Agenda packet — Imperial Beach City Council, December 6, 2023 (part 2 of 3)

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associated with reaching historically underserved urban and rural communities throughout California. OEP will fund program operating and transportation costs but will not fund capital projects. OEP grants will improve the health and wellness of Californians through new educational and recreational activities, service learning, career pathways, and leadership opportunities that strengthen a connection to the natural world.

The grant funds if awarded to the City of Imperial Beach will be used to pay for outdoor education, outdoor trips, staffing, career pathway training, transportation, etc. as well as any additional outdoor gear and supplies needed for the duration of grant period. This grant would support our most vulnerable high-risk residents in exploring outdoor nature experiences.

Submittal of the OEP Grant application is due by December 14, 2023. If application is selected there is no matching monetary grant requirement. Grant period will be from time awarded (TBD) till summer 2024.

ENVIRONMENTAL DETERMINATION:

Not a project as defined by CEQA.

FISCAL IMPACT:

If awarded, the Parks and Recreation Department budget will be increased by the amount of the grant award in the year in which it is awarded.

ATTACHMENTS:

ATT 1 – Outdoor Equity Grant Resolution 2023-111

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AUTHORIZING RESOLUTION (CHECKLIST ITEM #4)
RESOLUTION OF THE _______________________ OF ________________________ Approving the Application for

OUTDOOR EQUITY GRANTS PROGRAM GRANT FUNDS
WHEREAS, the State Department of Parks and Recreation has been delegated the responsibility by the Legislature of the State of California for the administration of the Outdoor Equity Grants Program, setting up necessary procedures governing the application; and
WHEREAS, said procedures established by the State Department of Parks and Recreation require the Applicant to certify by resolution the approval of the application before submission of said application to the State; and WHEREAS, successful Applicants will enter into a contract with the State of California to complete the Grant Scope program;
NOW, THEREFORE, BE IT RESOLVED that the _____________ hereby:

APPROVES THE FILING OF AN APPLICATION FOR THE _______________; AND Certifies that said Applicant has or will have available, prior to commencement of any work on the program(s) included in this application, the sufficient funds to complete the program(s); and

1. Certifies that if the grant is awarded, the Applicant has or will have sufficient funds to operate the program(s) as described in the Grant Selection Criteria response, and

3. 2.

Certifies that the Applicant has reviewed, understands, and agrees to the General Provisions contained in the contract shown in the Grant Administration Guide; and

4. Delegates the authority to _______________ to conduct all negotiations, sign and submit all documents, including, but not limited to applications, agreements, amendments, and payment requests, which may be necessary for the completion of the Grant Scope; and

5. Agrees to comply with all applicable federal, state and local laws, ordinances, rules, regulations and guidelines.

Approved and adopted the ____ day of ______,
I, the undersigned, hereby certify that the foregoing Resolution Number _______ was duly adopted by the ______________ following a roll call vote:

Ayes: ___
Noes: ___

Absent:
(Clerk, Print Name and Sign)
City Council City of Imperial Beach City Council of the City of Imperial Beach Imperial Beach Youth Outdoors City Manager 6th December 2023 2023-111 City Council Ayes Noes Absent Attachment 1

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December 6, 2023
ITEM TITLE: RESOLUTION NO. 2023-114 AUTHORIZING SUBMITTAL OF APPLICATION

FOR GRANT AND RELATED AUTHORIZATIONS TO THE DEPARTMENT OF RESOURCES RECYCLING AND RECOVERY. (0390-86)
ORIGINATING DEPARTMENT:

Environmental & Natural Resources
EXECUTIVE SUMMARY:

The City of Imperial Beach is eligible to receive and apply for grant funds offered by the California Department of Resources Recycling and Recovery (CalRecycle). The City previously received a grant under the SB 1383 Local Assistance Grant Program. Calrecycle recently updated their grant funding application process, and the City must authorize a new grant funding requests resolution to remain eligible for any future available grant funds. The attached resolution empowers the City to officially request grant funds from CalRecycle as they become accessible, ensuring continued financial support for relevant programs and initiatives.

RECOMMENDATION:

Adopt Resolution 2023-114.

OPTIONS:
 Adopt Resolution
 Ask for additional information
BACKGROUND/ANALYSIS:

Incorporated cities and counties in California are eligible to receive grant program funding from CalRecyle to support different program compliance efforts. Eligible funds are provided through the Local Assistance Grant program, which is used to support public education and outreach, promote Edible Food Recovery, and to comply with SB 1383 requirements. This resolution will allow the City to continue participating in Calrecycle Grant Programs and other funding programs as they become available from CalRecyle.

ENVIRONMENTAL DETERMINATION:

Not a project as defined by CEQA.

FISCAL IMPACT:

The amount of grant funds varies each year. For this current fiscal year, it is anticipated that the city will receive $75,000 to support education programs related to edible food recovery, required by SB 1383.

ATTACHMENTS:

ATT 1 - Resolution 2023-114

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ATTACHMENT 1
RESOLUTION NO. 2023-114

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

CITY OF IMPERIAL BEACH FOR SUBMITTAL OF INDIVIDUAL GRANT APPLICATIONS

FOR ALL GRANT PROGRAMS FOR WHICH THE CITY OF IMPERIAL BEACH IS ELIGIBLE WHEREAS, Public Resources Code sections 48000 et seq. authorize the Department of Resources Recycling and Recovery (CalRecycle) to administer various grant programs (grants) in furtherance of the State of California’s (state) efforts to reduce, recycle and reuse solid waste generated in the state thereby preserving landfill capacity and protecting public health and safety and the environment; and
WHEREAS, in furtherance of this authority CalRecycle is required to establish procedures governing the application, awarding, and management of the grants; and WHEREAS, CalRecycle grant application procedures require, among other things, an applicant’s governing body to declare by resolution certain authorizations related to the administration of CalRecycle grants; and
WHEREAS, the City of Imperial Beach authorizes the submittal of applications to CalRecycle for all grants for which the City of Imperial Beach is eligible; and WHEREAS, the City Manager, or designee, is hereby authorized and empowered to execute in the name of the City of Imperial Beach all grant documents, including but not limited to, applications, agreements, amendments and requests for payment, necessary to secure grant funds and implement the approved grant project.

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

1. The above recitals are true and correct.

2. This legislative body authorizes grant submittal applications to Calrecycle for five years from the date of adoption.

3. The City Manager or designee is authorized to accept and process any grant funds received from Calrecycle through the standard budget amendment process.

PASSED, APPROVED, AND ADOPTED by the City Council of the City of Imperial Beach at its meeting held on the 6
th day of December 2023, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS: NONE
ABSENT: COUNCILMEMBERS: NONE
_________________________

PALOMA AGUIRRE, MAYOR
ATTEST:
___________________________
JACQUELINE M. KELLY, MMC

CITY CLERK

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December 6, 2023
ITEM TITLE: INTRODUCTION OF ORDINANCE NO. 2023-1240 ADDING CHAPTER 2.26 TO

THE IMPERIAL BEACH MUNICIPAL CODE CREATING THE IMPERIAL BEACH VETERANS & MILITARY AFFAIRS COMMITTEE AND ESTABLISHING COMMITTEE DUTIES AND RESPONSIBILITIES. (0120-95)
ORIGINATING DEPARTMENT:

City Manager
EXECUTIVE SUMMARY:

The City of Imperial Beach is home to many United States active and veteran military personnel, and their families. In the interest of recognizing the contributions of one of the most honorable segments of our local citizenry, the City Council of the City of Imperial Beach desires to establish a Veterans & Military Affairs Committee to serve as a resource to provide advice and make recommendations to the City Council on issues affecting active military and veterans and on matters which veterans have special areas of knowledge and expertise.

RECOMMENDATION:

Staff recommends the City Council introduce Ordinance No. 2023-1240 creating the Imperial Beach Veterans & Military Affairs Committee and establish Committee duties and responsibilities, by title only and waive further reading of the Ordinance.

OPTIONS:
 Approve staff’s recommendation introducing Ordinance No. 2023-1240 and set adoption of the Ordinance for January 17, 2024; or
 Approve staff’s recommendation with alternative amendments or modifications; or  Request additional information and an additional report.

BACKGROUND/ANALYSIS:

The City of Imperial Beach is home to many United States active and veteran military personnel, and their families. The City Council values the contributions and experience of the many militaries, active and veterans, within the City of Imperial Beach who have dutifully served their country.

In the interest of recognizing the contributions of one of the most honorable segments of our local citizenry, the City Council of the City of Imperial Beach desires to establish a Veterans & Military Affairs Committee to serve as a resource to provide advice and make recommendations to the City Council on issues affecting active military and veterans and on matters which veterans have special areas of knowledge and expertise.

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The Veterans & Military Affairs Committee shall consist of five (5) members appointed in accordance with Chapter 2.18 of the Imperial Beach Municipal Code. Although there are no specific selection criteria the Mayor will consider the following in the identification of potential members for consideration:
 A cross section of the community should be represented including veterans, active military personnel, and individuals familiar with the military that work or have worked with military and veterans’ programs and resources.

Notwithstanding Imperial Beach Municipal Code section 2.18.040, all members of the Veterans & Military Affairs Committee shall be residents of the city unless the City Council determines by a four-fifths (4/5) vote that a non-resident shall be appointed due to special expertise that is not available among resident candidates. No more than one non-resident shall serve on the Committee at one time.

The Veterans & Military Affairs Committee shall meet at least on a quarterly basis, or as needed, and will act in a purely advisory capacity to the City Council. The stated and primary function of the Committee is to provide advice and make recommendations to the City Council on issues affecting active duty and veterans and on matters which veterans have special areas of knowledge and expertise and to serve as information resource on issues related to military, veterans, and family members of military and veterans in the City of Imperial Beach. The duties and responsibilities of the Committee are described in Attachment 1 under section 2.32.040 of the proposed Ordinance.

It is anticipated that staff support for the Committee will be minimal and limited to administrative support for scheduled meetings, the preparation of reports and information as directed by the City Council or City Manager, and other nominal staff time as needed to allow the Committee to function properly.

ENVIRONMENTAL DETERMINATION:

Not a project as defined by CEQA.

FISCAL IMPACT:

Besides staff support, there is no additional direct fiscal impact associated with the creation of a Veterans & Military Affairs Committee.

ATTACHMENTS:

ATT 1 – Ordinance No. 2023-1240

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Attachment 1
ORDINANCE NO. 2023-1240

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF IMPERIAL BEACH, CALIFORNIA, AMENDING THE IMPERIAL BEACH MUNICIPAL CODE BY ADDING CHAPTER 2.26, TO

CREATE THE IMPERIAL BEACH VETERANS & MILITARY AFFAIRS COMMITTEE AND

ESTABLISH COMMITTEE DUTIES AND RESPONSIBILITIES
WHEREAS, the City of Imperial Beach is home to many United States active and veteran military personnel, and their families; and
WHEREAS, in the interest of recognizing the contributions of one of the most honorable segments of our local citizenry, the City Council of the City of Imperial Beach desires to establish a Veterans & Military Affairs Committee to serve as a resource to provide advice and make recommendations to the City Council on issues affecting active military and veterans and on matters which veterans have special areas of knowledge and expertise; and WHEREAS, the City Council has identified the duties and responsibilities that will dictate the actions of the Veterans & Military Affairs Committee and desire to adopt an Ordinance that establishes the membership and purview of the Committee.

NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Imperial Beach that the Veterans & Military Affairs Committee is hereby created in accordance with the provisions of this Ordinance and all previous Ordinances, Resolutions, regulations, and laws pertaining to or related to veterans and military committees, boards, commissions, are repealed and replaced by the following provisions:

SECTION 1 Chapter 2.26 Veterans & Military Affairs Committee is hereby added to the Imperial Beach Municipal Code to read as follows:
“Chapter 2.26 Veterans & Military Affairs Committee.

2.26.010. Creation.

There is created in the city a Veterans Affairs Committee.

2.26.20 Composition- Quorum
A. The Veterans & Military Affairs Committee shall consist of five (5) members appointed in accordance with Chapter 2.18 of the Imperial Beach Municipal Code. Although there are no specific selection criteria, the Mayor will consider the following in the identification of potential members for consideration:
a. A cross section of the community should be represented including veterans, active military personnel, and individuals familiar that work or have worked with military and veterans’ programs and resources.

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Ordinance No. 2023-1240

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B. Members of the Veterans & Military Affairs Committee may be removed in accordance with Imperial Beach Municipal Code section 2.18.030.

C. Vacancies on the Committee shall be filled in accordance with Chapter 2.18 of the Imperial Beach Municipal Code.

D. The members of the Committee are subject to the provisions of the Brown Act and shall elect a chair and vice chair from the membership of the Committee, by majority vote. In general, parliamentary process will be a guideline for committee deliberations and meeting decorum.

E. Each Committee member shall have one (1) vote. Three (3) members will constitute a quorum.

F. Notwithstanding Imperial Beach Municipal Code section 2.18.040, all members of the Veterans & Military Affairs Committee shall be residents of the city unless the City Council determines by a four-fifths (4/5) vote that a non-resident shall be appointed due to special expertise that is not available among resident candidates. No more than one non-resident shall serve on the Committee at one time.

2.26.030 Terms of Office.

Appointments to the Veterans Affairs Committee shall be for four years. The terms of office shall be staggered as follows:

A. Two terms of office shall expire on December 31, 2027, and each March four years thereafter.

B. Three terms of office shall expire on December 31, 2025, and each December four years thereafter.

2.32.040 Duties and Responsibilities
The Veterans & Military Affairs Committee shall meet at least on a quarterly basis, or as needed, and will act in a purely advisory capacity to the City Council. The stated and primary function of the Committee is to provide advice and make recommendations to the City Council on issues affecting active duty and veterans and on matters which veterans have special areas of knowledge and expertise and to serve as information resource on issues related to military, veterans, and family members of military and veterans in the City of Imperial Beach. In order to accomplish the identified task, the Chair of the Committee will provide, on at least a quarterly basis or as directed by the City Council, suggestions and recommendations to the City Council in relation to the following:

1. Provide recommendations to the City Council on matters directly relating to military, veterans, and family members of military and veterans in the City of Imperial Beach.

2. Serve as an information resource to the City Council on matters related to directly relating to military, veterans, and family members of military and veterans in the City of Imperial Beach entitlement programs established by federal, state, or county legislation.

3. Promote and assist the City on Veteran's Day or Memorial Day observations and other City military recognition events.

4. Provide advice regarding matters of protocol with which military personnel and veterans are especially familiar, such as flag presentation, color guard procedures and other military

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Ordinance No. 2023-1240

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and paramilitary procedures; and promote interest in flag etiquette and display and represent the City in providing notices of flag use violations.

5. Provide a forum to discuss issues relating to military, veterans, and family members of military and veterans in the City of Imperial Beach.

6. Coordinate individual City recognition programs for active duty military and veteran residents of the City who have achieved significant merit.

7. Attend meetings of, and report on actions affecting the city in matters related to active military, veterans, and family members of military and veterans.

8. Assist in the preservation and upkeep of the Veterans Park and other related matters.

9. Raise awareness for active military, veterans, and family members of military and veterans in our community.

2.26.050 Staff Support
It is anticipated that staff support for the Committee will be minimal and limited to administrative support for scheduled meetings, the preparation of reports and information as directed by the City Council or City Manager, and other nominal staff time as needed to allow the Committee to function properly.

INTRODUCED AND FIRST READ at a regular meeting of the City Council of the City of Imperial Beach, California, held the 6
th day of December 2023; and thereafter PASSED AND
ADOPTED at a regular meeting of the City Council of the City of Imperial Beach, California, held on the 17
th day of January 2024, by the following roll call vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

PALOMA AGUIRRE, MAYOR
ATTEST:

JACQUELINE M. KELLY, MMC

CITY CLERK
APPROVED AS TO FORM:

JENNIFER LYON

CITY ATTORNEY

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December 6, 2023
ITEM TITLE: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF IMPERIAL BEACH, CALIFORNIA, AMENDING CHAPTERS 9.04, 12.56, AND 12.33 OF THE IMPERIAL BEACH

MUNICIPAL CODE RELATED TO ALCOHOL PERMITS AT SPECIAL EVENTS AND FACILITY RENTALS. (0920-95)
ORIGINATING DEPARTMENT:

Parks & Recreation
EXECUTIVE SUMMARY:

Staff has prepared amendments to Chapters 9.04, 12.56 and 12.33 of the Imperial Beach Municipal Code to clarify the rules, regulations and locations associated with alcohol permits at special events and facility rentals.

RECOMMENDATION:

Introduce ordinance by title only waiving the full reading of the ordinance and set adoption for the next regular meeting.

OPTIONS:
 Introduction of Ordinance 2023-1241 amending the Imperial Beach Municipal Codes related to alcohol permits at special events and facility rentals  Continuation of the item with direction provided to the City Manager  Reject the proposed Ordinance and amendments to the Municipal Code BACKGROUND/ANALYSIS:

During the November 15, 2023 City Council meeting staff was directed to bring back an ordinance updating the Imperial Beach Municipal Code for alcohol permits at special events and facility rentals. Staff has prepared amendments to allow consistency of rules, regulations, and locations associated with alcohol permits at special events and facility reservations.

Ordinance No. 2023-1241 identifies modifications to Chapters 9.04, 12.56 and Chapter 12.33 of the Imperial Beach Municipal Code that when implemented will clarify the existing rules, regulations and locations associated with alcohol permits for event organizers wishing to host special events or rent a city facility in Imperial Beach.

ENVIRONMENTAL DETERMINATION:

Not a project as defined by CEQA.

FISCAL IMPACT:

No Fiscal Impact

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ATTACHMENTS:

Attachment 1 – Ordinance 2023-1241

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Attachment 1
1 ORDINANCE NO. 2023-1241

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF IMPERIAL BEACH, CALIFORNIA, AMENDING CHAPTERS 9.04, 12.56, AND 12.33 OF THE IMPERIAL BEACH

MUNICIPAL CODE RELATED TO ALCOHOL PERMITS AT SPECIAL EVENTS AND

FACILITY RENTALS
WHEREAS, the City of Imperial Beach ("City") currently allows for special events at various City parks to obtain the permits to allow for sale of alcohol contingent upon meeting various requirements;
WHEREAS, this Ordinance seeks to clarify the various Imperial Beach Municipal Code sections related to special events and use of alcohol at such events.

NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF IMPERIAL BEACH AS FOLLOWS:

Section 1: The above recitals are true and correct and incorporated herein as findings as though set forth in full.

Section 2. Various sections in Chapters 9.04, 12.56, and 12.33 shall be amended to read as shown in Exhibit “A” to this Ordinance (underline indicates new language and strikethrough indicates deleted language).

Section 3. This Ordinance shall become effective thirty (30) days following its passage and adoption.

Section 4. The City Council of the City of Imperial Beach hereby declares that should any section, paragraph, sentence, phrase, term, or word of this Ordinance, hereby adopted, be declared for any reason to be invalid, it is the intent of the City Council that it would have adopted all other portions of this Ordinance irrespective of any such portion declared invalid.

INTRODUCED AND FIRST READ at a regular meeting of the City Council of the City of Imperial Beach, held on the 6th day of December 2023, and thereafter PASSED AND ADOPTED at a regular meeting of the City Council of the City of Imperial Beach, California, held on the 17th day of January 2024 by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

PALOMA AGUIRRE, MAYOR
ATTEST:

JACQUELINE M. KELLY, MMC

CITY CLERK

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Attachment 1
2 APPROVED AS TO FORM:

JENNIFER M. LYON

CITY ATTORNEY

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Attachment 1
3 Exhibit “A” to Ordinance 2023-1241

9.04.010 Consumption in public places prohibited.

It is unlawful for any person to consume any spirituous, vinous, malt or other intoxicating liquors, containing more than one-half of one percent of alcohol by volume, or possess an open container of alcoholic beverage, on any of the streets, sidewalks, alleys, municipal pier, public beach, parking lot, public parking structures, including private parking lots and parking structures held open for public use, public parks, public playgrounds, public buildings, or public lavatories within the City except restaurants or other commercial establishments where on sale consumption is permitted by license of the State, or at a special event, facility rental, or concession duly authorized by the City Manager in compliance with the requirements set forth in Chapter 12.56 and 12.33 of this code and any applicable policies and procedures, and in conjunction with a special event or facility rental for which the sponsoring organization is properly licensed by the State Department of Alcoholic Beverage Control.

12.56.020 Prohibited acts.

It is unlawful and no person shall do any of the following acts within the premises of any public park or public playground:
….

W. Sell or distribute any alcoholic beverage in or on any public park, public playground or public parking lot or public building without first having received a permit from the City Manager and having paid the fees required therefor. The issuance of a permit by the City Manager shall operate to suspend the enforcement of Section 9.04.010 of this code on such specific dates and times and at such specific locations as described upon the permit, which locations are limited to Pier Plaza, Dunes Park, Veteran’s Park, and the Senior Center;

12.33.090 Authority.

The City Manager or designated representative has the authority to:

A. Post the approved parking control signs as approved in the special event permit. Such signs shall be posted at least 24 hours in advance of such special event and when so posted may issue citations and/or tow away vehicles parked in violation of the posting; B. Close roadways as approved in the special event permit:

1. Signs advising the date and time of the closure shall be posted on roadways at least 10 days prior to the date of the closure,

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Attachment 1
4 2. A list of interested parties shall be established and shall include, but is not limited to:

Metropolitan Transit Development Board, San Diego Gas and Electric Company and EDCO.

The parties on the interested parties list shall be notified of the closure by mail at least 10 days prior to the event;
C. Stop a special event at any time it is determined that the public safety is in jeopardy; D. Approve certain temporary signage for the purpose of providing public notice of approved events, as per Section 19.52.250 of this code.

E. Issue an alcohol consumption permit for a special event or facility rental at specified locations if such permit is in compliance with all applicable policies and procedures. The locations that such permits may be issued are as follows: Pier Plaza, Dunes Park, Veteran’s Park, the Senior Center, and approved block parties/street closures.

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December 6, 2023
ITEM TITLE: REVIEW OF FISCAL YEAR 2022-23 AUDITED FINANCIAL STATEMENTS AND RELATED DOCUMENTS AND RESOLUTION NO. 2023-109 AMENDING THE FY24-25 EXPENDITURE BUDGET FOR PENSION UAL PAYMENT. (0412-50 & 0310-90) ORIGINATING DEPARTMENT:

Finance
EXECUTIVE SUMMARY:

The independent audit of the Financial Statements of City of Imperial Beach for the fiscal year ending June 30, 2023 has been completed and prepared for consideration by the City Council.

The audit reports on government-wide fiscal activities, as well as on the fund level activity in the General Fund, Other Governmental Funds, the Sewer Enterprise Fund and the Internal Services Funds from July 1, 2022 to June 30, 2023. The annual Housing Authority reports are also included in the audit.

RECOMMENDATION:

1. City Council and Board(s) receive and file the Fiscal Year 2022-23 City of Imperial Beach Audited Financial Statements and related documents.

2. Adopt Resolution No. 2023-109 authorizing a budget amendment to the increase the annual payment on City’s pension unfunded actuarial liability (UAL) for FY24-25.

OPTIONS:
 Receive and file the Fiscal Year 2022-23 City of Imperial Beach audited financial statements and related documents and approve Resolution No. 2023-109 authorizing a budget amendment to increase the annual payment on City’s pension unfunded actuarial liability (UAL) for FY24-25
 Receive and file the Fiscal Year 2022-23 City of Imperial Beach audited financial statements and related documents and do not approve Resolution No. 2023-109 Authorizing a budget amendment to the increase the annual payment on City’s pension unfunded actuarial liability (UAL) for FY24-25
 Provide direction to staff to provide additional information BACKGROUND/ANALYSIS:

The City’s fiscal year ends on June 30 which is followed by a two-month period during which payments are both issued and collected that relate to the prior fiscal year. In September, the Finance department processes remaining year-end close entries and conducts a year-end audit, typically scheduled for the last week of the month. The auditors collect data and perform procedures over several weeks, then statements are issued in the month of November. The Financial Statements of the City of Imperial Beach for the Fiscal Year Ended June 30, 2023, have

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been completed and are provided as attachments to this report along with an independent thirdparty audit firm which issued an opinion on such.

An independent audit is an important mechanism to validate fiscal data and to reassure constituents that the financial results are presented accurately, and City’s finances and internal processes are in good order. Moreover, an outside review is crucial for maintaining consistency with best financial practices and an opportunity for staff to obtain recommendations on the implementation of new procedures to optimize fiscal management.

This report will provide an overview of the more complex document, and the entire municipal audit is available for review by the public and will be published on the City’s website.

REVENUES
The Citywide fund level revenue in fiscal 2022-23, excluding transfers, was $42,284,889. The General Fund revenue of $29,166,366 represents approximately 69% of the Citywide revenue.

The Sewer Enterprise Fund revenue of $6,955,237 accounts for about 16% of Citywide revenue with the Internal Service Funds (total revenues of $2,273,204), and the Other Government Funds (total revenues of $3,890,082), making up the remainder of the revenue, as indicated in the chart below.

Fiscal Year 2022-23 total General Fund revenue was about $2.9 million greater than fiscal year 2021-22. The major contributors to the year-over-year increase were the City’s Property Tax ($0.8 million), Community Benefit Revenue ($0.6 million), Franchise Taxes ($0.4 million), and Transient Occupancy Tax ($0.2 million) combined accounting for $2.0 million of increase. Property value increases were strong during the fiscal year and while sales activity slowed down, high prices offset the lesser transaction count. FY22-23 was the first full year of collecting Community Benefit Revenue generated by a cannabis retail outlet. It is important to note that this type of revenue is earmarked for drug awareness programs, recreation and facilities improvements, and community well-being enhancements. Combined, franchise taxes grew year-over-year with some types experiencing strong growth, offset by others with year-over-year declines. In November 2022, the voters passed Measure R – The Imperial Beach Quality of Life Measure, which approved an General Fund
$29,166,366
Sewer Enterprise
Fund
$6,955,237
Internal Services
Fund
$2,273,204
Other Governmental
Funds
$3,890,082
Citywide Revenues (Fund Level)
Excludes Transfers
General Fund Sewer Enterprise Fund Internal Services Fund Other Governmental Funds

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increase in the City’s Transient Occupancy Tax (TOT) from 10% to 14% effective January 1, 2023, resulting in an increase in TOT collection in the fiscal year. However, recent concern regarding a state-wide challenge to all new local taxes adopted after January 1, 2022, threatens this additional revenue source.

An additional year-over-year difference of $0.5 million resulted from recoveries of investment market value adjustments which moved from negative values seen in FY21-22 to small positive adjustments in FY22-23. Other revenues such as certain types of fees and fines accounted for the remainder of the increase. One notable decrease in revenues collected was in the rent category as there were multiple cancellations of the City’s cell tower leases.

In addition to these revenues, the General Fund also received approximately $1 million in interfund transfers and other financing sources, bringing the actual revenues to $30,133,069 exceeding the final amended budget by $1.7 million.

EXPENDITURES
The Citywide expenditures, excluding transfers, in Fiscal Year 2022-23 was $36,906,966.

Approximately 70%, or $25,879,661, of the expenditures, is attributable to the General Fund, 15%, or $5,528,749, to the Sewer Enterprise Fund, 8%, or $2,795,683, to the Internal Services Funds, and the remainder, $2,702,873, to Other Government Funds.

The following chart provides an overview of the Citywide expenditures.

The fiscal year 2022-23 General Fund actual expenditures, including transfers of approximately $1.6 million, totaled $27,488,672. That is approximately $68,000 above the final amended budgeted expenditures of $27,421,046. The variance is related to required fiscal year-end accounting adjustments related to other post-employment benefits (OPEB) valuation, and new accounting standards. The City does not budget for such items.

The actual General Fund expenditures increased year-over-year by $1.5 million.

General Fund
$25,879,661
Sewer Enterprise Fund
$5,528,749
Internal Services Fund
$2,795,683
Other Governmental
Funds
$2,702,873
Citywide Expenditures (Fund Level)
Excludes Transfers
General Fund Sewer Enterprise Fund Internal Services Fund Other Governmental Funds

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When the pandemic struck in the winter of 2020, the City Council immediately adopted a Financial Preparation and Recovery Plan that reduced spending, implemented a "soft" hiring and spending freeze, and deferred spending on maintenance and capital projects. The City continued to gradually reverse these cost savings measures during FY2023 while carefully monitoring incoming revenues, as well as the overall economy. The primary focus continued to be on the deferred, but urgently needed, maintenance and capital improvement projects, funding of the newly established parks and recreation department, and filling open positions in other departments to keep up with service demand.

As certain revenues came in stronger than expected in fiscal 2022-23, the City amended the initial adopted expenditure budget, strategically increasing certain expenditures. An additional $0.7 million was allocated for one-time transfers to the Internal Service Funds to strengthen funding for the City’s vehicle fleet, informational technology, and facilities. The City also increased funding for capital improvement projects – such as $0.8 million for Sports Park restroom replacement and other facilities improvements both newly approved by City Council and carried over from the prior period. Overall, the expenditure (including transfers) budget increased by $2.7 million over the adopted budget. The actual expenditure came in right on target, slightly above the final amended budgeted expenditures as discussed above.

Overall, the net change in General Fund balance, or the difference between the actual revenues and expenditures, for fiscal year 2022-23 was $2,644,397.

The excess of revenues over expenditures is being utilized for additional reserve and cash flow requirements of the FY2023-24 budget which is substantially higher than in prior years, and as such requires larger set aside funds per the Council reserve policies. In addition, funding of onetime purchases such as facilities improvements, replacement of obsolete equipment, network infrastructure projects, security enhancements, and marine safety assessment project was approved from General Fund reserves in FY2023-24.

It is also important to note a significant increase in expenditure seen in Internal Service Funds of $1 million or 58% year-over-year change. These funds, although separate from the General Fund, provide important services to it such as fleet vehicles and informational technology maintenance.

This increase is due to higher demands for such supporting services by the General Fund operational departments and increased maintenance and capital investment needs of the City.

Additionally, the City was impacted by changes in California Public Employees Retirement System (CalPERS) actuarial valuations factors which significantly increased the Unfunded Actuarial Liability (UAL). These changes will start impacting the required annual payment on City’s the UAL pension liability during fiscal year FY2024-25 as discussed in the Government-wide section below and additional reserves will be needed to cover the increased required payments.

FUND BALANCE
Fund Balance represents the difference between assets and liabilities in a given fund of the City.

In other words, it is the City’s unrestricted net position in the fund, that can be used to satisfy the government’s ongoing obligations or goals. These funds may be assigned, committed, or used at the direction of the City Council.

The largest and most important fund balance in the City is the General Fund Unassigned Fund Balance. The assets in the General Fund Unassigned Fund Balance allow the City Council to appropriate funds for unforeseen expenses or emergency expenditures and it also provides funding for effective cash management. These items are discussed in detail in the Management’s Discussion and Analysis of the audit documents. The City Council has adopted a policy that the General Fund Unassigned Fund Balance should remain between 30% - 40% of General Fund

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P a g e | 5
expenditures. On June 30, 2023, the General Fund Unassigned Fund Balance was $12,154,620 or about 44% of the fiscal year 2022-23 General Fund expenditures or 41% of FY2023-24 budgeted expenditures. This represents an increase of $ 1,664,636 when compared to prior fiscal year.

The City Council has also established a policy creating an Economic Uncertainty Fund Balance which is to be used in fiscal emergency situations and is to be 10% of the General Fund expenditures. On June 30, 2023, the Economic Uncertainly Fund Balance was $2,900,000 which is consistent with the policy. Additionally, the City Council has established a Public Works Reserve Fund which is to be utilized only in the event of an emergency requiring funds to provide for public safety, minimum levels of circulation or other authorized emergency situations. The Fund Balance Policy requires a minimum of $1,000,000 and, as of June 30, 2023, the Public Works Reserve balance was $1,300,000 and in compliance with the policy. Other fund balances on June 30, 2023, include the Public Works Strategic Capital Reserve, with a balance of $504,482, community benefit funding of $872,349, $36,613 for public access use (PEG), and $737,840 invested in Section 115 Trust to address pension liability. Additionally, $37,388 is assigned for Public Works projects in progress as of June 30, 2023.

As mentioned, the General Fund Unassigned Fund balance is about 44% of the FY 2022-23 General Fund expenditures. This is at the high level set forth by City Council policy.

Actions of the Council during FY2023-24 already utilized a large portion of this reserve which as of the date of this report is estimated at being in the middle of the required 30-40% range.

Moreover, additional funding is needed to address pension liability in FY2024-25 and to accomplish this, Staff is requesting to amend FY24-25 expenditure budget as discussed in Government-wide paragraph below.

OTHER FUNDS
The City has several other funds that are included in the annual audit. These funds are discussed in detail in the financial statements report, but in summary, they include:

Sewer Enterprise Fund – The Sewer Enterprise Fund is the only business type activity operated by the City of Imperial Beach. On June 30, 2023, the Sewer Enterprise Fund had a net position of $15,143,645, of which $5,911,943 is unrestricted.

Miscellaneous Grant Fund – The fund is used for reporting various types of grants awarded to the City. This includes, but is not limited, to COVID-19 relief grants. The June 30, 2023, balance in the fund was $167,936 and restricted for Parks and Recreation.

Gas Taxes Fund Balance – The City receives revenue from gas taxes (Gas Tax, RMRA and Proposition A, or Transnet) that are restricted in use. Combined, the balance in these funds on June 30, 2023 was $ 1,371,186.

Supplemental Law Enforcement Fund (SLEF) – Funds received from the State of California and used to supplement existing resources for “front-line law enforcement services”. The balance in this fund on June 30, 2023 was $1,000.

Capital Improvement Project Funds (CIP and Park Maintenance CIP Fund – Funds restricted for maintenance of the City’s capital projects had a balance of $ 1,642,764 on June 30, 2023.

Internal Services Funds – There are four funds that have been created to provide services to the City including the Vehicle Replacement and Maintenance Fund with a June 30, 2023, unrestricted balance of $ 392,984, the Risk Management Fund with a balance of $ 955,677, the Technology and Communication Fund with a balance of $ 127,485, and the Facilities Repair and Maintenance Fund with a balance of $ 210,012.

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Housing Authority – The June 30, 2023, balance in the Housing Authority Fund was $837,098.

GOVERNMENT-WIDE FINANCIAL STATEMENTS
The City’s year-end financial report also contains Government-wide financial statements which combine a majority of the individual funds and are designed to provide a broad overview of the City's finances. They present information using accounting methods similar to those used by private sector companies. This includes reporting of long-term assets, such as equipment and infrastructure, and long-term liabilities, such as debt instruments or pension obligations that are not included in the statements of individual funds. Inclusion of long-term obligations, and unfunded pension obligation in particular, can and for many government agencies do, result in negative unrestricted fund balances (or “net position”) in Government-wide financial statements despite reporting positive unrestricted balances at the fund level.

Such is not the case at the City of Imperial Beach where management has been continuously targeting the threat of runaway pension obligation through pre-funding, strategic outsourcing of services, as well as cost sharing. As such, the City reports a positive unrestricted balance in the Statement of Net Position for both governmental and business-type (sewer) activities.

However, the City’s governmental activities unrestricted fund balance (net position) has declined year-over-year by approximately $1.1 million. The main factor in the deterioration of the City’s net position was a very significant increase in pension-related debt with the CalPERS. As of June 30, 2023, the City’s unfunded pension actuarial liability (UAL) was $12.1 million, with an additional $1.3 million owed in other post-retirement benefits (retiree healthcare benefits). The pension unfunded liability significantly increased year-over-year by $9.9 million or 433%. This dramatic increase is due to a combination of factors, with the most important being an adjustment by CalPERS to the discount rate from 7.00% to 6.80%, to which the pension liability is highly sensitive. Additional reasons included changes in certain assumptions recommended by the new CalPERS Experience Study and Review of Actuarial Assumptions. This study recommended modifications to retirement rates, termination rates, mortality rates, and rates of salary increases that were adopted by the CalPERS board. Lastly, the CalPERS investment earnings did not meet projections for the fiscal year. Combined these factors had a very significant negative impact on the City’s long-term pension obligations as well as required annual payments on UAL starting in FY2024-25. The management and staff will need to take continuous additional measures in order mitigate the negative impact of pension obligations on City finances to manage these liabilities properly in the long-term.

The required annual payment on the City’s pension UAL is to increase to $1.1 million in FY2024- 25, $0.3 million less than what was budgeted. As such, additional funding is needed to address pension liability in FY2024-25. To accomplish this, Staff is requesting to reallocate/transfer $333,300 of the General Fund Unassigned Fund Balance in the following manner:

1. Amend FY24-25 expenditure Budget for Non-departmental division by $236,400 to address increased UAL funding for miscellaneous & lifeguard pension groups

2. Amend FY24-25 expenditure Budget for Fire division by $96,900 to address increased UAL funding for fire safety pension group

AUDIT FINDINGS
Staff is pleased to announce there were no findings for FY 2022-23. Additionally, the independent auditors found no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

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OTHER CITY RELATED FUNDS
The Citywide Audited Financial Statements are inclusive of the separate agencies of the Imperial Beach Redevelopment Successor Agency and the Housing Authority of the City of Imperial Beach. The required Housing Authority Specified Activity report will be posted on the City’s website in accordance with the California Health and Safety Code 34176.1 et. seq.

ENVIRONMENTAL DETERMINATION:

Not a project as defined by CEQA.

FISCAL IMPACT: Increase the required annual payment on the City’s unfunded pension liability for FY24-25 for both Miscellaneous and Fire Group by $333,300 total.

FISCAL YEAR: FY 2024-25
BUDGETED: Y

BUDGET AMENDMENT Y
ACCOUNT NO(S).: 101-1920-419.1110 Pension Expense $236,400 101-3020-422.1101 – PERS – City Portion $96,900
PROJECT NO(S).: N/A
FISCAL ANALYSIS: The required annual payment on the City’s pension UAL is to increase to $1.1 million in FY2024-25, $0.3 million less than what was budgeted. As such, additional funding is
needed to address pension liability in FY2024-25.

CURRENT BUDGET: $796,000 as follows:
101-1920-419.1110 – Pension Expense $484,000
101-3020-422.1101 – PERS – City Portion $312,000

ANTICIPATED
EXPENDITURE:
$1,129,300
ATTACHMENTS:

ATT 1 – FY23 Audited Financial Statements
ATT 2 – FY23 Housing Asset Audit Report
ATT 3 – FY23 Housing Successor Specified Activity Report ATT 4 – Resolution 2023-109

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FINANCIAL STATEMENTS

FISCAL YEAR ENDED
JUNE 30, 2023
ATTACHMENT 1

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CITY OF IMPERIAL BEACH, CALIFORNIA

FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2023

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City of Imperial Beach
Financial Statements
For the Fiscal Year Ended
June 30, 2023

TABLE OF CONTENTS
Page
Number
INDEPENDENT AUDITOR’S REPORT ................................................................................... 1 MANAGEMENT’S DISCUSSION AND ANALYSIS ................................................................. 4

BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Statement of Net Position .......................................................................................... 19 Statement of Activities ................................................................................................ 20 Fund Financial Statements
Balance Sheet – Governmental Funds ...................................................................... 22 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ................................................................................ 23 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds .................................................................................................. 24 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ...................... 25 Statement of Net Position – Proprietary Funds .......................................................... 26 Statement of Revenues, Expenses and Changes in Net Position – Proprietary Funds ....................................................................................................... 27 Statement of Cash Flows – Proprietary Funds .......................................................... 28 Statement of Fiduciary Net Position – Fiduciary Funds ............................................. 29 Statement of Changes in Fiduciary Net Position – Fiduciary Funds .......................... 30 Notes to Financial Statements .......................................................................................... 31

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City of Imperial Beach
Financial Statements
For the Fiscal Year Ended
June 30, 2023

TABLE OF CONTENTS
Page
Number

REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Proportionate Share of the Net Pension Liability And Related Ratios as of the Measurement Date .........................................................81 Schedule of Plan Contributions .........................................................................................82 Schedule of Changes in the Net OPEB Liability and Related Ratios ...............................83 Schedule of Plan Contributions .........................................................................................84 Budgetary Comparison Schedule by Department
General Fund .............................................................................................................85 Budgetary Comparison Schedule
Miscellaneous Grants Fund .......................................................................................86 Notes to Required Supplementary Information ................................................................87

COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES
Combining Balance Sheet – Nonmajor Governmental Funds .........................................89 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds ...........................................................92 Budgetary Comparison Schedules – Special Revenue Funds
Gas Tax ......................................................................................................................95 Prop A Tax .................................................................................................................96 CDBG Grant ...............................................................................................................97 Supplemental Law Enforcement ................................................................................98 RMRA .........................................................................................................................99 Housing Authority .....................................................................................................100 Budgetary Comparison Schedules – Capital Projects Funds Parks Maintenance CIP ............................................................................................101 Capital Projects .........................................................................................................102 Combining Statement of Net Position – Internal Service Funds ....................................103

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City of Imperial Beach
Financial Statements
For the Fiscal Year Ended
June 30, 2023

TABLE OF CONTENTS
Page
Number
Combining Statement of Revenues, Expenses, and Changes in Fund Net Position – Internal Service Funds ................................................................................................104 Combining Statement of Cash Flows – Internal Service Funds .....................................105 Combining Statement of Fiduciary Net Position – All Custodial Funds ..........................106 Combining Statement of Changes in Fiduciary Net Position – All Custodial Funds ......108

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-1-
Independent Auditors' Report
To the Honorable Mayor and Members of the City Council
City of Imperial Beach, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Imperial Beach, California (the City), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2023, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards (GAS), issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Emphasis of Matter
As discussed in Note 1 to the financial statements, the City has adopted the provisions of Governmental Accounting Standards Board (GASB) Statement No. 96, Subscription-Based Information Technology Arrangements. Our opinions are not modified with respect to this matter.

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

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

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

In performing an audit in accordance with GAAS and GAS, we:
 Exercise professional judgment and maintain professional skepticism throughout the audit.
 Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.
 Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
 Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about City’s ability to continue as a going concern for a reasonable period of time.

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

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

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

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The supplementary information, as listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements.

The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the accompanying supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 20, 2023, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City’s internal control over financial reporting and compliance.

San Bernardino, California
November 20, 2023

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City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023
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The City of Imperial Beach (the City) offers readers of the financial statements this narrative overview and analysis of the financial activities for the fiscal year ended June 30, 2023. The contents of this overview are not a substitute for the more complete analysis found in the financial statements and readers are encouraged to consider this discussion in conjunction with information included in the more comprehensive financial statements.

FINANCIAL HIGHLIGHTS
• At the government-wide reporting level, the assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $88,272,059 (net position). This combined net position reflects restricted and unrestricted funds, as well as investment in capital assets (e.g., land, buildings, machinery, equipment, and infrastructure), less any related outstanding debt that was used to acquire those assets. The unrestricted position represents $17,731,346 of the total. The City’s total net position increased $2,081,787 from the prior fiscal year. The change is mainly attributable to current-year business activities of the sewer fund along with an increase in tax revenues received by the Primary Government offset by an increase in operating expenditure as the City returned to pre-pandemic levels of operations and also continued to expand services provided in areas such as parks and recreation.
• The Citywide fund level revenue recorded for the fiscal year ending June 30, 2023 was $40,354,466 inclusive of the General Fund, Miscellaneous Grant Fund, Other Government Funds, and the Sewer Fund. The Successor Agency to the former Redevelopment Agency revenue is not included in the Citywide revenue because the Successor Agency is considered a separate entity and not technically part of the municipal corporation. Conversely, the Citywide fund level expenditures and expenses (excluding transfers) for the fiscal year ending on June 30, 2023 were $38,272,679. • At the close of the current fiscal year, the City’s governmental funds reported combined fund balances of $22,598,750, an increase of $3,804,187 in comparison with the prior year. Of this amount, $12,154,620, or 53.8% constitutes the Unassigned Fund Balance, which is available for spending at the discretion of the City Council. The remaining $10,444,130 is either non-spendable, restricted, committed, or assigned. • At the end of the current fiscal year, unrestricted fund balance (the total of the committed, assigned, and unassigned components of fund balance) for the General Fund was $17,805,452. The unassigned fund balance of the General Fund was $12,154,620 or approximately 44.2% of total FY2023 General Fund expenditures and transfers.

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City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023
-5-

OVERVIEW OF THE ANNUAL FINANCIAL REPORT
This section of the Management's Discussion and Analysis is a review of the City's basic financial statements which consist of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) the notes to financial statements. This report also includes supplementary information intended to furnish additional detail to support the content of the financial statements.

Government-Wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. The statement of net position presents financial information on all of the City’s assets, liabilities, and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows.

Thus, revenues and expenses are reported for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

Both of the government-wide financial statements mentioned above distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, community development, parks, recreation and senior center, and public works. The business-type activities of the City include Sewer operation.

The government-wide financial statements include not only the City itself (known as the primary government), but also the following blended component units: the Imperial Beach Public Financing Authority (Financing Authority), and the Imperial Beach Housing Authority (Housing Authority), for which the City is financially accountable. The Financing Authority and the Housing Authority, although also legally separate, function for all practical purposes as a department of the City. The report also provides financial information for include legally separate Successor Agency of the former Redevelopment Agency. Financial information for this separate unit is reported as Private-Purpose fiduciary fund, separately from the financial information presented for the primary government itself.

Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

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City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023
-6-
Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements.

However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in assessing a governments near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements.

By doing so, readers may better understand the long-term impact of the City’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The City maintains sixteen individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund and the Miscellaneous Grant Fund, which are considered to be major funds. Data from the other governmental funds are combined into a single aggregated presentation as “Other Government Funds”. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements in the combining and individual fund statements and schedules section of this report.

The City adopts bi-annual appropriated budget for its General Fund. A budgetary comparison schedule has been provided for the General Fund to demonstrate compliance with this budget, as noted in the table of contents.

Proprietary Funds. The City maintains two types of proprietary funds. Enterprise Funds and Internal Service Funds. Enterprise Funds are used to report the same functions presented as business- type activities in the governmentwide financial statements. The City uses an Enterprise Fund to account for its Sewer operation. Internal Service Funds are an accounting device used to accumulate and allocate costs internally among the City's various functions. The City uses Internal Service Funds to account for the management of its retained risks, for its fleet of vehicles, information technology, and facilities maintenance. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements.

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide information for these business-type activities, which is considered to be a major fund of the City.

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City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023
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Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside of the government. Fiduciary funds are not reported in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds.

The City maintains two different types of fiduciary funds. The Private-Purpose Trust Fund is used to report resources held in trust for other entities. The Custodial Funds report resources held by the City in a custodial capacity for individuals, private organizations, and other governments. The City current has five Custodial Funds (Special Assessment Districts), and one Private Trust Fund (the Successor Agency of the Former RDA).

Notes to Basic Financial Statements. The notes provide additional information that is necessary to acquire a full understanding of the data provided in the government-wide and fund financial statements.

Other Information. In addition to the basic financial statements and accompanying notes, this report also presents required supplementary information concerning the City’s schedule of changes in the net pension liability and related ratios (miscellaneous employees), schedule of City’s proportionate share of the net pension liability and related ratios as of the measurement date (safety employees), schedules of plan contributions (both miscellaneous and safety employees), schedule of changes in the net OPEB liability and related ratios, and general fund and major special revenue funds’ budgetary schedules.

The combining statements referred to earlier in connection with non-major governmental funds are presented immediately following the required supplementary information.

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City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023
-8-

GOVERNMENT-WIDE OVERALL FINANCIAL ANALYSIS
As noted earlier, net position over time, may serve as a useful indicator of a government’s financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities by $88,272,059, at the close of the most recent fiscal year. That represents an increase of $2,081,787 from $86,190,272 on June 30, 2022.

City of Imperial Beach's Net Position
2023 2022 2023 2022 2023 2022
Current and other assets 35,595,900 $ 29,357,337 $ 5,186,620 $ 4,019,980 $ 40,782,520 $ 33,377,317 $ Capital assets, net 58,045,385 56,765,536 9,231,702 9,093,514 67,277,087 65,859,050 Total assets 93,641,285 86,122,873 14,418,322 13,113,494 108,059,607 99,236,367 Deferred outflows
of resources 9,352,410 5,354,322 212,337 121,565 9,564,747 5,475,887 Non-current liabilities 14,932,887 5,764,170 300,500 95,521 15,233,387 5,859,691 Other liabilities 10,934,365 7,962,644 175,158 297,077 11,109,523 8,259,721 Total Liabilities 25,867,252 13,726,814 475,658 392,598 26,342,910 14,119,412 Deferred inflows
of resources 2,942,576 4,304,833 66,809 97,737 3,009,385 4,402,570 Net position
Net investment in
capital assets 56,551,187 56,649,160 9,231,702 9,093,514 65,782,889 65,742,674 Restricted 4,757,824 2,860,859 - - 4,757,824 2,860,859
Unrestricted 12,874,856 13,935,529 4,856,490 3,651,210 17,731,346 17,586,739 Total net position 74,183,867 $ 73,445,548 $ 14,088,192 $ 12,744,724 $ 88,272,059 $ 86,190,272 $ Governmental Business-Type
Activities Activities Total
By far, the largest portion of the City’s net position 74.5% reflects its investment in capital assets (e.g., land, buildings, furniture and infrastructure), less any related outstanding debt that was used to acquire those assets. The City uses these capital assets to provide a variety of services to its citizens. Accordingly, these assets are not available for future spending. Although the City’s investment in capital assets is reported net of related debt, it should be noted that the resources used to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

An additional portion of the City’s net position (5.4%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of $17,731,346 is unrestricted, which is available for spending at the discretion of the City Council.

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City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023
-9-
At the end of the 2022-2023 fiscal year, the City is able to report positive balances for both the government as a whole, as well as for its separate governmental and business-type activities.

The same situation held true for the prior fiscal year.

The City’s overall net position increased $2,081,787 from the prior fiscal year. The reasons for this overall increase are discussed in the following sections for governmental activities and business-type activities.

Governmental Activities. During the current fiscal year, net position for governmental activities increased $738,319 from the prior fiscal year for an ending balance of $74,183,867. The increase in the overall net position of governmental activities is the result of revenues slightly exceeding expenditures. The City experienced a year-over year increase in various general revenues (sales tax, property tax, franchise tax, transient occupancy tax, etc.) of $2.6 million received by the Primary Government, offset by a significant increase in operating expenditures of $9.0 million as the City returned normal operations post pandemic, gradually reversed the pandemic hiring and spending freeze and funded some urgently needed maintenance and capital improvements projects, filled opened positions and also continued to expand services in areas such as parks and recreation and community services.

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City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023
-10-
City of Imperial Beach’s Changes in Net Position
2023 2022 2023 2022 2023 2022
Revenues
Program revenues:

Charges for services 2,418,466 $ 1,922,230 $ 6,861,442 $ 6,217,535 $ 9,279,908 $ 8,139,765 $ Operating contributions and
grants 7,412,916 7,916,615 - - 7,412,916 7,916,615
Capital contributions and grants 1,919,284 2,022,727 - - 1,919,284 2,022,727 General revenues:

Property taxes 7,210,204 6,779,578 - - 7,210,204 6,779,578 Transient occupancy taxes 1,563,419 1,353,140 - - 1,563,419 1,353,140 Sales taxes 8,150,691 7,523,483 - - 8,150,691 7,523,483 Franchise taxes 2,634,150 2,266,242 - - 2,634,150 2,266,242 Business licenses taxes 316,271 377,130 - - 316,271 377,130 Motor vehicle in lieu - unrestricted 27,171 32,086 - - 27,171 32,086 Use of money and property 884,966 (4,228) 93,795 (91,194) 978,761 (95,422) Miscellaneous 861,691 634,827 - - 861,691 634,827
Total Revenues 33,399,229 30,823,830 6,955,237 6,126,341 40,354,466 36,950,171 Expenses
General government 8,159,670 6,476,001 - - 8,159,670 6,476,001 Public safety 17,116,283 10,802,947 - - 17,116,283 10,802,947 Community development - 166 - - - 166
Parks, recreation and senior center 2,856,254 1,961,009 - - 2,856,254 1,961,009 Public works 4,480,268 4,454,317 - - 4,480,268 4,454,317 Interest on long-term debt 48,435 9,972 - - 48,435 9,972 Sewer - - 5,611,769 4,997,924 5,611,769 4,997,924
Total Expenses 32,660,910 23,704,412 5,611,769 4,997,924 38,272,679 28,702,336 Increase in Net Position
Before Transfers 738,319 7,119,418 1,343,468 1,128,417 2,081,787 8,247,835 Transfers - (20,518) - 20,518 - -
Change in Net Position 738,319 7,098,900 1,343,468 1,148,935 2,081,787 8,247,835 Net Position, Beginning 73,445,548 67,441,938 12,744,724 12,138,080 86,190,272 79,580,018 Restatement of Net Position - (1,095,290) - (542,291) - (1,637,581) Net Position, Ending 74,183,867 $ 73,445,548 $ 14,088,192 $ 12,744,724 $ 88,272,059 $ 86,190,272 $ Governmental Business-Type
Activities Activities Total

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City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023
-11-
Increase
(Decrease) Percent
Percent From Increase
Revenue Source 2023 of Total 2022 (Decrease)
Charges for services 2,418,466 $ 7.3% 496,236 $ 20.5%
Operating contributions and grants 7,412,916 22.2% (503,699) -6.8% Capital contributions and grants 1,919,284 5.7% (103,443) -5.4% Property taxes 7,210,204 21.6% 430,626 6.0%
Sales taxes 8,150,691 24.4% 627,208 7.7%
Franchise fees 2,634,150 7.9% 367,908 14.0%
Other general revenue and transfers 3,653,518 10.9% 1,281,081 35.1% Total revenue 33,399,229 $ 100.0% 2,595,917 $ 7.8%

GOVERNMENTAL ACTIVITIES
Revenue by Source
Charges for
Services, 7.3%
Operating
Contributions and
Grants, 22.2%
Capital
Contributions and
Grants, 5.7%
Property Taxes,

21.6%
Franchise Fees,

7.9%
Sales taxes shared
state revenue,

24.4%
Other General
Revenue and
Transfers, 10.9%

GOVERNMENTAL ACTIVITIES
Revenue by Source
Fiscal Year 2022-23

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City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023
-12-
Increase
(Decrease) Percent
Percent From Increase
Function 2023 of Total 2022 (Decrease)
General government 8,159,670 $ 25.1% 1,683,669 $ 20.6%
Public safety 17,116,283 52.4% 6,313,336 36.9%
Parks, recreation and senior center 2,856,254 8.7% 895,245 31.3% Public works 4,480,268 13.7% 25,951 0.6%
Interest on long-term debt 48,435 0.1% 38,463 79.4%
Total expenses 32,660,910 $ 100.0% 8,956,498 $ 27.4%

GOVERNMENTAL ACTIVITIES
Expenses by Function
General
government, 25.1%
Public safety, 52.4%
Parks, recreation
and senior center,

8.7%
Public works, 13.7% Interest on longterm debt, 0.1%

GOVERNMENTAL ACTIVITIES
Expenses by Function
Fiscal Year 2022-23
Business-type Activities. For the City’s business-type activities, the results for the current fiscal year were positive. Overall net position increased to an ending balance of $14,088,192.

The Wastewater Enterprise Fund accounts for the activity of a City-owned sewer operations.

The total increase in net position for business-type activities was $1,343,468 or 10.5% increase from the prior fiscal year.

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City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023
-13-

FINANCIAL ANALYSIS OF GOVERNMENTAL FUNDS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental Funds. The focus of the City of Imperial Beach’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements.

In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for discretionary use as they represent the portion of fund balance which has not yet been limited to use for a particular purpose by either an external party, the City itself, or a group or individual that has been delegated authority to assign resources for use for particular purposes by the City’s Council.

On June 30, 2023, the City’s governmental funds reported combined fund balances of $22,598,750, an increase of $3,804,187 in comparison to the prior year. Approximately 53.8% or $12,154,620 of this amount constitutes an unassigned fund balance, which is available for spending at the government's discretion. The remainder of the fund balance is either nonspendable, restricted, committed, or assigned to indicate that it is 1) not in spendable form ($35,474), 2) restricted for particular purposes ($4,757,824), 3) committed for a certain use ($4,200,000) or 3) assigned for particular purposes ($1,450,832).

Capital outlay expenditures increased by $1,044,191 or 94.4% due to activity of several ARPA funded facilities improvements projects and start of various larger street and parks projects.

Major Funds
The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned fund balance of the General Fund was $12,154,620, while the total fund balance increased by $2,644,397 or 16.6% to $18,578,766. As a measure of the General Fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total General Fund expenditures. Unassigned fund balance represents approximately 44.2% of total FY2023 General Fund expenditures and transfers out, while total fund balance represents approximately 67.59% of that same amount.

The Miscellaneous Grants Fund, the other major fund, is used for reporting of various types of grants awarded to the City. This includes, but is not limited, to COVID-19 relief grants.

This Fund ended the year with a fund balance of $167,936.

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City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023
-14-

GENERAL FUND BUDGETARY HIGHLIGHTS
The General Fund, as presented in the financial statements and for purposes of financial reporting in conformity with generally accepted accounting principles (GAAP), is comprised of three funds including the General Fund, Community Benefit Fund, and PEG Fund. However, in the City’s approved budget document, these funds are separately presented.

The City adopted a balanced General Fund budget for the fiscal year, originally budgeting $25,159,345 in revenues (and transfers) and $24,735,990 in expenditures (and transfers).

During the year, amendments to the original budgeted appropriations were authorized by the City Council and minor amendments to reallocate appropriations among departments took place. The movement of the appropriations between departments was not significant and did not increase the overall operating budget.

The largest amendment to the revenue budget was related to the first full year of the Measure I sales tax revenue. Measure I – the Clean and Safe Neighborhoods Measure was passed in November 2020, approving a one cent Transaction Use Tax (sales tax) and was crucial in allowing the City to maintain the existing level of public safety and emergency response, as well as allowed for the creation of the City’s new Parks and Recreation department. FY2023 was the first full year of revenue collection, and the budgeted estimate was adjusted upward as a result of the City receiving more revenue than expected.

Conversely, the expenditure transfer-out budget was increased during the year as funding for various parks and facility improvement projects were approved and transferred to respective CIP funds. Additional funding was also approved for some internal service funds (including fleet and informational technology).

CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets. The City’s investment in capital assets for its governmental and business-type activities as of June 30, 2023, amounts to $67,277,087 (net of accumulated depreciation). This investment in capital assets includes land, land improvements, buildings, furniture, machinery, equipment, and infrastructure. The total increase in capital assets for the current fiscal year was $1,418,036, or an increase of approximately 2.2%, due to an increase in construction in progress offset by capital asset dispositions and depreciations.

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City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023
-15-
City of Imperial Beach’s Capital Assets
(Net of accumulated depreciation)
2023 2022 2023 2022 2023 2022
Land 2,688,532 $ 2,688,532 $ - $ - $ 2,688,532 $ 2,688,532 $ Infrastructure right-of-way 12,406,327 12,406,327 - - 12,406,327 12,406,327 Construction in progress 3,195,823 825,364 716,436 426,861 3,912,259 1,252,225 Buildings and Improvements 4,072,242 4,493,003 - - 4,072,242 4,493,003 Furniture and Equipment 1,478,767 1,040,106 - 1,478,767 1,040,106 Infrastructure 33,932,726 35,197,378 - - 33,932,726 35,197,378 Right-to-use 270,968 114,827 4,082 - 275,050 114,827
Sewer - - 8,511,184 8,666,653 8,511,184 8,666,653
Total $ 56,765,537 58,045,385 $ 9,231,702 $ 9,093,514 $ 67,277,087 $ 65,859,051 $ Governmental Business-Type
Activities Activities Total
The City completed several facilities parks, and infrastructure improvements during the fiscal year, including installation of exercise equipment in Veterans Park and also started construction on several larger parks, facilities, and street improvements projects.

Additional information on the City’s capital assets can be found in Note 3 of this report.

Non-Current Liabilities. At the end of the current fiscal year, the City had total non-current outstanding liabilities of $16,961,891. The City does not carry any debt backed by the full faith and credit of the government. The City’s long-term obligations consisted of $649,420 principal outstanding on Transnet Commercial Paper borrowing, $509,858 principal outstanding on financed equipment, and $334,920 of lease/subscription liability for printing equipment and subscription-based information technology agreements.

The City's pension-related debt in the California Public Employees Retirement System (CalPERS) as of June 30, 2023 consisted of an obligation to pay $12,138,749 for net pension liability and $1,302,641 in other post-retirement benefits. The pension unfunded liability significantly increased year-over-year by $9,861,077 or 433%. The reasons are discussed in detail in Note 10 of this report.

The City also has a total obligation of $1,198,303 for compensated absences (vacation and sick leave) for the existing employees of which $383,696 is classified as non-current. The remainder of the City’s long-term obligations of $828,000 comprises of general liability and worker’s compensation claims.

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City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023
-16-
City of Imperial Beach’s Non-Current Outstanding Liabilities 2023 2022 2023 2022 2023 2022
Compensated absences 1,141,635 $ 1,072,291 $ 56,668 $ 39,021 $ 1,198,303 $ 1,111,312 $ Claims payable 828,000 700,000 - - 828,000 700,000
Direct borrowings payable 1,159,278 798,362 - - 1,159,278 798,362 Lease/subscription payable 334,920 116,376 - - 334,920 116,376 Net pension liability 11,869,269 2,227,108 269,480 50,564 12,138,749 2,277,672 Total OPEB liability 1,273,722 1,980,149 28,919 44,957 1,302,641 2,025,106 Total $ 6,894,286 16,606,824 $ 355,067 $ 134,542 $ 16,961,891 $ 7,028,828 $ Activities
Governmental Business-Type
Activities Total
The City’s total non-current liabilities as of June 30, 2023 increased by $9,933,063 or 141% during the current fiscal year. The increase was due to the significant increase in net pension liability. Additional information on the City’s long-term liabilities can be found in Notes 8, 9,10,11 and 12 of this report.

ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
When the pandemic struck in the winter of 2020, the City Council immediately adopted a Financial Preparation and Recovery Plan that reduced spending, implemented a "soft" hiring and spending freeze, and deferred spending on maintenance and capital projects. The City continued to gradually reverse these cost savings measures during FY2023 while carefully monitoring incoming revenues, as well as the overall economy. The primary focus continued to be on the deferred, but urgently needed, maintenance and capital improvements projects, funding of the newly established parks and recreation department, filling open positions in other departments to keep up with service demand. As revenues rebounded and the City’s 1% Sales Tax, as well as the new Measure I Sales Tax, came in stronger than expected, several capital improvement projects such as the Sports Park bathroom remodel and various other facilities improvements were approved during FY2023.

Another approximately $1.3 million of expenditure budget amendments was due to one-time transfers to the Internal Service Funds to strengthen the funds reserves in the City’s fleet and informational technology departments for future needs. Additional increases resulted from capital improvement projects – both newly approved by the City Council and carried over from the prior period. As such, the fiscal year ended with expenditures slightly above budget by $67,000. Much of the variance is related to adjustments required due to fiscal year-end accounting adjustments relating to OPEB valuation, and new accounting standards. The City does not budget for such items. In the prior fiscal year, the City experienced staffing shortages due to the challenging post-pandemic job market. In the current fiscal year, the City was able to recruit for many of the open positions which reflected was as an increase in operating expenditures in the salary and benefits categories. The expenditure budgetary savings as seen in the prior year were not seen in the current year.

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City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023
-17-
The General Fund revenue budget is expected to grow to $28,704,900; however, due to the economic outlook, the revenue growth is expected to flatten in comparison with prior years. The City management carefully monitors economic factors and their effect on City revenues. The City’s major sources of General Fund revenue include Property Tax, Sales and Measure I Tax, Port of San Diego, Transient Occupancy Tax (TOT), Gas Taxes, and Franchise Tax. These sources of revenue account for approximately 90% of the City’s General Fund revenue.

Property tax in particular may be negatively affected by the current environment of high interest rates. High cost of borrowing negatively effects property sales and capital investment activity and may also start to threaten property values as well as investment in the City in the near future.

In the November 2022 election, voters approved Measure R, increasing the TOT rate within the City of Imperial Beach. Measure R increased the TOT rate from the existing 10% to 14% effective January 1, 2023. However, recent concern regarding a state-wide challenge to all new local taxes adopted after January 1, 2022, which includes Measure R, has caused staff to proceed with caution in budgeting this new revenue source.

The General Fund expenses for FY2024 are projected to be $29,454,500. Excess of budgeted expenditures over revenues is due to one-time capital and infrastructure investments and does not represent a structural deficit.

Several factors contribute to expenditure increase in FY2024 expenditures, such as, increases to contracts and staffing. The Sheriff’s Department contract will increase by $301,700 as a result of a step-up in contract cost and the addition of a school resource officer as part of a joint use agreement with the Sweetwater Union High School District. The proposed budget also includes increased funding for the staffing and operation of the Parks and Recreation department to provide additional programs focused on improving the health, wellness, and quality of life for City residents. The improvements include the new aquatics program, additional community events, increased staffing for the park ranger program, and other items aimed at assisting with park safety and City-wide maintenance. Further, personnel increases are being proposed in the Community Development department to ensure timely processing of city permits, and to assist with new technology implementation; Fire Department to develop a succession plan and to improve timeliness of safety inspections; Parks and Streets divisions to ensure proper infrastructure maintenance; and Mayor and City Council to improve public outreach.

In addition, inflationary pressures that are causing increases in the City’s operating costs combined with a very significant increase in pension obligations seen in FY2023 are a cause for concern. To assist with the concerns with the rising pension and retiree costs, the City began contributing to a Section 115 Trust and will continue to prioritize these costs as pension related costs will be critical in the near and long term.

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City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2023
-18-
As the national and world economy continues to experience economic turbulences due to postpandemic recovery, supply chain and labor market challenges, and global conflict, the City management will continue to carefully evaluate the effects of various factors on the FY2024 budget.

FY2024—FY2025 Biennial Budget document contains additional economic and budgetary detail, and it is available on the City’s website or through the Finance Department.

REQUESTS FOR INFORMATION
This financial report provides a general overview of the City's financial documents for all those with an interest in the government's fiscal health. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Lily Flyte, Finance Director, City of Imperial Beach, Finance Department, 825 Imperial Beach Blvd., Imperial Beach, CA 91932.

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City of Imperial Beach
Statement of Net Position
June 30, 2023
See Notes to Financial Statements
-19-
Governmental Business-Type
Activities Activities Total
Assets:

Cash and investments 29,835,377 $ 6,109,723 $ 35,945,100 $ Restricted cash and investments 737,840 - 737,840
Receivables:

Accounts 822,257 552 822,809
Accrued interest 100,222 - 100,222
Internal balances 1,055,453 (1,055,453) -
Prepaid costs 38,174 - 38,174
Due from other governments 3,006,577 131,798 3,138,375
Capital assets, not being depreciated 18,290,682 716,436 19,007,118 Capital assets, net of depreciation 39,754,703 8,515,266 48,269,969 Total Assets 93,641,285 14,418,322 108,059,607
Deferred Outflows of Resources:

Deferred pension related items 8,418,962 191,144 8,610,106 Deferred OPEB related items 933,448 21,193 954,641
Total Deferred Outflows of Resources 9,352,410 212,337 9,564,747 Liabilities:

Accounts payable 2,284,772 96,859 2,381,631
Accrued liabilities 232,111 23,732 255,843
Unearned revenue 5,579,602 - 5,579,602
Deposits payable 1,163,943 - 1,163,943
Compensated absences due in one year 760,040 54,567 814,607 Claims payable due in one year 178,000 - 178,000
Long-term liabilities due in one year 735,897 - 735,897 Noncurrent liabilities:

Compensated absences due in more than one year 381,595 2,101 383,696 Claims payable due in more than one year 650,000 - 650,000 Long-term liabilities due in more than one year 758,301 - 758,301 Net Pension Liability 11,869,269 269,480 12,138,749
Net OPEB liability 1,273,722 28,919 1,302,641
Total Liabilities 25,867,252 475,658 26,342,910
Deferred Inflows of Resources:

Deferred pension related items 2,036,138 46,229 2,082,367 Deferred OPEB related items 906,438 20,580 927,018
Total Deferred Inflows of Resources 2,942,576 66,809 3,009,385 Net Position:

Investment in capital assets 56,551,187 9,231,702 65,782,889 Restricted for:

Community development 837,098 - 837,098
Public safety 1,000 - 1,000
Parks and recreation 1,264,802 - 1,264,802
Public works 1,917,084 - 1,917,084
Pension section 115 trust 737,840 - 737,840
Unrestricted 12,874,856 4,856,490 17,731,346
Total Net Position 74,183,867 $ 14,088,192 $ 88,272,059 $

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City of Imperial Beach
Statement of Activities
Year Ended June 30, 2023
See Notes to Financial Statements
-20-
Program Revenues
Operating Capital
Charges for Contributions Contributions
Expenses Services and Grants and Grants
Functions/Programs
Primary Government:

Governmental Activities:

General government 8,159,670 $ 929,043 $ 795 $ - $
Public safety 17,116,283 249,324 5,647,470 -
Community development - 736,863 - -
Parks, recreation and senior center 2,856,254 15,342 - - Public works 4,480,268 487,894 1,764,651 1,919,284
Interest on long-term liabilities 48,435 - - -
Total Governmental Activities 32,660,910 2,418,466 7,412,916 1,919,284 Business-Type Activities:

Sewer 5,611,769 6,861,442 - -
Total Business-Type Activities 5,611,769 6,861,442 - -
Total Primary Government 38,272,679 $ 9,279,908 $ 7,412,916 $ 1,919,284 $ General Revenues:

Taxes:

Property taxes, levied for general purpose
Transient occupancy taxes
Sales taxes
Franchise taxes
Business licenses taxes
Motor vehicle in lieu - unrestricted
Use of money and property
Other
Total General Revenues
Change in Net Position
Net Position at Beginning of Year
Net Position at End of Year

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See Notes to Financial Statements
-21-
Net (Expenses) Revenues and
Changes in Net Position
Primary Government
Governmental Business-Type
Activities Activities Total
$ - (7,229,832) $ (7,229,832) $
- (11,219,489) (11,219,489)
- 736,863 736,863
- (2,840,912) (2,840,912)
- (308,439) (308,439)
- (48,435) (48,435)
- (20,910,244) (20,910,244)
1,249,673 - 1,249,673
1,249,673 - 1,249,673
1,249,673 (20,910,244) (19,660,571)
- 7,210,204 7,210,204
- 1,563,419 1,563,419
- 8,150,691 8,150,691
- 2,634,150 2,634,150
- 316,271 316,271
- 27,171 27,171
93,795 884,966 978,761
- 861,691 861,691
93,795 21,648,563 21,742,358
1,343,468 738,319 2,081,787
12,744,724 73,445,548 86,190,272
$ 14,088,192 74,183,867 $ 88,272,059 $

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City of Imperial Beach
Balance Sheet
Governmental Funds
June 30, 2023
See Notes to Financial Statements
-22-
Special
Revenue Fund Other Total
Miscellaneous Governmental Governmental
General Grant Funds Funds
Assets:

Pooled cash and investments 18,685,231 $ 4,647,083 $ 3,817,533 $ 27,149,847 $ Restricted cash and investments 737,840 - - 737,840
Receivables:

Accounts 821,414 - 843 822,257
Accrued interest 100,222 - - 100,222
Prepaid costs 35,474 - - 35,474
Due from other governments 2,427,277 250,374 230,651 2,908,302 Due from other funds 122,764 - - 122,764
Total Assets 22,930,222 $ 4,897,457 $ 4,049,027 $ 31,876,706 $ Liabilities and Fund Balances:

Liabilities:

Accounts payable 1,965,343 $ 184,740 $ 71,465 $ 2,221,548 $ Accrued liabilities 187,229 120 2,750 190,099
Unearned revenues 1,034,941 4,544,661 - 5,579,602
Deposits payable 1,163,943 - - 1,163,943
Due to other funds - - 122,764 122,764
Total Liabilities 4,351,456 4,729,521 196,979 9,277,956 Fund Balances:

Nonspendable:

Prepaid costs 35,474 - - 35,474
Restricted for:

Community development projects - - 837,098 837,098
Public safety - - 1,000 1,000
Parks, recreation and senior center - 167,936 1,096,866 1,264,802 Public works - - 1,917,084 1,917,084
Pension section 115 trust 737,840 - - 737,840
Committed to:

Economic uncertainty reserve 2,900,000 - - 2,900,000
Public works 1,300,000 - - 1,300,000
Assigned to:

Public works strategic capital reserve 504,482 - - 504,482 Public works projects 37,388 - - 37,388
Community benefit 872,349 - - 872,349
PEG 36,613 - - 36,613
Unassigned (deficit) - 12,154,620 - 12,154,620
Total Fund Balances 18,578,766 167,936 3,852,048 22,598,750 Total Liabilities and Fund Balances 22,930,222 $ 4,897,457 $ 4,049,027 $ 31,876,706 $

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City of Imperial Beach
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position
June 30, 2023
See Notes to Financial Statements
-23-
Fund balances of governmental funds 22,598,750 $
Amounts reported for governmental activities in the statement of net position are different because:

Capital and intangible right to use assets have not been included as financial resources in governmental fund activity (excludes internal service funds).

Capital assets net of depreciation and amortization 56,426,304 Accrued interest payable for the current portion of interest due on long-term liabilities has not been reported in the governmental funds. (204)
Compensated absences, long term liabilities, net pension liability, and total OPEB liability that have not been included in the governmental fund activity (excludes internal service funds):

Compensated absences (1,106,530)
Long term liabilities (748,341)
Net pension liability (11,636,206)
Net OPEB liability (1,248,712)
Deferred inflows and outflows of resources related to pension and OPEB that have not been included in the government fund activity (excludes internal service funds):

Deferred outflows of resources - pension related 8,253,647 Deferred outflows of resources - OPEB related 915,119
Deferred inflows of resources - pension related (1,996,156) Deferred inflows of resources - OPEB related (888,639)
Internal service funds are used by management to charge the costs of certain activities, such as equipment management and self-insurance, to individual funds. The assets and liabilities of the internal service funds must be added to the statement of net position. This also includes the portion reflected in the Sewer Enterprise Fund. 3,614,835 Net Position of Governmental Activities 74,183,867 $

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City of Imperial Beach
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds
Year Ended June 30, 2023
See Notes to Financial Statements
-24-
Special
Revenue Fund
Other Total
Miscellaneous Governmental Governmental
General Grant Funds Funds
Revenues:

Taxes 19,558,463 $ - $ - $ 19,558,463 $
Licenses and permits 745,780 - - 745,780
Intergovernmental 426,004 1,005,445 2,612,938 4,044,387 Charges for services 6,419,685 - 36,056 6,455,741
Use of money and property 620,607 44,080 173,648 838,335 Fines and forfeitures 404,873 - - 404,873
Miscellaneous 990,954 - 17,915 1,008,869
Total Revenues 29,166,366 1,049,525 2,840,557 33,056,448 Expenditures:

Current:

General government 7,051,503 26,826 11,833 7,090,162
Public safety 14,030,392 - 222,260 14,252,652
Parks, recreation and senior center 2,270,753 1,931 - 2,272,684 Public works 2,278,195 164,944 15,632 2,458,771
Debt Service
Principal 35,443 - 296,932 332,375
Interest 1,403 - 25,184 26,587
Capital outlay 211,972 855,163 1,082,168 2,149,303
Total Expenditures 25,879,661 1,048,864 1,654,009 28,582,534 Excess (Deficiency of Revenues
Over (Under) Expenditures 3,286,705 661 1,186,548 4,473,914 Other Financing Sources (Uses):

Subscription acquisition 16,451 - - 16,451
Proceeds of commercial paper - - 148,000 148,000
Transfers in 950,252 - 800,000 1,750,252
Transfer out (1,609,011) (43,970) (931,449) (2,584,430) Total Other Financing Sources (Uses) (642,308) (43,970) 16,551 (669,727) Net Change in Fund Balances 2,644,397 (43,309) 1,203,099 3,804,187 Fund Balances at Beginning of Year 15,934,369 211,245 2,648,949 18,794,563 Fund Balances at End of Year 18,578,766 $ 167,936 $ 3,852,048 $ 22,598,750 $

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City of Imperial Beach
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended June 30, 2023
See Notes to Financial Statements
-25-
Net change in fund balances - total governmental funds 3,804,187 $ Amounts reported for governmental activities in the statement of net position are different because:

Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period.

Capital outlay 2,500,393 $
Depreciation (2,342,135)
Amortization 106,665 (51,593)
Compensated absences expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. (55,824)
The issuance of long term liabilities provides current financial resources to governmental funds, while the repayment of the principal of the principal of long term liabilities consumes current financial resources. These amounts are the net effect of the difference in treatment of long term liabilities and related items in the statement of activities.

Issuance of new liabilities (164,451)
Commercial paper 296,942
Lease liability 167,934 35,443
Accrued interest for debt service. This is the net change in accrued interest for the current period. (204)
Pension expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. (3,634,955)
OPEB obligation revenue (credits) reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as revenue in governmental funds. 129,770
Revenues reported as unavailable revenue in the governmental funds and recognized in the statement of activities. These are included in the intergovernmental revenues in the governmental fund activity. (173,973)
Internal service funds are used by management to charge the costs of certain activities, such as equipment management and self-insurance, to individual funds.

The net revenues (expenses) of the internal service funds is reported with governmental activities. 394,719
Change in Net Position of Governmental Activities 738,319 $

Page 205 of 390 ends

City of Imperial Beach
Statement of Net Position
Proprietary Funds
June 30, 2023
See Notes to Financial Statements
-26-
Enterprise Governmental
Fund Activities
Internal
Sewer Service Funds
Assets:

Current:

Cash and investments 6,109,723 $ 2,685,530 $
Receivables:

Accounts 552 -
Prepaid costs - 2,700
Due from other governments 131,798 98,275
Total Current Assets 6,242,073 2,786,505
Noncurrent:

Capital assets, not being depreciated 716,436 1,009,858 Capital assets, net of depreciation 8,515,266 609,223
Total Noncurrent Assets 9,231,702 1,619,081
Total Assets 15,473,775 4,405,586
Deferred Outflows of Resources:

Deferred pension related items 191,144 165,315
Deferred OPEB related items 21,193 18,329
Total Deferred Outflows of Resources 212,337 183,644
Liabilities:

Current:

Accounts payable 96,859 63,224
Accrued liabilities 23,732 41,808
Compensated absences due in one year 54,567 28,598
Claims and judgments due in one year - 178,000
Long-term liabilities due in one year - 298,041
Total Current Liabilities 175,158 609,671
Noncurrent:

Compensated absences due in more than one year 2,101 6,507 Claims and judgments due in more than one year - 650,000 Long-term liabilities - 447,816
Net pension liability 269,480 233,063
Net OPEB liability 28,919 25,010
Total Noncurrent Liabilities 300,500 1,362,396
Total Liabilities 475,658 1,972,067
Deferred Inflows of Resources:

Deferred pension related items 46,229 39,982
Deferred OPEB related items 20,580 17,799
Total Deferred Inflows of Resources 66,809 57,781
Net Position:

Investment in capital assets 9,231,702 873,224
Unrestricted 5,911,943 1,686,158
Total Net Position 15,143,645 $ 2,559,382 $
Reconciliation of Net Position to the
Statement of Net Position
Net Position per Statement of Net Position - Proprietary Funds 15,143,645 $ Prior years' accumulated adjustment to reflect the consolidation of internal service funds activities related to the enterprise funds (972,433) Current years' adjustments to reflect the consolidation of internal service activities related to enterprise funds (83,020) Net Position per Statement of Net Position 14,088,192 $

Page 206 of 390 ends

City of Imperial Beach
Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds
Year Ended June 30, 2023
See Notes to Financial Statements
-27-
Business-Type
Activities Governmental
Enterprise Fund Activities
Internal
Sewer Service Funds
Operating Revenues:

Sales and service charges 6,281,353 $ 1,756,450 $
Miscellaneous 580,089 470,123
Total Operating Revenues 6,861,442 2,226,573
Operating Expenses:

Source of supply 4,400,601 -
Services and supplies (6,158) 1,001,037
Claims expense - 594,259
Personnel and administrative 797,464 711,956
Depreciation expense 336,842 466,787
Total Operating Expenses 5,528,749 2,774,039
Operating Income 1,332,693 (547,466)
Nonoperating Revenues (Expenses):

Investment income 93,795 46,631
Interest expense - (21,644)
Total Nonoperating Revenues (Expenses) 93,795 24,987
Income Before Transfers 1,426,488 (522,479)
Transfers in 834,178 -
Total Transfers - 834,178
Change in Net Position 1,426,488 311,699
Net Position:

Beginning of Year 13,717,157 2,247,683
End of Fiscal Year 15,143,645 $ 2,559,382 $
Reconciliation of Changes in Net Position to
the Statement of Activities:

Changes in Net Position, per the Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds 1,426,488 $ Adjustment to reflect the consolidation of current fiscal year internal service funds activities related to enterprise funds (83,020) Changes in Net Position of Business-Type Activities per Statement of Activities 1,343,468 $

Page 207 of 390 ends

City of Imperial Beach
Statement of Cash Flows
Proprietary Funds
Year Ended June 30, 2023
See Notes to Financial Statements
-28-
Business-Type
Activities Governmental
Enterprise Fund Activities
Internal
Sewer Service Funds
Cash Flows from Operating Activities:

Cash received from customers and users 6,879,283 $ - $
Cash received from/(paid to) interfund service provided - 2,157,904 Cash paid to suppliers for goods and services (4,534,186) (1,484,180) Cash paid to employees for services (696,361) (602,940) Net Cash Provided by Operating Activities 1,648,736 70,784 Cash Flows from Non-Capital Financing Activities:

Transfers from other funds - 834,178
Net Cash Provided by Non-Capital Financing Activities - 834,178 Cash Flows from Capital and Related Financing Activities:

Principal paid on subscription lease (8,164) (167,294)
Interest paid on subscription lease - (21,644)
Acquisition and construction of capital assets (466,866) (725,283) Net Cash Used by Capital and Related Financing Activities (475,030) (914,221) Cash Flows from Investing Activities:

Investment income 93,795 46,631
Net Cash Provided by Investing Activities 93,795 46,631 Net Increase in Cash and Cash Equivalents 1,267,501 37,372 Cash and Cash Equivalents, Beginning of Year 4,842,222 2,648,158 Cash and Cash Equivalents, End of Year 6,109,723 $ 2,685,530 $ Reconciliation of Operating Income (Loss) to Net Cash
Provided by Operating Activities:

Operating income (loss) 1,332,693 $ (547,466) $
Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities:

Depreciation 336,842 466,787
(Increase) decrease in accounts receivable (552) -
(Increase) decrease in prepaid costs - 26,611
(Increase) decrease in due from other governments 18,393 (68,669) (Increase) decrease in deferred pension related items (93,262) (80,661) (Increase) decrease in deferred OPEB related items 2,490 2,154 Increase (decrease) in accounts payable (139,743) (43,495) Increase (decrease) in accrued liabilities 2,278 25,292 Increase (decrease) in compensated absences 17,647 13,520 Increase (decrease) in claims and judgments - 128,000
Increase (decrease) in net pension liability 218,916 189,332 Increase (decrease) in net OPEB liability (16,038) (13,872) Increase (decrease) in deferred inflows - pension (41,472) (35,868) Increase (decrease) in deferred OPEB - pension 10,544 9,119 Total Adjustments 316,043 618,250
Net Cash Provided (Used) by Operating Activities 1,648,736 $ 70,784 $ Noncash Capital and Financing Activities
Subscription liabilities 8,164 $ 403,293 $
Subscription acquisition (8,164) (403,293)

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City of Imperial Beach
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2023
See Notes to Financial Statements
-29-
PrivatePurpose Trust
Fund
Successor
Custodial Agency to the
Funds Former RDA
Assets:

Pooled cash and investments 452,487 $ 588,741 $
Restricted assets:

Cash and investments with fiscal agents - 1,532
Total Assets 452,487 590,273
Deferred Outflows of Resources:

Deferred charges - loss on bond refunding - 289,338
Total Deferred Outflows of Resources - 289,338
Liabilities:

Accounts payable - 62
Accrued liabilities - 5,438
Accrued interest - 82,317
Deferred charges - gain on bond refunding - 5,815
Long-term liabilities:

Due in one year - 910,000
Due in more than one year - 27,476,785
Total Liabilities - 28,480,417
Net Position (Deficit):

Held in trust for other purposes 452,487 (27,600,806)
Total Net Position 452,487 $ (27,600,806) $

Page 209 of 390 ends

City of Imperial Beach
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
Year Ended June 30, 2023
See Notes to Financial Statements
-30-
PrivatePurpose Trust
Fund
Successor
Custodial Agency to the
Funds Former RDA
Additions:

Taxes - $ 1,634,548 $
Interest and change in fair value of investments 7,449 34,358 Miscellaneous - (12,400)
Total Additions 7,449 1,656,506
Deductions:

Administrative expenses - 193,095
Contractual services - 5,823,417
Interest expense - 756,436
Bond issuance cost - 47,216
Total Deductions - 6,820,164
Changes in Net Position 7,449 (5,163,658)
Net Position (Deficit) at Beginning of Year 445,038 (22,437,148) Net Position (Deficit) at End of Year 452,487 $ (27,600,806) $

Page 210 of 390 ends

City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-31-
I. SIGNIFICANT ACCOUNTING POLICIES
Note 1: Summary of Significant Accounting Policies
a. Description of the Reporting Entity
The City of Imperial Beach, California (the City), was incorporated July 18, 1956, and operates as a General Law City. The City operates under a Council/Manager form of government and provides the following services: general government, fire, marine safety, highways and streets, planning and zoning, parks & recreation, and public improvements. Police services are contracted through the County of San Diego Sheriff’s Department. The City is not subject to federal or state income taxes.

As required by generally accepted accounting principles, these financial statements present the City (the primary government) and its component units.

The component units discussed below are included in the City's reporting entity because of the significance of their operational or financial relationship with the City. These entities are legally separate from each other. However, the City's elected officials have a continuing full or partial accountability for fiscal matters of the other entities. The financial reporting entity consists of: 1) the City, 2) organizations for which the City is financially accountable, and 3) organizations for which the nature and significance of their relationship with the City are such that exclusions would cause the City's financial statements to be misleading or incomplete.

An organization is fiscally dependent on the primary government if it is unable to adopt its budget, levy taxes or set rates or charges, or issue bonded debt without approval by the primary government. In a blended presentation, component units' balances and transactions are reported in a manner similar to the balances and transactions of the City. Component units are presented on a blended basis when the component unit's governing body is substantially the same as the City's or the component unit provides services almost entirely to the City. A description of these component units and the method of incorporating their financial information in the accompanying financial statements are summarized as follows:

Blended Component Units
Imperial Beach Public Financing Authority
The Imperial Beach Public Financing Authority was established on November 20, 2003, by a joint exercise of powers agreement between the City of Imperial Beach and the former Imperial Beach Redevelopment Agency pursuant to the Community Redevelopment Law (commencing with Section 33000) of the Health and Safety Code of the State of California. Separate financial statements are not prepared for the Authority.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-32-
Note 1: Summary of Significant Accounting Policies (Continued) Imperial Beach Housing Authority
The Imperial Beach Housing Authority was established on January 14, 2011, by Council resolution to transact business and exercise powers in the City of Imperial Beach and to accept any appropriate funds from the former Imperial Beach Redevelopment Agency. The Authority also acts as the Housing Successor Agency. Separate financial statements are not prepared for the Authority. b. Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its blended component units. All fiduciary activities are reported only in the fund financial statements. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. The fund financial statements provide information about the government's funds, including its fiduciary funds and blended component units.

Separate statements for each fund category - governmental, proprietary, and fiduciary - are presented.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-33-
Note 1: Summary of Significant Accounting Policies (Continued) c. Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting.

Revenues are recognized as soon as they are both measurable and available.

Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period.

For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting.

However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Agency funds are purely custodial (assets equal liabilities) and thus do not involve measurement of results of operations. The private-purpose trust funds are reported using the economic resources management focus and the full accrual basis of accounting.

Property taxes, franchise taxes, licenses and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government.

All proprietary funds are accounted for using the flow of economic resources measurement focus and the accrual basis of accounting. Their revenues are recognized when they are earned and become measurable; expenses are recognized when they are incurred. Unbilled service receivables are recorded as accounts receivable and as revenue when earned.

Page 213 of 390 ends

City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-34-
Note 1: Summary of Significant Accounting Policies (Continued) The City reports the following major governmental funds:
 The General Fund is the City's primary operating fund. It accounts for all financial resources of the general government except those required to be accounted for in another fund.
 The Miscellaneous Grants Fund is used for reporting of various types of grants awarded to the City. This includes, but is not limited, to COVID-19 relief grants.

The City reports the following major proprietary fund:
 The Sewer Fund is an Enterprise Fund that accounts for the revenues and expenses associated with providing wastewater treatment services to residents of the City.

Additionally, the City reports the following fund types:
 Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted or committed to expenditures for specified purposes.
 The Capital Projects Funds account for tracking the financial resources used to acquire and/or construct a major capital asset.
 Internal Service Funds account for the financing of goods or services related to repair, replacement and maintenance of City-owned equipment, the City's selfinsurance programs, the City's general information systems and telecommunications hardware, software and the repair, replacement and maintenance of City-owned facilities. These services are provided to other departments or agencies of the City on a cost reimbursement basis.  The Private Purpose Trust Fund accounts for the assets and liabilities of the former redevelopment agency and is allocated revenue to pay estimated installment payments of enforceable obligations until obligations of the former redevelopment agency are paid in full and assets have been liquidated.  Custodial Funds are used to report resources held by the City in a purely custodial capacity, which involves only the receipt, temporary investment and remittance of fiduciary resources to individuals, private organizations or other governments. They do not involve measurement of results of operations. The City's custodial funds account for its special assessment districts.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-35-
Note 1: Summary of Significant Accounting Policies (Continued) As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the government's proprietary funds function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the Enterprise Funds and of the Internal Service Funds are charges to customers for sales and services. Operating expenses for Enterprise Funds and Internal Service Funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. d. Assets, Liabilities and Net Position or Equity
Cash and Investments
For purposes of the statement of cash flows, the City considers cash and cash equivalents to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. For cash flow purposes, cash and cash equivalents are shown as both restricted and unrestricted cash and investments in the Proprietary Funds.

Investments for the City, as well as for its blended component units, are reported at fair value. The City's policy is generally to hold investments until maturity or until market values equal or exceed cost. The State Treasurer's Investment Pool operates in accordance with appropriate state laws and regulations. The reported value of the pool is the same as the fair value of the pool shares.

Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/due from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances."
All trade and property tax receivables are shown net of an allowance for uncollectibles.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-36-
Note 1: Summary of Significant Accounting Policies (Continued) Functional Classifications
Expenditures of the Governmental Funds are classified by function. Functional classifications are defined as follows:
 General Government includes legislative activities that have a primary objective of providing legal and policy guidelines for the City. Also included in this classification are those activities that provide management or support services across more than one functional area.
 Public Safety includes those activities that involve the protection of people and property.
 Community Development includes those activities which involve planning and economic development, as well as building and safety.
 Parks, Recreation and Senior Center include those activities that involve community park maintenance and recreational activities within the community.  Public Works includes those activities that involve the maintenance and improvement of City streets, roads and park department development and maintenance.
 Debt Service includes those activities that account for the principal and interest payment of long-term liabilities.
 Capital outlay includes those activities that account for the purchase of fixed and capital assets.

Inventories and Prepaid Items
All inventories are valued at cost using the first-in/first-out (FIFO) method. The General Fund inventory is accounted for on the consumption method. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-37-
Note 1: Summary of Significant Accounting Policies (Continued) Capital Assets
Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000 (amount not rounded). Such assets are recorded at historical cost or estimated historical cost if purchased or constructed.

Donated capital assets are recorded at acquisition value as of the date of acquisition.

Major outlays for capital assets and improvements are capitalized as projects are constructed. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized.

Property, plant and equipment of the primary government, as well as the component units, are depreciated using the straight-line method over the following estimated useful lives:

Assets Years
Buildings & improvements 25 - 50
Improvements other than buildings 10 - 50
Sewer lines and pump stations 35 - 50
Equipment 3 - 20
Vehicles 5 - 10
Infrastructure Years
Pavement 30 - 33
Curb and gutter 50

Page 217 of 390 ends

City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-38-
Note 1: Summary of Significant Accounting Policies (Continued) Deferred Outflows and Inflows of Resources
In addition to assets, the statements of net position and governmental fund balance sheets will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has two items which qualify for reporting in this category. They are the deferred pension and OPEB related items, which are reported in the government-wide statement of net position.

In addition to liabilities, the statements of net position and governmental fund balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time.

The City has three items which qualify for reporting in this category. One item, which arises only under a modified accrual basis of accounting, qualifies for reporting in this category. Unavailable revenue is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues that are recognized as an inflow of resources in the period that the amounts become available. The other items are deferred pension and OPEB related items reported in the government-wide statement of net position.

Compensated Absences
All permanent employees of the City are permitted to accumulate a maximum of two times their annual accrual rate (annual leave). Maximum sick leave accrual for miscellaneous employees is 800 hours and 1,400 for safety employees. Upon termination of employment, an employee is paid for accumulated annual leave but forfeits accumulated sick leave unless the employee has over five years of service. After five years of service, upon termination, the employee is paid half the accumulated sick leave. Compensated absences are paid out of the General Fund and are reported there as a liability when they have matured.

Accumulated vested sick pay and vacation pay for employees of the Proprietary Funds have been accrued. All accumulated compensated absences are accrued when incurred in the government-wide, proprietary and fiduciary fund financial statements.

Page 218 of 390 ends

City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-39-
Note 1: Summary of Significant Accounting Policies (Continued) Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Plan and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis.

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

GASB 68 requires that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date June 30, 2021
Measurement Date June 30, 2022
Measurement Period July 1, 2021 to June 30, 2022
Other Post-Employment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense have been determined by an independent actuary. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

GASB 75 requires that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date June 30, 2022
Measurement Date June 30, 2023
Measurement Period July 1, 2022 to June 30, 2023
Long-Term Obligations
In the government-wide financial statements and proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities or proprietary fund type statement of net position.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-40-
Note 1: Summary of Significant Accounting Policies (Continued) Fund Equity
In the fund financial statements, government funds report the following fund balance classification:

Nonspendable includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact.

Restricted includes amounts that are constrained on the use of resources by either (a) external creditors, granters, contributors, or laws of regulations of other governments or (b) by law through constitutional provisions or enabling legislation.

Committed includes amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the City Council. The formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a City Council resolution.

Assigned includes amounts that are constrained by the government's intent to be used for specific purposes but are neither restricted nor committed.

Resolution No. 2011-7039 authorizes the City Manager to assign amounts to a specific purpose.

Unassigned includes the residual amounts that have not been restricted, committed, or assigned to specific purposes.

An individual governmental fund could include nonspendable resources and amounts that are restricted or unrestricted (committed, assigned, or unassigned) or any combination of those classifications. Restricted amounts are to be considered spent when an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available and committed, assigned, and then unassigned amounts are considered to have been spent when an expenditure is incurred for purposes for which amounts in any of those unrestricted fund balance classifications can be used.

Net Position Flow Assumption
Sometimes the City will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted - net position and unrestricted – net position in the government-wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the City's policy to consider restricted - net position to have been depleted before unrestricted - net position is applied.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-41-
Note 1: Summary of Significant Accounting Policies (Continued) Fund Balance Flow Assumptions
Sometimes the City will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a flow assumption must be made about the order in which the resources are considered to be applied. It is the City's policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last.

Encumbrances
Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration. The City uses a modified encumbrance system in which only significant, select encumbrances are carried over at year-end. All other encumbrances lapse at year-end and are re-encumbered in the following fiscal year.

Property Tax Revenue
Property tax revenue is recognized in the fiscal year for which the taxes have been levied providing they become available. Available means then due, or past due and receivable within the current period and collected within the current period or expected to be collected soon enough thereafter (not to exceed 60 days) to be used to pay liabilities of the current period. The County of San Diego collects property taxes for the City. Tax liens attach annually on the first day in January preceding the fiscal year for which the taxes are levied. The tax levy covers the fiscal period July 1 to June 30. All secured personal property taxes and one-half of the taxes on real property are due November 1; the second installment is due February 1. All taxes are delinquent, if unpaid, on December 10 and April 10, respectively. Unsecured personal property taxes become due on the first of March each year and are delinquent, if unpaid, on August 31.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-42-
Note 1: Summary of Significant Accounting Policies (Continued) New Accounting Pronouncements
For the year ended June 30, 2023, the financial statements include the adoption of GASB Statement No. 96 – Subscription Based IT Arrangements. This Statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users. Under this Statement, a lessee is required to recognize a SBITA liability and an intangible right-to-use asset. For additional information, refer to the disclosures for capital assets and long-term liabilities.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-43-
II. DETAILED NOTES ON ALL FUNDS
Note 2: Cash and Investments
As of June 30, 2023, cash and investments were reported in the accompanying financial statements as follows:

Cash and investments:

Governmental activities
Cash and investments 29,835,377 $
Restricted cash and investments* 737,840
Business-Type activities 6,109,723
Fiduciary funds:

Custodial funds 452,487
Private Purpose Trust 588,741
Total Cash and Investments 37,724,168
Restricted cash with fiscal agents:

Fiduciary Funds:

Private Purpose Trust 1,532
Total cash and investments with fiscal agents 1,532
Total cash and investments 37,725,700 $
*Restricted cash and investments are related to the Pension Trust Fund being held with PARS to supplement the City’s Pension Plan created in 2023.

Cash and investments as of June 30, 2023 consists of the following:

Deposits with financial institutions 870,779 $
Cash on hand 1,000
Investments 36,853,921
Total cash and investments 37,725,700 $
The City follows the practice of pooling cash and investments of all funds except for funds required to be held by fiscal agents under the provisions of bond indentures.

Interest income earned on pooled cash and investments is allocated quarterly to the various funds based on monthly cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-44-
Note 2: Cash and Investments (Continued)
Deposits
At June 30, 2023, the carrying amount of the City's deposits was $870,779 and the bank balance was $1,059,350. The $188,571 difference represents outstanding checks and other reconciling items.

The California Government Code requires California banks and savings and loan associations to secure a city's deposits by pledging government securities with a value of 110% of a city's deposits. California law also allows financial institutions to secure city deposits by pledging first trust deed mortgage notes having a value of 150% of a city's total deposits. The City Treasurer may waive the collateral requirement for deposits that are fully insured up to $250,000 by the FDIC. The collateral for deposits in federal and state chartered banks is held in safekeeping by an authorized Agent of Depository recognized by the State of California Department of Banking. The collateral for deposits with savings and loan associations is generally held in safekeeping by the Federal Home Loan Bank in San Francisco, California as an Agent of Depository. These securities are physically held in an undivided pool for all California public agency depositors. Under Government Code Section 53655, the placement of securities by a bank or savings and loan association with an "Agent of Depository" has the effect of perfecting the security interest in the name of the local government agency. Accordingly, all collateral held by California Agents of Depository are considered to be held for, and in the name of, the local governmental agency.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-45-
Note 2: Cash and Investments (Continued)
Investments
Under provisions of the City's investment policy, and in accordance with the California Government Code, the following investments are authorized:
 U.S. Treasury Obligations (bills, notes and bonds)
 Bonds, notes or other evidence of indebtedness issued or guaranteed by agency of the United States government
 Certificates of Deposit or Time Deposits placed with commercial banks and savings and loans
 Medium-term Corporate Notes with an "A" or comparable ratings  Instruments of other California Government Entities with an "A" or comparable rating
 Banker's Acceptances
 Repurchase Agreements
 Local Agency Investment Fund Demand Deposits (State Pool)  County of San Diego Treasury (County Pool)
 California Arbitrage Management Program (Bond Pool)
 Passbook Savings Account Demand Deposits
 Money Market funds, which invest solely in securities issued by the U.S.

Treasury and agencies of the Federal government, and repurchase agreements collateralized with U.S. Treasury and Federal agency obligations  Overnight Sweep accounts as managed by the depository bank as part of the checking account packaged contracted by the City, provided the sweep account is collateralized in accordance with state law
 Supranational Securities
 Collateralized Mortgage Obligations (CMO)
Investments Authorized by Debt Agreements
The above investments do not address investment of debt proceeds held by a bond trustee. Investments of debt proceeds held by a bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City's investment policy.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-46-
Note 2: Cash and Investments (Continued)
Investments in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. LAIF is overseen by the Local Agency Investment Advisory Board, which consists of five members, in accordance with State statute.

The State Treasurer's Office audits the fund annually. The fair value of the position in the investment pool is the same as the value of the pool shares. Currently, LAIF does not have an investment rating. LAIF has a minimum $5,000 transaction amount in increments of $1,000 with a maximum of 15 transactions (combination of deposits and withdrawals) per month. LAIF requires a one-day prior notice for deposits and withdrawals of $10 million or more.

GASB Statement No. 31
The City adopted GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, as of July 1, 1997. GASB Statement No. 31 establishes fair value standards for investments in participating interest earning investment contracts, external investment pools, equity securities, option contracts, stock warrants and stock rights that have readily determinable fair values. Accordingly, the City reports its investments at fair value in the balance sheet.

All investment income, including changes in the fair value of investments, is recognized as revenue in the operating statement.

Disclosures Relating to Credit Risk
The City's investment policy limits investments in medium-term notes (MTN's) to those rated "A" or higher by Standard and Poor's (S&P) or by Moody's. As of June 30, 2023, the City's investment in Medium-Term Corporate Notes were all rated A or better by Moody's and S&P. In addition, the City's investments in Federal Home Loan Bank, Federal Farm Credit Bank, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation were rated "AA+" by Moody's and by S&P. All securities were investment trade and were legal under State law. Investments in U.S.

Treasuries are not considered to have credit risk; therefore, their credit quality is not disclosed.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-47-
Note 2: Cash and Investments (Continued)
The City also invests in LAIF which invests in various underlying securities, including the federal agency securities. While LAIF is not rated, the federal agency securities are, and these have been affected by this rating change as well.

As of June 30, 2023, the City's investments in external investment pools, money market mutual funds and investment agreements are unrated.

Disclosures Relating to Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. The City does not accept 150% of the secured public totals.

At June 30, 2023, the City deposits (bank balances) were insured by the Federal Depository Insurance Corporation up to $250,000 and the remaining balances were collateralized under California Law.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-48-
Note 2: Cash and Investments (Continued)
Concentration of Credit Risk
The City's investment policy imposes restrictions for certain types of investments with any one issuer to 20% of the total investment pool. With respect to concentration risk, as of June 30, 2023, the City has not invested more than 20% of its total investments in any one issuer. In addition, GASB 40 requires a separate disclosure if any single issuer comprises more than 5% of the total investment value. As of June 30, 2023, the City does not have investments in any single issuer that exceed 5% of the total investment value.

Investments guaranteed by the U.S. government and investments in mutual funds and external investment pools are excluded from this requirement.

Interest Rate Risk
The City's investment policy limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The City's investment policy states that the City's investment portfolio will not directly invest in securities maturing in more than five years. The City has elected to use the segmented time distribution method of disclosure for its interest rate risk.

As of June 30, 2023, the City had the following investments and original maturities:

Investment Maturities (in Years)
1 year 1 to 3 3 to 5
Investments or less years years Total
State Pooled Investment (LAIF) 13,945,864 $ - $ - $ 13,945,864 $ Federal Farm Credit Bank 993,093 84,717 - 1,077,810
Federal Home Loan Bank 97,625 1,253,223 - 1,350,848
Federal Home Loan Mortgage Corporation 1,213,818 - - 1,213,818 Federal National Mortgage Association 399,638 227,487 - 627,125 U.S. Treasury Notes 6,143,577 3,055,021 1,264,957 10,463,555 Medium Term Corporate Notes 1,107,650 3,084,213 827,189 5,019,052 Supranational 239,887 278,841 - 518,728
Money Market 174,460 - - 174,460
Collateralized Mortgage Obligations (CMO) - 807,000 917,821 1,724,821 Pension Section 115 Trust 737,840 - - 737,840
Total Investments 25,053,452 $ 8,790,502 $ 3,009,967 $ 36,853,921 $

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-49-
Note 2: Cash and Investments (Continued)
Fair Value Hierarchy
The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs.

The City has the following recurring fair value measurements as of June 30, 2023:

Fair Value Measurement Level
Cash & Investments Total 1 2 3
Federal Farm Credit Bank 1,077,810 $ - $ 1,077,810 $ - $ Federal Home Loan Bank 1,350,848 - 1,350,848 -
Federal Home Loan Mortgage Corporation 1,213,818 - 1,213,818 - Federal National Mortgage Association 627,125 - 627,125 - U.S. Treasury Notes 10,463,555 - 10,463,555 -
Medium Term Corporate Notes 5,019,052 - 5,019,052 -
Supranational 518,728 - 518,728 -
Collateralized Mortgage Obligations (CMO) 1,724,821 - 1,724,821 - Total 21,995,757 - $ 21,995,757 $ - $
Investments not subject to fair value
State Pooled Investment (LAIF) 13,945,864
Money Market 174,460
Pension Section 115 Trust 737,840
Total Investments 36,853,921 $
Local Agency Investment Funds classified in Level 2 of the fair value hierarchy are valued using specified fair market value factors. Federal Agency Securities and U.S.

Treasury Notes classified in Level 2 of the fair value hierarchy are valued using institutional bond quotes. Medium Term Corporate Notes classified in Level 2 of the fair value hierarchy are valued using institutional secondary market. Medium Term Corporate Notes can be defined as extended maturity commercial paper.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-50-
Note 3: Capital Assets
Capital asset activity for the year ended June 30, 2023, was as follows:

Beginning Ending
Balance Increases Decreases Balance
Governmental Activities:

Capital assets, not being depreciated:

Land 2,688,532 $ - $ - $ 2,688,532 $
Infrastructure right-of-way 12,406,327 - - 12,406,327
Construction-in-progress 825,364 3,124,938 (754,479) 3,195,823 Total Capital Assets,
Not Being Depreciated 15,920,223 3,124,938 (754,479) 18,290,682 Capital assets, being depreciated:

Structures and improvements 12,624,613 222,948 (409,363) 12,438,198 Equipment and vehicles 5,910,685 791,700 (46,200) 6,656,185 Infrastructure 50,175,094 263,422 - 50,438,516
Right-to-use equipment lease 146,143 1,222 - 147,365
Right-to-use subscriptions - 490,612 - 490,612
Total Capital Assets,
Being Depreciated 68,856,535 1,769,904 (455,563) 70,170,876 Less accumulated depreciation:

Structures and improvements (8,131,610) (643,709) 409,363 (8,365,956) Equipment and vehicles (4,870,579) (353,039) 46,200 (5,177,418) Infrastructure (14,977,716) (1,528,074) - (16,505,790)
Right-to-use equipment lease (31,316) (31,650) - (62,966) Right-to-use subscriptions - (304,043) - (304,043)
Total Accumulated Depreciation (28,011,221) (2,860,515) 455,563 (30,416,173) Total Capital Assets,
Being Depreciated, Net 40,845,314 (1,090,611) - 39,754,703 Governmental Activities
Capital Assets, Net 56,765,537 $ 2,034,327 $ (754,479) $ 58,045,385 $ Depreciation and amortization expense was charged to functions/programs of the primary government follows:

Governmental Activities:

General Government 404,666 $
Public Safety 97,340
Public Works 1,578,991
Parks, Recreation and Senior Center 312,731
Internal Service Funds 466,787
Total Governmental Activities 2,860,515 $

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-51-
Note 3: Capital Assets (Continued)
Beginning Ending
Balance Increases Decreases Balance
Business-Type Activities:

Capital assets, not being depreciated:

Construction-in-progress 426,861 $ 289,575 $ - $ 716,436 $ Total Capital Assets,
Not Being Depreciated 426,861 289,575 - 716,436
Capital assets, being depreciated:

Sewer lines and pump stations 14,609,328 177,291 (53,100) 14,733,519 Right-to-use subscriptions - 8,164 - 8,164
Total Capital Assets,
Being Depreciated 14,609,328 185,455 (53,100) 14,741,683 Less accumulated depreciation:

Sewer lines and pump stations (5,942,675) (332,760) 53,100 (6,222,335) Right-to-use subscriptions - (4,082) - (4,082)
Total Accumulated Depreciation (5,942,675) (336,842) 53,100 (6,226,417) Total Capital Assets,
Being Depreciated, Net 8,666,653 (151,387) - 8,515,266
Business-Type Activities
Capital Assets, Net 9,093,514 $ 138,188 $ - $ 9,231,702 $ Depreciation and amortization expense was charged to functions/programs of the primary government as follows:

Business-Type Activities:

Sewer 336,842 $
Note 4: Loans Receivable
Loans receivable offset by allowances consist of the following:

South Bay Community Services Loan – Hemlock Ave.

In April 2006, the Agency entered into a loan agreement for an amount not-to-exceed $540,425 with South Bay Community Services (SBCS) to loan low- and moderateincome housing set-aside funds to rehabilitate a seven-unit apartment complex located at 1360 Hemlock Avenue. This loan agreement was amended in October 2007, and increased the loan agreement by $89,183, creating a total not-to-exceed amount of $629,608. SBCC intends to rent all seven units to families earning 50% or below of the area median income, for a term of fifty-five years.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-52-
Note 4: Loans Receivable (Continued)
Beginning May 31, 2006, and continuing through 2061, simple interest accrues at 3% per annum on the principal balance. Monthly principal and interest payments are not required to be paid if the rental and occupancy conditions are met for the property. All principal and accrued interest on the Loan shall be due in full on (i) the date of any transfer not authorized by the Agency; (ii) the date of any Default; or (iii) the expiration of the Loan Term, whichever occurs first. However, upon expiration of the Loan Term, the Loan amount pursuant to the Note and accrued interest shall be forgiven provided all covenants and conditions were met over the Loan Term. Accrued interest at June 30, 2023, amounts to $310,241 and is offset by allowance. The outstanding balance at June 30, 2023, is $939,849, including accrued interest.

South Bay Community Services Loan - Calla Ave.

In April 2006, the Agency entered into a loan agreement for an amount not-to-exceed $491,271 with South Bay Community Services (SBCS) to loan low- and moderateincome housing set-aside funds to rehabilitate an eight-unit apartment complex located at 1260 Calla Avenue. SBCC intends to rent all seven units to families earning 50% or below of the area median income, for a term of fifty-five years. Beginning May 31, 2006, and continuing through 2061, simple interest accrues at 3% per annum on the principal balance. Monthly principal and interest payments are not required to be paid if the rental and occupancy conditions are met for the property. All principal and accrued interest on the Loan shall be due in full on (i) the date of any transfer not authorized by the Agency; (ii) the date of any Default; or (iii) the expiration of the Loan Term, whichever occurs first. However, upon expiration of the Loan Term, the Loan amount pursuant to the Note and accrued interest shall be forgiven provided all covenants and conditions were met over the Loan Term. Accrued interest at June 30, 2023, amounts to $246,618 and is offset by allowance. The loan has not been fully disbursed at June 30, 2023. The outstanding balance at June 30, 2023, is $733,073, including accrued interest.

Tax Increment Loan – 12th Street
In August 2008, the Agency entered into a loan agreement for an amount not-toexceed $1,945,000 with Beachwind Court, LP to loan low- and moderate-income housing set-aside funds to rehabilitate a fifteen-unit apartment complex located at 624 12th Street. As a condition of the loan, Beachwind Court, LP is to rent seven units to families earning 50% or below of the area median income and eight units to families earning 60% or below of the area median income, for a period of fifty-five years.

Beginning on the date of disbursement, simple interest accrues at 3% per annum on the principal balance. Monthly principal and interest payments are required to be paid within 30 days of completion of the annual audit equivalent to 50% of the residual receipts generated by the projects audited records. Accrued interest at June 30, 2023, amounts to $807,312 and is offset by allowance. The outstanding balance at June 30, 2023, is $2,752,312, including accrued interest.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-53-
Note 4: Loans Receivable (Continued)
American Legion Loan
The Imperial Beach Housing Authority and Hitzke Development Corporation entered into an Affordable Housing Agreement for the development of a mixed-use affordable housing development project and new American Legion Post. The Authority authorized financing for the Project for an amount not to exceed $4,100,000 to construct thirty (30) units of affordable housing consisting of twenty-nine (29) affordable residential rental units and one manager's unit. Monthly principal and interest payments are required to be paid within 30 days of completion of the annual audit equivalent to 50% of the residual receipts generated by the projects audited records. Accrued interest at June 30, 2023, amounts to $1,204,816 and is offset by allowance. The outstanding balance at June 30, 2023, is $5,304,816, including accrued interest.

Homeowner Loans
The Imperial Beach Housing Authority and the individual homeowners entered into Notes secured by a deed of trust agreement, whereas the Housing Authority sold the six units of property to homeowners, as it was understood the Authority may transfer these notes. There will be no interest except in the event of a default. The following shall each be deemed "Defaults" under these Notes: (i) an uncured Owner default under the terms of the Note, the Deed of Trust securing the Note and/or the Affordable Housing Resale Restrictions, Option to Designate Eligible Purchasers and Option to Purchase Upon Default ("Resale Restriction") affecting the Property's; (ii) a Transfer (as defined in the Resale Restriction) that is not approved by the Authority in writing; or (iii) any Owner default under the terms of the First Lien (as defined in the Resale Restriction). In the event of a Default, the principal shall become due and immediately payable together with interest, which shall be deemed to have accrued from the date of these Notes at the greater of the following amounts: a) The rate equal to the interest rate on the First Lien; or b) ten percent (10%) per annum. Accrued interest at June 30, 2023, amounts to $125,025 and is offset by allowance. The outstanding balance at June 30, 2023, is $958,525, including accrued interest.

Total loans receivable at June 30, 2023, amounts to $10,688,575, however, as the result of these loans being forgivable, the City has recorded an offsetting allowance for all loans for a net loans receivable balance of $0.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-54-
Note 5: lnterfund Receivable, Payable, and Transfers
The composition of interfund balances as of June 30, 2023 is as follows:

Due To/Due from Other Funds
Due to other funds
Non-Major
Governmental
Funds Funds Total
Due from Other Funds:

General Fund 122,764 $ 122,764 $
Total 122,764 $ 122,764 $
The General Fund is owed $122,764 from non-major governmental funds for temporary negative cash and investments.

Interfund Transfers
Transfer In
Non-major Internal
General Governmental Service
Transfers Out Fund Funds Funds Total
General Fund - $ 800,000 $ 809,011 $ 1,609,011 $
Miscellaneous Grants 18,803 - 25,167 43,970
Non-Major Governmental Funds 931,449 - - 931,449
Total 950,252 $ 800,000 $ 834,178 $ 2,584,430 $
Transfers into the General Fund totaling $931,449 were made from the Gas Tax Fund and Prop A Tax Fund to support street maintenance and transportation costs.

Transfer of $18,803 and $25,167 from the Miscellaneous Grants Fund was made to General Fund and Internal Service Funds, respectively. This was to reimburse the City for certain costs and services impacted by COVID-19 out of ARPA funds.

Transfer out of General Fund to Parks Maintenance CIP Fund in the total of $800,000 consisted of funding for various capital improvements projects.

Transfer of $809,011 out of General Fund was made to Internal Service Funds for support services.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-55-
Note 6: Deferred Outflows and Inflows of Resources
Pursuant to GASB Statement No. 63, “Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position,” and GASB Statement No. 65, “Items Previously Reported as Assets and Liabilities,” the City recognized deferred outflows of resources in the Statement of Net Position. These items are a consumption of net assets by the City that is applicable to a future reporting period.

Previous financial reporting standards do not include guidance for reporting those financial statement elements, which are distinct from assets and liabilities. The City has two items that are reportable in the Statement of Net Position. One relates to outflows from changes in the net pension liability (Note 10). Governmental activities and Business-Type Activities recorded deferred outflows of resources related to pension of $8,418,962 and $191,144, respectively. The other relates to the outflows from changes in net OPEB liability (Note 11). Governmental activities and BusinessType Activities recorded deferred outflows of resources related to OPEB of $933,448 and $21,193, respectively.

In addition, the City recognized deferred inflows of resources in the statement of Net Position and governmental fund balance sheet. These items are an acquisition of net assets by the City that is applicable to a future reporting period. Previous financial reporting standards do not include guidance for reporting those financial statement elements, which are distinct from assets and liabilities. The City has three items that are reportable on the Statement of Net Position. One relates to inflows from changes in the net pension liability (Note 10). Governmental activities and Business-Type Activities recorded deferred inflows of resources related to pension of $2,036,138 and $46,229, respectively. The other relates to the inflows from changes in net OPEB liability (Note 11). Governmental activities and Business-Type Activities recorded deferred inflows of resources related to OPEB of $906,438 and $20,580, respectively.

Note 7: Unearned Revenue
General Fund unearned revenue consists of $406,281 relating to prepayment of improvements by developers and $39,274 of miscellaneous items such as unearned donations grant/ grants and prepaid rent. In addition, the City entered into a development agreement with March and Ash Imperial Beach, Inc., dba March and Ash in December 2021. March and Ash paid the City $1,500,000 at the beginning of the agreement for the development and expansion of community programs and infrastructure. As of June 30, 2023 $589,386 remains of this unearned revenue.

Miscellaneous Grants Fund unearned revenue consists of $4,544,661 as of June 30, 2023 relating to the American Rescue Plan Act of 2021 (ARPA) and other miscellaneous grants.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-56-
Note 8: Compensated Absences
a. Compensated Absences - Governmental Activities
The City's policies relating to compensated absences are described in Note 1 of the Notes to Financial Statements. The following is a summary of changes in compensated absences of the City for the year ended June 30, 2023:

Beginning Ending Due Within
Balance Increases Decreases Balance One Year
Compensated
absences $ 782,606 1,072,291 $ 713,262 $ 1,141,635 $ 760,040 $ b. Compensated Absences - Business-Type Activities
The following is a summary of changes in Proprietary Fund compensated absences for the year ended June 30, 2023:

Beginning Ending Due Within
Balance Increases Decreases Balance One Year
Compensated
absences $ 55,221 39,021 $ 37,574 $ 56,668 $ 54,567 $
Note 9: Long-Term Liabilities
The following is a summary of changes in long-term liabilities of the City for the year ended June 30, 2023:

Beginning Ending Due Within
Balance Additions Deletions Balance One Year
Long-term liabilities:

Direct borrowings
Transnet Commercial Paper 798,362 $ 148,000 $ (296,942) $ 649,420 $ 423,182 $ Financed equipment - 509,858 - 509,858 95,439
Equipment lease liability 116,376 - (29,884) 86,492 32,073 Subscription lease liability - 419,744 (171,316) 248,428 185,203 Total long-term liabilities 914,738 $ 1,077,602 $ (498,142) $ 1,494,198 $ 735,897 $

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-57-
Note 9: Long-Term Liabilities (Continued)
Transnet Commercial Paper
On October 4, 2019, the City entered into a loan agreement with the San Diego County Regional Transportation Commission for a $1.3 million loan for the purposes of financing Imperial Boulevard enhancement project. The proceeds were funded when the City requested reimbursement for valid expenditures related to the project.

The City entered into a loan agreement with the San Diego County Regional Transportation Commission for another $600,000 in May 2020 and $148,000 in April 2023 for State Route 75 Signal Interconnection Project. The repayment of the debt is the first priority on the use of the City's annual Transnet revenues, which are received from SANDAG. As of June 30, 2023, the City has drawn a total on $1,603,000 on these loan agreements with $297,000 still available to draw for SR 75 Signal project.

The principal remaining on the loan is $649,420 payable through 2026.

The following is a schedule by years, of future debt service payments as of June 30:

Year Ending Direct borrowing
June 30, Principal
2024 423,182 $
2025 200,989
2026 25,249
Totals $ 649,420
Financed Equipment
On December 9, 2022, the City entered into a purchase option lease agreement with PNC Bank in order to acquire a pierce-arrow XT multipurpose response vehicle from South Coast Fire Equipment, Inc. The annual payments on the long-term financed equipment as of June 30, 2023 were as follows:

Year Ending
June 30, Principal Interest
2024 95,439 $ 21,270 $
2025 96,236 20,472
2026 100,990 15,718
2027 105,979 10,729
2028 111,214 5,494
Totals 509,858 $ 73,683 $
Direct borrowing

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-58-
Note 9: Long-Term Liabilities (Continued)
Lease Liability
On July 1, 2021, the City entered into a 60-month lease as Lessee for the use of Printers - Advanced Imaging Care (AIS). An initial lease liability was recorded in the amount of $146,143. As of June 30, 2023, the value of the lease liability is $86,492.

The City is required to make monthly fixed payments of $2,753. The lease has an interest rate of 1.340%. The value of the right to use asset as of June 30, 2023 of $147,365 with accumulated amortization of $62,966 is included with right-to-use equipment lease in capital asset note.

The following is a schedule by years, of future debt service payments as of June 30:

Year Ending Lease liability
June 30, Principal Interest
2024 32,073 $ 948 $
2025 32,505 522
2026 21,914 109
Totals $ 1,579 86,492 $
Subscription Liability
The City entered into various subscription agreements ranging from 14 through 84 months from various vendors. An Initial subscription liability was recorded in the amount of $419,744. As of June 30, 2023, the value of the subscription liability is $248,428. The City is required to make fixed payments ranging from $1,228 to $41,174. The subscription liabilities have an interest rate ranging from 1.7% - 2.72%.

The value of the subscription right-to-use asset as of June 30, 2023 is $498,776 with accumulated amortization of $308,125 is included with the right-to-use subscription in the capital asset note.

Year Ending Subscription liability
June 30, Principal Interest
2024 185,203 $ 4,683 $
2025 58,626 1,600
2026 1,103 125
2027 1,133 95
2028 1,164 64
2029 1,199 33
Totals $ 6,600 248,428 $

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-59-
Ill. OTHER INFORMATION
Note 10: Pensions
General Information about the Pension Plan
Plan Description
All qualified permanent and probationary employees are eligible to participate in the Public Agency Cost-Sharing Multiple-Employer Defined Benefit Pension Plan (Plan or PERF C) administered by the California Public Employees’ Retirement System (CalPERS.) The Plan consists of a miscellaneous pool and a safety pool (also referred to as “risk pools”), which are comprised of individual employer miscellaneous and safety rate plans, respectively. Plan assets may be used to pay benefits for any employer rate plan of the safety and miscellaneous pools. Accordingly, rate plans within the safety or miscellaneous pools are not separate plans under generally accepted accounting principles. Individual employers may sponsor more than one rate plan in the miscellaneous or safety risk pools. The City participates in 8 rate plans (three miscellaneous and five safety). Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on CalPERS’ website, at www.calpers.ca.gov.

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

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

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-60-
Note 10: Pensions (Continued)
The Plan’s provisions and benefits in effect at June 30, 2023 are summarized as follows:

Miscellaneous Plan
Classic Second Tier PEPRA
On or after
Prior to March 9, 2012 but prior On or after
Hire date March 9, 2012 to January 1, 2013 January 1, 2013 Benefit formula 2.7% @ 55 2.0% @ 60 2.0% @ 62
Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 and up 50 and up 52 and up
Monthly benefits, as a % of eligible compensation 2.0% to 2.7% 1.092% to 2.418% 1.0% to 2.5% Required employer contribution rates 14.030% 8.630% 7.470% Safety Plan
Other Safety
Lifeguard Lifeguard Second Tier PEPRA
On or after
Prior to March 9, 2012 but prior On or after
Hire date March 9, 2012 to January 1, 2013 January 1, 2013 Benefit formula 2.0% @ 50 2.0% @ 50 2.7% @ 57
Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 and up 50 and up 50 and up
Monthly benefits, as a % of eligible compensation 2.0% to 2.7% 2.0% to 2.7% 2.0% to 2.7% Required employer contribution rates 19.270% 18.170% 12.780% Fire Fire PEPRA
Prior to On or after
Hire date March 9, 2012 January 1, 2013
Benefit formula 3.0% @ 50 2.7% @ 57
Benefit vesting schedule 5 years service 5 years service Benefit payments monthly for life monthly for life
Retirement age 50 and up 50 and up
Monthly benefits, as a % of eligible compensation 3.00% 2.0% to 2.7% Required employer contribution rates 23.750% 12.780%

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-61-
Note 10: Pensions (Continued)
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements are classified as plan member contributions. Employer Contributions to the Plan for the fiscal year ended June 30, 2023 were $1,697,620.

The actual employer payments of $1,498,066 made to CalPERS by the City during the measurement period ended June 30, 2022 differed from the City’s proportionate share of the employer’s contributions of $3,039,196 by $1,541,130, which is being amortized over the expected average remaining service lifetime in the Public Agency Cost-Sharing Multiple Employer Plan.

Net Pension Liability
The City’s net pension liability for the Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of the Plan is measured as of June 30, 2022, using an annual actuarial valuation as of June 30, 2021 rolled forward to June 30, 2022 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is as follows.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
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Note 10: Pensions (Continued)
Actuarial Methods and Assumptions Used to Determine Total Pension Liability Valuation Date June 30, 2021
Measurement Date June 30, 2022
Actuarial Cost Method Entry Age Actuarial Cost Method
Asset Valuation Method Fair Value of Assets
Actuarial Assumptions:

Discount Rate 6.90%
Inflation 2.30%
Salary Increases Varies by Entry Age and Service
Mortality Rate Table (1) Derived using CalPERS' membership data for all funds
Post Retirement Benefit
Increase
The lesser of contract COLA or 2.30% until
Purchasing Power Protection Allowance floor on
purchasing power applies, 2.30% thereafter.
(1) The mortality table used was developed based on CalPERS’ specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study for the period from 2001 to 2019. Pre-retirement and Post-retirement mortality rates include generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from November 2021 that can be found on the CalPERS website.

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

In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations. Using historical returns of all of the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-63-
Note 10: Pensions (Continued)
The expected real rates of return by asset class are as follows:

Asset Class
Assumed Asset
Allocation Real Return1 2
Global Equity - cap weighted 30.0% 4.54%
Global Equity - non-cap-weighted 12.0% 3.84%
Private Equity 13.0% 7.28%
Treasury 5.0% 0.27%
Mortgage-backed securities 5.0% 0.50%
Investment grade corporation 10.0% 1.56%
High yield 5.0% 2.27%
Emerging market debt 5.0% 2.48%
Private debt 5.0% 3.21%
Real assets 15.0% 3.21%
Leverage (5.00%) (0.59%)
2 Figures are based on the 2021 Assets Liability Management Study. 1 An expected inflation of 2.3% used for this period
Change of Assumptions
Effective with the June 30, 2021, valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the longterm expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-64-
Note 10: Pensions (Continued)
Discount Rate
The discount rate used to measure the total pension liability for PERF C was 6.90%.

The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Subsequent Events
On July 12, 2021, CalPERS reported a preliminary 21.3% net return on investments for fiscal year 2020-21. Based on the thresholds specified in CalPERS Funding Risk Mitigation policy, the excess return of 14.3% prescribes a reduction in investment volatility that corresponds to a reduction in the discount rate used for funding purposes of 0.20%, from 7.00% to 6.80%. Since CalPERS was in the final stages of the fouryear Asset Liability Management (ALM) cycle, the board elected to defer any changes to the asset allocation until the ALM process concluded, and the board could make its final decision on the asset allocation in November 2021.

On November 17, 2021, the board adopted a new strategic asset allocation. The new asset allocation along with the new capital market assumptions, economic assumptions and administrative expense assumption support a discount rate of

6.90% (net of investment expense but without a reduction for administrative expense) for financial reporting purposes. This includes a reduction in the price inflation assumption from 2.50% to 2.30% as recommended in the November 2021 CalPERS Experience Study and Review of Actuarial Assumptions. This study also recommended modifications to retirement rates, termination rates, mortality rates and rates of salary increases that were adopted by the board. These new assumptions will be reflected in the GASB 68 accounting valuation reports for the June 30, 2022, measurement date.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-65-
Note 10: Pensions (Continued)
Pension Plan Fiduciary Net Position
Information about the pension plan’s assets, deferred outflows of resources, liabilities, deferred inflows of resources, and fiduciary net position are presented in CalPERS’ audited financial statements, which are publicly available reports that can be obtained at CalPERS’ website, at www.calpers.ca.gov. The plan’s fiduciary net position and additions to/deductions from the plan’s fiduciary net position have been determined on the same basis used by the pension plan, which is the economic resources measurement focus and the accrual basis of accounting. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan.

Investments are reported at fair value.

Proportionate Share of Net Pension Liability
The following table shows the Plan’s proportionate share of the net pension liability over the measurement period.

Plan Total
Pension Liability
Plan Fiduciary
Net Position
Plan Net Pension
Liability
Balance at: 6/30/2021 (VD) 61,282,085 $ 59,004,413 $ 2,277,672 $ Balance at: 6/30/2022 (MD) 64,882,223 52,743,474 12,138,749 Net Changes during 2021-22 3,600,138 $ (6,260,939) $ 9,861,077 $ Increase (Decrease)
Valuation Date (VD), Measurement Date (MD).

The City’s proportion of the net pension liability was determined by CalPERS using the output from the Actuarial Valuation System and the fiduciary net position, as provided in the CalPERS Public Agency Cost-Sharing Allocation Methodology Report, which is a publicly available report that can be obtained at CalPERS’ website, at www.calpers.ca.gov. The City’s proportionate share of the net pension liability for the total Plan as of June 30, 2022 and 2023 was as follows:

Proportionate Share - June 30, 2022 0.04211%
Proportionate Share - June 30, 2023 0.10509%
Change - Increase (Decrease) 0.06298%

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-66-
Note 10: Pensions (Continued)
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate
The following presents the City’s proportionate share of the net pension liability of the total Plan as of the measurement date, calculated using the discount rate of 6.9 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (5.9 percent) or 1 percentage-point higher (7.9 percent) than the current rate:

Discount Rate Current Discount Rate Discount Rate
- 1% (5.90%) (6.90%) + 1% (7.90%)
Net Pension Liability / (Asset) 21,028,824 $ 12,138,749 $ (4,843,738) $ Amortization of Deferred Outflows and Deferred Inflows of Resources Under GASB 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time.

The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense.

The amortization period differs depending on the source of the gain or loss:

Net difference between projected
and actual earnings on pension
plan investments
5-year straight-line amortization
All other amounts Straight-line amortization over the expected average remaining service lives (EARSL) of all
members that are provided with benefits (active,
inactive and retired) as of the beginning of the
measurement period
The expected average remaining service lifetime (EARSL) is calculated by dividing the total future service years by the total number of plan participants (active, inactive, and retired) in the Public Agency Cost-Sharing Multiple-Employer Plan (PERF C).

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-67-
Note 10: Pensions (Continued)
The EARSL for PERF C for the measurement period ending June 30, 2022 is 3.7 years, which was obtained by dividing the total service years of 574,665 (the sum of remaining service lifetimes of the active employees) by 153,587 (the total number of participants: active, inactive, and retired) in PERF C. Inactive employees and retirees have remaining service lifetimes equal to 0. Total future service is based on the members’ probability of decrementing due to an event other than receiving a cash refund.

Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions
As of the start of the measurement period (July 1, 2021), the City’s net pension liability was $2,277,672. For the measurement period ending June 30, 2022 (the measurement date), the City incurred a pension expense of $5,489,559.

As of June 30, 2023, the City has deferred outflows and deferred inflows of resources related to pensions as follows:

Deferred Outflows Deferred Inflows
of Resources of Resources
Changes of assumptions 1,235,505 $ - $
Difference between expected and
actual experience 352,371 (150,059)
Difference between projected and
actual investment earnings 2,094,734 -
Differences between employer's
Contributions and Proportionate
share of contributions - (1,932,308)
Change in employer's proportion 3,229,876 -
Pension contributions subsequent
to measurement date 1,697,620 -
Total 8,610,106 $ (2,082,367) $

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-68-
Note 10: Pensions (Continued)
The amounts above are net of outflows and inflows recognized in the 2021-22 measurement period expense. Contributions subsequent to the measurement date of $1,697,620 reported with deferred outflows of resources will be recognized as a reduction of the net pension liability in the upcoming fiscal year. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in future pension expense as follows:

Year Ended Deferred Outflows/
June 30, (Inflows) of Resources
2024 1,407,951 $
2025 1,335,948
2026 806,315
2027 1,279,905
2028 -
Thereafter -
Payable to the Pension Plan
At June 30, 2023, the City reported a payable of $0 for the outstanding amount of contributions to the pension plan required for the year then ended.

Allocation of the Proportional Share of the Net Pension Liability The allocation of the proportionate share of the net pension liability, pension expense, deferred outflows and inflows of resources are allocated as follows:

Percentage Allocation
Governmental Activities 97.78%
Business-Type Activities 2.22%
The governmental activities portion is allocated to the general fund departments as follows:

Percentage Allocation
General Government 18.18%
Public Safety 65.46%
Public Works 9.63%
Parks, Recreation and Senior Center 6.73%

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-69-
Note 11: Other Post-Employment Benefits
Plan Description
The City provides other post-employment benefits (OPEB) through a single employer defined benefit healthcare plan by contributing up to a maximum of $149 per month for of all premiums charged under the health benefit plan for all eligible employees and qualified family members. These benefits are provided per contract between the City and the employee associations. A separate financial report is not available for the plan. This plan is not administered through a qualifying trust.

Employees Covered
As of the June 30, 2023 measurement date, the following current and former employees were covered by the benefit terms under the Plan:

Inactive employees benefit payments 82
Inactive employees entitled to but not yet receiving benefit payments - Participating active employees 16
Total 98
Funding Policy
The contribution requirements of plan members and the City are established and may be amended by the City, City Council, and/or employee associations. Currently, contributions are not required from plan members. For the fiscal year ended June 30, 2023, the City’s contributions were $300,000 in payments to the PARS trust, a contribution of $29,520 was made for the purpose of the contribution was to pay current year premiums for retirees, and the estimated implied subsidy of $36,183 resulting in a total of $365,703. In fiscal year 2023, the City established an irrevocable trust with the Public Agency Retirement Services (PARS).

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-70-
Note 11: Other Post-Employment Benefits (Continued)
Net OPEB Liability
The City's net OPEB liability was measured as of June 30, 2023 and the total OPEB liability was determined by an actuarial valuation dated June 30, 2022 based on the following actuarial methods and assumptions:

Actuarial Cost Method Entry Age Normal
Actuarial Assumptions
Discount Rate 5.95%
Inflation 2.50%
Salary Increases 2.75%
Investment Rate of Return 5.95%
Mortality Rate 2017 CalPERS Mortality Rates
Pre-Retirement Turnover 2017 CalPERS Rates
Healthcare Trend Rate 4.00%
Discount Rate
The discount rate was 5.95% per year net of expenses. This is based on the Bond Buyer 20 Bond Index. The discount rate changed from 3.54% to 5.95%. This is due to the current valuation report incorporating the OPEB trust fund and the expected rate of return on investments in the fund as the new valuation rate. The expected rate of return for the PARS Balanced portfolio is 5.95%, which is significantly higher than the 3.54% municipal bond index that was used in the prior year valuation.” Change of Assumptions
No changes in assumptions for the measurement date as of June 30, 2023.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-71-
Note 11: Other Post-Employment Benefits (Continued)
Changes in the Net OPEB Liability
The changes in the net OPEB liability for the Plan are as follows:

Total OPEB Fiduciary Net OPEB
Liability Net Position Liability
Balance at June 30, 2022 2,025,106 $ - $ 2,025,106 $
(Valuation Date: June 30, 2022)
Changes recognized for the
measurement period:

Service cost 132,985 - 132,985
Interest 72,880 16,932 55,948
Employer Contributions - 365,703 (365,703)
Changes of assumptions (546,410) - (546,410)
Benefit payments (65,703) (65,703) -
Administrative Expenses - (715) 715
Net changes (406,248) 316,217 (722,465)
Balance at June 30, 2023 1,618,858 $ 316,217 $ 1,302,641 $ Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following presents the total OPEB liability of the City if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2023:

Current
1% Decrease Discount Rate 1% Increase
Net OPEB Liability 1,513,437 $ 1,302,641 $ 1,158,802 $

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-72-
Note 11: Other Post-Employment Benefits (Continued)
Sensitivity of the total OPEB Liability to Changes in the Health Care Cost Trend Rates
The following presents the total OPEB liability of the City if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2023:

Current Healthcare
1% Decrease Cost Trend Rates 1% Increase
Net OPEB Liability 894,640 $ 1,302,641 $ 1,550,325 $
OPEB Expense and Deferred Outflows and Deferred Inflows of Resources Related to OPEB
As of the start of the measurement period (July 1, 2022), the City’s net OPEB liability was $2,025,106. For the fiscal year ended June 30, 2023, the City recognized OPEB expense of $230,330. As of fiscal year ended June 30, 2023, the City reported deferred outflows of resources related to OPEB from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
Changes between expected and
actual experience 116,021 $ 75,952 $
Changes of assumptions 838,620 837,521
13,545 -
Total 954,641 $ 927,018 $
Differences between projected and
actual return on assets
Amounts reported as deferred inflows of resources related to OPEB will be recognized as expense as follows:

Year Ended Deferred Outflows/
June 30 (Inflows) of Resources
2024 23,750 $
2025 23,750
2026 23,750
2027 23,753
2028 27,137
Thereafter (94,517)

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-73-
Note 12: Self-Insurance Program
General Liability
Since July 1, 2015, the City of Imperial Beach has been a member of Public Risk Innovation and Management (PRISM), an insurance risk sharing pool. The City's selfinsurance retention is $100,000 per occurrence.

In addition to its coverage through PRISM, effective July 1, 1993, the San Diego Unified Port District agreed to fund an Escrow Reserve Account in the amount of $300,000 for the purpose of reimbursing the City for any claim costs not covered by the insurance risk sharing pool, provided the claim is directly related to services provided to the District and arising from incidents actually occurring on tidelands and/or lands leased by the City to the District.

Workers Compensation
The City is a member of Public Risk Innovation and Management (PRISM). The City is self-insured for the first $125,000 of workers' compensation claims. Claims between $125,000 and $5,000,000 are covered through the City's risk sharing membership in PRISM. Claims between $5,000,000 and $50,000,000 are covered by excess purchased insurance.

The City established a Self-Insurance Fund (an internal service fund) to account for and finance its uninsured risk of loss when it became a member of SANDPIPA, PEPIP and PRISM for liability, property casualty and workers' compensation coverage. All funds of the City participate in the program and make payments to the Self-Insurance Fund based on estimates of the amounts needed to pay prior and current year claims and to establish a reserve for catastrophe losses. The estimated claims liability of $828,000 reported at June 30, 2023, is based on the requirements of Governmental Accounting Standards Board Statement 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. The above amount includes an estimate for incurred but not reported claims.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-74-
Note 12: Self-Insurance Program (Continued)
During the last three fiscal years none of the above programs of protection have had settlements or judgments that exceeded pooled or insured coverage. There have been no significant reductions in pooled or insured liability coverage from coverage in the prior year.

Changes in the reported liability for the last three fiscal years are as follows:
2020-2021 2021-2022 2022-2023
Claims outstanding at beginning of year 963,000 $ 792,000 $ 700,000 $ Claims and changes in estimates 41,602 (40,582) 141,247 Claim payments (212,602) (51,418) (13,247)
Claims outstanding at end of year 792,000 $ 700,000 $ 828,000 $ Note 13: Commitments and Contingencies
THE AFFORDABLE HOUSING COALITION OF SAN DIEGO V. TRACY SASNOVAL, ET AL-. the San Diego County Affordable Housing Coalition of San Diego County (“Petitioner”) filed a petition for a writ of mandate seeking to have unmet affordable housing development obligations, including the projects and /or funds need to meet them, as well as repayment of all deferrals and loans owed to the Low and Moderate Income Housing Fund (“Housing Fund”), to be recognized as “enforceable obligations” under the Dissolution Laws and placed on the Successor Agency’s Recognized Obligation Payment Schedule (“ROPS”) for future payment with the Redevelopment Property Tax Trust Funds (“RPTTF”) (See Health and Safety Code §§34172(c) and (d); 34182(c)(2); 34183). The City is named in the action as a real party in interest. The Successor Agency is named as a respondent and defendant.

On September 27, 2016, Judge Michael Kenny ruled that the Affordable Housing obligations are not enforceable obligations and denied the Petition for Writ of Mandate. The ruling was appealed by Petitioner. After oral argument, on July 20,2020, the Third Appellate District ruled that repayment of all deferrals and loans owed to the Housing Fund were “enforceable obligations” under the Dissolution Laws but denied the remaining claims of Petitioner. On remand to the Trial Court, Judge Shelleyanne W.L. Chang ordered that all respondents file “returns” identifying the status of repayment of deferrals and loans owed to the Housing Fund. The City and the Successor Agency reported that it had no such deferrals or loans. Petitioner never formally challenged the “returns” with a Motion nor did the Petitioner claim that the “return” of Imperial Beach was incorrect. It appears that the case on the claims is over, although there is no statutory provision which limits the time for a challenge to the “returns” by Petitioner.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-75-
Note 13: Commitments and Contingencies (Continued)
While it is not anticipated that such a challenge by Petitioner will be filed on Imperial Beach’s “return”, there is no certainty that such a challenge will not occur. Petitioner, however, did file a Motion for Attorneys’ Fees, but did not name the City or the Successor Agency as party against whom a demand for attorneys’ fees was made.

If Petitioner does not dismiss the City and Successor Agency from the action in the near future, a Motion to the Court of Appeal will be filed requesting a Dismissal Order.

As there were no claims for attorneys’ fees against the City or the Successor Agency, the attorneys’ fees claim appears to be concluded as to the City and Successor Agency in this matter.

Note 14: Successor Agency Trust for Assets of the Former Redevelopment Agency On December 29, 2011, the California Supreme Court upheld Assembly Bill 1 X 26 ("the Bill ") that provides for the dissolution of all redevelopment agencies in the State of California. This action impacted the reporting entity of the City of Imperial Beach that previously had reported a redevelopment agency within the reporting entity of the City as a blended component unit.

The Bill provides that upon dissolution of a redevelopment agency, either the city or another unit of local government will agree to serve as the "successor agency" to hold the assets until they are distributed to other units of state and local government. On November 1, 2011, the City Council elected to become the Successor Agency for the former redevelopment agency in accordance with the Bill.

In accordance with the timeline set forth in the Bill (as modified by the California Supreme Court on December 29, 2011,) all redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as of February 1, 2012. After the date of dissolution, the assets and activities of the dissolved redevelopment agency are reported in a fiduciary fund (private-purpose trust fund) in the financial statements of the City.
a. Cash and Investments
Cash and investments reported in the accompanying financial statements consisted of the following:

Cash and investments pooled with the City 588,741 $
Cash and investments with fiscal agent 1,532
$ 590,273

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-76-
Note 14: Successor Agency Trust for Assets of the Former Redevelopment Agency (Continued)
b. Long-Term Debt
A description of long-term debt outstanding (excluding defeased debt) of the Successor Agency as of June 30, 2023, follows:

Beginning Ending Due Within
Balance Additions Deletions Balance One Year
Public Offerings:
2020 Tax Allocation Bonds 13,780,000 $ - $ - $ 13,780,000 $ - $ 2020 Tax Allocation Bonds
Premium 2,474,889 - (140,009) 2,334,880 -
2022 Tax Allocation Bonds 11,800,000 - (885,000) 10,915,000 910,000 2022 Tax Allocation Bonds
Premium 1,497,128 - (140,223) 1,356,905 -
Total Public Offerings 29,552,017 $ - $ (1,165,232) $ 28,386,785 $ 910,000 $ Tax Allocation Bonds, 2020
In March 2020, the Imperial Beach Public Financing Authority issued $14,490,000 Tax Allocation Bonds, 2020. The proceeds of the bonds were to defease the 2010 Tax Allocation Bonds. Interest on the bonds is payable semiannually and principal payments are due annually. Debt service payments occur on June 1, 2021, and then from June 1, 2034, through June 1, 2040.

Interest rates on the bonds is 4% per annum. The balance at June 30, 2023, excluding unamortized original issue premium of $2,334,880 is $13,780,000.

The outstanding 2020 bonds contain a provision that upon the occurrence and during the continuance of any event of default the timing of the principal of the bonds, together with the accrued interest thereon, become due and payable immediately.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-77-
Note 14: Successor Agency Trust for Assets of the Former Redevelopment Agency (Continued)
The following is a schedule by years, of future debt service payments as of June 30:

Year Ending 2020 Tax Allocation Refunding Bonds
June 30, Principal Interest
2024 - $ 551,200 $
2025 - 551,200
2026 - 551,200
2027 - 551,200
2028 - 551,200
2029-2033 - 2,756,000
2034-2038 9,105,000 2,180,000
2039-2040 4,675,000 282,400
Totals $ 7,974,400 13,780,000 $
Tax Allocation Bonds, 2022
In March 2022, the Imperial Beach Public Financing Authority issued $11,800,000 Tax Allocation Bonds, 2022. The proceeds of the bonds were to defease the 2013 Tax Allocation Bonds. Interest on the bonds is payable semiannually and principal payments are due annually. Debt service payments occur from June 1, 2022, through June 1, 2033. Interest rates on the bonds is 4% per annum. The balance at June 30, 2023, excluding unamortized original issue premium of $1,356,905 is $10,915,000.

The refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $6,610. This difference is being amortized on a straight-line basis as interest expense (interest on debt). The City refunded the Series 2013 Tax Allocation Bonds to reduce its total debt service payments by $2,144,313 and to obtain an economic gain (difference between the present values of the debt service payments on the old and new debt, less any prior funds on hand) of $1,783,298.

The outstanding 2022 bonds contain a provision that the principal due on the Bonds is subject to acceleration upon the occurrence of an event of default. As a practical matter in the event of a payment default by the Successor Agency, it is unlikely the Successor Agency would have the financial resources to meet accelerated obligations. No real or personal property in the project area is pledged to secure the bonds, and it is not anticipated that the Successor Agency will have available moneys sufficient to redeem all of the Bonds in the event of a default.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-78-
Note 14: Successor Agency Trust for Assets of the Former Redevelopment Agency (Continued)
The following is a schedule by years, of future debt service payments as of June 30:

Year Ending 2022 Tax Allocation Refunding Bonds
June 30, Principal Interest
2024 910,000 $ 436,600 $
2025 955,000 400,200
2026 985,000 362,000
2027 1,015,000 322,600
2028 1,065,000 282,000
2029-2033 5,985,000 736,600
Totals $ 2,540,000 10,915,000 $
Pledged Revenue
The City pledged, as security for bonds issued, either directly or through the Financing Authority, a portion of tax increment revenue (including Low- and Moderate-Income Housing set-aside and pass-through allocations) that it receives. The bonds issued were to provide financing for various capital projects, accomplish Low- and Moderate-Income Housing projects and to defease previously issued bonds. Assembly Bill 1 X 26 provided that upon dissolution of the Redevelopment Agency, property taxes allocated to redevelopment agencies no longer are deemed increment but rather property tax revenues and will be allocated first to successor agencies to make payments on the indebtedness incurred by the dissolved redevelopment agency. Total principal and interest remaining on the debt is $35,209,400 with annual debt service requirements as indicated above. For the current year, the total property tax revenue recognized by the Successor Agency for the payment of indebtedness incurred by the dissolved redevelopment agency was $1,634,548 and the debt service obligation on the bonds was $885,000. c. Insurance
The Successor Agency is covered under the City of Imperial Beach's insurance policies. Therefore, the limitation and self-insured retentions applicable to the City also apply to the Successor Agency. Additional information as to coverage and self-insured retentions can be found in Note 12.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-79-
Note 15: 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 2023, the City did not have any components of net position restricted by enabling legislation.

The restricted component of net position at June 30, 2023, for governmental activities is as follows:

Restricted for Community Development Projects:

Housing Authority 837,098 $
Total
Restricted for Public Works:

Gas Tax 4,222 $
Prop A Tax 141,494
RMRA 1,225,470
Capital Projects 545,898
Total 1,917,084
Restricted for Public Safety:

Supplemental Law Enforcement 1,000
Restricted for Parks, Recreation and Senior Center:

Miscellaneous Grants 167,936
Parks Maintenance 1,096,866
Total 1,264,802
Restricted for Pension section 115 trust:

General 737,840
Total Restricted Component of Net Position -
Government Activities 4,757,824 $

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City of Imperial Beach
Notes to Financial Statements
June 30, 2023
-80-
Note 16: 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, 2023, the City abated TOT taxes totaling $279,004 under this agreement.

Note 17: Subsequent Event
On October 24, 2023, the City reached a settlement agreement in an ongoing litigation case. A settlement agreement was signed in the amount of $341,606.

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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
-81-
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%
6/30/2022 0.10509% 12,138,749 6,625,249 183.22% 81.29%
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 nine years are presented.

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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
-82-
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%
6/30/2023 1,697,620 (1,697,620) - 7,370,969 23.03%
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: Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial 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 ramp-up 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 with 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.

Changes 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, 2021 valuation date, unless the liability impact is deemed to be material to the Public Agency Pool.

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City of Imperial Beach
Schedule of Changes in the Net OPEB Liability and Related Ratios As of June 30, 2023 for the Last Ten Fiscal Years (1)
See Notes to Required Supplementary Information
-83-
Measurement Date (June 30) 2022 2021 2020 2019 2018 2017 Report Date (June 30) 2023 2022 2021 2020 2019 2018
Total OPEB Liability
Service cost 132,985 $ 141,432 $ 136,440 $ 42,506 $ 37,920 $ 36,905 $ Interest on TOL / Return on FNP 72,880 52,597 51,105 31,887 28,462 28,779 Differences between expected and
actual experience - (90,018) - 170,621 - -
Changes in assumptions (546,410) (400,373) 13,465 1,180,019 41,088 - Benefit payments (65,703) (85,701) (97,152) (23,042) (770) (20,915) Net change in total OPEB liability (382,063) (406,248) 103,858 1,401,991 106,700 44,769 Total OPEB liability - beginning 2,407,169 2,025,106 2,303,311 901,320 794,620 749,851 Total OPEB liability - ending (a) $ 2,025,106 1,618,858 $ 2,407,169 $ 2,303,311 $ 901,320 $ 794,620 $ Plan Fiduciary Net Position
Contribution - employer 365,703 - - - - -
Interest on TOL / Return on FNP 16,932 - - - - -
Benefit payments (65,703) - - - - -
Administrative expense (715) - - - - -
Net change in Plan Fiduciary Net Position - 316,217 - - - - Plan Fiduciary Net Position - beginning - - - - - -
Plan Fiduciary Net Position - ending (b) - 316,217 - - - - Net OPEB Liability - ending (a) - (b) $ 2,025,106 1,302,641 $ 2,407,169 $ 2,303,311 $ 901,320 $ 794,620 $ Plan fiduciary net position as a percentage
of the total OPEB liability 19.53% 0.00% 0.00% 0.00% 0.00% 0.00% Covered-employee payroll 7,502,746 $ 6,625,249 $ 6,059,385 $ 5,878,059 $ 5,484,385 $ 5,388,899 $ Net OPEB liability as a percentage of
covered-employee payroll 17.36% 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. (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.

Prior to fiscal year 2023, the City did not accumulate assets in a qualifying trust for future OPEB benefits.

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City of Imperial Beach
Schedule of Plan Contributions
As of June 30, 2023 for the Last Ten Fiscal Years (1)
See Notes to Required Supplementary Information
-84-
Fiscal Year Ended June 30, 2023
Contractually Determined Contributions (CDC) $ 29,520
Contributions in relation to the CDC (329,520)
Contribution deficiency/(excess) $ (300,000)
Covered-employee payroll $ 7,502,746
Contribution as a percentage of covered-employee payroll 4.39% Notes to schedule:

Valuation date used 6/30/2022
Actuarial cost method Entry Age Normal
Amortization method Level % of pay
Amortization period 11.7 years
Asset valuation method Fair Value
Inflation 2.50%
Healthcare cost trend rates 4.00%
Salary increases 2.75%
Investment rate of return 5.95%
Retirement age From 50 to 62
Mortality 2017 CalPERS Study
1 Historical information is required only for measurement periods for which GASB 75 is applicable.

Future years' information will be displayed up to 10 years as information becomes available.

Prior to fiscal year 2023, the City did not accumulate assets in a qualifying trust for future OPEB benefits, and as such, only information for fiscal year ended June 30, 2023 is presented.

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

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City of Imperial Beach
Budgetary Comparison Schedule by Department
General Fund
Year Ended June 30, 2023
See Notes to Required Supplementary Information
-85-
Budget Amounts Actual Variance with
Original Final Amounts Final Budget
Budgetary Fund Balance, July 1 15,934,369 $ 15,934,369 $ 15,934,369 $ - $ Resources (Inflows):

Taxes 15,136,400 18,190,400 19,558,463 1,368,063
Licenses and permits 665,095 724,695 745,780 21,085
Intergovernmental 117,000 312,884 426,004 113,120
Charges for services 6,643,310 6,373,310 6,419,685 46,375 Use of money and property 556,800 486,800 620,607 133,807 Fines and forfeitures 233,410 343,410 404,873 61,463
Miscellaneous 164,080 974,080 990,954 16,874
Lease acquisition - - 16,451 16,451
Transfers in 1,643,250 1,002,850 950,252 (52,598)
Amounts Available for Appropriations 41,093,714 44,342,798 46,067,438 1,724,640 Charges to Appropriation (Outflow):

General government
Mayor/City Council 229,000 224,000 219,170 4,830
City Clerk's Office 571,375 574,448 572,543 1,905
City Manager 904,845 1,098,795 1,095,474 3,321
Human Resources 318,700 332,000 336,754 (4,754)
Administrative Services 873,500 1,105,525 1,101,046 4,479 City Attorney 182,000 182,000 167,569 14,431
Community Development 690,300 659,450 597,438 62,012
Facilities Maintenance 456,200 505,617 494,965 10,652
Non-Departmental 2,101,130 2,207,530 2,466,544 (259,014) Public safety
Law Enforcement Contract 8,428,900 8,208,900 8,193,552 15,348 Fire Protection 3,028,970 3,028,970 3,029,027 (57)
Ocean/Beach Safety 1,746,470 1,877,970 1,822,117 55,853 Building and Housing Inspection 377,750 465,750 459,444 6,306 Animal Control 355,250 355,250 354,902 348
Code Enforcement 168,700 168,700 171,350 (2,650)
Parks, recreation and senior center
Recreation 329,650 617,425 591,266 26,159
Park Maintenance 632,750 652,750 643,309 9,441
Senior Services 57,600 60,600 53,295 7,305
Tideland Maintenance 1,035,250 1,020,250 982,883 37,367 Public works
Street Maintenance 1,306,500 1,447,500 1,445,480 2,020
Administration 434,100 383,600 363,767 19,833
Solid Waste Management 98,550 103,985 97,206 6,779
Storm Water 327,000 367,865 371,742 (3,877)
Debt Service
Principal - - 35,443 (35,443)
Interest - - 1,403 (1,403)
Capital outlay 56,700 154,166 211,972 (57,806)
Transfers out 24,800 1,618,000 1,609,011 8,989
Total Charges to Appropriations 24,735,990 27,421,046 27,488,672 (67,626) Budgetary Fund Balance, June 30 16,357,724 $ 16,921,752 $ 18,578,766 $ 1,657,014 $

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City of Imperial Beach
Budgetary Comparison Schedule
Miscellaneous Grants Fund
Year Ended June 30, 2023
See Notes to Required Supplementary Information
-86-
Budget Amounts Actual Variance with
Original Final Amounts Final Budget
Budgetary Fund Balance, July 1 211,245 $ 211,245 $ 211,245 $ - $ Resources (Inflows):

Intergovernmental - 2,240,762 1,005,445 (1,235,317)
Use of money and property - - 44,080 44,080
Amounts Available for Appropriations 211,245 2,452,007 1,260,770 (1,191,237) Charges to Appropriation (Outflows):

General government - 250,000 26,826 223,174
Parks and recreation - 20,000 1,931 18,069
Public works - 163,234 164,944 (1,710)
Capital outlay - 6,111,269 855,163 5,256,106
Transfers out 675,150 675,150 43,970 631,180
Total Charges to Appropriations 675,150 7,219,653 1,092,834 6,126,819 Budgetary Fund Balance, June 30 (463,905) $ (4,767,646) $ 167,936 $ 4,935,582 $

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City of Imperial Beach
Notes to Required Supplementary Information
June 30, 2023
-87-
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, 2023, 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.

Page 268 of 390 ends

City of Imperial Beach
Notes to Required Supplementary Information
June 30, 2023
-88-
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:

General government
Human Resources 336,754 $ 332,000 $ (4,754) $
Non-Departmental 2,466,544 2,207,530 (259,014)
Public safety
Fire Protection 3,029,027 3,028,970 (57)
Code Enforcement 171,350 168,700 (2,650)
Public works
Storm Water 371,742 367,865 (3,877)
Debt Service
Principal 35,443 - (35,443)
Interest 1,403 - (1,403)
Capital outlay 211,972 154,166 (57,806)
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.

Page 269 of 390 ends

City of Imperial Beach
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2023
-89-
Special Revenue Funds
Supplemental
Law
Gas Tax Prop A Tax CDBG Grant Enforcement
Assets:

Pooled cash and investments - $ 171,556 $ - $ 41,564 $
Receivables:

Accounts - 843 - -
Due from other governments 59,453 - 67,533 -
Total Assets 59,453 $ 172,399 $ 67,533 $ 41,564 $
Liabilities and Fund Balances:

Liabilities:

Accounts payable - $ 30,008 $ - $ 40,564 $
Accrued liabilities - 897 - -
Due to other funds 55,231 - 67,533 -
Total Liabilities 55,231 30,905 67,533 40,564
Fund Balances (Deficit):

Restricted for:

Community development projects - - - -
Public safety - - - 1,000
Parks, recreation and senior center - - - -
Public works 4,222 141,494 - -
Total Fund Balances 4,222 141,494 - 1,000
Total Liabilities and Fund Balances 59,453 $ 172,399 $ 67,533 $ 41,564 $

Page 270 of 390 ends

City of Imperial Beach
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2023 (Continued)
-90-
Capital Projects Funds
Parks
Housing Maintenance Capital
RMRA Authority CIP Projects
Assets:

Pooled cash and investments 1,121,805 $ 837,148 $ 1,099,562 $ 545,898 $ Receivables:

Accounts - - - -
Due from other governments 103,665 - - -
Total Assets 1,225,470 $ 837,148 $ 1,099,562 $ 545,898 $ Liabilities and Fund Balances:

Liabilities:

Accounts payable - $ 50 $ 843 $ - $
Accrued liabilities - - 1,853 -
Due to other funds - - - -
Total Liabilities - 50 2,696 -
Fund Balances (Deficit):

Restricted for:

Community development projects - 837,098 - -
Public safety - - - -
Parks, recreation and senior center - - 1,096,866 -
Public works 1,225,470 - - 545,898
Total Fund Balances 1,225,470 837,098 1,096,866 545,898 Total Liabilities and Fund Balances 1, $ 837,148 225,470 $ 1,099,562 $ 545,898 $ Special Revenue Funds

Page 271 of 390 ends

City of Imperial Beach
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2023
-91-
Total
Governmental
Funds
Assets:

Pooled cash and investments 3,817,533 $
Receivables:

Accounts 843
Due from other governments 230,651
Total Assets 4,049,027 $
Liabilities and Fund Balances:

Liabilities:

Accounts payable 71,465 $
Accrued liabilities 2,750
Due to other funds 122,764
Total Liabilities 196,979
Fund Balances (Deficit):

Restricted for:

Community development projects 837,098
Public safety 1,000
Parks, recreation and senior center 1,096,866
Public works 1,917,084
Total Fund Balances 3,852,048
Total Liabilities and Fund Balances 4, $ 049,027

Page 272 of 390 ends

City of Imperial Beach
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds
Year Ended June 30, 2023
-92-
Special Revenue Funds
Supplemental
Law
Gas Tax Prop A Tax CDBG Grant Enforcement
Revenues:

Intergovernmental 681,948 $ 606,974 $ 408,052 $ 173,271 $ Charges for services - - - -
Use of money and property 4,888 3,133 - -
Miscellaneous - 17,915 - -
Total Revenues 686,836 628,022 408,052 173,271
Expenditures:

Current:

General government - - - -
Public safety - - - 222,260
Public works - 5,368 - -
Debt Service
Principal - 296,932 - -
Interest - 25,184 - -
Capital outlay - 237,033 408,052 -
Total Expenditures - 564,517 408,052 222,260
Excess (Deficiency) of Revenues
Over (Under) Expenditures 686,836 63,505 - (48,989)
Other Financing Sources (Uses):

Proceeds of commercial paper - 148,000 - -
Transfers in - - - -
Transfers out (681,949) (249,500) - -
Total Other Financing Sources (Uses) (681,949) (101,500) - - Net Change in Fund Balances 4,887 (37,995) - (48,989)
Fund Balances (Deficit), Beginning of Year (665) 179,489 - 49,989 Fund Balances, End of Year 4,222 $ 141,494 $ - $ 1,000 $

Page 273 of 390 ends

City of Imperial Beach
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds
Year Ended June 30, 2023 (Continued)
-93-
Parks
Housing Maintenance Capital
RMRA Authority CIP Projects
Revenues:

Intergovernmental 591,593 $ - $ 151,100 $ - $
Charges for services - - 36,056 -
Use of money and property 6,678 135,808 5,024 18,117
Miscellaneous - - - -
Total Revenues 598,271 135,808 192,180 18,117
Expenditures:

Current:

General government - 11,833 - -
Public safety - - - -
Public works - - 9,448 816
Debt Service
Principal - - - -
Interest - - - -
Capital outlay - - 228,124 208,959
Total Expenditures - 11,833 237,572 209,775
Excess (Deficiency) of Revenues
Over (Under) Expenditures 598,271 123,975 (45,392) (191,658) Other Financing Sources (Uses):

Proceeds of commercial paper - - - -
Transfers in - - 800,000 -
Transfers out - - - -
Total Other Financing Sources (Uses) - - 800,000 -
Net Change in Fund Balances 598,271 123,975 754,608 (191,658) Fund Balances (Deficit), Beginning of Year 627,199 713,123 342,258 737,556 Fund Balances, End of Year 1,225,470 $ 837,098 $ 1,096,866 $ 545,898 $ Special Revenue Funds Capital Projects Funds

Page 274 of 390 ends

City of Imperial Beach
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds
Year Ended June 30, 2023
-94-
Total
Governmental
Funds
Revenues:

Intergovernmental 2,612,938 $
Charges for services 36,056
Use of money and property 173,648
Miscellaneous 17,915
Total Revenues 2,840,557
Expenditures:

Current:

General government 11,833
Public safety 222,260
Public works 15,632
Debt Service
Principal 296,932
Interest 25,184
Capital outlay 1,082,168
Total Expenditures 1,654,009
Excess (Deficiency) of Revenues
Over (Under) Expenditures 1,186,548
Other Financing Sources (Uses):

Proceeds of commercial paper 148,000
Transfers in 800,000
Transfers out (931,449)
Total Other Financing Sources (Uses) 16,551
Net Change in Fund Balances 1,203,099
Fund Balances (Deficit), Beginning of Year 2,648,949
Fund Balances, End of Year 3,852,048 $

Page 275 of 390 ends

City of Imperial Beach
Budgetary Comparison Schedule – Special Revenue Funds
Gas Tax
Year Ended June 30, 2023
-95-
Budget Amounts Actual Variance with
Original Final Amounts Final Budget
Budgetary Fund Balance, July 1 (665) $ (665) $ (665) $ - $ Resources (Inflows):

Intergovernmental 696,050 696,050 681,948 (14,102)
Use of money and property - - 4,888 4,888
Amounts Available for Appropriations 695,385 695,385 686,171 (9,214) Charges to Appropriation (Outflows):

Transfers out 696,050 696,050 681,949 14,101
Total Charges to Appropriations 696,050 696,050 681,949 14,101 Budgetary Fund Balance (Deficit), June 30 (665) $ (665) $ 4,222 $ 4,887 $

Page 276 of 390 ends

City of Imperial Beach
Budgetary Comparison Schedule – Special Revenue Funds
Prop A Tax
Year Ended June 30, 2023
-96-
Budget Amounts Actual Variance with
Original Final Amounts Final Budget
Budgetary Fund Balance, July 1 179,489 $ 179,489 $ 179,489 $ - $ Resources (Inflows):

Intergovernmental 432,000 607,000 606,974 (26)
Use of money and property - - 3,133 3,133
Miscellaneous 26,500 165,000 17,915 (147,085)
Commercial paper acquisition - - 148,000 148,000
Amounts Available for Appropriations 637,989 951,489 955,511 4,022 Charges to Appropriation (Outflows):

Public works - - 5,368 (5,368)
Debt Service
Principal - 296,900 296,932 (32)
Interest 296,900 25,200 25,184 16
Capital outlay - 942,535 237,033 705,502
Transfers out 249,500 249,500 249,500 -
Total Charges to Appropriations 546,400 1,514,135 814,017 700,118 Budgetary Fund Balance, June 30 91,589 $ (562,646) $ 141,494 $ 704,140 $

Page 277 of 390 ends

City of Imperial Beach
Budgetary Comparison Schedule – Special Revenue Funds
CDBG Grant
Year Ended June 30, 2023
-97-
Budget Amounts Actual Variance with
Original Final Amounts Final Budget
Budgetary Fund Balance (Deficit), July 1 - $ - $ - $ - $ Resources (Inflows):

Intergovernmental - 408,100 408,052 (48)
Amounts Available for Appropriations - 408,100 408,052 (48) Charges to Appropriation (Outflows):

Capital outlay - 408,037 408,052 (15)
Total Charges to Appropriations - 408,037 408,052 (15)
Budgetary Fund Balance, June 30 - $ 63 $ - $ (63) $

Page 278 of 390 ends

City of Imperial Beach
Budgetary Comparison Schedule – Special Revenue Funds
Supplemental Law Enforcement
Year Ended June 30, 2023
-98-
Budget Amounts Actual Variance with
Original Final Amounts Final Budget
Budgetary Fund Balance, July 1 49,989 $ 49,989 $ 49,989 $ - $ Resources (Inflows):

Intergovernmental 150,000 173,300 173,271 (29)
Amounts Available for Appropriations 199,989 223,289 223,260 (29) Charges to Appropriation (Outflows):

Public safety 150,000 222,300 222,260 40
Total Charges to Appropriations 150,000 222,300 222,260 40 Budgetary Fund Balance, June 30 49,989 $ 989 $ 1,000 $ 11 $

Page 279 of 390 ends

City of Imperial Beach
Budgetary Comparison Schedule – Special Revenue Funds
RMRA
Year Ended June 30, 2023
-99-
Budget Amounts Actual Variance with
Original Final Amounts Final Budget
Budgetary Fund Balance, July 1 627,199 $ 627,199 $ 627,199 $ - $ Resources (Inflows):

Intergovernmental 536,450 536,450 591,593 55,143
Use of money and property - - 6,678 6,678
Amounts Available for Appropriations 1,163,649 1,163,649 1,225,470 61,821 Charges to Appropriation (Outflows):

Capital outlay - 436,343 - 436,343
Total Charges to Appropriations - 436,343 - 436,343
Budgetary Fund Balance, June 30 1,163,649 $ 727,306 $ 1,225,470 $ 498,164 $

Page 280 of 390 ends

City of Imperial Beach
Budgetary Comparison Schedule – Special Revenue Funds
Housing Authority
Year Ended June 30, 2023
-100-
Budget Amounts Actual Variance with
Original Final Amounts Final Budget
Budgetary Fund Balance, July 1 713,123 $ 713,123 $ 713,123 $ - $ Resources (Inflows):

Use of money and property - - 135,808 135,808
Amounts Available for Appropriations 713,123 713,123 848,931 135,808 Charges to Appropriation (Outflows):

General government - 12,000 11,833 167
Total Charges to Appropriations - 12,000 11,833 167
Budgetary Fund Balance, June 30 713,123 $ 701,123 $ 837,098 $ 135,975 $

Page 281 of 390 ends

City of Imperial Beach
Budgetary Comparison Schedule – Capital Projects Funds
Parks Maintenance CIP
Year Ended June 30, 2023
-101-
Budget Amounts Actual Variance with
Original Final Amounts Final Budget
Budgetary Fund Balance, July 1 342,258 $ 342,258 $ 342,258 $ - $ Resources (Inflows):

Intergovernmental - - 151,100 151,100
Charges for services 40,000 40,000 36,056 (3,944)
Use of money and property - - 5,024 5,024
Transfers in - 800,000 800,000 -
Amounts Available for Appropriations 382,258 1,182,258 1,334,438 152,180 Charges to Appropriation (Outflows):

Public works - - 9,448 (9,448)
Capital outlay - 1,178,907 228,124 950,783
Total Charges to Appropriations - 1,178,907 237,572 941,335 Budgetary Fund Balance, June 30 382,258 $ 3,351 $ 1,096,866 $ 1,093,515 $

Page 282 of 390 ends

City of Imperial Beach
Budgetary Comparison Schedule – Capital Projects Funds
Capital Projects
Year Ended June 30, 2023
-102-
Budget Amounts Actual Variance with
Original Final Amounts Final Budget
Budgetary Fund Balance (Deficit), July 1 737,556 $ 737,556 $ 737,556 $ - $ Resources (Inflows):

Use of money and property - - 18,117 18,117
Amounts Available for Appropriations 737,556 737,556 755,673 18,117 Charges to Appropriation (Outflows):

Public works - - 816 (816)
Capital outlay - 786,933 208,959 577,974
Total Charges to Appropriations - 786,933 209,775 577,158 Budgetary Fund Balance (Deficit), June 30 737,556 $ (49,377) $ 545,898 $ 595,275 $

Page 283 of 390 ends

City of Imperial Beach
Combining Statement of Net Position
Internal Service Funds
June 30, 2023
-103-
Vehicle Facilities
Replacement & Self- Technology & Repair &
Maintenance Insurance Communication Maintenance Total
Assets:

Current:

Pooled Cash and investments 484,736 $ 1,790,555 $ 190,387 $ 219,852 $ 2,685,530 $ Prepaid costs - - 2,700 - 2,700
Due from other governments 24,252 74,023 - - 98,275
Total Current Assets 508,988 1,864,578 193,087 219,852 2,786,505 Noncurrent:

Capital assets, not being depreciated 1,009,858 - - - 1,009,858 Capital assets, net of depreciation 416,114 - 151,288 41,821 609,223 Total Noncurrent Assets 1,425,972 - 151,288 41,821 1,619,081 Total Assets 1,934,960 1,864,578 344,375 261,673 4,405,586 Deferred Outflows of Resources:

Deferred pension and related items 73,186 45,634 46,495 - 165,315 Deferred OPEB related items 8,114 5,060 5,155 - 18,329
Total Deferred Outflows of Resources 81,300 50,694 51,650 - 183,644 Liabilities:

Current:

Accounts payable 23,086 25,306 4,992 9,840 63,224
Accrued liabilities 23,497 4,090 14,221 - 41,808
Compensated absences due in one year 10,890 8,503 9,205 - 28,598 Claims and judgments due in one year - 178,000 - - 178,000 Long-term liabilities due in one year 116,708 - 181,333 - 298,041 Total Current Liabilities 174,181 215,899 209,751 9,840 609,671 Noncurrent:

Compensated absences due in more than one year - 6,507 - - 6,507 Claims and judgments due in more than one year - 650,000 - - 650,000 Long-term liabilities 393,150 - 54,666 - 447,816
Net pension liability 103,179 64,335 65,549 - 233,063
Net OPEB liability 11,072 6,904 7,034 - 25,010
Total Noncurrent Liabilities 507,401 727,746 127,249 - 1,362,396 Total Liabilities 681,582 943,645 337,000 9,840 1,972,067 Deferred Inflows of Resources:

Deferred pension related items 17,700 11,037 11,245 - 39,982 Deferred OPEB related items 7,880 4,913 5,006 - 17,799
Total Deferred Inflows of Resources 25,580 15,950 16,251 - 57,781 Net Position (Deficit):

Investment in capital assets 916,114 - (84,711) 41,821 873,224 Unrestricted 392,984 955,677 127,485 210,012 1,686,158
Total Net Position 1,309,098 $ 955,677 $ 42,774 $ 251,833 $ 2,559,382 $

Page 284 of 390 ends

City of Imperial Beach
Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds
Year Ended June 30, 2023
-104-
Vehicle Facilities
Replacement & Self- Technology & Repair &
Maintenance Insurance Communication Maintenance Total
Operating Revenues:

Sales and service charges 421,800 $ 756,950 $ 567,200 $ 10,500 $ 1,756,450 $ Miscellaneous 135,786 334,337 - - 470,123
Total Operating Revenues 557,586 1,091,287 567,200 10,500 2,226,573 Operating Expenses:

Services and supplies 444,898 173,819 249,301 133,019 1,001,037 Claims expense - 594,259 - - 594,259
Personnel and administrative 265,663 147,819 298,356 118 711,956 Depreciation/ Amortization expense 178,077 - 284,100 4,610 466,787 Total Operating Expenses 888,638 915,897 831,757 137,747 2,774,039 Operating Income (Loss) (331,052) 175,390 (264,557) (127,247) (547,466) Nonoperating Revenues (Expenses):

Investment income 22,270 24,423 (128) 66 46,631
Interest expense (17,015) - (4,629) - (21,644)
Total Nonoperating Revenues (Expenses) 5,255 24,423 (4,757) 66 24,987 Income (Loss) Before Transfers (325,797) 199,813 (269,314) (127,181) (522,479) Transfers in 230,000 - 290,978 313,200 834,178
Total Transfers 230,000 - 290,978 313,200 834,178
Changes in Net Position (95,797) 199,813 21,664 186,019 311,699 Net Position (Deficit):

Beginning of Year 1,404,895 755,864 21,110 65,814 2,247,683 End of Year 1,309,098 $ 955,677 $ 42,774 $ 251,833 $ 2,559,382 $

Page 285 of 390 ends

City of Imperial Beach
Combining Statement of Cash Flows
Internal Service Funds
Year Ended June 30, 2023
-105-
Vehicle Facilities
Replacement & Self- Technology & Repair &
Maintenance Insurance Communication Maintenance Total
Cash Flows from Operating Activities:

Cash received from/(paid to) interfund service provided 562,940 $ 1,017,264 $ 567,200 $ 10,500 $ 2,157,904 $ Cash paid to suppliers for goods and services (470,446) (617,820) (272,735) (123,179) (1,484,180) Cash paid to employees for services (213,537) (124,119) (265,166) (118) (602,940) Net Cash Provided (Used) by
Operating Activities (121,043) 275,325 29,299 (112,797) 70,784 Cash Flows from Non-Capital
Financing Activities:

Transfers from other funds 230,000 - 290,978 313,200 834,178 Net Cash Provided by
Non-Capital Financing Activities 230,000 - 290,978 313,200 834,178 Cash Flows from Capital and Related Financing Activities:

Principal Paid on subscription lease - - (167,294) - (167,294) Interest paid on subscription lease (17,015) - (4,629) - (21,644) Acquisition and construction of capital assets (648,464) - (32,095) (44,724) (725,283) Net Cash Used by Capital and Related Financing Activities (665,479) - (204,018) (44,724) (914,221) Cash Flows from Investing Activities:

Investment income (loss) 22,270 24,423 (128) 66 46,631
Net Cash Provided (Used) by
Investing Activities 22,270 24,423 (128) 66 46,631
Net Increase (Decrease) in Cash and
Cash Equivalents 299,748 (534,252) 116,131 155,745 37,372 Cash and Cash Equivalents, Beginning of Year 1,018,988 1,490,807 74,256 64,107 2,648,158 Cash and Cash Equivalents, End of Year 484,736 $ 1,790,555 $ 190,387 $ 219,852 $ 2,685,530 $ Reconciliation of Operating Income (Loss) to Net Cash
Provided (Used) by Operating Activities:

Operating income (loss) (331,052) $ 175,390 $ (264,557) $ (127,247) $ (547,466) $ Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:

Depreciation 178,077 - 284,100 4,610 466,787
(Increase) decrease in prepaid costs - - 26,611 - 26,611 (Increase) decrease in due from other governments 5,354 (74,023) - - (68,669) (Increase) decrease in deferred outflows - pension (35,709) (22,266) (22,686) - (80,661) (Increase) decrease in deferred outflows - OPEB 954 594 606 - 2,154 Increase (decrease) in accounts payable (25,548) 22,258 (50,045) 9,840 (43,495) Increase (decrease) in accrued liabilities 17,531 682 7,079 - 25,292 Increase (decrease) in compensated absences 3,514 3,640 6,366 - 13,520 Increase (decrease) in claims and judgments - 128,000 - - 128,000 Increase (decrease) in net pension liability 83,819 52,263 53,250 - 189,332 Increase (decrease) in net OPEB liability (6,141) (3,829) (3,902) - (13,872) Increase (decrease) in deferred inflows - pension (15,879) (9,901) (10,088) - (35,868) Increase (decrease) in deferred inflows - OPEB 4,037 2,517 2,565 - 9,119 Total Adjustments 210,009 99,935 293,856 14,450 618,250 Net Cash Provided (Used) by
Operating Activities (121,043) $ 275,325 $ 29,299 $ (112,797) $ 70,784 $ Noncash Capital and Financing Activities
Subscription liabilities - $ - $ 403,293 $ - $ 403,293 $ Subscription acquisition - - (403,293) - (403,293)

Page 286 of 390 ends

City of Imperial Beach
Combining Statement of Fiduciary Net Position
All Custodial Funds
June 30, 2023
-106-
Special Assessment Districts
Assessment Assessment Assessment
District #63 District #64 District #66
Assets:

Pooled cash and investments 122,573 $ 31,240 $ 176,761 $ Total Assets 122,573 31,240 176,761
Net Position:

Held in trust for other purposes 122,573 31,240 176,761 Total Net Position 122,573 $ 31,240 $ 176,761 $

Page 287 of 390 ends

City of Imperial Beach
Combining Statement of Fiduciary Net Position
All Custodial Funds
June 30, 2023
-107-
Special Assessment Districts
Custodial
Assessment Assessment Funds
District #68 District #71 Total
Assets:

Pooled cash and investments 105,018 $ 16,895 $ 452,487 $ Total Assets 105,018 16,895 452,487
Net Position:

Held in trust for other purposes 105,018 16,895 452,487 Total Net Position 105,018 $ 16,895 $ 452,487 $

Page 288 of 390 ends

City of Imperial Beach
Combining Statement of Changes in Fiduciary Net Position All Custodial Funds
Year Ended June 30, 2023
-108-
Special Assessment Districts
Assessment Assessment Assessment
District #63 District #64 District #66
Additions:

Interest and change in fair value of investments 2,018 $ 514 $ 2,910 $ Total Additions 2,018 514 2,910
Changes in Net Position 514 2,018 2,910
Net Position at Beginning of Year 120,555 30,726 173,851 Net Position at End of Year 122,573 $ 31,240 $ 176,761 $

Page 289 of 390 ends

City of Imperial Beach
Combining Statement of Changes in Fiduciary Net Position All Custodial Funds
Year Ended June 30, 2023
-109-
Special Assessment Districts
Custodial
Assessment Assessment Funds
District #68 District #71 Total
Additions:

Interest and change in fair value of investments 1,729 $ 278 $ 7,449 $ Total Additions 1,729 278 7,449
Changes in Net Position 278 1,729 7,449
Net Position at Beginning of Year 103,289 16,617 445,038 Net Position at End of Year 105,018 $ 16,895 $ 452,487 $

Page 290 of 390 ends

735 E. Carnegie Dr. Suite I 00
San Bernardino, CA 92408
909 889 0871 T
909 889 5361 F
ramscpa.net

ROGERS, ANDERSON , MALODY & SCOTT, LLP
CERTIFIED PUBLIC ACCOUNTANTS. SINCE 1948
STABILITY. ACCURACY. TRUST.
-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, 2023.

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, 2023.

Basis for Opinion
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS), the standards applicable to financial audits contained in Government Auditing Standards (GAGAS), issued by the Comptroller General of the United States, and the audit guidelines issued by the California State Controller’s Office. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the compliance section of our report.

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

Page 291 of 390 ends

-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, GAGAS, 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 GAAS, 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, GAGAS, 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.

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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, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Imperial Beach as of the year ended June 30, 2023, and have issued our report thereon dated November 20, 2023, 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 20, 2023

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City of Imperial Beach
Computation of Housing Successor Excess/Surplus (HSC 34176.1) For the year ended June 30, 2023
-4-
Opening Fund Balance, as restated 713,123 $ 837,148 $
Available Low & Mod Funds 713,123 837,148
Limitation (Greater of $1,000,000 or four years of deposits) Aggregate amount deposited for last four years:
2022-2023 - $ 135,808 $
2021-2022 49,012 49,012
2020-2021 31,606 31,606
2019-2020 23,670 23,670
2018-2019 19,382 -
Total Amounts Deposited for Last 4 Years 123,670 240,096 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, 2022
Low & Moderate
Housing Funds
All Project Area
July 1, 2023

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Attachment 3

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, 2023
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 FY2023 $ 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 $ 135,808
Recognized Obligation Payment Schedule amounts $ 0
Other amounts (20% of SA Loan Repayment; above) $ 0
TOTAL $ 135,808

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) $ 837,098
TOTAL $ 837,098

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Annual Housing Successor Progress Report
Year End June 30, 2023

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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 $ 11,833
(B) Homeless prevention/rapid rehousing $ 0
(C) Housing development (Habitat for Humanity) $ 0
TOTAL $ 11,833

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 $ 10,688,575
TOTAL $ 10,688,575

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.

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Annual Housing Successor Progress Report
Year End June 30, 2023

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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, 2023.

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Annual Housing Successor Progress Report
Year End June 30, 2023

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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

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ATTACHMENT 4
RESOLUTION NO. 2023-109

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF IMPERIAL BEACH, CALIFORNIA, AMENDING THE FY24-25 EXPENDITURE BUDGET FOR ANNUAL PAYMENT ON CITY’S

UNFUNDED ACTUARIAL LIABILITY (UAL) FOR PENSION
WHEREAS, the City Council is responsible for the adoption of and approval of any modification of the Fiscal Year 2024-25 City of Imperial Beach Budget; and WHEREAS, the California Public Employees' Retirement System (CalPERS) periodically amends factors determining the amount of the City’s UAL and required annual payments on such; and
WHEREAS, a budget amendment is necessary in order to adjust the required annual contribution for FY24-25 UAL as determined by the updated CalPERS actuarial procedures; and WHEREAS, Resolution No. 2023-109 will amend Fiscal Year 2024-25 City of Imperial Beach Budget.

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

1. The City Council authorizes an increase to FY24-25 budgeted annual payment of the City’s unfunded pension liability for FY24-25 for Miscellaneous and Fire Group by $333,300 total as follows:
101-1920-419.1110 - Pension Expense $236,400
101-3020-422.1101 - PERS – City Portion $96,900

2. The City Council hereby authorizes the Finance Director to make the necessary budget amendments.

PASSED, APPROVED, AND ADOPTED by the City Council of the City of Imperial Beach at its meeting held on the 6th day of December 2023, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

PALOMA AGUIRRE, MAYOR
ATTEST:

JACQUELINE M. KELLY, MMC

CITY CLERK

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December 6, 2023
ITEM TITLE: COMMUNITY EMERGENCY RESPONSE TEAM (CERT) UPDATE. (0210-11) ORIGINATING DEPARTMENT:

Fire
EXECUTIVE SUMMARY:

In March of 2004 the Imperial Beach Fire Department implemented its own Community Emergency Response Team (CERT). The purpose of the CERT team was to provide training, free of charge, to citizens that were interested in making a difference in their community. The training provided citizens with basic skills that they would need to respond to immediate community needs in the aftermath of a disaster when emergency services are not immediately available. By working together, CERT members can assist in saving lives and protecting property using the basic techniques in this course. This CERT update will include Imperial Beach CERT history, training and skills taught, how CERT has changed and the future of CERT in Imperial Beach.

RECOMMENDATION:

That the City Council receive the Community Emergency Response Team (CERT) update.

OPTIONS:
 Receive the Imperial Beach CERT update.
 Provide direction to the City Manager
 Continue the item to a future meeting and request additional information.

BACKGROUND/ANALYSIS:

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From September of 2004 to May of 2009, the Department conducted a series of 10 classes and taught over 120 citizens to become Imperial Beach CERT members. The training classes taught the following skills, each module included classes varying from 4-to-6-hour in length. Total hours of time spent in training is greater than 30 hours.

The following is a brief description of the CERT classes and some of the skills that are included in the training:
 Module 1 – Disaster Preparedness:

Introduction to types of disasters and the role of CERT members in a disaster.  Module 2 – Disaster Fire Suppression:

Basic fire suppression strategy, firefighting resources, and firefighting techniques.  Module 3 – Disaster Medical Operations:

Treatment techniques for life-threatening conditions, principles of triage, establishing treatment areas, and more.
 Module 4 – Light Search and Rescue Operations:

Search and rescue priorities, size-up strategies, and rescuer safety.  Module 5 – Terrorism:

Potential threats and how to identify them, CERT activation, and Preparedness in Imperial Beach.
 Module 6 – Disaster Psychology and Team Organization:

The post-disaster emotional environment, the CERT organization and decision making.

CERT’s Mission Statement is to enhance the safety of the Citizens of Imperial Beach and surrounding communities through disaster preparedness. As our goal remains, “do the greatest good for the greatest number of people,” CERT of Imperial Beach will provide continued training opportunities for its members and provide outreach and educational programs to the community.

Further, the Department maintains the Disaster Response Trailer in a state of readiness to provide HAM Radio response and other emergency services before, during and after a disaster.

After the initial training we had weekend skills training sessions and monthly meetings to keep CERT members’ skills up to date. In 2020 at the beginning of the COVID pandemic this training was halted. We still have a great core team of CERT members that are still interested in helping before, during and after a disaster. With future training sessions and new CERT members they will be a big asset to the City of Imperial Beach.

ENVIRONMENTAL DETERMINATION:

Not a project as defined by CEQA.

FISCAL IMPACT:

This is an informational item. The fiscal impact includes staff support managing the CERT program, grants management, and it may include additional resources related to the training.

ATTACHMENTS: None

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December 6, 2023
ITEM TITLE: CONSIDERATION OF RESOLUTION 2023-106 TO AUTHORIZE AMENDMENTS TO THE FY24 GENERAL FUND BUDGET. (2023-106)
ORIGINATING DEPARTMENT:

Marine Safety
EXECUTIVE SUMMARY:

The FY24 municipal budget was adopted in May of 2023 and represents the first year of the twoyear budget cycle. Staff has reviewed the adopted General Fund Budget in comparison with necessary equipment needed. Resolution No. 2023-106 would authorize amendments to the budget.

RECOMMENDATION:

Staff recommends adoption of Resolution No. 2023-106, authorizing amendments to the FY24 Budget.

OPTIONS:
 Adopt Resolution No. 2023-106 to authorize amendments to the FY24 Budget.  Request additional information and an additional report.

BACKGROUND/ANALYSIS:

The municipal budget is the primary document that links the priorities of the City Council with the funding necessary to accomplish those goals. The City of Imperial Beach has incorporated a twoyear budget cycle to project the revenues and expenditures of the City. Throughout the budget period, the City Council considers various anticipated revenues and expenditures in the General Fund as financial needs change over time. Occasionally, unanticipated expenditures arise which require staff to return to City Council during the fiscal year to request an amendment to the budget.

The City of Imperial Beach has experienced an exponential increase in illegal maritime immigration and maritime smuggling events. The number of events has increased every year for the last five years. These events result in water rescues, drownings, capsized vessels, and disabled vessels. There have been several incidents of mass migration events involving swimmers and people on various floatation devices attempting to cross the border via the Pacific Ocean. Lifeguards from Imperial Beach and City of San Diego are the only agencies that are responding to these migration incidents that have the primary mission of aquatic search and rescue and providing medical assistance. All other agencies, outside of the Fire Departments, have a primary mission of enforcement and protection. These federal partners rely on the Lifeguards to render aid to the victims of these events.

The City of Imperial Beach has also experienced challenges with water quality impacting the ocean due to the transboundary pollution flows into the Tijuana River Valley which are getting more severe each day. The County has issued water advisories and closures due to high bacteria

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counts in the testing samples taken from the ocean, which have impacted the opening of the beach. The ocean has not been opened a single day so far in 2023. Lifeguards do not conduct in-water patrols or training when there is a county water advisory or higher. Lifeguards only contact water under an advisory or higher when there is a rescue that needs to be performed.

The Marine Safety Department has identified that due to the constant water closures, the best tool for patrol and response is a rescue boat. This will provide a safer way for Imperial Beach Lifeguards to patrol and protect the beach.

In 2019, the City of San Diego purchased two custom built rescue vessels and trailers. An opportunity was provided to partner with the City of San Diego to purchase these two boats through the City of San Diego obsolete/depreciation property selling which is allowed by their municipal code. The used boats went through a depression and the City of Imperial Beach would be paying the City of San Diego $198,817 for two rescue boats with trailers. Putting these vessels in service in Imperial Beach would immediately benefit Imperial Beach Lifeguard’s and assist them with emergency response while protecting them from contact with polluted water.

The United States Coast Guard has supplied the Imperial Beach Marine Safety Department (Lifeguards) with a secure dock space, at no charge, on Naval Base Point Loma. Naval Base Point Loma is located on Ballast Point and is the closest dock space to the Imperial Beach Lifeguards Area of Responsibility (AOR).

The Marine Safety staff does an exceptional job at maintaining equipment. Purchasing the two vessels will allow the department to delay/defer the purchase of a few pieces of replacement equipment under FY24 & FY25. About $6,500 would cover the annual cost of the maintenance of the rescue vessels. Additionally, the Marine Safety Department will be seeking out and applying for maritime grant funding such as the FEMA Port Security Grant Program (PSGP). In FY 2023, the total amount of funds under PSGP is $100 million.

California Department of Boating and Waterways (DBW) provides a Rescue Boat Handling course and certification. This course is 40 hours and is used as a minimum standard for most Marine Safety Departments. Three (3) out of the 8 fulltime lifeguards currently have the DBW Rescue Boat Handling certification. A goal of the Marine Safety Department would be to have all full-time Marine Safety personnel certified in DBW Rescue Boat Handling or equivalent. Additionally, the Marine Safety Department would like all full-time personnel to get further Rescue Boat Operator training from the National Association of State Boating Law Administrators (NASBLA). Training costs would be independent from the cost of maintenance.

Unanticipated Expense:

A number of projects and services have been recommended by staff related to safety and employee working conditions that were not anticipated when the budget was adopted. One such recommendation will result in an increase of $198,817 in the projected expenses in the FY24 General Fund Budget as a one-time expenditure. The increase would transfer funds from the General Fund Unreserved Fund Balance to provide revenue for the expense as a one-time expenditure. This unanticipated expense includes:
 $198,817 for (2) Willard 22’ rescue boats with electronics (VHF radio, GPS, PA, etc), Yamaha 225 hp outboard motor, and custom aluminum trailer built for the Willard Hull, required carriage equipment, tow line, specific rescue gear to the vessel.

Summary:

The General Fund Budget is a tool that connects the necessities, enhancement projects, and policies of the City Council with the financial constraints of the City. The City of Imperial Beach has been able to provide effective municipal services and complete significant improvements to

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Imperial Beach City CouncilDecember 6, 2023

Imperial Beach City Council
December 6, 2023