Imperial Beach City Council
December 3, 2025

Imperial Beach
Recognized Obligation Payment Schedule (ROPS 26-27) - Notes July 1, 2026 through June 30, 2027
Item # Notes/Comments
payment on the 2020A Tax Allocation Refunding Bonds (Refunded 2010 Series) issued in March 2020. The December 1, 2026, debt service payment will be paid from RPTTF paid in the ROPS 25-26B period as a reserve. The Total Outstanding Debt listed for items #43 (Payment) and #44 (Reserve) is a duplicate in that both these items are for the same debt issuance. 44 The amount of RPTTF sought in the ROPS 26-27B period represents a reserve for the December 1, 2027 debt service payment. Bond covenants require that we request a full year (June/Dec Payments) on the ROPS.
45 The amount of RPTTF sought in the ROPS 26-27 B period represents the June 1, 2027 debt service payment on the 2022 Tax Allocation Refunding Bonds (Refunded 2013 Series) issued in March 2022.

The December 1, 2026 debt service payment will be paid from RPTTF paid in the ROPS 25-26B period as a reserve. The Total Outstanding Debt listed for items #45 (Payment) and #46 (Reserve) is a duplicate in that both these items are for the same debt issuance. 46 The amount of RPTTF sought in the ROPS 26-27B period represents a reserve for the December 1, 2027 debt service payment. Bond covenants require that we request a full year (June/Dec Payments) on the ROPS.
48 49 The ROPS 19-20PPA was mistakenly calculated without including a bond payment expenditure of $644,345.63 made during a bond refunding process in FY19-20. This error resulted in DOF reducing the amount of RPTTF approved for payment to SA for enforceable obligations listed on ROPS 22-23, creating a shortfall that has continued and reduced RPTTF in subsequent ROPS. To remedy this, SA and City seek to enter into a Loan Agreement whereby City would loan SA a total of $644,346, to be repaid by SA to City via ROPS 26-27 RPTTF paid to SA for enforceable obligations. H&S Code Section 34173(h) of the Dissolution Law authorizes City to loan funds to SA for payment of administrative costs, enforceable obligations, or project-related expenses that qualify as enforceable obligations. SA is seeking DOF’s approval that SA and City may enter into a Loan Agreement for $644,346, listed as enforceable obligation #49 on the ROPS 26-27, and the SA’s repayment to City by SA with RPTTF.

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December 3, 2025
ITEM TITLE: PUBLIC HEARING AND INTRODUCTION OF ORDINANCE NOS. 2025-1258 AND 2025-1259 TO APPROVE CLERICAL REVISIONS TO THE PREVIOUSLY APPROVED

LOCAL COASTAL PROGRAM AMENDMENT AND RELATED ZONING ORDINANCE UPDATES. (0660-95)
ORIGINATING DEPARTMENT:

Community Development
EXECUTIVE SUMMARY:

The City Council originally adopted Ordinance Nos. 2023-1225 and 2024-1251 in 2023 and 2024 which were then submitted to Coastal Commission for approval prior to taking effect because they are considered Local Coastal Program Amendments. During its review of the related Local Coastal Program Amendment (LCPA-23-0001), the Coastal Commission required clerical revisions, including consolidating the two overlapping “Exhibit A” documents, updating outdated Government Code references, and correcting a duplicate zoning definition number used in both ordinances. These revisions were incorporated, and the Commission approved the LCPA on May 7, 2025. Because the revised ordinances approved by Coastal now differ slightly from those previously adopted by the City Council, Ordinance Nos. 2025-1258 and 2025-1259 are being introduced.

RECOMMENDATION:

That the City Council hold the public hearing to consider the public input on the item and introduce Ordinance No. 2025-1258 and 2025-1259 by title only and waive further reading of the ordinances and set the matter for its second reading and adoption at the next regularly scheduled City Council meeting.

OPTIONS:

The City Council can also:
 Provide direction to modify the ordinance prior to further consideration by the City Council.  Continue the item and provide direction to the City Manager to obtain additional information.

BACKGROUND/ANALYSIS:

Ordinance No. 2023-1225
The California Legislature enacted legislation (ref. Assembly Bill (AB) 101, AB 2162, AB 1584, AB 2162, Senate Bill (SB) 1030, and SB 744) amending Government Code Sections 65650 et. seq. requiring a city to permit permanent supportive housing meeting provisions of state law “by right,” and Sections 65660 et. seq. of the California Government Code requiring a city to permit low barrier navigation centers meeting provisions of state law “by right”. Existing ordinances

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related to permanent supportive housing developments and low barrier navigation centers that fail to meet the requirements of the legislation are considered null and void as the City must apply the standards established within the legislation.

The City's existing ordinances do not meet the state's requirements, and as such, permanent supportive housing developments and low barrier navigation centers proposed in the City of Imperial Beach are regulated by the requirements in Government Code Sections 65650 et seq. and 65660 et seq. unless the City adopts an ordinance that complies with state law. The City adopted its Housing Element on June 16, 2021, which was certified by the California Department of Housing and Community Development on September 20, 2021. Within the Housing Element, the City has outlined goals and policies to address Imperial Beach’s housing needs which are implemented through a series of housing programs. Housing programs define the specific actions the City will undertake to achieve the stated goals and policies within the eight-year (2021-2029) planning period. Program 13 of Section 5.2.4 (Removal of Governmental Constraints) of the City’s Housing Element provides that the City will amend the zoning ordinance to allow permanent supportive housing and low barrier navigation centers.

To be consistent with the requirements per California Government Code Section 65650 et seq., California Government Code Section 65660 et. seq., and with the adopted Housing Element, the City should revise the Title 19 (Zoning) ordinance to permit permanent supportive housing and low barrier navigation centers. In general, “Supportive housing” means housing with no limit on length of stay, that is occupied by the target population (persons with low incomes who have one or more disabilities), and that is linked to onsite or offsite services that assist the supportive housing resident in retaining the housing, improving health status, and maximizing the ability to live and, when possible, work in the community. “Low Barrier Navigation Center” means a Housing First, low-barrier, service enriched shelter focused on moving people into permanent housing that provides temporary living facilities while case managers connect individuals experiencing homelessness to income, public benefits, health services, shelter, and housing.

On April 5, 2023, the City Council introduced and conducted the first reading of Ordinance No. 2023-1225, and subsequently passed and adopted the ordinance on April 18, 2023, however, the ordinance could not take effect until approved by the Coastal Commission. Upon review, the Coastal Commission required clerical revisions, including consolidating two overlapping Exhibits, which are being considered in this staff report.

Ordinance No. 2024-1251
The California Legislature enacted legislation amending Government Code Sections 65580, 65583, and 65583.2 relating to housing that went into effect as of January 1, 2018 with the intent to strengthen the obligations in Housing Element Law that housing elements identify and zone sufficient sites to address the need for lower income housing units and facilitate the construction of new affordable residential dwelling units in response to the state's housing shortage (ref.

Assembly Bill (AB) 1397). Existing ordinances that fail to meet the requirements of the legislation are considered null and void as the City must apply the standards established within the legislation.

The City's existing Zoning ordinance, Imperial Beach Municipal Code Title 19 Zoning, does not include provisions to meet the state's requirements and, as such, affordable housing developments that qualify for by-right review and approval in the City of Imperial Beach are regulated by the requirements in Government Code Section 65583.2 in addition to the provisions of the City’s adopted Housing Element. The City of Imperial Beach adopted its Housing Element on June 16, 2021, which was certified by the California Department of Housing and Community Development on September 20, 2021. Within the Housing Element, the City has outlined goals and policies to address Imperial Beach’s housing needs which are implemented through a series

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of housing programs. Housing programs define the specific actions the City will undertake to achieve the stated goals and policies within the eight-year (2021-2029) planning period. Program 9 of Section 5.2.3 (Provision of Adequate Housing Sites) of the City’s Housing Element provides that the City is required to amend the Zoning Ordinance to require by-right approval of housing development that includes 20 percent of the units as housing affordable to lower income households, on sites being used to meet the 6th cycle Regional Housing Needs Assessment (RHNA) that represent a “reuse” of sites previously identified in the 4th and 5th cycles Housing Element. The “reuse” sites are specifically identified in the sites inventory section of the Housing Element.

To be consistent with the requirements per California Government Code Section 65583.2 and with the adopted Housing Element, the revisions are proposed for sections of Title 19 (Zoning) ordinance. Additionally, modifications to State density bonus law amending Government Code Section 65915 have been implemented and, as such, alterations are proposed for Title 19 (Zoning) to update the City’s density bonus ordinance to reflect changes in State Law.

On November 6, 2024, the City Council introduced and conducted the first reading of Ordinance No. 2024-1251, and subsequently passed and adopted the ordinance on November 20, 2024 however, the ordinance could not take effect until approved by the Coastal Commission. Upon review, the Coastal Commission required clerical revisions, including consolidating two overlapping Exhibits, which are being considered in this staff report.

Ordinance Nos. 2025-1258 and 2025-1259
Ordinance No. 2023-1225 and Ordinance No. 2024-1251 were originally adopted and approved by the City Council in 2023 and 2024 and were thereafter submitted to the Coastal Commission for approval. During its review of the Local Coastal Program Amendment (LCPA), the Coastal Commission required clerical revisions to the ordinances. The Commission requested that each ordinance’s separate “Exhibit A” be consolidated into a single exhibit, since both were overlapping. In addition, because of the timing of the review, the Government Code references in the Council-adopted ordinances had become outdated and needed to be updated. It was also identified that both ordinances mistakenly used the same zoning code definition number. For example, Ordinance No. 2023-1225 assigned “19.04.526” to Low Barrier Navigation Center, while Ordinance No. 2024-1251 used “19.04.526” for Lower Income Household. As part of the review process, the exhibits were consolidated into one, the zoning definition number was corrected, and the Government Code references have been updated. With these revisions, the Commission approved the LCPA on May 7, 2025.

The attached proposed Ordinance Nos. 2025-1258 and 2025-1259 are the versions approved by Coastal Commission with the minor clerical amendments from the original versions adopted by the City Council. Staff is recommending that Council approve Ordinance Nos. 2025-1258 and 2025-1259 to complete the process that was initiated in 2023 to be compliant with State Law and the Housing Element.

LOCAL COASTAL PROGRAM AMENDMENT:

The project constitutes an amendment to the City’s certified Local Coastal Program. A public notice initiated a six-week/45-day public review period (October 19, 2025, to December 2, 2025) for this item prior to any final action being taken by the City Council on this amendment request, pursuant to California Code of Regulations Code §13515 (14 CCR 13515) and California Government Code §65352. The notice and proposed modifications to Title 19 have been posted on the City’s website at https://www.imperialbeachca.gov/260/Planning-Division.

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ENVIRONMENTAL DETERMINATION:

The ordinance is exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061(b)(3) (the common sense exemption) because it can be seen with certainty that there is no possibility that the adoption of this ordinance may have a significant effect on the environment, in that the ordinance merely implements the provisions of state law and includes no provisions beyond those included in Government Code Sections 65650 et seq., 65660 et seq. 65580, 65583, and 65583.2 that that may result in a direct or indirect impact on the physical environment.

FISCAL IMPACT:

There would be no fiscal impact.

ATTACHMENTS:

ATT 1 – Ordinance Nos. 2025-1258 and 2025-1259
ATT 2 – LCPA-23-0001 Ordinances Notice of Public Hearing 120325 ATT 3 – Ordinance 2023-1225 and 2024-1251 Strike-out
ATT 4 – LCP-6-IMB-23-0025-2 Certification Letter
ATT 5 – Ordinance No. 2024-1251
ATT 6 – Ordinance No. 2023-1225

Attachment 1

ORDINANCE NO. 2025-1258

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF IMPERIAL BEACH, CALIFORNIA, AMENDING TITLE 19 (ZONING) OF THE IMPERIAL BEACH MUNICIPAL CODE TO PERMIT

PERMANENT SUPPORTIVE HOUSING AND LOW BARRIER NAVIGATION CENTERS AS REQUIRED BY STATE LAW.

WHEREAS, Sections 65650 et seq. of the California Government Code require a city to permit permanent supportive housing meeting provisions of state law “by right;” and WHEREAS, Sections 65660 et seq. of the California Government Code require a city to permit low barrier navigation centers meeting provisions of state law “by right;” and WHEREAS, Program 13 of Section 5.2.4 (Removal of Governmental Constraints) of the City’s Housing Element, which was adopted on June 16, 2021, and subsequently approved by the California Department of Housing and Community Development, provides that the City will amend the Zoning Ordinance to allow permanent supportive housing and low barrier navigation centers; and
WHEREAS, a Public Notice of Availability of Proposed General Plan/Local Coastal Program Amendments was issued, which opened a six-week public review period that ran from February 9, 2023, to March 27, 2023; and
WHEREAS, the City Council conducted a public hearing on April 5, 2023, to consider the proposed amendments to the zoning ordinance and considered all evidence, including but not limited to public testimony and the evaluations and recommendations of staff; and WHEREAS, notices of said public hearings were made at the time and in the manner required by law; and
WHEREAS, on April 5, 2023, the City Council introduced and conducted the first reading of Ordinance No. 2023-1225, and subsequently passed and adopted the ordinance on April 18, 2023; and
WHEREAS, the proposed amendments to Title 19 of the Imperial Beach Municipal Code in Ordinance No. 2023-1225 needed to be submitted to the California Coastal Commission for review and certification for the amendment to be effective; and WHEREAS, during its review of the related Local Coastal Program Amendment (LCPA23-0001), the Coastal Commission required clerical revisions, including consolidating the two identical “Exhibit A” documents which were attached to Ordinance Nos. 2023-1225 and 2024- 1251, updating outdated Government Code references, and correcting a duplicate zoning definition number used in both ordinances. These revisions were incorporated, and the Commission approved the LCPA on May 7, 2025. Because the revisions adopted by Coastal now differ slightly from those previously adopted by the City Council in Ordinance Nos. 2023-1225 and 2024-1251, Ordinance Nos. 2025-1258 and 2025-1259 are being introduced; and WHEREAS, another Public Notice of Availability of Proposed General Plan/Local Coastal Program Amendments was issued, which opened a six-week public review period that ran from October 19, 2025, to December 2, 2025; and

Ordinance 2025-1258 and 2025-1259

WHEREAS, the City Council conducted a public hearing on December 3, 2025, to consider the proposed amendments to the zoning ordinance and considered all evidence, including but not limited to public testimony and the evaluations and recommendations of staff; and
WHEREAS, notices of said public hearings were made at the time and in the manner required by law.

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

Section 1. All of the statements set forth in the recitals above are true and correct and are incorporated herein as substantive findings.

Section 2. Title 19 (Zoning) of the Imperial Beach Municipal Code is hereby amended to read as shown in Exhibit "A" attached hereto and incorporated herein by reference.

Section 3. The City Council finds that this Ordinance is exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061(b)(3) (the common sense exemption) because it can be seen with certainty that there is no possibility that the adoption of this ordinance may have a significant effect on the environment, in that the ordinance merely implements the provisions of state law and includes no provisions beyond those included in Government Code Sections 65650 et seq. and 65660 et seq. that that may result in a direct or indirect impact on the physical environment.

Section 4. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of the Ordinance, or its application to any person or circumstance, is for any reason held to be invalid and unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of the remaining sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases of this Ordinance, or its application to any other person or circumstance. The City Council declares that it would have adopted each section, subsection, subdivision, paragraph, sentence, clause or phrase hereof, irrespective of the fact that any one or more other sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases hereof be declared invalid or unenforceable.

Section 5. The provisions of Exhibit “A” were previously approved by the California Coastal Commission on May 7, 2025.

Section 6. All provisions of Ordinance No. 2023-1225 and its exhibits that conflict with or are inconsistent with the provisions of this Ordinance are hereby superseded and replaced in their entirety.

Section 7. The City Clerk is directed to prepare and have published a summary of this Ordinance no less than five (5) days prior to the consideration of its adoption and again within fifteen (15) days after adoption indicating votes cast.

Ordinance 2025-1258 and 2025-1259

INTRODUCED AND FIRST READ at a regular meeting of the City Council of the City of Imperial Beach held on the on the 3rd day of December, 2025; and thereafter PASSED AND ADOPTED at a regular meeting of the City Council of the City of Imperial Beach, California, on the __________ day of ________________ , 2026, by the following vote:

AYES: COUNCILMEMBERS: NONE
NOES: COUNCILMEMBERS: NONE
ABSENT: COUNCILMEMBERS: NONE

MITCHELL D. MCKAY,
MAYOR
ATTEST:

JACQUELINE M. KELLY, MMC

CITY CLERK
APPROVED AS TO FORM:

JENNIFER M. LYON

CITY ATTORNEY

Ordinance 2025-1258 and 2025-1259

ORDINANCE NO. 2025-1259

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF IMPERIAL BEACH, CALIFORNIA, AMENDING TITLE 19 (ZONING) OF THE IMPERIAL BEACH MUNICIPAL CODE TO PROVIDE

FOR BY RIGHT APPROVAL OF CERTAIN SITES DESIGNATED FOR LOWER INCOME

HOUSING AND TO UPDATE THE CITY'S DENSITY BONUS ORDINANCE TO REFLECT CHANGES IN STATE LAW.

WHEREAS, Government Code Section 65863.2, subdivision (c), requires that certain sites designated for lower income housing and included in the site inventory for previous housing elements, be zoned to permit by right approval, as defined in Government Code Section 65863.2, subdivisions (h) and (i); and
WHEREAS, Program 9 (By-Right Approval for Projects with 20 Percent Affordable Units) of Section 5.2.3 (Provision of Adequate Housing Sites) of the City’s Housing Element, which was adopted on July 16, 2021 and subsequently approved by the California Department of Housing and Community Development, provides that the City will amend the Zoning Ordinance to require by-right approval of housing that includes 20 percent of the units affordable to lower income households on certain sites designated in the Housing Element; and WHEREAS, Sections 65915 et seq. of the California Government Code, known as State Density Bonus Law, require a city to provide a developer that proposes a housing development containing affordable and other types of housing with a density bonus and other incentives; and WHEREAS, California Government Code Section 65915(a) requires that all cities adopt an ordinance that specifies how compliance with State Density Bonus Law will be implemented; and
WHEREAS, since adoption of the City’s density bonus ordinance, the State Legislature has passed, and the Governor has signed into law, changes to State Density Bonus Law; and WHEREAS, Program 11 of Section 5.2.4 (Removal of Governmental Constraints) of the City’s Housing Element, which was adopted on July 16, 2021, and subsequently approved by the California Department of Housing and Community Development, provides that the City will "[r]evise the Zoning Ordinance to update density bonus provisions consistent with State law"; and WHEREAS, a Public Notice of Availability of Proposed General Plan/Local Coastal Program Amendments was issued, which opened a six-week public review period that ran from August 22, 2024, to October 7, 2024; and
WHEREAS, the City Council conducted a public hearing on November 6, 2024 to consider the proposed amendments to the zoning ordinance and considered all evidence, including but not limited to public testimony and the evaluations and recommendations of staff; and WHEREAS, notice of said public hearing was made at the time and in the manner required by law.

WHEREAS, on November 6, 2024, the City Council introduced and conducted the first reading of Ordinance No. 2024-1251 and subsequently passed and adopted the ordinance on November 20, 2024.

Ordinance 2025-1258 and 2025-1259

WHEREAS, the proposed amendments to Title 19 of the Imperial Beach Municipal Code in Ordinance No, 2024-1251 were then submitted to the California Coastal Commission for review and certification for the amendment to be effective.

WHEREAS, during its review of the related Local Coastal Program Amendment (LCPA23-0001), the Coastal Commission required clerical revisions, including consolidating the two identical “Exhibit A” documents which were attached to Ordinance Nos. 2023-1225 and 2024- 1251, updating outdated Government Code references, and correcting a duplicate zoning definition number used in both ordinances. These revisions were incorporated, and the Commission approved the LCPA on May 7, 2025. Because the revisions adopted by Coastal now differ slightly from those previously adopted by the City Council in Ordinance Nos. 2023-1225 and 2024-1251, Ordinance Nos. 2025-1258 and 2025-1259 are being introduced.

WHEREAS, another Public Notice of Availability of Proposed General Plan/Local Coastal Program Amendments was issued, which opened a six-week public review period that ran from October 19, 2025, to December 2, 2025; and
WHEREAS, the City Council conducted a public hearing on December 3, 2025, to consider the proposed amendments to the zoning ordinance and considered all evidence, including but not limited to public testimony and the evaluations and recommendations of staff; and
WHEREAS, notices of said public hearings were made at the time and in the manner required by law.

NOW, THEREFORE, the City Council of the City of Imperial Beach hereby ordains as follows:

Section 1. All of the statements set forth in the recitals above are true and correct and are incorporated herein as substantive findings.

Section 2. Title 19 (Zoning) of the Imperial Beach Municipal Code is hereby amended to read as shown in Exhibit "A" attached hereto and incorporated herein by reference.

Section 3. The City Council finds that this Ordinance is exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061(b)(3) (the common sense exemption) because it can be seen with certainty that there is no possibility that the adoption of this ordinance may have a significant effect on the environment, in that the ordinance merely implements the provisions of state law and includes no provisions beyond those required by Government Code Section 65580, 65583, and 65583.2 and State Density Bonus Law that that may result in a direct or indirect impact on the physical environment.

Section 4. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of the Ordinance, or its application to any person or circumstance, is for any reason held to be invalid and unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of the remaining sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases of this Ordinance, or its application to any other person or circumstance. The City Council declares that it would have adopted each section, subsection, subdivision, paragraph, sentence, clause or phrase hereof, irrespective of the fact that any one or more other

Ordinance 2025-1258 and 2025-1259

sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases hereof be declared invalid or unenforceable.

Section 5. The provisions of Exhibit “A” were previously approved by the California Coastal Commission on May 7, 2025.

Section 6. All provisions of Ordinance No. 2024-1251 that conflict with or are inconsistent with the provisions of this Ordinance are hereby superseded and replaced in their entirety.

Section 7. The City Clerk is directed to prepare and have published a summary of this Ordinance no less than five (5) days prior to the consideration of its adoption and again within fifteen (15) days after adoption indicating votes cast.

Ordinance 2025-1258 and 2025-1259

INTRODUCED AND FIRST READ at a regular meeting of the City Council of the City of Imperial Beach held on the on the 3rd day of December, 2025; and thereafter PASSED AND ADOPTED at a regular meeting of the City Council of the City of Imperial Beach, California, on the __________ day of ___________, 2026, by the following vote:

AYES: COUNCILMEMBERS: NONE
NOES: COUNCILMEMBERS: NONE
ABSENT: COUNCILMEMBERS: NONE

MITCHELL D. MCKAY,
MAYOR
ATTEST:

JACQUELINE M. KELLY, MMC

CITY CLERK
APPROVED AS TO FORM:

JENNIFER M. LYON

CITY ATTORNEY

Ordinance 2025-1258 and 2025-1259

EXHIBIT “A”
To Ordinance No. 2025-1258 & Ordinance No. 2025-1259

1.) Title 19, Chapter 19.04 (Definitions), of the Imperial Beach Municipal Code is hereby amended by adding or amending the following sections:

19.04.056 Affordable rent
“Affordable rent” means the maximum allowable rent for a unit affordable to lower income households, equal to one-twelfth (1/12th) of 30 percent of 60 percent of area median income adjusted for assumed household size of one person in a studio affordable unit, two persons in a one-bedroom affordable unit, and one additional person for every additional bedroom; or as determined by the financing for the project, such as rents established for projects receiving tax credits.

19.04.058 Affordable sales price
“Affordable sales price” means the maximum purchase price that will be affordable to a lower income household. The purchase price shall be considered affordable only if it is based on a reasonable down payment, and monthly housing payments (including interest, principal, mortgage insurance, property taxes, homeowners insurance, homeowners association dues, property maintenance and repairs, and a reasonable allowance for utilities), all as determined by the city, that total no more than one-twelfth (1/12th) of 30 percent of 70 percent of area median income adjusted for assumed household size of one person in a studio affordable unit, two persons in a one-bedroom affordable unit, and one additional person for every additional bedroom; or as determined by the financing for the project.

19.04.091 Area median income
“Area median income” means the area median income applicable to San Diego County, adjusted for household size, as published and periodically updated in the California Code of Regulations, Title 25, Section 6932.

19.04.187 By right review
“By right review” is as defined in Government Code Section 65583.2(i). By right review does not exempt the use from design review or approval of a coastal development permit. By right review that includes design review approval is described in Section 19.83.065.

19.04.526 Lower income household
“Lower income household” means a household whose household income does not exceed the low income limits applicable to San Diego County, adjusted for household size, as published and periodically updated in the California Code of Regulations, Title 25, Section 6932.

19.04.527. Low barrier navigation center
“Low barrier navigation center” is a facility as defined in Government Code Section 65660(a) that meets all of the requirements of Government Code Sections 65660 et seq. (Article 12 of Chapter 3 of Division 1 of Title 7).

19.04.527 Main streets

Ordinance 2025-1258 and 2025-1259

“Main street” is defined as the primary street adjacent to a parcel that carries the largest amount of pedestrian and automotive traffic. For the commercial zones, within the City, the main streets are considered Palm Avenue, Old Plam Avenue, State Route 75 (SR-75), Seacoast Drive, Imperial Beach Boulevard, and 13th Street.

19.04.528 Main streets
“Main street” is defined as the primary street adjacent to a parcel that carries the largest amount of pedestrian and automotive traffic. For the commercial zones within the City, the main streets are considered Palm Avenue, Old Palm Avenue, State Route 75 (SR-75), Seacoast Drive, Imperial Beach Boulevard, and 13th Street.

19.04.747 Supportive housing
"Supportive housing" means housing with no limit on length of stay, that is occupied by the target population, and that is linked to onsite or offsite services that assist the supportive housing resident in retaining the housing, improving his or her health status, and maximizing his or her ability to live and, when possible, work in the community pursuant to Health and Safety Code Section 50675.14(a)(B)(2). The “target population” is defined in Government Code Section 65582(p). Pursuant to Government Code Section 65583(ac)(53), transitional housing and supportive housing shall be considered a residential use of property, and shall be subject only to those restrictions that apply to other residential dwellings of the same type in the same zone.

19.04.748. Supportive housing, permanent
“Supportive housing, permanent” means housing as defined in Government Code Section 65650(b) serving the target population is defined in Government Code Section 65650(d) that meets all of the requirements of Government Code Sections 65650 et seq. (Article 11 of Chapter 3 of Division 1 of Title 7).

2.) Title 19, Subsection 19.15.020(A), of Chapter 19.15, R-3000 Two-Family Residential Zone, of the Imperial Beach Municipal Code is hereby amended by revisions as follows:

19.15.020. Permitted uses.

A. The following uses are permitted in the R-3000 zone, provided that all projects except Accessory Dwelling Units and Junior Accessory Dwelling Units containing two to four units shall be subject to the approval of a site plan review by the community development department and five or more units shall be subject to the approval of a site plan review by the planning commission.

Permanent supportive housing shall be reviewed consistent with the provisions of Government Code Sections 65650 et seq. and subject to by right review that includes design review approval:

1. Detached or attached residential dwelling units;

2. Accessory buildings, structures and uses customarily incidental to any permitted use;

3. Private garages to accommodate not more than four cars per dwelling unit;

4. Family day care facilities as permitted in Chapter 19.64;

5. Home occupations as permitted in Chapter 19.74;

6. Swimming pools, spas and hot tubs as permitted in Chapter 19.70;

Ordinance 2025-1258 and 2025-1259

7. Signs as permitted in Chapter 19.52;

8. Satellite dish antennae as permitted in Chapter 19.71;

9. Accessory Dwelling Units and Junior Accessory Dwelling Units as permitted in Chapter 19.66;

10. Permanent supportive housing with a maximum of 50 units.

3.) Title 19, Subsection 19.16.020(A), of Chapter 19.16, R-2000 Medium Density Residential Zone, of the Imperial Beach Municipal Code is hereby amended by revisions as follows:

19.16.020. Permitted uses.

A. The following uses are permitted in the R-2000 zone, provided that all projects except Accessory Dwelling Units and Junior Accessory Dwelling Units containing two or more units shall be subject to the approval of a site plan review by the community development department and five or more units shall be subject to the approval of a site plan review by the planning commission.

Permanent supportive housing shall be reviewed consistent with the provisions of Government Code Sections 65650 et seq. and subject to by right review that includes design review approval:

1. Detached or attached residential dwelling units;

2. Accessory buildings, structures and uses customarily incidental to any permitted use;

3. Private garages to accommodate not more than four cars per dwelling unit;

4. Family day care facilities as permitted in Chapter 19.64;

5. Home occupations as permitted in Chapter 19.74;

6. Swimming pools, spas and hot tubs as permitted in Chapter 19.70;

7. Signs as permitted in Chapter 19.52;

8. Satellite dish antennae as permitted in Chapter 19.71.;

9. Accessory Dwelling Units and Junior Accessory Dwelling Units as permitted in Chapter 19.66.

10. Permanent supportive housing with a maximum of 50 units.

4.) Title 19, Subsection 19.17.020(A), of Chapter 19.17, R-1500 High Density Residential Zone, of the Imperial Beach Municipal Code is hereby amended by revisions as follows:

19.17.020. Permitted uses.

A. The following uses are permitted in the R-1500 zone, provided that all projects except Accessory Dwelling Units and Junior Accessory Dwelling Units containing two to four units shall be subject to the approval of a site plan review by the community development department and five or more units shall be subject to the approval of a site plan review by the planning commission.

Permanent supportive housing shall be reviewed consistent with the provisions of Government Code Sections 65650 et seq. and subject to by right review that includes design review approval:

1. Detached or attached residential dwelling units;

2. Accessory buildings, structures and uses customarily incidental to any permitted use;

Ordinance 2025-1258 and 2025-1259

3. Private garages to accommodate not more than four cars per dwelling unit;

4. Family day care facilities as permitted in Chapter 19.64;

5. Home occupations as permitted in Chapter 19.74;

6. Swimming pools, spas and hot tubs as permitted in Chapter 19.70;

7. Signs as permitted in Chapter 19.52;

8. Satellite dish antennae as permitted in Chapter 19.71;

9. Accessory Dwelling Units and Junior Accessory Dwelling Units as permitted in Chapter 19.66;

10. Permanent supportive housing with a maximum of 50 units.

5.) Title 19, Section 19.23.010 of Chapter 19.23, Commercial Mixed-Use Regulations, of the Imperial Beach Municipal Code is hereby amended by revisions as follows:

C/M
U-1
C/M
U-2
C/M
U-3 Notes
Commercial Uses
Adult bookstore,
adult hotel/motel,
adult mini-motion
picture theater,
adult motion picture
arcade, adult
motion picture
theater, sexual
encounter studio,
rap parlor, model
studio
P N N See definitions. Subject to requirements for adultoriented businesses in Chapter 19.60.

Antique store P P P See definition.

Arcades and game
centers
C C C See definition.

Art studio, gallery,
museum
P P P See definition.

Athletic and health
clubs
P P P See definition.

Bars or cocktail
lounges
C C N See definition.
with live
entertainment
C C N See definition.

Beach equipment
rental, bike rental,
surf shop, fishing
supply
P P N

Ordinance 2025-1258 and 2025-1259

C/M
U-1
C/M
U-2
C/M
U-3 Notes
Body piercing
establishment
C N N See definition. Subject to
Section 19.26.020(B)(1).

Bookstore P P P
Boutique P P P
Cabaret C N N See definition. Subject to Chapter 19.60.

Campsites C N N See definition.

Cannabis permitted
use
P N N See definition and number allowed in
Chapter 4.60. Subject to the requirements of
Chapters 19.61 and 4.60.

Child day care
center
P P P See definition.

Clinic P P P See definition.

Dancehall C N N See definition. Subject to Chapter 19.60.

Department store P N N
Drive-in restaurant P P N See definition.

Drive-through
establishment
C N C See definition.

Fortune telling
establishment
C N N See definition. Subject to
Section 19.26.020(B)(3).

Hostel C C N See definition.

Kennel C N N See definition. Subject to Section 19.74.050.

Kiosk P P P See definition. In C/MU-2: Subject to
Section 19.27.020(A)(2).

Liquor store C C N See definition.

Massage therapy
establishment
P P P See definition. Per Senate Bill 731.

Mortuary C N N
Motor vehicle sales C N N Subject to Section 19.74.070.

Palm reading
establishment
C N N See definition. Subject to
Section 19.26.020(B)(3).

Pawnshop C N C See definition.

Personal
convenience
services
P P P See definition.

Pool or billiard hall C C N See definition.
with live
entertainment
C C N See definition.

Postal services,
private
P P P
Professional
offices, financial
P P P

Ordinance 2025-1258 and 2025-1259

C/M
U-1
C/M
U-2
C/M
U-3 Notes
institutions, and
real estate
Restaurant P P P See definition.
with live
entertainment
C C C See definition.

Retail food store P P P
Retail sales P P P See definition.

Sales of
secondhand or
used merchandise
N N N See definition.

Single-family
detached
N N* N *Only permitted in Seacoast MixedUse/Residential Overlay Zone.

Tattoo
establishment
C N N See definition. Subject to
Section 19.26.020(B)(4).

Residential and Similar Uses
Accessory building,
structures, private
garages
C C C See definition of accessory building.

Boarding house C N N See definition.

Emergency shelter P N N See definition.

Hostel N C N See definition.

Hotel, motel, bed
and breakfast
lodging, inn (H-1,
H-2, H-3, H4, H-5)
P P P See definitions above.

Live/work unit P P P See definition.

Low barrier
navigation center
P P P See definition. Subject to review consistent with Government Code Sections 65660 et seq. and
to by right review that includes design review
approval.

Mixed-use
development
P P P See definition.

Motor
home/manufacture
d housing
community
N N N See definitions.

Multiple-family
dwellings
P P P See definition. See requirement for active
commercial uses on ground floor per
Sections 19.26.020(A)(1), 19.27.020(A)(1), 19.2

8.020(A)(1).

Second-family units N N N

Ordinance 2025-1258 and 2025-1259

C/M
U-1
C/M
U-2
C/M
U-3 Notes
Senior housing,
nursing home,
retirement home
C C C See definitions.

Short-term rental P P P See definition.

Single-family
detached
N N* N *Only permitted in Seacoast Residential Overlay
Zone.

Single-room
occupancy units
C N N
Supportive
housing,
permanent, with a
maximum of 50
units
P P P See definition. Subject to review consistent with Government Code Sections 65650 et seq. and to
by right review that includes design review
approval.

Timeshare C C N See definition.

Light Industrial Uses
Automobile
dismantling or
wrecking yard
N N N See definition.

Automobile repair
or automobile body
shop
C N N See definitions.

Automobile sales
lot
C N N See definition.

Automobile service
station/gas station
C N C See definition.

Energy facility C N N See definition.

Equipment rental
yard
C N N
Incidental
manufacturing
C C C See definition.

Light
manufacturing,
manufacturing,
industrial
N N N
Public and Semi-Public Uses
Campsites N N N See definition.

Clubs,
fraternal/veteran/se
rvice organizations
C C C Subject to
Sections 19.26.020(B)(2), 19.27.020(A)(3), 19.2

8.020(A)(2).
with live
entertainment
C C C
Educational
institutions
C C N

Ordinance 2025-1258 and 2025-1259

C/M
U-1
C/M
U-2
C/M
U-3 Notes
Governmental or
quasi-public
building
P P P
Library P P P
Religious assembly C C C See definition. Subject to
Sections 19.26.020(B)(2), 19.27.020(A)(3), 19.2

8.020(A)(2).

Public parking lot P P P
Theatre/assembly C C C
Wireless
communication
facility
C C C See definition. Subject to Chapter 19.90.

Green Building Utilities
Green building
utilities
P P P See definition. Subject to Chapter 19.92.

Open Space and Recreation
Passive public
parks
P P P
Playground and
recreation areas
C C C Permitted if incidental and accessory to a
permitted use.

Public riding and
hiking trails
P P P

2.) Title 19, Subsection 19.26.020(C), of Chapter 19.26, C/MU-1 General Commercial And Mixed-Use Zone, of the Imperial Beach Municipal Code, is hereby amended by revisions as follows:

C. Site plan review by the City Council will be required if any of the following applies to proposed uses located in the C/MU-1 zone:

1. All proposed developments involving new construction.

2. Any addition, construction, or alteration of existing buildings resulting in an increase of ten percent or greater of the gross floor area of a commercial structure or in an individual commercial space within the structure or within a commercial shopping center.

3. Any proposed use or structure requiring the approval of a conditional use permit.

4. Any development including residential dwelling units, except Accessory Dwelling Units and Junior Accessory Dwelling Units as allowed in Chapter 19.66.

5. Notwithstanding any other provisions of this subsection C, low-barrier navigation centers and permanent supportive housing shall be subject to by right review that includes design review approval.

Ordinance 2025-1258 and 2025-1259

5. Notwithstanding any other provisions of this subsection C, the following uses shall be subject only to by right review that includes design review approval as described in Section 19.83.065:
a. Llow-barrier navigation centers; and
b. Ppermanent supportive housing;
c. Housing development projects where 20 percent of the total number of housing units in the project are proposed to be available to lower income househoulds at affordable rent or affordable sales price, located on sites shown in Table C-2 of the Housing Element as designated for lower income housing and identified in the 5th cycle; and d. Other uses eligible for by right approval by state law. shall be subject to by right review that includes design review approval.

3.) Title 19, Subsection 19.27.020(B), of Chapter 19.27, C/MU-2 Seacoast Commercial and Mixed-Use Zone, of the Imperial Beach Municipal Code is hereby amended by revisions as follows:

B. Site plan review by the City Council will be required if any of the following applies for proposed uses located in the C/MU-2 zone:

1. All proposed developments involving new construction;

2. Any addition, construction, remodeling or alteration of existing buildings resulting in an increase of ten percent or greater of the gross floor area of a commercial structure or in an individual commercial space within the structure or within a commercial shopping center;

3. Any proposed commercial use, residential use, or structure requiring the approval of a conditional use permit;

4. Any development including residential dwelling units except Accessory Dwelling Units and Junior Accessory Dwelling Units as allowed in Chapter 19.66;

5. Public parking lots; and

6. Notwithstanding any other provisions of this subsection B, low-barrier navigation centers and permanent supportive housing shall be subject to by right review that includes design review approval.

6. Notwithstanding any other provisions of this subsection B, the following uses shall be subject only to by right review that includes design review approval as described in Section 19.83.065:
a. Llow-barrier navigation centers; and
b. Ppermanent supportive housing;
c. Housing development projects where 20 percent of the total number of housing units in the project are proposed to be available to lower income househoulds at affordable rent or affordable housing cost, located on sites shown in Table C-2 of the Housing Element as designated for lower income housing and identified in the 5th cycle; and

Ordinance 2025-1258 and 2025-1259

d. Other uses eligible for by right approval by state law. shall be subject to by right review that includes design review approval.

4.) Title 19, Subsection 19.28.020(B), of Chapter 19.28, C/MU-3 Neighborhood Commercial And Mixed-Use Zone, of the Imperial Beach Municipal Code is hereby amended by revisions as follows:

B. Site plan review by the City Council will be required if any of the following applies for proposed uses located in the C/MU-3 zone:

1. All proposed developments involving new construction;

2. Any addition, construction, remodeling, or alteration of existing buildings resulting in an increase of ten percent or greater of the gross floor area of a commercial structure or in an individual commercial space within the structure or within a commercial shopping center;

3. Any proposed commercial use or structure requiring the approval of a conditional use permit;

4. Any development including residential dwelling units except Accessory Dwelling Units and Junior Accessory Dwelling Units as allowed in Chapter 19.66;

5. Public parking lots; and

6. Notwithstanding any other provisions of this subsection B, low-barrier navigation centers and permanent supportive housing shall be subject to by right review that includes design review approval.

6. Notwithstanding any other provisions of this subsection B, the following uses shall be subject only to by right review that includes design review approval as described in Section 19.83.065:
a. Llow-barrier navigation centers; and
b. Ppermanent supportive housing;
c. Housing development projects where 20 percent of the total number of housing units in the project are proposed to be available to lower income househoulds at affordable rent or affordable housing cost, located on sites shown in Table C-2 of the Housing Element as designated for lower income housing and identified in the 5th cycle; and d. Other uses eligible for by right approval by state law. shall be subject to by right review that includes design review approval.

9.) Title 19, Section 19.48.040, of Chapter 19.48 Off-Street Parking, of the Imperial Beach Municipal Code is hereby amended by revisions as follows:

19.48.040. Required spaces—Other residentially oriented uses.

The number of required off-street parking spaces for other residentially oriented uses shall be as follows:

A. Boarding houses, retirement homes, and clubs having sleeping rooms: two spaces plus one space for each three beds;

Ordinance 2025-1258 and 2025-1259

B. Hostels: one space per five beds, plus two total employee spaces; C. Mobile home parks, trailer parks: one and one-half spaces for each trailer space; D. Hospitals, sanitariums: one and one-half spaces for each bed.

E. Accessory Dwelling Units and Junior Accessory Dwelling Units: As specified in Chapter 19.66.

F. Permanent supportive housing: as specified in Government Code Section 65650 et seq.

5.) Title 19, Subsection 19.65.030(C)(3), of Chapter 19.65, Affordable Housing Density Bonus, of the Imperial Beach Municipal Code, is hereby amended by revisions as follows:

3. Requested waivers. The application shall include the following minimum information for each waiver requested on each lot, shown on a site plan (if applicable),: a. tThe City's usual development standard and the requested development standard.
b. Reasonable documentation that the development standards for which waivers are requested will have the effect of physically precluding the construction of the development at the densities or with the concessions or incentives permitted by Government Code Section 65915.

6.) Title 19, Subsection 19.65.070(C), of Chapter 19.65, Affordable Housing Density Bonus, of the Imperial Beach Municipal Code, is hereby amended by revisions as follows:

C. Except where a housing development is eligible for an additional bonus pursuant to Government Code Section 65915(v), Eeach housing development is entitled to only one density bonus. If a housing development qualifies for a density bonus under more than one category, the applicant shall identify the category under which the density bonus is requested to be granted. Each housing development is entitled to only one density bonus.

7.) Title 19, Subsection 19.65.070(D), of Chapter 19.65, Affordable Housing Density Bonus, of the Imperial Beach Municipal Code, is hereby amended by revisions as follows:

D. The density bonus units shall not be included in determining whether the number of affordable units required to qualify a housing development for a density bonus pursuant to State Density Bonus Law.

8.) Title 19, Subsection 19.83.020(A), of Chapter 19.83, Design Review, of the Imperial Beach Municipal Code is hereby amended by revisions as follows:

A. Design review by the Design Review Board is required as follows:

1. Any development adjacent to the following corridors within the City limits:
a. Highway 75;
b. Palm Avenue;

Ordinance 2025-1258 and 2025-1259

c. Silver Strand Boulevard;
d. Rainbow Drive;
e. Imperial Beach Boulevard;
f. Seacoast Drive;
g. 9th Street; and,
h. 13th Street;

2. All commercial development within the City;

3. All development requiring site plan review by the Planning Commission or a conditional use permit;

4. All sign permits when deemed necessary by the Community Development Department;

5. All City projects, except street repair, resurfacing, etc.

6. Those projects referred by the Community Development Department for action.

7. Those projects eligible for by right approval that includes design review approval, subject to the provisions of Section 19.83.065.

9.) Title 19, Subsection 19.83.065, is added to Chapter 19.83, Design Review, of the Imperial Beach Municipal Code to read as follows:

19.83.065 By right approval that includes design review approval.

A. As provided by Government Code Section 65583.2(i), design review approval for projects eligible for by right approval is exempt from the California Environmental Quality Act. Review of these projects shall be limited to conformance with objective standards established by the general plan, zoning ordinance, and design guidelines and conformance with the local coastal plan.

B. Permanent supportive housing shall be reviewed consistent with the provisions of Government Code Sections 65650 et seq.

C. Low barrier navigation centers shall be reviewed consistent with the provisions of Government Code Section 65660 et seq.

D. Any subdivision of the site shall be subject to all laws, including but not limited to Title 18 (Subdivisions).

E. The project shall comply with the development standards for the affordable units contained in Section 19.65.090.

F. The applicant shall enter into an affordable housing agreement with the city as follows:

1. The affordable housing agreement shall set forth the conditions and guidelines to be met regarding the affordable housing included in the project, including but not limited to the type,

Ordinance 2025-1258 and 2025-1259

size and location of each affordable unit; the eligible occupants; affordable rents and sales prices, as applicable; phasing of the affordable units in relation to the market-rate units; and other relevant provisions approved by the City Attorney. The affordable housing agreement shall run with the land, to be executed by the City Manager or designee.

2. The agreement shall require the continued affordability of rental units that qualified the applicant for by-right approval for a minimum of 55 years and shall require the continued affordability of for-sale units for 45 years.

1.3. The executed affordable housing agreement shall be recorded against the housing development prior to final or parcel map approval, or prior to issuance of building permits for the housing development, whichever is earliest.

 

























  

 





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ATTACHMENT 4

ATTACHMENT 5

Ordinance 2024-1251

Section 2. Title 19 (Zoning) of the Imperial Beach Municipal Code is hereby amended to read as shown in Exhibit "A" attached hereto and incorporated herein by reference.

Section 3. The City Council finds that this Ordinance is exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061 (b)(3) (the common sense exemption) because it can be seen with certainty that there is no possibility that the adoption of this ordinance may have a significant effect on the environment, in that the ordinance merely implements the provisions of state law and includes no provisions beyond those required by Government Code Section 65863.2 and State Density Bonus Law that that may result in a direct or indirect impact on the physical environment.

Section 4. The Community Development Director or designee is hereby authorized to submit this Ordinance as part of a Local Coastal Program Amendment to the California Coastal Commission for their review and adoption.

Section 5. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of the Ordinance, or its application to any person or circumstance, is for any reason held to be invalid and unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of the remaining sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases of this Ordinance, or its application to any other person or circumstance. The City Council declares that it would have adopted each section, subsection, subdivision, paragraph, sentence, clause or phrase hereof, irrespective of the fact that any one or more other sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases hereof be declared invalid or unenforceable.

Section 6: This Ordinance shall take effect upon approval by the California Coastal Commission.

Section 7. The City Clerk is directed to prepare and have published a summary of this Ordinance no less than five (5) days prior to the consideration of its adoption and again within fifteen (15) days after adoption indicating votes cast.

INTRODUCED AND FIRST READ at a regular meeting of the City Council of the City of Imperial Beach held on the on the 6
th day of November, 2024; and thereafter
PASSED AND ADOPTED at a regular meeting of the City Council of the City of Imperial Beach, California, on the 20th day of November, 2024, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

LEYBA-GONZALEZ, FISHER, SEABURY, MCKAY,

AGUIRRE
NONE
NONE

PALOMA AGUIRRE, MAYOR

ATTEST
J�C

CITY RK
\. _ __ )
APPROVED AS TO FORM:

JENNIFER'l:vON L./'"/ CITY _A TTOR�EY)
·! LJ I
�/
Ordinance 2024-1251

ATTACHMENT 6

Ordinance 2023-1225

irrespective of the fact that any one or more other sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases hereof be declared invalid or unenforceable.

Section 6: This Ordinance shall take effect upon approval by the California Coastal Commission.

Section 7. The City Clerk is directed to prepare and have published a summary of this Ordinance no less than five (5) days prior to the consideration of its adoption and again within fifteen (15) days after adoption indicating votes cast.

INTRODUCED AND FIRST READ at a regular meeting of the City Council of the City of Imperial Beach held on the on the 5th day of April, 2023; and thereafter PASSED AND ADOPTED at a regular meeting of the City Council of the City of Imperial Beach, California, on the 19th day of April, 2023, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ATTEST:

ITV CLERK
APPROVED AS TO FORM:

FISHER, MCKAY, LEYBA-GONZALEZ, AGUIRRE
NONE

SEABURY

PALOMA AGUIRRE, MAYOR

P a g e | 1
December 3, 2025
ITEM TITLE: ORD. NO. 2025-1257 & RESO. NO. 2025-063 PROVIDING NOTICE OF INTENT

TO APPROVE AMENDMENT TO RETIREMENT CONTRACT BETWEEN BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM (CalPERS) & CITY OF IMPERIAL BEACH, CALIFORNIA. (0520-70) ORIGINATING DEPARTMENT:

Human Resources
EXECUTIVE SUMMARY:

Staff is recommending that the City Council introduce Ordinance No. 2025-1257 by title only and adopt Resolution No. 2025-063 providing the Board of Administration of the California Public Employees’ Retirement System (CalPERS) notice of intent to approve an amendment to the retirement contract to include additional cost sharing for classic local miscellaneous members, classic local fire members, and classic local ocean beach lifeguard members. The percentages included in the amendment to the contract would continue to equate to approximately fifty (50%) percent of the total Normal Cost Rate as permitted under Government Code §20516(f).

RECOMMENDATION:

Staff is recommending that the City Council:

1. Introduce Ordinance No. 2025-1257 by title only and waive future reading and set the matter for adoption at the City Council meeting on January 21, 2026; and

2. Adopt Resolution of Intention No. 2025-063 providing the Board of Administration of the California Public Employees’ Retirement System (CalPERS) a notice of intent to approve an amendment to the retirement contract to include cost sharing for classic local miscellaneous members, classic local fire members, and classic local ocean beach lifeguard members.

OPTIONS:
 Introduce Ordinance No. 2025-1257 and adopt Resolution of Intention No. 2025-063 providing the Board of Administration of the California Public Employees’ Retirement System (CalPERS) a notice of intent to approve an amendment to the retirement contract to include cost sharing for classic local miscellaneous members, classic local fire members, and classic local ocean beach lifeguard members.  Provide direction to the City Manager to take a specific action.  Request additional information and an additional report.

BACKGROUND/ANALYSIS:

The City of Imperial Beach is a member of the California Public Employees’ Retirement System (CalPERS). In accordance with California Government Code Section 20516, the City is seeking

P a g e | 2
to amend its retirement contract with CalPERS to include cost sharing for classic local miscellaneous members, classic local fire members, and classic local ocean beach lifeguard members.

On August 20, 2025, the City Council approved the Memorandum of Understanding (MOU) with Imperial Beach Firefighters’ Association, Local 4692 (IBFA). The MOU included a change to retirement benefits to include cost sharing for Fire Classic – Tier 1 & Tier 2 members. In addition to approving the MOU, Council approved the City’s Appointive Management & Confidential Benefits Summary, which also included a change to the retirement benefits to include cost sharing for Classic Tier 1 & Tier 2 Members of the unrepresented groups. Later, on September 3, 2025, the City Council approved the Memorandum of Understanding (MOU) with Service Employees International Union (SEIU), Local 221, which also included a change to retirement benefits to include cost sharing for Miscellaneous Classic – Tier 1 & Tier 2 members.

The changes to the retirement benefits require a contract amendment with CalPERS. The process requires the City Council to adopt a Resolution of Intention and an Ordinance to approve an amendment to the contract. The City Council would consider the first reading of the Ordinance under this item and would subsequently be presented with the second and final reading of the Ordinance on January 21, 2026. The Ordinance would become effective 30 days after the final reading and, according to CalPERS regulations, the effective date of the contract amendment would be the first day of the payroll period following the effective date of the final Ordinance, which is anticipated to be March 6, 2026.

The City’s retirement formulas are as follows:

Miscellaneous Employees (including represented, confidential, mid-management, and management employees)
Employees hired prior to March 9, 2012, Miscellaneous Employees (Classic Member – Tier 1): The CalPERS formula for members is 2.7% @ 55 with the use of average of the employee’s highest-one-year salary.

Employees hired on or after March 9, 2012, Miscellaneous Employees (Classic Member – Tier 2): The CalPERS formula for members is 2% @ 60 with the use of average of the employee’s highest-three-year salary.

Employees hired after January 1, 2013, Miscellaneous Employees (PEPRA Member): The CalPERS formula for members is 2% @ 62 with the use of average of the employee’s highest-three-year salary.

The following are the changes to the employee cost sharing retirement contract amendment with CalPERS:

Employees hired prior to March 9, 2012, Miscellaneous (Classic Member – Tier 1):

Currently, employees/members contribute 8% of the normal employee rate with a 2.8% modifier. Upon the effective date of the contract amendment with CalPERS, members/employees would pick up an additional modifier of 2% on top of the existing

2.8% for a total modifier of 4.8% making the employees/members cost approximately

12.8%. As stated in the MOU, if the employer costs increase, employees may be responsible for up to 50% cost sharing.

Employees hired on or after March 9, 2012, Miscellaneous (Classic Member – Tier 2): Currently, employees/members contribute 7% of the normal employee rate with a .6% modifier. Upon the effective date of the contract amendment with CalPERS, members/employees would pick up an additional modifier of 2% on top of the existing .6% for a total modifier of 2.6% making the employees/members cost approximately 9.6%. As

P a g e | 3
stated in the MOU, if the employer costs increase, employees may be responsible for up to 50% cost sharing.

Employees hired after January 1, 2013, Miscellaneous Employees (PEPRA Member): Effective January 1, 2013, new members already pay 50% of the normal cost contribution as defined by the Public Employees’ Pension Reform Act (PEPRA).

Employees under this retirement tier would not have a change in retirement benefits.

Fire Employees
Employees hired prior to March 9, 2012, Safety Fire Employees (Classic Member – Tier 1): The CalPERS formula for members is 3% @ 50 with the use of average of the employee’s highest-one-year salary.

Employees hired on or after March 9, 2012, Safety Fire Employees (Classic Member – Tier 2): The CalPERS formula for members is 2% @ 50 with the use of average of the employee’s highest-three-year salary.

Employees hired after January 1, 2013, Safety Fire Employees (PEPRA Member):

The CalPERS formula for members is 2.7% @ 57 with the use of average of the employee’s highest-three-year salary.

The following are the changes to the employee cost sharing retirement contract amendment with CalPERS:

Employees hired prior to March 9, 2012, Safety Fire Employees (Classic Member– Tier 1): Currently, employees/members contribute 9% of the normal employee rate with a

6.78% modifier. Upon the effective date of the contract amendment with CalPERS, members/employees would pick up an additional modifier of 3% on top of the existing

6.78% for a total modifier of 9.78% making the employees/members cost approximately

18.78%. As stated in the MOU, if the employer costs increase, employees may be responsible for up to 50% cost sharing.

Employees hired on or after March 9, 2012, Safety Fire Employees (Classic Member – Tier 2): Currently, employees/members contribute 9% of the normal employee rate with a 3% modifier. Upon the effective date of the contract amendment with CalPERS, members/employees would pick up an additional modifier of 3% on top of the existing 3% for a total modifier of 6% making the employees/members cost approximately 15%. As stated in the MOU, if the employer costs increase, employees may be responsible for up to 50% cost sharing.

Employees hired after January 1, 2013, Safety Fire Employees (PEPRA Member):

Effective January 1, 2013, new members already pay 50% of the normal cost contribution as defined by the Public Employees’ Pension Reform Act (PEPRA). Employees under this retirement tier would not have a change in retirement benefits.

Safety Other - Lifeguard Employees
Employees hired prior to March 9, 2012 Safety – Other Lifeguard Employees (Classic Member – Tier 1): The CalPERS formula for members is 2% @ 50 with the use of average of the employee’s highest-one-year salary.

Employees hired on or after March 9, 2012, Safety – Other Lifeguard Employees (Classic Member – Tier 2): The CalPERS formula for members is 2% @ 50 with the use of average of the employee’s highest-three-year salary.

P a g e | 4
Employees hired after January 1, 2013, Safety – Other Lifeguard Employees (PEPRA Member): The CalPERS formula for members is 2.7% @ 57 with the use of average of the employee’s highest-three-year salary.

The following are the changes to the employee cost sharing retirement contract amendment with CalPERS:

Employees hired prior to March 9, 2012, Safety – Other Lifeguard Employees (Classic Member–Tier 1): Currently, employees/members contribute 9% of the normal employee rate with a 4.4% modifier. Upon the effective date of the contract amendment with CalPERS, members/employees would pick up an additional modifier of 2% on top of the existing 4.4% for a total modifier of 6.4% making the employees/members cost approximately 15.4%. As stated in the MOU, if the employer costs increase, employees may be responsible for up to 50% cost sharing.

Employees hired on or after March 9, 2012, Safety – Other Lifeguard Employees (Classic Member – Tier 2): Currently, employees/members contribute 9% of the normal employee rate with a 3.9% modifier. Upon the effective date of the contract amendment with CalPERS, members/employees would pick up an additional modifier of 2% on top of the existing 3.9% for a total modifier of 5.9% making the employees/members cost approximately 14.9%. As stated in the MOU, if the employer costs increase, employees may be responsible for up to 50% cost sharing.

Employees hired after January 1, 2013, Safety – Other Lifeguard Employees (PEPRA Member): Effective January 1, 2013, new members already pay 50% of the normal cost contribution as defined by the Public Employees’ Pension Reform Act (PEPRA).

Employees under this retirement tier would not have a change in retirement benefits.

Per the CalPERS contract, the portion of the employer’s contribution that the member agrees to contribute from their compensation, over and above the member/employee normal contribution (“cost sharing percentage”), may not exceed the Employer Normal Cost Rate.

ENVIRONMENTAL DETERMINATION:

Not a project as defined by CEQA.

FISCAL IMPACT:

Pursuant to labor negotiations, the City Council approved salary adjustments to every group effective July 1, 2025. The CalPERS employee sharing additional cost increases the employee contribution to the CalPERS retirement and thus decreases the employer’s retirement costs.

Employee CalPERS deductions would be made on a pre-tax basis under the Internal Revenue Code (IRC) Section 414(h) (2).

ATTACHMENTS:

1. Ordinance No. 2025-1257

2. Resolution No. 2025-063

3. Contract Amendment Draft

4. CalPERS Resolution of Intention Form

ATTACHMENT 1
ORDINANCE NO. 2025-1257

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF IMPERIAL BEACH, CALIFORNIA,

AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN THE CITY OF IMPERIAL

BEACH AND THE BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM (CALPERS)
WHEREAS, the City of Imperial Beach is a member of the California Public Employees’ Retirement System (CalPERS); and
WHEREAS, in accordance with California Government Code Section 20516, the City is seeking to amend its retirement contract with CalPERS to include additional cost sharing for classic local miscellaneous members, classic local fire members, and classic local ocean beach lifeguard members; and
WHEREAS, the amendment shall include an additional Employee Cost Sharing of 2% for classic local miscellaneous members; 3% for classic local fire members; and 2% for classic local ocean beach lifeguards; and

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF IMPERIAL BEACH DOES ORDAIN AS FOLLOWS:

Section 1. That the recitals above are true and correct and incorporated herein as though set forth in full.

Section 2. That an amendment to the contract between the City of Imperial Beach and the Board of Administration of the California Public Employees’ Retirement System is hereby authorized, a copy of said amendment is attached to the staff report as Attachment 3, and by such reference made a part of hereof as though set out in full.

Section 3. The City Manager or Chief Administrative Officer of the City of Imperial Beach is hereby authorized, empowered, and directed to execute said amendment for and on behalf of said Agency.

Section 4. This Ordinance shall take effect 30 days after the date of its adoption, and the City Clerk is directed to prepare and have published in the Imperial Beach Eagle & Times, a newspaper of general circulation in the City of Imperial Beach, a summary of this Ordinance no less than five days prior to the consideration of its adoption, and again within fifteen days following adoption, indicating votes cast.

Ordinance No. 2025-1257

INTRODUCED AND FIRST READ at a regular meeting of the City Council of the City of Imperial Beach, held on the 3rd day of December 2025; and PASSED AND ADOPTED at a regular meeting of the City of Imperial Beach, California, held on January 21, 2026, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

MITCHELL D. MCKAY, MAYOR
ATTEST:

JACQUELINE M. KELLY, MMC

CITY CLERK

APPROVED AS TO FORM

JENNIFER LYON

CITY ATTORNEY

ATTACHMENT 2
RESOLUTION NO. 2025-063

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

GIVING NOTICE OF ITS INTENTION TO APPROVE AN AMENDMENT TO THE CONTRACT BETWEEN THE BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES’

RETIREMENT SYSTEM AND THE CITY OF IMPERIAL BEACH, CALIFORNIA WHEREAS, the Public Employees' Retirement Law permits the participation of public agencies and their employees in the Public Employees' Retirement System by the execution of a contract, and sets forth the procedure by which said public agencies may elect to subject themselves and their employees to amendments to said Law; and WHEREAS, one of the steps in the procedures to amend this contract is the adoption by the governing body of the public agency of a resolution giving notice of its intention to approve an amendment to said contract, which resolution shall contain a summary of the change proposed in said contract; and
WHEREAS, the following is a statement of the proposed change:

To provide Section 20516 (Employees Sharing Additional
Cost) of 2% for classic local miscellaneous members; 3% for classic local fire members; and 2% for classic local ocean beach lifeguard.

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

1. That the recitals above are true and correct.

2. The City Council of the City of Imperial Beach hereby give notice of intention to approve an amendment to the contract between said public agency and the Board of Administration of the Public Employees' Retirement System, a copy of said amendment being attached hereto, as an "Attachment 3" and by this reference made a part hereof.

3. Mayor is hereby authorized to sign the Resolution of Intention form as provided by CalPERS.

PASSED, APPROVED, AND ADOPTED by the City Council of the City of Imperial Beach at its meeting held on the 3
rd day of December 2025, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

MITCHELL MCKAY, MAYOR
ATTEST:

JACQUELINE M. KELLY, MMC

CITY CLERK

ATTACHMENT 3

ATTACHMENT 4

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December 3, 2025
ITEM TITLE: REVIEW OF FISCAL YEAR 2024-25 AUDITED FINANCIAL STATEMENTS AND RELATED DOCUMENTS AND RESOLUTION NO. 2025-059 AUTHORIZING THE

ALLOCATION OF FUND BALANCE AND AUTHORIZING NECESSARY ASSIGNMENTS, TRANSFERS, AND BUDGET AMENDMENTS. (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 Ended June 30, 2025, 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, 2024, to June 30, 2025. The annual Housing Authority reports are also included in the audit.

RECOMMENDATION:

1. City Council and Board(s) receive and file the Fiscal Year 2024-25 City of Imperial Beach Audited Financial Statements and related documents.

2. Adopt Resolution No. 2025-059 authorizing the allocation of fund balance and authorizing necessary assignments, transfers, and budget amendments.

OPTIONS:
 Receive and file the Fiscal Year 2024-25 City of Imperial Beach audited financial statements and related documents, and approve Resolution No. 2025-059 authorizing the allocation of fund balance and authorizing necessary assignments, transfers, and budget amendments
 Receive and file the Fiscal Year 2024-25 City of Imperial Beach audited financial statements and related documents, and do not approve Resolution No. 2025-059 authorizing the allocation of fund balance and authorizing necessary assignments, transfers, and budget amendments
 Direct the City Manager to provide additional information.

BACKGROUND/ANALYSIS:

The City of Imperial Beach’s fiscal year ends on June 30, followed by a two-month period during which payments related to the prior fiscal year continue to be issued and collected. In September, the Finance Department finalizes year-end closing entries, and the annual audit is typically conducted at the end of that month. During this time, the independent auditors collect data and

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perform various testing and verification procedures over several weeks. Once these procedures are completed, the final financial statements and the auditor’s opinion are issued, typically in November.

The Financial Statements for the Fiscal Year Ended June 30, 2025, have now been finalized and are included as attachments to this report, along with a letter from the independent third-party audit firm providing its opinion on the City’s financial position.

An independent audit is a critical component of fiscal accountability. It verifies the accuracy of the City’s financial data and assures constituents that the City’s finances and internal controls are sound. The audit also supports adherence to best financial practices and provides valuable recommendations for strengthening financial management and internal processes. It is important to note that the auditors independently determine the scope of their review, including which areas and transactions to test, based on their professional judgment and risk assessment. They evaluate the financial statements for potential risks, material misstatements, and other areas of concern to guide their audit procedures.

This report provides an overview of key aspects of the financial statements. The complete audited document is available for public review and will be published on the City’s website.

REVENUES
In Fiscal Year 2024-25, the Citywide fund-level revenue, excluding transfers, totaled $51,564,258.

The distribution of these expenditures across various funds is as follows:
 General Fund $32,437,332 (approximately 63% of the total Citywide revenue)  Other Government Funds $9,210,818 (approximately 18%)  Sewer Enterprise Fund $6,721,97 (approximately 13%)
 Internal Service Funds $3,194,133 (approximately 6%)
The following chart provides a visual overview of the Citywide revenues:

General Fund
$32,437,332
Other Governmental Funds,
$9,210,818
Internal Services Funds,
$3,194,133
Sewer Enterprise Fund,
$6,721,975
Citywide Revenues (Fund Level)
Excludes Transfers = $51,564,258
General Fund Other Governmental Funds Internal Services Funds Sewer Enterprise Fund

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The General Fund revenues for FY 2024–25 were approximately $1.5 million higher compared to the prior year, reflecting steady, though moderate, growth—slightly below the $1.8 million increase observed in the previous fiscal year.

The City continues to rely heavily on tax revenues, which remain the primary driver of overall financial performance. During the fiscal year, tax revenues increased by approximately $460,000, contributing significantly to overall revenue growth; however, results across individual tax categories were mixed:
 Property Tax ($0.5 million increase) - property tax revenues remained strong and exceeded expectations despite the ongoing high-interest-rate environment.  Sales Tax/Measure I ($0.2 million increase) - sales tax, the City’s second-largest revenue source, grew modestly but did not meet budget projections, consistent with regional trends influenced by shifts in consumer spending behavior, inflationary impacts on discretionary purchases, and continued economic uncertainty. While Measure I performed relatively well, while the City’s 1% sales tax underperformed relative to budget expectations. While overall sales tax showed modest growth, it remains an area of concern. Weak growth highlights the importance of ongoing economic development initiatives aimed at strengthening and stimulating taxable sales activity, which will be critical to stabilizing and enhancing this key funding source in future fiscal periods.  Transient Occupancy Tax (TOT) ($0.2 million decrease) - revenue decline reflects a broader slowdown in this category.
 Cannabis Community Benefit Fee ($50,000 decrease) – revenue in this category also fell below budget expectations, extending the downward trend seen in recent years.  Other Taxes ($20,00 increase) - comprised primarily of franchise taxes, remained relatively flat compared to the prior year. While some individual tax types within this category experienced modest increases, others declined, resulting in an overall neutral impact.

On the non-tax revenue side, the City experienced several notable year-over-year changes during the fiscal year. The most significant increases occurred in charges for services, which rose by approximately $0.5 million, and the Licenses and Permits category, which increased by approximately $0.4 million. This growth reflects adjustments implemented through the comprehensive cost assessment and fee study adopted in March 2024, which resulted in higher fees for certain City-provided services, including building permits, plan checks, and fire inspections. It is important to note that these fees are charged on a cost-recovery basis, and while recent adjustments have improved alignment with the actual cost of service delivery, many remain intentionally subsidized to maintain affordability and accessibility for residents and businesses.

Investment earnings also performed strongly, increasing by approximately $0.2 million compared to the prior fiscal year. This growth was driven by the high interest rate environment, which allowed the City to earn strong returns on its well-maintained reserves. Maintaining these reserves is critical, as they provide both financial stability and the opportunity to generate ongoing annual investment income that supports City operations and services.

The remaining non-tax revenue categories performed as follows: intergovernmental revenues increased by approximately $66,000, while fines and forfeitures and miscellaneous revenues declined by approximately $68,000 and $13,000, respectively.

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In addition to these revenues, the General Fund also received approximately $1.1 million in interfund transfers and other financing sources, bringing total FY 2024–25 revenues for the General Fund to $33,480,064. This amount exceeded the final amended budget by $1.2 million.

EXPENDITURES
In Fiscal Year 2024-25, Citywide expenditures, excluding transfers, totaled $47,411,185. The distribution of these expenditures across various funds is as follows:
 General Fund: $29,781,703 (approximately 63% of total expenditures)  Other Government Funds: $8,642,042 (approximately 18%)  Sewer Enterprise Fund: $6,231,334 (approximately 13%)  Internal Services Funds: $2,756,106 (approximately 6%) The following chart provides a visual overview of the Citywide expenditures.

For FY 2024–25, General Fund total expenditures, including transfers of approximately $716,000, totaled $30,497,399, which was about $0.3 million below the final amended budget. This variance was primarily attributable to the timing of certain capital asset purchases. Additional variances resulted from year-end accounting adjustments related to Other Post-Employment Benefits (OPEB) valuations and accounting changes for leases and software agreements—items that are not typically included in the City’s annual budget.

A key distinction from the prior fiscal year was the impact of the City’s “right-sizing” efforts, implemented and emphasized during the most recent budget process. These initiatives focused on aligning revenue growth more closely with expenditure trends and addressing the prior year’s imbalance when costs had risen significantly faster than revenues. As a result, overall General Fund spending declined year over year.

General Fund,
Other Governmental $29,781,703
Funds, $8,642,042
Internal Services Funds,
$2,756,106
Sewer Enterprise Fund,
$6,231,334
Citywide Expenditures (Fund Level)
Excludes Transfers = $47,411,185
General Fund Other Governmental Funds Internal Services Funds Sewer Enterprise Fund

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Compared to the prior fiscal year, General Fund departmental expenditures increased by approximately $1.2 million, while transfer-out decreased by $2.1 million, resulting in a net decrease of $0.9 million in total General Fund spending.

The largest decline occurred in the transfers category, reflecting the reduced use of reserves for one-time projects. In FY 2023–24, major capital initiatives—such as the Community Room remodel, additional funding for Sports Park facility improvements, and several vehicle replacements—were funded through General Fund reserves. In FY 2024–25, reserve use was more limited, resulting in fewer transfers and a corresponding reduction in total expenditures.

While transfers decreased, departmental costs continued to rise, with the most significant growth occurring in Public Safety, driven primarily by increasing personnel-related costs. Public Safety expenditures rose by approximately $0.7 million, largely due to higher costs in the Fire Protection Department (a $0.4 million increase) stemming from a higher required annual pension obligation contribution for the safety pension plan, as well as elevated personnel and overtime costs. The cost of the San Diego County Sheriff’s Department contract also increased during the fiscal year.

However, prolonged staff vacancies within the Sheriff’s Department generated credits to the City—offsetting what would otherwise have been a substantially larger increase. In addition, the City received partial cost reimbursement for the School Resource Officer position.

General Government expenditures increased by approximately $0.4 million, primarily due to a higher required annual pension obligation contribution on the miscellaneous plan and increases in risk management, insurance, and information technology costs.

Public Works expenditures rose by approximately $0.2 million, primarily due to higher personnel costs within the Street Maintenance and Public Works Administration divisions.

During FY 2024–25, the City continued to make significant progress in enhancing community infrastructure while prudently managing its resources and actively pursuing grant opportunities.

Notable accomplishments included the completion of streetscape enhancements on 10th Street, a new restroom at Sports Park, improvements to the Senior Center, and upgrades to various other City facilities. Construction continued at the Sports Park complex, progressed on the 9th Street improvements project, 10th Street Pocket Park, and several sewer infrastructure projects, with preliminary work beginning on the Palm Avenue enhancement project.

Total capital outlay reached $6.3 million, surpassing the prior year’s record, with more than 70% funded through grants. Grants supported a broad range of capital and non-capital initiatives, including the purchase of a new fire engine, homelessness assistance programs, coastal hazard mitigation planning, public safety equipment, internship and recycling programs, senior services, or transportation infrastructure improvements. This accelerated pace of project delivery, while highly beneficial to the community, has also increased administrative demands, as grant management and compliance are more resource-intensive than locally funded projects. Moving forward, the City will also need to establish a sustainable maintenance and staffing strategy to support these expanded facilities and programs.

Overall, the General Fund ended FY 2024–25 with a $3.0 million increase in fund balance, as revenues exceeded expenditures for the year. However, this positive outcome was largely driven by non-recurring factors, including unscheduled vacancies and non-operating income such as cost reimbursements and investment earnings. Continued efforts to right-size City operations will be essential to maintaining long-term fiscal stability. Additionally, the number one fiscal challenge continues to be the rising annual payment toward the City’s unfunded actuarial pension liability, which places increasing pressure on operating resources. Further details on pension obligations are provided in the Government-Wide Financial Analysis section of this report.

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FUND BALANCE
Fund Balance represents the difference between assets and liabilities within a given City fund. In essence, it reflects the City’s equity, or “savings fund”, which can be used to meet City obligations or achieve strategic goals. Fund balances may be assigned, committed, or allocated to various purposes through formal City Council approval.

The largest and most significant balance is the General Fund Unassigned Fund Balance, which provides flexibility for unforeseen or emergency expenditures and supports effective cash management. City policy requires this balance to be maintained between 30% and 40% of General Fund expenditures. As of June 30, 2025, the balance stood at $14,372,157, or 47.1% of FY 2024–25 expenditures—an increase of approximately $1.8 million from the prior year.

The City Council also maintains an Economic Uncertainty Fund Balance for use in fiscal emergencies, with a required minimum of 10% of General Fund expenditures. As of June 30, 2025, this balance was $3,158,100, in full compliance with policy.

Additionally, the City’s Public Works Reserve Fund is designated for emergencies that threaten public safety, circulation, or other essential services. Policy requires a minimum of $1,000,000 in this fund, and as of June 30, 2025, the balance was $1,300,000, also meeting the required threshold.

Other fund balances as of June 30, 2025, include:
 Public Works Strategic Capital Reserve: $504,482
 Community Benefit Funding: $1,194,784
 Public Access Use (PEG): $48,396
 Section 115 Trust for Pension Liability: $1,298,153
 Projects in Progress (assigned): $160,873
The General Fund Unassigned Fund Balance represents approximately 47.1% of FY 2024–25 General Fund expenditures, exceeding the upper limit of the range established by City Council policy. This provides an opportunity for the City to further strengthen its financial position and address key fiscal vulnerabilities, as outlined in the Proposed Fund Balance Reallocation section of this report. Accordingly, staff recommends reallocating $1.8 million, representing the year-overyear increase in the fund balance, from the General Fund Unassigned Fund Balance. Following this transfer, the reserve would remain at approximately 39.1% of FY 2025-26 expenditures, within the target policy range and reflective of the City’s continued strong fiscal standing. Historical trend of the Unassigned Fund Balance below:

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OTHER FUNDS
The City has several other funds that are included in the annual audit. In summary, the key funds are as follows:
 Sewer Enterprise Fund: the City’s only business-type activity, reported a net position of $16.3 million as of June 30, 2025, including $6.4 million in unrestricted funds. While total net position increased by $0.5 million, the unrestricted portion declined by $0.2 million (3.7% year-over-year), reducing resources available for operations. Sewer fees collected via the San Diego County property tax roll grew slightly, but fee growth continues to lag behind rising Metro JPA wastewater charges and other operational costs. Because fees are tied to water consumption, ongoing conservation efforts further limit revenue growth.

Adoption of a new Sewer Fee Study will be essential to address this structural imbalance and ensure the long-term financial sustainability of the Fund and proper funding of critical wastewater infrastructure. Management continues to monitor these challenges and evaluate strategies to maintain reliable wastewater infrastructure.  Miscellaneous Grant Fund: This fund is used to report various types of grants awarded to the City, including but not limited to COVID-19 relief grants. The fund ended the fiscal year with a balance of $(275,374). The negative balance reflects grant expenditures incurred but not yet reimbursed.
 Gas Taxes Funds: The City receives revenue from various gas taxes (Gas Tax, RMRA, and Proposition A/Transnet) that are restricted in use. On June 30, 2025, the combined balance in these funds was $1,892,390. However, stagnant gas tax revenues continue to raise concerns about the ability of this revenue source to keep pace with rising street maintenance and infrastructure improvement costs. This remains an important area for ongoing monitoring and long-term fiscal planning.
 Supplemental Law Enforcement Fund (SLEF): This fund receives state funding to supplement existing resources for front-line law enforcement services. As of June 30, 2025, the balance in this fund was $79,222.
 Capital Project Funds (CIP and Park Maintenance CIP Fund): These funds are restricted for the maintenance and improvement of the City’s capital infrastructure. As of 2020-2021 2021-2022 2022-2023 2023-2024 2024-2025
Unassigned Fund Balance (in
millions) $9.7 $10.5 $12.2 $12.6 $14.4
% of GF Expenditures 44.8% 39.4% 44.2% 40.2% 47.1%
2020-2021 2021-2022 2022-2023 2023-2024 2024-2025

34.0%

36.0%

38.0%

40.0%

42.0%

44.0%

46.0%

48.0%
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
Growth in Unassigned Fund Balance (in millions) and % of GF Expenditures

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June 30, 2025, the combined balance in these funds was $1,637,220. This balance supports the ongoing key City parks and infrastructure improvement projects.  Internal Services Funds: There are four funds established to provide internal services to the City. The balances in these funds as of June 30, 2025, are as follows:
o Vehicle Replacement and Maintenance Fund: $1,042,247 (unrestricted balance).

This fund supports the replacement and maintenance of the City’s vehicle fleet. o Risk Management Fund: $1,885,701. This fund covers the City’s liability for claims, insurance, and other risk management-related expenses.
o Technology and Communication Fund: $706,707. This fund is used to manage and maintain the City’s technology infrastructure, including communication systems and IT support.
o Facilities Repair and Maintenance Fund: $466,921. This fund is designated for the repair and maintenance of City facilities.
 Housing Authority Fund: The balance as of June 30, 2025, was $1,105,152. This fund is used to support the City’s affordable housing programs and related services.

GOVERNMENT-WIDE FINANCIAL STATEMENTS
The City’s year-end financial report includes government-wide financial statements that consolidate most individual funds to provide a comprehensive view of the City’s financial position.

These statements, prepared using accounting methods similar to those of private-sector entities, report long-term assets—such as equipment and infrastructure—as well as long-term liabilities, including debt and pension obligations. Although these long-term items are not reflected in the individual fund statements, they are essential to understanding the City’s overall fiscal health, and focusing solely on fund-level reporting would present an incomplete picture.

While long-term liabilities often result in a negative unrestricted net position for many government agencies when reported at the government-wide level, the City of Imperial Beach continues to maintain a positive unrestricted balance for both its governmental and business-type (sewer) activities. This reflects the City’s proactive approach to managing pension obligations through pre-funding contributions, strategic outsourcing of services, and other targeted financial management practices.

As of June 30, 2025, the City’s net pension liability totaled $13.2 million, with an additional $1.5 million in Other Post-Employment Benefits (OPEB). Although the net pension liability decreased slightly year-over-year, required annual payments continue to rise at an unsustainable rate, reflecting higher interest costs assessed by CalPERS. To address these challenges, the City is pursuing multiple strategies, including continued contributions to the Section 115 Pension Trust, additional discretionary payments to CalPERS, and expanded cost-sharing arrangements under recently negotiated labor agreements.

The City’s current CalPERS funded ratio is approximately 79% and remains below the level necessary to prevent significant cost increases from interest accrual. Required annual Unfunded Actuarial Liability (UAL) payments are projected to rise from $1.1 million in FY 2024–25 to nearly $1.6 million by FY 2026–27. For perspective, $1.6 million is roughly equivalent to the annual cost of operating the entire Street Maintenance Division, representing a growing strain on the City’s budget and cash flow.

Given the scale of this challenge, City management recognizes the need for continued and proactive measures to mitigate the financial impact of rising pension obligations. Effective longPage 217 of 354 P a g e | 9
term management of these liabilities remains critical to ensuring the City’s fiscal sustainability and protecting its capacity to maintain essential public services.

As such, staff is recommending both an additional discretionary payment to CalPERS and an additional contribution to the Pension and OPEB Trust Fund be included as part of the year-end fund reallocations. Please see the section below for details.

PROPOSED FUND BALANCE RE-ALLOCATIONS:

Staff respectfully requests the reallocation of $1.8 million from the General Fund Unassigned Fund Balance to address several of the City’s most pressing fiscal challenges, including escalating pension costs and the depletion of reserves designated for strategic projects as outlined below:
 Make an additional discretionary payment to CalPERS toward the City’s pension obligations in the amount of $1,000,000, to be allocated between the Safety (Fire) and Miscellaneous plans on a 70/30 split. This payment is projected to generate approximately $934,000 in interest cost savings and reduce required annual contributions by about $70,000 in future fiscal years.
 Contribute an additional $250,000 to the Section 115 Trust Fund, with $200,000 designated for future pension obligations and $50,000 for OPEB obligations. These funds will be invested in instruments with higher return potential than typical City investments, helping to strengthen the City’s long-term strategy for addressing pension and OPEB liabilities.
 Provide an additional $550,000 to the Public Works Strategic Reserve, which was significantly depleted during the COVID era, to begin rebuilding funds needed for critical facility improvements and other essential capital projects. The reserve amount is currently $504,482, down from almost $1.8 million in FY 2018-19.

AUDIT FINDINGS
Staff is pleased to announce there were no findings for FY 2024-25. Additionally, the independent auditors found no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

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:

Reallocate/transfer $1,800,000 of the General Fund Unassigned Fund Balance as follows:
a) Contribute $1,000,000 to CalPERS towards the City’s unfunded pension actuarial liability b) Contribute $250,000 to Section 115 Trust Fund ($200,000 to pension, $50,000 OPEB) c) Contribute $550,000 to Public Works Strategic Reserve (GL 101-0000-253.0800)

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FISCAL YEAR: FY 2025-26
BUDGETED: N

BUDGET AMENDMENT N
ACCOUNT NO(S).: N/A
PROJECT NO(S).: N/A
FISCAL ANALYSIS: Allocate $1,000,000 to pay down the City’s unfunded pension actuarial liability with CalPERS, which currently stands at $13.2 million and presents a significant fiscal strain. This contribution is projected to generate approximately $934,000 in interest cost savings and reduce required annual contributions by about $70,000 in future fiscal years.

Allocate an additional $250,000 to the Section 115 Trust Fund to build assets for future offsets pension and Other PostEmployment Benefit (OPEB) costs. This allocation will strengthen the City’s ability to manage long-term pension and OPEB obligations.

Contribute $550,000 to the Public Works Strategic Reserve, which was severely depleted, to begin rebuilding funds needed for critical facility improvements and other essential capital projects.

CURRENT BUDGET: CalPERS UAL payments are budgeted at the required annual amounts with no budget allocated towards additional
discretionary payment.

Section 115 Trust Fund contribution is not budgeted but is set by the City’s policy to be funded from the interest savings realized by paying the required annual UAL payment in a lump sum rather than in monthly installments.

Reserve contributions are not budgeted (balance sheet only transaction)

ANTICIPATED
EXPENDITURE:
$1,800,000
ATTACHMENTS:

ATT 1 – FY25 Audited Financial Statements
ATT 2 – FY25 Housing Asset Audit Report
ATT 3 – FY25 Annual Housing Successor Specified Activity Report ATT 4 – Resolution No. 2025-059

FINANCIAL STATEMENTS
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JUNE 30, 2025
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ATTACHMENT 1

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CITY OF IMPERIAL BEACH, CALIFORNIA

FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2025

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City of Imperial Beach
Financial Statements
For the Fiscal Year Ended
June 30, 2025

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

City of Imperial Beach
Financial Statements
For the Fiscal Year Ended
June 30, 2025

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 ....................................................... 80 Schedule of Plan Contributions ...................................................................................... 81 Schedule of Changes in the Net OPEB Liability and Related Ratios ............................. 82 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

City of Imperial Beach
Financial Statements
For the Fiscal Year Ended
June 30, 2025

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

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CERTIFIED PUBLIC ACCOUNTANTS
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Independent Auditor’s 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, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2025, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

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

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

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

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

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

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

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.
 Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
 Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about 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 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 GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

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

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 7, 2025, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

San Bernardino, California
November 7, 2025

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City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2025
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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, 2025. 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 City’s assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources by $101,135,083 at the close of the fiscal year, representing the City’s net position. This combined net position includes restricted and unrestricted resources, as well as the City’s investment in capital assets (e.g., land, buildings, machinery, equipment, and infrastructure), net of any related outstanding debt used to acquire those assets. The unrestricted net position accounted for $19,693,741 of the total. Overall, the City’s total net position increased by $6.9 million from the prior fiscal year. The majority of this increase—approximately $6.4 million—was attributable to governmental activities, primarily driven by a notable rise in net investment in capital assets.
• The Citywide revenue recorded for the fiscal year ended June 30, 2025, for both governmental and business-type activities totaled $49,299,792. Revenue from the Successor Agency to the former Redevelopment Agency is not included in this amount, as the Successor Agency is considered a separate legal entity and is not technically part of the municipal corporation. Conversely, Citywide expenses for the fiscal year totaled $42,441,635.
• At the close of the current fiscal year, the City’s governmental funds reported combined fund balances of $26,498,357, representing an increase of approximately $2.8 million compared to the prior year. Of this amount, $13,817,396, or 52.1%, constitutes the unassigned fund balance, which is available for appropriation upon City Council majority approval. The remaining $12,680,961 is classified as nonspendable, restricted, committed, or assigned, in accordance with Governmental Accounting Standards Board (GASB) definitions.
• At the end of the current fiscal year, the unrestricted fund balance—comprising the committed, assigned, and unassigned components of fund balance—for the General Fund totaled $20,738,792. The unassigned portion of the General Fund balance was $14,372,157, representing approximately 47.1% of total Fiscal Year 2025 General Fund expenditures and transfers.

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.

City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2025
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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.

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 government's near-term financing requirements.

City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2025
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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 ten 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 a 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.

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 currently has five Custodial Funds (Special Assessment Districts), and one Private Trust Fund (the Successor Agency of the Former RDA).

City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2025
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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, schedule of plan contributions, schedule of changes in the net OPEB liability and related ratios, schedule of plan contributions, 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.

GOVERNMENT-WIDE OVERALL FINANCIAL ANALYSIS
The change in net position over time is a valuable indicator of a government's financial health.

For the City, assets and deferred outflows of resources exceeded liabilities by $101,135,083 at the end of the most recent fiscal year, reflecting an increase of $6.9 million from $94,276,926 on June 30, 2024. This growth represents a positive trend in the City's financial position.

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City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2025
-8-
City of Imperial Beach's Net Position
2025 2024 2025 2024 2025 2024
Current and other assets 39,237,464 $ 36,608,868 $ 5,693,428 $ 5,893,539 $ 44,930,892 $ 42,502,407 $ Capital assets, net 65,902,972 62,041,966 9,842,815 9,158,496 75,745,787 71,200,462 Total assets 105,140,436 98,650,834 15,536,243 15,052,035 120,676,679 113,702,869 Deferred outflows
of resources 5,985,971 8,262,314 89,146 187,588 6,075,117 8,449,902 Non-current liabilities 16,006,842 15,800,421 268,755 335,182 16,275,597 16,135,603 Other liabilities 7,289,488 9,196,191 139,145 147,900 7,428,633 9,344,091 Total Liabilities 23,296,330 24,996,612 407,900 483,082 23,704,230 25,479,694 Deferred inflows
of resources 1,879,486 2,342,956 32,997 53,195 1,912,483 2,396,151 Net position
Net investment in
capital assets 65,307,003 61,064,409 9,842,815 9,158,496 75,149,818 70,222,905 Restricted 6,291,524 5,852,059 - - 6,291,524 5,852,059
Unrestricted 14,352,064 12,657,112 5,341,677 5,544,850 19,693,741 18,201,962 Total net position 85,950,591 $ 79,573,580 $ 15,184,492 $ 14,703,346 $ 101,135,083 $ 94,276,926 $ Governmental Business-Type
Activities Activities Total
The largest portion of the City’s net position, comprising 74.3%, reflects its investment in capital assets—such as land, buildings, furniture, and infrastructure—minus any related outstanding debt incurred to acquire those assets. These capital assets are essential for providing a range of services to residents, but they are not available for future spending. While the investment in capital assets is reported net of related debt, it's important to note that resources to repay this debt must come from other sources, as the capital assets themselves cannot be used to settle these liabilities.

An additional portion of the City’s net position, representing 6.2%, consists of resources that are subject to external restrictions regarding their use. The remaining balance of $19,693,741 is unrestricted, and can be allocated to various projects following a formal approval process by the City Council majority.

At the end of the 2024-2025 fiscal year, the City reported positive balances for both the government as a whole and its individual governmental and business-type activities, consistent with the prior fiscal year. Although it is common for governmental entities to report negative balances due to pension and other post-retirement benefit obligations, the City’s results demonstrate a continued commitment to fiscal responsibility and the effective management of its long-term pension liabilities.

City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2025
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Overall, the City’s net position increased by $6,858,157 compared to the prior fiscal year. The reasons for this overall increase will be explored in the following sections, focusing on both governmental activities and business-type activities.

Governmental Activities. During the current fiscal year, the overall net position for governmental activities increased by $6.4 million, bringing the ending balance to $85,950,591. This increase was primarily driven by revenue growth. The City saw a year-over-year rise in various revenue sources, including Property Tax, Use of Money and Property, and Charges for Services, amounting to $3.8 million for the Primary Government. This was partially offset by an increase in expenditures of $2.8 million.

In another positive trend, the unrestricted net position increased by $1.7 million, reversing the year-over-year decline reported in the prior fiscal year.

City of Imperial Beach’s Changes in Net Position
2025 2024 2025 2024 2025 2024
Revenues
Program revenues:

Charges for services 3,489,108 $ 2,385,909 $ 6,383,580 $ 6,167,817 $ 9,872,688 $ 8,553,726 $ Operating contributions and
grants 11,880,692 9,932,736 - - 11,880,692 9,932,736
Capital contributions and grants 2,713,166 2,097,641 - - 2,713,166 2,097,641 General revenues:

Property taxes 11,321,207 7,631,894 - - 11,321,207 7,631,894 Transient occupancy taxes 1,555,066 1,785,561 - - 1,555,066 1,785,561 Sales taxes 5,373,855 8,394,363 - - 5,373,855 8,394,363 Franchise taxes 2,834,907 2,812,981 - - 2,834,907 2,812,981 Business licenses taxes 309,089 315,588 - - 309,089 315,588 Motor vehicle in lieu - unrestricted 41,904 32,743 - - 41,904 32,743 Use of money and property 1,949,821 1,700,993 338,395 293,617 2,288,216 1,994,610 Miscellaneous 1,109,002 1,637,699 - 4,575 1,109,002 1,642,274 Total Revenues 42,577,817 38,728,108 6,721,975 6,466,009 49,299,792 45,194,117 Expenses
General government 8,748,417 7,199,142 - - 8,748,417 7,199,142 Public safety 16,479,415 16,313,268 - - 16,479,415 16,313,268 Community development 1,905,065 915,164 - - 1,905,065 915,164 Parks, recreation and senior center 4,121,644 3,994,461 - - 4,121,644 3,994,461 Public works 4,936,312 4,865,518 - - 4,936,312 4,865,518 Interest on long-term debt 9,953 50,842 - - 9,953 50,842 Sewer - - 6,240,829 5,850,855 6,240,829 5,850,855
Total Expenses 36,200,806 33,338,395 6,240,829 5,850,855 42,441,635 39,189,250 Change in Net Position 6,377,011 5,389,713 481,146 615,154 6,858,157 6,004,867 Net Position, Beginning 79,573,580 74,183,867 14,703,346 14,088,192 94,276,926 88,272,059 Net Position, Ending 85,950,591 $ 79,573,580 $ 15,184,492 $ 14,703,346 $ 101,135,083 $ 94,276,926 $ Governmental Business-Type
Activities Activities Total

City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2025
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Increase
(Decrease) Percent
Percent From Increase
Revenue Source 2025 of Total 2024 (Decrease)
Charges for services 3,489,108 $ 8.2% 1,103,199 $ 31.6% Operating contributions and grants 11,880,692 27.9% 1,947,956 16.4% Capital contributions and grants 2,713,166 6.4% 615,525 22.7% Property taxes 11,321,207 26.6% 3,689,313 32.6%
Sales taxes 5,373,855 12.6% (3,020,508) -56.2%
Franchise fees 2,834,907 6.7% 21,926 0.8%
Other general revenue and transfers 4,964,882 11.6% (507,702) -10.2% Total revenue 42,577,817 $ 100.0% 3,849,709 $ 9.0%

GOVERNMENTAL ACTIVITIES
Revenue by Source
Charges for
Services, 8.2%
Operating
Contributions and
Grants, 27.9%
Capital
Contributions and
Property Taxes, Grants, 6.4%

26.6%
Franchise Fees,

6.7%
Sales taxes shared
state revenue,

12.6%
Other General
Revenue and
Transfers, 11.6%

GOVERNMENTAL ACTIVITIES
Revenue by Source
Fiscal Year 2024-25

City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2025
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Increase
(Decrease) Percent
Percent From Increase
Function 2025 of Total 2024 (Decrease)
General government 8,748,417 $ 24.2% 1,549,275 $ 17.7%
Public safety 16,479,415 45.5% 166,147 1.0%
Community development 1,905,065 5.3% 989,901 52.0%
Parks, recreation and senior center 4,121,644 11.4% 127,183 3.1% Public works 4,936,312 13.6% 70,794 1.4%
Interest on long-term debt 9,953 0.0% (40,889) -410.8%
Total expenses 36,200,806 $ 100.0% 2,862,411 $ 7.9%

GOVERNMENTAL ACTIVITIES
Expenses by Function
General
Government, 24.2%
Public Safety,

45.5%
Community
Development, 5.3%
Parks, Recreation
and Senior Center,

11.4%
Public Works,

13.6% Interest on Longterm Debt, 0.0%

GOVERNMENTAL ACTIVITIES
Expenses by Function
Fiscal Year 2024-25
Business-type Activities. For the City’s business-type activities, represented by the Wastewater Enterprise Fund, the results for the current fiscal year were mixed. The overall net position increased slightly to an ending balance of $15,184,492, with a total increase of $481,146, or

3.27% from the prior fiscal year. However, the unrestricted net position decreased by $203,173, representing a 3.7% decline year-over-year, indicating that while total net position improved, the portion available for operational use experienced a slight reduction.

City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2025
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While sewer fees collected through the San Diego County property tax roll increased slightly yearover-year, there remains a concern that the pace of fee growth is not keeping up with rising wastewater flow charges imposed by the Metro Wastewater Joint Powers Authority and other operational needs of the Wastewater Enterprise Fund. Additionally, because these fees are based on water consumption, they are influenced by water conservation measures.

The current rate of sewer fee growth may limit the City’s ability to fund essential sewer infrastructure rehabilitation projects in the coming years. Management is actively monitoring these funding challenges and evaluating strategies to ensure the long-term sustainability of the Wastewater Enterprise Fund and the City’s critical wastewater infrastructure.

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.

Unassigned fund balance may serve as a valuable indicator of a government's net resources available for discretionary use, as it represents the portion of fund balance that has not yet been limited for a particular purpose by either an external party, the City itself, or individuals or groups delegated by the City Council to assign resources. This flexibility allows the City to allocate these funds to meet various needs or respond to emerging priorities without being bound by pre-existing commitments.

On June 30, 2025, the City’s governmental funds reported combined fund balances of $26,498,357, an increase of $2.8 million in comparison to the prior year. Approximately 52.1% or $13,817,396 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 a spendable form ($22,802), 2) restricted for particular purposes ($6,291,524), 3) committed for a certain use ($4,458,100), or 3) assigned for particular purposes ($1,908,535).

Capital outlay expenditures continued to be a major driver of the City’s financial position, increasing to $6,784,549, consistent with the record capital spending of the prior year. This increase reflects ongoing construction activities on several ARPA-funded facility improvements, as well as progress on various larger street and park projects.

Major Funds
The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the unassigned fund balance of the General Fund was $14,372,157, while the total fund balance increased by $3 million or 15.6% to $22,059,747. To assess the General Fund's liquidity, it's useful to compare both the unassigned fund balance and total fund balance to total General Fund

City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2025
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expenditures. The unassigned fund balance represents approximately 47.1% of total FY2025 General Fund expenditures and transfers out, while the total fund balance accounts for about

72.3% of that amount.

The Miscellaneous Grants Fund, another major fund, is used to account for various grants awarded to the City, including COVID-19 relief grants. The fund ended the fiscal year with a balance of $(275,374). The negative balance reflects grant expenditures incurred but not yet reimbursed.

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 originally adopted a General Fund budget with projected revenues (including transfers) of $30,557,300 and projected expenditures (including transfers) of $30,002,400, resulting in a budgeted surplus of $554,900. During the fiscal year, the City Council authorized amendments to the original appropriations, and minor reallocations of funds among departments were made.

These adjustments between departments were not significant and did not increase the overall operating budget. Additionally, certain budgets for ongoing projects were carried forward from the prior fiscal year budgeted allocations.

The more significant amendments to the revenue budget were primarily due to higher-thanexpected Franchise Tax revenues, as solid waste franchise fees exceeded projections, and Property Tax revenues, which continued to perform strongly. Additionally, multiple types of Charges for City-Provided Services, including plan checks, planning fees, and permits, were adjusted upward. These increases reflect higher collections resulting from the adoption of a new fee schedule that more accurately aligns fees with the true costs of providing services to the public. Offsetting these positive adjustments, certain downward revisions were made as Sales Tax and Cannabis Tax revenues underperformed relative to expectations.

On the expenditure side, adjustments to the transfer-out budget were the primary driver of fluctuations. The budget was increased during the year to allocate funding for various facility improvement projects, including HVAC replacements at the Fire Station and the IT Server Room, which were transferred to their respective Capital Improvement Project (CIP) funds. Additionally, a series of expenditure amendments—both increases and decreases—were made across various departments, resulting in a net increase of $749,000 in the overall expenditure budget. This increase was largely attributable to the aforementioned transfers, which utilized General Fund reserves to fund these one-time facility projects.

City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2025
-14-

CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets. As of June 30, 2025, the City’s investment in capital assets for its governmental and business-type activities totaled $75,745,787, net of accumulated depreciation. This investment includes land, land improvements, buildings, furniture, machinery, equipment, and infrastructure. The total increase in capital assets during the current fiscal year was $4.9 million, representing a growth of approximately 7.0%. This increase is primarily attributable to construction in progress, structure improvements, and infrastructure projects, partially offset by capital asset dispositions and depreciation.

City of Imperial Beach’s Capital Assets
(Net of accumulated depreciation)
2025 2024 2025 2024 2025 2024
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 7,707,107 5,609,507 1,814,316 908,410 9,521,423 6,517,917 Structures and Improvements 7,693,936 6,004,134 5,570 - 7,699,506 6,004,134 Equipment and vehicles 1,970,051 2,115,013 - 1,970,051 2,115,013 Infrastructure 33,331,700 33,052,981 - - 33,331,700 33,052,981 Right-to-use 105,319 165,472 11,544 - 116,863 165,472
Sewer - - 8,011,385 8,250,086 8,011,385 8,250,086
Total $ 62,041,966 65,902,972 $ 9,842,815 $ 9,158,496 $ 75,745,787 $ 71,200,462 $ Governmental Business-Type
Activities Activities Total
During the fiscal year, the City completed several parks, facilities, and infrastructure improvements, including streetscape enhancements on 10th Street, a new restroom at Sports Park, improvements to the Senior Center, and various other city facility upgrades. Construction continued on several large street and facility improvement projects, supported by significant external funding sources, including state and private grants as well as federal assistance. These initiatives are designed to enhance the community and improve the quality of services provided to residents.

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 $ 17,260,853. Notably, 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 $173,426 principal outstanding on Transnet Commercial Paper borrowing, $318,184 principal outstanding on financed equipment, and $104,359 of lease/subscription liability for printing equipment and subscription-based information technology agreements (SBITA).

City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2025
-15-
As of June 30, 2025, the City’s pension-related obligations in the California Public Employees’ Retirement System (CalPERS) consisted of a net pension liability of $13,231,805 and other postretirement benefits (OPEB) liability of $1,522,525. The pension unfunded liability decreased slightly by $306,131 (2.3%) following several years of significant increases. In contrast, the OPEB liability increased by $119,000 (8.5%). Managing the impact of these substantial post-employment benefit costs remains a primary focus of management. Further details are provided in Note 10 of this report.

The City also has a total obligation of $1,624,554 for compensated absences (vacation and sick leave) for the existing employees, of which $1,043,358 is classified as non-current.

The remainder of the City’s long-term obligations of $286,000 comprises of general liability and workers’ compensation claims.

City of Imperial Beach’s Non-Current Outstanding Liabilities 2025 2024 2025 2024 2025 2024
Compensated absences 1,531,854 $ 1,215,329 $ 92,700 $ 62,044 $ 1,624,554 $ 1,277,373 $ Claims payable 286,000 370,000 - - 286,000 370,000
Direct borrowings payable 491,610 821,581 - - 491,610 821,581 Lease/subscription payable 104,359 155,976 - - 104,359 155,976 Net pension liability 13, 11,869,269 062,185 169,620 269,480 13,231,805 12,138,749 Total OPEB liability 1, 1,273,722 488,725 33,800 28,919 1,522,525 1,302,641 Total $ 15,705,877 16,964,733 $ 296,120 $ 360,443 $ 17,260,853 $ 16,066,320 $ Activities
Governmental Business-Type
Activities Total
The City’s total non-current liabilities increased by $1,194,533, or 7.4%, during the current fiscal year. This change was primarily driven by reductions in direct borrowings, net pension liabilities, and claims payable, partially offset by increases in compensated absences and other postemployment benefits (OPEB) liabilities. 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
During Fiscal Year 2025, the City of Imperial Beach made significant progress on capital and operational initiatives while continuing to focus on fiscal responsibility. The City maintains zero municipal debt and actively advances its Capital Improvement Program (CIP) to address critical infrastructure needs, leveraging outside funding opportunities whenever possible.

City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2025
-16-
Key initiatives included the construction phase of several federally funded ARPA projects, delivering new amenities for residents of all ages. Notable accomplishments included streetscape enhancements on 10th Street, a new restroom at Sports Park, improvements to the Senior Center, and upgrades to various other City facilities. Construction continued at the Sports Park complex, progressed on the 9th Street improvements project, 10th Street Pocket Park, and sewer infrastructure projects, with preliminary work beginning on the Palm Avenue enhancement project.

In total, nearly $6.3 million was expended on capital outlay from various governmental funds, with over 70% funded through grants, providing critical external resources to benefit the community.

Grant funding supported a wide range of initiatives, including the purchase of a new fire engine, programs assisting the unsheltered population, coastal hazard mitigation planning, acquisition of personnel protective equipment for public safety staff, internship programs, recycling initiatives, senior services, and projects promoting bike and pedestrian safety, among others.

During FY2025, General Fund revenues increased by approximately $1.5 million compared to the prior year—reflecting steady, though moderate, growth consistent with the prior year’s performance.

The City continues to rely heavily on tax revenues, which presented a mixed picture this fiscal year. Property tax revenues remained strong and exceeded expectations despite the continued high-interest-rate environment.

Conversely, Transient Occupancy Tax (TOT) declined slightly compared to the prior year, reflecting a general slowdown in this revenue category. Sales tax, the City’s second-largest revenue source, increased modestly during the fiscal year but did not meet budgeted projections.

This shortfall mirrors broader regional trends, including shifts in consumer spending behavior, inflationary pressures on discretionary purchases, and ongoing economic uncertainty. Cannabisrelated tax revenues also declined year over year and fell short of budget expectations, continuing the downward trend observed in this category.

Additionally, stagnant gas tax revenues continue to raise concerns about the ability of this revenue source to keep pace with rising street maintenance and infrastructure improvement costs. This remains an important area for ongoing monitoring and long-term fiscal planning.

On the non-tax revenue side, investment earnings exceeded expectations, supported by a highinterest-rate environment that generated strong returns on the City’s reserves. Revenue also increased from a variety of user fees for services such as building permits, plan checks, and fire inspections. However, it is important to note that these fees are charged on a cost-recovery basis, and most are still not set to fully cover the total cost of providing the service, as some are intentionally subsidized to maintain accessibility for residents and businesses. The increase in revenue reflects the implementation of a comprehensive fee study, which took effect in March 2024 to better align fees with the actual cost of service delivery.

City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2025
-17-
A key distinction from the prior fiscal year was the impact of the City’s “right-sizing” efforts, which were implemented and emphasized during the FY2025 budget process. These initiatives focused on better aligning revenue growth with expenditure trends, addressing the prior year’s imbalance when costs rose significantly faster than revenues. As a result, overall General Fund expenditures declined year over year.

The largest decline in General Fund expenditures occurred in the transfers category, reflecting reduced use of reserves for one-time projects. In FY2024, significant capital initiatives—such as the Community Room remodel, additional funding for the Sports Park facility remodel, and several major vehicle replacements—were funded through General Fund reserves. In FY2025, reserve funding was used more sparingly, resulting in lower transfers out of the General Fund and contributing to an overall decline in expenditures. Departmental budgets continued to increase, with the largest growth occurring in public safety, primarily driven by rapidly rising personnel costs across these critical departments.

The City’s unfunded actuarial liability (UAL) pension payments continue to be a major budgeting and operational concern and remain a central focus of management. Required UAL payments have steadily increased, and higher assessed liabilities to CalPERS result in rising contributions that place significant pressure on the City’s operating budget. To address these obligations, the City has begun contributing to a Section 115 Trust and is implementing other strategies to manage pension-related costs, making this a critical near- and long-term priority for management.

With the adoption of the FY2026 and FY2027 budgets, the City is also addressing other key challenges, including aging infrastructure, growing maintenance backlogs, rising labor and construction costs, and regulatory limits on revenue generation. Core revenue streams, such as sales tax and Transient Occupancy Tax, remain flat or show modest growth, while environmental and tourism-related concerns continue to affect the community. Management remains committed to strategically allocating resources to maintain essential services, complete key capital projects, and ensure long-term financial sustainability.

Federal COVID-era funding is winding down, and the City continues to plan for the funding and operation of new facilities. Inflationary pressures on personnel costs are expected to persist, requiring ongoing strategies to secure resources and manage costs.

The City continues to actively address environmental challenges, including transboundary pollution from Mexico into the Tijuana River and coastal tributaries, which impacts water and air quality, public health, and local economic activity. Addressing this issue requires collaboration across multiple jurisdictions and remains a high priority.

Amid ongoing economic uncertainties—including labor market fluctuations, supply chain disruptions, and regional economic trends—City management continues to monitor conditions closely to ensure resources are effectively managed and essential services maintained.

FY2026—FY2027 Biennial Budget document contains additional economic and budgetary details, and it is available on the City’s website or through the Finance Department.

City of Imperial Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2025
-18-

REQUESTS FOR INFORMATION
This financial report provides a general overview of the City’s financial position and results of operations for all those interested in the City’s fiscal health. Questions regarding any of the information contained in this report or requests for additional financial information should be directed 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, 2025
The accompanying notes are an integral part of these financial statements. -19-
Governmental Business-Type
Activities Activities Total
Assets:

Pooled cash and investments 31,312,271 $ 6,589,375 $ 37,901,646 $ Restricted cash and investments 1,298,153 - 1,298,153 Receivables:

Accounts 1,168,904 1,433 1,170,337
Accrued interest 129,417 - 129,417 Loan receivable 1,311,420 - 1,311,420 Lease receivable 139,975 - 139,975 Internal balances 1,066,189 (1,066,189) - Prepaid costs 22,802 - 22,802 Due from other governments 2,788,333 168,809 2,957,142 Capital assets, not being depreciated/amortized 22,801,966 1,814,316 24,616,282 Capital assets, net of depreciation 43,101,006 8,028,499 51,129,505 Total Assets 105,140,436 15,536,243 120,676,679 Deferred Outflows of Resources:

Deferred pension related items 5,135,854 69,845 5,205,699 Deferred OPEB related items 850,117 19,301 869,418 Total Deferred Outflows of Resources 5,985,971 89,146 6,075,117 Liabilities:

Accounts payable 3,815,087 73,385 3,888,472
Accrued liabilities 507,734 38,395 546,129 Unearned revenue 890,621 - 890,621 Deposits payable 1,118,155 - 1,118,155 Compensated absences due in one year 553,831 27,365 581,196 Claims payable due in one year 69,000 - 69,000 Long-term liabilities due in one year 335,060 - 335,060 Noncurrent liabilities:

Compensated absences due in more than one year 978,023 65,335 1,043,358 Claims payable due in more than one year 217,000 - 217,000 Long-term liabilities due in more than one year 260,909 - 260,909 Net pension liability 13,062,185 169,620 13,231,805 Net OPEB liability 1,488,725 33,800 1,522,525 Total Liabilities 23,296,330 407,900 23,704,230 Deferred Inflows of Resources:

Deferred pension related items 901,927 13,805 915,732 Deferred OPEB related items 845,321 19,192 864,513 Lease 132,238 - 132,238
Total Deferred Inflows of Resources 1,879,486 32,997 1,912,483 Net Position:

Net Investment in capital assets 65,307,003 9,842,815 75,149,818 Restricted for:

Community development 1,105,152 - 1,105,152 Public safety 79,222 - 79,222 Parks and recreation 892,406 - 892,406 Public works 2,916,591 - 2,916,591 Pension section 115 trust 1,298,153 - 1,298,153 Unrestricted 14,352,064 5,341,677 19,693,741 Total Net Position 85,950,591 $ 15,184,492 $ 101,135,083 $

City of Imperial Beach
Statement of Activities
Year Ended June 30, 2025
The accompanying notes are an integral part of these 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 8,748,417 $ 1,054,281 $ 92,419 $ - $ Public safety 16,479,415 382,780 4,736,731 - Community development 1,905,065 1,720,397 - - Parks, recreation and senior center 4,121,644 146,349 - - Public works 4,936,312 185,301 7,051,542 2,713,166 Interest on long-term liabilities 9,953 - - - Total Governmental Activities 36,200,806 3,489,108 11,880,692 2,713,166 Business-Type Activities:

Sewer 6,240,829 6,383,580 - - Total Business-Type Activities 6,240,829 6,383,580 - - Total Primary Government $ 42,441,635 $ 9,872,688 $ 11,880,692 $ 2,713,166 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

The accompanying notes are an integral part of these financial statements. -21-
Net (Expenses) Revenues and
Changes in Net Position
Primary Government
Governmental Business-Type
Activities Activities Total
$ - (7,601,717) $ (7,601,717) $
- (11,359,904) (11,359,904)
- (184,668) (184,668)
- (3,975,295) (3,975,295)
- 5,013,697 5,013,697
- (9,953) (9,953)
(18,117,840) - (18,117,840)
142,751 - 142,751
- 142,751 142,751
(18,117,840) 142,751 (17,975,089)
- 11,321,207 11,321,207
- 1,555,066 1,555,066
- 5,373,855 5,373,855
- 2,834,907 2,834,907
- 309,089 309,089
- 41,904 41,904
338,395 1,949,821 2,288,216
- 1,109,002 1,109,002
24,494,851 338,395 24,833,246
481,146 6,377,011 6,858,157
14,703,346 79,573,580 94,276,926 $ 85,950,591 $ 15,184,492 $ 101,135,083

City of Imperial Beach
Balance Sheet
Governmental Funds
June 30, 2025
The accompanying notes are an integral part of these financial statements. -22-
Special
Revenue Fund Nonmajor Total
Miscellaneous Governmental Governmental
General Grant Funds Funds
Assets:

Pooled cash and investments 21,260,070 $ 439,008 $ 4,781,695 $ 26,480,773 $ Restricted cash and investments 1,298,153 - - 1,298,153 Receivables:

Accounts 1,033,588 369 133,534 1,167,491 Accrued interest 129,417 - - 129,417 Loan receivable 1,311,420 - - 1,311,420 Lease receivable 139,975 139,975 Prepaid costs 22,802 - - 22,802 Due from other governments 1,032,708 1,536,775 198,157 2,767,640 Due from other funds 41,180 - - 41,180 Total Assets 26,269,313 $ 1,976,152 $ 5,113,386 $ 33,358,851 $ Liabilities and Fund Balances:

Liabilities:

Accounts payable 2,061,619 $ 1,183,158 $ 358,222 $ 3,602,999 $ Accrued liabilities 444,840 - - 444,840 Unearned revenues 452,714 437,907 - 890,621 Deposits payable 1,118,155 - - 1,118,155 Due to other funds - - 41,180 41,180 Total Liabilities 4,077,328 1,621,065 399,402 6,097,795 Deferred Inflows of Resources:

Unavailable revenues - 630,461 - 630,461 Leases 132,238 - - 132,238 Total Deferred Inflows of Resources 132,238 630,461 - 762,699 Fund Balances:

Nonspendable:

Prepaid costs 22,802 - - 22,802 Restricted for:

Community development projects - - 1,105,152 1,105,152 Public safety - - 79,222 79,222 Parks, recreation and senior center - - 892,406 892,406 Public works - - 2,916,591 2,916,591 Pension section 115 trust 1,298,153 - - 1,298,153 Committed to:

Economic uncertainty reserve 3,158,100 - - 3,158,100
Public works 1,300,000 - - 1,300,000
Assigned to:

Public works strategic capital reserve 504,482 - - 504,482 Public works projects 160,873 - - 160,873 Community benefit 1,194,784 - - 1,194,784 PEG 48,396 - - 48,396 Unassigned (deficit) (275,374) 14,372,157 (279,387) 13,817,396 Total Fund Balances 22,059,747 (275,374) 4,713,984 26,498,357 Total Liabilities and Fund Balances 26,269,313 $ 1,976,152 $ 5,113,386 $ 33,358,851 $

City of Imperial Beach
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position
June 30, 2025
The accompanying notes are an integral part of these financial statements. -23-
Fund balances of governmental funds 26,498,357 $
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 64,304,226 Accrued interest payable for the current portion of interest due on long-term liabilities has not been reported in the governmental funds. (1,395) Compensated absences, long term liabilities, net pension liability, and net OPEB liability that have not been included in the governmental fund activity (excludes internal service funds):

Compensated absences (1,466,781) Long-term liabilities (229,744) Net pension liability (12,915,487) Net OPEB liability (1,459,493) 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 5,075,447 Deferred outflows of resources - OPEB related 833,424 Deferred inflows of resources - pension related (889,987) Deferred inflows of resources - OPEB related (828,723) 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. 630,461 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. 6,400,286 Net Position of Governmental Activities 85,950,591 $

City of Imperial Beach
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds
Year Ended June 30, 2025
The accompanying notes are an integral part of these financial statements. -24-
Special
Revenue Fund
Nonmajor Total
Miscellaneous Governmental Governmental
General Grant Funds Funds
Revenues:

Taxes 21,085,034 $ - $ - $ 21,085,034 $
Licenses and permits 1,085,524 - 106,759 1,192,283
Intergovernmental 194,101 5,659,179 2,993,052 8,846,332 Charges for services 7,457,788 - - 7,457,788
Use of money and property 1,295,469 40,244 409,159 1,744,872 Fines and forfeitures 270,728 - - 270,728 Miscellaneous 1,048,688 2,425 - 1,051,113 Total Revenues 32,437,332 5,701,848 3,508,970 41,648,150 Expenditures:

Current:

General government 7,347,069 - - 7,347,069 Public safety 15,389,013 - 115,441 15,504,454 Community development 761,326 1,125,418 18,321 1,905,065 Parks, recreation and senior center 3,299,784 78,882 - 3,378,666 Public works 2,689,794 416,862 - 3,106,656
Debt Service:

Principal 51,413 - 334,736 386,149
Interest 781 - 10,356 11,137 Capital outlay 242,523 4,662,787 1,879,239 6,784,549 Total Expenditures 29,781,703 6,283,949 2,358,093 38,423,745 Excess (Deficiency of Revenues Over (Under) Expenditures 2,655,629 (582,101) 1,150,877 3,224,405 Other Financing Sources (Uses):

Subscription acquisition 17,901 - - 17,901 Proceeds of commercial paper - - 101,000 101,000 Transfers in 1,024,831 - 305,001 1,329,832 Transfer out (715,696) - (1,141,539) (1,857,235) Total Other Financing Sources (Uses) 327,036 - (735,538) (408,502) Net Change in Fund Balances 2,982,665 (582,101) 415,339 2,815,903 Fund Balances at Beginning of Year 19,077,082 306,727 4,298,645 23,682,454 Fund Balances at End of Year 22,059,747 $ (275,374) $ 4,713,984 $ 26,498,357 $

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, 2025
The accompanying notes are an integral part of these financial statements. -25-
Net change in fund balances - total governmental funds 2,815,903 $ 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 6,706,323 $
Depreciation and amortization (2,820,521) 3,885,802 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. (290,297) 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 (118,901) Commercial paper 334,736 Lease liability (67,079) 148,756 Accrued interest for debt service. This is the net change in accrued interest for the current period. 19,077 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. (1,514,974) 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. (119,715) 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. 457,534
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. 974,925 Change in Net Position of Governmental Activities 6,377,011 $

City of Imperial Beach
Statement of Net Position
Proprietary Funds
June 30, 2025
The accompanying notes are an integral part of these financial statements. -26-
Business-Type
Activities Governmental
Enterprise Fund Activities
Internal
Sewer Service Funds
Assets:

Current:

Cash and investments 6,589,375 $ 4,831,498 $
Receivables:

Accounts 1,433 1,413
Due from other governments 168,809 20,693
Total Current Assets 6,759,617 4,853,604
Noncurrent:

Capital assets, not being depreciated 1,814,316 1,009,858 Capital assets, net of depreciation 8,028,499 588,888
Total Noncurrent Assets 9,842,815 1,598,746
Total Assets 16,602,432 6,452,350
Deferred Outflows of Resources:

Deferred pension related items 69,845 60,407
Deferred OPEB related items 19,301 16,693
Total Deferred Outflows of Resources 89,146 77,100
Liabilities:

Current:

Accounts payable 73,385 212,088
Accrued liabilities 38,395 61,499
Compensated absences due in one year 27,365 31,926
Claims and judgments due in one year - 69,000
Long-term liabilities due in one year - 124,320
Total Current Liabilities 139,145 498,833
Noncurrent:

Compensated absences due in more than one year 65,335 33,147 Claims and judgments due in more than one year - 217,000 Long-term liabilities - 241,905
Net pension liability 169,620 146,698
Net OPEB liability 33,800 29,232
Total Noncurrent Liabilities 268,755 667,982
Total Liabilities 407,900 1,166,815
Deferred Inflows of Resources:

Deferred pension related items 13,805 11,940
Deferred OPEB related items 19,192 16,598
Total Deferred Inflows of Resources 32,997 28,538
Net Position:

Net investment in capital assets 9,842,815 1,232,521
Unrestricted 6,407,866 4,101,576
Total Net Position 16,250,681 $ 5,334,097 $
Reconciliation of Net Position to the
Statement of Net Position
Net Position per Statement of Net Position - Proprietary Funds 16,250,681 $ Prior years' accumulated adjustment to reflect the consolidation of internal service funds activities related to the enterprise funds (1,056,694) Current years' adjustments to reflect the consolidation of internal service activities related to enterprise funds (9,495)
Net Position per Statement of Net Position 15,184,492 $

City of Imperial Beach
Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds
Year Ended June 30, 2025
The accompanying notes are an integral part of these financial statements. -27-
Business-Type
Activities Governmental
Enterprise Fund Activities
Internal
Sewer Service Funds
Operating Revenues:

Sales and service charges 6,383,580 $ 2,722,000 $
Miscellaneous - 165,945 Total Operating Revenues 6,383,580 2,887,945 Operating Expenses:

Source of supply 5,035,926 - Services and supplies - 912,858 Claims expense - 779,814 Personnel and administrative 843,821 824,751
Depreciation/amortization expense 351,587 220,790
Total Operating Expenses 6,231,334 2,738,213 Operating Income 152,246 149,732 Nonoperating Revenues (Expenses):

Investment income 338,395 204,952
Miscellaneous revenue - 101,236
Interest expense - (17,893) Total Nonoperating Revenues (Expenses) 338,395 288,295 Income Before Transfers 490,641 438,027
Transfers in - 527,403
Total Transfers - 527,403
Change in Net Position 490,641 965,430
Net Position:

Beginning of Year 15,760,040 4,368,667 End of Fiscal Year 16,250,681 $ 5,334,097 $ 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 490,641 $ Adjustment to reflect the consolidation of current fiscal year internal service funds activities related to enterprise funds (9,495) Changes in Net Position of Business-Type Activities per Statement of Activities 481,146 $

City of Imperial Beach
Statement of Cash Flows
Proprietary Funds
Year Ended June 30, 2025
The accompanying notes are an integral part of these 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 6,335,895 $ - $
Cash received from/(paid to) interfund service provided - 2,898,051 Cash paid to suppliers for goods and services (5,011,022) (1,724,489) Cash paid to employees for services (865,663) (835,523) Net Cash Provided by Operating Activities 459,210 338,039 Cash Flows from Non-Capital Financing Activities:

Cost reimbursements - 101,236
Transfers from other funds - 527,403
Net Cash Provided by Non-Capital Financing Activities - 628,639 Cash Flows from Capital and Related Financing Activities:

Principal paid on subscription lease - (174,949)
Interest paid on subscription lease - (17,893) Acquisition and construction of capital assets (1,035,906) (142,622) Net Cash Used by Capital and Related Financing Activities (1,035,906) (335,464) Cash Flows from Investing Activities:

Investment income 338,395 204,952 Net Cash Provided by Investing Activities 338,395 204,952 Net Increase (Decrease) in Cash and Cash Equivalents (238,301) 836,166 Cash and Cash Equivalents, Beginning of Year 6,827,676 3,995,332 Cash and Cash Equivalents, End of Year 6,589,375 $ 4,831,498 $ Reconciliation of Operating Income to Net Cash
Provided by Operating Activities:

Operating income 152,246 $ 149,732 $
Adjustments to Reconcile Operating Income to Net Cash
Provided by Operating Activities:

Depreciation/amortization 351,587 220,790 Miscellaneous change on subscription - (111,255) (Increase) decrease in accounts receivable (151) (1,413) (Increase) decrease in prepaid costs - 23,198 (Increase) decrease in due from other governments (47,534) 11,519 (Increase) decrease in deferred outflows - pension 95,652 82,726 (Increase) decrease in deferred outflows - OPEB 2,790 2,412 Increase (decrease) in accounts payable 24,904 140,240
Increase (decrease) in accrued liabilities (1,758) 6,884 Increase (decrease) in compensated absences 30,656 26,228 Increase (decrease) in claims and judgments - (84,000)
Increase (decrease) in net pension liability (130,922) (113,230) Increase (decrease) in net OPEB liability 1,938 1,676
Increase (decrease) in deferred inflows - pension (18,242) (15,776) Increase (decrease) in deferred inflows - OPEB (1,956) (1,692) Total Adjustments 306,964 188,307 Net Cash Provided by Operating Activities 459,210 $ 338,039 $ Noncash Capital and Financing Activities
Subscription liabilities - $ 53,372 $
Subscription acquisition - (53,372)

City of Imperial Beach
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2025
The accompanying notes are an integral part of these financial statements. -29-
PrivatePurpose Trust
Fund
Successor
Custodial Agency to the
Funds Former RDA
Assets:

Pooled cash and investments 485,460 $ 1,739,265 $
Restricted assets:

Cash and investments with fiscal agents - 1,844 Total Assets 485,460 1,741,109 Deferred Outflows of Resources:

Deferred charges - loss on bond refunding - 255,298 Total Deferred Outflows of Resources - 255,298 Liabilities:

Accounts payable - 3,550 Accrued liabilities - 5,379
Accrued interest - 76,100 Due to Other Agencies - 1,329,015 Long-term liabilities:

Due in one year - 985,000 Due in more than one year - 24,976,319 Total Liabilities - 27,375,363 Deferred Inflows of Resources:

Deferred charges - gain on bond refunding - 4,613 Total Deferred Inflows of Resources - 4,613 Net Position (Deficit):

Held in trust for other purposes 485,460 (25,383,569) Total Net Position 485,460 $ (25,383,569) $

City of Imperial Beach
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
Year Ended June 30, 2025
The accompanying notes are an integral part of these financial statements. -30-
PrivatePurpose Trust
Fund
Successor
Custodial Agency to the
Funds Former RDA
Additions:

Taxes - $ 1,854,610 $
Interest and change in fair value of investments 19,085 26,092 Total Additions 19,085 1,880,702 Deductions:

Administrative expenses - 121,622 Contractual services - 45,866 Interest expense - 701,998 Total Deductions - 869,486
Changes in Net Position 19,085 1,011,216 Net Position (Deficit) at Beginning of Year 466,375 (26,394,785) Net Position (Deficit) at End of Year 485,460 $ (25,383,569) $

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-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 and 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.

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-32-
Note 1: Summary of Significant Accounting Policies (Continued) a. Description of the Reporting Entity (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 appropriated 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.

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-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.

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-34-
Note 1: Summary of Significant Accounting Policies (Continued) c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (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.

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-35-
Note 1: Summary of Significant Accounting Policies (Continued) c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (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."

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-36-
Note 1: Summary of Significant Accounting Policies (Continued) d. Assets, Liabilities and Net Position or Equity (Continued) All trade and property tax receivables are shown net of an allowance for uncollectibles.

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.
 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 other infrastructure.  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.

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-37-
Note 1: Summary of Significant Accounting Policies (Continued) d. Assets, Liabilities and Net Position or Equity (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
Right-to-use lease and subscription assets are amortized over the life of the associated contract.

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-38-
Note 1: Summary of Significant Accounting Policies (Continued) d. Assets, Liabilities and Net Position or Equity (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 four 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, and deferred lease related items, all of which are 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.

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-39-
Note 1: Summary of Significant Accounting Policies (Continued) d. Assets, Liabilities and Net Position or Equity (Continued) Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Plan and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis.

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

Generally accepted accounting principles 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, 2023
Measurement Date June 30, 2024
Measurement Period July 1, 2023 to June 30, 2024
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.

Generally accepted accounting principles 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, 2024
Measurement Date June 30, 2025
Measurement Period July 1, 2024 to June 30, 2025
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.

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-40-
Note 1: Summary of Significant Accounting Policies (Continued) d. Assets, Liabilities and Net Position or Equity (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.

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-41-
Note 1: Summary of Significant Accounting Policies (Continued) d. Assets, Liabilities and Net Position or Equity (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.

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-42-
Note 1: Summary of Significant Accounting Policies (Continued) d. Assets, Liabilities and Net Position or Equity (Continued) New Accounting Pronouncements
During the fiscal year ended June 30, 2025, the City implemented the following accounting standard:

Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences. The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences.

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City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-43-
II. DETAILED NOTES ON ALL FUNDS
Note 2: Cash and Investments
As of June 30, 2025, cash and investments were reported in the accompanying financial statements as follows:

Cash and investments:

Governmental activities:

Cash and investments 31,312,271 $
Restricted cash and investments* 1,298,153 Business-Type activities 6,589,375 Fiduciary funds:

Custodial funds 485,460 Private Purpose Trust 1,739,265 Total Cash and Investments 41,424,524 Restricted cash with fiscal agents:

Fiduciary Funds:

Private Purpose Trust 1,844 Total cash and investments with fiscal agents 1,844 Total cash and investments 41,426,368 $
*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, 2025 consists of the following:

Deposits with financial institutions 379,507 $
Cash on hand 200
Investments 41,046,661 Total cash and investments 41,426,368 $ 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.

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-44-
Note 2: Cash and Investments (Continued)
Deposits
At June 30, 2025, the carrying amount of the City's deposits was $379,507 and the bank balance was $882,405. The $502,898 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, 2025
-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.

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-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, 2025, the City's investment in Medium-Term Corporate Notes were all rated A or better by Moody's and S&P. The City’s investments in supranational is limited to those rated “AA” or higher, as of June 30, 2025 these were rated AA or better. 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.

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-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, 2025, 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, 2025, 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.

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-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, 2025, 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, 2025, the City did have the following investments in a single issuer that exceeded 5% of the total investment value.

Reported Percent
Issuer amount of portfolio
Federal Home Loan Mortgage Corporation 2,613,582 $ 6.37% 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, 2025, the City had the following investments and maturities:

Investment Maturities (in Years)
1 year 1 to 3 3 to 5
Investments or less years years Total
State Pooled Investment (LAIF) 15,226,042 $ - $ - $ 15,226,042 $ Federal Farm Credit Bank 999,687 - 763,550 1,763,237 Federal Home Loan Bank - 1,411,475 509,830 1,921,305 Federal Home Loan Mortgage Corporation 693,096 954,383 966,103 2,613,582 Federal National Mortgage Association 248,468 - - 248,468 U.S. Treasury Notes 2,081,473 4,328,810 2,674,724 9,085,007 Medium Term Corporate Notes 1,283,253 4,680,703 2,195,056 8,159,012 Supranational 150,535 479,849 630,384 Money Market 101,471 101,471 Pension Section 115 Trust 1,298,153 - - 1,298,153 Total Investments 22,082,178 $ 11,855,220 $ 7,109,263 $ 41,046,661 $

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-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, 2025:

Fair Value Measurement Level
Cash & Investments Total 1 2 3
Federal Farm Credit Bank 1,763,237 $ - $ 1,763,237 $ - $ Federal Home Loan Bank 1,921,305 - 1,921,305 - Federal Home Loan Mortgage Corporation 2,613,582 - 2,613,582 - Federal National Mortgage Association 248,468 - 248,468 - U.S. Treasury Notes 9,085,007 - 9,085,007 - Medium Term Corporate Notes 8,159,012 - 8,159,012 - Supranational 630,384 - 630,384 - Total 24,420,995 - $ 24,420,995 $ - $ Investments not subject to fair value
State Pooled Investment (LAIF) 15,226,042 Money Market 101,471 Pension Section 115 Trust 1,298,153 Total Investments 41,046,661 $ 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.

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-50-
Note 3: Capital Assets
Capital asset activity for the year ended June 30, 2025, 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 5,609,507 6,431,548 (4,333,948) 7,707,107 Total Capital Assets, Not Being Depreciated 20,704,366 6,431,548 (4,333,948) 22,801,966 Capital assets, being depreciated/amortized:

Structures and improvements 14,988,329 2,534,120 (43,588) 17,478,861 Equipment and vehicles 7,300,717 384,978 (39,202) 7,646,493 Infrastructure 51,096,722 1,821,811 - 52,918,533 Right-to-use equipment lease 147,365 - - 147,365 Right-to-use subscriptions 233,781 71,273 (53,019) 252,035 Total Capital Assets,
Being Depreciated/Amortized 73,766,914 4,812,182 (135,809) 78,443,287 Less accumulated depreciation/amortized:

Structures and improvements (8,984,195) (843,083) 42,353 (9,784,925) Equipment and vehicles (5,185,704) (526,597) 35,859 (5,676,442) Infrastructure (18,043,741) (1,543,092) - (19,586,833) Right-to-use equipment lease (94,616) (31,758) - (126,374) Right-to-use subscriptions (121,058) (96,781) 50,132 (167,707) Total Accumulated Depreciation/Amortization (32,429,314) (3,041,311) 128,344 (35,342,281) Total Capital Assets, Being Depreciated, Net 41,337,600 1,770,871 (7,465) 43,101,006 Governmental Activities Capital Assets, Net 62,041,966 $ 8,202,419 $ (4,341,413) $ 65,902,972 $ Depreciation and amortization expense was charged to functions/programs of the primary government follows:

Governmental Activities:

General government 526,047 $
Public safety 172,117 Public works 1,633,326 Parks, recreation and senior center 489,031 Internal service funds 220,790
Total Governmental Activities 3,041,311 $

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-51-
Note 3: Capital Assets (Continued)
Beginning Ending
Balance Increases Decreases Balance
Business-Type Activities:

Capital assets, not being depreciated:

Construction-in-progress 908,410 $ 905,906 $ - $ 1,814,316 $ Total Capital Assets,
Not Being Depreciated 908,410 905,906 - 1,814,316 Capital assets, being depreciated/amortized:

Sewer lines and pump stations 14,807,442 100,722 - 14,908,164 Structures and improvements - 6,189 - 6,189 Right-to-use subscriptions - 23,089 - 23,089 Total Capital Assets, Being Depreciated/Amortized 14,807,442 130,000 - 14,937,442 Less accumulated depreciation/amortized:

Sewer lines and pump stations (6,557,356) (339,423) - (6,896,779) Structures and improvements - (619) - (619) Right-to-use subscriptions - (11,545) - (11,545) Total Accumulated Depreciation/Amortization (6,557,356) (351,587) - (6,908,943) Total Capital Assets, Being Depreciated/Amortized, Net 8,250,086 (221,587) - 8,028,499 Business-Type Activities Capital Assets, Net 9,158,496 $ 684,319 $ - $ 9,842,815 $ Depreciation and amortization expense was charged to functions/programs of the primary government as follows:

Business-Type Activities:

Sewer 351,587 $
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.

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-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, 2025, amounts to $348,017 and is offset by allowance. The outstanding balance at June 30, 2025, is $977,625, 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, 2025, amounts to $275,806 and is offset by allowance. The loan had not been fully disbursed at June 30, 2025. The outstanding balance at June 30, 2025, is $762,261, 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, 2025, amounts to $909,314 and is offset by allowance. The outstanding balance at June 30, 2025, is $2,854,314, including accrued interest.

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-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, 2025, amounts to $1,252,773 and is offset by allowance. The outstanding balance at June 30, 2025, is $5,352,773, 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, 2025, amounts to $175,035 and is offset by allowance. The outstanding balance at June 30, 2025, is $1,008,535, including accrued interest.

Total loans receivable at June 30, 2025, amounts to $10,955,508, 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.

Loan receivable from Successor Agency
During fiscal year 2025, there were some discrepancies noted in the reporting to the Department of Finance for the Successor Agency. This resulted in a reduction to the amount of RPTTF received in the fiscal year. In order for the Successor Agency to meet its debt service obligations, a loan receivable was created of $1,311,420. The Department of Finance has approved the reimbursement of funds in the fiscal year 2026 distribution.

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-54-
Note 5: lnterfund Receivable, Payable, and Transfers
The composition of interfund balances as of June 30, 2025 is as follows:

Due To/Due from Other Funds
Due to other funds
Nonmajor
Governmental
Funds Funds Total
Due from Other Funds:

General Fund 41,180 $ 41,180 $
Total 41,180 $ 41,180 $
The General Fund is owed $41,180 from other governmental funds for temporary negative cash and investments.

Interfund Transfers
Transfer In
Nonmajor Internal
General Governmental Service
Transfers Out Fund Funds Funds Total
General Fund - $ 305,001 $ 410,695 $ 715,696 $
Nonmajor Governmental Funds 1,024,831 - 116,708 1,141,539 Total 1,024,831 $ 305,001 $ 527,403 $ 1,857,235 $ Transfers into the General Fund totaling $1,024,831 were made from the Gas Tax Fund and Prop A Tax Fund to support street maintenance and transportation costs.

Transfers out of the General Fund to the RMRA fund and the Capital Projects Fund totaling $305,001 consisted of funding for various facilities capital improvements projects.

Transfers of $410,695 out of the General Fund and $116,708 out of the CDBG Grant Fund were made to Internal Service Funds for support services.

City of Imperial Beach
Notes to Financial Statements
June 30, 2025
-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 $5,135,854 and $69,845, 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 $850,117 and $19,301, 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 $901,927 and $13,805, 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 $845,321 and $19,192, respectively.

Lastly, the inflows from lease related items of $132,238 in Governmental activities.

The City has one item that is reportable on the Governmental Fund Balance Sheet:
this item relates to unavailable revenue of $630,461.

Note 7: Unearned Revenue
As of June 30, 2025, the General Fund unearned revenue consists of $406,280 relating to prepayment of improvements by developers and $46,434 of miscellaneous items such as unearned donations grant/ grants and prepaid rent.

Miscellaneous Grants Fund unearned revenue consists of $437,907 as of June 30, 2025 relating to the American Rescue Plan Act of 2021 (ARPA) and other miscellaneous grants.