Hanford City Council
January 20, 2026

City Council Meeting
Agenda
January 20, 2026
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 Brown 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. Receive a report on the City of Hanford Landscape and Lighting Districts and authorize staff to bring back the district balloting at the April 7, 2026, Council Meeting during a Public Hearing to receive ballots and public testimony on proposed funding changes/assessment increases for 2026/27 of the Quail Run Estates, Portofino, Gateway Estates, Crystal Springs, Cielo en Tierra, and Hyde Park Landscape and Lighting Maintenance Assessment Districts, and provide feedback on issuance of a maintenance request for bids.

B. Finance: Annual Comprehensive Financial Report presentation for the fiscal year ending June 30, 2025
CLOSED SESSION FOR DISCUSSION OF THE FOLLOWING:

A. CONFERENCE WITH LEGAL COUNSEL-ANTICIPATED LITIGATION (54956.9 (d)(2)) 2 Potential Cases.

B. CONFERENCE WITH LEGAL COUNSEL-PROPERTY NEGOTIATIONS (GC 54956.8)

APNs: 012045001, 012045010, 012045004, 012045005, 012046019, 012046005, 012046006, 012046007, 012045001
Negotiating Party: Solis Martin Vieyra & Araujo Fanny Castro, Miya Farms, PRE 4 LLC Agency Negotiators: Chris Tavarez, Jason Waters, and Ty Mizote APNs: 012083001, 012083010, 012083009, 012083008, 012083007, 012083006, 012083012, 012083011, 012083003, 012083004, 012083005, 012083001 Negotiating Party: Lacey Milling Co., Padilla, Jesus
Agency Negotiators: Chris Tavarez, Jason Waters, and Ty Mizote C. PUBLIC EMPLOYMENT (GC 54957(b)(1)):

Title: City Manager
CALL TO ORDER REGULAR SESSION:

ROLL CALL:

INVOCATION:

Pastor Lori Niles
FLAG SALUTE:

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

B. City Clerk: Approval of the Minutes of the October 21, 2025 Meeting C. City Clerk: Approval of the Minutes of the November 4, 2025 Meeting D. City Clerk: Approval of the Minutes of the November 18, 2025 Meeting E. City Clerk: Approval of the Minutes of the December 2, 2025 Meeting F. Community Development: Waiver of second reading and adoption of Ordinance 2025- 07, approving Zone Text Amendment No. 2025-10, a request to amend Title 17, Section

17.56.230, Wall mural placement and design criteria: in order to comply with free speech requirements.

G. Community Development: Waiver of second reading and adoption of Ordinance 2025- 08, approving Zone Text Amendment No. 2025-12, a request to amend Title 17, Section

17.56.200, Property maintenance and add Chapter 9.12 – Graffiti: in order to establish

regulations for abatement of graffiti on public and private property.

H. Community Development: Waiver of second reading and adoption of Ordinance 2025- 09, approving Zone Text Amendment No. 2025-11, a request to amend Title 17.56.050,

17.56.150, 17.56.155, and 17.56.310 Temporary and Portable Signs: in order to establish the placement, size and materials for portable signs.

I. Parks and Community Services: Youth Athletic Complex (YAC) Facility Use Agreement with Hanford Youth Baseball, pending modifications, which are approved by the City Attorney, that are consistent with provisions contained in the draft.

J. Public Works: Authorization for the City to accept and appropriate funding for an FAA Airport Improvement Program grant (AIP), once the grant offer is received, for the Hanford Municipal Airport, in the amount of $857,000 for reconstruction of the south transient ramp, phase 1 and removal of Taxiway B and a segment of Taxiway D and authorization for the City Manager to execute the Grant Agreement. A total appropriation in the Airport Fund of $857,000. $96,907 of local matching funds will be required contingent on the grant award.

K. Public Works: Affirm approval and appropriation from the General Fund reserve for emergency repairs on Fire Engine #164 in the amount of $63,712.72 from Betts Truck Parts and Service of Fresno CA.

L. Public Works: Approval of the Notice of Completion for the FY 24-25 Pavement Resurfacing Treatment (Single and Double Fiberized Slurry Overlay) Project, with a final sub-project cost of $936,588.01, and Authorization for the Mayor to execute and the City Clerk to file the Notice with the Kings County Recorder's Office.

M. Utilities and Engineering: Intent to Form Community Facilities District No. 2026-3 (Public Maintenance Services)
N. Utilities and Engineering: Approval of the Notice of Completion for Tract No. 934 Unit, at the Southeast corner of 13th Ave and Grangeville Blvd., in the City of Hanford O. Utilities and Engineering: Approval of the reimbursement for Tract 928, Units 1 & 2 to Presidio JJR Bella Vista II 150, LLC and Presidio FFO Bonterra II 160, LLC for street improvements and park land and storm basin acquisition and improvements in the amount of $969,886.34; and, further approve an appropriation of $667,340.91 from the Park Impact Fees Fund 0180 and $119,353.13 from the Storm Drain Impact Fees Fund 0184 to fulfill the reimbursement.

P. Police: Approval of the purchase of two Dodge Durango police-package patrol vehicles from National Auto Fleet Group in the amount of $121,550.50 pursuant to Sourcewell Contract No. 091521-NAF, authorization of vehicle upfitting by Cook’s Communications in the amount of $87,339.64, and an appropriation from the Fleet Reserve Account in the total amount of $208,890.14.

Q. Police: Approval of the purchase of a slicktop Dodge Durango and upfitting from National Auto Fleet Group (Sourcewell Contract 091521-NAF) and Cook's Communication in the total amount of $88,705.81, and an appropriation from the Fleet Replacement Reserve in the amount of $27,748.18 to cover costs not reimbursed by the FY25/26 California Highway Patrol (CHP) grant.

R. Police: Adoption of Resolution No. 26-02-R to authorize the acceptance of an award of

$482,016 in grant funding from the California Department of Justice for tobacco enforcement, amend the budget to recognize the grant, appropriate this amount in the General Fund for the Police Department, and authorize the Police Chief to execute the Memorandum of Understanding (MOU).

S. Fire: Approval and authorization for the City Manager to enter into a contract with Cook's Communications (Fresno, CA) in the amount of $361,802.13 for the supply and delivery of Mobile and Portable Radios to the Fire Department funded under the Measure H Fire Communications Update Project.

T. Finance: Approval of Resolution 25-74-R, Amendments to the City of Hanford Purchasing Policy
PUBLIC HEARING:

A. Community Development: Continued Public Hearing for the Copper Ridge Mixed Use Project. The project proposes the phased development of a 650-unit subdivision with a

5.45-acre commercial portion, through Tentative Subdivision Map 00012-24. Additional project components include:

1. Annexation 165, in order to annex 141.85 acres into the City limits from the Kings County Jurisdiction.

2. General Plan Amendment No. 0009-24: to change the land use designation from Lowand Medium-Density Residential to Medium-Density Residential (78.16 acres) and Neighborhood Mixed Use (5.45 acres).

3. Prezone No. 0013-24: to prezone the properties as R-M (78.16 acres), MX-N (5.45 acres), R-L-5 (51.92 acres) and C-N (6.32 acres);

4. Planned Unit Development No. 0037-24: to allow various deviations from the regulation of the R-M Medium-Density Residential zone district; and

5. Mitigated Negative Declaration No. 2025-73: a request to certify that the project will have a less than significant adverse impact on the environment with the incorporation of mitigation measures.

The Project site is located north of Grangeville Boulevard and east of 9 ¼ Avenue. (APNS 014-143-022, -069, -078, 014-830-010, -011, and -013 to -018).

CONVENE AS SUCCESSOR AGENCY:

PUBLIC COMMENT-SUCCESSOR AGENCY :

Any person may directly address the Board at this time on any item on the agenda, or on any item that is within the subject matter jurisdiction of the Board. A maximum of three minutes is allowed for each speaker.

SUCCESSOR AGENCY FOR THE DISCUSSION OF THE FOLLOWING:

A. Review And Approval Of the Recognized Obligation Payment Schedule (ROPS 26-27) For The Period July 1, 2026 To June 30, 2027, as required by AB 1484 and amendments under SB 107 of Redevelopment Agency (RDA) Successor Agencies.

ADJOURN AS THE SUCCESSOR AGENCY:

GENERAL BUSINESS:

A. Public Works: Designation of a Public Hearing date for the City of Hanford Solid Waste rate study.

B. Finance: Approval of the 2026 Solar Equipment Lease/Purchase Agreement and an

Escrow and Account Control Agreement and the City Manager to execute such actions.

C. Human Resources: Approval of the City of Hanford Salary Schedules D. City Attorney: City Manager Employment Agreement
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).

ITEMS FOR FUTURE AGENDAS:

At this time, any Council Member may ask a question for clarification or may request a matter, which is not otherwise scheduled on a City Council agenda, to be placed on a future agenda. The Council Member referring the item shall provide sufficient information as to the nature of the item. The City Council, by concurrence of a majority, may direct the City Manager to put the item on a future agenda. (GOV. CODE SEC. 54954.2) A. Council Future Agenda Items
B. Upcoming Events and Important Dates:

January 28: Council Corner 5:30 pm - 7:00 pm Me-n-Ed's, 2483 N.10th Avenue. More Information
February 3: Regular City Council Meeting
February 11: City/County Coordinating Meeting
February 17: Regular City Council Meeting
February 19: City offices will be closed in observance of Presidents' Day 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: 1/20/2026 AGENDA SECTION:

STUDY SESSION
SUBJECT:

Receive a report on the City of Hanford Landscape and Lighting Districts and authorize staff to bring back the district balloting at the April 7, 2026, Council Meeting during a Public Hearing to receive ballots and public testimony on proposed funding changes/assessment increases for 2026/27 of the Quail Run Estates, Portofino, Gateway Estates, Crystal Springs, Cielo en Tierra, and Hyde Park Landscape and Lighting Maintenance Assessment Districts, and provide feedback on issuance of a maintenance request for bids.

RECOMMENDATION:

Recommendation:That Council receives a report on the City of Hanford Landscape and Lighting Districts and authorize staff to bring back the district balloting at the April 7, 2026, Council Meeting during a Public Hearing to receive ballots and public testimony on proposed funding changes/assessment increases for 2026/27 of the Quail Run Estates, Portofino, Gateway Estates, Crystal Springs, Cielo en Tierra, and Hyde Park Landscape and Lighting Maintenance Assessment Districts, and provide feedback on issuance of a maintenance request for bids.

Recommended Motion: I move to accept the report and authorize staff to bring back the district balloting at the April 7, 2026, Council Meeting during a Public Hearing to receive ballots and public testimony on proposed funding changes/assessment increases for 2026/27 of the Quail Run Estates, Portofino, Gateway Estates, Crystal Springs, Cielo en Tierra, and Hyde Park Landscape and Lighting Maintenance Assessment Districts, and provide feedback on issuance of a maintenance request for bids.

BACKGROUND:

In 1990, developers began using the Landscaping and Lighting Act of 1972 to create maintenance districts to finance maintenance of decorative block fencing and landscaping improvements located along arterial and collector streets adjacent to subdivisions. Since 1990, 44 landscape and lighting assessment districts have been created encompassing 64 acres of landscape. Seventeen (17) of these districts were built before 2000 and do not have a Consumer Price Index (CPI) provision to increase revenue. Several districts in the past have had elections with ballot and information packets sent out to residents in these districts through the years for an assessment increase approval, with limited success.

With costs for utilities and maintenance increasing over the years, staff have been forced to reduce

the levels of service, to balance expenditures and revenues. The six (6) districts being proposed for balloting have had maintenance eliminated to reduce costs and have deficient reserve funds balanced. This has become highly visible, with trees and shrubs in need of pruning, turf mowed monthly (by City staff) and a sparse landscape void of plant material and bark/mulch.

Staff are proposing to ballot the six (6) deficient landscape and lighting districts. To increase the assessment for these districts the City must ballot and conduct a public hearing in accordance with the Landscaping and Lighting Act of 1972 and Article XIIID., Section 4 of the California Constitution to receive oral and written testimony regarding the proposed reduction, no change, or proposed increase in the annual assessment and imposition of a Standard Annual CPI Increase. City staff have completed a comprehensive Engineer’s Estimate for the six (6) deficient districts to identify the assessment increase. Ballots have been prepared and are currently under review with our Finance Department. City staff have also consulted with Peregrine Strategies on a public outreach plan. Once staff receive direction from Council, the public outreach will begin, with a public hearing target date of April 7, 2026, to receive ballots and public testimony on proposed funding changes/assessment increases for 2026/27.

Staff are also requesting feedback from Council on the process the landscape maintenance contract is administered for the landscape and lighting assessment districts. The current landscape maintenance contract was awarded as a Request for Proposal (RFP). RFPs are for complex projects needing innovative, customized solutions, evaluating detailed plans, experience, and strategy beyond just cost.

It is proposed the landscape maintenance contract be advertised as a Request for Bids (RFB). RFBs are quick, transparent, and price-driven, ideal for standardized needs. An RFB is for straightforward projects with clear specs, focusing on the lowest price from qualified vendors. Staff have developed a very detailed scope of services, with maintenance standards, and expectations for the winning bidder. With clear levels of service and cost reductions with each level of service performed and a comprehensive inspection process for City staff and contractors. Staff are also proposing a clear mechanism to withhold certain amounts of payment for Landscape Districts that are out of compliance with the requirements of the maintenance agreement.

Based on the results of the RFB process, Staff proposes to potentially consider, the creation of a new Public Works Division. Landscape maintenance that would be performed by City staff. This division would be responsible for the maintenance and management of the Landscape Maintenance Districts and Community Facilities Districts. Over the last several years staff have seen an increase in costs for contractual services. Some of the factors that have created this increase are state prevailing wage requirements, state mandated minimum wage increases, fuel and material costs. After reviewing these costs, staff found that the costs had increased to the level that in-house staff could be hired to not only perform the current level of maintenance but also improve response times in resolving maintenance issues. Some of the pros with in-house staff would be staff members on-site daily, they will be available to respond to issues that may arise throughout the week. Staff will be able to respond quickly to irrigation, tree, and safety hazards. Another advantage of in-house staffing is that it will increase the level of service for the City. Some of the cons would be initial startup costs, staffing will take time to recruit, hire, and train. Equipment procurement, vehicles, lawnmowers, and power tools will take time to purchase. Equipment costs, staff have completed an initial cost estimate ($265,175) for the equipment necessary to complete maintenance and maintenance would be started in phases as equipment and staffing become available.

Staff believes with issuance of an RFB, staff can then review the updated contractual costs and determine the best approach for maintenance that would be the most cost-effective of the proposed

options. Staff would then return to Council with more defined contractual costs to receive direction on the preferred method of maintenance for the Landscape and Lighting Maintenance Districts. Balloting of the recommended districts will be required to balance and improve the overall condition and financial health of the Quail Run Estates, Portofino, Gateway Estates, Crystal Springs, Cielo en Tierra, and Hyde Park Landscape and Lighting Maintenance Assessment Districts.

FISCAL IMPACT:

Table 1 shows the current financial condition of the Quail Run Estates, Portofino, Gateway Estates, Crystal Springs, Cielo en Tierra, and Hyde Park Landscape and Lighting District.

ATTACHMENTS:

1. Sample Ballot_2026 Hfd LAD

2. Hanford Landscape Maintenance Scope of Work

3. Current Levels of Services

4. Proposed New Levels of Service

5. Downward Payment Adjustment Example

6. LAD maintenance standards

7. Consolidated Services 5-year Cost Estimate

CITY OF HANFORD
D e p a r t m e n t o f P u b l i c W o r k s
Focused On Our Community 24/7
900 South 10th Avenue • HANFORD, CA 93230-5234 • (559) 585-2550 «DATE_MAILED»
«OWNER_NAME»
«PO_ADDRESS»
«PO_CITY_ZIP»
Subject: Maintenance of common landscape for:

Lighting and Landscape District: 94-03 QUAIL RUN ESTATES Proposed Benefit Assessment Increase for Fiscal Year: 2026 and an Annual Adjustment for Inflation Allowance for the district.

Service
Level
Level No
Service
Dear «OWNER_NAME» :

The maintenance of the common landscaping (lawn mowing, planting and replanting of plants and trees, sprinkler maintenance, etc.) for your subdivision is funded by your payment of a benefit assessment through a Lighting and Landscaping District. The common landscaping is maintained at the service level mentioned above. In order to increase this level of service, the City is seeking your support of an increase in the assessment amount you currently pay and establishing an annual Consumer Price Index (CPI) adjustment. The maintained landscaping and improvements visually enhance your neighborhood, add value to the surrounding properties and increase your quality of life.

This letter includes a ballot. The City is requesting you return the enclosed ballot indicating your choice, either approving or disapproving increasing the annual benefit assessment amount, and the establishment of an annual CPI adjustment allowance. The approval of the assessment increase and the CPI adjustment will allow the City to make changes in the benefit assessment fee to balance the district’s finances and increase the current level of service to an A service. The increased assessment amount will also provide funds to refurbish the district’s landscaping over a period of time as reserves are replenished.

Proposal: Current
Rate
Proposed
Rate
Increase the annual benefit assessment and establish
an annual benefit district CPI adjustment allowance in
accordance with California Government Code Section
53739(b)(1).
from $59.00 to $XX
Please consider the enclosed documents, which include an informational page about the district, a ballot form, a return envelope, Notice of Public Hearing and a map depicting the landscape areas maintained by your district.

If you have questions or concerns, you may contact Alvin Dias, Deputy Public Works Director at 559- 415-7189 or Russ Sterling, Director of the Public Works Department at 559-585-2565. Thank you for your time and consideration.

INFORMATION
The City is proposing an increase in the Benefit District Assessment Amount in order to keep up with maintenance costs for the common landscape areas in the District and to create a small reserve to complete landscape enhancement projects and help offset any future unexpected maintenance costs.

Keeping the landscaped common areas maintained helps to keep neighborhoods looking good and helps to maintain property values. Currently your district is comprised of 272 lots, with a total current year benefit assessment equaling $16,048.00. The projected expenses are detailed as follows:

Annual Benefit District Assessment Reserve - Cash Balance as of Dec 31, 2024 $(XX) Annual Benefit District Assessment Revenue Collected Amount $16,048.00 Expenses for the Calendar Year $(XX)
TOTAL PROJECTED ENDING CASH BALANCE $(XX)
Projected CY Assessment Reserve - Cash Balance as of Dec 31, 2025 $(XX) Annual Benefit District Assessment Revenue Proposed Collection Amount $16,048.00 Proposed Expenses for the Calendar Year $(XX)
TOTAL PROJECTED ENDING CASH BALANCE $(XX)
Projected CY Assessment Reserve - Cash Balance as of Dec 31, 2026 $(XX) Annual Benefit District Assessment Revenue Proposed Collection Amount $16,048.00 Proposed Expenses for the Calendar Year $(XX)
TOTAL PROPOSED ENDING CASH BALANCE $(XX)
Based on the current benefit district assessment revenue and proposed expenses the total cash balance is $(28,540.00) for the projected calendar year 2026.

Existing Amount Proposed Amount Increase
Monthly Per Lot $4.92 $XX $XX
Annually Per Lot $59.00 $XX $XX
Annually Per District $16,048.00 $XX $XX
The cost to you to keep the maintenance up in your District will be an additional $XX per year, or $XX per month.

You will see this as an increase in the Property Benefit Assessment included on your County of Kings real property tax bill.

District: 94-03 QUAIL RUN ESTATES
Calendar Year Cash Balance: 2025 $ $(XX)
Projected Ending Calendar Year Cash Balance: 2026 $ $(XX) Number of Lots multiplied by Assessment per Lot 272 X $59.00 $16,048.00

In addition to the proposed benefit assessment increase, the City is proposing that an annual benefit CPI adjustment allowance be established in accordance with California Government Section 53739(b)(1). The annual benefit assessment amount will be adjusted by the CPI on an annual basis in accordance with the following formula:

Commencing with calendar year 2026 and on January 1 or each calendar year (“Adjustment Date”) thereafter during the life of the District, the Total Annual Assessment amount for the next calendar year shall be an amount equal to the greater of:
(i) the Total Annual Assessment amount in effect immediately prior to the Adjustment Date; or (ii) the product obtained by multiplying the Total Annual Assessment amount in effect immediately prior to the Adjustment Date by a fraction, the numerator of which is the Index published nearest but prior to the Adjustment Date and the denominator of which is the Index published nearest but prior to January 1 of the first year of the Adjustment becomes effective.

The term “Index” means the Consumer Price Index for Urban Wage Earners and Clerical Workers, San Francisco-Oakland-San Jose Consolidated Statistical Area, 1982-1984, equal 100, published by the Bureau of Labor Statistics of the United States Department of Labor. If the Bureau of Labor Statistics revises the Index, the Bureau of Labor Statistics will be the sole judge of the comparability of successive indexes, but if that agency fails to supply indexes that it deems comparable or if no succeeding index is published, the City shall determine an appropriate alternative published price index.

This annual CPI adjustment allowance process is already being used in districts created after 2001. If approved, the annual inflation allowance will allow the City to better fiscally manage the district and to more closely match benefit assessment revenue to the actual costs incurred.

On the last page is a ballot which gives you, the property owner, certain options:

Yes. I approve of the proposed Benefit Assessment Increase with a CPI Adjustment Allowance for Fiscal Year 2026. If a majority of the returned ballots select YES, it will allow the City to secure funding from your District for the current increased costs of maintenance and utilize a CPI adjustment inflation formula to offset future maintenance cost increases. With the proposed Benefit Assessment Increase the current cash balance deficiency will be repaid and funding will become available to fund enhancement projects for the district.

No. I do not approve of the proposed Benefit Assessment Increase for Fiscal Year 2026. If a majority of the returned ballots select NO, it will cause the City to re-evaluate the level of maintenance provided to your District, which will likely result in reduced maintenance, such as reduced watering and/or reduced frequency of mowing and trimming of the common areas.

It is very important that you complete and return your ballot. Ballots that are not returned will not be counted. If the “no” ballots exceed the number of “yes” ballots, the proposed fee increase and automatic CPI adjustment will not occur. If only a few people return ballots to the City, those few people will make the decision for the entire district.

The failure to raise service fees will result in a reduction in maintenance services, which will result in a deterioration of the landscaping and/or other improvements.

If the CPI adjustment is approved, any future increase in service fees that exceed the CPI adjustment will require the City to distribute ballots and seek owner approval.

If you want maintenance of the landscaping and other improvements to improve from the current level, it will be necessary to vote “yes” and to return your ballot to the City.

Notice of Public Hearing
A Public Hearing for this proposal will be held on April XX, 2026, at the hour of 7:00 PM in the Council Chambers of the Civic Auditorium at 400 N. Douty Street, Hanford, CA. The ballots will be counted and the results announced at the end of the City Council Special Meeting that same evening. At this meeting, affected citizens will have an opportunity to speak to Council, and may also change their ballot vote if desired.

City of Hanford City Clerk’s Office
319 N. Douty Street
Hanford, CA 93230
April XX, 2026

BALLOT INSTRUCTIONS
Completion and Return Instructions:

1. Fill out the ballot at the bottom of this page. Be sure to print your name, mark your choice, sign, and date the ballot (the ballot will not be counted without your signature)

2. Fold this page so the address above is visible.

3. Insert this page into the provided return envelope so the Clerk’s address is visible through the window of the envelope.

4. Place appropriate postage on the return envelope and mail it.

5. In order to be counted, the ballot must arrive at the above address (City Clerk’s Office) on or before 5:00pm, April XX, 2026.

6. ALTERNATIVE DELIVERY: You may also hand deliver the ballot to the City Clerk’s office at 319 N. Douty Street, Hanford, CA, on or before 5:00pm on April XX, 2026 or hand deliver the ballot to the City Clerk at the time of the Public Hearing on April XX, 2026. If delivered in person, the ballot must be in a sealed envelope, or it cannot be accepted.

If you have any question or concerns about the ballot process or Increase in the Annual Benefit District Assessment or Annual Benefit District Assessment Adjustment for Inflation Allowance, please contact Alvin Dias, Deputy Public Works Director at 559-415-7189 or Russ Sterling, Director of the Public Works Department at 585-2565.

DISTRICT No. 94-03 QUAIL RUN ESTATES BENEFIT DISTRICT
City of Hanford, City Clerk’s Office
319 N. Douty Street
Hanford, CA 93230
Re: 94-03 QUAIL RUN ESTATES District
Ballot

BALLOT (QUAIL RUN ESTATES)
Proposal: Increase the annual benefit district assessment amount from $59.00 to $268.08 and establish an Annual Benefit District Assessment adjustment for inflation allowance. «OWNER_NAME», owning property with Assessment Number «APN» :
(Check one) Fee Increase APPROVES DISAPPROVES
_________________________________________________ ______________________ (Property Owner Signature) (Date)
_________________________________________________
(Print Name)

Quail Run Estates 94-03

N U T M E G

VI. SCOPE OF WORK/SERVICES
A. STANDARD REQUIREMENTS AND LEVEL OF SERVICE
Maintenance of areas must include if applicable, but not be limited to, pruning, shaping and training of trees, shrubs and ground covers; fertilization; weed control; litter control; control of all plant diseases and pests; mowing; maintenance of irrigation system; and all other duties required to keep the area(s) in safe, attractive, usable condition and maintain plant and turf condition with horticulturally acceptable growth and color and as otherwise described herein. Landscape Maintenance for the City of Hanford must be "priority work" for the successful contractor.

Contractor must have sufficient equipment and employees to complete the work in accordance with the specifications and requirements of this Invitation to Bid.

LEVELS OF SERVICE
The City of Hanford prefers the highest level of service for all areas of the Quadrant. Most areas in all Quadrants have funding that can support the highest level of service. However, there are rare instances when the available funding in a particular area of a Quadrant will require the City to reduce the costs for that area by reducing the level of service (frequency of service) for that area.

Therefore, the City of Hanford reserves the right to assign a service level of less frequency (Level B or Level C Service) to specific areas of a Quadrant when City deems necessary.

The City will provide the Contractor with 30 days advance written notice listing the area and square footages for which service shall be reduced and the effective day of service reduction. City will also automatically reduce the contract payment amount for those specific areas according to the table below which shows the reduction for Level B and Level C.

Service
Level
Frequency of Service Number of
Services
Annually
Percentage by
which Contractor’s
price will be
reduced
A Once per week intervals 52 -
B Two-week intervals 26 25%
C Once per month intervals 12 33%

1. Standards. Contractor must perform services in a manner commensurate with the highest quality professional standards of the landscape maintenance profession, using qualified and experienced personnel and high-quality equipment and materials.

The specifications and standards must be met by Contractor at all times regardless of Contractor’s employees’ absence or established staffing pattern and levels.

2. Working Day. The contractor's activities must be confined to the hours between 6:00 a.m.

PST and 6:00 p.m. PST, Monday through Friday, excluding holidays. Deviation from these hours will not be permitted without the prior written consent of the City, except in emergencies involving immediate hazard to persons or property.
• No normal and routine maintenance operations that cause excessive noise shall be performed before 7:00 a.m.
• All or some locations may require blowing of parking lots and other hardscape areas prior to normal business hours of 8 a.m. PST to avoid materials being blown onto private vehicles and customers, i.e., Civic Center, and other customer-based facilities.

Contractor shall comply with the City of Hanford’s Municipal Code, Title 9 Public Peace, Morals, and Welfare, Chapter 9.10 Noises Prohibited. The City of Hanford Municipal Code can be found at www.ci.hanford.ca.us.

3. Company Identification.
• All employees must wear uniforms or other identifying clothing, to make clear to all observers that they are employed by the contractor.
• All vehicles (trucks, etc.) used in the course of fulfilling this contract shall have appropriate company identification, visible to all observers, to identify vehicles as being owned by the contractor.

4. Professional Conduct. Contractor and contractor’s employees must conduct themselves professionally at all times in public and when dealing with City staff and/or Hanford citizens.

This will include but not be limited to refraining from using profane or vulgar language in public areas while performing work under this agreement. Contractor and contractor’s employees will also afford residents and citizens the utmost courtesy and respect at all times.

5. Property Owner Concerns. Contractor must make every attempt to satisfactorily address concerns and issues presented by residents of the district. As soon as the contractor is aware of a resident concern either directly or indirectly, the contractor shall immediately inform the Project Manager of the concern (including the resident’s name and phone number if possible), and what action was taken or will be taken by the contractor to address the concern.

Failure of the Contractor to abide by these terms and meet addressed concerns of the Quadrant’s residents will result in a $100 liquidated damages assessment or contract termination. The amount of damages for these types of issues is difficult to estimate, therefore a $100 liquidated damages assessment (per incident) shall represent costs incurred by the City in responding to complaints concerning the Contractor.

6. Mowing All Turf areas covered by this contract shall be mowed at the intervals established by the Level of Service assigned to the area (Level A, Level B or Level C Service).

7. Watering. Irrigation systems must be maintained, repaired, and adjusted to prevent wetting of adjacent streets and water waste during the irrigation cycle.

Contractor shall follow the City’s and State’s water regulations. There will be a liquidated damage assessment of $100 per incident or termination of contract if multiple or gross violations occur in recognition of the importance of water conservation. The amount of damage for these types of issues is difficult to estimate and therefore, $100 shall represent costs incurred by the City in responding to complaints concerning the Contractor.

8. Signage. All regulatory park, street, and traffic signs, city information signs, botanical garden signs, donation monuments or stones, individual plant placards, etc., must be kept clean and clear of plant materials, dirt and dust, graffiti, and animal and bird excrements.

9. Chemicals. The City reserves the right to reject any chemicals Contractor and/or their subcontractors propose to use, prior to or during actual use. Safety Data Sheets (S.D.S.) shall be provided to City prior to award of contract and in case of changes after award of contract at least thirty (30) days prior to usage by Contractor for any chemicals while performing this contract.

Materials shall be non-staining, non-corrosive, and shall not leave a flammable residue.

Contractor shall not use pesticides in Category 1 (no chemicals with LD50 levels lower than 500 mg/km). These would include, but not be limited to, several organophosphate and

carbamate possessing high mammalian toxicity due to their intense anticholinesterase activity.

Pesticides in Category II may be used with the authorization of the Project Manager.

Contractor shall, as part of the required monthly report to the City, prepare a Chemical Use and Proposed Work Report to indicate in writing the amount, type, and location of all chemicals used. If no chemicals are used, then the report must still be submitted indicating to the City that no chemicals were used.

10. Fertilizer. Short release fertilizer: Only commercial fertilizer containing ten percent (10%) or more nitrogen (N), available phosphoric acid (P205) or eight percent (8%) soluble potash (K2O), singly or collectively may be used. Generally, 16-6-8 would be nitrogen coming from an ammonic or nitrogen source. A slow-release fertilizer shall have at least half of the nitrogen coming from a coated slow-release nitrogen source.

Fertilization will be on an as needed basis. Project Manager will request a quote for cost of additional services from time to time when services are needed.

11. Clean-up. All areas covered by the contract must be kept free of debris and potential safety hazards generated by but not limited to, leaves, grass clippings, pruning, weeding, trimming, and other operations of the contractor, as well as bottles, cans, trash and paper and other yard waste. All trash and debris are to be removed and disposed of at intervals established by the Level of Service assigned to the area and at the contractor’s expense.

12. Emergency Response. Contractor must be able to respond immediately to emergencies.

Emergencies are generally construed as those events that in the opinion of City staff constitute an immediate danger or hazard to property or persons, or that significantly violate water conservation requirements. If the emergency condition is identified and the contractor is notified (either through discovery or by contact from City personnel) during normal work hours, the contractor must respond to the emergency within two hours unless otherwise specified.

If discovery or notification occurs after normal working hours, the contractor must respond by 10am on the following working day.

Contractor must provide some acceptable method by which contact can be made in case of emergency, i.e., paging system, cell phone, etc. and shall also provide a method by which non-emergency messages can be received during the workday, i.e., phone messages, email, etc.

13. Reporting and Inspections
Status Reports
a. A written report is to be prepared by the Contractor and given to the Project Manager monthly. The report shall include a description of unusual circumstances, locations of any homeless encampments that are found in areas being maintained by the Contractor, lighting that is inoperable, major irrigation breaks, safety hazards, etc.

For emergencies and safety hazards, the Project Manager is to be called immediately.

Failure to provide a report may result in a $100 penalty per incident or termination of contract if multiple incidents are noted. The reports are important especially if they are safety hazards. Amount of damages for these types of issues are difficult to estimate.

Therefore, $100 per incident shall represent costs incurred by the City in responding to complaints concerning the Contractor.
b. The Contractor must schedule a meeting with the Project Manager no less than once per month to review the work site to ensure compliance with the contract specifications and standards. At this meeting, Contractor or Contractor’s supervisor

shall sign the meeting attendance and inspection reports prepared by the City, provide all chemical use and proposed use reports, irrigation inspection and schedule changes, and usage and/or proposed fertilizer usage reports and discuss major accomplishments for the previous month, notable problems, schedule changes and goals and deadlines for the coming month. The Project Manager shall discuss areas out of compliance and options to bring areas back into compliance with contractor.

Project Manager shall discuss any penalties with the Contractor and/or intensions to withhold payment of invoices. Project Manager shall document these meetings.

Failure to attend these meetings may be cause for a $100 penalty per incident or termination of contract if Contractor has failed to meet with City staff after multiple attempts to discuss gross breaches of duty.
c. The Project Manager shall report any maintenance deficiencies to Contractor.

Contractor must correct any deficiencies at Contractor’s cost within five (5) working days of written notification. Unusual horticultural problems such as pests, disease, and damages that are beyond the scope of Contractor’s responsibility shall be brought to the attention of Project Manager.
d. A Chemical Use and Proposed Work Report must be completed for each chemical application and proposed application. These reports shall be submitted each month during contractor’s monthly meeting with City’s Project Manager. Failure to submit reports may delay the City’s payment to Contractor and be cause for a liquidated damage assessment of $100 per incident. The amount of damage and costs to the City for these types of issues is difficult to estimate and therefore, $100 shall represent costs incurred by the City in responding to incidents where the City was unsure of what chemicals were applied by the Contractor. The Contractor is responsible for submitting chemical usage reports to the County Agricultural Department. Copies are to be sent to the Project Manager as part of the Contractor’s monthly report.
e. Monthly Irrigation Inspection reports (described below), irrigation schedule changes, and contractor signed landscape inspections from the City must be submitted with monthly invoice before payment will be made. Failure to submit all reports may delay the City’s payment to Contractor.

B. LANDSCAPE MAINTENANCE – SPECIFICATIONS

1. Irrigation. Irrigation must be done with the use of automatic or manual sprinkler systems where available and operable, unless outlined in the initial acceptance inspections for repairs. These areas will be addressed with Contractor during initial inspection and noted for regular monthly inspections. Failure of an existing system to provide full and adequate coverage after Contractor signs Notice of Acceptance shall not relieve the contractor of the responsibility to provide proper coverage of all areas. Providing any supplementary hoses, sprinklers, nozzles, etc. necessary to accomplish proper coverage shall be the contractor's responsibility. Exclusions will be identified in description of areas and will be addressed with Contractor during initial inspection. Original brand and size of heads and nozzles will be used in replacement of vandalized or faulty heads in turf and planter areas.

Contractor is responsible for all repairs to the irrigation system starting at the City side of the water meter, with the exception of the testing of the back flow and repair/replacement of the backflow.
a. Maintenance. At all times, Contractor must maintain all sprinkler systems in such a way as to give proper coverage and full working capacity, making whatever adjustments or repairs necessary to maintain healthy turf, plant growth, prevent dry

spots in turf, plants, and shrubs, and prevent excessive run-off into streets or other areas not intended to be irrigated. Care must be taken to prevent wasting water, causing soil erosion, or allowing seepage into existing underground improvements or structures.

The contractor shall keep controllers and valve boxes free of dirt and debris; repair, replace, clean, adjust, straighten, raise, or lower the following sprinkler system components:
• Sprinkler heads
• Sprinkler risers
• Quick coupler valve boxes
• Hose bib boxes
• Remote control valves
• Remote control valve boxes and covers
• Maintain and replace batteries in battery operated controllers on a continual basis
• All irrigation wiring should be maintained to City standards including proper splices using DBR/Y-6 splice kits
• Proper solenoid/decoder replacement should be completed with dry and tight connections
• Minor graffiti removal from irrigation controllers
• Controllers to be kept free of all plant materials, spiders and webs, and any other material that could cause the controller to be non-accessible or damaging to the controller

If contractor fails to keep sprinkler nozzles properly adjusted/aligned to prevent water waste, repair or replace malfunctioning, broken or missing sprinkler heads and/or sprinkler head risers and water waste results, the City of Hanford reserves the right to bill contractor for excess amount of water in addition to assessing a liquidated damage assessment of $100 per incident. Because It is difficult to estimate the potential losses in water and the costs for City response time to complaints from residents, $100 has been established as a reasonable assessment.

The Contractor shall prepare a written Irrigation Inspection Report (a report template has been included with this RFB, as a sample for Contractor). The report shall describe any irrigation schedule changes, malfunctions, and necessary repairs. The Irrigation Inspection Report must be submitted with monthly invoice before payment will be made.
b. Inspection. The contractor must inspect all irrigation systems for any malfunction on an interval established by Level of Service assigned for the area. This must be accomplished by utilizing a remote-control receiver or placing the controller in test mode and visually inspecting sprinkler operation. This includes, but is not limited to breaks in irrigation lines, irrigation valves, heads, leaks and washouts, saturated areas or dry spots. Contractor must notify Project Manager within twenty-four (24) hours of any malfunctions. Failure to provide notice to the Project Manager may be cause for liquidated damage assessments of $100 per incident or termination of contract. Because It is difficult to estimate the potential losses in water and the costs for City response time to investigate complaints from residents, $100 has been established as a reasonable assessment.

Contractor is to track all irrigation locations where plants are missing and maintain irrigation heads until plants are replaced.

Excessive water run off or overflow onto hard surface areas must be kept to an absolute minimum so as not to cause waste of water, pedestrian and/or vehicular liabilities. Problems reported to Project Manager or designated representative will be repaired within twenty-four (24) hours. Failure to complete repair or notify Project Manager of any delay to repairs may be cause for liquidated damage assessment of $100 per incident or termination of contract if multiple breaches occur.

Water leaks or stations must be turned off within two hours (2 hrs.) on the day reported to save water. Repairs must be made within twenty-four (24) hours or sooner if City classifies the necessary repairs as requiring an Emergency Response as stated in this Agreement. Twenty-four (24) hour fixit notices will be sent to contractor via email. Failure to comply may result in liquidated damage assessments to the Contractor of $100 per incident, unless the Project Manager is contacted, and an agreed time frame modification is made between the contractor and the Project Manager in writing.

Approximately sixty (60) days prior to the conclusion of the contract, a comprehensive test of all irrigation systems shall be made by a Public Works Department representative. Any repairs deemed the contractor's responsibility must be made by the contractor prior to the end of the contract period.

If the repairs made are not to the Project Manager's satisfaction, deductions shall be made in the final contract payment to cover the cost of eliminating the discrepancies determined by the Project Manager.
c. Repairs. Irrigation systems which are damaged by vandalism or in any way as a result of work performed under this contract must be repaired or replaced in kind and in an approved manner by the contractor. Repairs must be made immediately after damage occurs, unless otherwise directed. Vandalism will be documented by the contractor with the use of digital photos or video tape and supplied to the Project Manager as proof of vandalism. The preferred method of transmission of photos would be digital photos transmitted via email. Failure to provide such documentation may be cause for no reimbursement of corrective expenses to Contractor.

The contractor shall keep an itemized list of material(s) used to repair vandalism damage and submit to Project Manager for reimbursement of the Contractor’s labor at an hourly rate established in this contract and pay for replacement materials at COST. • Normal Repairs = Contractor is responsible for all normal repairs (i.e. Main line (including from water service meter to the back flow), irrigation controllers, valves, control wires, decoders, sprinklers, nozzles, lateral lines, etc.) The backflow devices annual maintenance/testing will be the responsibility of the City of Hanford. All normal repairs are the sole responsibility of the contractor except for repairs needed due to vandalism.

Repairs not made within twenty-four (24) hours of notification or not completed to the satisfaction of the Project Manager may be assessed a liquidated damage assessment of $100 per incident.
• Major Repairs = City is responsible for funding major repairs, which include repairs to Booster Pumps or Backflow Devices. All major repairs are the responsibility of the contractor to repair and make operable but must be authorized by Project Manager in writing prior to repairs being made. Hourly rate plus materials for major repairs to be authorized by Project Manager prior to any work being done. Contractor is responsible to report in writing any issues with these devices to the Project Manager for authorization to repair or replace.

Failure to complete repairs in the allotted time on a repeated basis will cause the Contractor to have the full costs of repairs deducted from monthly billing and may be grounds for termination of contract. Contractor will be responsible for any fines applicable under state law, public utility billing, or local ordinance, due to continuous running water.
d. Turf Watering. All turf areas must be watered based on 85-95% of daily evapotranspiration rate and need to maintain a uniform, green, healthy growth pattern and promote deep root growth. (If City water restrictions are imposed to conserve water, they will supersede the previous statement). Water shall be applied in short repeat cycles of 3 - 5 minutes each to prevent water run-off into street. Care shall be taken to not over water or waterlog any soil. Contractor shall turn off irrigation system during the wet season and adjust the controller seasonally. Each time the schedule is changed due to seasons or any other reason, a revised schedule shall be provided to the Project Manager.

Water applications on turf and ground cover areas shall generally be applied between 12:00 a.m. and 6:00 a.m. where possible, to lower the risk of fungus in turf.

Drip stations may be operated during daytime hours.

e. Water Schedule. Turf and landscape watering shall be scheduled in accordance with prevailing water conservation requirements, and unless otherwise specified shall be scheduled Tuesday through Sunday. No watering shall be allowed on Monday without prior approval of Project Manager. Irrigation program shall be set up so that no water is applied to turf 48 hours prior to mowing. Overhead systems shall not be operated between 8:00 a.m. and 6 p.m.

Contractor will be responsible for any fines associated with not following the City’s Water Conservation Rules and Regulations.

A proposed quarterly schedule of watering shall be provided to the Project Manager one (1) month after award of contract. Each time the schedule is changed a new updated schedule must be provided to the Project Manager. f. Ground Cover. Sufficient amounts of water shall be applied to ground cover areas to maintain a healthy growth pattern and promote deep rooting. Care shall be taken to not over water or waterlog soil.
g. Banks and Slopes. Sloped landscape areas shall be irrigated in short cycles as required to prevent water runoff, and to maintain horticulturally acceptable growth and color. Irrigation practice is to promote deep root growth with a minimum of runoff. h. Shrub and Trees. All shrubs and trees shall be watered as needed to maintain healthy growth and promote deep rooting. Care shall be taken to not over water.

Irrigation rates shall be adjusted according to shrubs or tree types and seasonal weather conditions. Deep watering for root growth is encouraged and surface runoff is to be kept at a minimum. i. Newly Planted Trees, Shrubs, and Groundcover. All newly planted areas are to receive special attention until plants are established. Adequate water shall be applied to promote normal, healthy growth. Watering basins around newly planted shrubs and trees to be used during establishment period. It is the contractor’s responsibility to contact the City’s Water Utilities Division to get a twenty-one

(21) day establishment permit for any additional irrigation that will be needed for newly planted plant materials.
j. Remote Control Receiver. Upon contract commencement, the contractor is required to have a radio-frequency ready remote-control receiver that is compatible with all major irrigation systems. It is the responsibility of the contractor to obtain and purchase these devices.

Continuous activation of valves by manual solenoid or bleeding valve stem can be damaging to the fragile irrigation mechanisms. The remote control allows the contractor to inspect the irrigation system effectively by utilizing the technology currently in place.

2. Weed Control.
a. Weed control clarification. For the purpose of this specification, a weed shall be considered to be any undesirable plant or plant growing out of place. • Maintenance shall include the removal and chemical abatement of weeds growing on all paved and unpaved surfaces of all maintenance areas of contract. All landscaping within the specified maintenance areas including lawns, planter areas, median islands, and tree wells shall be kept weed free at all times.
• Complete removal of all weed growth is to be accomplished by the Level of Service assigned to the area. Weeds shall be controlled by chemical methods by the contractor.
• Weeds reaching height or width of four inches (4") shall be physically removed from landscaped areas.
• Seedlings growing out of desired landscape plants shall be removed and chemically treated to terminate the growth of the undesirable seedling. b. Use of Chemical Herbicides. The contractor shall abide by all rules and regulations of the California State Department of Food and Agriculture, Department of Health, and Department of Industrial Relations regarding the safe application of herbicides under this contract. Care shall be taken to ensure the safety of the public and the contractor's employees during chemical weed control operations. The Project Manager may restrict the use of chemical weed control in certain areas. Pesticide Applicators License is required to apply herbicide. Contractor must supply a copy of this license to the Project Manager. Failure to provide documentation of active license may result in a liquidated damage assessment or termination of contract.

Contractor shall take necessary precautions to prevent herbicide drift onto non-target plants.

3. Diseases and Pest Control. The contractor must regularly inspect all landscaped areas for the presence of disease, insect, or rodent infestation. The contractor shall notify the Project Manager within three (3) days of finding such a condition, outlining identification and control measures to be taken. Upon approval of the Project Manager, the contractor shall implement the approved control measures utilizing all safeguards necessary to protect the public and contractor's employees.
a. Use of Chemical Pesticides. All rules of the California State Department of Food and Agriculture, Department of Health, and Department of Industrial Relations regarding safe application of pesticides under this contract shall be observed.

Pesticide Applicators License-Category B, along with a valid Maintenance Gardener Pest Control Business License are required to apply pesticide.

Contractor shall take necessary precautions to avoid pesticide drift onto non-target organisms.
b. Rodent Mounding. Mound of soil in turf and planter areas caused by rodent activity shall be raked down at the intervals established by the Level of Service assigned to the area, to prevent soil build up in turf and around plants. All curbs, gutters, and other hardscapes adjacent to the maintenance areas will be free of any soil mounds or erosion caused by rodents.
c. Rodent/Pest Control. Contractor must inspect all turf and planter areas for rodent (gopher, squirrel, and other pest) activity, and initiate control measures at the intervals established by the Level of Service assigned to the area. Contractor must fill all rodent holes in areas that are used by walkers and pedestrians for safety (i.e. trails, turf, DG paths, etc.). Contractor shall take necessary precautions and safeguards to protect health of public and employees.

4. Plants. All shrubs and ground cover plants growing in the work area must be pruned once every other month to maintain plants in a healthy growing condition, and to allow for full coverage of the irrigation system. Pruning is to be done in a manner that promotes the plant's natural growth characteristics. If hedging is needed to clear the sidewalk, the plant must be trimmed on all sides to balance growth. Hedging, shearing, or other severe pruning will not be allowed except with prior approval. All debris from trimming of plant material will be removed from beds, hauled off, and disposed of immediately and appropriately. Fallen leaf material shall be removed from planter areas and off the plants on a monthly basis to allow for proper growth of the plants.
a. Growth Control. Plant growth shall be kept within reasonable bounds to prevent its encroachment into walks, passageways, and streets. Clear view of traffic signs and intersections is to be maintained at all times.

All shrubs and plant growth in planter areas along walls are to be maintained to a height no greater than four feet (4’) (unless specified by the project manager) and kept from blocking any subdivision, safety signage, and overhead or landscape lighting.

All trees, large and small shrubs, and groundcovers in planters or Right of Way areas along streets and at intersections, must be maintained and trimmed for traffic sightline clearances.

Mature tree canopies must be maintained above eighty-four (84) inches above soil grade for site line visibility. Newly planted, young or non-mature trees, multi-trunk trees, or large shrubs (i.e. Western Redbuds) must also be raised or thinned to maintain site line visibility.

Pruning is to be done in a manner that promotes the plant's natural growth characteristics.

Small shrubs and groundcovers must be kept below thirty (30) inches at road level to allow for visual site of oncoming traffic.
b. Removal. All dead, dying, or damaged plants (including trees) and any branches must be removed immediately. This debris, including plant growth removed by contractor, shall be removed away from job sites and appropriately disposed of at the intervals established by the Level of Service assigned to the area. Hauling and

disposing of said debris must be included in bid price. Dead stems of daylily, agapanthus, and similar plants shall be removed on a monthly frequency. Dead leaves around base of plants shall also be removed on a monthly basis. c. Trees. The contractor is responsible for removal of suckers, limb growth that inhibits site line visibility of any traffic, and all pruning that can be reached with a twelve-foot (12’) pole saw by a person standing on the ground as part of this contract.

All trees are to be maintained in their natural shape, and pruning is to be done in a manner that promotes the trees natural growth characteristics using sharp and proper pruning tools along with the correct pruning techniques to promote and achieve the trees natural growth characteristics and to meet International Society of Arboriculture (I.S.A.) Standards; all cuts shall be made cleanly with no stubs or projections remaining.

No weed whackers or hedging type tools shall be allowed to trim and maintain trees.

The use of improper tools and techniques resulting in the negligent and irresponsible care of trees or plants, thus causing damage to trees or plants and resulting in the need for the Project Manager to hire outside services to correct the damage will result in those costs associated with the corrections being deducted from the Contractors monthly invoice along with a $100 liquidated damage assessment per incident or up to termination of the contract.

Canopy clearance above sidewalks, bikeways, and other pathways of 10'0" is to be maintained for pedestrian safety.

All regulatory street and traffic signs must be clear of tree and plant growth at all times for sight clearances.

Clippings must be picked up, hauled away, and disposed of by the Contractor immediately and appropriately.

Leaves in planter areas shall be removed on a monthly basis. In addition, during seasonal drop leaves will need to be removed off of walkways as needed for safety.

Fallen leaf material shall be removed off the plants regularly to allow for proper plant growth.

Newly planted trees that do not have trunk caliber sufficient to support tree shall be staked, pruned, and shaped to promote their eventual development into strong, healthy representatives of their species.

Until young trees are strong enough to stand alone, they shall be flex-tied between two (2) approved two-inch (2") diameter x eight foot (8') treated tree stakes. Tree stakes shall be of treated lodge pole pine. Metal stakes may be required in some areas. Tree ties made of extruded vinyl base, 1” wide, and a minimum of .01” thick shall be used to secure the young trees. Tree ties to be inspected often for signs of girdling or abrasion.

Contractor must maintain a three-foot (3’) diameter circle free of grass/weeds around all trees located in turf areas.

Trees damaged by maintenance equipment shall be replaced by contractor with like size and species. Contractor is responsible for all costs related to replacement.

Maintenance shall include the removal of dead trees, limbs, and dead leaf material at the intervals established by the Level of Service for that area. Dead trees will need

to be replaced per the contract for plant replacement in Item 6 (below) of this scope of work and per the discretion and determination of the Project Manager.

Young or new trees along trails, paths, riparian landscapes, Landscape and Lighting Districts, parkway strips, and pocket parks shall be maintained, pruned, and shaped to promote their eventual development into strong, healthy representatives of their species by the contractor for the first three (3) years of the trees life within the landscape. Stakes must be removed when tree has sufficient strength to support itself. These costs are to be factored into the planter costs. Project Manager will instruct contractor when tree stakes are to be removed. Contractor is responsible for the proper disposal of all pressure treated wooden tree stakes. All metal stakes in good condition must be taken to City of Hanford, Corporation Yard for storage.

The contractor shall notify the Project Manager within twenty-four (24) hours of any tree that shows sign of root heaving, leaning, having hanger limbs, or in some manner constitutes a safety hazard. Failure to notify Project Manager may result in a liquidated damage assessment of $100 per incident to recover the losses to the City for responding to resident complaints of the Contractor noncompliance or termination of contract if multiple breaches or gross violations occur that place residents in danger.
d. Shrubs. All shrubs must be trimmed to prevent encroachment onto walks, passageways, streets, curbing, and trails to allow for safe passage of users. Shrubs must be trimmed to allow a clear sightline of oncoming traffic at all Right of Ways and intersections. Shrubs must be cleared away from all regulatory street and traffic signs.

Shrubs in planters must be kept below thirty (30) inches at intersections and turn lanes for sightline of oncoming traffic.

5. Fertilization. Fertilization will be performed on an as needed basis as requested by the Project Manager. Project Manager will request separate pricing for fertilization when it is required. A slow-release fertilizer will be applied when fertilizer is requested by Project Manager.

When fertilizer is applied as needed, to maintain healthy and vigorous plants: The City anticipates that primarily nitrogen will be deficient in soils; however, Contractor shall identify and correct other mineral deficiencies that affect plant growth.

Analysis of fertilizer shall be approved by the Project Manager prior to application.

All turf fertilizer shall be watered in thoroughly within two (2) hours of application.

Fertilizer shall be applied uniformly using an appropriate spreader. Prior to beginning a fertilization program, Project Manager shall submit to the Contractor a schedule showing sites to be fertilized. The Contractor shall submit to the Project Manager a schedule showing the dates and approximate times of fertilizer applications. Timing or number of sites fertilized per day or week shall not be set up to preclude normal on-site maintenance work.

Once the Project Manager has requested that fertilization is necessary the Contractor shall notify Project Manager at least ten (10) days before any fertilizer applications. Receipts for the Contractor’s purchase of the approved fertilizer will be required and must be submitted to the Project Manager with monthly invoice.

Note: Subject to approval of the Project Manager, fertilization may be altered by use of slow-release fertilizers such as Woodace containing IBDU formula.

6. Replacement of Plant Material

a. The contractor must notify the Project Manager within three (3) days of discovery of loss of turf, shrub, ground cover, or tree material due to any cause. b. The contractor must supply all labor and materials to replace any tree, shrub, turf, or ground cover damaged during work by the contractor or lost through the contractor’s faulty maintenance or negligence.

Trees, shrubs, or turf that are damaged or lost through disease, insect infestation, or rodents, that could have been prevented with reasonable ordinary care by the Contractor shall be the responsibility of the Contractor.

Contractor is not responsible for plant loss due to vandalism, theft, vehicle accident, fires, storm, or water restriction in response to drought conditions. Whether or not the loss was due to Contractor faulty maintenance or negligence shall be determined by the Project Manager. The size and species of replacement plant material shall also be determined by the Project Manager but shall be reasonably equal to the plant material that is being replaced.

In regard to trees, where there is a difference between the tree lost and the replacement tree, the difference will be deducted from the contract payment. The value will be determined using the latest American Shade Tree Conference guidelines.
c. Any plant damaged or lost through fires, storms, or water restrictions in response to drought conditions, theft, vehicular damage, or vandalism that are not the responsibility of the Contractor (as determined by the Project Manager), shall be replaced in kind and size at the Project Manager’s direction. The Contractor will perform the work and the City will pay for the Contractor’s labor at an hourly rate established in this contract and pay for replacement materials at COST.

From time to time it may be necessary or desirable to replace some plants to enhance the overall appearance of a site. Any such replacements will be at the Project Manager's decision. The Contractor will perform the work and the City will pay for the Contractor’s labor at contract rates and cost of replacement materials. All landscape repairs and replanting requested by the City’s Project Manager must be completed according to a date agreed upon in writing between the City Project Manager and Contractor.

The Contractor shall supply itemized labor hours and material cost invoice(s) with monthly invoices in order to be reimbursed for plant replacement.

7. Turf Maintenance
a. Mowing. The turf must be mowed and edged at the intervals established by the Level of Service assigned to the area during its growing season in order to maintain a neat appearance and healthy growth. If weather conditions do not permit regular mowing, longer intervals may be observed by Project Manager with notice from Contractor. • Contractor shall never mow turf when it is in a wet, saturated condition that would cause rutting, tearing or sliding on the turf surface or when it could be unsafe for Contractor’s employees to operate equipment. • All lawn areas in this contract must be mowed with power-propelled reel or rotary-type mowers.
• All mowers must be cleaned prior to each mowing to avoid possible weed invasion.

• Mowers must be adjusted and maintained to provide a smooth, uniform cut with no ridges or depressions.
• Turf must be cut with the size of equipment, which will give a neat appearance without rutting, sliding over, or scalping the turf. This will be strictly adhered to, including cases of steep turf slopes. • Blades must be kept sharp at all times to prevent turf damage. • Mowing patterns must be changed for each mowing service or as often as necessary to avoid rutting.
• Turf must be kept at a uniform height that is recommended for that particular type of turf grass.
• Grass clippings must be removed promptly and disposed of at the Contractor’s expense unless they will dry and drop beneath the growing level of the turf within twenty-four (24) hours.
• Recycling cutting decks that provide an acceptable cut may be used if written approval of Project Manager is obtained prior.

Contractor’s employees shall take care to avoid obstructions such as electrical boxes, signage, buildings, vehicles, etc. Contractor shall be responsible for repair of damage caused by its mowing or other activities.

Contractor shall take great care around trees. Any trees which have more than fifty percent (50%) of the bark removed in a given three-inch (3”) area of trunk by weed whips or mowers shall be considered destroyed and shall be replaced at the Contractor’s expense with like species and size.
b. Mowing Height All turf, except Bermuda, must be maintained at a height range between three and one-half inches (3 ½ “) maximum and two and three fourths inches (2 ¾”) minimum.

Fescue height shall not exceed three and one half inches (3 ½”).

Common Bermuda must not exceed two inches (2”) in height.

Mowing shall be performed so that no more than one third (1/3) of the grass blade is removed per frequency in returning the grass to acceptable height for the species being mowed within areas assigned at a level A Service.

All turf areas shall be mowed at the intervals established by the Level of Service assigned to the area on a preset day and route. Any changes to this schedule shall be approved in advance by the Project Manager.

During periods of heavy growth, more than one mowing per week may be required to maintain acceptable appearance within areas assigned at a Level A Service.

All turf areas shall be maintained at a level that will ensure a healthy, green color and uniform growth.
c. Broad Leaf and Noxious Weeds. These weeds shall be controlled on an as needed basis by chemical or manual method when requested by Project Manager. Chemicals used for control shall be registered for use on Fescue and Bermuda turfs. A Broadleaf and Crabgrass pre-emergent herbicide shall be applied between mid-January and March and again between September and Mid-November of every year. Herbicides such as Dimension, Pendulum, or Barricade are recommended during this application period. For post broadleaf weed control Triplet, Trimec, or Triamine will be applied to control Broadleaf and Crabgrass weeds that are currently growing and weather

conditions permit the application. Contractor shall provide Project Manager a quote for work prior to work being started and shall not perform work without Project Manager’s approval of quote. Contractor will be required to notify the Project Manager of the application dates and provide a schedule of areas treated as completed.
d. Edging. All turf adjacent to improved surfaces shall be edged a minimum of once every mowing. Unimproved surfaces between turf and planter areas and/or property lines shall be edged a minimum of once per month to maintain turf delineation.

String trimmers, a.k.a. weed eaters, shall not be used around trees. e. Clean-up. All surfaces shall be free of grass clippings and debris including turf, gutters, and street upon completion of mowing and edging operation. It is the responsibility of the Contractor to remove these items immediately and dispose of them appropriately.
f. Turf grass seeding. Turf grass seeding will be done on an as-needed basis when requested by Project Manager. This is considered additional work and will be paid separately from this contract. Contractor shall provide Project Manager a quote for work prior to work being started. When seed is used, areas shall be top-dressed with humus.
g. Renovation. Renovation will be done on an as-needed basis when requested by Project Manager. Project Manager will furnish square footage and locations for renovation This is considered additional work and will be paid separately from this contract. Contractor shall provide Project Manager a quote for work prior to work being started.

Turf renovation to remove accumulated thatch from all sites under this contract must be accomplished by power raking or dethatching rakes on turf (care shall be taken so turf is not damaged).

A schedule of equipment to be used by the Contractor shall be submitted to the Project Manager for approval 10 days prior to beginning work.

Refuse generated by renovating shall be removed not later than the day following the operation.
h. Aerification. Aerification will be done on an as-needed basis when requested by Project Manager. This is considered additional work and will be paid separately from this contract. Contractor shall provide Project Manager a quote for work prior to work being started. Contractor shall not perform work without Project Manager’s approval of quote.

Project Manager will furnish square footage and locations for aerification.

8. Ground Cover Maintenance & Wall Covering of Ficus Pumila, and All Other Vines. a. All areas planted in ground covers shall be adequately irrigated to maintain vigorous growth.
b. Groundcover beds shall be periodically edged to keep them in their intended space.

Groundcovers shall not be allowed to encroach into sidewalks, lawns, shrub beds, or other areas deemed as undesirable by the Project Manager.

c. Groundcover plantings shall be periodically thinned and pruned for vigorous growth and overall appearance of the site.
d. Groundcovers in median and other Right of Way areas must be trimmed below thirty (30) inches at road/asphalt level for sight clearances for traffic safety. e. Wall covering of Ficus Pumila and other vines, will be trimmed back close to the wall and removed from trees and shrubs, and removed from planter areas as needed.

Wall coverings shall not be allowed to grow over the top of the wall.

9. Hardscape Areas. All patios, curbs, gutters, pathways, sidewalks, parking lots, and other hardscape areas (i.e. Center median island points, roundabouts, etc.) adjacent to and part of the City owned property or Right of Way must be kept free of weeds, debris, leaves, grass clippings, etc. at all times to provide a safe and clean passage for users and to prevent slips and falls.

All areas covered by the contract must be kept free of debris and potential safety hazards generated by but not limited to, leaves, grass clippings, pruning, weeding, trimming, and other operations of the contractor, as well as glass, bottles, cans, trash, paper, and other yard waste.

All trash and debris are to be removed and disposed of at the intervals established by the Level of Service and at the contractor’s expense.

10. Vegetation. All vegetation areas must be kept free of weeds, trash, leaves, grass clippings, etc. at all times. The contractor is responsible for removal of suckers, limb growth, and all pruning of trees that can be reached with a twelve-foot (12’) pole saw to a minimum height of eight (8) feet, by a person standing on the ground as part of this contract. Contractor must maintain a three-foot (3’) diameter circle free of grass/weeds around all trees. Mowing shall be performed as weed control bi-weekly.

Note: If and when using a blower or other power equipment, Contractor shall comply with the City’s Municipal Code 9.10.060 Noises Prohibited - Blowers, Mowers, Trimmers, and Similar Devices. In or in proximity to residential or noise sensitive areas, between the hours of 8:00 p.m. and 7:00 a.m., the operation of any noise-creating blower, mower, trimmer, power fan, or any battery/electrical-powered or internal-combustion-powered equipment, provided that the noise can be heard across the property line of the property from which it emanates.

Refer to Exhibits D-1 and D-2 for square footages and locations.

Current Landscape Service Levels
Service
Level
Frequency
A Every week
B Every week (March-Oct.), every two weeks (Nov.-Feb.)
C Every other week
D Every other week (March-Oct.), every four weeks (Nov.-Feb.) E Once monthly
F Six times per year
XXX No service

Proposed New Levels of Service

LEVELS OF SERVICE
The City of Hanford prefers the highest level of service for all areas of the Quadrant. Most areas in all Quadrants have funding that can support the highest level of service. However, there are rare instances when the available funding in a particular area of a Quadrant will require the City to reduce the costs for that area by reducing the level of service (frequency of service) for that area.

Therefore, the City of Hanford reserves the right to assign a service level of less frequency (Level B or Level C Service) to specific areas of a Quadrant when City deems necessary.

The City will provide the Contractor with 30 days advance written notice listing the area and square footages for which service shall be reduced and the effective day of service reduction. City will also automatically reduce the contract payment amount for those specific areas according to the table below which shows the reduction for Level B and Level C.

Service
Level
Frequency of Service Number of
Services
Annually
Percentage by
which Contractor’s
price will be
reduced
A Once per week intervals 52 -
B Two-week intervals 26 25%
C Once per month intervals 12 33%

Downward Payment Adjustment Example
A. CITY’S RIGHT TO WITHHOLD CERTAIN AMOUNTS
The City may withhold a sufficient amount of any payment otherwise due to the contractor to cover:

• Payments that may be past due and payable for just claims for labor or materials furnished in and about the performance of the work under this contract and as a result of contractor’s failure to properly make payments to its subcontractors or suppliers. • Claims filed or reasonable evidence indicating the probable filing of claims. The City shall disburse and shall have the right to act as agent for the contractor in disbursing such funds as have been withheld pursuant to this subsection, to the party or parties who are entitled to payment therefrom. The City will render to the contractor a proper accounting of all such funds disbursed on behalf of the contractor.
• Work required in the specifications which is not performed or is incomplete or for defective work not remedied.
• When Contractor is out of compliance with the requirements of the maintenance agreement, an appropriate downward adjustment in contractor’s payment shall be made. Downward adjustments will be made for incomplete and /or unsatisfactory work or non-performance based on a percentage of the estimated cost to the City for each area maintained by the Contractor. See tables below which list the cost adjustment percentage. The Area Cost Estimate used by the City will be the square footage descriptions contained in Exhibit D-1 (or as that document is amended if additional areas are added during the term of the Agreement) and then adjusted based on the Unit Price provided by the successful bidder.

Areas with Planters and Turf:

Area Cost
Estimate
Trash/Debris Turf Planters Trees Irrigation Weed
Control
10% 15% 20% 15% 15% 25%
Areas with only Planters:

Area Cost Estimate Trash/Debris Ground
Cover
and
Shrubs
Trees Irrigation Weed Control
10% 25% 25% 15% 25%
• If an inspection by City indicates an area is out of compliance, the City shall:
o Notify the Contractor in writing of the area that the inspection showed was incomplete or unsatisfactory,
o Describe the reason why the inspection listed the area as incomplete or unsatisfactory, o List the amount that the City will withhold if the area is not brought into compliance, and
o List a date that re-inspection by the City shall occur. • If the area is not brought into compliance by the re-inspection date or the matter otherwise resolved, the City shall withhold the stated amount for the incomplete and/or unsatisfactory work from the next payment processed by the City.
• If the corrections are not made by the Contractor, the City may, in the sole discretion of the City, have the out of compliance area brought into compliance by City forces or by a third party and charge the expense to the Contractor in lieu of a payment adjustment.

Downward Payment Adjustment Example
• The City reserves the right to assess a $100 liquidated damage assessment per incident over and above the cost to correct the unsatisfactory condition for failure to perform any part of the work covered in this contract. Because it is difficult to estimate the potential costs to the City in responding to resident complaints over such conditions, $100 is set as a reasonable estimate of potential costs to the City in responding to a failure by the Contractor.

LANDSCAPE ASSESSMENT DISTRICT MAINTENANCE STANDARDS
Item Inspected Grade Description
High Quality/Pay H Green and healthy appearance, neatly mowed and edged Satisfactory Quality/Pay S Mowed recently and reasonable quality job needing minor improvement

1. Turfgrass Condition
Poor Quality/Do Not Pay P Not mowed per contract schedule, missed mowing and edging, many weeds and major brown areas, noticeably not edged since last visit, spent clippings High Quality/Pay H Trees straight and properly staked if applicable, healthy with no pedestrian or vehicle encroachment
Satisfactory Quality/Pay S Trees in reasonable condition, may need canopy raising within next few weeks, minor restaking or support needed

2. Tree Condition
Poor Quality/Do Not Pay P Dead trees needing removal, trees being damaged by weed eater or mowing practices, obvious pedestrian or vehicle obstructions needing immediate attention, trees leaning and vulnerable due to lack of support
High Quality/Pay H Clean, healthy, hedged at proper height, trimming not needed Satisfactory Quality/Pay S Overall okay but trimming should be scheduled within next few weeks

3. Shrubs/Ground Covers
Poor Quality/Do Not Pay P Obvious overgrowth, hedges well beyond specified height, sidewalk encroachment creating pedestrian interference, numerous dead shrubs needing removal High Quality/Pay H System operating normally, controlled, properly timed with appropriate run times and start times, appropriate moisture applied with no standing water
Satisfactory Quality/Pay S System operating normally, controller may need minor adjustment, minor standing water usually evaporating a few hours after cycle has ended, may have minor head replacement or realignment needed

4. Irrigation
Poor Quality/Do Not Pay P Major over or under irrigation occurring, total system failure, many broken or plugged heads, several heads misaligned and not irrigating target area High Quality/Pay H All areas clean of trash, limbs and leaf litter, no grass clippings visible Satisfactory Quality/Pay S Minor trash and leaf litter present but not highly visible, may require cleaning next visit but okay at this point, minor grass clippings present but not highly visible

5. Litter/Trash
Poor Quality/Do Not Pay P Trash more than one visit old, limbs and leaf litter build-up highly noticeable, excessive grass clippings and leaf litter blown into beds
High Quality/Pay H Planter beds and turf areas free of weed growth Satisfactory Quality/Pay S Planter beds or turf areas have newly germinated weed growth requiring attention

6. Weed Control
Poor Quality/Do Not Pay P Some mature weeds present and highly noticeable, noticeable neglect, infestation of nutgrass, weed growth only being weed whipped, lack of control measures obvious High Quality/Pay H Clean, nice edge, no debris from maintenance activities present Satisfactory Quality/Pay S Fairly clean, minor dirt present but not related to maintenance activities

7. Walks/Curb
Poor Quality/Do Not Pay P Dirty, obvious litter, debris and dirt left from maintenance activity

High Quality/Pay H Most areas being maintained in the highest standards Satisfactory Quality/Pay S Most areas being maintained but minor maintenance issues becoming more visible and require additional attention during next maintenance visit
Overall Appearance
Poor Quality/Do Not Pay P One or more areas showing improper poor quality due to contractor technique and/or poor scheduling, expected strong criticism from public regarding conditions; if contractor has been warned of poor quality on previous reports, payment will be withheld until such time as the contractor complies with minimum satisfactory levels.

City Cost Start up Cost
Year 1
FY 26/27
Year 2
FY 27/28
Year 3
FY 28/29
Year 4
FY 29/30
Year 5
FY 30/31 Total
Total City Cost to include
employee, tools, fuel, equipment
repair and equipment
replacement costs.

Total City Cost $ 265,175 $ 518,573 $ 541,453 $ 567,236 $ 594,270 $ 622,614 $ 3,109,321 Out Sourcing Work
Total Outsource Cost to include
landscape maintenance of
current LAD and CFD landscapes.

Total Outsource Cost $ 544,875 $ 561,222 $ 578,058 $ 595,400 $ 613,262 $ 2,892,818 Costs if done by City Employees/(Cost increase in Year 5) $ (216,503) Landscape and Lighting District Maintenance (City Employees vs Out Sourcing)

4.B.

AGENDA

STAFF REPORT
MEETING DATE: 1/20/2026 AGENDA SECTION:

STUDY SESSION
SUBJECT:

Annual Comprehensive Financial Report presentation for the fiscal year ending June 30, 2025 RECOMMENDATION:

Recommendation: Staff recommends that City Council review the Annual Comprehensive Financial Report (ACFR) for the City of Hanford, for the fiscal year ended June 30, 2025 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 in the third year of its agreement with independent auditors Rogers, Anderson, Malody and Scott, LLP (RAMS) for assistance in the preparation of an Annual Comprehensive Financial Report (ACFR). In addition, pursuant to Ordinance 2024-10 City of Hanford Sales and Use Tax Accountability Measure (Section 3.60.050 Annual Audit), RAMS also prepared the Agreed-Upon Procedures Report for the Measure H sales and use tax.

The ACFR is a primary source of objective financial information for residents, City staff, creditors, investors, businesses and other interested parties. It presents the City’s financial position, operational results, and economic condition for the fiscal year audited.

For the fiscal year ended June 30, 2025, the City received an unqualified opinion (clean). An unqualified opinion concludes, with the highest level of assurance that the ACFR presents 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; and the respective changes in financial position. The ACFR is prepared annually in accordance with generally accepted accounting principles (GAAP) and reporting standards established by the national Governmental Accounting Standards Board (GASB), as verified during the independent auditor’s examination. The Independent Auditors Report and opinion letter is included on page one of the attached ACFR.

There were no audit findings for fiscal year 2024-25.

MAJOR FUND SUMMARY HIGHLIGHT

The Fund Summary Highlight provides a snapshot of the fund conditions as of June 30, 2025 in addition to the net change from prior year.

General Fund
The City’s most discretionary fund, the General Fund showed a positive increase to its unrestricted fund balance which is primarily due to one-time American Rescue Plan Act (ARPA) revenues, which concluded FY25. The City’s reserve percentage decreased from 28% to 21%, largely attributable to a $17.5 million litigation settlement payment that was fully reimbursed by insurance. Excluding this one-time transaction, the reserve percentage would be approximately 29%.

City Council has adopted a minimum reserve goal of 35% (Resolution 2022-20-R). Staff will continue working toward this goal through balanced budgeting, careful use of General fund balance, limiting unplanned special projects, and pursuing additional revenue opportunities. Once achieved, reserves above the 35% threshold may be directed toward capital, pension, or internal service funds.

Measure H Fund
Measure H, approved by voters in November 2024, established a 1% transactions and use tax, with revenue distributions beginning in June 2025. While initial receipts were recorded in FY 2024–25, the formal 10-year expenditure plan will begin in FY 2025–26. Including accruals, approximately $3.3 million in revenue was recorded. This helped to establish a minimum Measure H Fund Balance of 15% for fiscal emergencies and continuity of services supported by Measure H.

Some initial costs were temporarily advanced (as approved by City Council and considered by the Measure H Oversight Board) by the General Fund and reimbursed at year-end.

Outlook: Based on updated sales tax projections that are lower than originally forecast, certain projects may need to be deferred, with street preservation and rehabilitation being the most flexible due to longer lead times. Ongoing monitoring will allow staff to manage resources effectively and maintain long-term sustainability.

ACO Fund
Growth in the ACO Fund is limited to interest earnings. Major projects currently funded include the YAC Building restoration and City Hall improvements. This fund would grow as the City's General Fund reserve exceeds 35%.

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. Examples of these funds include fleet replacement reserve and maintenance, building maintenance reserve, information technology services and equipment, medical fund, workers compensation insurance fund, etc. These funds continue to grow gradually as seen in this year’s change in fund balance. In practice, not all vehicles/equipment need to be replaced at one time nor do major expenses generally all occur at one time. The City has an effective cost allocation plan and practices in place which allows for a consistent yearly replenishment to the funds while also monitoring the costs occurring in those funds.

Water Fund
The Water fund showed positive growth supported by previously adopted rate adjustments in 2024.

Remaining rate increases will occur 07/01/25 through 2027. During the fiscal year the City began a $16.1 million water replacement project affecting over 19,000 water meters city wide with completion date anticipated by the end of 2026. Cash balances are expected to decline due to the continual progress payments until the project meets completion. Staff will continue monitoring operations, capital needs, and long-term rate adequacy.

Wastewater Fund
The Wastewater Fund experienced slight growth; however, significant capital investments and aging infrastructure will place continued pressure on fund balance. A timely rate study will need to take place otherwise there will likely be significant capital deferrals. The latest rate study in 2024 still has remaining rate increases scheduled for 07/01/25 through 2027 although these will not likely sustain the ongoing needs. With the City’s growing population Wastewater infrastructure has remained a high priority for City Council. Throughout the fiscal year, the City has invested in several significant and costly assets.

Storm Drain Fund
A rate study was performed for this fund in 2024 which showed a need to increase rates. However, due to legal limitations/variables the fund was unable to proceed with a rate increase at that time.

Until rates are adjusted, the fund is expected to continue declining, with limited capital maintenance occurring in the interim.

Refuse Fund
The Refuse Fund currently has no fund balance and is temporarily borrowing approximately $3 million from the General Fund. The most recent study was completed in 2022 and has remaining rate increases for 07/01/25 through 2026. At a recent study session, Council was advised of the results of the current rate study and core issues contributing to the declining health of the fund, which included rising tipping fees, costly capital needs and increasing operational costs. A Proposition 218 process has been initiated by Council to seek voter approval for rate adjustments necessary to restore financial stability and long-term sustainability.

Summary
Overall, the City’s discretionary funds remain in sound financial condition and are positioned to manage short-term economic uncertainty such as a recession or lower tax revenues. Staff will

continue working toward the 35% goal to further strengthen the City’s financial position. Despite lower future tax projections, Measure H will still enable the City to fund projects that would not otherwise be possible without the voter-approved tax. In addition, City Council may continue to consider an increase to the Transient Occupancy Tax (TOT) that was considered in 2025 to be taken to voters.

Due to rising costs, asset replacement demands, and new capital needs, the enterprise funds that provide essential services including water, wastewater, storm drain, and refuse require closer monitoring at this time, along with necessary rate adjustments for certain services. Absent these actions, serious consideration will need to be given to cost reductions, including service level reductions or capital project deferrals, to prevent further financial decline.

FISCAL IMPACT:

This item is informational; there is no fiscal impact from this report.

ATTACHMENTS:

1. Annual Comprehensive Financial Report Fiscal Year 2025

2. Agreed-Upon Procedures Report-Measure H Fiscal Year 2025

3. Statement on Auditing Standards

4. Generally Accepted Governmental Auditing Standards

City of Hanford
Hanford, California
Annual Comprehensive Financial Report
For the year ended June 30, 2025

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City of Hanford, California

ANNUAL COMPREHENSIVE

FINANCIAL REPORT
For the year ended June 30, 2025
Prepared by the Finance Department

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CITY OF HANFORD
Annual Comprehensive Financial Report
For the year ended June 30, 2025
Table of Contents
-iPage

INTRODUCTORY SECTION
Letter of transmittal .................................................................................................................... iv Principal Officials ...................................................................................................................... xii Organization Chart .................................................................................................................. xiii

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

Government-Wide Financial Statements:

Statement of Net Position ............................................................................................ 18 Statement of Activities ................................................................................................. 19 Fund Financial Statements:

Balance Sheet – Governmental Funds ........................................................................ 20 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ...................................................................................... 22 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ............................................................................................. 23 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ................... 25 Proprietary Funds:

Statement of Net Position ............................................................................................ 26 Statement of Revenues, Expenses and Changes in Fund Net Position ....................... 27 Statement of Cash Flows ............................................................................................. 28 Fiduciary Funds:

Statement of Fiduciary Net Position ............................................................................. 32 Statement of Changes in Fiduciary Net Position .......................................................... 33 Notes to the Financial Statements ..................................................................................... 34 Required Supplementary Information (Unaudited):

Schedule of Changes in the Net Pension Liability and Related Ratios .............................. 84 Schedule of the City's Proportionate Share of the Net Pension Liability ............................ 85 Schedule of Plan Contributions – Pension Plan .................................................................. 86 Schedule of Changes in Total OPEB Liability and Related Ratios ..................................... 87 Schedule of Contributions – OPEB .................................................................................... 88 Budgetary Comparison Schedules (GAAP Basis):

General Fund .............................................................................................................. 89

CITY OF HANFORD
Annual Comprehensive Financial Report
For the year ended June 30, 2025
Table of Contents
-iiPage
FINANCIAL SECTION (continued)
Required Supplementary Information (Unaudited) (continued):

CDBG Home/Housing Fund ........................................................................................ 90 Transportation Development Act Fund ........................................................................ 91 American Rescue Plan Act Fund ................................................................................. 92 Measure H Fund ........................................................................................................... 93 Notes to Budgetary Comparison Required Supplementary Information .............................. 94 Supplementary Information:

Non-Major Special Revenue Governmental Funds:

Combining Balance Sheet ........................................................................................... 95 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ..... 99

Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget to Actual (GAAP Basis):

CMAQ Transportation Fund ........................................................................................ 103 Park Impact Fees Fund .............................................................................................. 104 Parking Fund ............................................................................................................. 105 Downtown Reinvestment Fund .................................................................................. 106 Central Parking and Business Improvement Fund ...................................................... 107 Fire Protection Impact Fee Fund ............................................................................... 108 Police Protection Impact Fees Fund .......................................................................... 109 Traffic Safety Fund .................................................................................................... 110 State Gas Tax Fund .................................................................................................. 111 Public Housing Authority Fund .................................................................................. 112 Transportation Impact Fees ....................................................................................... 113 Cannabis Operations Fund ........................................................................................ 114 Non-major Enterprise Funds:

Combining Statement of Net Position ........................................................................ 115 Combining Statement of Revenues, Expenses and Changes in Net Position ............ 116 Combining Statement of Cash Flows ......................................................................... 117 Internal Service Funds:

Combining Statement of Net Position ........................................................................ 118 Combining Statement of Revenues, Expenses and Changes in Net Position ............ 120 Combining Statement of Cash Flows ......................................................................... 122

Custodial Funds:

Combining Statement of Fiduciary Net Position ......................................................... 124 Combining Statement of Changes in Fiduciary Net Position ...................................... 125

CITY OF HANFORD
Annual Comprehensive Financial Report
For the year ended June 30, 2025
Table of Contents
-iiiPage

STATISTICAL SECTION (UNAUDITED)
Net Position by Component 126
Changes in Net Position ................................................................................................. 128 Governmental Activities Tax and Assessment Revenue by Source ................................. 132 Fund Balances of Governmental Funds ......................................................................... 133 Changes in Fund Balances of Governmental Funds ....................................................... 135 General Fund Tax Revenue by Source ........................................................................... 137 Top 25 Sales Tax Producers ........................................................................................... 138 Assessed Value and Estimated Actual Value of Taxable Property .................................. 139 Direct and Overlapping Property Tax Rates .................................................................... 140 Principal Property Taxpayers .......................................................................................... 141 Property Tax Levies and Collections ............................................................................... 142 Assessed Value of Property by Use Code ....................................................................... 143 Ratios of Outstanding Debt by Type ............................................................................... 145 Ratios of General Bonded Debt Outstanding ................................................................... 146 Direct and Overlapping Governmental Activities Debt ..................................................... 147 Computation of Legal Debt Margin .................................................................................. 148 Pledge Revenue Coverage ............................................................................................. 150 Demographic and Economic Statistics ............................................................................ 152 Principal Employers......................................................................................................... 153 Full-Time Equivalent City Government Employees by Function ...................................... 154 Operating Indicators by Function ..................................................................................... 155 Capital Asset Statistics by Function ................................................................................. 156

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FINANCE DEPARTMENT | 315 N. DOUTY ST. HANFORD, CA 93230 559.585.2500 | WWW.HANFORD.CITY
December 17, 2025
Rogers, Anderson, Malody & Scott, LLP
This representation letter is provided in connection with your audit of the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Hanford (the entity) which compromise the statement of financial position as of June 30, 2025, and the respective change in financial position and, where applicable, cash flows for the year then ended, and the related notes to the financial statements, for the purpose of expressing opinions on whether the financial statements of the various opinion units are presented fairly, in all material respects, in accordance with accounting principles generally accepted for governments in the United States of America (U.S. GAAP).

Certain representations in this letter are described as being limited to matters that are material. Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information such that, in the light of surrounding circumstances, 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.

We confirm that, to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves as of December 17, 2025:

Financial Statements
 We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated March 19, 2025, for the preparation and fair presentation of the financial statements of the various opinion units referred to above in accordance with U.S. GAAP.  The financial statements refer to above have been fairly presented in accordance with U.S. GAAP and include all properly classified funds, required supplementary information, and noted to the basic financial statements.
 We acknowledge our responsibility for the design, implementation, and maintenance of the system 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.  We acknowledge our responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud.
 The methods, data and significant assumptions used by us in making accounting estimates and their related disclosures, are appropriate to achieve recognition, measurement, or disclosure that is reasonable in the context of U.S. GAAP.
 All related party relationships and transactions have been appropriately accounted for and disclosed in accordance with the requirements of U.S. GAAP.  All events subsequent to the date of the financial statements and for which U.S. GAAP requires adjustment or disclosure have been adjusted or disclosed.  We acknowledge our responsibility for compliance with the laws, regulations, and provisions of contracts and grant agreements.
 The effects of uncorrected misstatements summarized in the attached schedule and aggregated by you during the current engagement are immaterial, both individually and in the aggregate, to the applicable opinion units and to the financial statements as a whole.  The effects of all known actual or possible litigation and claims have been accounted for and disclosed in accordance with U.S. GAAP.

-vThe City of Hanford operates under the council-manager form of government. Policy-making and legislative authority are vested in a governing council consisting of the mayor and four other members. The council is elected on a non-partisan basis. Council members serve four-year staggered terms, with two council members elected in one election and three elected in another election, separated by two years. The mayor is selected from among the council members by the council members and serves a two-year term. All five members of the governing board are elected at large. The council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees, and hiring the City’s manager and attorney. The City manager is responsible for carrying out the policies and ordinances of the governing council, for overseeing the day-to-day operations of the government, and for appointing the heads of the various departments.

The City of Hanford provides a full range of services, including police and fire protection; the construction, maintenance, and cleaning of streets and other infrastructure; planning and development services; water service; refuse collection, disposal, and recycling services; sewer service; storm drainage; recreation activities and cultural events; and general administration.

The annual budget serves as the foundation for the City’s financial planning and control. All departments of the City are required to submit requests for appropriations to the City Manager during March every two years. The City Manager uses these requests along with input from the council to develop a proposed budget. By the second Tuesday in May the proposed budget is presented to the City Council for review. The council is required to hold public hearings on the proposed budget and to adopt a final budget by no later than June 30, the close of the City of Hanford’s fiscal year. The appropriated budget is prepared by fund and department. The City Manager may make transfers of appropriations within a specific fund. Budget-to-actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted.

THE REPORTING ENTITY
This report includes all activities carried out by the City as a legal entity, including its component units and is financially accountable as determined under the guidelines of the Governmental Accounting Standards Board (GASB). Basic City operations are accounted for in the City’s General Fund, with other activities accounted for in separate funds as required by law or determined by management discretion.

ACCOUNTING SYSTEMS AND BUDGETARY CONTROL
The City’s fund accounting records are maintained using a modified accrual basis of accounting as explained in the Notes to the Financial Statements, following the accounting practices for governmental units as mandated by the Governmental Accounting Standards Board (GASB).

The Government-Wide financial statements (Statement of Net Position and Statement of Activities) follow the accrual basis of accounting. As required by GASB, an accompanying summary reconciliation schedule is presented following the Governmental fund financial statements.

-viThe Finance Director/City Treasurer is charged with the responsibility for the receipt and disbursement of all monies and to maintain control over all expenditures to ensure that budget appropriations are not exceeded. The level of budgetary control, that is, the level at which expenditures are not to exceed Council-approved appropriations is established at the department level. Adjustments within the same fund and major categories of expenditures are permissible with the department head and Finance Director recommendation and City Manager approval.

Adjustments between funds and additional supplemental appropriation funding require City Council approval. Appropriations lapse at year-end unless encumbered and become available for re-appropriation the following year. Capital project appropriations shall continue until the project is completed or no longer determined feasible by the City Manager. City Council is also presented with regular updates on the budget in addition to original budget adoption at mid-year (usually in February or March) and mid-cycle in June.

SIGNIFICANT EVENTS AND ACCOMPLISHMENTS
The City of Hanford has achieved several significant milestones and accomplishments in recent years, reflecting its commitment to development, public engagement, and community spirit.

Community Engagement and Technological Advancements
Grant funded, the City was able to enhance the City’s GIS and permitting systems, a long overdue project. The project aimed to modernize and streamline the systems to better support staff, residents and developers including expanding public access to planning information. It introduced user-friendly GIS maps on the City website and developed comprehensive datasets covering utilities, zoning, land use, infill potential, and connectivity to trails and multimodal facilities.

Permitting processes were updated to reduce manual data entry, improve fee transparency, and minimize errors. The project also included staff training and resources to ensure the City could sustainably maintain and update the GIS system moving forward.

Community Engagement
The City celebrated the 100th anniversary of its iconic landmark, the Civic Auditorium which houses City Council chambers and hosts many events throughout the year including both Citysponsored events and privates events. The anniversary was held with an invitation to the public to admire recent updates to the building, historical displays, entertainment and the reveal of a time capsule from 1976.

Hanford Winter Wonderland, now an established regional event at Civic Center Park continued for its 4th year and in support of its popularity and longevity of the event the Community Services Department invested in the purchasing of the ice rink. This will allow for long-term cost savings as well as continue the tradition of the event which has been well-attended by the community and travelers from destinations outside the County and brings about economic activity and community enhancement.

Major Capital Projects and Improvements
The City is currently undertaking a citywide replacement of approximately 19,000 water meters at a total cost of $16.1 million. At the time of bid, most of the existing meters were more than 15 years old and required replacement due to inconsistent transmission of meter reads, an increase in work orders for repairs and maintenance, and a rise in customer complaints.

-viiThe primary goals of this system-wide meter replacement project are to enhance water conservation and efficiency, improve system reliability, reduce ongoing operational costs, and ensure better availability of replacement parts. The City anticipates completing the project by end of 2026 or sooner.

Once a Hanford resident’s meter has been installed, they will be able to download the EyeOnWater app to monitor their water usage in near real time. Overall, the project is expected to significantly improve equipment reliability and increase customer satisfaction.

With the City’s growing population and the increasing strain on aging infrastructure, the Wastewater Fund has remained a high priority for the City Council. Ensuring that critical backup systems are in place in the event of a major equipment failure has been a central focus.

Throughout the fiscal year, the City invested in several significant and costly assets, including a standby pump and new screw pumps. The City also purchased electrical switchgear in preparation for a solar power upgrade at the wastewater treatment plant.

The solar equipment must be operational by April 14, 2026, in order for the City to qualify for a more favorable solar incentive program that provides credits for excess energy returned to the grid. Additionally, the City Council has recently reviewed preliminary information regarding an estimated $63 million comprehensive upgrade of the entire wastewater treatment plant. These discussions are ongoing. Any project of that scale would require the Council to initiate a Proposition 218 process to determine whether ratepayers would support the additional long-term rate increases needed to fund the improvements.

The Hanford Municipal Airport is also undergoing significant infrastructure enhancements aimed at improving its long-term self-sufficiency. A primary revenue source for the airport is the sale of aviation gasoline (AvGas). To support this, the City Manager successfully secured both federal and state grant funding to initiate design and engineering services for a new fuel island and upgraded fuel tanks.

In addition to installing a new 12,000-gallon AvGas tank, the project will introduce a separate 12,000-gallon tank dedicated to jet fuel. The airport currently does not offer jet fuel, resulting in missed opportunities for substantial revenue growth within the Airport Enterprise Fund. Jet fuel yields a significantly higher profit margin compared to AvGas, and with the steady increase in aircraft operations in recent years—particularly among aircraft that require jet fuel—the demand is rising.

Financial Transparency and Planning
During the Fiscal Year 2024/2025, Hanford maintained its commitment to financial transparency by publishing key financial documents, including the Fiscal Year 2023/24 audited financial statements, single audit and Transportation Development Act Audit. In addition, ARPA fund reports were completed timely and submitted to the US Treasury for viewing on the Treasury’s website. The City has maintained these reports on its website as well. These publications provide residents with insights into the city's financial health, strategic planning efforts and use of public funds.

These steps underscore Hanford's dedication to fostering a connected, informed, and vibrant community.

-viiiFACTORS AFFECTING FINANCIAL CONDITION
The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of Hanford operates.

LOCAL ECONOMY AND PROSPECTS FOR THE FUTURE
As the City transitions out of the pandemic period and adapts to a “new normal”, we continue to monitor fiscal projections in light of evolving economic indicators. Hanford’s local economy remains stable and with careful management, the City was able to continue to provide service enhancements, infrastructure improvements, and increases in employee compensation and benefits. The City’s unemployment rate in June of 2025 was 7% which is a 1% increase from the prior year. This is largely due to the continued cooling of post-pandemic economic activity, ongoing inflation, and the impact of elevated interest rates, which slowed hiring in key local sectors such as agriculture, retail, and construction. Sales and use tax increased in FY25 as compared to prior year, however projections show a leveling period over the next couple of years. The impact of lower consumer spending is also apparent in the lower than expected forecasting of the newly passed 1% Measure H transactions and use tax. Property tax showed a positive increase. Over the past year home values in Hanford have increased modestly by an approximate 2% in a very competitive market. Any future deficiencies in sales tax will optimistically be balanced by steady and increasing property taxes.

Nationally, inflation increased to 2.7% as of June 2025 (in California 3%) and its associated impacts continue to challenge the broader economy. While inflation has moderated from its peak, price levels remain elevated, and certain sectors—such as housing, energy, and services—are still experiencing persistent cost pressures. As a result, the potential for an economic slowdown or recession remains, particularly given the combination of stubborn inflation in key areas, a tight labor market, moderating consumer spending, and financial markets operating at historically high levels.

The Labor market shows the U.S. unemployment rate at 4.1% as of June 2025, no change from the year prior. Overall personal income has grown compared to last year, supported in part by rising employee compensation. However, this growth has been partially offset by an increase in personal current taxes, which can dampen household spending power and contribute to more cautious consumer behavior.

The Federal Reserve has begun cautiously lowering interest rates in response to cooling inflation and slowing job growth. These reductions are intended to support economic activity while maintaining vigilance against any resurgence of inflationary pressures. Despite these efforts, uncertainty persists. Global conflicts, ongoing trade tensions, and volatility in energy markets continue to pose risks that could influence national and local economic conditions, potentially affecting revenue performance for state and municipal governments.

In this environment, the City will continue to prioritize prudent financial management and longterm planning to maintain fiscal stability. Emphasis will remain on preserving healthy reserves, investing strategically in critical infrastructure, and operating efficiently to sustain essential public services. The City is committed to developing balanced, forward-looking budgets that reflect the City Council’s priorities and respond to evolving economic conditions. These measures will help ensure financial sustainability and strengthen the City’s resilience in the years ahead.

-ixThe City of Hanford is part of the Hanford-Corcoran Metropolitan Area. This includes the City of Hanford and the developed areas of the County of Kings. The population of Kings County is 154,015 as of 2025. The City’s population of 61,238 experienced a 3.3% growth in 2025 compared to a 1.1% growth rate in the County. There are approximately 53,900 employed in Kings County.

The City of Hanford has 24,400 employed out of a total labor force of 25,500.

Major employers of the City include Central Valley Meat Co, Del Monte Foods, Hanford Elementary School District, Hanford Joint Union High School District, Walmart Supercenter, City of Hanford, Costco Wholesale, Marquez Brothers International, College of the Sequoias, and the largest employer, Adventist Health Hanford Hospital with over 1,700 employees.

LONG-TERM FINANCIAL PLANNING AND FINANCIAL POLICIES
As part of the City of Hanford land use planning process, the City’s completed General Plan is at the top of the City’s land use regulation hierarchy. It is the foundation for most of the Council’s budgeting decisions in terms of capital facilities, staffing, programs, utility infrastructure, and levels of service; it establishes a land use pattern for lands beyond the City limit; it provides the vision and guidance for capital improvements and the development of City infrastructure; and it is used to create development impact fees and provides the basis for environmental analysis of the growth of the City. The plan is intended to guide development for a period of ten years and will be the basis of the City’s annual 5 year operating and capital forecast. To finance current growth, the City has in place a variety of user and developer fees to pay for streets, parks, water wells and lines, and sewer lines. The City reviews these fees on an annual basis to assure that the fee structure is in line with the cost of construction.

Measure H-Transactions and Use Tax
Approved by voters in November 2024, the Measure H Transactions and Use Tax established a 1% tax, with revenue distributions beginning in June 2025. While the first receipts were recorded in FY25, the City’s 10-year expenditure plan budget for Measure H will formally begin in FY26.

Including accruals, the City reported approximately $3.3 million in sales tax revenue for FY25.

In February 2025, the City Council appointed eleven members to the Measure H Oversight Board Committee, with initial terms ranging from two to three years. The committee is charged with reviewing annual expenditure plans, evaluating annual audits, and providing recommendations to the City Council. Beyond these formal responsibilities, the committee serves an important role in supporting the long-term success of Measure H. By ensuring that funds are spent in accordance with the voter-approved plan, the committee helps promote transparency, strengthen accountability, and provides residents with added confidence that community members are directly involved in monitoring how the tax revenues are used.

Developer Impact Fee Study
A comprehensive Impact Fee Study is currently underway. The City’s last comprehensive study was completed and subsequently adopted in November of 2019. Since then, only increases based on annual CPI % increases have been made. The City is experiencing rapid and expansive growth which necessitates the need for the study because of significant construction cost increases since 2019. By establishing an updated DIF program the City can ensure that new development pays the capital costs associated with their growth and impact on infrastructure and increased service demands.

-xAlignment with Council’s Goals
Each budget is created with City Councils’ established goals in mind. These goals continue to guide decisions and investments as we focus on:
 Improving quality of life for residents
 Maintaining and enhancing fiscal sustainability
 Promoting community outreach and transparent governance  Strengthening our customer service culture
 Becoming an employer of choice
Structurally Balanced Budget Policy
Maintaining a structurally balanced budget where current estimated expenditures are within projected current revenues is paramount for the long-term financial health of the City in order to provide budgetary stability for all operating budgets. In FY 2020 Council passed a resolution formalizing the requirement of the City Manager to present to the City Council a balanced budget proposal with each budget cycle. This policy has allowed for continued growth to the General Fund unrestricted fund balance over the last several years. Reserve balance % of General Fund expenditures has decreased from prior year 28% to 21% . However, the fund still had a positive increase overall of $908,363. This does not include the committed fund balance of Measure H which is maintained in a separate fund at a total amount of $3.25 million.

Assigned for Emergencies
The City currently has a reserve policy with a goal of 35% unrestricted General Fund balance of budgeted expenditures. A portion (15%) of the fund balance is for fiscal emergencies. These emergencies can range from major catastrophic incidents to significant economic downturns. The City Council annually considers a change in the fund balance assigned for emergencies whenever there is unexpected or one-time revenue or expenditure savings are realized.

INDEPENDENT AUDIT
An independent audit of the City’s records was performed for the year ended June 30, 2025, by the certified public accounting firm Rogers, Anderson, Malody & Scott, LLP. The auditor’s report on the basic financial statements (government-wide financial statements and the fund financial statements), the notes to the basic financial statements and supplementary information is included in the Financial Section of the ACFR.

In general, the auditors concluded that the basic financial statements and supplementary information referred to above present fairly, in all material respects, the financial position of the City of Hanford and its component units, as of June 30, 2025, and the results of its operations and cash flows of its proprietary fund types for the year ended in accordance with accounting principles generally accepted in the United States of America. The professionalism and knowledge by Rogers, Anderson, Malody & Scott, LLP during the audit is appreciated.

-xiAWARDS AND ACKNOWLEDGEMENTS
Government Finance Officers Association of the United States and Canada (GFOA) awarded a Distinguished Budget Presentation Award for its biennial budget document for FY 26 & 27. This was the 2nd consecutive award that the City has received. To qualify for the Distinguished Budget Presentation Award, the government’s budget document was judged to be proficient in several categories, including a policy document, a financial plan, an operations guide and a communications device.

The preparation of this report has been accomplished with the efficient and dedicated service of the City’s Finance Department. I would like to express my appreciation to everyone who assisted in its preparation, especially Aubrey Balbina, David Chang and Penny Sutphin.

Respectfully submitted,
Destiny Borba
Acting Finance Director

-xiiCITY OF HANFORD

PRINCIPAL CITY OFFICIALS
JUNE 30, 2025

NAME POSITION

CITY COUNCIL
Lou Martinez Mayor
Travis Paden Vice Mayor
Mark Kairis Council Member
Nancy Howze Council Member
Kimber Regan Council Member

ADMINISTRATION
Christopher Tavarez Interim City Manager
Griswold, LaSalle, Cobb, Dowd & Ginn, LLP City Attorneys Natalie Corral City Clerk
Destiny Borba Acting Treasurer/Finance Director
Jason Waters Community Development Director
Daniel Perkins Fire Chief
Stephanie Huddleston Police Chief
Russell Sterling Public Works Director
Francisco Senteno Utilities & Engineering Director
Bradley Albert Community Services Director
Sarah Cardoza Human Resources Manager

ORGANIZATIONAL CHART

CITY OF HANFORD
City Manager
City Council
Citizens of
Hanford
City Attorney
Finance
Accounting
Utility Billing
Payroll
Information Technology
Fire
Suppression
Prevention
Public Works
Admin/Engineering
Water
Wastewater
Refuse
Storm Drainage
Street Maintenance
Fleet
Facilities
Maintenance
Administration
Human Resources
Risk Management
City Clerk
Airport
Community Relations
Police
Parks and Community Services
Parks
Recreation
Community Events
LADs
Community Development
Building Safety
Planning
Code Compliance
Housing
Support Services
Records
Communications
Operations
HART
Park Resource
Traffic Unit
Multi-Agency Task Force
School Resource Officer
Animal Control
K-9
Evidence
-xiiiPage 58 of 1226
Tel. 909-889-0871 | www.ramscpa.net | 735 E. Carnegie Dr. Suite 100, San Bernardino, CA 92408

CERTIFIED PUBLIC ACCOUNTANTS
-1-
Independent Auditor’s Report
To the Honorable Mayor and Members of the City Council
City of Hanford, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Hanford (the City), as of and for the year ended June 30, 2025, 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 accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2025, and the respective changes in financial position, and, where applicable, cash flows thereof for the fiscal 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 (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Emphasis of Matter
As described in Note 1 to the financial statements during the year ended June 30, 2025, the City adopted new accounting guidance under Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences and No. 102, Certain Risk Disclosures. Our opinions are not modified with respect to this matter.

-2-
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 events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and 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 GAAS 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.

-3-
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the required supplementary information, including the management’s discussion and analysis and the schedules listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements.

We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The combining and individual nonmajor fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the accompanying supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information
Management is responsible for the other information included in the annual comprehensive financial report (ACFR). The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.

In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

-4-
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 17, 2025, on our consideration of the City of Hanford’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance.

That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Hanford’s internal control over financial reporting and compliance.

San Bernardino, California
December 17, 2025

City of Hanford
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2025
-5-
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, 2025. 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 2025 by $401.8 million. Of this amount, about $79.2 million in unrestricted net position may be used to meet the City’s ongoing obligation to citizens and creditors.
 As of June 30, 2025, the City’s governmental funds reported combined ending fund balances of $87.9 million.
 Approximately 15% of the combined governmental fund balances is considered available for spending at the City’s discretion.
 As of June 30, 2025, unassigned fund balance in the General Fund was $13.6 million, or 21% of total General Fund Expenditures.
 The City’s total debt decreased by $3.9 million during fiscal year 2025, which is due to the normal maturity of debt in the water system, the wastewater system, the citywide solar energy system, and the Pension Obligation Bond.
 The following pension liabilities totaling $26,970,974 are included in the financial statements as required by generally accepted accounting principles: General Government $24,240,550; Water System Enterprise $803,066; Wastewater Enterprise $642,453; Storm Drainage $321,226; Refuse Enterprise $963,679; Computer Maintenance $160,613; Building $321,226; and Fleet Management $321,226.

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 generally accepted accounting principles. 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.

City of Hanford
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2025
-6-
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 report a fiduciary net position and a statement of changes in net position 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.

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 privatesector 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 position 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, Courthouse Square Funds and Building Safety 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 enables the City to demonstrate compliance with legal and/or contractual requirements that may be associated with these funds.

City of Hanford
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2025
-7-
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, 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 that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City’s general governmental operation 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.

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 all 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 trustee, 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 information 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.

City of Hanford
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2025
-8-

GOVERNMENT-WIDE FINANCIAL ANALYSIS
The City 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 $401,808,246 at the close of the 2024-2025 fiscal year.

By far, the largest portion of the City’s net position, 71%, 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 value is not available for future spending. Although the City’s investment in the 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 themselves cannot be used to liquidate these liabilities.

Of the total current assets totaling $161,143,762, approximately 89.3% or $143,890,167, 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.
2025 2024 2025 2024 2025 2024
ASSETS
Current assets 95,342,888 $ 84,679,531 $ 65,800,874 $ 54,695,865 $ 161,143,762 $ 139,375,396 $ Capital and non-current
assets (net of depreciation) 187,150,554 191,642,952 144,328,343 143,660,523 331,478,897 335,303,475 Total Assets 282,493,442 276,322,483 210,129,217 198,356,388 492,622,659 474,678,871 Deferred outflows of resources 16,145,176 18,945,144 1,865,764 1,903,416 18,010,940 20,848,560 LIABILITIES Current and other liabilities 10,289,210 13,613,178 7,240,401 5,559,050 17,529,611 19,172,228 Long-term liabilities 57,839,065 56,560,553 22,833,494 26,112,733 80,672,559 82,673,286 Total Liabilities 68,128,275 70,173,731 30,073,895 31,671,783 98,202,170 101,845,514 Deferred inflows of resources 9,279,977 11,762,775 1,343,206 853,940 10,623,183 12,616,715 NET POSITION Net investment in capital assets 160,790,661 165,368,191 125,287,048 121,203,106 286,077,709 286,571,297 Restricted 36,440,081 29,207,622 - - 36,440,081 29,207,622 Unrestricted 23,999,624 18,755,308 55,290,832 46,530,975 79,290,456 65,286,283 Total Net Position 221,230,366 $ 213,331,121 $ 180,577,880 $ 167,734,081 $ 401,808,246 $ 381,065,202 $

STATEMENT OF NET POSITION
Governmental Activities Business-Type Activities Total
As of June 30,

City of Hanford
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2025
-9-
An additional portion of the City’s net position of $36,440,081 represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position, $79,290,456, 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 longterm liabilities and fulfill its obligations pursuant to external restriction imposed on City assets. In short, the City is in sound financial condition.

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, 2024 to June 30, 2025, the net position of the City as a whole increased, due to maintaining expenditures below revenue whilst current year capital grants and contributions revenues were significantly lower than year prior but were offset by increase in tax revenue.

City of Hanford
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2025
-10-
2025 2024 2025 2024 2025 2024 REVENUES
Program Revenues:

Charges for services 4,366,807 $ 4,544,558 $ 39,903,211 $ 32,097,134 $ 44,270,018 $ 36,641,692 $ Operating grants and contributions 10,460,453 12,658,886 - - 10,460,453 12,658,886 Capital grants and contributions 6,085,235 16,354,756 624,700 4,431,308 6,709,935 20,786,064 General Revenues:

Taxes 41,161,158 35,942,896 - - 41,161,158 35,942,896
Investment earnings 2,120,623 2,947,174 2,514,315 2,735,869 4,634,938 5,683,043 Other revenues 17,945,684 558,387 3,160,816 2,701,155 21,106,500 3,259,542 Lease revenue - - 188,843 111,166 188,843 111,166 Total Revenues 82,139,960 73,006,657 46,391,885 42,076,632 128,531,845 115,083,289 EXPENSES Governmental Activities:

General government 26,361,639 7,755,643 - - 26,361,639 7,755,643 Public safety 25,850,371 26,472,385 - - 25,850,371 26,472,385 Public works 10,121,963 10,096,705 - - 10,121,963 10,096,705 Parks and recreation 7,038,008 5,483,946 - - 7,038,008 5,483,946 Community development 2,362,734 2,890,465 - - 2,362,734 2,890,465 Interest expense 1,012,248 1,086,925 - - 1,012,248 1,086,925 Business-type Activities:

Water system - - 10,570,388 7,711,131 10,570,388 7,711,131 Wastewater system - - 8,199,461 7,506,365 8,199,461 7,506,365 Storm drain - - 1,208,294 1,680,905 1,208,294 1,680,905 Refuse - - 12,416,109 10,852,999 12,416,109 10,852,999 Airport - - 707,402 558,304 707,402 558,304 Intermodal - - 53,768 56,256 53,768 56,256 Courthouse square - - 92,428 107,624 92,428 107,624 Building safety - - 1,793,988 1,649,670 1,793,988 1,649,670 Total Expenses 72,746,963 53,786,069 35,041,838 30,123,254 107,788,801 83,909,323 Increase in Net Position Before Transfers 9,392,997 19,220,588 11,350,047 11,953,378 20,743,044 31,173,966 Transfers (1,805,302) (1,154,605) 1,805,302 1,154,605 - - Change in Net Position 7,587,695 18,065,983 13,155,349 13,107,983 20,743,044 31,173,966 Net Position, Beginning of Year, Restated 213,642,671 195,265,138 167,422,531 154,626,098 381,065,202 349,891,236 Net Position, End of Year 221,230,366 $ 213,331,121 $ 180,577,880 $ 167,734,081 $ 401,808,246 $ 381,065,202 $ Governmental Activities Business-Type Activities Total

STATEMENT OF ACTIVITIES
For the fiscal year ended June 30.

The City’s revenue totaled $128,531,845 with 34% generated from charges for services and 32% generated from taxes. The largest source of revenues in governmental activities comes from taxes at 50.1%. 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 86%. The Business-Type Activities include enterprise fund operations, such as Water, Sewer, Refuse, Storm Drain, Airport, Courthouse Square, Intermodal Funds and Building Safety, all of which recover their costs through fees and charges just like a normal business.

City of Hanford
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2025
-11-
Expenses of the City totaled $107,788,801. The two largest categories of expenses in governmental activities are general government, which represents 24.5% of total costs, and public safety which represents 24% of total costs. However, in relation to Governmental Activity totals only, general government makes up 36.2% of the total and public safety makes up 35.5% 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 increased by $7,587,695, or

3.7% due to significant increase in revenue mostly due to charges for services net general government expenses. In the funds included within the Business-Type Activities category, net position increased by $13,155,349, or 7.7% mostly due to the increase in charges for services and net expenses and transfers in.

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 fund 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 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 $13,596,699 while total fund balance was $13,983,364. 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 21.1% of General Fund expenditures.

CDBG/HOME/Housing Fund - The Community Development Block Grant (CDBG) and Home Investment Partnerships Program (HOME) are federal grants that fund affordable housing and community development projects. The grants are administered by the U.S. Department of Housing and Urban Development (HUD). Funds are used for developing and maintaining affordable housing, financing public improvements, funding public service agencies that serve lower income households, etc.

Transportation Development Act Fund - A state level funding sources that provides funding for public transit operations, including bus and rail projects, as well as some non-transit related transportation projects like bike paths and specialized services for people with disabilities, funded through a dedicated quarter-cent sales tax collected statewide; it consists of two main components: the Local Transportation Fund (LTF) and the State Transit Assistance (STA) fund.

City of Hanford
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2025
-12-
American Resue Plan Act - In March of 2021, the ARPA or also known as the COVID-19 Stimulus Package was signed into law to aid to aid economic recovery and emergency response to COVID19, The City of Hanford was allocated $13,077,740 million in federal aid. The Act states that funding can be used to respond to COVID-19 or its economic impacts.

Measure H - The Measure H fund is a special revenue fund approved by voters in November 2024 and is used to account for financial resources provided by a voter-approved one percent (1%) local transactions and use (sales) tax.

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

The Water System Fund has a total net position of $79,330,085 at the end of the fiscal year. Total net position includes $48,606,642 invested in capital assets which are not available to pay for current expenses. The remaining net position of $30,723,443 is unrestricted and available to pay for current operating and capital needs of the fund.

The Wastewater Fund has a total net position of $49,354,305 at the end of the fiscal year. Total net position includes $40,375,958 invested in capital assets, which are not available to pay for current expenses. The remaining net position of $8,978,347 is unrestricted and available to pay for current operating and capital needs of the fund.

The Storm Drain Fund has a total net position of $28,903,928 at the end of the fiscal year. Total net position includes $23,490,092 invested in capital assets, which are not available to pay for current expenses. The remaining net position of $5,413,836 is unrestricted and available to pay for current operating and capital needs of the fund.

The Refuse Fund has a total net position of $2,248,834 at the end of the fiscal year. Total net position includes $6,034,515 invested in capital assets, which are not available to pay for current expenses.

City of Hanford
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2025
-13-

CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets – The City of Hanford’s investment in capital assets for governmental and business type activities as of June 30, 2025 amounts to $311,832,065 (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 $3,969,442. This decrease is a net result of annual depreciation, infrastructure, 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
825600 BADGER METER REPLACEMENT PROJ 3,024,131 $
825301 STORM DRAIN VAC TRUCK 776,614 825609 WWTP3RD INTERNAL LIFT ADDITION 427,414 824618 TRANSIT-ORIENTED DEV-HIGH SPEED RAIL 419,850
824011 WW STAND-BY PUMP 364,035
824621 DESIGN & CONTST OF SCE-OWNED FAC 336,962
824002 AUTOMATED REFUSE CONTAINERS 258,985
822649 HEROES PARK 246,325
824001 COMMERCIAL/RECYCLE DUMPSTERS 210,857
824010 ICE RINK 193,962
2025 2024 2025 2024 2025 2024
Land 61,094,107 $ 61,094,107 $ 11,966,873 $ 11,966,873 $ 73,060,980 $ 73,060,980 $ Construction in progress 7,713,017 6,947,608 4,418,542 509,213 12,131,559 7,456,821 Buildings and improvements 14,101,785 14,572,268 112,761,016 115,852,898 126,862,801 130,425,166 Infrastructure 74,741,815 80,766,404 - - 74,741,815 80,766,404 Machinery and equipment 7,268,043 7,635,602 15,166,592 15,311,073 22,434,635 22,946,675 Right to use leased asset 1,631,368 927,235 15,320 20,466 1,646,688 947,701 Right to use SBITA asset 953,587 197,760 - - 953,587 197,760 Total Capital Assets 167,503,722 $ 172,140,984 $ 144,328,343 $ 143,660,523 $ 311,832,065 $ 315,801,507 $

CAPITAL ASSETS
(Net of Depreciation)
Governmental Activities Business-Type Activities Total
Long-Term Debt – At the end of the current fiscal year, the City had a total debt outstanding of $47,307,554. 2025 2024 2025 2024 2025 2024 Pension obligation bonds payable 22,129,180 $ 23,922,715 $ 4,046,820 $ 4,006,284 $ 26,176,000 $ 27,928,999 $ Bonds payable - - 10,845,000 12,725,000 10,845,000 12,725,000 Unamortized bond premium - - 336,504 409,811 336,504 409,811 Lease payable 1,160,951 638,867 15,758 20,742 1,176,709 659,609 SBITA payable 929,308 178,371 - - 929,308 178,371 Notes payable - - 3,460,993 3,890,840 3,460,993 3,890,840 Finance purchase arrangement - - 4,383,040 5,411,024 4,383,040 5,411,024 Total Outstanding Debt 24,219,439 $ 24,739,953 $ 23,088,115 $ 26,463,701 $ 47,307,554 $ 51,203,654 $ Governmental Activities Business-Type Activities Total OUTSTANDING DEBT

City of Hanford
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2025
-14-
In the Business-Type Activities, the revenue 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 $3,155,000 remains. For the sewer system there remains a 2015 $2,005,000 Refunding Revenue Bond, and a 2012 $5,685,000 Refunding Revenue Bond. In 2022, the City issued Pension Obligation Bonds of which $4,046,820 is payable from the Business-Type Activities.

The notes payable portion of the outstanding debt totaling $3,460,993 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, $4,383,040, 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.

GENERAL FUND BUDGETARY HIGHLIGHTS
The fiscal year budget did not have significant net changes throughout the year with the exception of appropriation roll-over for capital projects or capital projects appropriated in the 5-year Capital Improvement Plan. However, if funding is not available to pay for projects or a grant to cover the expense of the capital project is not received as forecasted in the plan, then the purchase is not approved.

Actual revenues were $21.2 million over estimated budget amounts. This was mainly due to a legal related stop-loss insurance recovery of $17.5 million. The remaining is due to increases in property taxes and grant funding.

Federal funding in the amount of $3,299,497 was used to cover eligible costs of public safety workers performing essential work during Covid-19. This will be the final year of this one-time funding.

Expenditures were over budget in the amount of $17.9 million. This was primarily due to a legal settlement in the amount of $17.5 and related costs. In addition, unfilled positions throughout the year and some operational savings also attributed to lower expenditures.

Overall, the unrestricted fund balance of the General Fund increased by $908,363 million. The Measure H Fund unrestricted balance, which is also considered General Fund generated $3.3 million (first year of distributions).

City of Hanford
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2025
-15-
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES
The key assumptions and considerations in the General Fund revenue forecast for fiscal year 2025-2026 budget process were:
- Biennial Budget was balanced- Resolution 25-29-R
- Balanced budget was a challenge to achieve for FY26
- Conservative revenue projections in General Fund due to stagnant sales tax projections and fiscal prudence
- 1st year of 10-year expenditure plan for Measure H
- Measure H is General Fund but will be maintained separate for transparency and auditing purposes
- Maintain operating expenditures in General Fund, no large increases or limited increases to non-fixed/essential costs
- No annual increases in staffing in General Fund (unless offset by grants or revenue increases)
- Addition of 20 FTE to be funded by Measure H
- Budgeted salaries at top step
- Reviewed and updated reserves. Fully budgeted
- Updated cost allocation plan. Slight increase to GF and provided for more accurate indirect costs and allocations
Per policy, continue to strive for 35% goal of General Fund Reserve of unrestricted fund balance to budgeted expenditures in preparation of financial pressures or emergencies. As of fiscal year 2025 reserve decreased from 28% to 21%. However, the actual dollar amount increased by $908,363.

Items addressed in the budget were:

General Fund Operations – Maintain current services and increase efficiency in operations, decrease expenses where possible and anticipate stagnant revenue growth with no draw from reserves. Should continue to anticipate increases to our second largest fund source, property taxes. Some capital projects will be deferred unless offset by grants or related revenue.

Accumulated capital outlay fund was used when a special revenue or restricted fund was not available for use.

Parks and Community Services – Continue with a variety of recreation programs and activities including Boys and Girls Club, 46th Renaissance Fair, 100-year Celebration of the Civic Auditorium, Catfish Crawl Fishing Derby, Summer and Winter camps for kids, Adult softball league, etc. Budget was increased for City’s fourth annual Winter Wonderland Event to include the purchase of the ice rink. The Parks division also was awarded with a $1 million dollar grant for the “Hanford Goes Green” project. An integral component of the program’s scope of work is to complete a comprehensive tree inventory, tree canopy assessment, urban forestry program background and operations review, and community engagement, leading to the completion of the Urban Forest Master Plan, which will guide the future of the City's Urban Forest Program.

City of Hanford
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2025
-16-
Additionally, the City collaborated on a purchase with the Hanford Joint Union High School District to purchase an ABI force field machine to be used at the Hanford Softball Complex, a facility jointly used and operated by both parties. The replacement equipment is designed for professional infield maintenance and will enhance field safety and playability due to its precise grading, grooming and surface conditioning.

Fire – With grant funding, purchased 3 unmanned aircraft (drones) with thermal imaging capabilities that can assist during fire incidents, illegal fireworks operations, etc. Replaced an engine for a 2014 Pierce Pumper (Fire Engine) that is critical to operations. Provided additional budget for Part-Time help for the efficiency and effectiveness of the Fire Inspection program to increase public safety.

Police – With grant funding, purchased a patrol Durango for the Departments fleet and new sights and slides that will improve target acquisition and accuracy. Added additional portable ratios to inventory. Final year of participation in the Multi-Agency Task force with the County which allowed for the FTE to be transferred to Operations Division. In coordination with the City’s vehicle-leasing agreement with Enterprise, the department added 11 patrol Durangos to its fleet as replacements for aging vehicles, bringing the total number of newly leased replacements to 27 over the past couple of years.

Community Development – With grant funding, hired consultant to make updates to the Hanford Planning documents including the general plan, municipal code and objective-based standards and modernize the GIS and permitting processes to improve efficiency and public access to planning resources. Additionally, the department also obtained funding for planning services for the Kings-Tulare high-speed rail station transit-oriented development and connectivity plan, and Cross Valley Corridor Rail Service planning project. The Building Division is in its second year of prioritizing the scanning and indexing of building plans, with completion anticipated next year.

This effort preserves critical records, protects them from loss or damage, and ensures long-term accessibility.

Airport – With grant funding began engineering services for the replacement of fuel island and tanks and reconstruction of South Transient Ramp. Worked with consultant to update the Pavement Management Program which not only evaluates the current condition of the pavement but provides consistent, objective, and systematic procedures. for establishing facility policies, setting priorities and schedules, allocating resources, and budgeting for pavement maintenance and rehabilitation.

Water – Prepared City’s 2025 Urban Water Management Plan and Water Shortage Contingency Plan as mandated by the California State Water Resources Control Board (must be prepared every 5 years). Began the water meter replacement project to replace over 19,000 water meters City wide. Estimated to be completed end of 2026. Substantial site facility improvements to water wells 51 & 52.

Based on most recent rate study-remaining rate increases scheduled for 07/01/25 through 2027.

City of Hanford
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2025
-17-
Wastewater – Purchased critical back up equipment including standby pump and screw pumps.

Invested in electrical switch gear to prepare for upcoming solar power project. Contracted consultant for additional utility rate study to support current and needs and future growth.

Approved net energy metering and interconnection agreement with Southern California Edison which included payment for the design and construction of SCE-owned facilities to accept power generated from proposed City-owned solar energy generating facility.

Based on most recent rate study-remaining rate increases scheduled for 07/01/25 through 2027.

Refuse – Replaced automated refuse containers and commercial/recycle dumpsters. Awarded small grant to place three solar compactors in the downtown area.

Based on most recent rate study- remaining rate increases scheduled for 07/01/25 through 2026.

Storm Drain – Continued curb and gutter installation, increased flow capacity in Peoples Ditch, storm drain repairs, tree trimming and removal for the effectiveness of drains. Purchased portable pumps and new vacuum truck.

Streets – Ongoing resurfacing, sealing, and maintenance, replacing curb, gutters, and sidewalks, lane widening, installing/replacing traffic signals at various locations. Replaced streets water truck.

Building – City made substantial building improvements to the intermodal facility (Amtrak station) both externally and internally to facilitate a shared employee use only health clinic in partnership with the Hanford Joint Union High School Districted. Upon first year City will evaluate employee use and overall fiscal sustainability.

In November 2024, the City Council approved a disposition and development agreement, along with all related documents, for the sale of the historic County of Kings Courthouse to Barrelhouse Brewing for $1. At the time, the courthouse was largely unoccupied, with most suites vacant due to needed repairs and ADA accessibility upgrades—improvements the City lacked sufficient funding to complete. Barrelhouse plans to undertake major rehabilitation of the building, converting it into a brewery and taproom while also activating additional spaces as a multi-tenant entertainment and food hub. The sale officially closed escrow in October 2025.

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.

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FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS

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City of Hanford
Statement of Net Position
June 30, 2025
The accompanying notes are an integral part of these financial statements. -18-
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments 94,275,682 $ 49,614,485 $ 143,890,167 $ Receivables, net 9,373,702 5,166,142 14,539,844 Leases receivables 691,081 852,018 1,543,099 Interest receivable 555 12,356 12,911
Internal balances (9,897,068) 9,897,068 -
Inventory 295,796 202,235 498,031 Deposits 289,500 14,000 303,500 Prepaid expenses and other assets 313,640 42,570 356,210 Loan receivables 19,646,832 - 19,646,832 Capital Assets:

Capital assets, not being depreciated 68,807,124 16,385,415 85,192,539 Capital assets, net of accumulated depreciation 98,696,598 127,942,928 226,639,526 Total assets 282,493,442 210,129,217 492,622,659

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows related to pensions 15,122,825 1,399,223 16,522,048 Deferred outflows related to OPEB 1,022,351 466,541 1,488,892 Total deferred outflows of resources 16,145,176 1,865,764 18,010,940 LIABILITIES Accounts payable 2,908,208 2,438,460 5,346,668 Salary and benefits payable 568,199 145,625 713,824 Accrued interest payable 5,022 219,338 224,360 Deposits and unearned revenue 1,291,216 189,209 1,480,425 Compensated absences - current portion 880,187 322,935 1,203,122 Compensated absences - noncurrent portion 1,634,632 364,160 1,998,792 Long-term debt - current 1,998,963 3,886,666 5,885,629
Long-term debt - noncurrent 22,220,476 19,201,449 41,421,925 Claims payable 7,566,000 - 7,566,000 Total OPEB liability - current 137,415 38,168 175,583 Total OPEB liability - noncurrent 2,177,407 537,461 2,714,868 Net pension liability 24,240,550 2,730,424 26,970,974 Settlement liability - current 2,500,000 - 2,500,000 Total liabilities 68,128,275 30,073,895 98,202,170 DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pensions 7,005,400 51,904 7,057,304 Deferred inflows related to OPEB 1,609,490 499,001 2,108,491 Deferred inflows related to leases 665,087 792,301 1,457,388 Total deferred inflows of resources 9,279,977 1,343,206 10,623,183 NET POSITION Net investment in capital assets 160,790,661 125,287,048 286,077,709 Restricted for:

Community Development 2,577,388 - 2,577,388 Street and Roads 22,422,771 - 22,422,771 Recreation 7,545,344 - 7,545,344 Landscape Maintenance 2,358,368 - 2,358,368 Public Safety 1,536,210 - 1,536,210
Unrestricted 23,999,624 55,290,832 79,290,456 Total net position 221,230,366 $ 180,577,880 $ 401,808,246 $

City of Hanford
Statement of Activities
For the Year Ended June 30, 2025
The accompanying notes are an integral part of these financial statements. -19-
Charges Operating Capital
for Grants and Grants and Governmental Business-type
Expenses Services Contributions Contributions Activities Activities Total Primary Government:

Governmental activities:

General government 26,361,639 $ 259,316 $ 3,802,527 $ - $ (22,299,796) $ - $ (22,299,796) $ Public safety 25,850,371 1,061,431 2,318,631 404,801 (22,065,508) - (22,065,508) Public works 10,121,963 1,193,779 2,778,934 4,100,501 (2,048,749) - (2,048,749) Recreation 7,038,008 1,039,902 700,419 1,579,933 (3,717,754) - (3,717,754) Community development 2,362,734 812,379 859,942 - (690,413) - (690,413) Interest expense 1,012,248 - - - (1,012,248) (1,012,248) Total governmental activities 72,746,963 4,366,807 10,460,453 6,085,235 (51,834,468) - (51,834,468) Business-type activities:

Water system 10,570,388 15,674,307 - 334,000 - 5,437,919 5,437,919 Wastewater system 8,199,461 9,559,836 - 188,950 - 1,549,325 1,549,325 Storm drain 1,208,294 1,496,551 - 101,750 - 390,007 390,007 Refuse 12,416,109 10,686,423 - - - (1,729,686) (1,729,686) Airport 707,402 120,938 - - - (586,464) (586,464) Intermodal 53,768 - - - - (53,768) (53,768) Courthouse square 92,428 36,954 - - - (55,474) (55,474) Building safety 1,793,988 2,328,202 - - - 534,214 534,214 Total business-type activities 35,041,838 39,903,211 - 624,700 - 5,486,073 5,486,073 Total Primary Government 107,788,801 $ 44,270,018 $ 10,460,453 $ 6,709,935 $ (51,834,468) 5,486,073 (46,348,395) General Revenues:

Taxes:

Property taxes 16,445,724 - 16,445,724 Sales and use tax 21,107,925 - 21,107,925 Franchise taxes 1,173,931 - 1,173,931 Transfer taxes 217,043 - 217,043 Transient occupancy taxes 705,508 - 705,508 Other taxes 1,511,027 - 1,511,027
Investment earnings 2,120,623 2,514,315 4,634,938
Gain on disposal of capital assets 137,460 5,043 142,503 Miscellaneous/other 17,808,224 3,155,773 20,963,997 Lease revenue - 188,843 188,843 Transfers - interfund (1,805,302) 1,805,302 - Total General Revenues and Transfers 59,422,163 7,669,276 67,091,439 Change in Net Position 7,587,695 13,155,349 20,743,044 Net Position
Beginning of year, previously reported 213,331,121 167,734,081 381,065,202 Adjustment - correction of error 311,550 (311,550) - Beginning of year, as restated 213,642,671 167,422,531 381,065,202 End of year 221,230,366 $ 180,577,880 $ 401,808,246 $ Net (Expense) Revenue and Changes in Net Position
Functions/Programs
Program Revenues

GOVERNMENTAL FUNDS

FINANCIAL STATEMENTS

City of Hanford
Balance Sheet – Governmental Funds
June 30, 2025
The accompanying notes are an integral part of these financial statements. -20-
General Fund

CDBG/HOME/
Housing Fund
Transportation
Development
Act Fund
American Rescue
Plan Act
Cash and investments 10,596,785 $ 2,479,891 $ 9,336,450 $ 1,313,509 $ Receivables, net:

Accounts 2,645,143 174,927 - -
Interest 555 - - - Taxes 1,901,094 - 1,355,009 - Leases 691,081 - - - Loans - 17,839,739 - - Due from other funds 3,144,260 - - - Deposits 104,500 - - - Prepaid expenses and other assets 282,165 - - - Advances to other funds - - - - Total assets 19,365,583 $ 20,494,557 $ 10,691,459 $ 1,313,509 $

RESOURCES AND FUND BALANCES
Liabilities:

Accounts payable 1,682,054 $ 77,430 $ - $ 49,121 $
Accrued wages payable 531,943 - - - Advance from other governments - - - 1,288,081 Consumer deposits 3,135 - - - Settlement liability 2,500,000 - - - Due to other funds - - - - Total liabilities 4,717,132 77,430 - 1,337,202 Deferred inflows from leases 665,087 - - - Total deferred inflows of resources 665,087 - - - Nonspendable:

Loans receivable - 17,839,739 - - Prepaid expenses 282,165 - - - Deposits 104,500 - - - Restricted for:

Community development - 2,577,388 - - Street and roads - - 10,691,459 - Recreation - - - - Landscape maintenance - - - - Public Safety - - - - Committed for:

Parking and business improvement - - - - Community development - - - - Street and roads - - - - Parks and community services - - - - Public safety - - - - Cannabis - - - - Unassigned 13,596,699 - - (23,693) Total fund balances 13,983,364 20,417,127 10,691,459 (23,693) Total liabilities, deferred inflows of
resources and fund balances 19,365,583 $ 20,494,557 $ 10,691,459 $ 1,313,509 $ Fund Balances (deficit):

ASSETS

LIABILITIES, DEFERRED INFLOWS OF
Special Revenue
Deferred Inflows of Resources:

City of Hanford
Balance Sheet – Governmental Funds (concluded)
June 30, 2025
The accompanying notes are an integral part of these financial statements. -21-
Special Revenue
Measure H Fund
All Other NonMajor
Governmental
Funds Total
$ 36,734,515 729,273 $ 61,190,423 $
308,586 - 3,128,656
- - 555
461,960 2,524,632 6,242,695
- - 691,081
1,807,093 - 19,646,832
- - 3,144,260
- - 104,500
1,100 - 283,265
636,692 - 636,692
$ 39,949,946 3,253,905 $ 95,068,959 $
$ 188,787 - $ 1,997,392 $
3,838 - 535,781
- - 1,288,081
- - 3,135
- - 2,500,000
96,199 - 96,199
288,824 - 6,420,588
- - 665,087
- - 665,087
1,807,093 - 19,646,832
1,100 - 283,265
- - 104,500
- - 2,577,388
11,731,312 - 22,422,771
7,545,344 - 7,545,344
2,358,368 - 2,358,368
1,536,210 - 1,536,210
3,025,495 - 3,025,495
11,390,909 97,617 11,488,526
- 1,041,250 1,041,250
- 130,156 130,156
- 1,984,882 1,984,882
265,291 - 265,291
- - 13,573,006
39,661,122 3,253,905 87,983,284
$ 39,949,946 3,253,905 $ 95,068,959 $

This page intentionally left blank.

City of Hanford
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2025
The accompanying notes are an integral part of these financial statements. -22-
Total Fund Balances Governmental Funds 87,983,284 $
Amounts reported for governmental activities in the statement of net position are different because:

Capital assets at historical cost 321,874,184 $
Right to use asset 3,330,866 Accumulated depreciation (156,955,417) Accumulated amortization (745,911) Adjustments for Internal Service Fund capital assets, net (4,622,802) 162,880,920 14,536,734
Compensated absences (2,514,819) Pension obligation bonds (22,129,180) Lease payable (1,160,951) SBITA payable (929,308) OPEB liability (2,314,822)
Net pension liability (24,240,550) Adjustments for Internal Service Fund long term debt 1,985,042 (51,304,588) Deferred outflows related to pensions and OPEB 16,145,176 Adjustment for Internal Service Fund Deferred outflows related to pension (411,535) 15,733,641 Deferred inflows related to pensions and OPEB (8,614,890) Adjustment for Internal Service Fund Deferred inflows related to pension 15,265 (8,599,625) Total Net Position - Governmental Activities 221,230,366 $ 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:

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.

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:

City of Hanford
Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds
For the Year Ended June 30, 2025
The accompanying notes are an integral part of these financial statements. -23-
General
Fund

CDBG/HOME/
Housing Fund
Transportation
Development Act
Fund
American
Rescue Plan
Act

REVENUES
Taxes and special assessments 35,878,197 $ - $ 1,355,009 $ - $ Aid from other government agencies 3,151,749 531,855 - 3,802,527 Licenses and permits 63,690 - - - Fines and forfeitures 144,373 - - - Charges for services 2,733,388 - - - Lease revenue 163,635 - - - Revenue from use of money and property 413,348 309,955 445,506 - Miscellaneous 17,589,996 148 - - Total revenues 60,138,376 841,958 1,800,515 3,802,527 EXPENDITURES Current:

General government 21,986,050 - 9,114 - Public safety 26,572,968 - - - Public works 2,868,444 - - - Recreation 6,323,733 - - - Community development 895,219 608,065 - - Debt service:

Principal 1,841,625 - - -
Interest 1,012,248 - - - Capital outlay 3,089,492 - 50,420 380,011 Total expenditures 608,065 64,589,779 59,534 380,011 Excess (deficiency) of revenues over (under) expenditures (4,451,403) 233,893 1,740,981 3,422,516 OTHER FINANCING SOURCES (USES) Transfers in 5,431,606 - - - Transfers out (1,719,428) (191,073) - (3,299,497) Lease and SBITA acquisition 1,755,501 - - - Proceeds from sale of assets 24,896 34,342 - - Total other financing sources (uses) 5,492,575 (156,731) - (3,299,497) Net change in fund balances 77,162 1,041,172 1,740,981 123,019 FUND BALANCE (DEFICIT) Beginning of year 12,942,192 20,339,965 8,950,478 (146,712) End of year 13,983,364 $ 20,417,127 $ 10,691,459 $ (23,693) $ Special Revenue

City of Hanford
Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds (concluded)
For the Year Ended June 30, 2025
The accompanying notes are an integral part of these financial statements. -24-
Special Revenue
Measure H Fund
All Other NonMajor
Governmental
Funds Total
$ 8,659,443 3,388,557 $ 49,281,206 $
121,654 - 7,607,785
- - 63,690
29,463 - 173,836
- - 2,733,388
- - 163,635
1,558,970 9,184 2,736,963
165,921 - 17,756,065
10,535,451 3,397,741 80,516,568
78,483 86 22,073,733
- - 26,572,968
1,009,529 - 3,877,973
- - 6,323,733
387,503 - 1,890,787
- - 1,841,625
- - 1,012,248
1,839,527 - 5,359,450
3,315,042 86 68,952,517
7,220,409 3,397,655 11,564,051
299,805 - 5,731,411
(688,123) (143,750) (6,041,871)
- - 1,755,501
72,172 - 131,410
(316,146) (143,750) 1,576,451
6,904,263 3,253,905 13,140,502
32,756,859 - 74,842,782
$ 39,661,122 3,253,905 $ 87,983,284 $

City of Hanford
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities
Governmental Funds
For the Year Ended June 30, 2025
The accompanying notes are an integral part of these financial statements. -25-
Total net changes in fund balances - governmental funds 13,140,502 $ $ 5,335,415
(3,304,508) (8,639,923)
1,824,011
(718,760)
68,510 (1,036,741)
(49,008)
(1,008,362)
(992,286)
(267,153)
Changes in net position of governmental activities 7,587,695 $ payments. In the statement of activities, OPEB expense includes the net change in the net OPEB liability and related change in OPEB amounts for deferred outflows deferred inflows of resources.

Capital outlay expense, net of disposals
Depreciation expense (net of internal service funds)
SBITA acquisition, net of internal service funds
Principal payments on long term liabilities, net of internal service funds use of current financial resources and, therefore, are not reported as expenditures in the governmental funds.

Pension expenditures reported in the governmental funds includes the annual required contributions. In the statement of activities, pension expense includes the net change in the net pension liability, and related change in pension amounts for deferred outflows of resources and deferred inflows of resources.

OPEB expenditures reported in the governmental funds includes the actual premium 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:

Compensated absences expenses reported in the statement of activities do not require the Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense. This is the amount by which capital outlay exceeded depreciation and disposals in the current period.

The issuance of long term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of issuance cost, discounts and similar items when the debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. These amounts are the net effect of these differences in the treatments of long-term debt and related items.

Amounts reported for governmental activities in the statement of activities are different because:

Internal Service funds are used by management to charge the costs of fleet maintenance, Lease acquisition, net of internal service funds

Governmental Funds

PROPRIETARY FUNDS

FINANCIAL STATEMENTS

This page intentionally left blank.

City of Hanford
Statement of Net Position
Proprietary Funds
June 30, 2025
The accompanying notes are an integral part of these financial statements. -26-
Sewer Improvement Funds Total Governmental
Water System Wastewater Storm Drain Refuse Total Non-major Enterprise Activities Internal Fund Fund Fund Fund Enterprise Funds Funds Service Funds Current assets: Cash and investments 32,546,564 $ 9,495,048 $ 5,754,136 $ 623,185 $ 1,195,552 $ 49,614,485 $ 33,085,259 $ Receivables, net:

Accounts 2,058,276 1,252,891 218,451 1,351,045 285,479 5,166,142 2,351 Leases 346,998 - - - 505,020 - 852,018 Interest 8,417 - - - 3,939 - 12,356 Deposits 10,000 4,000 - - - 14,000 185,000 Prepaid expenses 7,359 34,161 - - 1,050 42,570 30,375 Inventory 202,235 - - - - 202,235 295,796 Total current assets 34,824,434 11,141,515 5,972,587 1,974,230 1,991,040 55,903,806 33,598,781 Noncurrent assets: Capital Assets:

Land 362,350 4,141,540 4,587,476 - 2,875,507 11,966,873 - Construction in progress 764,376 3,479,372 37,777 7,816 129,201 - 4,418,542 Buildings and improvements 68,706,226 90,590,955 24,643,775 1,400,645 11,495,823 196,837,424 26,191 Machinery and equipment 18,452,732 2,804,228 2,023,535 11,346,345 401,951 35,028,791 15,301,713 Right to use assets 25,726 - - - - 25,726 237,867 Less accumulated depreciation/amortization (35,490,276) (45,813,333) (7,802,471) (6,720,291) (8,122,642) (103,949,013) (10,942,969) Capital assets, net 55,536,130 52,487,766 23,490,092 6,034,515 6,779,840 144,328,343 4,622,802 Total noncurrent assets 55,536,130 52,487,766 23,490,092 6,034,515 6,779,840 144,328,343 4,622,802 Total assets 90,360,564 63,629,281 29,462,679 8,008,745 8,770,880 200,232,149 38,221,583 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows related to pensions 411,536 329,229 164,614 493,844 - 1,399,223 411,535 Deferred outflows related to OPEB 141,991 121,706 - 202,844 - 466,541 - Total Deferred Outflows of Resources 553,527 450,935 164,614 696,688 - 411,535 1,865,764 Current liabilities: Accounts payable 1,717,432 294,448 39,324 319,209 68,047 2,438,460 910,816 Salaries and benefits payable 39,185 31,742 12,999 43,204 18,495 145,625 32,418 Interest payable 63,742 148,791 1,049 5,222 534 5,022 219,338 Deposits and unearned revenue 188,729 - - 480 - 189,209 - Due to other funds - - - 3,012,361 35,700 3,048,061 - Advances to other funds - - - - 636,692 636,692 - Compensated absences - current portion 124,445 43,924 25,586 84,240 44,740 322,935 12,106 Bonds and notes payable - current portion 1,935,000 1,811,748 19,268 95,913 19,622 3,881,551 63,463 Total OPEB liability - current portion 12,070 9,847 - 16,251 - 38,168 - Lease payable 5,115 - - - - 5,115 - SBITA payable - - - - - - 79,275 Total current liabilities 4,085,718 2,340,500 98,226 3,576,880 823,830 10,925,154 1,103,100 Noncurrent liabilities: Compensated absences payable 102,389 67,100 30,346 120,765 43,560 364,160 146,189 Claims payable - - - - - - 7,566,000 Lease payable 10,643 - - - - 10,643 - Bonds and notes payable, net 6,240,518 11,079,063 267,461 1,331,391 272,373 19,190,806 880,944 Total OPEB liability 164,762 137,983 - 234,716 - 537,461 - Net pension liability 803,066 642,453 321,226 963,679 - 2,730,424 803,065 Total noncurrent liabilities 7,321,378 11,926,599 619,033 2,650,551 315,933 22,833,494 9,396,198 Total liabilities 11,407,096 14,267,099 717,259 6,227,431 1,139,763 33,758,648 10,499,298 DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pensions 15,266 12,213 6,106 18,319 - 51,904 15,265 Deferred inflows related to OPEB 161,643 126,509 - 210,849 - 499,001 - Deferred inflows related to leases - 320,090 - - 472,211 792,301 - Total deferred inflows of resources 176,909 458,812 6,106 229,168 472,211 1,343,206 15,265 NET POSITION (DEFICIT) Net investment in capital assets 48,606,643 40,375,958 23,490,092 6,034,515 6,779,840 125,287,048 4,622,802 Unrestricted 30,723,443 8,978,347 5,413,836 (3,785,681) 379,066 41,709,011 23,495,753 Total net position 79,330,086 $ 49,354,305 $ 28,903,928 $ 2,248,834 $ 7,158,906 $ 166,996,059 28,118,555 $ Adjustment to reflect the consolidation of internal service fund activities 13,581,821 Net Position of Business-type Activities $ 180,577,880

LIABILITIES
ASSETS

City of Hanford
Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds
For the Year Ended June 30, 2025
The accompanying notes are an integral part of these financial statements. -27-
Total Governmental
Water System Wastewater Storm Drain Refuse Total Non-major Enterprise Activities Internal Fund Fund Fund Fund Enterprise Funds Funds Service Funds

OPERATING REVENUES
Charges for services 15,674,307 $ 9,559,836 $ 1,496,551 $ 10,686,423 $ 2,486,094 $ $ 13,760,999 39,903,211 $ Other revenues 1,073,537 1,133,792 407,489 305,984 234,971 64,126 3,155,773 Total operating revenues 16,747,844 10,693,628 1,904,040 10,992,407 2,721,065 43,058,984 13,825,125 OPERATING EXPENSES Personnel services 2,629,421 2,096,832 868,117 3,222,920 1,085,107 2,227,301 9,902,397 Services and supplies 5,349,807 4,019,794 989,274 8,343,622 1,169,188 9,136,619 19,871,685 Depreciation and amortization 2,443,992 1,800,683 412,422 785,250 370,523 1,025,725 5,812,870 Total operating expenses 10,423,220 7,917,309 2,269,813 12,351,792 2,624,818 35,586,952 12,389,645 Operating income (loss) 6,324,624 2,776,319 (365,773) (1,359,385) 96,247 7,472,032 1,435,480 NONOPERATING REVENUES (EXPENSES) Interest income 471,958 1,178,443 235,460 19,888 65,694 1,137,104 1,971,443 Unrealized gain (loss) on investments 109,296 354,588 71,091 6,369 1,529 354,878 542,873 Interest expense (451,727) (324,221) (14,479) (72,077) (14,211) (50,330) (876,715) Lease revenue 78,338 - - - 110,505 - 188,843 Gain/(loss) on disposal of capital assets 1,782 - - 3,261 - (9,469) 5,043 Total Nonoperating Revenues (Expenses) 1,208,810 209,647 292,072 (42,559) 163,517 1,831,487 1,432,183 Income (Loss) Before Capital Contributions
and Transfers 2,985,966 7,533,434 (73,701) (1,401,944) 259,764 9,303,519 2,867,663 CAPITAL CONTRIBUTIONS AND TRANSFERS Capital contributions 188,950 334,000 101,750 - - - 624,700 Transfers in 5,385,557 3,503,910 1,391,918 11,924 1,250,706 4,509,669 11,544,015 Transfers out (5,050,424) (3,520,649) (1,045,798) (11,924) (109,918) (6,004,511) (9,738,713) Total Capital Contributions and Transfers 172,211 669,133 447,870 - 1,140,788 2,430,002 (1,494,842) Change in Net Position 8,202,567 3,158,177 374,169 (1,401,944) 1,400,552 11,733,521 1,372,821 NET POSITION (DEFICIT) Beginning of year, as previously reported 71,127,519 46,196,128 28,529,759 6,069,904 3,650,778 26,745,734 Adjustment - correction of an error - - - - - (311,550) Beginning of year, as restated 71,127,519 46,196,128 28,529,759 3,650,778 5,758,354 26,745,734 End of year 79,330,086 $ 49,354,305 $ 28,903,928 $ 2,248,834 $ 7,158,906 $ 28,118,555 $ Adjustment to reflect the consolidation of internal service fund activities 1,421,828 Net Position of Business-type Activities
$ 13,155,349
Sewer Improvement Funds

City of Hanford
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2025
The accompanying notes are an integral part of these financial statements. -28-
Sewer Improvement Funds
Water System Wastewater Storm Drain Refuse
Fund Fund Fund Fund

CASH FLOWS FROM OPERATING ACTIVITIES
Cash received for current services $ 9,396,200 15,443,673 $ 1,488,754 $ 10,631,603 $ Cash received for other operating revenues 1,133,792 1,073,537 407,489 305,984 Cash paid to suppliers for goods and services (4,215,413) (3,905,950) (956,264) (8,350,812) Cash paid for salaries and benefits (2,337,109) (1,912,951) (781,813) (2,918,376) Net cash provided (used) by operating activities 9,964,688 4,711,091 158,166 (331,601) CASH FLOWS FROM NONCAPITAL AND

RELATED FINANCING ACTIVITIES
Transfers (to) from other funds 335,133 (16,739) 346,120 - Loans from/(to) other funds - - - 1,121,880 Net cash provided (used) by noncapital financing activities 335,133 (16,739) 346,120 1,121,880

CASH FLOWS FROM CAPITAL AND

RELATED FINANCING ACTIVITIES
Principal payments on long-term debt (1,779,845) (1,694,658) (19,202) (95,586) Interest payments on long-term debt (368,861) (510,215) (13,430) (66,855) Payments for capital asset acquisition (3,300,073) (1,074,949) (853,107) (493,582) Lease payments (4,983) - - - SBITA payments - - - - Lease income - 83,172 - - Proceeds from the sale of capital assets - - - - Net cash provided (used) by capital and related financing activities (5,453,762) (3,196,650) (885,739) (656,023) CASH FLOWS FROM INVESTING ACTIVITIES Unrealized gain (loss) on investments 354,588 109,296 71,091 6,369 Interest received on investments 1,178,443 471,958 235,460 19,888 Net cash provided by investing activities 1,533,031 581,254 306,551 26,257 Net increase (decrease) in cash and investments 6,379,090 2,078,956 (74,902) 160,513 Cash and investments, beginning of year 26,167,474 7,416,092 5,829,038 462,672 Cash and investments, end of year 32,546,564 $ 9,495,048 $ 5,754,136 $ 623,185 $ Reconciliation to Statement of Net Position:

Cash and investments 32,546,564 $ 9,495,048 $ 5,754,136 $ 623,185 $ Total cash and investments 32,546,564 $ 9,495,048 $ 5,754,136 $ 623,185 $

City of Hanford
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2025
The accompanying notes are an integral part of these financial statements. -29-
Total Governmental
Total Non-major Enterprise Activities Internal
Enterprise Funds Funds Service Funds

CASH FLOWS FROM OPERATING ACTIVITIES
Cash received for current services 2,317,807 $ 39,278,037 $ 13,773,713 $ Cash received for other operating revenues 234,971 3,155,773 64,126 Cash paid to suppliers for goods and services (1,147,449) (18,575,888) (8,287,746) Cash paid for salaries and benefits (1,027,416) (8,977,665) (2,028,928) Net cash provided (used) by operating activities 377,913 14,880,257 3,521,165 CASH FLOWS FROM NONCAPITAL AND

RELATED FINANCING ACTIVITIES
Transfers (to) from other funds 1,140,788 1,805,302 (1,494,842) Loans from/(to) other funds (1,200,751) (78,871) - Net cash provided (used) by noncapital financing activities (59,963) 1,726,431 (1,494,842) CASH FLOWS FROM CAPITAL AND

RELATED FINANCING ACTIVITIES
Principal payments on long-term debt (19,555) (3,608,846) (63,246) Interest payments on long-term debt (13,677) (973,038) (48,413) Payments for capital asset acquisition (129,235) (5,850,946) (352,957) Lease payments - (4,983) - SBITA payments - - (77,207) Lease income 84,827 167,999 - Proceeds from the sale of capital assets - - 650,516 Net cash provided (used) by capital and related financing activities (77,640) (10,269,814) 108,693

CASH FLOWS FROM INVESTING ACTIVITIES
Unrealized gain (loss) on investments 542,873 1,529 354,878 Interest received 1,967,833 62,084 1,137,104 Net cash provided by investing activities 63,613 2,510,706 1,491,982 Net increase (decrease) in cash and investments 303,923 8,847,580 3,626,998 Cash and investments, beginning of year 891,629 40,766,905 29,458,261 Cash and investments, end of year 1,195,552 $ 49,614,485 $ 33,085,259 $ Reconciliation to Statement of Net Position:

Cash and investments 1,195,552 $ 49,614,485 $ 33,085,259 $ Total cash and investments 1,195,552 $ 49,614,485 $ 33,085,259 $

City of Hanford
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2025
The accompanying notes are an integral part of these financial statements. -30-
Sewer Improvement Funds
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) 6,324,624 $ 2,776,319 $ (365,773) $ (1,359,385) $ Adjustments to reconcile operating income (loss)
to net cash provided (used) by
operating activities:

Depreciation and amortization 2,443,991 1,800,683 412,422 785,250 Changes in assets, liabilities, and deferred resources in:

Receivables (154,655) (163,216) (7,522) (54,856) Prepaid expenses 2,520 4,903 55 55 Inventory 46,247 - - - Deferred outflows of resources 13,614 9,811 (3,188) 17,415 Accounts payable 1,085,628 108,941 32,955 (7,245) Salaries and benefits payable 9,238 6,390 3,867 8,974
Interest payable (8,292) - - - Compensated absences 126,497 53,637 31,057 106,274 Deposits and unearned revenue (67,687) (420) (275) 36 Claims payable - - - - Net OPEB liability 536,019 417,909 - 601,106 Net pension liability (480,212) (368,149) 63,236 (539,253) Deferred inflows of resources 87,156 64,283 (8,668) 110,028 Net cash provided (used) by operating activities 9,964,688 $ 4,711,091 $ 158,166 $ (331,601) $

SCHEDULE OF NON-CASH CAPITAL AND RELATED

FINANCING ACTIVITIES
Contributed Capital 334,000 $ 188,950 $ 101,750 $ - $

City of Hanford
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2025 (concluded)
The accompanying notes are an integral part of these financial statements. -31-
Governmental
Total Activities
Total Non-major Enterprise Internal
Enterprise Funds Funds Fund

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET

CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Operating income (loss) 96,247 $ 7,472,032 $ 1,435,480 $ Adjustments to reconcile operating income (loss)
to net cash provided (used) by
operating activities:

Depreciation and amortization 370,523 5,812,869 1,025,725 Changes in assets, liabilities, and deferred resources in:

Receivables (168,287) (548,536) 12,714 Prepaid expenses (1,050) 6,483 - Inventory - 46,247 13,926 Deferred outflows of resources - 37,652 (7,970) Accounts payable 22,789 1,243,068 267,947 Salaries and benefits payable 6,927 35,396 (20,559) Interest payable - (8,292) - Compensated absences 50,764 368,229 90,482 Deposits and unearned revenue - (68,346) - Claims payable - - 567,000 Net OPEB liability - 1,555,034 - Net pension liability - (1,324,378) 158,090 Deferred inflows of resources - 252,799 (21,670) Net cash provided (used) by operating activities 377,913 $ 14,880,257 $ 3,521,165 $

SCHEDULE OF NON-CASH CAPITAL AND RELATED

FINANCING ACTIVITIES
Contributed Capital - $ 624,700 $ - $

FIDUCIARY FUNDS

FINANCIAL STATEMENTS

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City of Hanford
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2025
The accompanying notes are an integral part of these financial statements. -32-
Redevelopment
Successor Agency
Private Purpose
Trust Fund Custodial Funds
ASSETS
Cash and investments 271,071 $ 1,966,030 $
Accounts receivable - 29,823
Assets held for resale 38,192 - Total assets 309,263 1,995,853 LIABILITIES Accounts payable - 1,283,685 Deposits held for others - 698,311 Total liabilities - 1,981,996 FIDUCIARY NET POSITION Held in trust for the retirement of obligations of the
former Hanford Redevelopment Agency and
other purposes 309,263 - Restricted - 13,857 Total fiduciary net position 309,263 $ 13,857 $

City of Hanford
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Year Ended June 30, 2025
The accompanying notes are an integral part of these financial statements. -33-
Redevelopment
Successor Agency
Private-Purpose
Trust Fund Custodial Funds

ADDITIONS
Investment earnings 10,071 $ - $
Unrealized gain/(loss) on investments 3,086 - Total additions 13,157 - DEDUCTIONS General government 267 -
Total deductions 267 - Change in fiduciary net position 12,890 - NET POSITION Beginning of year 296,373 13,857 End of year 309,263 $ 13,857 $

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-35-
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 various 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, 2025 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 CouncilAdministrator 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 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 significance 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 presented on a blended basis 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 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.

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-36-
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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 between the governmental and business type activities of the City. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees 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 of reach 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.

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 restricted 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 nonexchange 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.

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-37-
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Presentation (Continued)
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 the repair and improvement of targeted housing areas.

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 has elected to present this fund as a major fund.

American Rescue Plan Act Fund – This fund is used to account for financial resources provided by the American Rescue Plan Act.

Measure H Fund – This fund is used to account for financial resources provided by a 1% sales tax used to fund public services. The City has elected to present this fund as a major fund.

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.

The City presents the following non-major enterprise funds:

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.

Building Safety Fund – The Building Safety Fund is used to account for the financial activities of the City’s review of building plans from developers, contractors and/or property owners and inspectors of buildings. Revenue is provided by the permit and review fees.

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-38-
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Presentation (Continued)
The City reports the following fund types in aggregate as part of other non-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.

Capital Projects Fund – Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities other than those finances by proprietary funds.

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 Purpose Trust Fund is used to account for the activities of the former Hanford Redevelopment Agency during the wind down period.

Custodial Funds – Custodial Funds are used to account for assets held by the City in a purely custodial 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 generally accepted accounting principles 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 assets) 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 resources (acquisition of net assets) that apply to future periods and that, therefore, are not recognized as a revenue until that time.

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-39-
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Presentation (Continued)
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.

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 governmental 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 providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operation. 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.

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-40-
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities, Net Assets or Fund Balance, and Other Financial Statement Items (Continued)
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 benefiting 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.

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 and proprietary fund statements, capital assets are presented on the statement of net position and valued at historical cost or estimated historical cost if actual is unavailable, except for donated capital assets which are recorded at acquisition value at the date of acquisition.

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-41-
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities, Net Assets or Fund Balance, and Other Financial Statement Items (Continued)
The City’s capitalization threshold is $10,000. In other words, capital 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.

Capital 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 capital 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 capital assets is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation reflected in the Statement of Net Position 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 3 to 20 years
Leases and subscription assets Life of associated contract 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.

In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital 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 unsaved vacation, sick pay benefits and compensatory time. All vacation and compensatory pay is accrued when incurred 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.

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-42-
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities, Net Assets or Fund Balance, and Other Financial Statement Items (Continued)
Long-Term Obligations
In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type Statement of Net Position.

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.

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 $25,000 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 lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight-line basis over its useful life.

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-43-
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities, Net Assets or Fund Balance, and Other Financial Statement Items (Continued)
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 interest 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 interest 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
For the Year Ended June 30, 2025
-44-
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities, Net Assets or Fund Balance, and Other Financial Statement Items (Continued)
The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of lease receivable.

Right-to-Use Lease / Subscription Based Information Technology Arrangements (SBITA) Assets Right-to-use lease/SBITA assets are recorded at the amount of the initial measurement of the lease/SBITA 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/SBITA assets are amortized using the straight-line method over the shorter of the 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.

Other Post-employment Benefits (OPEB)
For purposes of measuring the total OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, have been determined by an independent actuary.

For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:

OPEB
Valuation Date June 30, 2025
Measurement Date June 30, 2025
Measurement Period June 30, 2024 to June 30, 2025

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-45-
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities, Net Assets or Fund Balance, and Other Financial Statement Items (Continued)
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 Plan and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis. For this purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms.

Investments are reported at fair value.

Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used.

CalPERS
Valuation Date June 30, 2023
Measurement Date June 30, 2024
Measurement Period June 30, 2023 to June 30, 2024
Net Position
In the government-wide financial statements and proprietary fund financial 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 restrictions 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.

When expenses are incurred for purposes for which both restricted and unrestricted net position is available, the City's policy is to apply restricted net position first.

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-46-
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities, Net Assets or Fund Balance, and Other Financial Statement Items (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 if 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 expenditures are incurred for purposes for which both restricted and unrestricted fund balances are available, the City's policy is to apply restricted fund balances first, then unrestricted fund balances as they are needed. When expenditures are incurred for purposes where only unrestricted fund balances are available, the City uses the unrestricted resources in the following order: committed, assigned, and unassigned.

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-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.

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-47-
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities, Net Assets or Fund Balance, and Other Financial Statement Items (Continued)
The property tax calendar for the City 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
Advances from other Governments
The City reports advances from other governments in its financial statements. These advances arise when resources are received 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.

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.

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-48-
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Stewardship, Compliance, and Accountability (Continued) Supplemental budgetary appropriations were negligible for the fiscal year ended June 30, 2025. 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. No budgets are adopted for the Proprietary and Fiduciary Fund types.

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.

Implementation of Governmental Accounting Standards Board (GASB) Pronouncements The City has implemented GASB No. 101, Compensated Absences. The primary objective of this Statement is to establish accounting and financial reporting guidance for compensated absences, which are leave benefits that are attributable to services already rendered, related to rights that accumulate, and are more likely than not to be used for time off or otherwise paid to employees. The Statement requires governments to recognize a liability for certain types of compensated absences, such as vacation, sick leave, and paid time off, when the leave is earned rather than when it is taken.

The City also implemented GASB No. 102, Certain Risk Disclosures. The primary objective of this Statement is to provide users of financial statements with better insight into risks that could have a material impact on the government’s ability to provide services or meet obligations. These risks include concentration in revenue sources, investments, or loans; constraints imposed by external parties or legislation; and other conditions that may expose the entity to significant vulnerabilities.

The City is currently analyzing its accounting practices to determine the potential impact on the financial statements for the following GASB statements:

GASB Statement No. 103, Financial Reporting Model Changes is effective for fiscal years beginning after June 15, 2025.

GASB Statement No. 104, Disclosure of Certain Capital Assets is effective for fiscal years beginning after June 15, 2025.

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-49-
NOTE 2 - CASH AND INVESTMENTS
Cash and investments as of June 30, 2025 are classified in the accompanying financial statements as follows:

Statement of Net Position:

Cash and investments 143,890,167 $
Fiduciary funds:

Cash and investments 2,237,101 Total Cash and Investments 146,127,268 $ Cash and investments as of June 30, 2025 consist of the following:

Cash on hand 4,000 $
Deposits with financial institutions 10,394,336
Investments 135,728,932 Total Cash and Investments 146,127,268 $ The table below identifies the investment types that are authorized for the City by the California Government Code (or the City’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (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, rather than the general provisions of the California Government Code or the City’s investment policy.

Authorized Investment Type
Maximum
Maturity
Maximum
Percentage of
Portfolio*
Maximum
Investment 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
Mortgage Pass-Through / Asset-Backed Securities 5 years 20% AA rating or better Municipal Bonds (Local Agencies) 5 years None 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.

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-50-
NOTE 2 - CASH AND INVESTMENTS (Continued)
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:

Authorized Investment Type
Maximum
Maturity
Maximum
Percentage of
Portfolio*
Maximum
Investment in
One Issuer
U.S. Treasury Obligations 5 years None None
U.S. Agency Securities 5 years None None
Bankers' Acceptances 180 days 40% None
Commercial Paper 270 days 40% None
Negotiable Certificates of Deposit 5 years 30% None
Repurchase Agreements 1 Year 30% None
Mortgage Pass-Through / Asset-Backed Securities5 years 20% None Municipal Bonds (Local Agencies) 5 years None None
Mutual Funds N/A 20% None
Money Market Mutual Funds N/A 20% None
Local Agency Investment Fund (LAIF) N/A 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 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:

Investment Type Total
12 Months
or Less
13 to 24
Months
25 to 60
Months
More than
60 Months
U.S. Treasury Obligations 10,928,661 $ 498,144 $ 4,014,060 $ 6,416,457 $ - $ U.S. Agency Securities 26,994,266 9,917,120 3,199,538 13,877,608 - Commercial Paper 3,760,624 3,760,624 - - - Negotiable Certificates of Deposits 4,312,544 1,937,017 493,372 1,882,155 - Corporate Investments 24,998,043 870,452 7,515,046 16,612,545 - Asset-Backed Securities 20,173,321 2,465,850 - 17,707,471 - Municipal Bonds 10,642,811 - 597,054 10,045,757 - Held by bond trustee:

Money Market Funds 3,070,842 3,070,842 - - - County Investment Pool 1,158,812 1,158,812 - - - California Class 29,689,008 29,689,008 - - - Total 135,728,932 $ 53,367,869 $ 15,819,070 $ 66,541,993 $ - $ Remaining Maturity (in Months)

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-51-
NOTE 2 - CASH AND INVESTMENTS (Continued)
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented 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.

Investment Type Amount
Minimum Legal
Rating A/A+ AA+ Unrated
U.S. Treasury Obligations 10,928,661 $ AA - $ 10,928,661 $ - $ U.S. Agency Securities 26,994,266 N/A - 26,994,266 - Commercial Paper 3,760,624 N/A 3,760,624 - - Negotiable Certificates of Deposits 4,312,544 N/A - - 4,312,544 Corporate Investments 24,998,043 N/A 23,492,748 1,505,295 - Asset-Backed Securities 20,173,321 AA - 18,143,481 2,029,840 Municipal Bonds 10,642,811 N/A 5,437,471 2,421,085 2,784,255 Held by bond trustee:

Money Market Funds 3,070,842 N/A - - 3,070,842 County Investment Pool 1,158,812 N/A - - 1,158,812 California Class 29,689,008 N/A - 29,689,008 - Total 135,728,932 $ 32,690,843 $ 89,681,796 $ 13,356,293 $ Standard's & Poor's Ratings as of Year End
Concentration of Credit Risk
The investment policy 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 investment 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 deposits 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 securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies.

California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-52-
NOTE 2 - CASH AND INVESTMENTS (Continued)
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 State of California. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amount based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. For withdrawals over $10,000,000 LAIF requires at least 24‐hour notice. Also, there is a $5,000 minimum and a limit of 15 transactions per month.

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.

The City has the following recurring fair value measurements as of June 30, 2025:

Investment type Level 1 Level 2 Level 3 Total
U.S. Treasury Obligations - $ 10,928,661 $ - $ 10,928,661 $ U.S. Agency Securities - 26,994,266 - 26,994,266 Commercial Paper - 3,760,624 - 3,760,624 Negotiable Certificates of Deposits - 4,312,544 - 4,312,544 Corporate Investments - 24,998,043 - 24,998,043 Asset-Backed Securities - 20,173,321 - 20,173,321 Municipal Bonds - 10,642,811 - 10,642,811
$ 101,810,270 - $ - $ 101,810,270
Investments not subject to fair value hierarchy:

County Investment Pool 1,158,812 California Class 29,689,008 Money Market Funds 3,070,842 Total 135,728,932 $
Debt securities classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. There have been no changes in fair value measurement classifications from the prior year.

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-53-
NOTE 3 - CAPITAL ASSETS
Capital assets activities for the year ended June 30, 2025 were as follows:

Balance
July 1, 2024
Additions/
Completions
Retirements/
Adjustments
Balance
June 30, 2025
Governmental Activities
Capital assets not being depreciated:

Land 61,094,107 $ - $ - $ 61,094,107 $
Construction in progress 6,947,608 1,291,069 (525,660) 7,713,017 Total capital assets not being depreciated 68,041,715 1,291,069 (525,660) 68,807,124 Capital assets being depreciated/amortized:

Buildings 25,261,269 - - 25,261,269
Infrastructure 203,803,718 1,788,809 (644,586) 204,947,941 Equipment 22,870,178 933,191 (945,519) 22,857,850 Right to use leased equipment 1,067,622 988,635 - 2,056,257 Right to use SBITA asset 395,074 1,036,741 (157,206) 1,274,609 Total capital assets being depreciated/amortized 253,397,861 4,747,376 (1,747,311) 256,397,926 Less accumulated depreciation/amortization:

Buildings (10,689,001) (470,483) - (11,159,484)
Infrastructure (123,037,314) (7,168,812) - (130,206,126) Equipment (15,234,576) (1,460,937) 1,105,706 (15,589,807) Right to use leased equipment (140,387) (284,502) - (424,889) Right to use SBITA asset (197,314) (280,914) 157,206 (321,022) Total accumulated depreciation/amortization (149,298,592) (9,665,648) 1,262,912 (157,701,328) Total capital assets being depreciated, net 104,099,269 (4,918,272) (484,399) 98,696,598 Governmental Activities capital assets, net 172,140,984 $ (3,627,203) $ (1,010,059) $ 167,503,722 $ Business-type Activities
Capital assets not being depreciated:

Land 11,966,873 $ - $ - $ 11,966,873 $
Construction in progress 509,213 3,975,594 (66,265) 4,418,542 Total capital assets not being depreciated 12,476,086 3,975,594 (66,265) 16,385,415 Capital assets being depreciated:

Buildings and improvements 196,146,459 690,965 - 196,837,424 Machinery and equipment 33,592,077 2,006,546 (569,832) 35,028,791 Right to use leased equipment 25,726 - - 25,726 Total capital assets being depreciated 229,764,262 2,697,511 (569,832) 231,891,941 Less accumulated depreciation:

Buildings and improvements (80,293,561) (3,782,847) - (84,076,408) Machinery and equipment (18,281,004) (2,024,877) 443,682 (19,862,199) Right to use leased equipment (5,260) (5,146) - (10,406) Total accumulated depreciation (98,579,825) (5,812,870) 443,682 (103,949,013) Total capital assets being depreciated, net 131,184,437 (3,115,359) (126,150) 127,942,928 Business-type Activities capital assets, net 143,660,523 $ 860,235 $ (192,415) $ 144,328,343 $

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-54-
NOTE 3 - CAPITAL ASSETS (Continued)
Depreciation/amortization expense for the fiscal year ending June 30, 2025 was charged to the following activities:

Governmental Activities:

General governmental 6,652,741 $
Public safety 259,198 Public works 1,382,388 Recreation 259,198 Community development 86,399 Capital assets held by the internal service funds that were charged to the various functions based on their usage 1,025,725 Total 9,665,648 $ Business-type Activities:

Water system 2,443,992 $
Wastewater 1,800,683 Storm drain 412,422 Refuse 785,250 Airport 319,509
Intermodal 26,116 Building Safety 24,898
Total 5,812,870 $
NOTE 4 - LONG-TERM DEBT
The following is a summary of the long-term debt activity for the year ended June 30, 2025:

Balance
July 1, 2024
Prior period
adjustment Additions Deletions
Balance
June 30, 2025
Due Within
One Year
Governmental Activities
Pension obligation bonds payable 23,922,715 $ (311,550) $ - $ (1,481,985) $ 22,129,180 $ 1,487,059 $ Lease payable 638,867 - 718,760 (196,676) 1,160,951 273,178 SBITA payable 178,371 - 1,036,741 (285,804) 929,308 238,726 Total Governmental Activities 24,739,953 (311,550) 1,755,501 (1,964,465) 24,219,439 1,998,963 Business-type Activities Pension obligation bonds payable 4,006,284 311,550 - (271,014) 4,046,820 271,944 Bonds payable 12,725,000 - - (1,880,000) 10,845,000 1,960,000 Bond premiums 409,811 - - (73,307) 336,504 73,308 Note payable - direct 3,890,840 - - (429,847) 3,460,993 444,892 Finance purchase arrangement - direct borrowing 5,411,024 - - (1,027,984) 4,383,040 1,131,407 Lease payable 20,742 - - (4,984) 15,758 5,115 Total Business-type Activities 26,463,701 311,550 - (3,687,136) 23,088,115 3,886,666 Total Primary Government 51,203,654 $ - $ 1,755,501 $ (5,651,601) $ 47,307,554 $ 5,885,629 $

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-55-
NOTE 4 - 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 covenants, 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 on June 30, 2025 for governmental activities are $22,129,180.

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

Fiscal Year Principal Interest Total
2026 1,487,059 $ 918,146 $ 2,405,205 $
2027 1,478,605 852,378 2,330,983 2028 1,543,701 783,716 2,327,417 2029 1,269,791 717,767 1,987,558
2030 1,299,380 660,724 1,960,104
2031-2035 7,173,221 2,040,254 9,213,475
2036-2038 7,877,423 904,714 8,782,137
Totals 22,129,180 $ 6,877,699 $ 29,006,879 $

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-56-
NOTE 4 - LONG-TERM DEBT (Continued)
Governmental Activities (Continued)
Leases Payable
The City entered into several lease agreements for the use of various types of equipment. The lease agreements range from 12 to 60 months. The City is required to make annual fixed payments ranging from $4,046 to $14,712. The agreements have interest rates ranging from 0.2% to 2.63%. As of June 30, 2025, the City had total outstanding lease payable of $1,160,951 and right to use asset of $1,631,368, net of amortization.

The future maturities of lease payments are as follows:

Fiscal Year Principal Interest Total
2026 273,178 $ 29,462 $ 302,640 $
2027 280,669 21,542 302,211 2028 275,959 13,538 289,497 2029 229,192 6,224 235,416
2030 101,953 1,399 103,352
Totals 1,160,951 $ 72,165 $ 1,233,116 $
Subscription based IT arrangement (SBITA) payable
The City entered into several subscription-based IT arrangements for the use of various types of software. The subscription agreements range from 12 to 60 months. The City is required to make annual fixed payments ranging from $21,889 to $186,707. The agreements have interest rates ranging from 0.2% to 2.63%. As of June 30, 2025, the City had total outstanding SBITA payable of $929,308 and right to use asset of $953,587, net of amortization.

The future maturities of SBITA payments are as follows:

Fiscal Year Principal Interest Total
2026 238,726 $ 23,339 $ 262,065 $
2027 164,564 17,540 182,104 2028 169,841 12,148 181,989 2029 175,255 6,519 181,774
2030 180,922 725 181,647
Totals 929,308 $ 60,271 $ 989,579 $

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-57-
NOTE 4 - LONG-TERM DEBT (Continued)
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 longterm 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.

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, 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 of the bond are the revenues payable from the City’s Wastewater fund for the life of the bonds.

Wastewater revenue bonds outstanding on June 30, 2025 are $5,685,000.

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

Fiscal Year Principal Interest Total
2026 725,000 $ 201,375 $ 926,375 $
2027 750,000 175,563 925,563 2028 785,000 148,209 933,209 2029 805,000 119,391 924,391
2030 835,000 88,100 923,100
2031-2033 1,785,000 109,100 1,894,100 Totals 5,685,000 $ 841,738 $ 6,526,738 $

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-58-
NOTE 4 - LONG-TERM DEBT (Continued)
Business-type Activities (Continued)
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 refinance 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 Bonds 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 for the life of the bonds.

Water revenue bonds outstanding on June 30, 2025 are $3,155,000.

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

Fiscal Year Principal Interest Total
2026 1,015,000 $ 115,075 $ 1,130,075 $
2027 1,055,000 68,600 1,123,600 2028 530,000 36,238 566,238 2029 555,000 12,488 567,488 Totals 3,155,000 $ 232,401 $ 3,387,401 $

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-59-
NOTE 4 - LONG-TERM DEBT (Continued)
Business-type Activities (Continued)
On January 28, 2015, the City of Hanford issued $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 bond 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 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 for the life of the bonds.

Wastewater revenue bonds outstanding on June 30, 2025 are $2,005,000.

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

Fiscal Year Principal Interest Total
2026 220,000 $ 72,450 $ 292,450 $
2027 225,000 65,775 290,775 2028 235,000 57,700 292,700 2029 245,000 48,100 293,100
2030 255,000 38,100 293,100
2031-2033 825,000 50,300 875,300
Totals 2,005,000 $ 332,425 $ 2,337,425 $

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-60-
NOTE 4 - LONG-TERM DEBT (Continued)
Business-type Activities (Continued)
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 on June 30, 2025 for business-type activities are $4,046,820.

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

Fiscal Year Principal Interest Total
2026 271,944 $ 177,657 $ 449,601 $
2027 270,398 165,718 436,117 2028 282,302 153,848 436,150 2029 232,212 141,455 373,666
2030 237,623 131,261 368,883
2031-2035 1,311,794 493,938 1,805,733 2036-2039 1,440,546 102,206 1,542,752 Totals 4,046,820 $ 1,366,082 $ 5,412,902 $
Notes Payable – direct borrowing
On May 28, 2002, the City of Hanford obtained a loan from 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 .26% 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, 2025, the balance outstanding was $3,460,993.

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 shall 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.

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-61-
NOTE 4 - LONG-TERM DEBT (Continued)
Business-type Activities (Continued)
The future maturities of the note payable are as follows:

Fiscal Year Principal Interest Total
2026 444,892 $ 113,349 $ 558,241 $
2027 460,463 97,505 557,968 2028 476,579 81,107 557,686 2029 493,259 64,135 557,394
2030 510,523 46,569 557,092
2031-2032 1,075,277 37,958 1,113,235 Totals 3,460,993 $ 440,624 $ 3,901,617 $ Finance Purchase Arrangements – direct borrowing
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, 2025 was $696,904.

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 reorganization 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 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 lease.

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
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NOTE 4 - LONG-TERM DEBT (Continued)
Business-type Activities (Continued)
The future maturities for the 2011 Finance Purchase Arrangement outstanding on June 30, 2025 are as follows:

Fiscal Year Principal Interest Total
2026 332,549 $ 23,207 $ 355,756 $
2027 364,355 12,133 376,488 Totals 696,904 $ 35,340 $ 732,244 $ 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, 2025 was $3,686,136.

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 lease.

The future maturities for the 2014 Finance Purchase Arrangement outstanding on June 30, 2025 are as follows:

Fiscal Year Principal Interest Total
2026 798,858 $ 123,481 $ 1,721,197 $
2027 877,195 94,514 1,848,905 2028 960,630 62,730 1,983,990 2029 1,049,453 27,944 2,126,848
Totals 3,686,136 $ 308,670 $ 7,680,939 $

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
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NOTE 4 - LONG-TERM DEBT (Continued)
Business-type Activities (Continued)
Leases Payable
The City entered into a lease agreements for the use of equipment. The lease agreement ranges from 12 to 60 months. The City is required to make annual fixed payments ranging from $5,814 to $6,291. The agreement has an interest rate of 2.63%. As of June 30, 2025, the City had total outstanding lease payable of $15,758 and right to use asset of $15,320, net of amortization.

The future maturities of lease payments are as follows:

Fiscal Year Principal Interest Total
2026 5,115 $ 336 $ 5,451 $
2027 5,252 199 5,451 2028 5,391 59 5,450
Totals 15,758 $ 594 $ 16,352 $
NOTE 5 - LEASE RECEIVABLE
Lease Receivables
The City has entered into various lease agreement as the lessor. The leases range from 12 to 240 months. The lessees are required to make monthly fixed payments ranging from $3,511 to $90,643.

The leases have interest rates ranging from 0.2% to 2.63%. The combined value of lease receivables and deferred inflow of resources as of June 30, 2025 was $1,543,099 and $1,457,388, respectively.

In addition, the City recognized lease revenue of $322,344 during the fiscal year related to these leases.

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

Fiscal Year Principal Interest Total
2026 285,176 $ 24,128 $ 309,304 $
2027 296,695 18,429 315,124 2028 308,630 12,544 321,174 2029 190,544 7,670 198,214
2030 104,556 5,941 110,497
2031-2033 357,498 8,327 365,825
Totals 1,543,099 $ 77,040 $ 1,620,139 $

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
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NOTE 6 - CHANGES IN OTHER LONG-TERM LIABILITIES
Compensated Absences
Balance
July 1, 2024 Net Change
Balance
June 30, 2025
Due Within
One Year
Governmental Activities
Compensated absences 1,415,975 $ 1,098,844 $ 2,514,819 $ 880,187 $ Total Governmental Activities 1,415,975 $ 1,098,844 $ 2,514,819 $ 880,187 $ Business-type Activities
Compensated absences 318,866 $ 368,229 $ 687,095 $ 322,935 $ Total Business-type Activities 318,866 $ 368,229 $ 687,095 $ 322,935 $ The City accounts for compensated absences (unpaid vacation, sick leave, and compensatory time) in accordance with generally accepted accounting principles. In governmental funds, compensated absences are recorded as expenditures in the year paid, as it is the City’s intention to liquidate any unpaid compensated absences as of 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. The General Fund typically liquidates governmental funds compensated absences.

NOTE 7 - PENSION PLAN
Plan Descriptions
All qualified permanent and probationary employees are eligible to participate in the Public Agency Cost-Sharing Multiple-Employer Defined Benefit Pension Plan (Plan or PERF C) administered by the California Public Employees’ Retirement System (CalPERS.) The Plan consists of a miscellaneous pool and a safety pool (also referred to as “risk pools”), which are comprised of individual employer miscellaneous and safety rate plans, respectively. Plan assets may be used to pay benefits for any employer rate plan of the safety and miscellaneous pools. Accordingly, rate plans within the safety or miscellaneous pools are not separate plans under generally accepted accounting principles. Individual employers may sponsor more than one rate plan in the miscellaneous or safety risk pools. The City participates in three rate plans (one miscellaneous and two safety). The miscellaneous plan is an agent multiple-employer plan and the police and fire safety plans are cost-sharing multiple employer plans. Benefit provisions under the Plan are established by State statute and Local Government resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on the CalPERS’ website, at www.calpers.ca.gov.

City of Hanford
Notes to the Financial Statements
For the Year Ended June 30, 2025
-65-
NOTE 7 - PENSION PLAN (Continued)
Benefits Provided (Continued)
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 5 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

The Plan operates under the provisions of the California Public Employees’ Retirement Law (PERL), the California Public Employees’ Pension Reform Act of 2013 (PEPRA), and the regulations, procedures and policies adopted by the CalPERS Board of Administration. The Plan’s authority to establish and amend the benefit terms are set by the PERL and PEPRA, and may be amended by the California state legislature and in some cases require approval by the CalPERS Board.

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