Imperial Beach City Council
November 16, 2022

City of Imperial Beach
Notes to Financial Statements
June 30, 2022
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Note 16: Restricted Components of Net Position
The restricted component of net position are assets that are subject to constraints either (1) externally imposed by creditors (such as debt covenants), grantors, contributors, or laws or regulations of other governments; or (2) imposed by law through constitutional provisions or enabling legislation. In fiscal year 2022, the City did not have any components of net position restricted by enabling legislation.

The restricted component of net position at June 30, 2022, for governmental activities is as follows:

Restricted for Community Development Projects:

Housing Authority 713,123 $
Total
Restricted for Public Works:

Prop A Tax 179,489 $
RMRA 627,199 Capital Projects 737,556
Total 1,544,244 Restricted for Public Safety:

Supplemental Law Enforcement 49,989 Restricted for Parks, Recreation and Senior Center:

Miscellaneous Grants 211,245 Parks Maintenance 342,258
Total 553,503 Total Restricted Component of Net Position - Government Activities 2,860,859 $

City of Imperial Beach
Notes to Financial Statements
June 30, 2022
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Note 17: Tax Abatement
The City entered into an agreement Sudberry-Palm Avenue LLC on June 6, 2018.

The Developer is the owner of certain real property totaling approximately 1.4 acres and located in the City of Imperial Beach on which the Developer operates and maintains a hotel known as “Hampton Inn by Hilton”. In order to induce the Developer to construct and operate the hotel on the property for the Operating Period, and upon the fulfillment of the City Disbursement Conditions, the City agreed provide to the Developer TOT Incentive Payments upon the terms set and as follows:

The City shall pay TOT Incentive Payments to Developer pursuant to and in accordance with the terms of the Agreement in an amount equal to fifty percent (50%) of the Net Transient Occupancy Tax Revenues collected and remitted to the City from the Hotel during the first ten (10) years of operation of the Hotel commencing upon the City's receipt of the Opening Certification from Developer ("Payment Period") provided, however, that the aggregate total of TOT Incentive Payments shall not exceed a total amount of Two Million Five Hundred Thousand Dollars ($2,500,000), subject to the limitations set forth in the definitions of Net Transient Occupancy Tax Collected and TOT Incentive Payments.

Upon commencement of the Payment Period, TOT Incentive Payments shall be made by the City to Developer every six (6) months thereafter no later than sixty (60) Days after the applicable six (6) month period. The amount of the TOT Incentive Payments due on each such payment date shall be calculated and based upon the Net Transient Occupancy Tax Revenues Collected and remitted to the City from the Hotel in the immediate prior six (6) month period, subject to the limitations set forth in the definitions of Net Transient Occupancy Tax Collected and TOT Incentive Payments.

The City's making of TOT Incentive Payments pursuant to the Agreement shall not be deemed to constitute a pledge of any particular funds by the City, but instead an obligation contingent upon the construction and operation of the Hotel and the City's receipt of Transient Occupancy Tax from the Hotel in accordance with the terms of the Agreement.

As of June 30, 2022, the City abated TOT taxes totaling $222,766 under this agreement.

City of Imperial Beach
Notes to Financial Statements
June 30, 2022
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Note 18: Restatements
A restatement in the amount of $1,095,290 was made in the Governmental Activities to adjust activity from the prior year related to the long-term liability – TransNet Commercial Paper. A restatement in the amount of $542,291 was made in the Sewer Fund to adjust activity from the prior year related to construction-in-progress.

Government-Wide - Governmental Activities
Net Position, as previously reported 67,441,938 $
Restatement (1,095,290) Net Position, as restated 66,346,648 $ Proprietary Funds - Sewer
Fund Balance, Beginning of Year, as Previously Stated 13,118,912 $ Restatement (542,291) Fund Balances, Beginning of Year, as Restated 12,576,621 $

City of Imperial Beach
Schedule of Proportionate Share of the Net Pension Liability And Related Ratios as of the Measurement Date
As of June 30, for the Last Ten Fiscal Years *
See Notes to Required Supplementary Information
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Measurement
Date
Employer's
Proportion of the
Collective Net
Pension Liability1
Employer's
Proportionate
Share of the
Collective Net
Pension Liability
Employer's
Covered Payroll
Employer's
Proportionate
Share of the
Collective Net
Pension Liability
as a
Percentage of
the Employer's
Covered Payroll
Pension Plan
Fiduciary Net
Position as a
Percentage of
the Total
Pension Liability
6/30/2014 0.09955% 6,194,125 $ 4,376,672 $ 141.53% 79.82% 6/30/2015 0.11650% 7,997,144 4,287,307 186.53% 80.86%
6/30/2016 0.12284% 10,629,198 4,984,408 213.25% 75.81%
6/30/2017 0.12522% 12,418,086 5,217,228 238.02% 74.88%
6/30/2018 0.12807% 12,341,076 5,241,053 235.47% 76.23%
6/30/2019 0.08029% 8,227,242 5,670,863 145.08% 85.11%
6/30/2020 0.08736% 9,504,977 5,774,101 164.61% 83.84%
6/30/2021 0.04211% 2,277,672 5,971,175 38.14% 96.28%
1 Proportion of the collective net pension liability represents the plan's proportion of PERF C, which includes both the Miscellaneous and Safety Risk Pools excluding the 1959 Survivors Risk Pool. * Measurement period June 30, 2014 was the first year of implementation, therefore, only seven years are presented.

City of Imperial Beach
Schedule of Plan Contributions
As of June 30, for the Last Ten Fiscal Years (1)
See Notes to Required Supplementary Information
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Fiscal Year
Actuarially
Determined
Contribution
Contributions
in Relation to
the Actuarially
Determined
Contribution
Contribution
Deficiency
(Excess)
Employer's
Covered
Payroll
Contributions
as a
Percentage
of Covered
Payroll
6/30/2015 757,141 $ (757,141) $ - $ 4,287,307 $ 17.66%
6/30/2016 928,277 (928,277) - 4,984,408 18.62%
6/30/2017 1,015,261 (1,015,261) - 5,217,228 19.46%
6/30/2018 1,159,776 (1,159,776) - 5,241,053 22.13%
6/30/2019 3,424,387 (8,454,260) (5,029,873) 5,670,863 149.08% 6/30/2020 1,226,832 (1,226,832) - 5,774,101 21.25%
6/30/2021 1,386,331 (1,386,331) - 5,971,175 23.22%
6/30/2022 1,498,066 (1,498,066) - 6,625,249 22.61%
Notes to Schedule:
(1) Fiscal year 2014-15 (measurement date June 30, 2014) was the first year of implementation, therefore, only seven years are presented.

Changes in Assumptions: There were no assumption changes for 2021. For 2020, the Plan adopted a new amortization policy effective with the 2019 actuarial valuation. The new amortization policy shortens the period over which actuarial gains and losses are amortized from 30 years to 20 years with the payments computed as a level dollar amount. In addition, the new policy does not utilize a five-year rampup and ramp-down on UAL bases attributable to assumption changes and non-investment gains/losses.

The new policy also does not utilize a five-year ramp-down on investment gains/losses. These changes apply only to new UAL bases established on or after June 30, 2019. There were no changes in assumptions in 2019. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate in 2019. In 2017, the accounting discount rate was reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes in the discount rate. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In 2014, amounts reported were based on the 7.5 percent discount rate.

Change in Benefit Terms: There were no changes to benefit terms that applied to all members of the Public Agency Pool. Additionally, the figures above do not include any liability impact that may have resulted from Golden Handshakes that occurred after the June 30, 2020 valuation date, unless the liability impact is deemed to be material to the Public Agency Pool.

City of Imperial Beach
Schedule of Changes in the Total OPEB Liability and Related Ratios As of June 30, 2022 for the Last Ten Fiscal Years (1)
See Notes to Required Supplementary Information
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Measurement Date ( June 30) 2022 2020 2019 2018 2017
Report Date (June 30) 2022 2021 2020 2019 2018
Total OPEB Liability
Service cost 141,432 $ 136,440 $ 42,506 $ 37,920 $ 36,905 $ Interest 52,597 51,105 31,887 28,462 28,779 Differences between expected and actual experience (90,018) - 170,621 - - Changes in assumptions (400,373) 13,465 1,180,019 41,088 - Benefit payments (85,701) (97,152) (23,042) (770) (20,915) Net change in total OPEB liability (382,063) 103,858 1,401,991 106,700 44,769 Total OPEB liability - beginning 2,407,169 2,303,311 901,320 794,620 749,851 Total OPEB liability - ending (a) 2,025,106 $ 2,407,169 $ 2,303,311 $ 901,320 $ 794,620 $ Covered-Employee payroll 6,625,249 $ 6,059,385 $ 5,878,059 $ 5,484,385 $ 5,388,899 $ Total OPEB liability as a percentage of Covered-Employee payroll 30.57% 39.73% 39.18% 16.43% 14.75% Notes to Schedule:

Contributions are fixed and not based on a measure of pay, therefore covered-employee payroll is used in the schedule.

Changes in assumptions:

For measurement date June 30, 2022, the discount rate was changd from 2.16% to 3.54% (1) Historical information is required only for measurement years for which GASB 75 is applicable. Fiscal Year 2018 was the first year of implementation. Future years' information will be displayed up to 10 years as information becomes available.

The City does not accumulate assets in a qualifying trust for future OPEB benefits, and as such, only the total OPEB liability is shown.

City of Imperial Beach
Budgetary Comparison Schedule by Department
General Fund
Year Ended June 30, 2022
See Notes to Required Supplementary Information
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Budget Amounts Actual Variance with
Original Final Amounts Final Budget
Budgetary Fund Balance, July 1 14,851,972 $ 14,851,972 $ 14,851,972 $ - $ Resources (Inflows):

Taxes 14,397,100 16,802,100 17,922,444 1,120,344 Licenses and permits 644,750 781,752 788,075 6,323 Intergovernmental 117,000 634,407 497,624 (136,783) Charges for services 6,454,438 6,232,938 6,300,535 67,597 Use of money and property 540,000 483,000 46,311 (436,689) Fines and forfeitures 224,500 228,500 239,492 10,992 Miscellaneous 131,500 433,500 448,812 15,312 Lease acquisition - - 146,143 146,143 Transfers in 2,325,075 1,369,075 1,335,025 (34,050) Amounts Available for Appropriations 39,686,335 41,817,244 42,576,433 759,189 Charges to Appropriation (Outflow):

General government
Mayor/City Council 217,950 218,354 188,012 30,342 City Clerk's Office 546,950 537,371 489,020 48,351 City Manager 863,650 1,011,955 988,078 23,877
Human Resources 310,700 313,791 273,788 40,003
Administrative Services 855,900 907,600 906,872 728 City Attorney 182,000 182,000 171,101 10,899 Community Development 630,050 695,752 674,763 20,989 Facilities Maintenance 434,900 441,897 407,331 34,566
Non-Departmental 2,128,080 2,164,080 2,133,080 31,000
Public safety
Law Enforcement Contract 8,060,300 8,054,500 7,993,309 61,191 Fire Protection 2,969,520 3,118,581 3,066,826 51,755 Ocean/Beach Safety 1,656,750 1,662,799 1,529,532 133,267 Building and Housing Inspection 357,800 361,609 347,878 13,731 Animal Control 343,350 343,350 343,345 5 Code Enforcement 166,000 170,371 177,116 (6,745) Parks, recreation and senior center Recreation 356,350 356,350 270,528 85,822 Park Maintenance 856,300 680,371 604,268 76,103 Senior Services 52,575 57,291 34,726 22,565
Tideland Maintenance 987,550 1,030,880 909,496 121,384 Public works Street Maintenance 1,272,750 1,410,793 1,391,739 19,054 Administration 415,800 421,406 321,430 99,976 Solid Waste Management 94,350 109,962 99,132 10,830
Storm Water 373,600 728,958 653,286 75,672
Debt Service
Principal - - 29,767 (29,767)
Interest - - 1,614 (1,614) Capital outlay - 381,074 382,388 (1,314) Transfers out 24,400 2,270,289 2,253,639 16,650
Total Charges to Appropriations 24,157,575 27,631,384 26,642,064 989,320 Budgetary Fund Balance, June 30 15,528,760 $ 14,185,860 $ 15,934,369 $ 1,748,509 $

City of Imperial Beach
Notes to Required Supplementary Information
June 30, 2022
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Note 1: General Budget Policies
The two-year operating budget adopted by the City Council provides for the general operations of the City. It includes proposed expenditures and the means of financing them on a departmental basis. Budgets are legally adopted for the General Fund and the Special Revenue Funds.

The City Council approves total budgeted appropriations and any amendments to appropriations throughout the year. All amendments made during the year are included in the budgetary amounts reported herein. The "appropriated budget" covers all City expenditures, with the exception of debt service on bond issues and capital improvement projects carried forward from prior years, which expenditures constitute the legally authorized "non-appropriated budget." Actual expenditures may not exceed budgeted appropriations at the fund level, which is the legal level of control for the Capital Projects Funds. All other funds use the departmental level as the legal level of control.

Formal budgetary integration is employed as a management control device during the year. Commitments for materials and services, such as purchase orders and contracts, are recorded as encumbrances to assist in controlling expenditures.

Appropriations that are encumbered lapse at year-end and then are added to the following years' budgeted appropriations.

Budgets for the General Fund and Special Revenue Funds are adopted on a basis substantially consistent with generally accepted accounting principles (GAAP).

Accordingly, actual revenues and expenditures can be compared with related budgeted amounts without any significant reconciling items. Appropriations for capital projects authorized but not constructed or completed during the year are carried forward as continuing appropriations into the following year's budget.

Under Article Xlll-B of the California Constitution (the Gann Spending Limitation Initiative), the City is restricted as to the amount of annual appropriations from the proceeds of taxes, and if proceeds of taxes exceed allowed appropriations, the excess must either be refunded to the State Controller or returned to the taxpayers through revised tax rates or revised fee schedules, or an excess in one year may be offset by a deficit in the following year. For the fiscal year ended June 30, 2022, based on calculations by City staff, proceeds of taxes did not exceed appropriations. Further, Section 5 of Article Xlll-B allows the City to designate a portion of fund balance for general contingencies to be used for any purpose.

Appropriations lapse at the end of the fiscal year except for the Capital Projects Funds, which may be carried over to the next fiscal year if not completed at year-end.

Expenditures may not exceed budget appropriations at the department level for the General Fund and at the function level for the Special Revenue Funds.

City of Imperial Beach
Notes to Required Supplementary Information
June 30, 2022
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Note 1: General Budget Policies (Continued)
A project-length budget is adopted for the capital projects funds. The debt service fund is governed by bond covenants; therefore, a formal budget is not adopted. Thus, the City does not show a budget comparison debt service funds. In addition, the Housing Authority did not adopt a budget; therefore, a budget comparison is not shown.
a. Excess of Expenditures Over Appropriations
Excess expenditures over appropriations were as follows:

Expenditures Appropriations Excess
General Fund:

Public safety
Code Enforcement 177,116 $ 170,371 $ 6,745 $
Debt Service
Principal 29,767 - 29,767
Interest 1,614 - 1,614 Capital outlay 382,388 381,074 1,314 b. Basis of Budgeting
Budgets for governmental funds are adopted on a basis consistent with generally accepted accounting principles (GAAP) except that for budgeting purposes only encumbrances are treated as expenditures. A reconciliation has been provided on the applicable schedule when the basis of budgeting differs from GAAP.

City of Imperial Beach
Budgetary Comparison Schedule
Miscellaneous Grants Fund
Year Ended June 30, 2022
-79-
Budget Amounts Actual Variance with
Original Final Amounts Final Budget
Budgetary Fund Balance, July 1 - $ - $ - $ - $
Resources (Inflows):

Intergovernmental 3,025,000 3,565,000 2,038,701 (1,526,299) Use of money and property - - (9,437) (9,437) Amounts Available for Appropriations 3,025,000 3,565,000 2,029,264 (1,535,736) Charges to Appropriation (Outflows):

General government - - 639,975 (639,975) Parks and recreation - - 2,576 (2,576) Public works 445,000 455,000 316,166 138,834 Capital outlay - 1,479,000 369,166 1,109,834 Transfers out - - 490,136 (490,136) Total Charges to Appropriations 445,000 1,934,000 1,818,019 115,981 Budgetary Fund Balance, June 30 2,580,000 $ 1,631,000 $ 211,245 $ (1,419,755) $

City of Imperial Beach
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2022
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Special Revenue Funds
Supplemental
Law
Gas Tax Prop A Tax CDBG Grant Enforcement
Assets:

Pooled cash and investments - $ 171,426 $ - $ 88,485 $
Due from other governments 50,254 30,472 - - Total Assets 50,254 $ 201,898 $ - $ 88,485 $ Liabilities, Deferred Inflows of Resources,
and Fund Balances:

Liabilities:

Accounts payable 625 $ 22,409 $ - $ 38,496 $
Unearned revenues - - - - Due to other funds 50,294 - - - Total Liabilities 50,919 22,409 - 38,496 Fund Balances (Deficit):

Restricted for:

Community development projects - - - - Public safety - - - 49,989 Parks, recreation and senior center - - - - Public works - 179,489 - - Unassigned - (665) - - Total Fund Balances (Deficit) (665) 179,489 - 49,989 Total Liabilities, Deferred Inflows of Resources, and Fund Balances 50,254 $ 201,898 $ - $ 88,485 $

City of Imperial Beach
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2022 (Continued)
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Capital Projects Funds
Parks
Housing Maintenance Capital
RMRA Authority CIP Projects
Assets:

Pooled cash and investments 534,951 $ 713,123 $ 492,258 $ 775,491 $ Due from other governments 92,248 - - - Total Assets 627,199 $ 713,123 $ 492,258 $ 775,491 $ Liabilities, Deferred Inflows of Resources,
and Fund Balances:

Liabilities:

Accounts payable - $ - $ - $ 37,935 $
Unearned revenues - - 150,000 - Due to other funds - - - - Total Liabilities - - 150,000 37,935 Fund Balances (Deficit):

Restricted for:

Community development projects - 713,123 - - Public safety - - - - Parks, recreation and senior center - - 342,258 - Public works 627,199 - - 737,556 Unassigned - - - - Total Fund Balances (Deficit) 627,199 713,123 342,258 737,556 Total Liabilities, Deferred Inflows of Resources, and Fund Balances 627,199 $ 713,123 $ 492,258 $ 775,491 $ Special Revenue Funds

City of Imperial Beach
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2022
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Total
Governmental
Funds
Assets:

Pooled cash and investments 2,775,734 $
Due from other governments 172,974 Total Assets 2,948,708 $ Liabilities, Deferred Inflows of Resources,
and Fund Balances:

Liabilities:

Accounts payable 99,465 $
Unearned revenues 150,000 Due to other funds 50,294 Total Liabilities 299,759 Fund Balances (Deficit):

Restricted for:

Community development projects 713,123 Public safety 49,989 Parks, recreation and senior center 342,258 Public works 1,544,244 Unassigned (665)
Total Fund Balances (Deficit) 2,648,949
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 2,948,708 $

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City of Imperial Beach
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds
Year Ended June 30, 2022
-83-
Special Revenue Funds
Supplemental
Law
Gas Tax Prop A Tax CDBG Grant Enforcement
Revenues:

Intergovernmental 665,018 $ 799,898 $ 60,305 $ 153,285 $ Charges for services - 31,626 - - Use of money and property (2,010) (2,684) - - Miscellaneous - - - - Total Revenues 663,008 828,840 60,305 153,285 Expenditures:

Current:

Public safety - - - 160,023 Community development - - - - Public works - - - - Debt Service Principal - 296,928 - -
Interest - 8,358 - - Capital outlay - 115,981 58,800 - Total Expenditures - 421,267 58,800 160,023 Excess (Deficiency) of Revenues Over (Under) Expenditures 663,008 407,573 1,505 (6,738) Other Financing Sources (Uses):

Transfers in - - - - Transfers out (665,017) (230,100) - - Total Other Financing Sources (Uses) (665,017) (230,100) - - Net Change in Fund Balances (2,009) 177,473 1,505 (6,738) Fund Balances (Deficit), Beginning of Year 1,344 2,016 (1,505) 56,727 Fund Balances (Deficit), End of Year (665) $ 179,489 $ - $ 49,989 $

City of Imperial Beach
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds
Year Ended June 30, 2022 (Continued)
-84-
Parks
Housing Maintenance Capital
RMRA Authority CIP Projects
Revenues:

Intergovernmental 552,812 $ - $ - $ - $
Charges for services - - 37,325 - Use of money and property (8,793) 49,013 (8,769) (16,468) Miscellaneous - - 8,992 - Total Revenues 544,019 49,013 37,548 (16,468) Expenditures:

Current:

Public safety - - - - Community development - 166 - - Public works 129,578 - - - Debt Service Principal - - - -
Interest - - - - Capital outlay - - 20,192 158,585 Total Expenditures 129,578 166 20,192 158,585 Excess (Deficiency) of Revenues
Over (Under) Expenditures 414,441 48,847 17,356 (175,053) Other Financing Sources (Uses):

Transfers in - - 200,000 945,518 Transfers out - - - - Total Other Financing Sources (Uses) - - 200,000 945,518 Net Change in Fund Balances 414,441 48,847 217,356 770,465 Fund Balances (Deficit), Beginning of Year 212,758 664,276 124,902 (32,909) Fund Balances (Deficit), End of Year 627,199 $ 713,123 $ 342,258 $ 737,556 $ Special Revenue Funds Capital Projects Funds

City of Imperial Beach
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds
Year Ended June 30, 2022
-85-
Total
Governmental
Funds
Revenues:

Intergovernmental 2,231,318 $
Charges for services 68,951 Use of money and property 10,289 Miscellaneous 8,992 Total Revenues 2,319,550 Expenditures:

Current:

Public safety 160,023 Community development 166 Public works 129,578 Debt Service
Principal 296,928
Interest 8,358 Capital outlay 353,558
Total Expenditures 948,611
Excess (Deficiency) of Revenues
Over (Under) Expenditures 1,370,939 Other Financing Sources (Uses):

Transfers in 1,145,518
Transfers out (895,117) Total Other Financing Sources (Uses) 250,401 Net Change in Fund Balances 1,621,340 Fund Balances (Deficit), Beginning of Year 1,027,609 Fund Balances (Deficit), End of Year 2,648,949 $

City of Imperial Beach
Budgetary Comparison Schedule – Special Revenue Funds
Gas Tax
Year Ended June 30, 2022
-86-
Budget Amounts Actual Variance with
Original Final Amounts Final Budget
Budgetary Fund Balance, July 1 1,344 $ 1,344 $ 1,344 $ - $ Resources (Inflows):

Intergovernmental 696,050 696,050 665,018 (31,032) Use of money and property - - (2,010) (2,010) Amounts Available for Appropriations 697,394 697,394 664,352 (33,042) Charges to Appropriation (Outflows):

Transfers out 696,050 696,050 665,017 31,033 Total Charges to Appropriations 696,050 696,050 665,017 31,033 Budgetary Fund Balance (Deficit), June 30 1,344 $ 1,344 $ (665) $ (2,009) $

City of Imperial Beach
Budgetary Comparison Schedule – Special Revenue Funds
Prop A Tax
Year Ended June 30, 2022
-87-
Budget Amounts Actual Variance with
Original Final Amounts Final Budget
Budgetary Fund Balance, July 1 2,016 $ 2,016 $ 2,016 $ - $ Resources (Inflows):

Intergovernmental 454,000 454,000 799,898 345,898 Charges for services 26,000 26,000 31,626 5,626 Use of money and property - - (2,684) (2,684) Amounts Available for Appropriations 482,016 482,016 830,856 348,840 Charges to Appropriation (Outflows):

Debt Service
Principal - - 296,928 (296,928)
Interest - - 8,358 (8,358) Capital outlay - 1,043,779 115,981 927,798 Transfers out 230,100 230,100 230,100 - Total Charges to Appropriations 230,100 1,273,879 651,367 622,512 Budgetary Fund Balance, June 30 251,916 $ (791,863) $ 179,489 $ 971,352 $

City of Imperial Beach
Budgetary Comparison Schedule – Special Revenue Funds
CDBG Grant
Year Ended June 30, 2022
-88-
Budget Amounts Actual Variance with
Original Final Amounts Final Budget
Budgetary Fund Balance (Deficit), July 1 (1,505) $ (1,505) $ (1,505) $ - $ Resources (Inflows):

Intergovernmental - 299,123 60,305 (238,818) Amounts Available for Appropriations (1,505) 297,618 58,800 (238,818) Charges to Appropriation (Outflows):

Capital outlay - 297,618 58,800 238,818 Total Charges to Appropriations - 297,618 58,800 238,818 Budgetary Fund Balance, June 30 (1,505) $ - $ - $ - $

City of Imperial Beach
Budgetary Comparison Schedule – Special Revenue Funds
Supplemental Law Enforcement
Year Ended June 30, 2022
-89-
Budget Amounts Actual Variance with
Original Final Amounts Final Budget
Budgetary Fund Balance, July 1 56,727 $ 56,727 $ 56,727 $ - $ Resources (Inflows):

Intergovernmental 150,000 150,000 153,285 3,285 Amounts Available for Appropriations 206,727 206,727 210,012 3,285 Charges to Appropriation (Outflows):

Public safety 150,000 150,000 160,023 (10,023) Total Charges to Appropriations 150,000 150,000 160,023 (10,023) Budgetary Fund Balance, June 30 56,727 $ 56,727 $ 49,989 $ (6,738) $

City of Imperial Beach
Budgetary Comparison Schedule – Special Revenue Funds
RMRA
Year Ended June 30, 2022
-90-
Budget Amounts Actual Variance with
Original Final Amounts Final Budget
Budgetary Fund Balance, July 1 212,758 $ 212,758 $ 212,758 $ - $ Resources (Inflows):

Intergovernmental 536,450 536,450 552,812 16,362 Use of money and property - - (8,793) (8,793) Amounts Available for Appropriations 749,208 749,208 756,777 7,569 Charges to Appropriation (Outflows):

Public works - 536,450 129,578 406,872 Total Charges to Appropriations - 536,450 129,578 406,872 Budgetary Fund Balance, June 30 749,208 $ 212,758 $ 627,199 $ 414,441 $

City of Imperial Beach
Budgetary Comparison Schedule – Capital Projects Funds
Parks Maintenance CIP
Year Ended June 30, 2022
-91-
Budget Amounts Actual Variance with
Original Final Amounts Final Budget
Budgetary Fund Balance, July 1 124,902 $ 124,902 $ 124,902 $ - $ Resources (Inflows):

Charges for services 40,000 40,000 37,325 (2,675) Use of money and property - - (8,769) (8,769) Miscellaneous - - 8,992 8,992 Transfers in 200,000 200,000 200,000 - Amounts Available for Appropriations 364,902 364,902 362,450 (2,452) Charges to Appropriation (Outflows):

Capital outlay - 89,083 20,192 68,891 Total Charges to Appropriations - 89,083 20,192 68,891 Budgetary Fund Balance, June 30 364,902 $ 275,819 $ 342,258 $ 66,439 $

City of Imperial Beach
Budgetary Comparison Schedule – Capital Projects Funds
Capital Projects
Year Ended June 30, 2022
-92-
Budget Amounts Actual Variance with
Original Final Amounts Final Budget
Budgetary Fund Balance (Deficit), July 1 (32,909) $ (32,909) $ (32,909) $ - $ Resources (Inflows):

Use of money and property - - (16,468) (16,468) Transfers in - 945,518 945,518 - Amounts Available for Appropriations (32,909) 912,609 896,141 (16,468) Charges to Appropriation (Outflows):

Capital outlay - 945,518 158,585 786,933 Total Charges to Appropriations - 945,518 158,585 786,933 Budgetary Fund Balance (Deficit), June 30 (32,909) $ (32,909) $ 737,556 $ 770,465 $

City of Imperial Beach
Combining Statement of Net Position
Internal Service Funds
June 30, 2022
-93-
Vehicle Facilities
Replacement & Self- Technology & Repair &
Maintenance Insurance Communication Maintenance Total
Assets:

Current:

Pooled Cash and investments 1,018,988 $ 1,490,807 $ 74,256 $ 64,107 $ 2,648,158 $ Prepaid costs - - 29,311 - 29,311 Due from other governments 29,606 - - - 29,606 Total Current Assets 1,048,594 1,490,807 103,567 64,107 2,707,075 Noncurrent:

Capital assets, net of depreciation 445,727 - - 1,707 447,434 Total Noncurrent Assets 445,727 - - 1,707 447,434 Total Assets 1,494,321 1,490,807 103,567 65,814 3,154,509 Deferred Outflows of Resources:

Deferred pension and related items 37,477 23,368 23,809 - 84,654 Deferred OPEB related items 9,068 5,654 5,761 - 20,483 Total Deferred Outflows of Resources 46,545 29,022 29,570 - 105,137 Liabilities:

Current:

Accounts payable 48,634 3,048 55,037 - 106,719 Accrued liabilities 5,966 3,408 7,142 - 16,516 Compensated absences due in one year 7,376 9,250 2,839 - 19,465 Claims and judgments due in one year - 123,000 - - 123,000 Total Current Liabilities 61,976 138,706 65,018 - 265,700 Noncurrent:

Compensated absences due in more than one year - 2,120 - - 2,120 Claims and judgments due in more than one year - 577,000 - - 577,000 Net pension liability 19,360 12,072 12,299 - 43,731 Total OPEB liability 17,213 10,733 10,936 - 38,882 Total Noncurrent Liabilities 36,573 601,925 23,235 - 661,733 Total Liabilities 98,549 740,631 88,253 - 927,433 Deferred Inflows of Resources:

Deferred pension related items 33,579 20,938 21,333 - 75,850 Deferred OPEB related items 3,843 2,396 2,441 - 8,680 Total Deferred Inflows of Resources 37,422 23,334 23,774 - 84,530 Net Position:

Investment in capital assets 445,727 - - 1,707 447,434 Unrestricted 959,168 755,864 21,110 64,107 1,800,249 Total Net Position (Deficit) 1,404,895 $ 755,864 $ 21,110 $ 65,814 $ 2,247,683 $

City of Imperial Beach
Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds
Year Ended June 30, 2022
-94-
Vehicle Facilities
Replacement & Self- Technology & Repair &
Maintenance Insurance Communication Maintenance Total
Operating Revenues:

Sales and service charges 494,150 $ 737,850 $ 597,600 $ 10,200 $ 1,839,800 $ Miscellaneous 135,135 51,378 - - 186,513 Total Operating Revenues 629,285 789,228 597,600 10,200 2,026,313 Operating Expenses:

Services and supplies 312,225 43,555 499,559 143,691 999,030 Claims expense - 260,083 - - 260,083 Personnel and administrative 138,651 80,579 113,448 - 332,678 Depreciation expense 171,866 - - 1,752 173,618 Total Operating Expenses 622,742 384,217 613,007 145,443 1,765,409 Operating Income (Loss) 6,543 405,011 (15,407) (135,243) 260,904 Nonoperating Revenues (Expenses):

Investment loss (18,103) (29,383) (1,503) (2,402) (51,391) Total Nonoperating Revenues (Expenses) (18,103) (29,383) (1,503) (2,402) (51,391) Income (Loss) Before Transfers (11,560) 375,628 (16,910) (137,645) 209,513 Transfers in 505,382 151,522 388,156 92,771 1,137,831 Total Transfers 505,382 151,522 388,156 92,771 1,137,831 Changes in Net Position 493,822 527,150 371,246 (44,874) 1,347,344 Net Position (Deficit):

Beginning of Year 911,073 228,714 (350,136) 110,688 900,339 End of Year 1,404,895 $ 755,864 $ 21,110 $ 65,814 $ 2,247,683 $

City of Imperial Beach
Combining Statement of Cash Flows
Internal Service Funds
Year Ended June 30, 2022
-95-
Vehicle Facilities
Replacement & Self- Technology & Repair &
Maintenance Insurance Communication Maintenance Total
Cash Flows from Operating Activities:

Cash received from/(paid to) interfund service provided 629,341 $ 789,228 $ 597,600 $ 10,200 $ 2,026,369 $ Cash paid to suppliers for goods and services (272,905) (447,306) (430,865) (261,513) (1,412,589) Cash paid to employees for services (171,548) (110,639) (131,974) - (414,161) Net Cash Provided (Used) by Operating Activities 184,888 231,283 34,761 (251,313) 199,619 Cash Flows from Non-Capital Financing Activities:

Transfers from other funds 505,382 151,522 388,156 92,771 1,137,831 Amounts received from other funds - - (347,158) - (347,158) Net Cash Provided by Non-Capital Financing Activities 505,382 151,522 40,998 92,771 790,673 Cash Flows from Capital and Related Financing Activities:

Acquisition and construction of capital assets (64,067) - - - (64,067) Net Cash Used by Capital and Related Financing Activities (64,067) - - - (64,067) Cash Flows from Investing Activities:

Investment loss (18,103) (29,383) (1,503) (2,402) (51,391) Net Cash Provided (Used) by Investing Activities (18,103) (29,383) (1,503) (2,402) (51,391) Net Increase (Decrease) in Cash and Cash Equivalents 353,422 608,100 74,256 (160,944) 874,834 Cash and Cash Equivalents, Beginning of Year 410,888 1,137,385 - 225,051 1,773,324 Cash and Cash Equivalents, End of Year 1,018,988 $ 1,490,807 $ 74,256 $ 64,107 $ 2,648,158 $ Reconciliation of Operating Income (Loss) to Net Cash
Provided (Used) by Operating Activities:

Operating income (loss) 6,543 $ 405,011 $ (15,407) $ (135,243) $ 260,904 $ Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:

Depreciation 171,866 - - 1,752 173,618 (Increase) decrease in prepaid costs - - 23,898 - 23,898 (Increase) decrease in due from other governments 56 - - - 56 (Increase) decrease in deferred outflows - pension 12,271 7,652 7,796 - 27,719 (Increase) decrease in deferred outflows - OPEB 953 594 605 - 2,152 Increase (decrease) in accounts payable 39,320 (51,668) 44,796 (117,822) (85,374) Increase (decrease) in accrued liabilities 1,999 (778) 3,832 - 5,053 Increase (decrease) in compensated absences 3,559 (5,306) 2,073 - 326 Increase (decrease) in claims and judgments - (92,000) - - (92,000) Increase (decrease) in net pension liability (61,432) (38,304) (39,028) - (138,764) Increase (decrease) in total OPEB liability (3,248) (2,025) (2,063) - (7,336) Increase (decrease) in deferred inflows - pension 9,158 5,711 5,818 - 20,687 Increase (decrease) in deferred inflows - OPEB 3,843 2,396 2,441 - 8,680 Total Adjustments 178,345 (173,728) 50,168 (116,070) (61,285) Net Cash Provided (Used) by Operating Activities 184,888 $ 231,283 $ 34,761 $ (251,313) $ 199,619 $

City of Imperial Beach
Combining Statement of Fiduciary Net Position
All Custodial Funds
June 30, 2022
-96-
Special Assessment Districts
Assessment Assessment Assessment
District #63 District #64 District #66
Assets:

Pooled cash and investments 120,555 $ 30,726 $ 173,851 $ Total Assets 120,555 30,726 173,851 Net Position:

Held in trust for other purposes 120,555 30,726 173,851 Total Net Position 120,555 $ 30,726 $ 173,851 $

City of Imperial Beach
Combining Statement of Fiduciary Net Position
All Custodial Funds
June 30, 2022
-97-
Special Assessment Districts
Custodial
Assessment Assessment Funds
District #68 District #71 Totals
Assets:

Pooled cash and investments 103,289 $ 16,617 $ 445,038 $ Total Assets 103,289 16,617 445,038 Net Position:

Held in trust for other purposes 103,289 16,617 445,038 Total Net Position 103,289 $ 16,617 $ 445,038 $

City of Imperial Beach
Combining Statement of Changes in Fiduciary Net Position All Custodial Funds
Year Ended June 30, 2022
-98-
Special Assessment Districts
Assessment Assessment Assessment
District #63 District #64 District #66
Additions:

Miscellaneous 1,338 $ 341 $ 1,930 $
Total Additions 1,338 341 1,930 Changes in Net Position 341 1,338 1,930 Net Position at Beginning of Year 119,217 30,385 171,921 Net Position at End of Year 120,555 $ 30,726 $ 173,851 $

City of Imperial Beach
Combining Statement of Changes in Fiduciary Net Position All Custodial Funds
Year Ended June 30, 2022
-99-
Special Assessment Districts
Custodial
Assessment Assessment Funds
District #68 District #71 Totals
Additions:

Miscellaneous 1,147 $ 184 $ 4,940 $
Total Additions 1,147 184 4,940 Changes in Net Position 184 1,147 4,940 Net Position at Beginning of Year 102,142 16,433 440,098 Net Position at End of Year 103,289 $ 16,617 $ 445,038 $

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-1-
INDEPENDENT AUDITORS’ REPORT ON

COMPLIANCE WITH APPLICABLE REQUIREMENT

AND ON INTERNAL CONTROL OVER COMPLIANCE
To the Honorable City Council
City of Imperial Beach, California
Report on Compliance for the Housing Successor
Opinion
We have audited the City of Imperial Beach Housing Successor’s (Housing Successor) compliance with the type of compliance requirements described in the California Health and Safety Code sections applicable to California Housing Successor Agencies for the year ending June 30, 2022.

In our opinion, the Housing Successor complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its Housing Successor for the year ending June 30, 2022.

Basis for Opinion
We conducted our audit of compliance 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, and the audit guidelines issued by the California State Controller’s Office. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred above that could have a direct and material effect on Housing Successor occurred.

We are required to be independent of the City of Imperial Beach Housing Successor and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit.

We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for the Housing Successor. However, our audit does not provide a legal determination of the Housing Successor’s compliance with those requirements.

ATTACHMENT 2

-2-
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City of Imperial Beach Housing Successor’s general programs.

Auditor’s Responsibility for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City of Imperial Beach Housing Successor’s compliance based on our audit. 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 the audit guidelines issued by the California State Controller’s Office 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. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City of Imperial Beach Housing Successor’s compliance with the requirements of the government program as a whole.

In performing an audit in accordance with GAGAS and the audit guidelines issued by the California State Controller’s Office, we:
 Exercise professional judgment and maintain professional skepticism throughout the audit.
 Identify and assess the risks of material noncompliance, 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 City of Imperial Beach Housing Successor’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.
 Obtain an understanding of the City of Imperial Beach Housing Successor’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with GAAS and the audit guidelines issued by the California State Controller’s Office, but not for the purpose of expressing an opinion on the effectiveness of the City of Imperial Beach Housing Successor’s internal control over compliance. Accordingly, no such opinion is expressed.

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-
Report on Internal Control Over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a compliance requirement will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibility for the Audit of Compliance section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that have not been identified.

Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of California Health and Safety Code sections applicable to California Housing Successor Agencies. Accordingly, this report is not suitable for any other purpose.

Report on Excess/Surplus Calculation
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Imperial Beach as of the year ended June 30, 2022, and have issued our report thereon dated November 7, 2022, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements as a whole. The accompanying report on excess/surplus calculation is presented for purposes of additional analysis only and is not a required part of the financial statements. Such information is the responsibility of management and was derived from the financial statements. The report on excess/surplus calculation has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance.

San Bernardino, California
November 7, 2022

City of Imperial Beach
Computation of Housing Successor Excess/Surplus (HSC 34176.1) For the year ended June 30, 2022
-4-
Opening Fund Balance, as restated 664,276 $ 713,123 $
Available Low & Mod Funds 664,276 713,123
Limitation (Greater of $1,000,000 or four years of deposits) Aggregate amount deposited for last four years:
2021-2022 - $ 49,012 $
2020-2021 31,606 31,606
2019-2020 23,670 23,670
2018-2019 19,382 19,382
2017-2018 3,183 - Total Amounts Deposited for Last 4 Years 77,841 123,670 Base Limitation 1,000,000 1,000,000 Greater Amount 1,000,000 1,000,000 Computed Excess Surplus $ - $ -
Low & Moderate
Hosing Funds
All Project Area
July 1, 2021
Low & Moderate
Housing Funds
All Project Area
July 1, 2022

ANNUAL HOUSING SUCCESSOR PROGRESS REPORT
HOUSING AUTHORITY OF THE CITY OF IMPERIAL BEACH – SUCCESSOR HOUSING ENTITY Specified Activity Information in Accordance with HSC Section 34176.1 (f) Year End June 30, 2022
The Imperial Beach Housing Authority serves as the housing successor (Housing Successor) of the former Imperial Beach Redevelopment Agency (Former RDA) designated under state laws governing dissolution of former redevelopment agencies set forth in Health and Safety Code (HSC) Sections 34161 through 34191.6 (referred to herein as the Dissolution Law).

The Dissolution Law imposes detailed reporting requirements on the Housing Successor. Specifically, HSC Section 34176.1(f) provides that the reporting requirements set forth in HSC Section 33080.1 and Government Code Section 12463.3 that previously applied to the Former RDA for affordable housing purposes no longer apply. Instead, the Housing Successor must conduct, and provide to its governing body (i.e. Board of Directors of the Housing Authority), an independent financial audit of the Low and Moderate Income Housing Asset Fund within six (6) months after the end of each fiscal year. Such audit may be included in the independent financial audit of the City. In addition, because the Housing Successor is not the City, the Housing Successor must provide to its governing body (i.e. the Board of Directors of the Housing Authority) and post on its Internet Website all of the following information for the previous fiscal year:

1. The amount the City received pursuant to subparagraph (A) of paragraph (3) of subdivision (b) of Section 34191.4. [HSC Section 34176.1(f)(1)]
SA Loan Repayment completed in FY2022 $ 0

2. The amount deposited to the Low and Moderate Income Housing Asset Fund, distinguishing between amounts deposited pursuant to subparagraphs (B) and (C) of paragraph (3) of subdivision (b) of Section 34191.4 , amounts deposited for other items listed on the Recognized Obligation Payment Schedule, and other amounts deposited. [HSC Section 34176.1(f)(2)] Interest and other $ 49,013
Recognized Obligation Payment Schedule amounts $ 0
Other amounts (20% of SA Loan Repayment; above) $ 0
TOTAL $ 49,013

3. A statement of the balance in the Low and Moderate Income Housing Asset Fund as of the close of the fiscal year, distinguishing any amounts held for items listed on the Recognized Obligation Payment Schedule from other amounts. [HSC Section 34176.1(f)(3)] Recognized Obligation Payment Schedule amounts $ 0
Other amounts (including SA Loan Repayment) $ 713,123
TOTAL $ 713,123
ATTACHMENT 3

Annual Housing Successor Progress Report
Year End June 30, 2022

4. A description of expenditures from the fund by category, including, but not limited to, expenditures (A) for monitoring and preserving the long-term affordability of units subject to affordability restrictions or covenants entered into by the Former RDA or the Housing Successor and administering the activities described in paragraphs (2) and (3) of subdivision (a) of HSC Section 34176.1, (B) for homeless prevention and rapid rehousing services for the development of housing described in paragraph (2) of subdivision (a) of HSC Section 34176.1, and (C) for the development of housing pursuant to paragraph (3) of subdivision (a) of HSC Section 34176.1. [HSC Section 34176.1(f)(4)]
(A) Monitoring/preserving $ 165
(B) Homeless prevention/rapid rehousing $ 0
(C) Housing development (Habitat for Humanity) $ 0
TOTAL $ 165

5. As described in paragraph (1) of subdivision (a) of HSC Section 34176.1, the statutory value of real property owned by the Housing Successor, the value of loans and grants receivable, and the sum of these two amounts. [HSC Section 34176.1(f)(5)] Assets held for disposition $ 0
Loans receivable $ 10,571,101
TOTAL $ 10,571,101

6. A description of any transfers made pursuant to paragraph (2) of subdivision (c) of HSC Section 34176.1 in the previous fiscal year and, if still unencumbered, in earlier fiscal years and a description of and status update on any project for which transferred funds have been or will be expended if that project has not yet been placed in service. [HSC Section 34176.1(f)(6)] Not applicable. No Low and Moderate Income Housing Asst Fund monies were transferred during the fiscal year between the Housing Authority and other housing successors that are located within the County of San Diego or in contiguous jurisdiction.

7. A description of any project that the Housing Successor receives or holds property tax revenue pursuant to the Recognized Obligation Payment Schedule and the status of that project. [HSC Section 34176.1(f)(7)]
Not applicable.

8. For interests in real property acquired by the Former RDA before February 1, 2012, a status update on compliance with HSC Section 33334.16. For interests in real property acquired by the Housing Successor on or after February 1, 2012, a status update on the project. [HSC Section 34176.1(f)(8)]
Not applicable.

Annual Housing Successor Progress Report
Year End June 30, 2022

9. A description of any outstanding obligations pursuant to HSC Section 33413 that remained to transfer to the Housing Successor on February 1, 2012, of the Housing Successor's progress in meeting those obligations, and of the Housing Successor's plans to meet unmet obligations. In addition, the Housing Successor shall include in the report posted on its Internet Web site the implementation plans of the Former RDA. [HSC Section 34176.1(f)(9)] Not applicable.

10. The information required by subparagraph (B) of paragraph (3) of subdivision (a) of HSC Section 34176.1. [HSC Section 34176.1(f)(10)]
Not applicable.

11. The percentage of units of deed-restricted rental housing restricted to seniors and assisted individually or jointly by the Housing Successor, its Former RDA, and the City within the previous 10 years in relation to the aggregate number of units of deed-restricted rental housing assisted individually or jointly by the Housing Successor, its Former RDA, and the City within the same time period. [HSC Section 34176.1(f)(11)] Not applicable.

12. The amount of any excess surplus, the amount of time that the Housing Successor has had excess surplus, and the Housing Successor's plan for eliminating the excess surplus. [HSC Section 34176.1(f)(12)]
The successor agency has no excess housing funds as of June 30, 2022.

Annual Housing Successor Progress Report
Year End June 30, 2022

13. An inventory of homeownership units assisted by the Former RDA or the Housing Successor that are subject to covenants or restrictions or to an adopted program that protects the Former RDA's investment of moneys from the Low and Moderate Income Housing Fund pursuant to subdivision (f) of HSC Section 33334.3. The inventory shall include all of the following information (A) the number of those units, (B) the number of the units lost to the portfolio in the last fiscal year and the reason for those losses, (C) any funds returned to the Housing Successor as part of an adopted program that protects the Former RDA’s investment of moneys from the Low and Moderate Income Housing Fund, and (D) whether the Housing Successor has contracted with any outside entity for the management of the units and, if so, the identity of the entity. [HSC Section 34176.1(f)(13)]
Project Name Number of
Units
Units
Lost
Funds
Returned
Contracted
Management
Beachwind Court – 624
12th Street
15 None None Beachwind Court LP
Southbay Community
Services – 1260 Calla Ave
8 None None Southbay Community
Services
Southbay Community
Services – 1360 Hemlock
7 None None Southbay Community
Services
American Legion – 1268
Palm Avenue
30 None None American Legion
Habitat for Humanity –
10th and Donax
6 None None Habitat for Humanity

ATTACHMENT 4
RESOLUTION NO. 2022-101

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF IMPERIAL BEACH, CALIFORNIA,

AUTHORIZING THE ALLOCATION OF FUND BALANCE AND AUTHORIZING NECESSARY

ASSIGNMENTS, TRANSFERS, AND BUDGET AMENDMENTS
WHEREAS, the City Council has a fiduciary responsibility to maintain fund balance reserves and allocate adequate funding to protect and plan for the City’ future; and WHEREAS, the City Council has adopted City Council Policy 420, Fund Balance Reserve Policy that identifies provisions of the fund balance standards for the City of Imperial Beach; and WHEREAS, City Council Policy 420 sets a minimum Unassigned Fund Balance of 30% of the annual General Fund expenditures; and
WHEREAS, as of June 30, 2022 the General Fund Unassigned Fund Balance was $10,489,984, which is approximately 39.4% of Fiscal Year 2021-2022 General Fund expenditures; and
WHEREAS, it is the City Council’s desire to create a more stable financial platform to allow the City to respond to unanticipated changes in revenue and expenditures, prepare for future large-scale purchases, and restore diminishing reserves, and:

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Imperial Beach as follows:

1. The above listed findings are true and correct.

2. The City Council authorizes the following uses/allocations of General Fund Unassigned Fund Balance:
a. $250,000 transfer from the General Fund Unassigned Fund Balance to the Public Works Strategic Capital (Strategic Capital) Reserve for future unanticipated capital projects
b. $250,000 transfer from the General Fund Unassigned Fund Balance to the Technology and Communication Fund (Fund 503) to replenish Fund 503 reserves and for future infrastructure needs and improvements c. $200,000 transfer from the General Fund Unassigned Fund Balance to the Facility Repair and Maintenance Fund (Fund 504) to replenish the Fund 504 reserves and for future unanticipated facility repairs and maintenance

3. The City Council hereby authorizes the Finance Director to make the necessary assignments, transfers, and budget amendments.

Resolution No. 2022-101

PASSED, APPROVED, AND ADOPTED by the City Council of the City of Imperial Beach at its meeting held on the 16th day of November 2022, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

SERGE DEDINA, MAYOR
ATTEST:

JACQUELINE M. KELLY, MMC

CITY CLERK

P a g e | 1
November 16, 2022
ITEM TITLE: CONSIDERATION OF RESOLUTION NO. 2022-105 APPROVING A ONE-TIME

EMPLOYEE RETENTION INCENTIVE STIPEND
ORIGINATING DEPARTMENT:

City Manager
EXECUTIVE SUMMARY:

Current economic conditions including, but not limited to, inflation, very high energy and fuel costs and daily expenses such as groceries have resulted in abnormal financial impacts on the Imperial Beach municipal employees. In an effort to support and recognize the City employees for their dedication and commitment to the community, the City Manager with direction and support from the City Council has proposed a one-time retention incentive stipend for all municipal employees.

Concurrent with the economic conditions described above, the City has faced challenges in hiring qualified staff to fill all of the positions in the organization. Nonetheless, the employees have stepped forward and continued to provide high quality municipal services to the community even with gaps in the workforce. Finally, and most importantly, the stipend is proposed in recognition of an effective work force completing tasks with limited resources during challenging times. The City of Imperial Beach is fortunate to have the opportunity to offer a retention incentive stipend in an effort to recognize and maintain well-trained employees.

RECOMMENDATION:

City Council adoption of Resolution No. 2022-105 approving a one-time retention incentive stipend for all city active employees, except the City Manager, in the amount of $700 for full-time employees and $350 for part-time employees.

OPTIONS:
 Adopt Resolution No. 2022-105
 Request additional information from the City Manager
 Deny Resolution No. 2022-105
BACKGROUND/ANALYSIS:

City employees are well trained, possess attractive skill sets, have important institutional knowledge, and continue to produce high quality work during a season of changing economic downturn. The City was faced with numerous vacancies during the pandemic, and it is taking time to recruit and fill many of the vacancies. A result of these vacancies has been increased an

P a g e | 2
workload and responsibilities for City employees. There has been a significant savings realized from the employee vacancies, but it has had an impact on the dedicated workforce of the City.

This stipend is a way to recognize the efforts and success of an effective work force during challenging times. In consultation and with the support of the City Council, the City Manager is seeking Council approval of a one-time retention incentive stipend for all municipal employees in an effort to recognize and maintain well trained employees.

The retention incentive stipend would be equal to $700 for full time employees and $350 for part time employees, exclusive of the City Manager and elected officials. Imperial Beach employees are without question some of the most dedicated and professional employees in the County.

Pursuant to Government Code Section 54953(c)(3), the retention stipend applies to Appointive Management personnel as part of this agenda item for City Council approval.

ENVIRONMENTAL DETERMINATION:

Not a project as defined by CEQA.

FISCAL IMPACT: The funding for the stipend is available from the General Fund Unassigned Fund Balance via the savings realized through the vacancies experienced during the pandemic.

It is anticipated to cost approximately $80,000 in total for all full time and part time employees.

FISCAL YEAR: 2022/2023
BUDGETED: No
BUDGET AMENDMENT Yes
ACCOUNT NO(S).:

PROJECT NO(S).:

FISCAL ANALYSIS: $80,000
CURRENT BUDGET: NA

ANTICIPATED
EXPENDITURE: $78,000
ATTACHMENTS:

ATT 1 Resolution No. 2022-105

ATTACHMENT 1
RESOLUTION NO. 2022-105

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF IMPERIAL BEACH, CALIFORNIA,

AUTHORIZING THE CITY MANAGER TO PROVIDE ONE-TIME RETENTION INCENTIVE

STIPENDS TO CITY EMPLOYEES
WHEREAS, City employees are well trained, possess important institutional knowledge, and continue to provide a high level of service to the residents of Imperial Beach City; and WHEREAS, City staff have continued to produce high quality work even during vacancies as a result of the pandemic while increasing their workload; and WHEREAS, a rise in inflation, high costs of energy and fuel prices and increases in everyday expenses such as groceries have impacted many of City employees, but more importantly in recognition of an effective work force during challenging times, the retention incentive stipend is an effort to recognize and maintain well-trained employees; and WHEREAS, the City Manager will hereby have the authority to assign retention stipends for city employees as an incentive to the employees for their future City service which will benefit the City of Imperial Beach by retaining long-term qualified personnel.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Imperial Beach as follows:

1. The foregoing recitals are true and correct.

2. The City Council of the City of Imperial Beach hereby authorizes the City Manager to provide a one-time retention incentive stipend to all City employees, except the City Manager and elected officials.

3. The one-time retention incentive stipend shall be in the amount of $700 for all active full time employees and $350 for all active part-time employees in good standing and not facing disciplinary action.

4. The City Council hereby authorizes the appropriation and expenditure of approximately $80,000 for the one-time retention incentive stipend to be distributed to the applicable accounts from the General Fund Unassigned Fund Balance.

PASSED, APPROVED, AND ADOPTED by the City Council of the City of Imperial Beach at its meeting held on the 16th day of November 2022, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

SERGE DEDINA, MAYOR
ATTEST:

JACQUELINE M. KELLY, MMC

CITY CLERK

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November 16, 2022
ITEM TITLE: RESO. NO. 2022-99 APPROVING ADOPTION OF A SECTION 115 PUBLIC

AGENCIES POST-EMPLOYMENT BENEFIT TRUST ADMINISTERED BY PUBLIC AGENCY RETIREMENT SERVICES (PARS), AND RESO. NO. 2022-100 APPROVING THE ADOPTION

OF A PENSION FUNDING POLICY
ORIGINATING DEPARTMENT:

City Manager
EXECUTIVE SUMMARY:

The City of Imperial Beach provides retirement benefits to its employees by contracting with the California Public Employees Retirement System (CalPERS). The City is subject to the changes of CalPERS funding policies, investment projections and actual performance, and actuarial assumptions which impact the level of funding commitment that is required on an annual basis with the amount of the unfunded liability carried by the City. CalPERS modification of the discount rate results in fiscal impacts for all member agencies including the City of Imperial Beach. Lower rates of return than originally anticipated has created an Unfunded Accrued Liability (UAL) for the City of Imperial Beach. The unfunded amount for the City of Imperial Beach on June 30, 2021 is about $5,295,670 which is in addition to the Normal Rate payment for current employees. In addition to the City’s UAL, the City has other post-retirement benefits (OPEB) obligations that include retiree health as required by Public Employees' Medical and Hospital Care Act (PEMHCA). Although this plan is pay as you go, interest accrues annually and the City’s OPEB liability on June 30, 2022 is $2,025,106. A strategy to address OPEB and Pension costs include the creation of a Section 115 Public Agencies Post-Employment Benefit Trust that would be administered by Public Agency Retirement Services (PARS). Assets held in the PARS Section 115 Irrevocable Trust can be diversely invested in a prudent fashion per Government Code Sections 53216 (Pension) and 53620 (OPEB). Furthermore, staff is recommending that the City Council adopt a Pension Funding Policy to establish a methodology and a process for funding current and future costs associated with the City’s contractual obligations to provide pension benefits as set forth in the City’s labor agreements.

RECOMMENDATION:

Adopt Resolution No. 2022-99 authorizing participation in a Section 115 Public Agencies PostEmployment Benefit Trust to be administered by Public Agency Retirement Services (PARS) appointing the Chief Administrative Officer as the City’s Plan Administrator and authorizing the City Manager or designee to execute the documents to implement the Trust, and authorize the Finance Director to process necessary budget adjustments to transfer $1 million to PARS previously assigned by the City Council from the General Fund Balance per Resolution No. 2021- 88; and Adopt Resolution No. 2022-100 approving a Pension Funding Policy.

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OPTIONS:
 Adopt Resolution No. 2022-99 authorizing participation in a Section 115 Public Agencies Post-Employment Benefit Trust to be administered by PARS and all necessary documents to establish the Trust and Adopt Resolution No. 2022-100 approving a Pension Funding Policy.
 Provide specific direction to the City Manager to take another specific action.  Deny Resolution No. 2022-99 and Resolution No. 2022-100.

BACKGROUND/ANALYSIS:

The City of Imperial Beach provides retirement benefits to its employees by contracting with the California Public Employees Retirement System (CalPERS). The City is subject to the changes of CalPERS funding policies, investment projections and actual performance, and actuarial assumptions which impacts the annual costs as well as the level of unfunded liability obligations of the City.

Employer contributions are determined by periodic actuarial valuations. These valuations are based on the benefit formulas the agency provides and the employee groups covered. The minimum required employer contribution includes the sum of two components:

1. Normal Cost Rate - represents the annual cost of service accrual for the upcoming fiscal year, for active employees. The Normal Cost is derived as a percentage of payroll and paid as part of the payroll reporting process.

2. Annual payment on the Unfunded Accrued Liability (UAL) - is the amortized dollar amount needed to fund past service credit earned (or accrued) for members who are currently receiving benefits (retirees), active members, and for members entitled to deferred benefits, as of the valuation date.

A portion of the retirement contributions to CalPERS is paid by the City of Imperial Beach and a portion is contributed by the employees. In 2016, the CalPERS Board of Administration voted to lower the discount rate (anticipated rate of return) from 7.5% to 7% over a three-year period. As of July 2021, CalPERS assumption rate lowered to 6.8%, however in July 2022 CalPERS reported a -6.1% net return on a -7% assumption on the total investments for the 12-month period that ended June 30, 2022.

For many years, CalPERS was able, on average, to achieve the assumed rate of return on the investment pool. However, the lowering of the discount rate means employers that contract with CalPERS will have fiscal impacts including the City of Imperial Beach. The lower rate of return increases the UAL for all CalPERS members (state, counties, cities, special districts, etc.) including the City of Imperial Beach. The unfunded amount for the City of Imperial Beach is about $5.3 million which is in addition to the Normal Rate payment for current employees.

Over the past decade, pension costs, both annual and long-term, have increased. Efforts to reduce the pension costs have been undertaken by the State and the City. CalPERS offers a defined benefit plan where retirement benefits are based on a formula, rather than contributions to and earnings from a savings plan such as those commonly used in the private sector such as 401k’s. Retirement benefit formulas are calculated based on an employee’s years of service credit, age at retirement, and final compensation, which is determined by an employee’s average salary, excluding overtime, for a defined period of employment. Retirement formulas for employee groups vary based on classification (miscellaneous or safety), and within these groups, by date

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of entering CalPERS membership. The Public Employees’ Pension Reform Act (PEPRA) created new pension formulas that would be applied across all CalPERS member jurisdictions to new employees (hired on or after January 1, 2013). The old formulas would apply only to employees and retirees who had already vested in the system as Classic employees (hired before January 1, 2013). Cities will not see the relief of PEPRA for another decade or two. Meanwhile, pension costs continue to rise. However, the City has taken various actions to reduce pension cost, e.g., sending a large lump sum payment to CalPERS towards the UAL, negotiating cost sharing with employees, and sending an annual UAL payment versus monthly which generates overall savings.

At the City Council Retreat held on September 20, 2021, the Council directed staff to explore the option of establishing a Section 115 Pension Prefunding Trust Program. On December 1, 2021, the City Council approved and adopted Resolution No. 2021-88 authorizing the allocation of fund balance and transfers which included assigning $1 million towards the establishment of a Section 115 Trust. Section 115 Trust accounts are used by cities and counties to reserve funds against pension liabilities. Funds can be transferred from a Section 115 Trust only to pay pension costs, and cannot be used for other purposes.

In 2012, the Government Accounting Standards Board (GASB) issued Statement No. 68, Accounting and Financial Reporting for Pensions. GASB 68 requires that governmental employers that sponsor Defined Benefit plans (i.e., CalPERS) must recognize a net pension liability (~ unfunded accrued liability) on their balance sheet. This is the difference between the City’s total pension liability (actuarial accrued liability) and actual plan assets. GASB 68 became effective for fiscal years starting after June 15, 2014.

There is an obligation to retire the City's UAL in the California Public Employees Retirement System (CalPERS). As of the most recent valuation date, June 30, 2022, the City had an obligation to pay $2,025,106 in other post-retirement benefits (OPEB) and $5,295,670 (as of June 30, 2021) for the unfunded actuarial liability. To reduce the GASB 68 net pension liability figure ($5,295,670 in FY 2021-22), the City’s only prior option was to send a Lump-Sum annual payment to CalPERS instead of a monthly payment towards the UAL. By sending a Lump-Sum UAL annual payment it saves the City up to 3.2% ($28,106) in interest while helping reduce its UAL. The City’s CalPERS UAL as of June 30, 2021, is $5,295,670 with an estimated annual payment of $840,450 on July 1, 2022.

The Internal Revenue Service allows the City to create a separate trust to “pre-fund” its CalPERS unfunded liability by the City Council. This would provide the City with an alternative to sending funds to CalPERS that will allow for greater local control over assets, investment by a professional fund management team selected and monitored by the City, with future excess contributions transferred to CalPERS at the City’s discretion.

City’s Unfunded Actuarial Liability per group as of June 30, 2021:

Group Fiscal Year Total UAL UAL Lump
Sum Payment
Savings
Miscellaneous Tier 1 FY 2023-24 $2,876,738 $492,708 $16,477 Safety Fire Tier 1 FY 2023-24 $2,287,544 $311,378 $10,413 Safety Lifeguard Tier 1 FY 2023-24 $218,579 $36,364 $1,216

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In addition to the City’s UAL, the City has other post-retirement benefits (OPEB) obligation that include retiree health as required by Public Employees' Medical and Hospital Care Act (PEMHCA). Although this plan is pay as you go, interest due accrues year after year. The City’s current OPEB liability is $2,025,106. There is an option to address OPEB and Pension costs through a combined Section 115 Trust Plan, such as the one PARS offers. Assets held in the PARS Section 115 Irrevocable Trust can be diversely invested in a prudent fashion per Government Code Sections 53216 (Pension) and 53620 (OPEB).

At the City Council retreat, City Council directed staff to complete a comparative analysis of various programs to identify the best Section 115 Trust program for Imperial Beach. Staff met with representatives from CalPERS and PARS. Staff conducted meetings with both vendors, and reviewed presentations and information from both. The following is a comparison between both vendors:

PARS
PARS is the leading Pension Prefunding Trust provider with more than 38 years of experience They currently have more than 284 clients in the Section 115 Trust Plan including local communities like Lemon Grove, La Mesa, National City, and Chula Vista. They have a private letter ruling by the IRS allowing all earnings to be tax exempt when the public agency applies for both the pension and OPEB plan. The City can combine a Trust for pension and OPEB under PARS via one agreement with one fee for both plans. The City may seek annual cost reimbursement for pension or OPEB for up to two (2) years. The City maintains oversight of the investment manager and the portfolio’s risk tolerance level. Investments can be tailored to the City’s unique demographics and needs. The combined consultant administrator fee and trustee management fee is 0.6% (60 basis points) for up to $10 million in assets, however the City is provided with more than 10 investment options from very conservative to very aggressive, with passive or actively managed, and with a dedicated Portfolio Manager (investment assistance; cell phone access; on-site reviews). A PARS consultant conducts regular meetings with City staff as frequently as desired. PARS provides mutual indemnification agreement. Their independent audit is conducted by Clifton Larson Allen, one of the top 10 CPA firms in the nation. Finally, the City may request a termination of the plan and expect a Trust to Trust transfer within 30-days of the full account balance with no fees.

CalPERS (California Employers’ Pension Prefunding Trust (CEPPT) The CEPPT was established in 2019 with approximately 75 clients. The private letter ruling by the IRS has been provided only for the OPEB plan and not pension, where pension is the biggest liability for the City. The City cannot combine a Trust for pension and OPEB under CEPPT via one agreement, instead the City must establish one plan for each with separate administration fees for each. The City may only seek an annual cost reimbursement for pension or OPEB for up to one (1) year. CEPPT only offers two strategies. The expense ratios are 0.25%, however, the City does not have direct ownership of the securities in the portfolio. Investments are in a pool and the City does not maintain direct oversight or communication with the investment manager.

The City may not expect regular meetings with CEPPT. CEPPT does not provide a mutual indemnification agreement. Their independent audit is conducted by lesser-known CPA firm. The termination of the plan transfer can take up to 150 days with board approval.

While the City’s general reserves are invested in the Local Agency Investment Fund (LAIF), there is more flexibility in how Section 115 Trust funds can be invested. Staff reviewed the options

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offered by the two leading Section 115 Trust managers, PARS and CalPERS, and staff recommends that the Section 115 Trust funds be invested in PARS in one plan for both OPEB and pension.

The Public Agency Retirement Services (PARS) Pension Rate Stabilization Program (PRSP) – also known as an Internal Revenue Code (RC) Section 115 Trust, is an irrevocable trust designed for agencies to prefund rising pension costs and address pension liabilities. Meaning that the PRSP Trust 115 Fund may only be used to fund the City’s retirement plan obligations.

Withdrawals may be made to either reimburse the City for pension obligations or to be sent directly to CalPERS. Additionally, it mitigates the impacts of rising CalPERS contributions on the General Fund Budget. This program can mitigate long-term pension investment volatility, while at the same time providing employers with greater local control of assets and investment flexibility to create a more sound retirement system. A trust fund is useful as a means to pre-fund upcoming pension costs because contributions to the trust are eligible to earn a higher rate of return than the City’s investment pool.

Expected benefits offered by the PARS PRSP include:
 Contributions placed in an exclusive benefit trust could address the City’s Net Pension Liability
 Investment flexibility with Section 115 Trust compared to restrictions on general fund investments (Govt. Code 53216)
 Increased risk diversification of plan assets through different asset management  Investments can be tailored to the City’s unique demographics  Oversight and control of fund management selection, monitoring of performance and ability to replace fund management based on performance criteria  Increased flexibility on use of trust assets (i.e., trust assets can be accessed at anytime as long as the assets are used to fund the City’s pension obligations and defray reasonable expenses associated therewith)
 Lower investment management and administrative expenses compared to CalPERS  Potential for positive rating agency and investor consideration.

To date, hundreds of public agencies have adopted the Pension Rate Stabilization Program (PRSP) through PARS including the City of Solana Beach, City of Escondido, City of Lemon Grove, City of Coronado, City of National City, and City of Chula Vista.

It is also recommended that the City Council approve Resolution No. 2022-100 Pension Funding Policy regarding future City contributions to the Section 115 Trust Program. Staff is recommending that an annual contribution resulting from the savings from making an annual UAL payment (pre-payment) versus monthly is made on a yearly basis to the 115 Trust. By sending a Lump-Sum UAL annual payment to CalPERS, it saves the City up to 3.5% in interest while helping reduce its UAL. In 2022, the City realized a savings of $28,106. The amount may vary depending on the annual UAL payment, which the payment is expected to grow every year. CalPERS has indicated that public agencies could save up to 3.5% when the UAL payment is made in the month of July. When the contributions are invested early in the fiscal year it gives a better chance of maximizing potential investment returns throughout the remainder of the year while realizing savings. In addition to the contribution to the 115 Trust from the savings from annual pre-payment of UAL pension contribution to CalPERS, staff is recommending that the City Council consider a percentage or flat amount of General Fund surplus beginning from FY 2022-2023, measured as

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of June 30 each year. This amount shall be calculated based on final audited financial statements.

The City Council shall approve the amount of contribution to the 115 Trust as part of the annual audit via Resolution.

Resolution No. 2022-99 will (1) authorize the participation in Section 115 Public Agencies PostEmployment Benefit Trust to be administered by Public Agency Retirement Services (PARS) (2) appoint the Chief Administrative Officer as the City’s Plan Administrator; (3) authorize the City Manager or designee to execute the documents to implement the Trust 115 Fund with PARS as the plan administrator and consultant, U.S. Bank for discretionary trustee services, and HighMark Capital for investment management services (4) authorize the Finance Director to appropriate $1 million from the General Budget Fund per Resolution No. 2021-88 to 101-1920-419.1110 for deposit into the Pension Rate Stabilization Program Trust Fund account held with US Bank to serve as trustee and its sub-adviser HighMark Capital Management, Inc., to provide investment management services for the program, and other budget documents as necessary to reflect and implement the changes specified in the Resolution. Resolution No. 2022-100 would approve the approving a Pension Funding Policy.

ENVIRONMENTAL DETERMINATION:

Not a project as defined by CEQA.

FISCAL IMPACT: The initial transfer of $1 million to PARS previously assigned by the City Council under the General Fund Balance per Resolution No. 2021-88 to establish the 115 Trust and the annual contributions from the savings from annual pre-payments versus monthly payments on each fiscal year UAL pension contribution to CalPERS which is approximately 3.5% savings, as recommended in the Pension Funding Policy per Resolution No. 2022-100.

ATTACHMENTS:

ATT 1 Resolution No. 2022-99
ATT 2 Resolution No. 2022-100
Exhibit A Pension Funding Policy

ATTACHMENT 1
RESOLUTION NO. 2022-99

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF IMPERIAL BEACH, CALIFORNIA,

APPROVING THE ADOPTION OF THE PUBLIC AGENCIES POST-EMPLOYMENT BENEFITS

TRUST ADMINISTERED BY PUBLIC AGENCY RETIREMENT SERVICES (PARS) WHEREAS, PARS has made available the PARS Public Agencies Post-Employment Benefits Trust (the “Program”) for the purpose of prefunding pension obligations and/or OPEB obligations; and
WHEREAS, the City of Imperial Beach (“City”) is eligible to participate in the Program, a tax-exempt trust performing an essential governmental function within the meaning of Section 115 of the Internal Revenue Code, as amended, and the Regulations issued there under, and is a tax-exempt trust under the relevant statutory provisions of the State of California; and WHEREAS, the City’s adoption and operation of the Program has no effect on any current or former employee’s entitlement to post-employment benefits; and WHEREAS, the terms and conditions of post-employment benefit entitlement, if any, are governed by contracts separate from and independent of the Program; and WHEREAS, the City’s funding of the Program does not, and is not intended to, create any new vested right to any benefit nor strengthen any existing vested right; and WHEREAS, the City reserves the right to make contributions, if any, to the Program.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Imperial Beach as follows:

1. The City Council hereby adopts the PARS Public Agencies Post-Employment Benefits Trust, effective November 16, 2022; and

2. The City Council hereby appoints the Chief Administrative Officer as the City’s Plan Administrator for the Program; and

3. The City’s Plan Administrator hereby authorized to execute the PARS legal and administrative documents on behalf of the City and to take whatever additional actions are necessary to maintain the City’s participation in the Program and to maintain compliance of any relevant regulation issued or as may be issued; therefore, authorizing the Chief Administrative Officer to take whatever additional actions are required to administer the City’s Program; and

4. Authorize the City Manager or designee to execute the documents to implement the PARS Public Agencies Post-Employment Benefits Trust 115 with PARS as the plan administrator and consultant; and

5. Authorize the City Manager or designee to execute the documents with U.S. Bank as the discretionary trustee; and

6. Authorize the City Manager or designee to execute the documents with HighMark Capital for investment management services; and

7. Authorize the Finance Director to appropriate $1,000,000 from the General Fund Budget per Resolution No. 2021-88 to 101-1920-419.1110 for deposit into the Pension Rate Stabilization Program Trust Fund account held with US Bank to serve as trustee and its sub-adviser HighMark Capital Management, Inc., to provide investment management services for the program, and other budget documents as necessary to reflect and implement the changes specified.

PASSED, APPROVED, AND ADOPTED by the City Council of the City of Imperial Beach at its meeting held on the 16th day of November 2022, by the following vote:

Resolution No. 2022-99

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

SERGE DEDINA, MAYOR
ATTEST:

JACQUELINE M. KELLY, MMC

CITY CLERK

ATTACHMENT 2
RESOLUTION NO. 2022-100

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF IMPERIAL BEACH, CALIFORNIA,

APPROVING THE ADOPTION PENSION FUNDING POLICY
WHEREAS, The City of Imperial Beach provides retirement benefits to its employees by contracting with the California Public Employees Retirement System (CalPERS); and WHEREAS, with CalPERS continuous lowering of the discount rate means employers that contract with CalPERS will have fiscal impacts including the City of Imperial Beach; and WHEREAS, the lower rate of return creates an Unfunded Accrual Liability for the City of Imperial Beach; and
WHEREAS, in addition to the City’s Unfunded Accrued Liability (UAL), the City has other post-retirement benefits (OPEB) obligations that include retiree health as required by Public Employees' Medical and Hospital Care Act (PEMHCA); and
WHEREAS, public agencies have the option to address OPEB and Pension costs through a Section 115 Public Agencies Post-Employment Benefit Trust; and WHEREAS, assets held in a Section 115 Irrevocable Trust can be diversely invested in a prudent fashion per Government Code Sections 53216 (Pension) and 53620 (OPEB); and WHEREAS, a Pension Funding Policy establishes a methodology and a process for funding current and future costs associated with the City’s contractual obligations to provide pension benefits as set forth in the City’s labor agreements.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Imperial Beach as follows:

1. The City Council hereby adopts the Pension Funding Policy, attached here to as Exhibit “A”.

PASSED, APPROVED, AND ADOPTED by the City Council of the City of Imperial Beach at its meeting held on the 16th day of November 2022, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

SERGE DEDINA, MAYOR
ATTEST:

JACQUELINE M. KELLY, MMC

CITY CLERK

CITY OF IMPERIAL BEACH COUNCIL POLICY NO. 619
Pension Investment Policy

CITY OF IMPERIAL BEACH

COUNCIL POLICY
SUBJECT: Pension Investment Policy POLICY
NUMBER:
619
PAGE
1 OF 3
ADOPTED BY: Resolution No. 2022-100 DATED: November 16, 2022 Introduction
The City provides its permanent employees with a defined benefit pension through the California Public Employees’ Retirement System (CalPERS). A number of recent changes at CalPERS have increased the City’s required payments to the pension plan and decreased the plan’s funded status. The City is anticipating that CalPERS will continue to enact changes to increase the financial stability of its pension program, and that those changes will result in higher City contributions. The City has assessed options to help address the increased pension costs and their volatility and has determined that it would be beneficial to join a trust in which to set aside City funds for future pension payments.

Purpose and Introduction
The purpose of this Pension Funding Policy (“Policy”) is to establish a methodology and a process for funding current and future costs associated with the City’s contractual obligations to provide pension benefits as set forth in the City’s labor agreements.

Adoption and Implementation
The City Council is responsible for adopting the Pension Funding Policy and for approving any significant revisions. Although the Chief Administrative Officer is the Plan Administrator for the Trust 115, it is the responsibility of the City Manager, Chief Administrative Officer, and Finance Director for developing administrative procedures, as needed, to implement the Policy. The City Council will review and approve this policy via resolution, as needed, to ensure it meets the current and future needs of the City.

Initial Set Up
The City shall establish an Internal Revenue Service Code Section 115 approved irrevocable trust to achieve a higher rate of return on investments than that earned in Local Agency Investment Fund (LAIF). Once the City transfers funds into such a trust, they can only be utilized for payment of employee pension costs.

The following outlines the governance and administration of the proposed Trust:
 City Council has the authority to establish the Trust and define policies for the administration of the Trust funds.
 The Plan Administrator will have overall responsibility for the Trust funds and will develop and manage procedures in accordance with the City Council’s adopted policies with consultation of the City Manager and Finance Director.
 Trust Administrator and Public Agency Retirement Services (PARS), keeps plan documents current to ensure that they reflect the substantive plan and provides ongoing consulting, reporting and plan accounting records.
 Trustee, currently US Bank, will be the plan’s trustee and custodian and will safeguard the assets in the Trust, hold the investment securities for safekeeping and make disbursements on request.

CITY OF IMPERIAL BEACH COUNCIL POLICY NO. 619
Pension Investment Policy

 Investment Manager, currently Highmark Capital Management, will recommend investment portfolio allocations based upon the Pension Trust Funds’ adopted investment policies and manage those assets accordingly.

Trust Administrator
PARS has established a multiemployer irrevocable trust in compliance with the requirements of Section 115 of the Internal Revenue Code. While it is a multi-employer trust, each employer’s contributions benefit only its own employees. There is no sharing of either liability or investment earnings, and separate employer accounts are maintained. PARS serves as the administrator of the Trust.

Trustee
Any contributions made to the program are held and invested by a trustee. The trustee duties include:

1. Safeguarding assets for the benefit of retirees;

2. Providing oversight protection of the investments;

3. Custodian of the assets; and

4. Disbursing funds to pay for pension costs.

Investment Manager
Investment Manager assists the City with selecting investment strategy depending on what rate of return the City expects to earn and level of risk tolerance the City is willing to take. Investment Manager provides annual review of the investment portfolio and asset allocation as well as takes on fiduciary responsibility for the City’s pension asset management.

Asset Allocation Investment Strategy
PARS provides flexibility to the City in the selection of the investment strategy for its funds in the Trust, giving the City control on target yield and level of risk on its investments. The City has the ability to select one of five Investment Options that best suits its desired or expected return on its investments in the Trust. Each Investment Option allocates the assets in varying investment combinations of equity, fixed income, and cash. With each Investment Option, as the expected rate of return increases, so does the assumed risk.

Pension 115 Trust Investment Strategy
PARS provides five (5) different active and five (5) different passive strategy options. An active approach allows for actively buying and selling assets in the hope of making profits and outperforming a benchmark. A passive approach is a long-term strategy in which investors buy and hold a diversified mix of assets in an effort to match not beat the market. The City Manager, Chief Administrative Officer, and Finance Director are responsible to work with the Investment Manager for the best model for the City to maximize its potential and rate of return and monitor the investments on a regular basis.

The Asset Allocation Strategies and the corresponding Investment Options:

The City Manager, Chief Administrative Officer, and Finance Director will consult to select the most appropriate investment option in the Trust. This Policy recognizes that there will be investment marketplace volatility and that actual economic and demographic experience will differ from assumed experience. Accordingly, this Policy is intended to provide flexibility to smooth such volatility and experience in a reasonable, systematic and financially sound manner.

CITY OF IMPERIAL BEACH COUNCIL POLICY NO. 619
Pension Investment Policy

Contributions
To begin the funding of the Trust, the City will make a one-time contribution of $1.0 million to the Trust utilizing General Fund resources. The City will consider making additional contributions to the Trust on an annual basis at a minimum every year based on the ongoing savings from prepaying CalPERS unfunded liability vs. higher monthly payments; an average of 3.5% savings.

An annual contribution resulting from the savings from making an annual UAL payment (prepayment) versus monthly is made on a yearly basis to the 115 Trust. By sending a Lump-Sum UAL annual payment to CalPERS, it saves the City up to 3.5% in interest while helping reduce its UAL. The amount may vary depending on the annual UAL payment, which the payment is expected to grow every year.

Additionally, City staff may bring forward to the City Council during the year end and submittal of the financial statements an additional contribution to the Trust Plan based on the General Fund surplus beginning from FY 2022-2023, measured as of June 30 each year. The amount will be based on unassigned General Fund Balance when revenues exceed costs in the audited financial statements. The recommended contribution amount will be approved by the City Council via Resolution.

Withdrawals
In order to establish a procedure for withdrawals of the funds:
a. City Manager or designee will make recommendations to City Council during the budget process.
b. If needed immediately, City Manager or designee will bring City Council Agenda Item for approval.