Board (GASB) Statement No. 34. The City’s basic financial statements 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 other supplementary information in addition to the basic financial statements themselves.

These Government-Wide Financial Statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private -sector business. The statements present the financial picture of the City from the economic resources measurement focus using the accrual basis of accounting. They present governmental activities and business -type activities separately. Additionally, certain eliminations have occurred as prescribed by the GASB statements regarding interfund activity, payables and receivables.

The Fund Financial Statements include statements for each of the three categories of activities – governmental, business-type and fiduciary. The governmental activities are prepared using the current financial resources measurement focus and modified accrual basis of accounting. The business -type activities are prepared using the economic resources measurement focus and the accrual basis of accounting. The fiduciary activities are agency funds, which only report a balance sheet and do not have a measurement focus. Reconciliations of the Fund Financial Statements to the Government -Wide Financial Statements are provided to explain the differences created by the integrated approach.

5 CITY OF HANFORD
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
FOR THE YEAR ENDED JUNE 30, 2022

OVERVIEW OF THE FINANCIAL STATEMENTS

Government-Wide Financial Statements

The Statement of Net Position and the Statement of Activities

The Statement of Net Position and the Statement of Activities report information about the City as a whole and about its activities. These statements included all assets and liabilities of the City using the accrual basis of accounting, which is similar to the accounting used by most private -sector companies. All of the current year’s revenue and expenses are taken into account, regardless of when cash is received or paid.

These two statements report the City’s net position and changes in them. Net positi on is the difference between assets and liabilities, which is one way to measure the City’s financial health, or financial position. Over time, increases or decreases in the City’s net position are one indicator of whether its financial health is improving or deteriorating. Other factors to consider are changes in the City’s property tax base and sales tax base.

In the Statement of Net Position and the Statement of Activities, we separate the City activities as follows:

Governmental Activities – Most of the City’s basic services are reported in this category, including General Government, Police, Fire, Public Works, Parks and Community Services, and Community Development. Property and sales taxes, user fees, interest income, franchise fees, and state and federal shared revenues and grants generally finance these activities.

Business-Type Activities – The City charges a fee to customers to cover all or most of the cost of certain services it provides. The City’s Water, Sewer, Storm Drain, Refuse, Airport , Intermodal, and Courthouse Square Funds are reported in this category.

FUND FINANCIAL STATEMENTS

The City, like other state and local governments, uses fund accounting to account for a number of funding sources and activities. In general, fund accounting provides a mechanism for separately accounting for a variety of different funding sources, and ena bles the City to demonstrate compliance with legal and/or contractual requirements that may be associated with these funds. Thus, the accompanying fund financial statements present individual funds, organized into one of three groups based on the nature of the activities and their purpose: Governmental, Proprietary or Fiduciary Funds. Note that the fund financial statements only present the most significant (or “major”) funds. In addition, the fund financial statements include a schedule that reconciles the fund financial statements to the Government -Wide Financial Statements. This is designed to explain the difference created by the integrated approach.

Governmental Funds – Most of the City’s basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year -end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets tha t can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City’s general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the City’s programs. The differences between the results shown in the governmental fund financial statements and those shown in the government-wide financial statements are explained in a reconciliation schedule following each governmental fund financial statement.

6 CITY OF HANFORD
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
FOR THE YEAR ENDED JUNE 30, 2022

Proprietary Funds – When the City charges customers for the services it provides, whether to outside customers or to other units of the City, these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that al l activities are reported in the Statement of Net Position and the Statement of Revenues, Expenses and Changes in Fund Net Position. In fact, the City’s enterprise funds are the same as the business -type activities reported in the government-wide statements, but provide more detail and additional information, such as cash flows, for proprietary funds. We use internal service funds (the other component of proprietary funds) to report activities that provide supplies and services for the City’s other programs and activities – such as the City’s self - insurance, fleet maintenance, and computer maintenance funds. The internal service funds are reported with governmental activities in the government-wide financial statements.

Fiduciary Funds – The City is the tr ustee, or fiduciary, for certain funds held on behalf of various third parties. The City’s fiduciary activities are reported in a separate Statement of Fiduciary Net Assets. We exclude these activities from the City’s other financial statements because the City cannot use these assets to finance its operations. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes.

Notes to the Financial Statement – The notes to the financial statements provide i nformation that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

Other Information – In addition to the basic financial statements and accompanying notes, this report also presents certain “required supplementary information” concerning the City’s progress in funding its obligation to provide pension benefits to its employees, budgetary comparison schedules for the general fund and other major funds.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

The C ity presents its financial statements under the reporting model required by Governmental Accounting Standards Board (GASB) Statement No. 34. The City is presenting prior fiscal years’ data for the purpose of providing comparative information for the Management Discussion and Analysis (MD&A).

Statement of Net Position

As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $328,166,118 at the close of the 2021-2022 fiscal year.

By far, the largest portion of the Ci ty’s net position , 78.6%, reflects its investment in capital assets (e.g., land, buildings, machinery, infrastructure and equipment), less any outstanding debt used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently, their val ue is not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the sources needed to repay this debt must be provided from other sources since the capital assets themse lves cannot be used to liquidate these liabilities.

7 CITY OF HANFORD
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
FOR THE YEAR ENDED JUNE 30, 2022

Of the total current assets totaling $132,622,001, approximately 77.5% or $102,724,445, consists of unrestricted cash and investments. These funds are invested in accordance with State law and the City’s investment policy and include funds legally and/or contractually restricted as to their use.

2022 2021 2022 2021 2022 2021
ASSETS
Current assets 71,598,372$ 49,354,666$ 61,023,629$ 44,276,495$ 132,622,001$ 93,631,161$ Capital and non-current
assets (net of depreciation) 174,167,728 177,619,707 137,293,785 140,249,947 311,461,513 317,869,654 Total Assets 245,766,100 226,974,373 198,317,414 184,526,442 444,083,514 411,500,815 Deferred outflows of resources 38,670,202 12,788,869 6,437,228 2,314,298 45,107,430 15,103,167

LIABILITIES
Current and other liabilities 28,194,878 7,317,025 1,686,955 1,667,793 29,881,833 8,984,818 Long-term liabilities 61,959,410 51,711,380 35,366,451 40,165,540 97,325,861 91,876,920 Total Liabilities 90,154,288 59,028,405 37,053,406 41,833,333 127,207,694 100,861,738 Deferred inflows of resources 16,624,319 966,359 17,192,813 326,319 33,817,132 1,292,678

NET POSITION
Net investment in capital assets 153,865,284 157,116,548 104,136,670 108,641,344 258,001,954 265,757,892 Restricted 44,531,429 39,517,385 2,379 2,379 44,533,808 39,519,764 Unrestricted (20,739,018) (16,865,455) 46,369,374 36,037,365 25,630,356 19,171,910 Total Net Position 177,657,695$ 179,768,478$ 150,508,423$ 144,681,088$ 328,166,118$ 324,449,566$ Governmental Activities Business-Type Activities Total

STATEMENT OF NET POSITION

An additional portion of the City’s net position of $ 44,533,808 represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position, $25,630,356, may be used to meet the government’s ongoing obligations to citizens and creditors.

At the end of the current fiscal year, the City is able to report an overall positive balance in net position. This means the City has sufficient current assets to satisfy both its current and long -term liabilities and fulfill its obligations pursuant to external restriction imposed on City assets. In short, the City is in sound financial condition.

8 CITY OF HANFORD
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
FOR THE YEAR ENDED JUNE 30, 2022

Statement of Activities

As discussed earlier, the Statement of Net Position provides a measure of the financial health of an entity at a specific date in time. The Statement of Activities provides details of how net position changed from the beginning of the year to the end of the year, and whether net assets increased or decreased. From June 30, 2021 to June 30, 2022, the net position of the City as a whole increased, largely due to the increase in other revenues.

2022 2021 2022 2021 2022 2021

REVENUES
Program Revenues:

Charges for services 6,970,563$ 5,962,037$ 27,232,541$ 26,671,382$ 34,203,104$ 32,633,419$ Operating grants and contributions 4,897,714 1,908,465 - - 4,897,714 1,908,465 Capital grants and contributions 531,131 780,926 - - 531,131 780,926 General Revenues:

Taxes 36,281,847 32,191,047 - - 36,281,847 32,191,047 Investment earnings (1,478,136) 936,759 (643,781) 243,843 (2,121,917) 1,180,602 Other revenues 3,505,720 3,697,145 2,931,612 5,986,373 6,437,332 9,683,518 Lease revenue - - 610,805 - 610,805 - Total Revenues 50,708,839 45,476,379 30,131,177 32,901,598 80,840,016 78,377,977

EXPENSES
Governmental Activities:

General government 6,839,279 7,777,169 - - 6,839,279 7,777,169 Public safety 21,556,505 21,878,581 - - 21,556,505 21,878,581 Public works 4,644,058 4,310,762 - - 4,644,058 4,310,762 Parks and recreation 3,280,139 3,290,716 - - 3,280,139 3,290,716 Community development 2,248,980 2,636,159 - - 2,248,980 2,636,159 Business-type Activities:

Water system - - 8,418,232 7,613,367 8,418,232 7,613,367 Wastewater system - - 5,776,311 5,830,921 5,776,311 5,830,921 Storm drain - - 945,288 1,082,412 945,288 1,082,412 Refuse - - 9,019,863 8,173,990 9,019,863 8,173,990 Airport - - 769,767 645,131 769,767 645,131 Intermodal - - 49,616 57,818 49,616 57,818 Courthouse square - - 97,270 102,750 97,270 102,750 Total Expenses 38,568,961 39,893,387 25,076,347 23,506,389 63,645,308 63,399,776 Increase in Net Position Before Transfers 12,139,878 5,582,992 5,054,830 9,395,209 17,194,708 14,978,201 Transfers (924,456) (1,861,652) 924,456 1,861,652 - - Extraordinary Item:

Settlement expenditures (12,500,000) - - - (12,500,000) - Change in Net Position (1,284,578) 3,721,340 5,979,286 11,256,861 4,694,708 14,978,201 Net Position, Beginning of Year,
as Previously Reported 179,768,478 176,912,706 144,681,088 133,700,599 324,449,566 310,613,305 Prior Period Adjustment (826,205) (865,568) (151,951) (276,372) (978,156) (1,141,940) Net Position, Beginning of Year,
Restated 178,942,273 176,047,138 144,529,137 133,424,227 323,471,410 309,471,365 Net Position, End of Year 177,657,695$ 179,768,478$ 150,508,423$ 144,681,088$ 328,166,118$ 324,449,566$

STATEMENT OF ACTIVITIES
Governmental Activities Business-Type Activities Total

9 CITY OF HANFORD
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
FOR THE YEAR ENDED JUNE 30, 2022

The City’s revenue totaled $80,840,016 with 42.3% generated from charges for services and 44.9% generated from taxes. The largest source of revenues in governmental activities comes from taxes at 71.5%. This is typical in that traditional services provided by a city, such as public safety, parks, recreation, and public works, are primarily funded from property, sales, transient occupancy, and other local taxes. The largest source of revenues in Business -Type Activities comes from charges for services at 90.4%. The Business-Type Activities include enterprise fund operations, such as Water, Sewer, Refuse, Storm Drain, Airport, Courthouse Square and Intermodal Funds, all of which recover their costs through fees and charges just like a normal business.

Expenses of the City totaled $63,645,308. The two largest categories of expenses are public safety, which represents

33.7% of total costs, and general government , which represents 10.8% of total costs. However, in relation to Governmental Activity expenses only, public safety makes up 5 5.8% of the total and general government makes up

17.8% of the total.

As shown in the Statement of Activities, net position increased from the prior year. In the funds included within the Governmental Activities category, net position decreased due to the decrease in change in net position and prior period adjustment by $ 2,110,783 a de crease of 1.2%. In the funds included within the Business -Type Activities category, net position increased due to the increase in change in net position offset by the prior period adjustment by $5,827,335 or 4.0%.

FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS

As previously noted, the City of Hanford uses fund accounting to demonstrate compliance with legal and contractual requirements. This section provides an analysis and discussion of individual funds and f und types presented in the financial statements.

Governmental Funds – The Focus of the City of Hanford’s governmental funds is on short-term inflows and outflows and balances of spendable resources. Such information is useful in assessing the City’s financial requirements. In particular, unreserved fund balance may serve a s a useful measure of a government’s net resources available for spending at the end of the fiscal year. The remainder of fund balance is reserved or designated to indicate that it is not available for new spending because it has already been committed to a specific future use.

The General Fund is the primary operating fund of the City of Hanford. At the end of the fiscal year, unassigned fund balance of the General Fund was $3,031,928 while total fund balance was $3,281,078. As a measure of the General Fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total expenditures. The unassigned fund balance of the general fund represents approximately 5.0% of general fund expenditures.

Capital Improvement Funds, which are categorized as governmental funds, show fluctuations in their ending fund balances because they are primarily used to account for capital improvement projects that span more than one year.

Therefore, the change in fund balance is generally due t o the timing of funding, which generally occurs in one year, in relation to the timing of expenditures, which occur over more than one year. Any remaining fund balances are either reserved or earmarked specifically for the continuing cost of the related pr ojects.

Proprietary Funds – The City proprietary funds include the Water, Wastewater, Storm Drain, Refuse, Airport, Intermodal, and Courthouse Square Funds. All of the proprietary funds are highly capital intensive, requiring a significant investment in c apital equipment and facilities to conduct their operations, whether it be in water and sewer lines, water and wastewater treatment facilities or runways.

10 CITY OF HANFORD
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
FOR THE YEAR ENDED JUNE 30, 2022

The Water System Fund has a total net position of $ 59,450,306 at the end of the fiscal year. Total net position includes $37,844,891 invested in capital assets and $21 restricted for debt service, which are not available to pay for current expenses. The remaining net position of $21,605,394 is unrestricted and available to cover current operating and capital needs of the fund.

The Refuse Fund has a total net position of $ 4,142,416 at the end of the fiscal year. Total net position includes $3,046,876 invested in capital assets, which are not available to cover current expenses.

The Wastewater Fund has a total net position of $43,962,112 at the end of the fiscal year. Total net position includes $36,080,506 invested in capital assets and $2,358 restricted for debt service, which are not available to cover current expenses. The fund has $7,879,248 available to cover current operating and capital needs.

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets – The City of Hanford’s investment in capital assets for its governmental and business type activities as of June 30, 2022 amounts to $291,156,690 (net of accumulated depreciation) . This investment in capital assets includes land, buildings and system, improvements, machinery and equipment, park facilities and roads. The net decrease in the City’s investment in capital assets for the current fiscal year was $6,207,426. This decrease is a net result of annual depreciation, land acquisition, normal equipment replacement, and construction of typical capital assets. Significant capital asset events during the fiscal year included the following:

CIP OBJ # DESCRIPTION PROJECT COST
821618 PAVEMENT RESURFACING TREATMENT $ 1,370,729 822615 PAVEMENT RESURFACING TREATMENT $ 926,221
820623 NEW WATER SUPPLY WELL 51&52 $ 882,988
822605 CIVIC AUD ROOF REPLACEMENT $ 681,880 821619 LACEY WIDEN/RECON/10TH-SIERRA $ 424,073
821655 CENTENNIAL PARK/PLAYGRD RENO $ 267,122 821653 LACEY PARK BASKETBALL COURTS $ 250,875 822634 WATER SYSTEM SECURITY UPGRADES $ 220,790
822003 RESIDENTIAL REFUSE CONTAINERS $ 216,399
822002 COMMERCIAL REFUSE CONTAINERS $ 176,425

2022 2021 2022 2021 2022 2021
Land 60,801,667$ 60,795,382$ 11,928,488$ 11,386,981$ 72,730,155$ 72,182,363$ Buildings 15,235,957 15,271,928 108,581,129 112,089,309 123,817,086 127,361,237 Infrastructure 67,915,576 70,607,008 - - 67,915,576 70,607,008 Equipment 9,535,394 10,389,595 15,586,623 16,759,692 25,122,017 27,149,287 Construction in progress 309,369 52,635 1,195,166 11,586 1,504,535 64,221 Right to use leased asset 67,321 - - - 67,321 - Total Capital Assets 153,865,284$ 157,116,548$ 137,291,406$ 140,247,568$ 291,156,690$ 297,364,116$

CAPITAL ASSETS
(Net of Depreciation)
Governmental Activities Business-Type Activities Total

11 CITY OF HANFORD
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
FOR THE YEAR ENDED JUNE 30, 2022

Long-Term Debt - At the end of the current fiscal year, the City had a total debt outstanding of $ 59,729,054.

2022 2021 2022 2021 2022 2021
Bonds payable 26,506,940$ -$ 20,709,060$ 17,945,000$ 47,216,000$ 17,945,000$ Unamortized bond premium - - 556,425 629,732 556,425 629,732 Notes payable - - 4,707,418 5,095,115 4,707,418 5,095,115 Lease payable 67,378 - - - 67,378 - Finance purchase arrangement - - 7,181,833 7,936,377 7,181,833 7,936,377 Total Outstanding Debt 26,574,318$ -$ 33,154,736$ 31,606,224$ 59,729,054$ 31,606,224$

OUTSTANDING DEBT
Governmental Activities Business-Type Activities Total

In the Business -Type Activities, the r evenue bonds payable consists of four bond issues. In 2013, for the water system, the City received $12,725,000 from the issuance of Water Revenue Bonds for the purpose of refinancing a 2003 Revenue Bond and 2007 note payable , of which $5,940,000 remains. For the sewer system there remains a 2015 $2,625,000 Refunding Revenue Bond, and a 2012 $7,705,000 Refunding Revenue Bond. In the current fiscal year, the City issued Pension Obligation Bonds of which $4,439,060 is payable from the Business -Type Activities.

The notes payable portion of the outstanding debt totaling $ 4,707,418 consists of one loan. In 2002, the City obtained a $10,000,000 loan for the purpose of expanding the wastewater treatment plant .

The outstanding lease purchase amount, $7,181,833, is comprised of two different finance purchase arrangements.

The first lease was for an energy efficient solar tracker system at the wastewater treatment plant for $4,325,556.

The second lease was for a second energy efficient solar tracking system in the amount of $8,495,138. This system is located at the wastewater treatment plant but is serving the whole city.

For detail information regarding each of these bonds or notes, please refer to Note 5 – Long-Term Debt.

In May 2022, Council approved issuance of a $30,946,000 private taxable Pension Obligation Bond with maturity in 2039 to take advantage of historically low interest rates and to increase the City’s funding ratio of pension unfunded accrued liability with CalPERS. This bond issuance is intended to result in near term cash savings, smoother long - term budget reliability, flexibility in maturity and potential savings. In conjunction with this debt issue, the City established a pension funding policy that would work to establish prefunding this debt issue should sufficient reserve be established.

GENERAL FUND BUDGETARY HIGHLIGHTS

The fiscal year budget did not have any significant changes made from the beginning of the fiscal year. Actual revenues, however, were $4.9 million over estimated budget amounts. This was due to conservative projections of sales tax due to the COVID-19 pandemic. In addition, some federal funding was used to assist the City in costs created due to the pandemic. Expenditures for the fiscal year, in addition to better than projected revenues, were under budget. This was a result of a concerted effort to redu ce operational costs during the pandemic and some unfilled positions in various departments.

12 CITY OF HANFORD
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
FOR THE YEAR ENDED JUNE 30, 2022

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES

The key assumptions and considerations in the General Fund revenue forecast for fiscal year 2021 -2022 budget process were:

• Conservative revenue projections due to potential recession concerns • Contracted services in lieu of increasing or filling in vacant positions • Reduced or removed contributions to external programs and organizations • Returned to setting aside contributions to building, equipment, and vehicle reserves • Defer equipment and capital project expenses

In early 2022, Council established a g oal of having a 35% General Fund Reserve of unrestricted fund balance to budgeted expenditures in order to be prepared for financial pressures or emergencies.

Items addressed in the budget were:

Wastewater – Sewer main oversizing, extension and replacem ent, sewer video inspection, manhole repair/coating and lift station pump monitoring projects.

Airport – No capital projects this fiscal year.

Water – The completion of various water main replacements and additions, and the continuation of meter replacement and AMR replacement. There were several well repairs needed and will continue to be planned.

Storm Drain – Continued curb and gutter installation, increased flow capacity in Peoples Ditch, storm drain oversizing, pump station upgrades, basin improvements and installation of a new lift station.

Building – Several ADA building modifications throughout City owned facilities.

Streets – Resurfacing, sealing, and maintenance on several streets, replacing curb, gutters, and sidewalks, lane widening, signage replacement and installing/replacing traffic signals at various locations.

General Fund Operations – Maintain current services and increase efficiency in operations, decrease expenses where possible, and anticipate minimal revenue growth with no draw from reserves. Also addressed are various ADA modifications, projects to increase security and safety of buildings and continued technology system upgrades.

Parks and Community Services – Continue with a variety of recreation programs and activities and look for more opportunities to involve the community as it comes out of the pandemic. Also continue improvements for ADA compliance in all parks and modification and upgrade in parks and recreational facilities.

REQUESTS FOR INFORMATION

This Financial Report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s finances and to show the City’s accountability for the money it receives. Questions concerning any of the information provided in the report or requests for additional financial information can be sent via e-mail to [email protected]. Formal written requests should be addressed to: City of Hanford, Attn:

Finance Department, 315 N. Douty Street, Hanford, California 93230.

FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS

The notes to the basic financial statements are an integral part of th ese statements. 13 CITY OF HANFORD

STATEMENT OF NET POSITION
JUNE 30, 2022

Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments 68,652,956$ 34,071,489$ 102,724,445$ Receivables 10,424,488 3,570,709 13,995,197 Leases receivables 557,209 13,479,690 14,036,899 Internal balances (9,434,071) 9,434,071 - Inventory 969,531 376,651 1,346,182 Deposits 279,500 14,000 293,500 Prepaid expenses and other assets 148,759 77,019 225,778 Long-term notes receivable 20,302,444 - 20,302,444 Restricted cash and investments - 2,379 2,379 Capital Assets:

Nondepreciable assets 61,111,036 13,123,654 74,234,690 Depreciable assets, net of depreciation 92,754,248 124,167,752 216,922,000 Total Assets 245,766,100 198,317,414 444,083,514

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows related to pensions 37,024,665 5,784,539 42,809,204 Deferred outflows related to OPEB 1,645,537 652,689 2,298,226 Total Deferred Outflows of Resources 38,670,202 6,437,228 45,107,430

LIABILITIES
Accounts payable 2,388,564 968,876 3,357,440 Salary and benefits payable 1,124,403 24,619 1,149,022 Accrued interest payable - 315,343 315,343 Deposits and unearned revenue 15,966,692 350,829 16,317,521 Compensated absences - current portion 146,286 27,288 173,574 Compensated absences - noncurrent portion 1,094,687 209,048 1,303,735 Long-term debt - current 1,068,933 3,156,440 4,225,373 Long-term debt - noncurrent 25,505,385 29,441,871 54,947,256 Unamortized bond premium - 556,425 556,425 Claims payable 5,589,000 - 5,589,000 Net OPEB liability 3,110,503 832,901 3,943,404 Net pension liability 21,659,835 1,169,766 22,829,601 Settlement liability - current 7,500,000 - 7,500,000 Settlement liability - noncurrent 5,000,000 - 5,000,000 Total Liabilities 90,154,288 37,053,406 127,207,694

DEFERRED INFLOWS OF RESOURCES
Deferred inflows related to pensions 15,587,500 4,031,154 19,618,654 Deferred inflows related to OPEB 490,929 146,641 637,570 Deferred inflows related to leases 545,890 13,015,018 13,560,908 Total Deferred Inflows of Resources 16,624,319 17,192,813 33,817,132

NET POSITION
Net investment in capital assets 153,865,284 104,136,670 258,001,954 Restricted for:

Streets 10,074,849 - 10,074,849 Debt service - 2,379 2,379 Community development 23,618,624 - 23,618,624 Public safety 713,464 - 713,464 Parks and recreation 6,222,445 - 6,222,445 Capital projects 3,902,047 - 3,902,047 Unrestricted (20,739,018) 46,369,374 25,630,356 Total Net Position 177,657,695$ 150,508,423$ 328,166,118$ Primary Government

The notes to the basic financial statements are an integral part of th ese statements. 14 CITY OF HANFORD

STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2022

Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Primary Government:

Governmental Activities:

General government 6,839,279$ -$ -$ -$ Public safety 21,556,505 1,311,433 4,111,448 - Public works 4,644,058 1,815,542 - 531,131 Recreation 3,280,139 736,230 - - Community development 2,248,980 3,107,358 786,266 - Total Governmental Activities 38,568,961 6,970,563 4,897,714 531,131 Business-type Activities:

Water system 8,418,232 10,881,388 - - Wastewater system 5,776,311 5,835,517 - - Storm drain 945,288 1,524,083 - - Refuse 9,019,863 8,783,599 - - Airport 769,767 149,270 - - Intermodal 49,616 1,572 - - Courthouse square 97,270 57,112 - - Total Business-type Activities 25,076,347 27,232,541 - - Total Primary Government 63,645,308$ 34,203,104$ 4,897,714$ 531,131$ Program Revenues

The notes to the basic financial statements are an integral part of th ese statements. 15 CITY OF HANFORD
STATEMENT OF ACTIVITIES (continued)
FOR THE YEAR ENDED JUNE 30, 2022
Net
(Expense) Governmental Business-type
Functions/Programs Revenue Activities Activities Total
Primary Government:

Governmental Activities:

General government (6,839,279)$ (6,839,279)$ -$ (6,839,279)$ Public safety (16,133,624) (16,133,624) - (16,133,624) Public works (2,297,385) (2,297,385) - (2,297,385) Recreation (2,543,909) (2,543,909) - (2,543,909) Community development 1,644,644 1,644,644 - 1,644,644 Total Governmental Activities (26,169,553) (26,169,553) - (26,169,553) Business-type Activities:

Water system 2,463,156 - 2,463,156 2,463,156 Wastewater system 59,206 - 59,206 59,206 Storm drain 578,795 - 578,795 578,795 Refuse (236,264) - (236,264) (236,264) Airport (620,497) - (620,497) (620,497) Intermodal (48,044) - (48,044) (48,044) Courthouse square (40,158) - (40,158) (40,158) Total Business-type Activities 2,156,194 - 2,156,194 2,156,194 Total Primary Government (24,013,359)$ (26,169,553) 2,156,194 (24,013,359) Property taxes 14,205,410 - 14,205,410 Sales and use tax 18,199,243 - 18,199,243 Franchise taxes 1,141,696 - 1,141,696 Other taxes 2,735,498 - 2,735,498 Revenue from use of money and property (1,478,136) (643,781) (2,121,917) Impact fees 3,372,830 2,916,474 6,289,304 Gain on disposal of assets 21,714 - 21,714 Miscellaneous/other 111,176 15,138 126,314 Lease revenue - 610,805 610,805 Transfers - interfund (924,456) 924,456 - Total General Revenues and Transfers 37,384,975 3,823,092 41,208,067 Settlement expenditures (12,500,000) - (12,500,000) Change in Net Position (1,284,578) 5,979,286 4,694,708 Net Position, Beginning of Year, as Previously Reported 179,768,478 144,681,088 324,449,566 Prior Period Adjustments (826,205) (151,951) (978,156) Net Position, Beginning of Year, Restated 178,942,273 144,529,137 323,471,410 Net Position, End of Year 177,657,695$ 150,508,423$ 328,166,118$ Net (Expense) Revenue and Changes in Net Position
General Revenues:

Taxes:

Extraordinary item:

GOVERNMENTAL FUNDS

FINANCIAL STATEMENTS

The notes to the basic financial statements are an integral part of th ese statements. 16 CITY OF HANFORD

BALANCE SHEET - GOVERNMENTAL FUNDS
JUNE 30, 2022

Capital CDBG/HOME/ Transportation All Other Non-Major
General Projects Housing Transportation Development Governmental Fund Fund Fund Impact Fees Act Fund Funds Total
ASSETS
Cash and investments 14,689,316$ 2,032,459$ 1,689,510$ 5,707,618$ 5,335,584$ 15,204,824$ 44,659,311$ Receivables 1,100,641 5,750 377,097 137,126 1,754,115 6,971,014 10,345,743 Loan receivable - - 18,488,671 - - 1,813,773 20,302,444 Lease receivable - - - - - 557,209 557,209 Due from other funds 684,577 - - - - - 684,577 Deposits 104,500 - - - - - 104,500 Prepaid expenses and other assets 144,650 1,100 - - - 622 146,372 Advances to other funds - 1,659,026 - - - - 1,659,026 Total Assets 16,723,684$ 3,698,335$ 20,555,278$ 5,844,744$ 7,089,699$ 24,547,442$ 78,459,182$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 813,394$ 86,956$ 70,610$ -$ 891,911$ 132,737$ 1,995,608$ Accrued wages payable 126,077 - - - - 61 126,138 Unearned revenue - - - - 5,872,677 10,090,880 15,963,557 Consumer deposits 3,135 - - - - - 3,135 Settlement liability 12,500,000 - - - - - 12,500,000 Due to other funds - - 81,392 - - 157,826 239,218 Total Liabilities 13,442,606 86,956 152,002 - 6,764,588 10,381,504 30,827,656 Deferred Inflows of Resources:

Deferred inflows from leases - - - - - 545,890 545,890 Total Deferred Inflows of Resources - - - - - 545,890 545,890 Fund Balances:

Nonspendable:

Loan receivable - - 18,533,201 - - 1,813,773 20,346,974 Lease receivable - - - - - 557,209 557,209 Prepaid expenses 144,650 1,100 - - - 622 146,372 Deposits 104,500 - - - - - 104,500 Restricted for:

Community development - - 1,870,075 - - - 1,870,075 Streets and roads - - - 5,844,744 325,111 3,905,928 10,075,783 Recreation - - - - - 5,107,894 5,107,894 Landscape maintenance - - - - - 968,179 968,179 Public safety - - - - - 713,464 713,464 Committed for:

Parking and business improvement - 3,610,279 - - - 291,768 3,902,047 Community development - - - - - 722,548 722,548 Cannabis - - - - - 121,818 121,818 Unassigned 3,031,928 - - - - (583,155) 2,448,773 Total Fund Balances 3,281,078 3,611,379 20,403,276 5,844,744 325,111 13,620,048 47,085,636 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 16,723,684$ 3,698,335$ 20,555,278$ 5,844,744$ 7,089,699$ 24,547,442$ 78,459,182$ Special Revenue

The notes to the basic financial statements are an integral part of th ese statements. 17 CITY OF HANFORD

RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS TO THE

STATEMENT OF NET POSITION - GOVERNMENTAL ACTIVITIES
JUNE 30, 2022

Total Fund Balances Governmental Funds 47,085,636$
Amounts Reported for Governmental Activities in the Statement of Net Position are different because:

Capital assets: In governmental funds, only current assets are reported.

In the Statement of Net Position, all assets are reported, including capital assets and accumulated depreciation:

Capital assets at historical cost 269,548,018$
Accumulated depreciation (123,610,757) 145,937,261
Internal service funds are used by management to charge the costs of fleet maintenance, purchasing, risk management, building usage, and computer maintenance to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the Statement of Net Position. 13,387,871
Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the governmental funds. Long-term liabilities at year-end consist of:

Compensated absences (1,176,271)$
Pension obligation bonds (25,390,437)
Lease payables (67,378)
Net OPEB liability (3,110,502)
Net pension liability (21,186,902) (50,931,490)
Deferred outflows related to pensions and OPEB 37,422,868 Deferred inflows related to pensions and OPEB (15,244,451) Total Net Position - Governmental Activities 177,657,695$

The notes to the basic financial statements are an integral part of th ese statements. 18 CITY OF HANFORD

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -

GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2022

Capital CDBG/HOME/ Transportation All Other Non-Major General Projects Housing Transportation Development Governmental Fund Fund Fund Impact Fees Act Fund Funds Total

REVENUES
Taxes and special assessments 32,425,620$ -$ -$ 2,031,907$ 786,999$ 6,177,644$ 41,422,170$ Aid from other government agencies 1,500,269 - 729,594 66,242 11,082 3,073,398 5,380,585 Licenses and permits 1,797,872 - - - - - 1,797,872 Fines and forfeitures 175,263 - - - - 49,136 224,399 Charges for services 3,062,208 66,225 - - - - 3,128,433 Lease revenue - - - - - 19,496 19,496 Revenue from use of money and property (425,086) (37,397) 275,500 (141,353) (130,680) (388,575) (847,591) Miscellaneous 56,747 492 637 149 - 136,380 194,405 Total Revenues 38,592,893 29,320 1,005,731 1,956,945 667,401 9,067,479 51,319,769

EXPENDITURES
General government 4,116,481 6,395 - 10,327 9,794 19,726 4,162,723 Public safety 42,528,787 - - - - - 42,528,787 Public works 4,601,080 - - - 258,190 1,332,784 6,192,054 Recreation 5,662,458 - - - - - 5,662,458 Community development 2,874,828 37,900 288,391 - - 307,081 3,508,200 Debt service:

Principal 22,193 - - - - - 22,193 Interest 513 - - - - - 513 Capital outlay 555,445 919,025 320,250 207,570 507,787 2,113,430 4,623,507 Total Expenditures 60,361,785 963,320 608,641 217,897 775,771 3,773,021 66,700,435 Excess (Deficiency) of Revenues Over Expenditures (21,768,892) (934,000) 397,090 1,739,048 (108,370) 5,294,458 (15,380,666)

OTHER FINANCING SOURCES (USES)
Operating transfers in 3,712,266 - - 1,657,592 - 824,143 6,194,001 Operating transfers out (3,001,032) - (157,802) (42,549) (26,210) (4,280,631) (7,508,224) Proceeds from issuance of bonds 25,390,437 - - - - - 25,390,437 Lease and other financing proceeds 89,571 - - - - - 89,571 Proceeds from sale of assets 1,716 - - - - 20,000 21,716 Total Other Financing Sources (Uses) 26,192,958 - (157,802) 1,615,043 (26,210) (3,436,488) 24,187,501

EXTRAORDINARY ITEM
Settlement expenditure (12,500,000) - - - - - (12,500,000) Net Change in Fund Balance (8,075,934) (934,000) 239,288 3,354,091 (134,580) 1,857,970 (3,693,165) Fund Balance, Beginning of Year 11,037,789 4,573,806 20,180,157 2,532,312 498,685 11,841,388 50,664,137 Prior Period Adjustments 319,223 (28,427) (16,169) (41,659) (38,994) (79,310) 114,664 Fund Balance, Beginning of Year (Restated) 11,357,012 4,545,379 20,163,988 2,490,653 459,691 11,762,078 50,778,801 Fund Balance, End of Year 3,281,078$ 3,611,379$ 20,403,276$ 5,844,744$ 325,111$ 13,620,048$ 47,085,636$ Special Revenue

The notes to the basic financial statements are an integral part of th ese statements. 19 CITY OF HANFORD

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

GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES - GOVERNMENTAL ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2022

Total Net Change in Fund Balances - Governmental Funds (3,693,165)$ Amounts Reported for Governmental Activities in the Statement of Activities are different because:

Capital outlays are reported in governmental funds as expenditures.

However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlay and contributed capital exceeded depreciation in the current period:

Expenditures for capital outlay 4,623,507$
Depreciation expense (7,001,393) (2,377,886)
Compensated absences: In governmental funds, compensated absences are measured by the amounts paid during the period. In the Statement of Activities, compensated absences are measured by the amounts earned.

The difference between compensated absences paid and those earned was: 158,620 Internal service funds are used by management to charge the costs of fleet maintenance, purchasing, employee welfare, workers' compensation, general and unemployment insurance to individual funds. The net revenue of certain activities of internal service funds is reported with governmental activities: 398,496
Leases and other debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Position.

Repayment of leases and other debt principal is an expenditure in the governmental funds, but repayment reduces long-term liabilities in the Statement of Net Position.

Leases issued (89,571)$
Principal paid on leases 22,193 (67,378)
Net Pension and OPEB liabilities: The expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. 18,992,414 Pension and OPEB contributions are reported as expenditures in the governmental funds, but contributions are reported as deferred outflows in the Statement of Net Position. 10,694,758
Pension obligation bonds are not due and payable in the current period and therefore are not reported in the governmental funds. (25,390,437)
Change in Net Position of Governmental Activities (1,284,578)$

PROPRIETARY FUNDS

FINANCIAL STATEMENTS

The notes to the basic financial statements are an integral part of th ese statements. 20 CITY OF HANFORD
STATEMENT OF NET POSITION –

PROPRIETARY FUNDS
JUNE 30, 2022

Water System Wastewater Storm Drain Refuse
Fund Fund Fund Fund
ASSETS
Current Assets:

Cash and investments 20,440,856$ 6,823,102$ 5,704,069$ 960,671$ Restricted cash and investments 21 2,358 - - Receivables, net 1,624,343 770,677 176,487 984,613 Lease receivables - 13,239,958 - - Deposits 10,000 4,000 - -
Prepaid expenses 17,052 52,593 1,074 6,300 Inventory 376,651 - - - Due from other funds - 912,470 - - Total current assets 22,468,923 21,805,158 5,881,630 1,951,584 Noncurrent Assets:

Capital Assets:

Land 352,240 4,135,650 4,565,091 - Buildings and improvements 60,315,708 87,746,755 21,162,285 1,351,845 Machinery and equipment 18,092,631 2,351,258 1,002,176 8,478,623 Construction in progress 1,126,641 13,193 55,331 - Less accumulated depreciation (28,769,337) (40,310,984) (6,673,001) (5,096,193) Capital assets, net 51,117,883 53,935,872 20,111,882 4,734,275 Total noncurrent assets 51,117,883 53,935,872 20,111,882 4,734,275 Total Assets 73,586,806 75,741,030 25,993,512 6,685,859

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows related to pensions 1,879,119 1,238,694 360,724 2,306,002 Deferred outflows related to OPEB 198,644 170,267 - 283,778 Total Deferred Outflows of Resources 2,077,763 1,408,961 360,724 2,589,780

LIABILITIES
Current Liabilities:

Accounts payable 317,581 115,658 15,042 497,520 Salaries and benefits payable 8,215 4,836 154 11,598 Deposits and unearned revenue 345,204 1,205 485 1,454 Due to other funds 159,912 752,558 - - Advances from other funds - - - - Interest payable 102,064 213,279 - - Compensated absences - current portion 11,839 5,166 1,935 8,348 Bonds and notes payable - current portion 1,535,663 1,540,759 13,386 66,632 Total current liabilities 2,480,478 2,633,461 31,002 585,552 Noncurrent Liabilities:

Compensated absences payable 90,748 39,604 14,703 63,993 Net OPEB liability 265,632 211,007 - 356,262 Claims payable - - - - Unamortized bond premium 181,639 374,786 - - Bonds and notes payable 11,555,690 15,939,821 325,593 1,620,767 Net pension liability (asset) 275,475 314,176 (277,973) 858,088 Total noncurrent liabilities 12,369,184 16,879,394 62,323 2,899,110 Total Liabilities 14,849,662 19,512,855 93,325 3,484,662

DEFERRED INFLOWS OF RESOURCES
Deferred inflows related to pensions 1,319,971 857,867 268,512 1,584,804 Deferred inflows related to OPEB 44,630 38,254 - 63,757 Deferred inflows related to leases - 12,778,903 - - Total Deferred Inflows of Resources 1,364,601 13,675,024 268,512 1,648,561

NET POSITION
Net investment in capital assets 37,844,891 36,080,506 19,772,903 3,046,876 Restricted for debt service 21 2,358 - - Unrestricted 21,605,394 7,879,248 6,219,496 1,095,540 Total Net Position 59,450,306$ 43,962,112$ 25,992,399$ 4,142,416$ Sewer Improvement Funds

The notes to the basic financial statements are an integral part of th ese statements. 21 CITY OF HANFORD
STATEMENT OF NET POSITION –
PROPRIETARY FUNDS (continued)
JUNE 30, 2022

Governmental
Airport Intermodal Courthouse Total Activities Internal Fund Fund Square Enterprise Funds Service Funds
ASSETS
Current Assets:

Cash and investments 122,339$ 15,197$ 5,255$ 34,071,489$ 23,993,645$ Restricted cash and investments - - - 2,379 - Receivables, net 5,202 6,202 3,185 3,570,709 78,745 Lease receivables - 239,732 - 13,479,690 - Deposits - - - 14,000 175,000 Prepaid expenses - - - 77,019 2,387 Inventory - - - 376,651 969,531 Due from other funds - - - 912,470 - Total current assets 127,541 261,131 8,440 52,504,407 25,219,308 Noncurrent Assets:

Capital Assets:

Land 2,596,623 278,884 - 11,928,488 - Buildings and improvements 10,123,741 1,305,817 - 182,006,151 280,697 Machinery and equipment 81,851 - - 30,006,539 17,557,998 Construction in progress - - - 1,195,165 - Less accumulated depreciation (6,304,456) (690,966) - (87,844,937) (9,910,672) Capital assets, net 6,497,759 893,735 - 137,291,406 7,928,023 Total other noncurrent assets 6,497,759 893,735 - 137,291,406 7,928,023 Total Assets 6,625,300 1,154,866 8,440 189,795,813 33,147,331

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows related to pensions - - - 5,784,539 1,247,328 Deferred outflows related to OPEB - - - 652,689 - Total Deferred Outflows of Resources - - - 6,437,228 1,247,328

LIABILITIES
Current Liabilities:

Accounts payable 20,153 539 2,383 968,876 392,956 Salaries and benefits payable (184) - - 24,619 998,265 Deposits and unearned revenue 2,481 - - 350,829 - Due to other funds - - 146,674 1,059,144 298,685 Advances from other funds 375,468 261,224 1,022,334 1,659,026 - Interest payable - - - 315,343 - Compensated absences - current portion - - - 27,288 7,622 Bonds and notes payable - current portion - - - 3,156,440 44,088 Total current liabilities 397,918 261,763 1,171,391 7,561,565 1,741,616 Noncurrent Liabilities:

Compensated absences payable - - - 209,048 57,080 Net OPEB liability - - - 832,901 - Claims payable - - - - 5,589,000 Unamortized bond premium - - - 556,425 - Bonds and notes payable - - - 29,441,871 1,072,415 Net pension liability (asset) - - - 1,169,766 472,931 Total noncurrent liabilities - - - 32,210,011 7,191,426 Total Liabilities 397,918 261,763 1,171,391 39,771,576 8,933,042

DEFERRED INFLOWS OF RESOURCES
Deferred inflows related to pensions - - - 4,031,154 833,978 Deferred inflows related to OPEB - - - 146,641 - Deferred inflows related to leases - 236,115 - 13,015,018 - Total Deferred Inflows of Resources - 236,115 - 17,192,813 833,978

NET POSITION
Net investment in capital assets 6,497,759 893,735 - 104,136,670 7,928,023 Restricted for debt service - - - 2,379 - Unrestricted (270,377) (236,747) (1,162,951) 35,129,603 16,699,616 Total Net Position 6,227,382$ 656,988$ (1,162,951)$ 139,268,652 24,627,639$ Adjustment to reflect the consolidation of internal service fund activities 11,239,771 Net Position of Business-type Activities 150,508,423$

The notes to the basic financial statements are an integral part of th ese statements. 22 CITY OF HANFORD
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION –

PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2022

Water System Wastewater Storm Drain Refuse
Fund Fund Fund Fund

OPERATING REVENUES
Charges for services 10,881,388$ 5,835,517$ 1,524,083$ 8,783,599$ Other revenues 1,383,423 1,079,119 44,338 239,672
Total Operating Revenues 12,264,811 6,914,636 1,568,421 9,023,271

OPERATING EXPENSES
Personnel services 1,493,356 954,720 326,945 1,896,478
Services and supplies 4,145,077 2,547,018 667,122 6,294,892 Depreciation 2,327,352 1,716,466 410,699 680,497
Total Operating Expenses 7,965,785 5,218,204 1,404,766 8,871,867 Operating Income (Loss) 4,299,026 1,696,432 163,655 151,404

NONOPERATING REVENUES (EXPENSES)
Intergovernmental - - - 15,138 Interest income 148,832 219,927 47,669 6,711 Interest expense (451,976) (570,083) (2,267) (17,078) Unrealized gain (loss) on investments (629,428) (238,556) (171,095) (31,413) Lease revenue - 571,453 - - Total Nonoperating Revenues (Expenses) (932,572) (17,259) (125,693) (26,642) Income (Loss) Before Capital Contributions
and Transfers 3,366,454 1,679,173 37,962 124,762 Transfers in (out) 363,508 (22,944) 106,373 492,791 Change in Net Position (Deficit) 3,729,962 1,656,229 144,335 617,553 Net Position (Deficit), Beginning of Year 55,720,344 42,334,002 25,904,144 3,524,863 Prior Period Adjustment - (28,119) (56,080) - Net Position (Deficit), Beginning of Year (Restated) 55,720,344 42,305,883 25,848,064 3,524,863 Net Position (Deficit), End of Year 59,450,306$ 43,962,112$ 25,992,399$ 4,142,416$ Sewer Improvement Funds

The notes to the basic financial statements are an integral part of th ese statements. 23 CITY OF HANFORD
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION – PROPRIETARY FUNDS (continued)
FOR THE YEAR ENDED JUNE 30, 2022

Governmental
Airport Intermodal Courthouse Total Activities Internal Fund Fund Square Enterprise Funds Service Funds

OPERATING REVENUES
Charges for services 149,270$ 1,572$ 57,112$ 27,232,541$ 11,508,518$ Other revenues 168,643 1,279 - 2,916,474 14,450 Total Operating Revenues 317,913 2,851 57,112 30,149,015 11,522,968

OPERATING EXPENSES
Personnel services 52,149 - - 4,723,648 1,333,867 Services and supplies 282,150 23,499 90,047 14,049,805 8,010,861 Depreciation 421,021 26,117 - 5,582,152 1,216,203 Total Operating Expenses 755,320 49,616 90,047 24,355,605 10,560,931 Operating Income (Loss) (437,407) (46,765) (32,935) 5,793,410 962,037

NONOPERATING REVENUES (EXPENSES)
Intergovernmental - - - 15,138 - Interest income 1,517 645 - 425,301 162,295 Interest expense - - - (1,041,404) (7,468) Unrealized gain (loss) on investments (4,060) (105) 5,575 (1,069,082) (753,406) Lease revenue - 39,352 - 610,805 - Total Nonoperating Revenues (Expenses) (2,543) 39,892 5,575 (1,059,242) (598,579) Income (Loss) Before Capital Contributions
and Transfers (439,950) (6,873) (27,360) 4,734,168 363,458 Transfers in (out) (15,272) - - 924,456 389,767 Change in Net Position (Deficit) (455,222) (6,873) (27,360) 5,658,624 753,225 Net Position (Deficit), Beginning of Year 6,682,604 731,613 (1,135,591) 24,815,283 Prior Period Adjustment - (67,752) - (940,869) Net Position (Deficit), Beginning of Year (Restated) 6,682,604 663,861 (1,135,591) 23,874,414 Net Position (Deficit), End of Year 6,227,382$ 656,988$ (1,162,951)$ 24,627,639$ Adjustment to reflect the consolidation of internal service funds 320,662 Change in Net Position of Business-type Activities 5,979,286$

The notes to the basic financial statements are an integral part of th ese statements. 24 CITY OF HANFORD
STATEMENT OF CASH FLOWS –

PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2022

Water System Wastewater Storm Drain Refuse
Fund Fund Fund Fund
Cash Flows from Operating Activities:

Cash received for current services 10,815,308$ 8,776,483$ 1,527,004$ 8,779,156$ Cash received for other operating revenues 1,386,497 1,079,119 44,338 239,672 Cash paid to suppliers for goods and services (4,225,888) (3,076,695) (654,441) (5,987,580) Cash paid for salaries and benefits (3,838,071) (3,277,955) (1,086,608) (4,630,095) Net Cash Provided (Used) by
Operating Activities 4,137,846 3,500,952 (169,707) (1,598,847) Cash Flows from Non-Capital
Financing Activities:

Transfers (to) from other funds 363,508 (22,944) 106,373 492,791 Loans from/(to) other funds 1,518 - - - Intergovernmental revenue - - - 15,138 Net Cash Provided (Used) by
Non-capital Financing Activities 365,026 (22,944) 106,373 507,929 Cash Flows from Capital and
Related Financing Activities:

Principal payments on long-term debt (1,371,208) (1,446,033) - - Interest payments on long-term debt (502,679) (625,249) - - Capital expenditures (1,296,486) (159,253) (592,708) (391,674) Lease and other financing proceeds - 110,398 - - Proceeds from issuance of debt 1,491,722 920,960 336,712 1,670,321 Proceeds from the sale of capital assets - - - - Net Cash Provided (Used) by Capital and
Related Financing Activities (1,678,651) (1,199,177) (255,996) 1,278,647 Cash Flows from Investing Activities:

Unrealized gain (loss) on investments (787,923) (266,675) (227,175) (31,413) Interest received on investments 148,832 219,927 47,669 6,711 Net Cash Provided (Used) by
Investing Activities (639,091) (46,748) (179,506) (24,702) Net Increase (Decrease) in
Cash and Investments 2,185,130 2,232,083 (498,836) 163,027 Cash and Investments, Beginning of Year 18,255,747 4,593,377 6,202,905 797,644 Cash and Investments, End of Year 20,440,877$ 6,825,460$ 5,704,069$ 960,671$ Reconciliation to Statement of Net Position:

Cash and investments 20,440,856$ 6,823,102$ 5,704,069$ 960,671$ Restricted cash and investments 21 2,358 - - Total Cash and Investments 20,440,877$ 6,825,460$ 5,704,069$ 960,671$ Sewer Improvement Funds

The notes to the basic financial statements are an integral part of th ese statements. 25 CITY OF HANFORD
STATEMENT OF CASH FLOWS –
PROPRIETARY FUNDS (continued)
FOR THE YEAR ENDED JUNE 30, 2022

Governmental
Activities
Airport Intermodal Courthouse Total Internal
Fund Fund Square Enterprise Funds Service Funds
Cash Flows from Operating Activities:

Cash received for current services 151,124$ 1,348$ 56,581$ 30,107,004$ 11,640,104$ Cash received for other operating revenues 168,643 169,642 - 3,087,911 (24,689) Cash paid to suppliers for goods and services (266,202) (23,246) (56,580) (14,290,632) (8,016,268) Cash paid for salaries and benefits (59,869) - - (12,892,598) (2,050,301) Net Cash Provided (Used) by
Operating Activities (6,304) 147,744 1 6,011,685 1,548,846 Cash Flows from Non-Capital
Financing Activities:

Transfers (to) from other funds (15,272) - - 924,456 456,871 Loans from/(to) other funds - - - 1,518 1,967,592 Intergovernmental revenue - - - 15,138 - Net Cash Provided (Used) by
Non-capital Financing Activities (15,272) - - 941,112 2,424,463 Cash Flows from Capital and
Related Financing Activities:

Principal payments on long-term debt - - - (2,817,241) - Interest payments on long-term debt - - - (1,127,928) - Capital expenditures (19,978) - - (2,460,099) (563,833) Lease and other financing proceeds - (200,380) - (89,982) - Proceeds from issuance of debt - - - 4,419,715 1,109,035 Proceeds from the sale of capital assets - - - - 55,118 Net Cash Provided (Used) by Capital and
Related Financing Activities (19,978) (200,380) - (2,075,535) 600,320 Cash Flows from Investing Activities:

Unrealized gain (loss) on investments (4,060) (105) 5,575 (1,311,776) (839,218) Interest received on investments 1,517 645 - 425,301 105,030 Net Cash Provided (Used) by
Investing Activities (2,543) 540 5,575 (886,475) (734,188) Net Increase (Decrease) in
Cash and Investments (44,097) (52,096) 5,576 3,990,787 3,839,441 Cash and Investments, Beginning of Year 166,436 67,293 (321) 30,083,081 20,154,204 Cash and Investments, End of Year 122,339$ 15,197$ 5,255$ 34,073,868$ 23,993,645$ Reconciliation to Statement of Net Position:

Cash and investments 122,339$ 15,197$ 5,255$ 34,071,489$ 23,993,645$ Restricted cash and investments - - - 2,379 - Total Cash and Investments 122,339$ 15,197$ 5,255$ 34,073,868$ 23,993,645$

The notes to the basic financial statements are an integral part of th ese statements. 26 CITY OF HANFORD
STATEMENT OF CASH FLOWS –
PROPRIETARY FUNDS (continued)
FOR THE YEAR ENDED JUNE 30, 2022

Water System Wastewater Storm Drain Refuse
Fund Fund Fund Fund
Reconciliation of Operating Income (Loss) to Net Cash
Provided (Used) by Operating Activities:

Operating income (loss) 4,299,026$ 1,696,432$ 163,655$ 151,404$ Adjustments to reconcile net income (loss) from
operating to net cash provided (used) by
operating activities:

Depreciation 2,327,352 1,716,466 410,699 680,497 Changes in assets, liabilities, and deferred resources in:

Receivables, net (77,230) 2,941,041 3,071 (4,327) Deposits - - - - Prepaid expenses 3,074 286,311 - - Inventory (72,502) - - - Deferred outflows of resources (1,369,547) (877,182) (337,898) (1,538,303) Due to/from other funds - (1,686,009) (210,175) (177,229) Accounts payable (8,309) (42,449) 12,681 243,555 Salaries and benefits payable (58,945) (40,418) (12,421) (70,065) Compensated absences (140,176) (1,470) (1,602) (20,142) Deposits and unearned revenue 11,150 (75) (150) (116) Net OPEB liability (30,951) (26,530) - (44,216) Net pension liability (2,021,967) (1,288,924) (505,839) (2,262,479) Deferred inflows of resources 1,276,871 823,759 308,272 1,442,574 Claims payable - - - - Net Cash Provided (Used) by Operating Activities 4,137,846$ 3,500,952$ (169,707)$ (1,598,847)$ Sewer Improvement Funds

The notes to the basic financial statements are an integral part of th ese statements. 27 CITY OF HANFORD
STATEMENT OF CASH FLOWS –
PROPRIETARY FUNDS (continued)
FOR THE YEAR ENDED JUNE 30, 2022

Governmental
Activities
Airport Intermodal Courthouse Total Internal
Fund Fund Square Enterprise Funds Service Funds
Reconciliation of Operating Income (Loss) to Net Cash
Provided (Used) by Operating Activities:

Operating income (loss) (437,407)$ (46,765)$ (32,935)$ 5,793,410$ 962,037$ Adjustments to reconcile net income (loss) from
operating to net cash provided (used) by
operating activities:

Depreciation 421,021 26,117 - 5,582,152 1,216,203 Changes in assets, liabilities, and deferred resources in:

Receivables, net 1,854 (67,976) (531) 2,795,902 (55,414) Deposits - - - - (50,000) Prepaid expenses - - - 289,385 - Inventory - - - (72,502) (262,532) Deferred outflows of resources - - - (4,122,930) (849,776) Due to/from other funds (5,960) - 33,927 (2,045,446) 33,886 Accounts payable 15,948 253 (460) 221,219 148,206 Salaries and benefits payable (1,760) - - (183,609) 720,677 Compensated absences - - - (163,390) (4,582) Deposits and unearned revenue - - - 10,809 - Net OPEB liability - - - (101,697) - Net pension liability - - - (6,079,209) (1,272,130) Deferred inflows of resources - 236,115 - 4,087,591 775,271 Claims payable - - - - 187,000 Net Cash Provided (Used) by Operating Activities (6,304)$ 147,744$ 1$ 6,011,685$ 1,548,846$

FIDUCIARY FUNDS

FINANCIAL STATEMENTS

The notes to the basic financial statements are an integral part of these statements. 28 CITY OF HANFORD
STATEMENT OF FIDUCIARY NET POSITION –

FIDUCIARY FUNDS
JUNE 30, 2022

Redevelopment
Successor Agency Trust and
Private-Purpose Custodial
Trust Fund Funds
ASSETS
Cash and investments 235,538$ 1,455,291$ Accounts receivable - 17,095
Assets held for resale 135,265 -
Total Assets 370,803 1,472,386

LIABILITIES
Accounts payable - 834,369
Deposits held for others - 671,714 Total Liabilities - 1,506,083

NET POSITION (DEFICIT)
Held in trust for the retirement of obligations of the
former Hanford Redevelopment Agency and
other purposes 370,803 -
Restricted - (33,697)
Total Net Position (Deficit) 370,803$ (33,697)$

The notes to the basic financial statements are an integral part of these statements. 29 CITY OF HANFORD
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION –

FIDUCIARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2022

Redevelopment
Successor Agency Trust and
Private-Purpose Custodial
Trust Fund Funds

ADDITIONS
Investment earnings (loss) 1,830$ -$ Other additions - 42,941
Total Additions 1,830 42,941

DEDUCTIONS
General government 3,141 9,211
Unrealized (gain) loss on investments 7,095 40,439 Total Deductions 10,236 49,650
Change in Fiduciary Net Position (8,406) (6,709) Net Position - Beginning of Year 381,487 77,702 Prior Period Adjustments (2,278) (104,690) Net Position (Deficit) - Beginning of Year, Restated 379,209 (26,988) Net Position (Deficit) - End of Year 370,803$ (33,697)$

CITY OF HANFORD

NOTES TO THE FINANCIAL STATEMENTS
30 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying financial statements of the City of Hanford, California (the City) have been prepared in conformity with U.S. Generally Accepted Accounting principles as prescribed by the Governmental Accounting Standards Board (GASB).

The accompanying financial statements present the financial position of the City and the variou s funds and fund types, the results of operations of the City and the various funds and fund types, and the cash flows of the proprietary funds. The financial statements are presented as of June 30, 2022 and for the year then ended.

Description of the Reporting Entity: The City was incorporated as a General Law city in 1891. The City operates under a Council -Administrator form of government and provides the following services: Public safety (police and fire), community development, community services, public works, cultural, general administrative services, and capital improvements.

As required by accounting principles generally accepted in the United States of America, these financial statements present the City (the primary government) and its component units. The component units discussed below is included in the City’s reporting entity because of the significance of their operational or financial relationship with the City. However, elected officials of the City of have a continuing accountability for fiscal matters of the other entities. The financial reporting entity consists of: (1) the City (2) organizations for which the City is financially accountable and (3) organizations for which the nature and significan ce of their relationship with the City are such that exclusion would cause the City’s financial statements to be misleading or incomplete.

An organization is fiscally dependent on the primary government if it is unable to adopt its budget, levy taxes or set rates or charges, or issue bonded debt without approval by the primary government. In a blended presentation, component unit balances and transactions are reported in a manner similar to the balances and transactions of the City. A component unit is pr esented on a blended basis when the component unit’s governing body is substantially the same as the City’s or the component unit provides services almost entirely to the City; otherwise the component unit is presented discretely.

Blended Component Unit: The financial statements of the City of include the financial activities of the City as well as of the Hanford Improvement Corporation. Although the Hanford Improvement Corporation is a legally distinct unit from the City, their financial operations are overseen by the City and the City Council is the board of directors of the Corporation.

Basis of Presentation

Government-Wide Financial Statements: The Government-wide financial statements (the Statement of Net Position and the Statement of Activities) report information of all of the non -fiduciary activities of the primary government and its component units. For the most part, eliminations have been made to minimize the double counting on internal activities. These statements distinguish betw een the governmental and business type activities of the City.

Governmental activities, which normally are supported by taxes and inter -governmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees charged to external parties.

The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the City and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and; therefore, are clearly identifiable to a particular function. Program revenues include 1) charges paid by the recipients of goods or services offered by the programs and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented instead as general revenues.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
31 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Government-Wide Financial Statements (continued): Net Position are restricted when constraints placed on them are either externally imposed or are imposed by constitutional provisions or enabling legislation. Internally imposed designations of resources are not presented as restricted net position. When both restrict ed and unrestricted resources are available for use, generally it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed.

Governmental Fund Financial Statements: The fund financial statements provide information about the City’s funds, with separate statements presented for each fund category – governmental, proprietary , and fiduciary. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are separately aggregated and reported as non -major funds.

Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non -operating revenues, such as subsidies and investment earnings, result from non - exchange transactions or ancillary activities.

The City reports the following major governmental funds:

General Fund - The General Fund is the principle operating fund of the City. It is used to account for all financial resources except those required to be accounted for in other funds. For the City, the General Fund includes basic governmental activities such as general government, public safety, public works, recreation and community development.

Capital Projects Fund – This fund is used to account for financial resources to be used for the acquisition or construction of major capital facilities other than those financed by proprietary funds.

CDBG Home/Housing Fund – This fund is used to receive and disburse funds in accordance with grants received from the Department of Housing and Urban Development for th e repair and improvement of targeted housing areas.

Transportation Impact Fees – This fund is used to hold and account for transportation development impact fees levied by city ordinance on development activities and collected for the purpose of financing construction of transportation facilities necessary to reduce impacts caused by growth or new development.

Transportation Development Act Fund – This fund is used to account for financial resources to be used for transit and non-transit related purposes that comply with regional transportation plans.

The City reports the following major enterprise funds:

Water System Fund – The Water System Fund is used to account for the financial activities of water utility of the City.

Wastewater Fund – The Wastewater Fund is used to account for financial activities of sewage collection and wastewater treatment utility of the City.

Storm Drain Fund – The Storm Drain Fund is used to account for the financial activities of the City’s storm drains.

Refuse Fund – The Refuse Fund is used to account for the financial activities of the collection of solid waste and disposal utility of the City.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
32 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Governmental Fund Financial Statements (continued):

The City reports the following major enterprise funds (continued):

Airport Fund – To account for all activities necessary to provide an airport to the residents of the City and surroundings areas.

Intermodal Fund – The Intermodal Fund is used to account for the financial activities of a building used to support state regional and local transportation.

Courthouse Square Fund – The Courthouse Square Fund is used to account for the financial activities of the maintenance and improvement of the property known as the Courthouse Square in downtown Hanford.

The City reports the following fund types in aggregate as part of other no n-major governmental funds:

Special Revenue Funds – Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes.

Additionally, the City reports the following fund types:

Internal Service Funds – Internal Service Funds are used to account for the financing of goods or services provided by one department or agency of the City to another on a cost -reimbursement basis.

Private-Purpose Trust Fund – The Private Purp ose Trust Fund is used to account for the activities of the former Hanford Redevelopment Agency during the wind down period.

Trust and Custodial Funds – Trust and Custodial Funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations and/or other governments.

Measurement Focus, Basis of Accounting, and Financial Statement Presentation: In accordance with GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position , the Statement of Net Position reports separate sections for Deferred Outflows of Resources and Deferred Inflows of Resources, when applicable.

Deferred Outflows of Resources – This amount represents outflows of resources (consumption of net position) that apply to future periods and that, therefore, will not be recognized as an expense until that time.

Deferred Inflows of Resources – This amount represents inflows of resour ces (acquisition of net position) that apply to future periods and that, therefore, are not recognized as a revenue until that time.

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 at the time liabilities are incurred, regardless of when the related cash flows take place. Non -exchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange, include property and sales taxes, grants, entitlements and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenues from sales tax are recognized when the underlying transactions take place. Revenues from grants, entitlements and donations are recognized in the fiscal year in which all eligible requirements have been satisfied.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
33 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Measurement Focus, Basis of Accounting, and Financial Statement Presentation (continued) : Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting.

Under this method, revenues are recognized when measurable and available. Property and sales taxes, interest, certain state and federal grants and charges for services are accrued when their receipt occurs within sixty days after the end of the accounting period so as to be both measurable and available. Expenditures are generally recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments are recorded only when payment is due. General capital assets acquisitions are reported as expenditures in governmen tal funds. Proceeds of general long -term debt and capital leases are reported as other financing sources.

Proprietary funds distinguish operating revenues and expenses from non -operating items. Operating revenues and expenses generally result from provid ing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. Revenues and expenses not meeting this definition are reported as non-operating.

Assets, Liabilities, Net Assets or Fund Balance, and Other Financial Statement Items

Cash and Cash Equivalents: For purposes of the Statement of Cash Flows, the City considers all short term and highly liquid investments (including restricted assets) to be cash and cash equivalents, as reported on the Statement of Net Position and Balance Sheet as cash and investments.

Investments: Investments are stated at fair value (the value at which a financial instrument could be exchanged in a current transaction between willing parties, other than a forced or liquidation sale).

Further cash and investment disclosures are presented in Note 2.

Interfund Transactions: Interfund transactions are reflected as either loans, services provided, reimbursements or transfers. Loans are reported as receivables and payables as appropriate, are subject to elimination upon consolidation and are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non -current portion of interfund loans). Any residual balances outstanding between the governmental activities and the business -type activities are reported in the government - wide financial statement as “internal balances.” Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not available financial resources.

Services provided, deemed to be a market or near market rates, are treated as revenues and expenditures/expenses.

Reimbursements are when one fund incurs a cost, charges the appropriate be nefiting fund and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government -wide presentation.

Receivables: In the government-wide statements, receivables consist of all revenues earned at year-end and not yet received. Allowances for uncollectible accounts receivable are based upon historical trends and the periodic aging of accounts receivable. Major receivable balances for the governmental activities include intergovernmental and tax revenue receivable. Business-type activities report trade and intergovernmental revenue as their major receivables.

Inventory: Inventories of materials and supplies in the proprietary and internal services funds are valued at the lower of cost or market, carried on a first-in, first-out (FIFO) basis.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
34 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Capital Assets: The accounting treatment over property, plant, and equipment (capital assets) depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government-wide or fund financial statements.

In the government-wide financial statements, fixed assets are accounted for as capital assets. All fixed assets are valued at historical cost or estimated historical cost if actual is unavailable, except for donated fixed assets which are recorded at their estimated fair value at the date of donation.

The City’s capitalization threshold is $ 10,000. In other words, fixed assets are capitalized only if they have a cost in excess of $ 10,000 and have an expected useful life of three years or more. Fixed assets that have a cost below $10,000 are expended during the fiscal year they are acquired.

The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Betterments and major improvements which significantly increase values, change capacities or extend useful lives are capitalized.

Upon sale or retirement of fixed assets, the cost and related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the results of operations.

Depreciation of all exhaustible fixed assets is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation reflected in the Statement of Net Position. Depreciation is provided over the assets’ estimated useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of assets is as follows:

Infrastructure 20 to 50 years
Buildings 20 to 50 years
Improvements other than buildings 20 to 50 years
Machinery and equipment 4 to 20 years

Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business -type activities is included as part of the capitalized value of the assets constructed.

Fund Financial Statements: In the fund financial statements, fixed assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Fixed assets used in proprietary fund operations are accounted for the same as in the government-wide statements.

Compensated Absences: It is the City’s policy to permit employees to accumulate earned but unused vacation, sick pay benefits and compensatory time. All vacation and compensatory pay is accrued when incurr ed in the government-wide, proprietary, and fiduciary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations or retirements. For additional information regarding compensated absences, see Note 7.

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 liabiliti es in the applicable governmental activities, business-type activities, or proprietary fund type Statement of Net Position. Debt principal payments of both government and business -type activities are reported as decreases in the balance of the liability on the Statement of Net Position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are expensed when incurred.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
35 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued )

Long-Term Obligations (continued) : In the fund financial statements, however, debt principal payments of governmental funds are recognized as expenditures when paid. 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 withheld from the actual debt proceeds received or not, are reported as debt service expenditures.

Leases: The City is a lessee for noncancelable leases of copiers and recognizes the liability and an intangible right-to- use lease asset at the inception of the lease agreement at the current present value of future payments, in the government-wide and proprietary fund financial statements. The City recognizes lease liabilities with an initial, individual value of $10,000 or more.

At the commencement of a lease, the 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 le ase 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 judgements related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments.

• The City uses the inter est rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for leases, which it has determined is the prime rate at the inception of the lease. • The lease term includes the noncancellable period of the lease. Lease payments included in the measurement of the lease 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 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 long-term debt on the Statement of Net Position.

The City is a lessor for noncancelable leases of the Hanford train station, hotel parking spaces, and agricultural ground leases. The City recognizes a lease receivable and a deferred inflow of resources in the government -wide, proprietary fund, and governmental fund financial statements at the inception of the lease agreement at current present value of all future payments.

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 judgements 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.

• The City uses the i nterest rate charges to the lessees as the discount rate. When the interest rate charged the lessees is not provided, the City generally uses the implied rate of return as the discount rate for leases.

When the implied rate of return cannot be determined, the City uses its estimated incremental borrowing rate which it has determined is the prime rate at the inception of the lease. • 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.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
36 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Leases (continued): The City monitors changes in circumsta nces 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 lease receivable.

Right-to-Use Lease Assets: Right-to-use lease assets are recorded at the amount of the initial measurement of the lease liabilities and modified by any lease payment made to the lessor at or before the commencement of the lease term, less any lease incentives received from the lessor at or before the commencement of the lease term along with any initial direct costs that are ancillary charges necessary to place the lease assets into service.

Right-to-use lease assets are amortized using the straight -line method over the shorter of t he lease term or the useful life on the underlying asset, unless the lease contains a purchase option that the City has determined is reasonably certain of being exercised.

Pensions: For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the plans and additions to/deductions from the plans’ fiduciary net position have been determined on the same basis as they are reported by the plans.

For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with benefit items. Investments are reported at fair value.

The following timeframes are used for pension reporting:

CalPERS
Valuation Date June 30, 2020
Measurement Date June 30, 2021
Measurement Period June 30, 2020 to June 30, 2021

Gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be rec ognized in future pension expense. The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is amortized straight -line over 5 years. All other amounts are amortized straight -line over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period.

Net Position: In the government -wide financial statements and proprietary fund fina ncial statements, net position is classified as follows:

• Net Investment in Capital Assets – This category groups all capital assets, including infrastructure, into one component of net position . Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce the balance in this category.

• Restricted Net Position – This category presents external restricti ons imposed by creditors, grantors, contributors or laws and regulations of other governments and restrictions imposed by law through constructional provisions or enabling legislation.

• Unrestricted Net Position – This category represents net position of the City, not restricted for any project or other purpose.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
37 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fund Balance: In the fund financial statements, governmental funds report fund balances as nonspendable, restricted, committed, assigned or unassigned based primarily on the extent to which the City is bound to honor constraints on how specific amounts can be spent.

• Nonspendable fund balance – amounts that cannot be spent because they are either (a) not spendable in form or (b) legally or contractually required to be maintained intact. • Restricted fund balance – amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws and regulations of other governments or (b) imposed by law through constitutional provisions or enabling legislation. • Committed fund balance – amounts that can only be used for specific purposes determined by formal action of the City’s highest level of decision -making authority (the City Council) and that remain binding unless removed in the same manner. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period.
• Assigned fund balance – amounts that are constrained by the City’s intent to be used for specific purposes.

The intent can be established by either the highest level of decision making, or by a body or an official designated for that purpose.
• Unassigned fund balance – the residual classification for the City’s General Fund that includes amounts not contained in the other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes.

The City Council establishes, modifies or rescinds fund balance commitments and assignments by passage of an ordinance or resolution. This is done through adoption of the budget and subsequent budget amendments that occur throughout the year.

When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, followed by the committed, assigned and unass igned resources as they are needed.

Property Taxes: In 1978, a state constitutional amendment (Proposition 13) provided that the tax rate be limited to 1% of market value, levied only by the County and shared with all other jurisdictions. Such limitation on the rate may only be increased through voter approval. The County Collects property taxes and distributes them to taxing jurisdictions on the basis of the taxing jurisdiction’s assessed valuations and on the tax rate for voter-approved debt.

In the fund financial statements, property tax is recorded as revenue in the period levied to the extent they are collected within 60 days of year-end.

The property tax calendar for the City and the Discretely Presented Component Unit is as follows:

Lien date January 1
Levy dates September 1
Due dates November 1 – 1st installment
February 1 – 2nd installment
Collection dates December 10 – 1st installment
April 10 – 2nd installment

Unearned Revenue: The City reports unearned revenue in its financial statements. Unearned revenue arises when resources are recovered by the government before it has legal claim to them.

Use of Estimates : The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
38 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Stewardship, Compliance, and Accountability

Budgets and Budgetary Accounting : The procedures established by the City Council in adopting the budgetary data reflected in the financial statements are as follows:

On or before the second meeting in May, the City Manager submits to the City Council a proposed operating and capital projects budget for the fiscal year commencing the following July 1. Following publication and public hearings, the budget is legally enacted by resolution.

The City Manager is authorized to transfer funds appropriated with respect to all classifications within the same department. The City Manager may transfer appropriated funds from any classification within other expenditure categories to existing capital outlay and capital projects classifications within the same department only; however, any revisions that alter the total expenditures of any department or create additional projects must be approved by the City Council.

Supplemental budgetary appropriations were negligible for the fiscal year ended June 30, 2022. All unencumbered appropriations lapse at year-end.

For budgeting purposes, the General Fund is composed of several departments while all other budgeted funds are considered a single department. Revenues are budgeted on a line item basis. A comparison of budgeted and actual revenues by line item would be too voluminous for this report.

Budgets for the General and major Special Revenue Funds are presented in the accompanying general purpose financial statements on a basis consistent with accounting principles generally accepted in the United States of America. Budgets for Capital Projects Funds are not presented because they are budgeted on a project basis rather than on an annual basis. No budgets are adopted for the Proprietary and Fiduciary Fund types.

Deficit Fund Balance/Net Position : At June 30, 2022, the CMAQ Transportation special revenue fund had a fund balance deficit of $ 64,837. The American Rescue Plan Act special revenue fund had a fund balance deficit of $125,837. The Courthouse Square proprietary fund had a net position deficit of $1,162,951. The City Payroll internal service fund had a net position deficit of $4,766.

Reclassification and Eliminations: Interfund balances must generally be eliminated in the government-wide financial statements, except for net residual amounts due between governmental activities. Amounts involving fiduciary funds should be reported as external transactions. Any allocations must reduce the expense of the function from which the expenses are being allocated, so that expenses are reported only once – in the function in which they are allocated.

Governmental Accounting Standards Update : During the year ending June 30, 2022 , the City implemented the following standards:

GASB Statement No. 87 – Leases. The requirements of this statement are effective for reporting periods beginning after Decem ber 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2021. See Note 6 for more information on lease liabilities and Note 1 on the Change in Accounting Principle.

GASB Statement No. 92 – Omnibus 2020. The requirements of this statement are effective for reporting periods beginning after June 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements o f this statement to June 15, 2021.

GASB Statement No. 97 – Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The requirements of this statement are effe ctive for reporting periods beginning after June 15, 2021.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
39 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Governmental Accounting Standards Update (continued):

GASB Statement No. 98 – The Annual Comprehensive Financial Report. The requirements of this statement are effective for reporting periods beginning after December 15, 2021.

Released GASB Statements to be implemented in future financial statements are as follows:

GASB Statement No. 91 – Conduit Debt Obligations. The requirements of this statement are effective for reporting periods beginning after December 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2021.

GASB Statement No. 93 – Replacement of Interbank Offered Rates. The requirements of this statement are effective for reporting periods beginning after June 15, 2021. Subsequent to issuance, GASB Statement No. 95 postponed the certain requirements of this statement to reporting periods beginning after June 15, 2022.

GASB Statement No. 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.

GASB Statement No. 96 – Subscription-Based Information Technology Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.

GASB Statement No. 99 – Omnibus 2022. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.

GASB Statement No. 100 – Accounting Changes and Error Corrections . The requirements of this statement are effective for reporting periods beginning after June 15, 2023.

GASB Statement No. 101 – Compensated Absences. The requirements of this statement are effective for reporting periods beginning after December 15, 2023.

Subsequent Events : In compliance with accounting standards, management has evaluated events that have occurred after year -end to determine if these events are required to be disclosed in the financial statements.

Management has determined that an event requires disclosure in accordance with accounting standards , see Note 16 for further details. These subsequent events have been evaluated through March 30, 2023, which is the date the financial statements were available to be issued.

Change in Accounting Principles : During the fiscal year ended June 30, 2022, the City adopted new accounting guidance by implementing the provisions of GASB Statement No. 87, Leases, which established criteria for identifying and reporting noncancelable lease agreem ents. This provision defines a lease as a contract that conveys control of the right to use another entity’s nonfinancial asset as specified in the contract for a period of time in an exchange or exchange-like transaction. Under this provision a lessee is required to recognize a lease liability and intangible right- to-use asset and a lessor is required to recognize a lease receivable and a deferred inflow of resources.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
40 NOTE 2 – CASH AND INVESTMENTS

Cash and investments as of June 30, 2022 are classified in the accompanying financial statements as follows:

Statement of Net Position:

Cash and investments 102,724,445$
Restricted cash and investments 2,379
Fiduciary funds:

Cash and investments 1,690,829
Total Cash and Investments 104,417,653$

Cash and investments as of June 30, 2022 consist of the following:

Cash on hand 1,760$
Deposits with financial institutions 7,413,204
Investments 97,002,689
Total Cash and Investments 104,417,653$

The table below identifies the investment types that are authorized for the City by the California G overnment Code (or the City’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City’s investment policy, where more restrictive) 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 , rathe r than the general provisions of the California Government Code or the City’s investment policy.

Maximum Maximum
Authorized Maximum Percentage Investment
Investment Type Maturity of Portfolio* in One Issuer
U.S. Treasury Obligations 5 years None None
U.S. Agency Securities 5 years None None
Bankers' Acceptances 180 days 40% 30%
Commercial Paper 270 days 25% 10%
Negotiable Certificates of Deposit 5 years None None
Repurchase Agreements 1 year 30% None
Mutual Funds N/A 20% 10%
Money Market Mutual Funds N/A 20% 10%
Local Agency Investment Fund (LAIF) N/A None None
Corporate Investments N/A None None
*Excluding amounts held by bond trustees that are not subject to California Government Code Restrictions.

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.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
41 NOTE 2 – CASH AND INVESTMENTS (continued)

Investments Authorized by Debt Agreements (continued):

Maximum Maximum
Authorized Maximum Percentage Investment
Investment Type Maturity of Portfolio in One Issuer
U.S. Treasury Obligations 5 years None None
U.S. Agency Securities 5 years None None
Bankers' Acceptances 180 days None None
Commercial Paper 270 days None None
Money Market Mutual Funds N/A None None
Investment Contracts 30 years None None
Corporate Investments N/A None None

Disclosure Relating to Interest Rate Risk: Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of short term and long-term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing and coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

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

12 Months 13 to 24 25 to 60 More than
Investment Type Total or Less Months Months 60 Months
Federal Agency Securities 4,346,900$ -$ -$ 4,346,900$ -$ State and County Investment Pools 73,548,606 73,548,606 - - - Negotiable Certificates of Deposits 11,532,733 6,406,112 1,194,171 3,932,450 - Corporate Investments 7,549,669 1,498,200 5,111,499 939,970 - Held by bond trustee:

Money Market Funds 24,781 24,781 - - - 97,002,689$ 81,477,699$ 6,305,670$ 9,219,320$ -$
Remaining Maturity (in Months)

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

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
42 NOTE 2 – CASH AND INVESTMENTS (continued)

Disclosures Relating to Credit Risk (continued):

Minimum
Legal
Investment Type Amount Rating AAA AA Unrated
Federal Agency Securities 4,346,900$ AA -$ 4,346,900$ -$ State and County Investment Pools 73,548,606 N/A - - 73,548,606 Negotiable Certificates of Deposits 11,532,733 N/A - - 11,532,733 Corporate Investments 7,549,669 N/A - - 7,549,669 Held by bond trustee:

Money Market Funds 24,781 N/A - - 24,781 97,002,689$ -$ 4,346,900$ 92,655,789$ Ratings as of Year End
Standards & Poor's

Concentration of Credit Risk : The investment poli cy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. The City had no investments in any one issuer (other than U.S. Treasury Securities, mutual funds, and external investmen t pools) that represent 5% or more of total City investments.

Custodial Credit Risk : Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its depos its or will not be able to recover collateral securities that are in the possession of an outside party (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 deposits or investments, other than the following provisions for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securit ies 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.

GASB Statement No. 40 requires that the following disclosure be made with respect to custodial credit risks relating to deposits and investments: $ 5,439,708 of the City’s deposits with financial institutions in excess of federal depository insurance limits were held in uncollateralized accounts. For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. None of the City’s investments were subject to custodial credit risk.

Investment in State and County Investment Pools: The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by 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 a ccounting records maintained by LAIF, which are recorded on an amortized cost basis.

The City is also a voluntary participant in the County of Tulare Investment Pool. Assumptions made in determining the fair value of the investment portfolio are available from the County Treasurer.

Fair Value Measurements : 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 inputs used to measure the fair value of the 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.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
43 NOTE 2 – CASH AND INVESTMENTS (continued)

Fair Value Measurements (continued):

The City has the following recurring fair value measurements as of June 30, 2022:

Debt Securities Level 1 Level 2 Level 3 Total
Federal Agency Securities -$ 4,346,900$ -$ 4,346,900$ Certificates of Deposit - 7,549,669 - 7,549,669 Corporate Investments - 11,532,733 - 11,532,733 23,429,302$ -$ 23,429,302$
Investments not subject to fair value hierarchy
State and County Investment Pools 73,548,606
73,548,606$

Debt securities classified in Level 2 of t he fair value hierarchy are valued using a matrix pricing technique. There have been no changes in fair value measurement classifications from the prior year.

NOTE 3 – RECEIVABLES

Receivables as of June 30, 2022 for the City’s individual major funds, nonmajor funds and internal service funds in the aggregate are as follows:

Accounts Taxes Loans Leases Total
Governmental Funds
General 1,100,641$ -$ -$ -$ 1,100,641$ CDBG Home/Housing 377,097 - 18,488,671 - 18,865,768 Capital Projects Fund 5,750 - - - 5,750 Transportation Impact Fees 137,126 - - - 137,126 Transportation Development Act - 1,754,115 - - 1,754,115 Nonmajor and Other 6,662,334 308,680 1,813,773 557,209 9,341,996 8,282,948 2,062,795 20,302,444 557,209 31,205,396 Enterprise Funds
Water System 1,624,343 - - - 1,624,343 Wastewater 770,677 - - 13,239,958 14,010,635 Storm Drain 176,487 - - - 176,487 Refuse 984,613 - - - 984,613 Airport Fund 5,202 - - - 5,202 Intermodal 6,202 - - 239,732 245,934 Courthouse Square 3,185 - - - 3,185 3,570,709 - - 13,479,690 17,050,399 Internal Service Funds
Fleet Maintenance Fund 890 - - - 890 Medical Fund 77,855 - - - 77,855 78,745 - - - 78,745 Total 11,932,402$ 2,062,795$ 20,302,444$ 14,036,899$ 48,334,540$

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
44 NOTE 4 – CAPITAL ASSETS

Capital assets activities for the year ended June 30, 2022 were as follows:

Balance Additions/ Retirements/ Balance
July 1, 2021 Completions Adjustments June 30, 2022
Governmental Activities
Capital assets not being depreciated:

Land 60,795,382$ 6,285$ -$ 60,801,667$ Construction in progress 52,635 256,734 - 309,369 Total capital assets not being depreciated 60,848,017 263,019 - 61,111,036 Capital assets being
depreciated:

Buildings 24,548,074 427,374 - 24,975,448 Infrastructure 174,601,331 3,401,810 - 178,003,141 Equipment 22,595,861 1,005,567 (393,910) 23,207,518 Right to use leased equipment - 89,570 - 89,570 Total capital assets being depreciated 221,745,266 4,924,321 (393,910) 226,275,677 Less accumulated depreciation:

Buildings (9,276,146) (463,345) - (9,739,491) Infrastructure (103,994,323) (6,093,244) - (110,087,567) Equipment (12,206,266) (1,638,758) 172,902 (13,672,122) Right to use leased equipment - (22,249) - (22,249) Total accumulated depreciation (125,476,735) (8,217,596) 172,902 (133,521,429) Total capital assets being depreciated, net 96,268,531 (3,293,275) (221,008) 92,754,248 Governmental Activities
capital assets, net 157,116,548$ (3,030,256)$ (221,008)$ 153,865,284$ Business-type Activities
Capital assets not being depreciated:

Land 11,386,981$ 541,507$ -$ 11,928,488$ Construction in progress 11,586 1,195,165 (11,585) 1,195,166 Total capital assets not being depreciated 11,398,567 1,736,672 (11,585) 13,123,654 Capital assets being
depreciated:

Buildings and improvements 181,892,961 113,190 - 182,006,151 Machinery and equipment 29,218,826 787,713 - 30,006,539 Total capital assets being depreciated 211,111,787 900,903 - 212,012,690 Less accumulated depreciation:

Buildings and improvements (69,803,652) (3,621,370) - (73,425,022) Machinery and equipment (12,459,134) (1,960,782) - (14,419,916) Total accumulated depreciation (82,262,786) (5,582,152) - (87,844,938) Total capital assets being depreciated, net 128,849,001 (4,681,249) - 124,167,752 Business-type Activities
capital assets, net 140,247,568$ (2,944,577)$ (11,585)$ 137,291,406$

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
45 NOTE 4 – CAPITAL ASSETS (continued)

Depreciation expense for the fiscal year ending June 30, 2022 was charged to the following activities:

Governmental Activities:

General governmental 5,398,946$
Public safety 239,790
Culture and recreation 1,095,661
Public works 61,162
Community development 205,834
Capital assets held by the internal service funds that were charged to the various functions based on their usage 1,216,203 Total 8,217,596$
Business-type Activities:

Water system 2,327,352$
Wastewater 1,716,466
Storm drain 410,699
Refuse 680,497
Airport 421,021
Intermodal 26,117
Total 5,582,152$

NOTE 5 – LONG-TERM DEBT

The following is a summary of the long-term debt activity for the year ended June 30, 2022:

Balance Balance Due Within
July 1, 2021 Additions Deletions June 30, 2022 One Year Governmental Activities
Bonds payable -$ 26,506,940$ -$ 26,506,940$ 1,046,710$ Lease payable - 67,378 - 67,378 22,223 Total Governmental Activities - 26,574,318 - 26,574,318 1,068,933 Business-type Activities
Bonds payable 17,945,000 4,439,060 (1,675,000) 20,709,060 1,915,290 Bond premiums 629,730 - (73,305) 556,425 73,307 Note payable 5,095,115 - (387,697) 4,707,418 401,266 Finance purchase
arrangement 7,936,378 - (754,545) 7,181,833 839,884 Total Business-type Activities 31,606,223 4,439,060 (2,890,547) 33,154,736 3,229,747 Total Primary Government 31,606,223$ 31,013,378$ (2,890,547)$ 59,729,054$ 4,298,680$

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
46 NOTE 5 – LONG-TERM DEBT (continued)

Governmental Activities –

Bonds Payable: On May 23, 2022, the City of Hanford issued $30,946,000 Pension Obligation Bonds bearing interest of 4.39% payable annually on June 1 commencing June 1, 2023. The bonds mature annually at various amounts through June 1, 2039. The bonds are payable from net revenues in both the governmental activities and business - type activities created under the Indenture.

The Bonds were issued to pay the City’s unfunded accrued actuarial liability (UAAL), now known as Net Pension Liability, to the California Public Employees’ Retirement System (CalPERS).

Significant terms that pertain to the Pension Obligation Bonds are as follows. If the City fails to make the payment of principal or interest when due and payable; if the City fails to observe and perform any of the coven ants, agreements, or conditions required in the bond agreement; if the City commences a voluntary case under Title 11 of the United States Code or any substitute or successor statute; the City shall be considered in default. In the event of a default, the Trustee may declare the principal and interest of the bond immediately due and payable. The revenues pledge from the bond are the revenues payable from the various funds allocated the issuance of the debt.

Pension obligation bonds outstanding at June 30, 2022 for governmental activities are $26,506,940.

The future maturities of the pension obligation bonds payable for governmental activities are as follows:

Fiscal Year Principal Interest Total
2023 1,046,765$ 1,189,577$ 2,236,342$ 2024 1,537,597 1,117,764 2,655,361 2025 1,501,620 1,050,263 2,551,883 2026 1,506,759 984,341 2,491,100 2027 1,498,194 918,195 2,416,389 2028-2032 6,899,913 3,643,185 10,543,098 2033-2037 8,160,828 2,082,513 10,243,341 2038-2039 4,355,264 291,210 4,646,474 26,506,940$ 11,277,048$ 37,783,988$

Business Type Activities –

Bonds Payable : On July 1, 2012, the City of Hanford issued $13,165,000 Wastewater Revenue Refunding Bonds Series 2012 bearing interest of 3.0% to 5.0% payable semi -annually on April 1 and October 1 commencing October 1, 2012. The bonds mature annually at various amounts through October 1, 2032. The bonds are payable from net revenues of the City’s Wastewater System and from amounts on deposit in certain funds and accounts created under the Indenture.

The Bonds were issued to refinance the City’s previously issued $5,000,000 CSCDA Water and Wastewater Revenue Bonds, dated October 1, 1999 and the $10,555,000 CSCDA Water and Wastewater Revenue Bonds dated April 16, 2002. As a result, the 1999 and 2002 Revenue Bonds are considered to be defeased and the liability for those bonds has been removed from the long-term liabilities of the Business Activities Debt.

The aggregate debt service payments of the new debt is $2,121,034 less than the old debt. The issuance of the new debt and refunding of the old debt resulted in an economic gain (the difference between the present value of the old debt and new debt payments) of approximately $1,537,677.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
47 NOTE 5 – LONG-TERM DEBT (continued)

Bonds Payable (continued): Significant terms that pertain to the Wastewater Revenue Refunding Bonds Series 2012 are as follows. If the City fails to make the payment of principal or interest when due and payable; if the City fails to observe and perform any of the covenants, agreemen ts, or conditions required in the bond agreement; if the City files a petition or answer seeking reorganization or arrangement under the Federal bankruptcy laws; the City shall be considered in default. In the event of a default, the Trustee may declare the principal and interest of the bonds immediately due and payable. The revenues pledged for the bond are the revenues payable from the City’s Wastewater fund.

Wastewater revenue bonds outstanding at June 30, 2022 are $7,705,000.

The future maturities of the wastewater revenue bonds payable are as follows:

Fiscal Year Principal Interest Total
2023 655,000$ 277,260$ 932,260$ 2024 670,000 255,264 925,264 2025 695,000 227,963 922,963 2026 725,000 201,374 926,374 2027 750,000 175,561 925,561 2028-2032 3,590,000 452,398 4,042,398 2033 620,000 12,405 632,405 7,705,000$ 1,602,225$ 9,307,225$

On July 1, 2013, the City of Hanford issued $12,725,000 Water Revenue Refunding Bonds Series 2013 bearing interest of 2.0% to 5.0% payable semi -annually on April 1 and October 1, commencing October 1, 2013. The bonds mature annually at various amounts through October 1, 2028. The bonds are payable from net revenues of the City’s Water System and from amounts on deposit in certain funds and accounts created under the Indenture.

The Bonds are being issued to refinance the City’s previously issued to refinan ce the City’s previously issued $8,925,000 CSDA Water and Wastewater Revenue Bonds, dated December 9, 2003 and the $8,150,000 Installment Sale Agreement – Water System dated December 20, 2007. As a result the 2003 Revenue Bond and 2007 Installment Sale Agreement are considered defeased and the liability for those issues has been removed from the long -term liabilities of the Business Activities Debt.

The aggregate debt service payments of the new debt are $1,430,167 less than the old debt. The issuance of the new debt and refunding of the old debt resulted in an economic gain (the difference between the present value of the old debt and new debt payments) of approximately $567,774.

Significant terms that pertain to the Water Revenue Refunding B onds Series 2013 are as follows. If the City fails to make the payment of principal or interest when due and payable; if the City fails to observe and perform any of the covenants, agreements, or conditions required in the bond agreement; if the City files a petition or answer seeking reorganization or arrangement under the Federal bankruptcy laws; the City shall be considered in default. In the event of a default, the Trustee may declare the principal and interest of the bonds immediately due and payable.

The revenues pledged for the bond are the revenues payable from the City’s Water fund.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
48 NOTE 5 – LONG-TERM DEBT (continued)

Bonds Payable (continued):

Water revenue bonds outstanding at June 30, 2022 are $5,940,000.

The future maturities of the water revenue bonds payable are as follows:

Fiscal Year Principal Interest Total
2023 885,000$ 243,025$ 1,128,025$ 2024 930,000 197,650 1,127,650 2025 970,000 157,425 1,127,425 2026 1,015,000 115,075 1,130,075 2027 1,055,000 68,600 1,123,600 2028-2029 1,085,000 48,724 1,133,724 5,940,000$ 830,499$ 6,770,499$

On January 28, 2015, the City of Hanford i ssued $3,885,000 Wastewater Revenue Refunding Bonds Series 2015, bearing interest of 2.0% to 4.0% payable semi -annually on April 1 and October 1, commencing April 1, 2015. The bonds mature annually at various amounts through October 1, 2032. The bonds are payable from net revenues of derived from charges and revenues received by the City from the operation of the Wastewater System.

The Bonds are being issued to provide funds to refund the City’s outstanding City of Hanford, Variable Rate Demand Sewer System Refunding Revenue Bonds, 1996 Series A, to purchase a reserve fund municipal bond insurance policy in lieu of cash funding a bon d reserve fund for the Bonds, and to pay the cost of issuing the Bonds. As a result the 1996 Revenue Bonds are considered to be defeased and the liability for those bonds has been removed from the long-term liabilities of the Business Activities Debt.

The aggregate debt service payments of the new debt are $644,540 more than the old debt. The issuance of the new debt and refunding of the old debt resulted in an economic loss (the difference between the present value of the old debt and new debt payments) of approximately $621,656.

Significant terms that pertain to the Wastewater Revenue Refunding Bonds Series 2015 are as follows. If the City fails to make the payment of principal or interest when due and payable; if the City fails to observe and perform any of the covenants, agreements, or conditions required in the bond agreement; if the City of the enterprise abandons a substantial part that shall continue for a period of sixty consecutive days; if the City files a petition or answer seeking reorganization or arrangement under the Federal bankruptcy laws; the City shall be considered in default.

In the event of a default, the Trustee may declare the principal and interest of the bonds immediately due and payable. The revenue pledged for the bond are the revenues payable from the City’s Wastewater fund.

Wastewater revenue bonds outstanding at June 30, 2022 are $2,625,000.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
49 NOTE 5 – LONG-TERM DEBT (continued)

Bonds Payable (continued):

The future maturities of the wastewater revenue bonds payable are as follows:

Fiscal Year Principal Interest Total
2023 200,000$ 91,350$ 291,350$ 2024 205,000 85,275 290,275 2025 215,000 78,975 293,975 2026 220,000 72,450 292,450 2027 225,000 65,775 290,775 2028-2032 1,275,000 188,500 1,463,500 2033 285,000 5,700 290,700 2,625,000$ 588,025$ 3,213,025$

On May 23, 2022, the City of Hanford issued $30,946,000 Pension Obligation Bonds bearing interest of 4.39% payable annually on June 1 commencing June 1, 2023. The bonds mature annually at various amounts through June 1, 2039.

The bonds are payable from net revenues in both the governmental activities and business -type activities created under the Indenture.

Pension obligation bonds outstanding at June 30, 2022 for business-type activities are $4,439,060.

The future maturities of the pension obligation bonds payable for business activities are as follows:

Fiscal Year Principal Interest Total
2023 175,290$ 199,142$ 374,432$ 2024 257,403 187,120 444,523 2025 251,380 175,820 427,200 2026 252,241 164,785 417,026 2027 250,807 153,711 404,518 2028-2032 1,155,032 609,891 1,764,923 2033-2037 1,366,172 348,625 1,714,797 2038-2039 730,735 48,751 779,486 4,439,060$ 1,887,845$ 6,326,905$

Notes Payable : On May 28, 2002, the City of Hanford obtained a loan fro m the California Infrastructure and Economic Development Bank in the amount of $10,000,000. The term of the agreement is thirty (30) years with a maturity date of February 1, 2034, and an annual interest rate of 3.50%. Prior to the Bond Date, there is a .2 6% reduction in the interest rate, resulting in an initial rate of 3.24%. Interest on the loan is payable semi -annually on each February 1 and August 1, commencing August 1, 2003 . As of June 30, 2022, the balance outstanding was $4,707,418.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
50 NOTE 5 – LONG-TERM DEBT (continued)

Notes Payable (continued) : Significant terms that pertain to the California Infrastructure and Economic Development Bank loan are as follows. If the City fails to make the payment of principal or interest when due and payable; if the City fails to observe and perform any of the covenants, agreements, or conditions required in the note agreement; if the City made any representation or other written statement contained in the agreement that was incorrect in any material respect ; if the City files a petition or answer seeking reorganization or arrangement under the Federal bankruptcy laws; the City sha ll be considered in default. In the event of a default, the CIEDB may declare the principal and interest of the bonds immediately due and payable. Additionally, revenues pledged for the note are the revenues payable from the City’s Wastewater fund.

The future maturities of the note payable are as follows:

Fiscal Year Principal Interest Total
2023 401,266$ 157,737$ 559,003$ 2024 415,311 143,447 558,758 2025 429,847 128,657 558,504 2026 444,892 113,349 558,241 2027 460,462 97,505 557,967 2028-2032 2,555,640 229,768 2,785,408 4,707,418$ 870,463$ 5,577,881$

Finance Purchase Arrangements : In November, 2011, the City entered into a finance purchase arrangement with Bank of America to design and construct an energy efficient tracker system for the City’s wastewater treatment plant. The purchase price of this project is $4,325,556, with annual payments in varying amounts including interest at 3.33% commencing on July 8, 2012 with a final payment in July, 2026. The balance outstanding as of June 30, 2022 was $1,522,200.

Significant terms that pertain to the 2011 Finance Purchase Arrangement are as follows. If the City fails to make the payment of principal or interest when due and payable; if the City fails to observe and perform any of the covenants, agreements, or conditions required in the agreement; if the City had a statement, representation, or warranty that was proven to be false, incorrect, misleading, or breached; if the City defaults on any other agreement for borrowing money, lease financing of property, or other credit under which the City is an obligor; if the City files a petition or answer seeking reorganizatio n or arrangement under the Federal bankruptcy laws; the City shall be considered in default. In the event of a default, the Lessor may take whatever action necessary or desirable to collect each rental payment as they become due and payable, or they may en ter the premises where the equipment is located and retake possession or they may take whatever action at law or in equity may appear necessary or desirable to enforce.

The collateral pledged for the lease is the equipment noted in the capital lease.

The annual debt service requirements for the 2011 Finance Purchase Arrangement outstanding at June 30, 2022 are as follows:

Fiscal Year Principal Interest Total
2023 248,126$ 50,689$ 298,815$ 2024 274,530 42,427 316,957 2025 302,640 33,285 335,925 2026 332,549 23,207 355,756 2027 364,355 12,133 376,488 1,522,200$ 161,741$ 1,683,941$

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
51 NOTE 5 – LONG-TERM DEBT (continued)

Finance Purchase Arrangements (continued):

In March 2014, the City entered into a finance purchase arrangement with Bank of America National Association to design and construct a solar photovoltaic energy system using an energy service contract with Chevron Energy Solutions Company for several facilities throughout the City. The purchase price of this contract is $8,495,138, with semi-annual payments in varying amounts including interest at 3.54% commencing on October 26, 2014 with a final payment in April, 2029. The balance outstanding as of June 30, 2022 was $5,659,633.

Significant terms that pertain to the 2014 Finance Purchase Arrangement are as follows. If the City fails to make the payment of principal or interest within 10 days after the date when due; if the City fails to observe and perform any of the covenants, agreements, or conditions required in the agreement; if the City had a statement, representation, or warranty that was proven to be false, incorrect, misleading, or breached; if the City defaults on any other agreement for borrowing money, lease financing of property, or other credit under which the City is an obligor; the City shall be considered in default. In the event of a default, the Lessor may take whatever action necessary or desirable to collect each rental payment as they become due and payable or they may enter the premises where the equipment is located and retake possession or they may take whatever action at law or in equity may appear necessary or desirable to enforce. The collateral pledged for the lease is the equipment noted in the capital lea se.

The annual debt service requirements for the 2014 Finance Purchase Arrangement outstanding at June 30, 2022 are as follows:

Fiscal Year Principal Interest Total
2023 591,758$ 195,160$ 786,918$ 2024 656,391 173,645 830,036 2025 725,343 149,803 875,146 2026 798,857 123,481 922,338 2027 877,193 94,515 971,708 2028-2030 2,010,091 90,675 2,100,766 5,659,633$ 827,279$ 6,486,912$

NOTE 6 – LEASES

Lease Receivables:

In fiscal year 1993, the City’s intermodal fund leased a building to a third party. The lease is for thirty -five years and the City will receive rent of $13,308 annually with an increase of 3% each year. The City recognized $39,352 in lease revenue and $439 in interest revenue during the current fiscal year related to this lease. As of June 30, 2022, the City’s receivable for lease payments was $239,732. Also, the City has a deferred inflow of resources associated with this lease that will be recognized as revenue over the lease term. As of June 30, 2022, the balance of the deferred inflow of resources was $236,115.

In fiscal year 2001, the City’s parking fund leased seventy -five parking spaces to a third party. The lease is for fifty years and the City will receive $9,000 annually for the first three years of the agreement after which the lease fee will increase 3% annually. The City recognized $ 19,496 in lease revenue and $7,601 in interest revenue during the current fiscal year related to this lease. As of June 30, 2022, the City’s receivable for lease payments was $557,209.

Also, the City has a deferred inflow of resources associated with this lease that will be recognized as revenue over the lease term. As of June 30, 2022, the balance of the deferred inflow of resources was $545,890.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
52 NOTE 6 – LEASES (continued)

Lease Receivables (continued):

In fiscal year 2020, the City’s wastewater fund leased 960 -acres of agricultural ground to a third party. The lease is for twenty-five years and the City will receive annual payments of $100 per acre. Beginning in fiscal year 2021, the rental amount shall increase by $50 per acre and continue to increase by the same amount each year that the lease remains in effect. The City recognized $571,453 in lease revenue and $183,199 in interest revenue during the current fiscal year related to this lease. As of June 30, 2022, the City’s receivable for lease payments was $13,239,958. Also, the City has a deferred inflow of resources associated with this lease that will be recognized as revenue over the lease term. As of June 30, 2022, the balance of the deferred inflow of resources was $ 12,778,903.

Payments for the lease receivables are expected to be received in the following subsequent years:

Fiscal Year Principal Interest Total
2023 182,625$ 206,890$ 389,515$ 2024 234,756 204,365 439,121 2025 287,706 201,068 488,774 2026 341,490 196,988 538,478 2027 396,121 192,111 588,232 2028-2032 2,643,679 859,561 3,503,240 2033-2037 4,062,529 613,451 4,675,980 2038-2042 5,641,012 253,441 5,894,453 2043-2047 143,502 12,365 155,867 2048-2050 103,479 1,717 105,196 14,036,899$ 2,741,957$ 16,778,856$

Lease Payables:

In fiscal year 2020, the City’s entered into a lease agreement as a lessee for the acquisition and use of copiers. An initial lease liability was recorded in the amount of $28,97 6. As of June 30, 2022, the value of the lease liability was $21,267. The City is required to make monthly principal and interest payments of $646. The lease has an interest rate of 0.20%. The copiers have a five-year estimated useful life. The value of the right -to-use asset as of the end of the current fiscal year was $21,249 and had accumulated amortization of $7,726.

In fiscal year 2020, the City’s entered into a lease agreement as a lessee for the acquisit ion and use of copiers. An initial lease liability was recorded in the amount of $40,914. As of June 30, 2022, the value of the lease liability was $30,711. The City is required to make monthly principal and interest payments of $ 856. The lease has an inte rest rate of 0.20%. The copiers have a five-year estimated useful life. The value of the right -to-use asset as of the end of the current fiscal year was $30,685 and had accumulated amortization of $10,229.

In fiscal year 2021, the City’s entered into a le ase agreement as a lessee for the acquisition and use of copiers. An initial lease liability was recorded in the amount of $19,681. As of June 30, 2022, the value of the lease liability was $15,400. The City is required to make monthly principal and intere st payments of $359. The lease has an interest rate of 0.20%. The copiers have a five-year estimated useful life. The value of the right -to-use asset as of the end of the current fiscal year was $15,387 and had accumulated amortization of $4,294.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
53 NOTE 6 – LEASES (continued)

Lease Payables (continued):

The future principal and interest lease payments as of June 30, 2022, are as follows:

Fiscal Year Principal Interest Total
2023 22,223$ 114$ 22,337$ 2024 22,267 70 22,337 2025 20,373 26 20,399 2026 2,515 2 2,517 67,378$ 212$ 67,590$

NOTE 7 – CHANGES IN OTHER LONG-TERM LIABILITIES

Balance Balance Due Within
July 1, 2021 Additions Deletions June 30, 2022 One Year Governmental Activities
Compensated absences 1,404,175$ 128,016$ (291,218)$ 1,240,973$ 146,286$ Total Governmental Activities 1,404,175$ 128,016$ (291,218)$ 1,240,973$ 146,286$ Business-type Activities
Compensated absences 399,726$ 32,146$ (195,536)$ 236,336$ 27,288$ Total Business-type Activities 399,726$ 32,146$ (195,536)$ 236,336$ 27,288$

Compensated Absences:

The City accounts for compensated absences (unpaid vacation, sick leave, and compensatory time) in accordance with GASB Codification Sec. C60. In governmental funds, compensated absences are recorded as expenditures in the year paid, as it is the City’s intention to liquate any unpaid compensated absences at June 30 from future resources, rather than current available financial resources. Accordingly, the unpaid liability for governmental funds is recorded in the government -wide statement of net assets. For the governmental activities, the compensated absences balance as of June 30, 2022 was $1,240,973.

NOTE 8 – PENSION PLAN

Plan Descriptions: The City’s defined benefit plans, the Miscellaneous, Police Safety and Fire Safety Plans of the City, are open to all qualified permanent and probationary employees. The miscellaneous plan is an agent multiple – employer plan and the police and fire safety plans are cost -sharing multiple – employer plans. The Plans are administered by the California Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent for participating public employers within the State of California. Benefit provisions under the Plans are established by State Statute and City resolution. CalP ERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.

Benefits Provided: CalPERS provides service retirement and disability benefits, annual cost of living adjustments, and death benefits to plan members 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 to 62 with statutorily reduced benefits. All members are eligible for non -duty disability benefits after 10 years of service. The death benefits is one of the following: The Basic Death Benefit, the 1957 Survivor Benefit, or the O ptional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
54 NOTE 8 – PENSION PLAN (continued)

The Plan’s provisions and benefits in effect at June 30, 2022, are summarized as follows:

PEPRA
Prior to On or After
January 1, 2013 January 1, 2013
Benefit formula 3.0% @ 60 2.0% @ 62
Benefit vesting schedule 5 years' service 5 years' service Benefit payments monthly for life monthly for life
Retirement age 50 52
Monthly benefits as a % of eligible compensation 1.426% - 2.418% 1.000% - 2.500% Required employee contribution rates 8.0% 8.0%
Required employer contribution rates 27.327% 28.226%
PEPRA
Prior to On or After
January 1, 2013 January 1, 2013
Benefit formula 3% @ 55 2.0% @ 62
Benefit vesting schedule 5 years' service 5 years' service Benefit payments monthly for life monthly for life
Retirement age 50 50
Monthly benefits as a % of eligible compensation 3.0% 1.000% - 2.500% Required employee contribution rates 9.0% 6.25%
Required employer contribution rates 31.532% 6.25%
PEPRA
Prior to On or After
January 1, 2013 January 1, 2013
Benefit formula 3% @ 55 2.0% @ 62
Benefit vesting schedule 5 years' service 5 years' service Benefit payments monthly for life monthly for life
Retirement age 50 50
Monthly benefits as a % of eligible compensation 3.0% 1.000% - 2.500% Required employee contribution rates 9.0% 6.25%
Required employer contribution rates 29.883% 6.25%
Miscellaneous
Safety Police
Safety Fire

Contributions: Section 20814(c) of the Cali fornia 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 July 1 following notice of a change in the rate. Funding contributions for the Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finan ce unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of the employees.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
55 NOTE 8 – PENSION PLAN (continued)

Contributions (continued):

For the year ended June 30, 2022, the contributions recognized as part of pension expense for the Plans are as follows:

Plans
Contributions - Employer 38,579,452$

As of June 30, 2022, the City reported net pension liabilities for its proportionate shares of the net pension liability of each Plan as follows:

Proportionate
Share of Net
Pension Liability
Miscellaneous 8,941,906$
Safety Plans 13,887,695
22,829,601$

The City’s net pension liability for each Plan is measured as the proportionate share of the net pension liability. The net pension liability of each of the Plans is measured as of June 30, 2020, and the total pension liability for each 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 plans relative to the projected contributions of all participating emp loyers, actuarially determined. The City’s proportionate share of the net pension liability f or each Plan as of June 30, 2020 and 2021 was as follows:

Miscellaneous Safety
Proportion - June 30, 2020 N/A 36.73%
Proportion - June 30, 2021 N/A 39.57%
Change - Increase (Decrease) N/A 2.84%

Deferred Outflows/Inflows of Resources:

Deferred outflows/inflows of resources for the Miscellaneous Plan consisted of the following as of June 30, 2022.

Deferred Deferred
Outflows Inflows
Differences between expected and actual experiences 233,012$ 506,933$ Net differences between projected and actual earnings on investments - 9,954,267 Pension contributions subsequent to measurement date 15,190,165 - Total 15,423,177$ 10,461,200$
Miscellaneous Plan

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
56 NOTE 8 – PENSION PLAN (continued)

Deferred Outflows/Inflows of Resources (continued):

Deferred outflows/inflows of resources for the Safety Plan consisted of the following as of June 30, 2022.

Deferred Deferred
Outflows Inflows
Differences between expected and actual experiences 2,372,700$ -$ Net differences between projected and actual earnings on investments - 8,265,845 Adjustment due to differences in proportions 1,596,054 - Adjustment due to differences between actual and proportionate share of contributions 27,980 891,609 Pension contributions subsequent to measurement date 23,389,293 - Total 27,386,027$ 9,157,454$
Safety Plan

Amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in future pension expense (not including contributions subsequent to the measurement date) as follows:

Measurement Period
Ended June 30 Miscellaneous Plan Safety Plan
2023 (2,499,733)$ (442,722)$
2024 (2,478,880) (868,337)
2025 (2,491,873) (1,575,014)
2026 (2,757,702) (2,274,647)
Total (10,228,188)$ (5,160,720)$
Deferred Outflows (Inflows) of Resources

Change of Assumption : GASB 68, paragraph 6 8 states that the long -term expected rate of return should be determined net of pension plan investment expense but without reduction for pension plan administrative expense.

The discount rate was changed from 7.65 percent (net of administrative expense in 2014) to 7.15 percent as of June 30, 2016 measurement date to correct the adjustment which previously reduced the discount rate for administrative expense.

Actuarial Methods and Assumptions Used to Determine Total Pension Liability : For the measurement period ended June 30, 2021, the total pension liability was determined by rolling forward the June 30, 2020 total pension liability.

The June 30, 2021 total pension liability was based on the following actuarial methods and assumptions:

Actuarial Cost Method Entry Age Normal in accordance with the Requirement of GASB Statement No. 68 Actuarial Assumptions:

Discount Rate 7.15%
Inflation 2.50%
Payroll Growth 2.75%
Salary Increases Varies by Entry Age and Service
Investment Rate of Return 7.00% Net of Pension Plan Investment and Administrative Expenses; includes inflation
Mortality Rate Table Derived from the January 2017 CalPERS Experience Study of the period from 1997 to 2015.

Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries.

Retirement Age Derived from the 2017 CalPERS Experience Study of the period from 1997 to 2015.

The experience study report can be obtained at CalPERS' website.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
57 NOTE 8 – PENSION PLAN (continued)

Actuarial Methods and Assumptions Used to Determine Total Pension Liabilit y (continued):
(1) Depending on age, service and type of employment
(2) Net of pension plan investment expenses, including inflation (3) The mortality table used was developed based on CalPERS’ specific data. The table includes 20 years of mortality improvements using Society of Actuaries Scale BB. For more details on this table, please refer to the CalPERS 2017 experience study report available on CalPERS website (4) All of the City’s plan for Miscellaneous and Safety employed the same assumptions

All other actuarial assumptions used in the June 30, 2020 valuation were based on the results of an actuarial experience study for the period 1997 to 2015, including updates to salary increase, mortality and retirement rates.

Further details of the Experience Study can be found on the CalPERS website under Forms and Publications.

Discount Rate: The discount rate used to measure the total pension liability was 7.15 percent. To determine whether the municipal bond rates should be used in the calculation of a discount rate for public agency plans (including PERF C), CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing of the plans, the tests revealed the assets would not run out.

Therefore, the current 7.15 percent discount rate is appropriate and the use of the municipal bond rate calculation is not deemed necessary. The long -term expected discount rate of 7.1 5 percent is applied to all plans in the Public Employees Retirement Fund, including PERF C. The stress test results are presented in a detailed report called “GASB Crossover testing Report” that can be obtained on CalPERS’ website under the GASB 68 section.

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

In determining the long-term expected rate of return, CalPERS accounted for both short-term and long-term market return expectations as well as the expected pension fund cash flows. Such cash flows were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years.

Using historical returns of all the funds’ asset classes, expected compound geometric returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach.

Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short -term and long -term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent.

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

Asset Class
New Strategic
Allocation
Real Return
Years 1-10*
Real Return
Years 11+**
Global Equity 50% 4.80% 6.00%
Global Fixed Income 28% 1.00 2.62
Inflation Sensitive 0% 0.77 1.81
Private Equity 8% 6.30 7.23
Real Estate 13% 3.75 4.93
Liquidity 1% 0.00 (0.92)
Total 100%
*An expected inflation of 2.5% used for this period
**An expected inflation of 3.0% used for this period

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
58 NOTE 8 – PENSION PLAN (continued)

Sensitivity of the Proportionate Share of the Net Pension Liability to Change in the Discount Rate : The following presents the City’s proportionate share of the net pension liability for each Plan, calculated using the discount rate for each 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
1% Decrease 6.15% 6.15%
Net Pension Liability $24,967,975 $27,299,940
Current Discount Rate 7.15% 7.15%
Net Pension Liability $8,941,906 $13,887,695
1% Increase 8.15% 8.15%
Net Pension Liability ($4,235,785) $2,871,190

Pension Plan Fiduciary Net Position: Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

NOTE 9 – POST EMPLOYMENT HEALTH CARE BENEFITS

Plan Description: The City participates in the CalPERS medical program under the Public Employees’ Medical and Hospital and Care Act (PEMHCA). As such, the City is obligated to contribute toward the cost of retiree medical coverage for the retiree’s lifetime or until coverage is discontinued. The City has selected the equal contribution method, where it resolves to contribute the same amount for retirees as is contributed toward active employee medical plan coverage. The City currently pays the minimum employer contribution (MEC) for both active and retired employees as well as their survivors, if covered at the time of the employee’s death. The MEC is $119 per month for 2022.

Dental insurance is available to retired employees as well, though the cost of coverage is paid entirely by the retiree.

Once the retiree reaches age 65 the City no longer allows the retiree to stay on the dental plan.

The above coverage is available for employees who satisfy the requirements for retirement under CalPERS (attained age 50 with 5 years of State or public agency service or app roved disability retirement). An employee cannot terminate employment before meeting the age condition and be entitled to receive benefits. As of January 1, 2016, the City terminated its healthcare contract with CalPERS. No future retirees are eligible for healthcare coverage or benefits from the City toward the cost of retiree medical coverage.

Employees Covered: As of the June 30, 2021 actuarial valuation, the following current and former City employees were covered by the OPEB plan membership:

Inactive employees or beneficiaries currently receiving benefit payments 44 Active employees 253
Total employees covered by the OPEB plan membership 297

Contributions: Currently the City funds ret iree healthcare benefits on a pay -as-you-go basis, paying a maximum of $119 per month for retiree benefits from the City funds as they are due with no prefunding for future years. The City recognizes expenditures for its share of the annual premiums as the se benefits become due. For fiscal year 2021- 2022, the City paid approximately $38,000 for benefits of 44 retirees or their beneficiaries receiving benefits.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
59 NOTE 9 – POST EMPLOYMENT HEALTH CARE BENEFITS (continued)

Total OPEB Liability: The City’s total OPEB liability was measured as of June 30, 2022 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2021, based on the following actuarial methods and assumptions.

Salary increases 3.00%
Inflation 2.50%
Discount rate 3.69%
Medical/Rx trend rate 5.7% for 2022, 5.6% for 2023, 5.5% for 2024, 5.4% for 2025-2026,

5.3% for 2027-2029, 5.2% for 2030-2051, 5.1% for 2052,

5.0% for 2053-2055, 4.9% for 2056-2060, 4.8% for 2061-2066,

4.7% for 2067, 4.6% for 2068, 4.5% for 2069, 4.4% for 2070-2071,

4.3% for 2072, 4.2% for 2073-2074, 4.1% for 2075,
decreasing to 4.0% for subsequent years

Discount Rate: The discount rate used to measure the total OPEB liability was 3.69 percent. The projection of the cash flows used to determine the discount rate assumed that the City contributions will be made at rates equal to the actuarially determined contribution rates. Based on these assumptions, the OPEB City’s net position was projected to be available to make all projected OPEB payments for inactive employees and beneficiaries based on the “pay as you go” annual contributions.

Changes in the Net OPEB Liability:

The change in the Net OPEB liability for the year ended June 30, 2022 is as follows:

Total OPEB
Liability
Plan
Fiduciary
Net Position
Net OPEB
Liability
(Asset)
Balance at June 30, 2021 $ 4,385,565 $ - $ 4,385,565 Changes in the year:

Service cost 310,994 - 310,994 Interest on the
total OPEB liability 88,810 - 88,810 Changes in assumptions (699,772) - (699,772) Contributions from the employer - 142,193 (142,193) Benefit payments (142,193) (142,193) - Net change (442,161) - (442,161) Balance at June 30, 2022 $ 3,943,404 $ - $ 3,943,404 Increase (Decrease)

Sensitivity of the Total OPEB Liability to Changes in the Discount Rate: The following presents the net OPEB liability of the Plan as of the measurement date, calculated using the discount rate of 3.69 percent, if it were calculated using a discount rate that is 1 percentage-point lower (2.69 percent) or 1 percentage-point higher (1.69 percent) than the current rate:

Current
Discount Rate Discount Rate Discount Rate
- 1% (2.69%) 3.69% + 1% (4.69%)
Net OPEB Liability 4,324,186$ 3,943,404$ 3,597,130$

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
60 NOTE 9 – POST EMPLOYMENT HEALTH CARE BENEFITS (continued)

Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rate: The following presents the net OPEB liability of the Plan if it were calculated using healthcare cost trend rates that are 1 percentage-point lower or 1 percentage-point higher than the current rate:

Current
Trend Rate
- 1% (4.70%) 5.70% + 1% (6.70%)
Net OPEB Liability 3,523,772$ 3,943,404$ 4,447,380$

OPEB Expense: As of the start of the measurement period (July 1, 2021), the Net OPEB liability was $3,943,404. For the measurement period ended June 30, 2022 (the measurement date), the City incurred an OPEB expense of $607,380.

Change in Net OPEB Liability (442,161)$
Change in Deferred Outflows 269,778
Change in Deferred Inflows 637,570
Employer Contributions 142,193
OPEB Expense 607,380$

As of June 30, 2022, the City has deferred outflows and deferred inflows of resources related to the Net OPEB liability as follows:

Deferred Outflows
of Resources
Deferred Inflows of
Resources
Difference between expected and actual experience 901,612$ -$ Changes in assumptions or other inputs 1,396,614 637,570 Total 2,298,226$ 637,570$

Other amounts reported as deferred inflows of resources related to pensions will be recognized in the future pension expense as follows:

Year ended June 30
Recognized Net Deferred
Outflows (Inflows) of
Resources
2023 207,576$
2024 207,576
2025 207,576
2026 207,576
2027 207,576
Thereafter 622,776
1,660,656$

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
61 NOTE 10 – RISK MANAGEMENT

The City is partially self -insured for workers’ compensation and general liability insurance. For worker s’ compensation, the City is responsible for claims up to $250,000 per occurrence. Coverage in excess of the City’s self- insured retention is purchased through CSAC Excess Insurance Authority (CSAC -EIA) up to the statutory limits. The City participates in a risk pool for general liability insurance through CSAC-EIA above the City’s self-insured retention of $100,000 up to $5,000,000 per occurrence. Reinsurance coverage in excess of the pool layer up to $25,000,000 is purchased through CSAC -EIA. For both workers’ compensation and general liability insurance, CSAC -EIA retains responsibility for claims in excess of each member’s self -insured retention. There were no reductions in insurance coverage from th e prior year and there were no settlements that exceeded insurance coverage for the past three fiscal years.

Workers’ compensation and general liability claims incurred prior to July 1, 2012 were covered through the City’s participation in the Central San Joaquin Valley Risk Management Authority (CSJVRMA), a public entity risk pool. For workers’ compensation insurance, the City is self-insured up to $200,000. Coverage between $200,000 and $500,000 is provided through a risk pool. CSJVRMA participates in a n excess pool which provides coverage from $500,000 to $5,000,000 and purchases excess insurance above $5,000,000 to the statutory limit.

For general liability insurance, the City participates in a risk pool which covers the City above its self -insurance retention level of $100,000 up to $1,000,000. CSJVRMA participates in an excess pool which provides coverage from $1,000,000 to $29,000,000. CSJVRMA members may receive rebates or be required to make additional contributions through a retrospective adjustment process.

NOTE 11 – INTERFUND TRANSACTIONS

Interfund transactions are reported as either loans, service provided, reimbursements, or transfers. Loans are reported as interfund receivables and payables, as appropriate, and are subject to elimination upon consolidation.

Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements occur when one fund incurs a cost, charges the appropriate benefiting fund, and reduces its re lated cost as a reimbursement. All other interfund transactions are treated as transfers.

Transfers among governmental or proprietary funds are netted as part of the reconciliation to the government-wide financial statements.

At June 30, 2022 the City’s interfund due from/to other funds were as follows:

Due From Due To
Other Funds Other Funds
Governmental Funds
General Fund 684,577$ -$
CDBG Home/Housing Fund - 81,392 Other Governmental Funds - 157,826 Proprietary Funds
Water System Fund - 159,912
Wastewater Fund 912,470 752,558
Courthouse Square - 146,674
Computer Maintenance Fund - 298,685 Total 1,597,047$ 1,597,047$

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
62 NOTE 11 – INTERFUND TRANSACTIONS (continued)

At June 30, 2022 the City’s interfund advances to/from other funds were as follows:

Advances To Advances From
Other Funds Other Funds
Governmental Funds
Capital Projects Fund 1,659,026$ -$
Proprietary Funds
Airport Fund - 375,468
Intermodal Fund - 261,224
Courthouse Square - 1,022,334
Total 1,659,026$ 1,659,026$

Interfund transfers consist of operating transfers from funds receiving resources to funds through which the resources are to be expended. Interfund transfers for the year-ended June 30, 2022 were as follows:

Transfers In Transfers Out
Governmental Funds
General Fund 3,712,266$ 3,001,032$
CDBG Home/Housing Fund - 157,802 Transportation Impact Fees 1,657,592 42,549 TDA Fund - 26,210
Other Governmental Funds 824,143 4,280,631 Proprietary Funds
Water System Fund 363,508 -
Wastewater Fund - 22,944
Storm Drain Fund 752,341 645,968
Refuse Fund 492,791 -
Airport Fund 5,960 21,232
Risk Management Fund 750,000 -
Building Fund - 71,901
Fleet Management Fund 60,746 349,078
Total 8,619,347$ 8,619,347$

NOTE 12 – CONTINGENT LIABILITIES

Litigation: The City is involved as a defendant in various legal proceedings. While it is not feasible to predict or determine the outcome in these cases, it is the opinion of the City that the outcome will have no material effect on the financial position of the City other than the case as disclosed in Note 16.

Special Tax Bond Series 1998: The City, by resolution, issued $5,365,000 of “Special Tax Bonds, Series 1998,” pursuant to the Mello -Roos Community Facilities Act of 1982, as amended commencing wit h Section 53311, et seq., of the Government Code of the State of California. Neither the full faith and credit nor the taxing power (except with respect to the special taxes) of the City of Hanford, the State of California or any political subdivision ther eof is pledged to the payment of the bonds. The bonds are not general or special obligations of the City or general obligations of the Community Facilities District No. 91 -1, but are limited obligations of the district payable solely from the special taxes and funds held pursuant to that agreement. The City is acting only as an agent for the property owners.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
63 NOTE 12 – CONTINGENT LIABILITIES (continued)

Other: The City participates in a number of programs that are fully or partially funded by grants received from federal, state, and county governments. Expenditures financed by grants are subject to audit by the appropriate grantor agency. If expenditures are disallowed due to non-compliance with grant program regulations, the City may be required to reimburse the grantor agency. As of June 30, 2022, significant amounts of grant expenditures have not been audited by the grantor agencies, but the City believes that disallowed expenditures, if any, based on subsequent audits will not have a material effect on any of the individual governmental funds or the City’s overall financial position.

NOTE 13 – PRIOR PERIOD ADJUSTMENTS

Prior period adjustments for the year ended June 30, 2022 is summarized as follows:

Governmental and Business-Type Activities
Governmental Business-Type
Activities Activities Total
Fund Balance, Beginning of Year, as Previously Reported $ 179,768,478 $ 144,681,088 $ 324,449,566 Correct investment interest/GASB 31 (491,326) (84,847) (576,173) Correct accounts receivable balances (143,585) - (143,585) Correct capital asset balances (165,890) - (165,890) Correct accounts payable balances 34,067 - 34,067 Correct revenue balances (59,471) (67,104) (126,575) Total Prior Period Adjustments (826,205) (151,951) (978,156) Fund Balance, Beginning of Year, Restated $ 178,942,273 $ 144,529,137 $ 323,471,410

Fund Financial Statements
Transportation
General Capital Projects CDBG/HOME/ Transportation Development Fund Fund Housing Fund Impact Fees Act Fund
Fund Balance, Beginning of Year, as Previously Reported $ 11,037,789 $ 4,573,806 $ 20,180,157 $ 2,532,312 $ 498,685 Correct investment interest/GASB 31 (114,590) (28,427) (16,169) (41,659) (38,994) Correct accounts receivable balances 560,388 - - - - Correct revenue balances (126,575) - - - - Total Prior Period Adjustments 319,223 (28,427) (16,169) (41,659) (38,994) Fund Balance, Beginning of Year, Restated $ 11,357,012 $ 4,545,379 $ 20,163,988 $ 2,490,653 $ 459,691 Governmental Funds

Park Landscaping City Fire State
Impact Assessment Housing Protection Gas Tax
Fees District Fund Impact Fees Fund
Fund Balance, Beginning of Year, as Previously Reported $ 4,322,904 $ 730,385 $ 1,575,053 $ 336,210 $ 3,491,045 Correct investment interest/GASB 31 (41,446) (7,085) (5,168) (3,143) (22,468) Total Prior Period Adjustments (41,446) (7,085) (5,168) (3,143) (22,468) Fund Balance, Beginning of Year, Restated $ 4,281,458 $ 723,300 $ 1,569,885 $ 333,067 $ 3,468,577 Nonmajor Governmental Funds

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
64 NOTE 13 – PRIOR PERIOD ADJUSTMENTS (continued)

Wastewater Storm Drain Intermodal
Fund Fund Fund
Net Position, Beginning of Year, as Previously Reported $ 42,334,002 $ 25,904,144 $ 731,613 Correct investment interest/GASB 31 (28,119) (56,080) (648) Correct revenue balances - - (67,104) Total Prior Period Adjustments (28,119) (56,080) (67,752) Net Position (Deficit), Beginning of Year, Restated $ 42,305,883 $ 25,848,064 $ 663,861 Proprietary Funds

Risk Fleet
Management Building Management Medical
Fund Fund Fund Fund
Net Position, Beginning of Year, as Previously Reported $ 707,295 $ 1,009,672 $ 20,492,406 $ 1,517,587 Correct investment interest/GASB 31 (57,265) (11,400) (88,962) (14,550) Correct revenue balances - 67,104 - - Correct capital asset balances - - (165,890) - Correct accounts payable balances - - - 34,067 Correct accounts receivable balances - - - (703,973) Total Prior Period Adjustments (57,265) 55,704 (254,852) (684,456) Net Position, Beginning of Year, Restated $ 650,030 $ 1,065,376 $ 20,237,554 $ 833,131 Internal Service Funds

Redevelopment
Successor Agency Miscellaneous
Private-Purpose Civil Subpoena Deposits
Fund Fund Trust Fund Total
Net Position, Beginning of Year, as Previously Reported $ 381,487 $ (53,748) $ 128,005 $ 455,744 Correct investment interest/GASB 31 (2,278) - - (2,278) Correct deposit balances - (16,054) (88,636) (104,690) Total Prior Period Adjustments (2,278) (16,054) (88,636) (106,968) Net Position (Deficit), Beginning of Year, Restated $ 379,209 $ (69,802) $ 39,369 $ 348,776 Fiduciary Funds

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
65 NOTE 14 – EXCESS EXPENDITURES OVER APPROPRIATIONS

For the fiscal year ended June 30, 2022, expenditures exceeded appropriations as follows:

Fund Amount
General Fund
General government 1,300,893$
Public safety 20,107,129
Public works 1,642,992
Recreation 1,257,687
Community development 741,464
Debt service - principal 22,193
Debt service - interest 513
Capital Projects Fund
General government 6,395
Community development 37,900
Transportation Impact Fees
General government 10,327
Transportation Development Act Fund
General government 9,794
Capital outlay 178,026

NOTE 15 – DEFICIT FUND BALANCE/NET POSITION

The Courthouse Square Fund has a net position deficit of $1,162,951. The deficit will be recovered through future charges for services.

The City Payroll Fund has a fund balance deficit of $4,766. The deficit will be recovered through future services provided within the City.

The CMAQ Transportation Fund has a fund balance deficit of $64,837, mainly attributable to the due to other funds balance. The deficit will be recovered through grant support received from other government agencies.

The American Rescue Plan Act Fund has a fund balance deficit of $125,837, main ly attributable to the unearned revenues. The deficient will be recovered as the City continues to spend and earn the revenue.

NOTE 16 – SUBSEQUENT EVENT/EXTRAORDINARY ITEM/SETTLEMENT LIABILITY

On November 25, 2014, the City and Helena entered into a Me morandum of Understanding (MOU). The MOU was approved by the City Council by a 5 -0 vote. The MOU generally contained provisions for the exchange of Helena’s current Lacey Boulevard property for property in the Kings Industrial Park. Further, the MOU contemplated the City paying Helena’s relocation costs to the Industrial Park. The MOU envisioned the parties negotiating and signing a further definitive agreement. During negotiation of definitive agreement terms in 2015, Helena identified its relocation costs as approximately $14.6 million dollars. The parties were unable to negotiate terms and the definitive agreement was never signed.

CITY OF HANFORD
NOTES TO THE FINANCIAL STATEMENTS (continued)
66 NOTE 16 – SUBSEQUENT EVENT/EXTRAORDINARY ITEM/SETTLEMENT LIABILITY (continued)

After a definitive agreement failed to be executed, in 2016 Helena and the City entered into a purchase and sale agreement for Helena’s purchase of the same Industrial Park property. After being in escrow for several months, Helena was ultimately unable to close a nd the City terminated escrow. On April 11, 2017, Helena filed a lawsuit in Kings County Superior Court. On June 4, 2018, Helena filed an amended complaint to include breach of the 2016 Purchase Agreement, which included an attorney’s fees provision. Trial was set to begin on February 6, 2023. It was anticipated that Helena would demand approximately $38 million dollars at trial, not including attorney’s fees, if it were successful at trial.

The City and Helena attended mediation on January 27, 2023. The parties were able to reach a tentative settlement, contingent upon approval by the City Council. The monetary terms of that settlement are as follows:
• The City will pay Helena $7.5 million dollars within thirty (30) days of executing the settlement agreem ent. • Additionally, the City will pay Helena $5 million dollars over the course of four years. The payments will be a lump sum of $1.25 million dollars each of the four years (no interest). The annual payments will begin on March 1, 2024.

In consideration for the payments described above, Helena will dismiss its current lawsuit against the City with prejudice. The public benefit in approving such settlement is that the City will not be required to expend large amounts of time, effort, and money to take thi s case to trial, and the matter will be fully and finally resolved for a fixed dollar amount of $12.5 million dollars without risk of a jury award of $38 million dollars plus interest and Helena’s legal fees. The applicable interest rate is 10% per year un der state law and could have started to accrue from the time that Helena claimed the City breached.

The City is paying $7.5 million dollars upon the parties’ signature of the Settlement Agreement, and the City will pay $1.25 million dollars each year for four years, starting on March 1, 2024. Payments will come from General Fund monies. The City will need to establish an internal note at a recommended term of up to 10 years for up to $7 million of the funding. There currently is $5.5 million of cash in the General Fund Reserve to pay without internal borrowing.

Staff has identified the ability to take a loan from other funds with available cash that will allow the City to maintain payments in accordance with the agreement. Staff would recommend a 2.5% inte rest rate on these internal notes, which is comparable to conservative investment instruments available to the City as of January 2023. This loan may impact the City’s ability to fund major projects while the loan is outstanding. Should the General Fund h ave fund balance to pay back an internal loan faster than 10 years, Council authorizes staff to direct funding towards the payment before re-establishing the General Fund Reserve.

REQUIRED SUPPLEMENTARY INFORMATION

67 CITY OF HANFORD

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS LAST TEN FISCAL YEARS*

Miscellaneous Plan

2022 2021 2020 2019 2018 2017 2016 2015
Total Pension Liability
Service cost 2,307,283$ 2,151,214$ 2,064,352$ 2,105,925$ 2,090,309$ 1,914,877$ 1,859,399$ 1,803,855$ Interest 8,011,156 7,725,010 7,440,145 7,031,320 7,021,932 6,976,069 6,689,193 6,381,234 Differences between expected and actual experience (436,335) (410,579) 1,398,071 (1,511,015) (3,768,183) (831,190) (443,007) - Changes in assumptions - - - (3,087,527) 6,006,913 - (1,698,571) - Benefit payments, including refunds of employee
contributions (5,729,725) (5,302,018) (5,004,441) (4,588,971) (4,191,413) (4,206,587) (3,783,672) (3,644,252) Net change in total pension liability 4,152,379 4,163,627 5,898,127 (50,268) 7,159,558 3,853,169 2,623,342 4,540,837 Total pension liability- beginning 114,191,701 110,028,074 104,129,947 104,180,215 97,020,657 93,167,488 90,544,146 86,003,309 Total pension liability- ending (a) 118,344,080 114,191,701 110,028,074 104,129,947 104,180,215 97,020,657 93,167,488 90,544,146 Plan Fiduciary Net Position
Contributions- employer 4,300,785 4,072,920 3,791,023 3,415,348 3,213,198 2,957,917 2,837,484 2,451,408 Contributions- employees 908,516 852,662 874,603 796,926 760,087 709,460 712,929 686,870 Net plan to plan resource movement - - - (188) - - - - Net investment income1 20,183,976 4,294,558 5,316,832 6,405,074 7,625,528 366,113 1,494,371 10,020,177 Benefit payments (5,729,725) (5,302,018) (5,004,441) (4,588,971) (4,191,413) (4,206,587) (3,783,672) (3,644,252) Administrative expense (89,733) (121,281) (57,883) (340,724) (100,570) (41,645) (76,906) - Other miscellaneous income/(expense) - - 186 - - - - - Net change in plan fiduciary net position 19,573,819 3,796,841 4,920,320 5,687,465 7,306,830 (214,742) 1,184,206 9,514,203 Total plan fiduciary net position- beginning 89,828,356 86,031,515 81,111,195 75,423,730 68,116,900 68,331,642 67,147,436 57,633,233 Total plan fiduciary net position- ending (b) 109,402,175 89,828,356 86,031,515 81,111,195 75,423,730 68,116,900 68,331,642 67,147,436 Net pension liability- ending (a)-(b) 8,941,905$ 24,363,345$ 23,996,559$ 23,018,752$ 28,756,485$ 28,903,757$ 24,835,846$ 23,396,710$ Plan fiduciary net position as a percentage
of the total pension liability 92.44% 78.66% 78.19% 77.89% 72.40% 70.21% 73.34% 74.16% City's covered-employee payroll 11,735,924$ 10,586,681$ 10,064,610$ 10,080,535$ 9,434,933$ 9,643,787$ 9,090,194$ 8,260,542$ Net pension liability as a percentage of
covered-employee payroll 76.19% 230.13% 238.43% 228.35% 304.79% 299.71% 273.22% 283.23%

1 Net of administrative expenses.

Notes to Schedule:

Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes.

Changes of Assumptions: The discount rate was changed from 7.65 percent (net of administrative expense) to 7.15 percent. *The pension schedules are required to show ten years of data and the additional years’ information will be displayed as it be comes available.

68 CITY OF HANFORD
SCHEDULE OF THE CITY’S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY LAST TEN FISCAL YEARS*

Safety Plan

2022 2021 2020 2019 2018 2017 2016 2015
City's Proportion of the Net Pension
Liability/(Asset) 0.2567% 0.3673% 0.3548% 0.3536% 0.3510% 0.3570% 0.3530% 0.2402% City's Proportionate Share of the Net
Pension Liability/(Asset) 13,887,694$ 24,469,544$ 22,146,338$ 20,744,090$ 20,972,247$ 18,487,608$ 14,547,173$ 14,946,492$ City's Covered-Employee Payroll 8,109,211$ 9,140,252$ 6,889,321$ 6,673,847$ 6,692,475$ 6,409,767$ 6,897,272$ 6,602,409$ City's Proportionate Share of the Net
Pension Liability/(Asset)as a
Percentage of its Covered-Employee
Payroll 171.26% 267.71% 321.46% 310.83% 313.37% 288.43% 210.91% 226.38% City's Proportionate Share of the
Fiduciary Net Position as a
Percentage of the Plan's Total Pension
Liability 86.06% 74.04% 75.21% 75.73% 74.07% 74.41% 78.71% 77.21%

*The pension schedules are required to show ten years of data and the additional years’ information will be displayed as it be comes available.

69 CITY OF HANFORD

SCHEDULE OF PLAN CONTRIBUTIONS
LAST TEN FISCAL YEARS *

Miscellaneous Plan

2022 2021 2020 2019 2018 2017 2016 2015
Actuarially determined contribution 4,300,785$ 4,072,920$ 3,791,023$ 3,415,348$ 3,213,198$ 2,957,917$ 2,837,484$ 2,451,408$ Contributions in relation to the
actuarially determined contribution (4,300,785) (4,072,920) (3,791,023) (3,415,348) (3,213,198) (2,957,917) (2,837,484) (2,451,408) Contribution deficiency (excess) -$ -$ -$ -$ -$ -$ -$ -$ Covered-employee payroll 11,735,924$ 10,586,681$ 10,064,610$ 10,080,535$ 9,434,933$ 9,643,787$ 9,090,194$ 8,260,542$ Contributions as a percentage of
covered-employee payroll 36.65% 38.47% 37.67% 33.88% 34.06% 30.67% 31.21% 29.68%

Safety Plan

2022 2021 2020 2019 2018 2017 2016 2015
Actuarially determined contribution 22,748,720$ 4,062,968$ 3,451,832$ 3,067,990$ 3,064,625$ 3,728,697$ 2,859,367$ 1,937,233$ Contributions in relation to the
actuarially determined contribution (22,748,720) (4,062,968) (3,451,832) (3,067,990) (3,064,625) (3,728,697) (2,859,367) (1,937,233) Contribution deficiency (excess) -$ -$ -$ -$ -$ -$ -$ -$ Covered-employee payroll 8,109,211$ 9,140,252$ 6,889,321$ 6,673,847$ 6,692,475$ 6,409,767$ 6,897,272$ 6,602,409$ Contributions as a percentage of
covered-employee payroll 280.53% 44.45% 50.10% 45.97% 45.79% 58.17% 41.46% 29.34%

Notes to Schedule:

Employers are assumed to make contributions equal to the actuarially determined contributions. However, some employers may c hoose to make additional contributions towards their unfunded liability. Employer contributions for such plans exceed the actuaria lly determined contributions.

*The pension schedules are required to show ten years of data and the additional years’ information will be displayed as it be comes available.

70 CITY OF HANFORD

SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS LAST TEN FISCAL YEARS *

2022 2021 2020 2019 2018
Total OPEB Liability
Service cost 310,994$ 120,203$ 105,251$ -$ -$ Interest on total OPEB liability 88,810 63,027 74,534 47,002 50,391 Differences between expected and actual
experience - 283,719 - 1,034,539 - Changes in assumptions (699,772) 1,541,087 141,650 39,397 (6,734) Benefit payments, including refunds of
employee contributions (142,193) (149,569) (136,950) (153,422) (168,043) Net change in total OPEB liability (442,161) 1,858,467 184,485 967,516 (124,386) Total Net OPEB liability- beginning 4,385,565 2,527,098 2,342,613 1,375,097 1,499,483 Total Net OPEB liability- ending (a) 3,943,404 4,385,565 2,527,098 2,342,613 1,375,097 Plan Fiduciary Net Position
Contributions- employer 142,193 149,569 136,950 153,422 168,043 Contributions- employees - - - - - Net investment income - - - - - Benefit payments (142,193) (149,569) (136,950) (153,422) (168,043) Trustee fees - - - - - Administrative expense - - - - - Net change in plan fiduciary net position - - - - - Total plan fiduciary net position- beginning - - - - - Total plan fiduciary net position- ending (b) - - - - - Net OPEB liability- ending (a)-(b) 3,943,404$ 4,385,565$ 2,527,098$ 2,342,613$ 1,375,097$ Plan fiduciary net position as a percentage
of the total OPEB liability - - - - City's covered-employee payroll 18,572,290 19,345,356 18,420,461 19,211,409 - Net OPEB liability as a percentage of
covered-employee payroll 21.23% 22.67% 13.72% 12.19% -

Notes to Schedule:

*Historical information is required only for measurement periods for which GASB 75 is applicable. Future years’ information will be displayed up to ten years as information becomes available.

71 CITY OF HANFORD
SCHEDULE OF CONTRIBUTIONS – OPEB
LAST TEN FISCAL YEARS *

2022 2021 2020 2019 2018
Actuarially determined contribution 142,193$ 149,569$ 136,950$ 153,422$ 168,043$ Contributions in relation to the
actuarially determined contribution (142,193) (149,569) (136,950) (153,422) (168,043) Contribution deficiency (excess) -$ -$ -$ -$ -$ City's covered-employee payroll 18,572,290$ 19,345,356$ 18,420,461$ 19,211,409$ -$ Contributions as a percentage of
covered-employee payroll 0.77% 0.77% 0.74% 0.80% -

Notes to Schedule:

The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2021-2022 were as follows for the June 30, 2021 measurement date actuarial valuations.

Valuation Date June 30, 2021
Funding Method Entry Age Normal Cost, level percent of pay Asset Valuation Method Market value of assets ($0; plan is not yet funded) Discount Rate 3.69% as of June 30, 2022

1.92% as of June 30, 2021
Participants Valued Only current active employees and retired participants and covered dependents are valued. No future entrants are considered in this valuation.

Salary Increase 3.00% per year, since benefits do not depend on salary, this is used only to allocate the cost of benefits between service years.

General Inflation Rate 2.50% per year.

Mortality CalPERS 2017 Experience Study
Mortality Improvement MacLeod Watts 2020 Scale Generationally Healthcare Trend 5.7% in 2022, step down to 4.0% by 2076

*Historical information is required only for measurement periods for which GASB 75 is applicable. Future years’ information will be displayed up to ten years as information becomes available.

CITY OF HANFORD

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES – BUDGET TO ACTUAL (GAAP BASIS)

GENERAL FUND
FOR THE YEAR ENDED JUNE 30, 2022
72 Variance
Original Final With Final
Budget Budget Actual Budget

REVENUES
Taxes and special assessments 28,663,000$ 29,341,000$ 32,425,620$ 3,084,620$ Aid from other government agencies 957,797 957,797 1,500,269 542,472 Licenses and permits 944,880 944,880 1,797,872 852,992 Fines and forfeitures 152,000 152,000 175,263 23,263 Charges for services 2,089,063 2,089,063 3,062,208 973,145 Revenue from use of money and property 216,275 216,275 (425,086) (641,361) Miscellaneous - - 56,747 56,747 Total Revenues 33,023,015 33,701,015 38,592,893 4,891,878

EXPENDITURES
General government 2,524,488 2,815,588 4,116,481 (1,300,893) Public safety 21,980,609 22,421,658 42,528,787 (20,107,129) Public works 2,924,726 2,958,088 4,601,080 (1,642,992) Recreation 4,132,228 4,404,771 5,662,458 (1,257,687) Community development 1,849,408 2,133,364 2,874,828 (741,464) Debt service:

Principal - - 22,193 (22,193) Interest - - 513 (513) Capital outlay - 9,313,222 555,445 8,757,777 Total Expenditures 33,411,459 44,046,691 60,361,785 (16,315,094) Excess (Deficiency) of Revenues Over Expenditures (388,444) (10,345,676) (21,768,892) (11,423,216)

OTHER FINANCING SOURCES (USES)
Operating transfers in 501,010 501,010 3,712,266 3,211,256 Operating transfers out (69,548) (69,548) (3,001,032) (2,931,484) Proceeds from issuance of bonds - - 25,390,437 25,390,437 Lease and other financing proceeds - - 89,571 89,571 Proceeds from sale of assets - - 1,716 1,716 Total Other Financing Sources (Uses) 431,462 431,462 26,192,958 25,761,496

EXTRAORDINARY ITEM
Settlement expenditure - - (12,500,000) (12,500,000) Net Change in Fund Balance 43,018 (9,914,214) (8,075,934) 1,838,280 Fund Balance, Beginning of Year 11,037,789 11,037,789 11,037,789 - Prior Period Adjustment - - 319,223 319,223 Fund Balance, Beginning of Year (Restated) 11,037,789 11,037,789 11,357,012 319,223 Fund Balance, End of Year 11,080,807$ 1,123,575$ 3,281,078$ 2,157,503$ General Fund

CITY OF HANFORD

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES – BUDGET TO ACTUAL (GAAP BASIS)

CDBG HOME/HOUSING FUND
FOR THE YEAR ENDED JUNE 30, 2022
73 Variance
Original Final With Final
Budget Budget Actual Budget

REVENUES
Aid from other government agencies 1,458,000$ 1,458,000$ 729,594$ (728,406)$ Revenue from use of money and property 45,000 45,000 275,500 230,500 Miscellaneous - - 637 637 Total Revenues 1,503,000 1,503,000 1,005,731 (497,269)

EXPENDITURES
Community development 1,021,000 1,021,000 288,391 732,609 Capital outlay - 512,400 320,250 192,150 Total Expenditures 1,021,000 1,533,400 608,641 924,759 Excess (Deficiency) of Revenues Over Expenditures 482,000 (30,400) 397,090 427,490 Other Financing Sources (Uses)
Operating transfers in 80,000 80,000 - (80,000) Operating transfers out - - (157,802) (157,802) Total Other Financing Sources (Uses) 80,000 80,000 (157,802) (237,802) Net Change in Fund Balance 562,000 49,600 239,288 189,688 Fund Balance, Beginning of Year 20,180,157 20,180,157 20,180,157 - Prior Period Adjustment - - (16,169) 16,169 Fund Balance, Beginning of Year (Restated) 20,180,157 20,180,157 20,163,988 16,169 Fund Balance, End of Year 20,742,157$ 20,229,757$ 20,403,276$ 205,857$ CDBG/HOME/Housing Fund

CITY OF HANFORD

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES – BUDGET TO ACTUAL (GAAP BASIS)

TRANSPORTATION IMPACT FEES
FOR THE YEAR ENDED JUNE 30, 2022
74 Variance
Original Final With Final
Budget Budget Actual Budget

REVENUES
Taxes and special assessments 763,000$ 763,000$ 2,031,907$ 1,268,907$ Aid from other government agencies - - 66,242 66,242 Revenue from use of money and property 38,510 38,510 (141,353) (179,863) Miscellaneous - - 149 149 Total Revenues 801,510 801,510 1,956,945 1,155,435

EXPENDITURES
General government - - 10,327 (10,327) Capital outlay 1,780,671 1,780,671 207,570 1,573,101 Total Expenditures 1,780,671 1,780,671 217,897 1,562,774 Excess (Deficiency) of Revenues Over Expenditures (979,161) (979,161) 1,739,048 2,718,209 Other Financing Sources (Uses)
Operating transfers in - - 1,657,592 1,657,592 Operating transfers out - - (42,549) (42,549) Total Other Financing Sources (Uses) - - 1,615,043 1,615,043 Net Change in Fund Balance (979,161) (979,161) 3,354,091 4,333,252 Fund Balance, Beginning of Year 2,532,312 2,532,312 2,532,312 - Prior Period Adjustment - - (41,659) 41,659 Fund Balance, Beginning of Year (Restated) 2,532,312 2,532,312 2,490,653 41,659 Fund Balance, End of Year 1,553,151$ 1,553,151$ 5,844,744$ 4,374,911$ Transportation Impact Fees

CITY OF HANFORD

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES – BUDGET TO ACTUAL (GAAP BASIS)

TRANSPORTATION DEVELOPMENT ACT FUND
FOR THE YEAR ENDED JUNE 30, 2022
75 Variance
Original Final With Final
Budget Budget Actual Budget

REVENUES
Taxes and special assessments 821,000$ 821,000$ 786,999$ (34,001)$ Aid from other government agencies - - 11,082 11,082 Revenue from use of money and property 8,400 8,400 (130,680) (139,080) Total Revenues 829,400 829,400 667,401 (161,999)

EXPENDITURES
General government - - 9,794 (9,794) Public works 629,589 629,589 258,190 371,399 Capital outlay 329,761 329,761 507,787 (178,026) Total Expenditures 959,350 959,350 775,771 183,579 Excess (Deficiency) of Revenues Over Expenditures (129,950) (129,950) (108,370) 21,580 Other Financing Sources (Uses)
Operating transfers out - - (26,210) (26,210) Total Other Financing Sources (Uses) - - (26,210) (26,210) Net Change in Fund Balance (129,950) (129,950) (134,580) (4,630) Fund Balance, Beginning of Year 498,685 498,685 498,685 - Prior Period Adjustment - - (38,994) (38,994) Fund Balance, Beginning of Year (Restated) 498,685 498,685 459,691 (38,994) Fund Balance, End of Year 368,735$ 368,735$ 325,111$ (43,624)$ Transportation Development Act Fund

SUPPLEMENTARY INFORMATION SECTION

CITY OF HANFORD

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES – BUDGET TO ACTUAL (GAAP BASIS)

CAPITAL PROJECTS FUND
FOR THE YEAR ENDED JUNE 30, 2022

76 Variance
Original Final With Final
Budget Budget Actual Budget

REVENUES
Aid from other government agencies 2,500$ 2,500$ -$ (2,500)$ Charges for services - - 66,225 66,225 Revenue from use of money and property 30,000 30,000 (37,397) (67,397) Miscellaneous - - 492 492 Total Revenues 32,500 32,500 29,320 (3,180)

EXPENDITURES
General government - - 6,395 (6,395) Community development - - 37,900 (37,900) Capital outlay 1,707,085 1,921,521 919,025 1,002,496 Total Expenditures 1,707,085 1,921,521 963,320 958,201 Excess (Deficiency) of Revenues Over Expenditures (1,674,585) (1,889,021) (934,000) 955,021 Net Change in Fund Balance (1,674,585) (1,889,021) (934,000) 955,021 Fund Balance, Beginning of Year 4,573,806 4,573,806 4,573,806 - Prior Period Adjustment - - (28,427) 28,427 Fund Balance, Beginning of Year (Restated) 4,573,806 4,573,806 4,545,379 28,427 Fund Balance, End of Year 2,899,221$ 2,684,785$ 3,611,379$ 983,448$ Capital Projects Fund

CITY OF HANFORD

COMBINING BALANCE SHEET

NON-MAJOR SPECIAL REVENUE FUNDS
JUNE 30, 2022
77 CMAQ Park Downtown Landscaping
Transportation Impact Parking Reinvestment Assessment
Fund Fees Fund Fund District
ASSETS
Cash and investments 4,343$ 5,140,102$ 142,572$ 126,899$ 1,021,329$ Receivables 74,095 - 10,837 - 8,280 Loan receivable - - - 29,558 - Lease receivable - - 557,209 - - Prepaid expenses - - - - - Total Assets 78,438$ 5,140,102$ 710,618$ 156,457$ 1,029,609$

LIABILITIES, DEFERRED INFLOWS OF RESOURCES,

AND FUND BALANCES (DEFICIT)
Liabilities:

Accounts payable 22,049$ 32,208$ -$ -$ 26,005$ Accrued wages payable - - - - - Unearned revenue - - - - - Due to other funds 121,226 - - - 36,600 Total Liabilities 143,275 32,208 - - 62,605 Deferred Inflows of Resources:

Deferred inflows from leases - - 545,890 - - Total Deferred Inflows of Resources - - 545,890 - - Fund Balances:

Nonspendable:

Loan receivable - - - 29,558 - Lease receivable - - 557,209 - - Prepaid expenses - - - - - Restricted for:

Streets and roads - - - - - Recreation - 5,107,894 - - - Landscape maintenance - - - - 967,004 Public safety - - - - - Committed for:

Parking and business improvement - - - 126,899 - Community development - - - - - Cannabis - - - - - Unassigned (64,837) - (392,481) - - Total Fund Balances (Deficit) (64,837) 5,107,894 164,728 156,457 967,004 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances (Deficit) 78,438$ 5,140,102$ 710,618$ 156,457$ 1,029,609$

CITY OF HANFORD

COMBINING BALANCE SHEET
NON-MAJOR SPECIAL REVENUE FUNDS (continued)
JUNE 30, 2022
78 Central Fire Police
City Parking and Protection Protection
Housing Business Impact Impact
Fund Improvement Fees Fees
ASSETS
Cash and investments 553,476$ 160,867$ 529,637$ 109,625$ Receivables 18,045 4,002 2,887 1,819 Loan receivable 1,784,215 - - - Lease receivable - - - - Prepaid expenses - - - - Total Assets 2,355,736$ 164,869$ 532,524$ 111,444$

LIABILITIES, DEFERRED INFLOWS OF RESOURCES,

AND FUND BALANCES (DEFICIT)
Liabilities:

Accounts payable -$ -$ -$ 1,173$ Accrued wages payable - - - - Unearned revenue - - - - Due to other funds - - - - Total Liabilities - - - 1,173 Deferred Inflows of Resources:

Deferred inflows from leases - - - - Total Deferred Inflows of Resources - - - - Fund Balances:

Nonspendable:

Loan receivable 1,784,215 - - - Lease receivable - - - - Prepaid expenses - - - - Restricted for:

Streets and roads - - - - Recreation - - - - Landscape maintenance - - - - Public safety - - 532,524 110,271 Committed for:

Parking and business improvement - 164,869 - - Community development 571,521 - - - Cannabis - - - Unassigned - - - - Total Fund Balances (Deficit) 2,355,736 164,869 532,524 110,271 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances (Deficit) 2,355,736$ 164,869$ 532,524$ 111,444$

CITY OF HANFORD

COMBINING BALANCE SHEET
NON-MAJOR SPECIAL REVENUE FUNDS (continued)
JUNE 30, 2022
79 Street American
Special Traffic Tree Rescue Plan
Aviation Safety Committee Act
ASSETS
Cash and investments 934$ 67,170$ 1,175$ 3,474,323$ Receivables - 3,499 - 6,538,870 Loan receivable - - - - Lease receivable - - - - Prepaid expenses - - - - Total Assets 934$ 70,669$ 1,175$ 10,013,193$

LIABILITIES, DEFERRED INFLOWS OF RESOURCES,

AND FUND BALANCES (DEFICIT)
Liabilities:

Accounts payable -$ -$ -$ 48,150$ Accrued wages payable - - - - Unearned revenue - - - 10,090,880 Due to other funds - - - - Total Liabilities - - - 10,139,030 Deferred Inflows of Resources:

Deferred inflows from leases - - - - Total Deferred Inflows of Resources - - - - Fund Balances:

Nonspendable:

Loan receivable - - - - Lease receivable - - - - Prepaid expenses - - - - Restricted for:

Streets and roads 934 - - - Recreation - - - - Landscape maintenance - - 1,175 - Public safety - 70,669 - - Committed for:

Parking and business improvement - - - - Community development - - - - Cannabis - - - - Unassigned - - - (125,837) Total Fund Balances (Deficit) 934 70,669 1,175 (125,837) Total Liabilities, Deferred Inflows of
Resources, and Fund Balances (Deficit) 934$ 70,669$ 1,175$ 10,013,193$

CITY OF HANFORD

COMBINING BALANCE SHEET
NON-MAJOR SPECIAL REVENUE FUNDS (continued)
JUNE 30, 2022
80 Total
State Public Non-Major
Gas Tax Housing Cannabis Special
Fund Authority Operations Revenue Funds
ASSETS
Cash and investments 3,596,314$ 154,240$ 121,818$ 15,204,824$ Receivables 308,680 - - 6,971,014 Loan receivable - - - 1,813,773 Lease receivable - - - 557,209 Prepaid expenses - 622 - 622 Total Assets 3,904,994$ 154,862$ 121,818$ 24,547,442$

LIABILITIES, DEFERRED INFLOWS OF RESOURCES,

AND FUND BALANCES (DEFICIT)
Liabilities:

Accounts payable -$ 3,152$ -$ 132,737$ Accrued wages payable - 61 - 61 Unearned revenue - - - 10,090,880 Due to other funds - - - 157,826 Total Liabilities - 3,213 - 10,381,504 Deferred Inflows of Resources:

Deferred inflows from leases - - - 545,890 Total Deferred Inflows of Resources - - - 545,890 Fund Balances:

Nonspendable:

Loan receivable - - - 1,813,773 Lease receivable - - - 557,209 Prepaid expenses - 622 - 622 Restricted for:

Streets and roads 3,904,994 - - 3,905,928 Recreation - - - 5,107,894 Landscape maintenance - - - 968,179 Public safety - - - 713,464 Committed for:

Parking and business improvement - - - 291,768 Community development - 151,027 - 722,548 Cannabis - - 121,818 121,818 Unassigned - - - (583,155) Total Fund Balances (Deficit) 3,904,994 151,649 121,818 13,620,048 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances (Deficit) 3,904,994$ 154,862$ 121,818$ 24,547,442$

CITY OF HANFORD

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

NON-MAJOR SPECIAL REVENUE FUNDS
FOR THE YEAR ENDED JUNE 30, 2022
81 CMAQ Park Downtown Landscaping
Transportation Impact Parking Reinvestment Assessment
Fund Fees Fund Fund District

REVENUES
Taxes and special assessments -$ 1,126,731$ -$ -$ 837,388$ Aid from other government agencies 76,538 - - - - Fines and forfeitures - - - - - Lease revenue - - 19,496 - - Revenue from use of money and property 4,620 (123,479) (608) (2,014) (25,828) Miscellaneous - 250 - - - Total Revenues 81,158 1,003,502 18,888 (2,014) 811,560

EXPENDITURES
General government - 9,795 1,579 1,507 566 Public works - - - - 567,290 Community development - - - - - Capital outlay 25,746 167,271 - - - Total Expenditures 25,746 177,066 1,579 1,507 567,856 Excess (Deficiency) of Revenues Over Expenditures 55,412 826,436 17,309 (3,521) 243,704

OTHER FINANCING SOURCES (USES)
Operating transfers in - - - - - Operating transfers out (37,614) - - - - Proceeds from sale of assets - - - - - Total Other Financing Sources (Uses) (37,614) - - - - Net Change in Fund Balance 17,798 826,436 17,309 (3,521) 243,704 Fund Balance (Deficit), Beginning of Year (82,635) 4,322,904 147,419 159,978 730,385 Prior Period Adjustment - (41,446) - - (7,085) Fund Balance (Deficit), Beginning of Year (Restated) (82,635) 4,281,458 147,419 159,978 723,300 Fund Balance (Deficit), End of Year (64,837)$ 5,107,894$ 164,728$ 156,457$ 967,004$

CITY OF HANFORD

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES
NON-MAJOR SPECIAL REVENUE FUNDS (continued)
FOR THE YEAR ENDED JUNE 30, 2022
82 Central Fire Police
City Parking and Protection Protection
Housing Business Impact Impact
Fund Improvement Fees Fees

REVENUES
Taxes and special assessments -$ 180,789$ 214,192$ 127,412$ Aid from other government agencies - - - - Fines and forfeitures - - - - Lease revenue - - - - Revenue from use of money and property (49,122) (5,190) (13,944) (3,358) Miscellaneous 45 - - 240 Total Revenues (49,077) 175,599 200,248 124,294

EXPENDITURES
General government 1,147 210 791 361 Public works - 90,390 - - Community development - - - - Capital outlay - 520 - 52,993 Total Expenditures 1,147 91,120 791 53,354 Excess (Deficiency) of Revenues Over Expenditures (50,224) 84,479 199,457 70,940

OTHER FINANCING SOURCES (USES)
Operating transfers in 816,075 - - - Operating transfers out - - - - Proceeds from sale of assets 20,000 - - - Total Other Financing Sources (Uses) 836,075 - - - Net Change in Fund Balance 785,851 84,479 199,457 70,940 Fund Balance (Deficit), Beginning of Year 1,575,053 80,390 336,210 39,331 Prior Period Adjustment (5,168) - (3,143) - Fund Balance (Deficit), Beginning of Year (Restated) 1,569,885 80,390 333,067 39,331 Fund Balance (Deficit), End of Year 2,355,736$ 164,869$ 532,524$ 110,271$

CITY OF HANFORD

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES
NON-MAJOR SPECIAL REVENUE FUNDS (continued)
FOR THE YEAR ENDED JUNE 30, 2022
83 Street American
Special Traffic Tree Rescue Plan
Aviation Safety Committee Act

REVENUES
Taxes and special assessments -$ -$ -$ -$ Aid from other government agencies 10,000 - - 2,986,860 Fines and forfeitures - 49,136 - - Lease revenue - - - - Revenue from use of money and property 1,096 (2,018) (26) (125,495) Miscellaneous - - - - Total Revenues 11,096 47,118 (26) 2,861,365

EXPENDITURES
General government - 554 14 343 Public works - - - - Community development - - - - Capital outlay - - - 153,526 Total Expenditures - 554 14 153,869 Excess (Deficiency) of Revenues Over Expenditures 11,096 46,564 (40) 2,707,496

OTHER FINANCING SOURCES (USES)
Operating transfers in 8,068 - - - Operating transfers out - - - (2,833,333) Proceeds from sale of assets - - - - Total Other Financing Sources (Uses) 8,068 - - (2,833,333) Net Change in Fund Balance 19,164 46,564 (40) (125,837) Fund Balance (Deficit), Beginning of Year (18,230) 24,105 1,215 - Prior Period Adjustment - - - - Fund Balance (Deficit), Beginning of Year (Restated) (18,230) 24,105 1,215 - Fund Balance (Deficit), End of Year 934$ 70,669$ 1,175$ (125,837)$

CITY OF HANFORD

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES
NON-MAJOR SPECIAL REVENUE FUNDS (continued)
FOR THE YEAR ENDED JUNE 30, 2022
84 Total
State Public Non-Major
Gas Tax Housing Cannabis Special
Fund Authority Operations Revenue Funds

REVENUES
Taxes and special assessments 2,918,852$ -$ 772,280$ 6,177,644$ Aid from other government agencies - - - 3,073,398 Fines and forfeitures - - - 49,136 Lease revenue - - - 19,496 Revenue from use of money and property (92,266) 49,995 (938) (388,575) Miscellaneous 790 8,594 126,461 136,380 Total Revenues 2,827,376 58,589 897,803 9,067,479

EXPENDITURES
General government 2,481 - 378 19,726 Public works 675,104 - - 1,332,784 Community development - 286,102 20,979 307,081 Capital outlay 1,713,374 - - 2,113,430 Total Expenditures 2,390,959 286,102 21,357 3,773,021 Excess (Deficiency) of Revenues Over Expenditures 436,417 (227,513) 876,446 5,294,458

OTHER FINANCING SOURCES (USES)
Operating transfers in - - - 824,143 Operating transfers out - (530,751) (878,933) (4,280,631) Proceeds from sale of assets - - - 20,000 Total Other Financing Sources (Uses) - (530,751) (878,933) (3,436,488) Net Change in Fund Balance 436,417 (758,264) (2,487) 1,857,970 Fund Balance (Deficit), Beginning of Year 3,491,045 909,913 124,305 11,841,388 Prior Period Adjustment (22,468) - - (79,310) Fund Balance (Deficit), Beginning of Year (Restated) 3,468,577 909,913 124,305 11,762,078 Fund Balance (Deficit), End of Year 3,904,994$ 151,649$ 121,818$ 13,620,048$

CITY OF HANFORD

COMBINING STATEMENT OF NET POSITION

INTERNAL SERVICE FUNDS
JUNE 30, 2022
85 City Risk Computer
Payroll Management Maintenance
Fund Fund Fund
ASSETS
Current assets
Cash and investments 925,076$ 6,237,196$ 368,858$ Receivables, net - - - Deposits - 175,000 - Inventory - - - Prepaid expenses - - - Total Current Assets 925,076 6,412,196 368,858 Noncurrent assets
Capital assets:

Building and improvements - - - Machinery and equipment - - 1,589,881 Accumulated depreciation - - (618,915) Total Capital Assets (Net of Accumulated Depreciation) - - 970,966 Total Noncurrent Assets - - 970,966 Total Assets 925,076 6,412,196 1,339,824

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows related to pensions - - 184,964 Total Deferred Outflows of Resources - - 184,964

LIABILITIES
Current Liabilities
Accounts payable 23,229 145,502 14,031 Salaries and benefits payable 906,613 - 1,458 Compensated absences - current portion - - - Bonds and notes payable - current portion - - 6,545 Due to other funds - - 298,685 Total Current Liabilities 929,842 145,502 320,719 Noncurrent Liabilities
Compensated absences payable - - - Claims payable - 5,589,000 -
Net pension liability - - 60,432 Bonds and notes payable - - 159,204 Total Noncurrent Liabilities - 5,589,000 219,636 Total Liabilities 929,842 5,734,502 540,355

DEFERRED INFLOWS OF RESOURCES
Deferred inflows related to pensions - - 130,393 Total Deferred Inflows of Resources - - 130,393

NET POSITION (DEFICIT)
Net investment in capital assets - - 970,966 Unrestricted (4,766) 677,694 (116,926) Total Net Position (Deficit) (4,766)$ 677,694$ 854,040$