AGENDA
REGULAR MEETING OF THE
CITY OF KING CITY COUNCIL
AND
Sitting as SUCCESSOR AGENCY OF
THE RDA FOR THE CITY OF KING
TUESDAY JUNE 27, 2023
6:00 P.M.
CITY HALL
212 S. VANDERHURST AVENUE
KING CITY, CALIFORNIA 93930
REMOTE LOCATION VIA TELECONFERENCE
Any interested parties or community members may attend
and participate in the meeting at the following address where Councilmember Avalos will join the meeting from:
1950 Tamarind Ave, Los Angeles CA 93930.
(The Agenda will be posted at this location)
The City Council meeting will be conducted in hybrid in-person/virtual format.
To join the meeting virtually, please use the link below to join the Zoom meeting:
https://bit.ly/3e0zvaR
Meeting ID: 881 5287 9536
Or by telephone: 1-669-900-9128
Passcode: 052933
In compliance with the Americans with Disabilities Act, if you need special assistance to participate in a City meeting, Please contact the City Clerk's Office (831-386-5925) at least 48 hours prior to the Meeting to ensure that reasonable arrangements can be made to provide accessibility to the meeting. * Please submit all correspondence for City Council PRIOR to the meeting with a copy to the City Clerk.
1. CALL TO ORDER
2. ROLL CALL: Council Members Oscar Avalos, Carlos DeLeon, Robert Cullen, Mayor Pro Tem Carlos Victoria, and Mayor Mike LeBarre
3. FLAG SALUTE
4. CLOSED SESSION ANNOUNCEMENTS
5. SPECIAL PRESENTATIONS
None
6. PUBLIC COMMENT
Any member of the public may address the Council for a period not to exceed three minutes’ total on any item of interest within the jurisdiction of this Council that is not on the agenda. The Council will listen to all communications; however, in compliance with the Brown Act, the Council cannot act on items not on the agenda. Comments should be directed to the Council as a whole and not to any individual Council Member. Slanderous, profane or personal remarks against any Council Member, staff member or member of the audience is not permitted.
7. COUNCIL COMMUNICATIONS & COMMITTEE REPORTS
Individual Council Members may comment on Council business, his or her Council activities, City operations, projects or other items of community interest. Council Members may also request staff to report back at a subsequent meeting on any matter or take action to direct staff to prepare a staff report for a future agenda.
8. STAFF COMMUNICATIONS
Comments presented by the City Manager, City Attorney or other staff on City business and/or announcements.
9. CONSENT AGENDA
The following items listed below are scheduled for consideration as a group. The recommendations for each item are noted. Members of the audience may speak on any item(s) listed on the Consent Agenda. Any Council Member, the City Manager, or the City Attorney may request that an item be withdrawn from the Consent Agenda to allow for full discussion.
The Council may approve the remainder of the Consent Agenda on one motion. Items withdrawn from the Consent Agenda may be considered by separate motions at the conclusion of the discussion of each item.
A. Consideration: Meeting Minutes of June 13, 2023, Council Meeting Recommendation: approve and file.
B. Consideration: City of King Check Register June 1, through June 15, 2023 Recommendation: receive and file.
C. Consideration: King City Community Power Paid Invoices May 2023 Recommendation: receive and file.
D. Consideration: Confirmation of Election of King City Volunteer Fire Department Officers and Engineers
Recommendation: 1) approve confirmation of the election of the following 2023-24 King City Volunteer Fire Department Officers; 2) approve appointment of the following Chief Engineer and First Assistant Engineer; and 3) approve confirmation of other following engineer positions:
• Chief: Russ Nichols
• First Assistant Chief: Matthew Owens
• Second Assistant Chief: Michael Hearne
• Secretary/Treasurer: Mark Phillips
• Chief Engineer: Steve Rianda
• First Assistant Engineer: John Nuno
• Second Assistant Engineer: Ty Caulk
• Third Assistant Engineer: Carlos Perez, Jr.
• Fourth Assistant Engineer: Joseph Kerr
• Fifth Assistant Engineer: Mark Silveira
• Sixth Assistant Engineer: Robert Eddington
E. Consideration: Successor Agency Check Register June 1, through June 15, 2023
Recommendation: receive and file.
F. Consideration: Notice of Completion – 2022 King City Sewer Improvements Project
Recommendation: 1) approve Resolution No. 2023-4955 accepting completion of the 2022 King City Sewer Improvements Project; and 2) authorize City Manager to execute and file a Notice of Completion with the Monterey County Recorder’s Office.
G. Consideration: Temporary Janitorial Services Contract Recommendation: authorize the City Manager to execute a contract for temporary janitorial services for the Interim Riverbed Homeless Strategy in an amount not to exceed $20,000 and in a form approved by the City Attorney.
10. PUBLIC HEARINGS
A. Consideration: Community Development Block Grant (CDBG) 2023 Notice Of Funding Availability (NOFA) Hearing
Recommendation: 1) review the program and available funding options and staff recommendations; 2) open the public hearing; 3) receive public comment regarding the Community Development Block Grant (CDBG) program and possible activities and projects to be considered for funding under the upcoming NOFA process; 4) close the public hearing; 5) discuss potential applications; 6) consider recommendations; and 7) direct staff to prepare for Council consideration a CDBG application.
11. REGULAR BUSINESS
A. Consideration: City and CDA Successor Agency’s Audited Financial Statements for the Fiscal Year 2021-2022
Recommendation: City Council and the Board of Directors of the King City CDA Successor Agency accept the City and CDA Successor Agency’s Audited Financial Statements for Fiscal Year Ended June 30, 2022.
12. CITY COUNCIL CLOSED SESSION
Announcement(s) of any reportable action(s) taken in Closed Session will be made in open session and repeated at the beginning of the next Regular City Council meeting as this portion of the meeting is not recorded.
13. ADJOURNMENT
The City of King is an equal opportunity provider and employer.
City Council Meeting
June 13, 2023
1.__CALL TO ORDER:
Regular Meeting called to order at 6:00pm by Mayor Pro Tem Victoria.
2.__ROLL CALL:
City Council: Council member, Mayor Pro Tem Carlos Victoria, Rob Cullen, Carlos DeLeon, Mayor Mike LeBarre and Councilmember Oscar Avalos, absent.
City Staff: City Manager Steven Adams; City Attorney Roy Santos; City Clerk, Erica Sonne.
3.__FLAG SALUTE:
The flag salute was led by Council member DeLeon.
4. CLOSED SESSION ANNOUNCEMENTS:
None
5.__SPECIAL PRESENTATIONS:
None
6. PUBLIC COMMUNICATIONS:
Liz Hall Public Sector Manager for Waste Management announced that they were coordinating with Beautification week and having a drop off event on Saturday June 17th from 8-10am until dumpsters are full at the Salinas Valley Fairgrounds. On June 24th they are having a composting event to learn about composting.
7. COUNCIL COMMUNICATIONS:
Council Member DeLeon had nothing to report tonight. He did have a comment about the death at the Monterey County Jail and that it was a King City resident. He stated that it was the 10th death at the jail and he is wondering if the City could reach out to the Monterey County Sheriff’s department to see if there is something the sheriff’s department can do about the investigation to see why this is happening.
Council Member Cullen stated that the Solid Waste Authority meeting Highlights from May 18th are in the packets and next meeting is this Thursday. He attended the ribbon cutting of Fenton and Keller, a new attorney at law business. He will not be at the June 27th meeting. Small Business Development Center Network asked him to serve on the board and he has accepted. He will be representing 14 counties. First board meeting is in August.
Mayor Pro Tem Victoria stated he had nothing tonight.
8. CITY STAFF REPORTS AND COMMENTS:
City Manager Steven Adams stated that the Streetscape project will be starting this week. Starting on Second St. and Vanderhurst. Businesses will be notified door to door.
City Attorney Roy Santos nothing to report out tonight. 9(A)
9. CONSENT
A. Consideration: Meeting Minutes of May 9, 2023, Council Meeting B. Consideration: City of King Check Register May 16, through May 31, 2023 C. Consideration: FY 2023-24 Job Classification Plan
D. Consideration: New Job Descriptions and Side Letters of Agreement with the King City Confidential Employees Association and the Service Employees International Union Local 521 E. Consideration: School Resource Officer Program Memorandum of Understanding F. Consideration: Road to Success Youth Diversion Program Memorandum of Understanding G. Consideration: Police Officer Recruit Employment Agreement H. Consideration: Memorandum of Understanding with California Water Service Company Regarding Sale of Recycled Water
I. Consideration: ProHousing Designation Program
J. Consideration: Special Meeting Minutes of May 30, 2023, Council Meeting K. Consideration: Sixth Amendment to the Employment Agreement for City Manager Services City Manager Steve Adams stated that Item 9(C) and 9(D) and you are approving the revised items.
Action: Motion to approve consent agenda items A—K by and Cullen seconded by DeLeon.
AYES: Council Members: Cullen, DeLeon, Victoria
NOES: Council Members:
ABSENT: Council Members: LeBarre, Avalos
ABSTAIN: Council Members:
10. PUBLIC HEARING:
A. Consideration: Riverview Gardens Landscape Maintenance District Annual Assessment for Fiscal Year 2023-24
City Manager Steve Adams introduced the Finance Director Mike Howard.
Finance Director Mike Howard introduced this item.
Mayor Pro Tem Victoria opened the public hearing. Hearing and seeing no one come forward Mayor Pro Tem Victoria closed the public hearing.
Action: Motion to adopt Resolution No. 2023-4950 approving the report and ordering the levy and collection of assessments for the Riverview Gardens Landscape Maintenance District pursuant to provisions of the Landscaping and Lighting Act of 1972 of the Streets and Highways Code of the State of California by and Cullen seconded by DeLeon.
AYES: Council Members: Cullen, DeLeon, Victoria
NOES: Council Members:
ABSENT: Council Members: LeBarre, Avalos
ABSTAIN: Council Members:
B. Consideration: USA Waste of California (DBA Waste Management) Garbage and Recycling Collection Service Fees for Fiscal Year 2023-24
City Manager Steven Adams introduced this item.
General Manager/CAO Salinas Valley Solid Waste Authority Patrick Mathews further introduced this item with a PowerPoint.
Mayor Pro Tem Victoria opened the public hearing. Hearing and seeing no one come forward Mayor Pro Tem Victoria closed the public hearing.
Action: Motion to 1) adopt a Resolution approving USA Waste of California (DBA Waste Management, hereinafter “WM”) garbage and recycling collection adjusted rates for Fiscal Year 2023-24 effective July 1, 2023, resulting in a 6.51% increase; 2) approve a Memorandum of Understanding (MOU) with Waste Management amending the calculations to the annual garbage and recycling collection service fees to include bad debt recovery; and 3) direct staff to develop and implement a lien process for delinquent refuse accounts to be effective July 1, 2024 by Cullen seconded by DeLeon.
AYES: Council Members: Cullen, DeLeon, Victoria
NOES: Council Members:
ABSENT: Council Members: LeBarre, Avalos
ABSTAIN: Council Members:
11. REGULAR BUSINESS
A. Consideration: FY 2023-24 / FY 2024-25 Biennial Budget and FY 2023-24 Appropriation Limit City Manager Steven Adams introduced this item with a PowerPoint.
Action: Motion to 1) adopt a Resolution approving the FY 2023-24/ FY 2024-25 Biennial Budget; and 2) adopt a Resolution establishing the appropriation limit from tax proceeds for FY 2023-24. by and Cullen seconded by Victoria.
AYES: Council Members: Cullen, DeLeon, Victoria
NOES: Council Members:
ABSENT: Council Members: LeBarre, Avalos
ABSTAIN: Council Members:
B. Consideration: Interim Riverbed Homeless Strategy
City Manager Steven Adams introduced this item with a PowerPoint.
Carla Mullinix Ackerman is concerned with this interim space being so close to the Highschool. She stated that she is working with the middle school, and they have issues there that continue to Highschool. She knows that they are running drugs, prostitution, in the river bottom. There is a pregnant woman down there. Children down there. She stated that we need to help the homeless, however we need to think of the protection of all children. She is concerned for the Highschoolers. She feels safety nets need to be put in place for all of our children and all of our community.
Council member DeLeon asked if site management includes security. He is concerned about security. City Manager stated that security in the beginning can be looked into.
Action: Motion to 1) approve the recommended Interim Salinas Riverbed Area Homeless Strategy; 2) authorize the City Manager to execute an agreement with Meldi, LLC in a form approved by the City Attorney to lease up to a maximum of 16 rooms at the Monarch Inn for temporary housing for the period
of July 15, 2023 through October 31, 2023 for $135,000; 3) appropriate $190,000 from the General Fund unappropriated fund balance to implement the program; 4) authorize the City Manager to execute funding agreements with Shangri-La Industries, the Monterey County Coalition of Homeless Service Providers, and the County of Monterey to provide funding assistance and reimburse the City for a portion of the costs for the program; 5) authorize the City Manager to execute an agreement with Step Up on Second Street for the provision of site management services; and 6) approve and authorize the City Manager to execute a Memorandum of Understanding (MOU) with the County of Monterey regarding enforcement authority on Parcel 245-081-031-000 in the unincorporated area of Monterey County by and DeLeon seconded by Cullen.
AYES: Council Members: Cullen, DeLeon, Victoria
NOES: Council Members:
ABSENT: Council Members: LeBarre, Avalos
ABSTAIN: Council Members:
12. CITY COUNCIL CLOSED SESSION
None
ADJOURNMENT:
Mayor Pro Tem Victoria adjourned the meeting at 7:39p.m. on a motion by Cullen and seconded by DeLeon.
Approved Signatures:
Mayor Mike LeBarre City Clerk, Erica Sonne
City of King City of King
Item No. 9(B)
REPORT TO THE CITY COUNCIL
DATE: JUNE 27, 2023
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: MIKE HOWARD, FINANCE DIRECTOR
RE: CONSIDERATION OF CITY OF KING CHECK REGISTER JUNE
1 THROUGH JUNE 15, 2023
RECOMMENDATION:
It is recommended City Council receive and file.
BACKGROUND:
At least once a month, the City Treasurer shall submit to the City Council, a copy of the invoices paid for the previous month.
DISCUSSION:
The purpose of this item is to provide the Council an opportunity to review and monitor ongoing expenditures. These documents are attached.
COST ANALYSIS:
There is no fiscal impact as a result of this action.
ENVIRONMENTAL REVIEW:
No Environmental Review required for this item.
ALTERNATIVES:
The following alternatives are provided for Council consideration:
1. Receive and file the report; or
2. Provide other direction to staff regarding requests for additional information.
Item No. 9(C)
REPORT TO THE CITY COUNCIL
DATE: JUNE 27, 2023
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: MIKE HOWARD, FINANCE DIRECTOR
RE: CONSIDERATION OF CITY OF KING KCCP PAYMENTS FOR
THE MONTH OF MAY 2023
RECOMMENDATION:
It is recommended City Council receive and file.
BACKGROUND:
At least once a month, the City Treasurer shall submit to the City Council, a copy of the invoices paid for the previous month.
DISCUSSION:
The purpose of this item is to provide the Council an opportunity to review and monitor ongoing expenditures. These documents are attached.
COST ANALYSIS:
There is no fiscal impact as a result of this action.
ENVIRONMENTAL REVIEW:
No Environmental Review required for this item.
ALTERNATIVES:
The following alternatives are provided for Council consideration:
1. Receive and file the report; or
2. Provide other direction to staff regarding requests for additional information.
Item No. 9 (D)
REPORT TO THE CITY COUNCIL
DATE: JUNE 27, 2022
TO: CITY COUNCIL
FROM: STEVEN ADAMS, CITY MANAGER
RE: CONSIDERATION OF CONFIRMATION OF ELECTION OF KING
CITY VOLUNTEER FIRE DEPARTMENT OFFICERS AND
ENGINEERS
RECOMMENDATION:
It is recommended the City Council: 1) approve confirmation of the election of the following 2023-24 King City Volunteer Fire Department Officers; 2) approve appointment of the following Chief Engineer and First Assistant Engineer; and 3) approve confirmation of other following engineer positions:
• Chief: Russ Nichols
• First Assistant Chief: Matthew Owens
• Second Assistant Chief: Michael Hearne
• Secretary/Treasurer: Mark Phillips
• Chief Engineer: Steve Rianda
• First Assistant Engineer: John Nuno
• Second Assistant Engineer: Ty Caulk
• Third Assistant: Carlos Perez, Jr.
• Fourth Assistant: Joe Kerr
• Fifth Assistant: Mark Silveira
• Sixth Assistant: Robert Eddington
BACKGROUND:
Section 2.20.030 of the King City Municipal Code sets forth that Fire Chief, First Assistant Chief, Second Assistant Chief, Secretary and Treasurer shall be elected from among the members of the Volunteer Fire Department and subject to confirmation by the City Council. The election is to be held on the first Tuesday in June of each year and the confirmation shall take place at the first meeting of the City Council following the election.
Item No. 9(E)
REPORT TO THE SUCCESSOR AGENCY TO THE FORMER KING CITY CDA DATE: JUNE 27, 2023
TO: HONORABLE CHAIR AND MEMBERS OF THE BOARD
FROM: MIKE HOWARD, FINANCE DIRECTOR
RE: CONSIDERATION OF SUCCESSOR AGENCY CHECK
REGISTER FOR JUNE 1 THROUGH JUNE 15, 2023
RECOMMENDATION:
It is recommended the City Council acting as the Successor Agency Board receive and file.
BACKGROUND:
At least once a month, the City Treasurer shall submit to the Successor Agency Board, a copy of the invoices paid for the previous month.
DISCUSSION:
The purpose of this item is to provide the Council an opportunity to review and monitor ongoing expenditures. These documents are attached.
COST ANALYSIS:
There is no fiscal impact as a result of this action.
ENVIRONMENTAL REVIEW:
No Environmental Review required for this item.
ALTERNATIVES:
The following alternatives are provided for Council consideration:
1. Receive and file the report; or
2. Provide other direction to staff regarding requests for additional information.
Item No. 9(F)
REPORT TO THE CITY COUNCIL
DATE: JUNE 27, 2023
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: OCTAVIO HURTADO, PUBLIC WORKS DIRECTOR / CITY
ENGINEER
RE: CONSIDERATION OF NOTICE OF COMPLETION - 2022 KING
CITY SEWER IMPROVEMENTS PROJECT
RECOMMENDATION:
It is recommended City Council: 1) adopt Resolution No. 2023-4955 accepting completion of the 2022 King City Sewer Improvements Project; and 2) authorize City Manager to execute and file a Notice of Completion with the Monterey County Recorder’s Office
BACKGROUND:
Improvement Plans and Specifications were put out to bid for the 2022 King City Sewer Improvements Project on August 26, 2022. The project included the following work:
o Furnish and installation of new sanitary sewer pipe, new sanitary sewer manholes and connection to existing laterals along Lynn Street from San Lorenzo Ave to First Street and along Pearl Street from San Lorenzo Avenue to First Street.
o Paving of Lynn Street and Pearl Street from San Lorenzo Avenue to First Street
Additional scope was added to the project to accomplish the following:
o Installation of reclaimed water line (purple pipe) along Pearl Street from San Lorenzo Avenue to First Street.
o Installation of pavement reinforcement fabric between concrete and new asphalt.
o Various sewer lateral repairs including the replacement of the lateral to City Hall.
CITY COUNCIL
CONSIDERATION OF NOTICE OF COMPLETION – 2022 KING CITY SEWER
IMPROVEMENTS PROJECT
JUNE 27, 2023
PAGE 2 OF 3
The City Council approved the contract at the October 11, 2022 City Council meeting. The Notice to Proceed was issued on December 5, 2022. The change order for the purple pipe was approved by City Council at the February 28, 2023 meeting.
DISCUSSION:
The primary purpose of this project was to upgrade the substandard 6-inch diameter clay sewer lines with 8-inch diameter PVC lines within the sewer collection system. In addition to upgrading the collection system, the project fulfilled construction of a recycled water line along Pearl Street. Installing the recycled water line (purple pipe) now eliminated the need to trench through the newly paved streets.
Monterey Peninsula Engineering’s operations were deliberate and steady since given the notice to proceed. Progress on installation of the upgraded sewer collection system proceeded with a concentrated effort put forth by the Contractor and the City staff to ensure a quality installation while working together to limit impacts on residents, the school and City Hall. Some unforeseen underground conditions were encountered such as unknown/abandoned utilities. The Contractor, City staff and the utility companies coordinated efforts to minimize project delays and assure a safe work zone.
The project was completed on May 26, 2023. This was before the final completion date set forth in the contract of May 31, 2023, after being amended due to rain delays. Staff have determined the work was completed satisfactorily and according to the terms of the contract. Therefore, staff recommend the City Council approve the Notice of Completion so remaining retention funds can be paid to the contractor.
COST ANALYSIS:
Funding for the project was provided from the sewer fund to make improvements to the existing Wastewater Collection System. The City budgets $500,000 to make improvements to the Wastewater Collection System. Staff has delayed making improvements for several years to accumulate funds to support a larger project and limit the impacts to residents.
The approved Contract amount was $1,999,697.97
Change order for the recycled water line as $601,000.00 Total: $2,600,687.97
10% Contingency $260,068.80
Total approved project cost: $2,860,756.77
RESOLUTION No. 2023-4955
ACCEPTANCE OF COMPLETION OF
2015 KING CITY SEWER IMPROVEMENTS PROJECT
RESOLVED, by the City Council of the City of King, California, that WHEREAS, Public Works Director of said City has filed with the City Manager of the City of King a recommendation of acceptance as to the completion of all the work provided to be done under and pursuant to contract between said City and Monterey Peninsula Engineering, dated November 11, 2022; and
WHEREAS, it appears to the satisfaction of the City Council that said work under said contract has been fully completed and done as provided in said contract plans and specifications therein referred to.
NOW, THEREFORE, IT IS ORDERED AS FOLLOWS:
1. That acceptance of completion of said work be, and is hereby, made and ordered.
2. That the City Manager is directed to execute and file with the recorder of the County of Monterey, notice of acceptance of completion thereof, as required by law.
PASSED AND ADOPTED by the City Council of the City of King at a regular meeting duly held on the 27th day of June, 2023, by the following vote:
AYES, and in favor thereof, Councilmembers:
NAYS, Councilmembers:
ABSENT, Councilmembers:
ABSTAINING, Councilmembers:
Mike LeBarre, Mayor
ATTEST:
Erica Sonne, City Clerk
Exhibit 1
APPROVED AS TO FORM:
Roy Santos, City Attorney
WHEN RECORDED MAIL TO:
City of King City
Department of Public Works
212 S Vanderhurst Avenue
King City, CA 93930
NOTICE OF COMPLETION
NOTICE IS HEREBY GIVEN:
That the public work described as 2022 King City Sanitary Sewer Improvements Project was constructed pursuant to a contract between the City of King City, 212 S Vanderhurst Avenue King City, CA 93930 and Monterey Peninsula Engineering, 192 Healy Avenue, Marina, CA 93933 for the base bid. The date of completion of said work was May 26, 2023, which was the date said public entity accepted said work to the satisfaction of the City Engineer. The City of King City herby accepts the project as completed in accordance with the plans and specifications.
CITY OF KING CITY
__________________________________
STEVEN ADAMS
CITY MANAGER
June 27, 2023
DATE
VERIFICATION
I, Steven Adams do herby certify that I am the City Manager of the public entity named above; that I am authorized to verify the foregoing notice; that I have read same; and that it is true of my knowledge.
I certify under penalty of perjury that the forgoing is true and correct.
Subscribed at City of King, California, this 27th day of June, 2023 __________________________________
STEVEN ADAMS
CITY MANAGER
Exhibit 2
STATE OF CALIFORNIA) SS
COUNTY OF MONTEREY)
Octavio Hurtado, being first duly sworn, deposes and says:
That he is an officer of the City of King, a municipal corporation; to wit: the City Engineer; that he has read the above and foregoing Notice of Completion, and that the same is true of his own knowledge except as to matters which are therein stated on his information or belief, and as to those maters that he believes them to be true.
Subscribed and sworn before me this _______ day of ____________, 2023. ____________________________________
Notary Public
State of California
CITY OF KING CITY
ATTN: OCTAVIO HURTADO
212 S. VANDERHURST AVE.
KING CITY, CA 93930
Payment Request # 7
PLEASE REMIT PAYMENT TO:
MONTEREY PENINSULA ENGINEERING Date: 5/26/2023
P.O. Box 400, Marina CA 93933 Job #: 2234
Phone: 831-384-4081 Invoice #: 05-12 RET
Fax: 831-883-1372 0 Thru: 5/31/2023
PAYMENT ACCEPTED BY CHECK ONLY
Job Name: KING CITY SEWER IMPROVEMENTS
Job Location: LYNN ST. / PEARL ST., KING CITY, CA
Qty. Total Qty. Total
Item No. Description Unit Qty. Unit Cost Total Amount This Period This Period To Date To Date 1 POTHOLE AND VERIFY LOCATION AND
DEPTH OF UTILITIES LS 1 $78,500.00 $78,500.00 $0.00 1 $78,500.00 2 FURNISH ADEQUATE SHEETING, SHORING,
AND BRACING LS 1 $20,000.00 $20,000.00 $0.00 1 $20,000.00 3 DEMO, REMOVAL, EXCAVATION, DISPOSAL
EXISTING MAIN LS 1 $35,000.00 $35,000.00 $0.00 1 $35,000.00 4 8" SEWER (0+22.21 to 23+89.30)(Lynn) LF 2367 $181.00 $428,427.00 $0.00 2367 $428,427.00 5 8" SEWER (0+23.68 to 23+91.68)(Pearl) LF 2368 $166.00 $393,088.00 $0.00 2368 $393,088.00 6 SEWER MANHOLE, 0+22.21 to 23+89.30 EA 12 $9,200.00 $110,400.00 $0.00 13 $119,600.00 7 WORK AREA & TRENCH RESTORATION,
0+17.2 LF 2377 $18.00 $42,786.00 $0.00 2377 $42,786.00
8 WORK AREA & TRENCH RESTORATION,
0+18.6 LF 2378 $18.00 $42,804.00 $0.00 2378 $42,804.00
9 4" SS LATERAL, PIPE & PAVEMENT
RESTORATION EA 153 $400.00 $61,200.00 $0.00 153 $61,200.00 10 GRIND 3" AC, INSTALL 3" AC SF 234587 $3.31 $776,482.97 $0.00 232602 $769,912.62 11 RAISE (E) MANHOLES TO GRADE EA 5 $2,200.00 $11,000.00 $0.00 5 $11,000.00 PCO 01 8" C900 WATERLINE LF 2400 $265.00 $636,000.00 $0.00 2400 $636,000.00 PCO 03.A
CUT OUT 2" GAS & REESTABLISH SEWER
MAIN CONNECTION LS 1 $1,874.35 $1,874.35 $0.00 1 $1,874.35 PCO 03.B EMERGENCY RESPONSE & DEWATERING LS 1 $2,018.04 $2,018.04 $0.00 1 $2,018.04 PCO 002.3.A PAVEMENT INTERLAYER - PEARL STREET LS 1 $122,000.00 $122,000.00 $0.00 1 $122,000.00 PCO 002.3.B PAVEMENT INTERLAYER - LYNN STREET LS 1 $125,000.00 $125,000.00 $0.00 1 $125,000.00 PCO 002.3.C CREDIT FOR 0.5" AC - PEARL ST. LS 1 ($31,680.00) ($31,680.00) $0.00 1 ($31,680.00) PCO 002.3.D CREDIT FOR 0.5" AC - LYNN ST. LS 1 ($32,516.00) ($32,516.00) $0.00 1 ($32,516.00) PCO 004.A CHASE BACK SEWER LATERAL - 1/31/23 LS 1 $2,880.93 $2,880.93 $0.00 1 $2,880.93 PCO 004.B CHASE BACK SEWER LATERAL - 2/1/23 LS 1 $2,281.19 $2,281.19 $0.00 1 $2,281.19 PCO 006 WWTP BERM REPAIR LS 1 $5,559.95 $5,559.95 $0.00 1 $5,559.95 PCO 007 WATERLINE VERTICAL OFFSET LS 1 $2,472.29 $2,472.29 $0.00 1 $2,472.29 PCO 008
SEWER LATERAL REPAIRS - 3/28, 3/30, 3/31,
4/3, 4/7, 4/17, 4/20 LS 1 $45,110.70 $45,110.70 $0.00 1 $45,110.70 PCO 011 AC DIG OUT REPAIR LS 1 $5,859.41 $5,859.41 $0.00 1 $5,859.41 PCO 12 T&M STRIPING - CROSSWALK (YELLOW) LS 1 $632.50 $632.50 $0.00 1 $632.50 Contract Total $2,887,181.33
Total to Date $2,889,810.98
Less Previous BILLED ($2,745,320.43)
TOTAL RETENTION DUE $144,490.55
Exhibit 3
Item No. 9 (G)
REPORT TO THE CITY COUNCIL
DATE: JUNE 27, 2023
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: STEVEN ADAMS, CITY MANAGER
RE: CONSIDERATION OF TEMPORARY JANITORIAL SERVICES
CONTRACT
RECOMMENDATION:
It is recommended the City Council authorize the City Manager to execute a contract for temporary janitorial services for the Interim Riverbed Homeless Strategy in an amount not to exceed $20,000 and in a form approved by the City Attorney.
BACKGROUND:
At the June 13, 2023 meeting, the City Council approved an Interim Riverbed Homeless Strategy. The strategy involves leasing 16 rooms and temporarily housing homeless individuals at the Monarch Inn. The Monarch Inn owner has requested weekly cleaning services be provided as a condition of the lease.
Staff have requested a proposal for temporary cleaning services but have not awarded a contract yet. Staff are working with a number of agency partners to implement the strategy in a short period due to the current escalation of homeless activity and construction in the riverbed area. Staff hope to have a contract in place prior to the next meeting, so authorization is requested at this time.
DISCUSSION:
Staff included an estimate of $15,000 in the program budget for cleaning services, which would be within the City Manager’s authorized contract approval amount. However, a proposal has been requested from the City’s current janitorial contractor. Since janitorial services will be provided by in-house staff beginning July 1
st, the contract is being reduced for only service of park facilities on weekend days, which is also within the City Manager’s contract authority.
Item No. 10 (A)
REPORT TO THE CITY COUNCIL
DATE: JUNE 27, 2023
TO: CITY COUNCIL
FROM: STEVEN ADAMS, CITY MANAGER
RE: CONSIDERATION OF COMMUNITY DEVELOPMENT BLOCK
GRANT (CDBG) APPLICATION PROCESS AND POSSIBLE
ACTIVITIES AND PROJECTS
RECOMMENDATION:
It is recommended the City Council: 1) review the program and available funding options and staff recommendations; 2) open the public hearing; 3) receive public comment regarding the Community Development Block Grant (CDBG) program and possible activities and projects to be considered for funding under the upcoming NOFA process; 4) close the public hearing; 5) discuss potential applications; 6) consider recommendations; and 7) direct staff to prepare for Council consideration a CDBG application.
BACKGROUND:
The purpose of this hearing is to receive public comment on possible applications, review the recommended projects to be considered, and receive information on other programs or projects that should be considered by other agencies, or citizens.
The State Department of Housing and Community Development (HCD) will publish a NOFA for the 2023 Non-Entitlement CDBG funds in the coming weeks/month. Eligible applicants may submit applications for CDBG funds under the NOFA. Although the “official” NOFA has not yet been released, to meet the application deadlines and requirements, we are conducting the required outreach and public hearing to determine the best use of the funds.
Staff anticipates submitting an application under the 2023 NOFA (maximum of 2 activities but only one per category) and possibly an application for Program Income. Over the counter items (OTC) are those that are funded on a first come first served basis and are not ranked by competitive criteria. The eligible
CITY COUNCIL
CONSIDERATION OF COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG)
APPLICATION PROCESS AND POSSIBLE ACTIVITIES AND PROJECTS JUNE 27, 2023
PAGE 2 OF 5
activities under the 2023 CDBG NOFA may include the following up to the maximum of $3,250,000:
• Public Service (maximum grant of $250,000), for one service. Examples include childcare, health care, recreation programs, fair housing counseling, drug and alcohol abuse counseling and testing, homeless services, food bank, senior services, and nutrition services benefiting lowand moderate-income persons. • Planning and Technical Assistance (maximum grant of $250,000 for one study/plan). The product must show a connection to assisting with an eligible CDBG activity that, if implemented, meets a National Objective.
Completed planning documents are submitted to the State at the time of completion. The grants may require match; in the past a $5,000 cash match to be expended prior to expenditure of CDBG funds – the NOFA will outline this final amount. Examples include studies, analysis, data gathering, preparation of plans, and identification of action that will implement plans, NEPA and environmental plans.
• Housing Programs (maximum grant of $1,500,000 – OTC Activity):
➢ Homeownership Assistance Program: assistance with down-payment or closing costs.
➢ Housing Rehabilitation Program for Single Family Homes: include repairs and improvements of owner-occupied units.
• Business Assistance or Microenterprise Assistance (maximum grant of $1,500,000 for either Business Assistance or Microenterprise Assistance – OTC Activity). Examples of Business Assistance include financing of working capital, furniture, equipment, and property repairs/improvements.
Examples of Microenterprise include business training, financing of working capital, furniture, equipment, and property repairs/improvements. • Public Infrastructure (maximum grant of $3,250,000 – OTC Activity).
Provides funding for all construction, project implementation, design, federal compliance and overlay requirements, environmental and other soft costs related to the project. Projects may include water, sewer, storm drain, sidewalks, roadways, wells, water storage tanks and other public infrastructure systems.
• Public Facility (maximum grant of $3,250,000 – OTC Activity). Provides funding for project equipment, construction of community/senior centers, homeless facilities, park and recreation facilities, fire stations, fire
CITY COUNCIL
CONSIDERATION OF COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG)
APPLICATION PROCESS AND POSSIBLE ACTIVITIES AND PROJECTS JUNE 27, 2023
PAGE 3 OF 5
equipment, health facilities, and other public facilities that meet the national objective of the program.
DISCUSSION:
The purpose of this public hearing is to solicit ideas and input from the general public, discuss staff recommendations and provide direction to staff on potential programs to include in the CDBG applications (NOFA and Program Income).
The application may include the following:
Maximum Award: $3,250,000
Maximum Activities: 2
Public Service: Up to $250,000 – not more than 1
Planning Grants: Up to $250,000 – not more than 1
OTC Activities: Up to $3,250,000 – may apply for 2
Other grant requirements include:
• Activities should address serious health & safety needs • Activities should primarily benefit lower income households (defined as at or below 80% of the median income)
• Applicants must demonstrate capacity to complete the project within the grant term (36 months)
• OTC projects and programs must be ready to bid or implement the program within 90 days of contract execution
• Single audit must be completed and submitted
• Housing Element must be up to date with HCD
• Sam.Gov registration must be active
Staff have reviewed alternatives that meet the requirements of the CDBG program. Based on staff’s internal discussion and initial outreach, it is recommended the City Council consider submittal of an application for $3.25 million for street resurfacing projects on the following streets:
• Luckett Street from San Lorenzo Street to Mildred Avenue • Talbot Street from Canal Street to Mildred Avenue
• San Lorenzo Street from Broadway Street to Division Street • Monte Vista Place from Talbot Street to Reich Street
• Vanderhurst Avenue from Broadway Street to Division Street • 7
th Street from Bassett Street to Division Street
• Park Place from the west end to the east end
• Fairview Drive from Park Place to Division Street
• Reich Street from Canals Street to San Lorenzo Street
CITY COUNCIL
CONSIDERATION OF COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG)
APPLICATION PROCESS AND POSSIBLE ACTIVITIES AND PROJECTS JUNE 27, 2023
PAGE 4 OF 5
These streets all represent City infrastructure among the streets in the poorest condition. They are all residential streets in the southern section of the community that include some of the City’s oldest and most underserved neighborhoods. The City has received extensive feedback from the community that City streets need to be improved. The City conducts a citywide public opinion survey every two years, and street repairs and improvements consistently score as one of the top priorities. The last survey in 2022 scored street repairs as the third highest priority, below only financial stability and public safety.
The City has funded the ProYouth HEART program as its public service activity in the past. However, additional funding has been obtained from the King City Union School District for that program, so the CDBG funding is not necessary at this time. In addition, CDBG can only be used for program expansion, and no expansions are proposed.
COST ANALYSIS:
The City’s grant consultant for CDBG, Adams Ashby Group, will be preparing the application at a cost of $3,000. If the application is awarded, the funding by the grant will cover all costs associated with implementation of the grant.
If the City Council chooses the street improvements as the proposed application, the estimated costs are as follows:
Construction
Luckett Street $172,355
Talbot Street $178,533
San Lorenzo Street $612,144
Monte Vista Place $132,818
Vanderhurst Avenue $734,573
7 th Street $357,458
Park Place $155,844
Fairview Drive $103,896
Reich Street $352,123
Construction Subtotal $2,799,744
Project Management $251,977
Administration $195,982
Total $3.247.704
Item No. 11 (A)
REPORT TO THE CITY COUNCIL
DATE: JUNE 27, 2023
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: MIKE HOWARD, FINANCE DIRECTOR
RE: CONSIDERATION OF THE CITY AND CDA SUCCESSOR
AGENCY’S AUDITED FINANCIAL STATEMENTS FOR THE
FISCAL YEAR 2021-2022
RECOMMENDATION:
It is recommended that the City Council and the Board of Directors of the King City CDA Successor Agency accept the City and CDA Successor Agency’s Audited Financial Statements for Fiscal Year Ended June 30, 2022.
BACKGROUND:
The State of California Government code (sections 25250 & 25253) requires all general-purpose local governments to issue an annual report on the financial position and activities of that government. The report must be presented in conformance with generally accepted accounting principles (GAAP) and must be audited by an independent firm of certified public accountants (CPA) in conformance with generally accepted auditing standards (GAGAS). The goal of the audit by an independent firm is to provide reasonable assurance that the accounting transactions, practices, and procedures result in fair presentation of the financial position of the organization. In addition, the audit provides the same type of assurance about management’s assertions about the adequacy of internal accounting controls to safeguard the assets of the entities.
DISCUSSION:
The independent auditor has rendered an unqualified audit opinion indicating that the City and Successor Agency are materially in compliance and have accounting records that properly reflect the financial position of those entities.
The final numbers for FY 2021-22 demonstrate continued positive movement for the City, particularly in the General Fund. The General Fund ended the Fiscal Year with another increase to the Fund Balance of $1,934,373. Much of this was due to capital projects not being completed, ongoing expenditure control, and
CITY OF KING CITY
INDEPENDENT AUDITOR’S REPORT
AND
FINANCIAL STATEMENTS
JUNE 30, 2022
Exhibit 1
C O N T E N T S
Page
INDEPENDENT AUDITOR’S REPORT 1 – 3
BASIC FINANCIAL STATEMENTS:
Government-Wide Financial Statements
Statement of Net Position 4
Statement of Activities 5
Fund Financial Statements
Balance Sheet – Governmental Funds 6
Reconciliation of Total Governmental Fund Balance to
Net Position of Governmental Activities 7
Statement of Revenue, Expenditures and Changes in
Fund Balance – Governmental Funds 8
Reconciliation of Statement of Revenue, Expenditures
and Changes in Fund Balance of Governmental Funds
to the Statement of Activities 9
Statement of Net Position – Proprietary Funds 10
Statement of Revenue, Expense and Changes in Fund Net
Position – Proprietary Funds 11
Statement of Cash Flow – Proprietary Funds 12 – 13
Statement of Fiduciary Net Position – Private-Purpose
Trust Fund – Successor Agency 14
Statement of Changes in Fiduciary Net Position – Private-Purpose Trust Fund – Successor Agency 15
Notes to Basic Financial Statements 16 – 42
C O N T E N T S (Continued)
Page
Required Supplementary Information
Budgetary Comparison Schedule – General Fund 43
Budgetary Comparison Schedule – American Rescue Plan Act 44 Budgetary Comparison Schedule – CDBG Grant 45
Budgetary Comparison Schedule – Development Impact Fees Fund 46 Budgetary Comparison Schedule – Measure X Fund 47
Schedule of the City’s Proportionate Share of Net Pension Liability 48 Schedule of Contributions 49
Supplemental Only Information
Combining Balance Sheet – Nonmajor
Governmental Funds 50 – 52
Combining Statement of Revenue, Expenditures and
Changes in Fund Balance – Nonmajor
Governmental Funds 53 – 55
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER
MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 56 – 57 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR
EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE 58 – 60
Schedule of Expenditures of Federal Awards 61
Notes to Schedule of Expenditures of Federal Awards 62
Schedule of Findings and Questioned Costs 63
Summary Schedule of Prior Audit Findings 64
BRYANT L. JOLLEY
CERTIFIED PUBLIC ACCOUNTANTS Bryant L. Jolley C.P.A.
Ryan P. Jolley C.P.A.
Darryl L. Smith C.P.A.
Luis A. Perez C.P.A.
Lan T. Kimoto
901 “N” STREET, SUITE 104 FIREBAUGH, CALIFORNIA 93622 PHONE 559.659.3045 FAX 559.659.0615 INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and City Council
City of King City, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of King City (the “City”), California, as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2022, and the respective changes in financial 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 and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
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.
2 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 generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Required Supplementary Information
Management has omitted the management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, 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. Our opinion on the basic financial statements is not affected by this missing information.
Accounting principles generally accepted in the United States of America require that the budgetary comparison information on pages 43–47 and the Schedule of the City’s Proportionate Share of Net Pension Liability and the Schedule of Contributions pages 48 and 49 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 3 Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying combining and individual nonmajor fund financial statements and schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, are presented for purposes of additional analysis and are not a required part of the basic financial 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 auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 13, 2023, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City’s internal control over financial reporting and compliance.
June 13, 2023
See accompanying notes. 4
CITY OF KING CITY
STATEMENT OF NET POSITION
JUNE 30, 2022
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments 5,680,489 $ 11,305,792 $ 16,986,281 $ Restricted cash and investments - 3,503 3,503
Accounts receivable 252,446 264,844 517,290
Due from other governments 3,725,541 - 3,725,541
Interest receivable 841,788 2,762 844,550
Notes receivable 3,000,000 - 3,000,000
Capital assets (net of allowance
for depreciation and amortization) 9,113,804 13,935,547 23,049,351 Total assets 20,690,705 27,435,811 48,126,516
DEFERRED OUTFLOW OF RESOURCES 195,196 1,489,010 1,684,206
LIABILITIES
Accounts payable and accrued expenses 696,357 123,803 820,160 Accrued interest - 27,350 27,350
Deposits 340,498 - 340,498
Noncurrent liabilities
Due within one year 158,121 292,651 450,772
Due in more than one year 782,637 4,682,971 5,465,608
Compensated absences 398,551 - 398,551
Lease liability 80,528 56,113 136,641
Net pension liability 62,230 3,595,232 3,657,462
Total liabilities 5,245,118 6,051,924 11,297,042
DEFERRED INFLOW OF RESOURCES 62,266 3,095,806 3,158,072
NET POSITION
Net investment in capital assets 12,994,789 4,138,182 17,132,971 Restricted for debt service - 3,503 3,503
Restricted for capital projects 4,438,266 - 4,438,266
Restricted for long-term notes receivable 3,000,000 - 3,000,000 Restricted for specific projects and programs 456,716 - 456,716 Unrestricted (deficit) (1,112,680) 11,436,832 10,324,152 Total net position $ 15,578,517 19,777,091 $ 35,355,608 $ See accompanying notes. 5
CITY OF KING CITY STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2022 Operating Capital
Charges for Grants and Grants and Governmental Business-Type Expense Services Contributions Contributions Activities Activities Total Primary Government
Governmental activities
General government $ 405,607 1,497,902 $ 1,847,212 $ 293,820 $ 1,048,737 $ - $ 1,048,737 $ Public safety 5,830,299 151,858 1,324,651 - (4,353,790) - (4,353,790) Public works 2,586,792 18,893 415,490 - (2,152,409) - (2,152,409) Culture and recreation 681,119 187,107 2,200 319 (491,493) - (491,493) Community development 2,123,719 570,887 2,515,435 - 962,603 - 962,603 Debt service
Interest expense - 32,737 - - (32,737) - (32,737)
Total governmental activities 1,334,352 12,752,568 6,104,988 294,139 (5,019,089) - (5,019,089) Business-type activities
Sewer 1,882,485 3,191,454 - - - 1,308,969 1,308,969
Power 2,346,447 2,508,516 - - - (162,069) (162,069)
Total business-type activities 5,537,901 4,391,001 - - - 1,146,900 1,146,900 Total primary government $ 6,872,253 17,143,569 $ 6,104,988 $ 294,139 $ (5,019,089) 1,146,900 (3,872,189) General Revenue
Property taxes - 1,260,526 1,260,526Franchise taxes - 1,385,596 1,385,596Sales taxes - 5,374,235 5,374,235Transient occupancy taxes - 546,656 546,656Utility users tax - 391,883 391,883Business licenses - 407,760 407,760Motor vehicle in-lieu - 1,085,295 1,085,295Investment income 5,840 94,428 100,268Gain on sale of property - 17,966 17,966Other revenues 60,550 92,550 153,100Transfers (200,000) 200,000 - Total general revenue and transfers (133,610) 10,856,895 10,723,285 Change in Net Position 1,013,290 5,837,806 6,851,096Net Position Beginning of year 14,565,227 13,939,285 28,504,512End of year $ 15,578,517 19,777,091 $ 35,355,608 $ Program Revenue Primary Government
Net Revenue/(Expense) and Changes in Net Position
Functions/Programs
See accompanying notes. 6
CITY OF KING CITY BALANCE SHEET – GOVERNMENTAL FUNDS JUNE 30, 2022 American Other Total
Rescue Plan CDBG Development Governmental Governmental
General Act HOME Grant Grant Impact Fees Measure X Funds Funds ASSETS
Cash and investments 1,271,884 $ 1,320,358 $ - $ - $ 1,894,437 $ 507,929 $ 685,881 $ 5,680,489 $ Accounts receivable 118,380 - - - - - 134,066 252,446Due from other governments 1,544,408 - - 1,303,292 - 150,032 727,809 3,725,541Interest receivable 566 366 840,000 47 469 125 215 841,788Due from other funds 1,501,193 - - - - - - 1,501,193Notes receivable - - 3,000,000 - - - - 3,000,000 Total assets $ 1,320,724 4,436,431 $ 3,840,000 $ 1,303,339 $ 1,894,906 $ 658,086 $ 1,547,971 $ 15,001,457 $
LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND FUND BALANCEAccounts payable and accrued expense 396,445 $ 6,703 $ - $ 31,952 $ 1,870 $ 15,070 $ 244,317 $ 696,357 $ Deposits 340,498 - - - - - - 340,498Due to other funds - - - 1,078,218 - - 422,975 1,501,193 Total liabilities 6,703 736,943 - 1,110,170 1,870 15,070 667,292 2,538,048 Deferred inflows of resources
Deferred loans - - 3,840,000 - - - - 3,840,000
Total deferred inflows of resources - - 3,840,000 - - - - 3,840,000
FUND BALANCE
Restricted
Circulation improvements - - - - - - 395,010 395,010
Capital improvement projects - 1,314,021 - 193,169 1,893,036 643,016 14 4,043,256 Public safety - - - - - - 449,299 449,299
Unassigned - 3,699,488 - - - - 28,939 3,728,427
Total fund balance 3,699,488 1,314,021 - 193,169 1,893,036 643,016 880,679 8,623,409 Total liabilities, deferred inflows of
resources, and fund balance $ 1,320,724 4,436,431 $ 3,840,000 $ 1,303,339 $ 1,894,906 $ 658,086 $ 1,547,971 $ 15,001,457 $ See accompanying notes. 7
CITY OF KING CITY
RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCE TO NET POSITION
OF GOVERNMENTAL ACTIVITIES
JUNE 30, 2022
Total governmental fund balances $ 8,623,409
Amounts reported for governmental activities in the statement of net position are different because:
Capital assets used in Governmental Activities are not financial resources and, therefore, are not reported in the governmental funds 13,935,547 Certain revenues in Governmental Funds are deferred because they are not collected within the prescribed time period after fiscal year end.
Those revenues are recognized on the accrual basis in Governmental Activities 3,840,000
Net pension liability applicable to Governmental Activities are not due and payable in the current period and accordingly is not reportable in the Governmental Funds (3,595,232)
Deferred inflows/outflows of resources related to net pension liability, represent an acquisition/consumption of net position or fund balance that applies to future period(s) and so will not be recognized as an inflow/outflow of resources (revenue/expenditure) until that time (1,606,796)
Governmental long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds (1,021,286) Compensated absences are not due and payable in the current period and, therefore, are not reported in the Governmental Funds (398,551) Net position of governmental activities $ 19,777,091
See accompanying notes. 8
CITY OF KING CITY STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE – GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2022 American Other Total
Rescue Plan CDBG Development Governmental Governmental
General Act HOME Grant Grant Impact Fees Measure X Funds Funds Revenue
Taxes 8,421,055 $ - $ - $ - $ - $ 562,041 $ 752,414 $ 9,735,510 $ Intergovernmental 1,306,157 1,683,759 - 2,237,791 - - 806,720 6,034,427 Charges for services 20,662 - - - 30,021 - 184,217 234,900 Licenses, permits and impact fees 1,665,535 - - - 295,090 - - 1,960,625 Fines and forfeitures 18,088 - - - - - - 18,088
Interest and rent 39,471 854 - 93 1,000 207 395 42,020
Other 198,903 - - - - - 61,737 260,640
Total revenue 11,669,871 1,684,613 - 2,237,884 326,111 562,248 1,805,483 18,286,210 Expenditures
Current
General government 1,184,019 27,980 - - - - - 1,211,999 Public safety 5,698,423 - - - - - 204,414 5,902,837
Public works 875,201 - - - 19,987 388,340 745,204 2,028,732 Culture and recreation 543,543 - - - 70 - 322 543,935
Community development 1,566,416 - - 242,733 44,717 - 257,592 2,111,458 Capital outlay - 342,612 - 1,923,040 23,966 - - 2,289,618 Debt Service
Principal 75,535 - - - - - 73,329 148,864
Interest and fiscal charges 22,962 - - - - - 9,775 32,737 Total expenditures 9,966,099 370,592 - 2,165,773 88,740 388,340 1,290,636 14,270,180 Revenue over/(under) expenditures 1,703,772 1,314,021 - 72,111 237,371 173,908 514,847 4,016,030 Other Financing Sources/(Uses)
Sale of property 17,966 - - - - - - 17,966
Transfers in/(out) - net 212,635 - - - - - (12,632) 200,003 Total other financing sources/(uses) 230,601 - - - - - (12,632) 217,969 Change in Fund Balance 1,314,021 1,934,373 - 72,111 237,371 173,908 502,215 4,233,999 Fund Balance
Beginning of year 1,765,115 - - 121,058 1,655,665 469,108 378,464 4,389,410 End of year $ 3,699,488 1,314,021 $ - $ 193,169 $ 1,893,036 $ 643,016 $ 880,679 $ 8,623,409 $ See accompanying notes. 9
CITY OF KING CITY
RECONCILIATION OF STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN
FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2022
Net change in fund balance - total governmental funds $ 4,233,999 Amounts reported for governmental activities in the statement of activities are different because:
Repayment of long-term debt and lease liabilities is an expenditure in the Governmental Funds, but the repayment reduces long-term liabilities in the Statement of Net Position 148,864 Revenues in the statement of activities that do no provide current financial resources are not reported as revenues in the funds 90,000
Governmental Funds report capital outlay as expenditures. However, in the Statement of Activities the cost of those assets are capitalized as an asset and depreciated over the period of service 2,289,618 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 the Governmental Funds 97,681
Compensated absence costs in the Statement of Activities does not require the use of current financial resources and, therefore, is not reported as expenditures in Governmental Funds (53,178) Depreciation and amortization expense on capital assets is reported in the Statement of Activities, but they do not require the use of current financial resources. Therefore, depreciation expense is not recorded as expenditures in Governmental Funds (969,178)
Change in net position of governmental activities $ 5,837,806 See accompanying notes. 10
CITY OF KING CITY
STATEMENT OF NET POSITION – PROPRIETARY FUND
JUNE 30, 2022
Sewer Community Power Total
ASSETS
Current assets
Cash and investments 11,247,170 $ 58,622 $ 11,305,792 $ Restricted cash and investments 3,503 - 3,503
Accounts receivable 264,844 - 264,844
Interest receivable - 2,762 2,762
Total current assets 58,622 11,518,279 11,576,901
Non-current assets
Property, plant and equipment
(net of allowance for depreciation and amortization) - 9,113,804 9,113,804 Total noncurrent assets - 9,113,804 9,113,804
Total assets 58,622 20,632,083 20,690,705
DEFERRED OUTFLOW OF RESOURCES - 195,196 195,196
LIABILITIES
Current liabilities
Accounts payable and accrued expense 80,273 43,530 123,803 Accrued interest 27,350 - 27,350
Current portion of long-term debt - 292,651 292,651
Total current liabilities 43,530 400,274 443,804
Noncurrent Liabilities
Long-term debt 4,682,971 - 4,682,971
Lease liability 56,113 - 56,113
Net pension liability - 62,230 62,230
Total liabilities 43,530 5,201,588 5,245,118
DEFERRED INFLOW OF RESOURCES - 62,266 62,266
NET POSITION
Net investment in capital assets 4,138,182 - 4,138,182
Restricted for debt service 3,503 - 3,503
Unrestricted 15,092 11,421,740 11,436,832
Total net position $ 15,092 15,563,425 $ 15,578,517 $
Business-Type Activities - Enterprise Fund
See accompanying notes. 11
CITY OF KING CITY
STATEMENT OF REVENUE, EXPENSE, AND CHANGES IN FUND NET POSITION –
PROPRIETARY FUND
YEAR ENDED JUNE 30, 2022
Sewer Community Power Total
Operating Revenue
Charges for services $ 2,346,447 3,191,454 $ 5,537,901 $ Total operating revenue 2,346,447 3,191,454 5,537,901
Operating Expense
Contractual services and utilities 790,057 2,504,170 3,294,227 Personnel 207,795 - 207,795
Supplies and materials 395,942 - 395,942
Depreciation and amortization - 342,446 342,446
Total operating expense 2,504,170 1,736,240 4,240,410
Operating income/(loss) (157,723) 1,455,214 1,297,491
Nonoperating Revenue/(Expense)
Interest income 5,840 - 5,840
Other income 60,550 - 60,550
Interest expense (4,346) (146,245) (150,591)
Total nonoperating revenue/(expense) (4,346) (79,855) (84,201) Net income/(loss) before transfers 1,375,359 (162,069) 1,213,290 Operating Transfers In/(Out) - (200,000) (200,000)
Change in Net Position (162,069) 1,175,359 1,013,290
Net Position
Beginning of year 177,161 14,388,066 14,565,227
End of year $ 15,092 15,563,425 $ 15,578,517 $
Business-Type Activities - Enterprise Fund
See accompanying notes. 12
CITY OF KING CITY
STATEMENT OF CASH FLOW - PROPRIETARY FUND
YEAR ENDED JUNE 30, 2022
Sewer Community Power Total
Operating Activities
Receipts from customers and users 3,215,085 $ 2,346,447 $ 5,561,532 $ Payments for contractual services and utilities (784,056) (2,504,170) (3,288,226) Payments to employees (189,178) - (189,178)
Payments to suppliers (395,942) - (395,942)
Net cash provided by (used in)
operating activities (157,723) 1,845,909 1,688,186
Non-capital Financial Activities
Cash received from (paid to) other funds (200,000) - (200,000) Net cash provided by (used in)
noncapital financing activities (200,000) - (200,000)
Capital and Related Financing Activities
Purchase of property, plant, and equipment (111,468) - (111,468) Principal paid on long-term debt and lease liabilities (218,109) - (218,109) Interest paid on long-term debt (118,895) (4,346) (123,241) Net cash provided by (used in)
capital and related financing activities (448,472) (4,346) (452,818) Investing Activities
Interest received - 64,913 64,913
Net cash provided by (used in)
investing activities - 64,913 64,913
Net Increase/(Decrease) in Cash (162,069) 1,262,350 1,100,281 Cash
Beginning of year 220,691 9,988,323 10,209,014
End of year $ 58,622 11,250,673 $ 11,309,295 $
Business-Type Activities - Enterprise Fund
See accompanying notes. 13
CITY OF KING CITY
STATEMENT OF CASH FLOW - PROPRIETARY FUND (CONTINUED)
YEAR ENDED JUNE 30, 2022
Sewer Community Power Total
Reconciliation of Cash to Financial Statements
Cash and investments 11,247,170 $ 58,622 $ 11,305,792 $ Restricted cash and investments - 3,503 3,503
Total cash and investments $ 58,622 11,250,673 $ 11,309,295 $ Cash Flows from Operating Activities
Operating income (loss) 1,455,214 $ (157,723) $ 1,297,491 $ Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:
Depreciation and amortization 342,446 - 342,446
(Increase) Decrease in Deferred Outflow of Resources 11,824 - 11,824 (Increase) Decrease in Accounts Receivable 23,631 - 23,631 Increase (Decrease) in Deferred Inflows of Resources 57,489 - 57,489 Increase (Decrease) in Net Pension Liability (50,696) - (50,696) Increase (Decrease) in Accounts Payable
and Accrued Expense - 6,001 6,001
Net Cash Provided by/(Used in) Operating Activities $ (157,723) 1,845,909 $ 1,688,186 $ Business-Type Activities - Enterprise Fund
See accompanying notes. 14
CITY OF KING CITY
STATEMENT OF FIDUCIARY NET POSITION
PRIVATE-PURPOSE TRUST FUND – SUCCESSOR AGENCY
JUNE 30, 2022
Assets
Cash and investments
Cash and investments 424,860 $
Cash and investments with fiscal agent 1,005,446
Accounts Receivable 1,800
Total assets 1,432,106
Liabilities
Accounts payable and accrued liabilities 2,091
Interest payable 84,614
Long-term debt
Due within one year 1,032,249
Due in more than one year 5,220,917
Total liabilities 6,339,871
Net Position
Held in trust for other governments (4,907,765) $
See accompanying notes. 15
CITY OF KING CITY
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
PRIVATE-PURPOSE TRUST FUND – SUCCESSOR AGENCY
JUNE 30, 2022
Additions
Property taxes 1,158,125 $
Investment earnings and other 25,089
Total additions 1,183,214
Deductions
Administrative costs 122,571
Interest and fiscal agency expenses of former redevelopment agency 364,582 Total deductions 487,153
Change In Net Position 696,061
Net Position
Beginning of year (5,603,826)
End of year $ (4,907,765)
16 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 1 – Summary of Significant Accounting Policies
The financial statements of the City of King City (the City) have been prepared in conformity with Accounting Principles Generally Accepted in the United States of America (GAAP) as applicable to governmental entities. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles.
Reporting Entity
The City of King City, State of California (the "City"), was incorporated as a general law city in 1911. In June 2010, the voters of the City approved a Charter, which gives the City Council greater self-rule. The City is governed by a City Council of five members. The City's major operations include public safety; highways and streets; sewer services; parks and recreation; building inspection; public improvements; planning and zoning, and general administrative services.
Basis of Presentation – Fund Accounting
Government-Wide Financial Statements - The Government-Wide Financial Statements (the Statement of Net Position and the Statement of Activities) report information of all of the nonfiduciary activities of the primary government and its component units. For the most part, eliminations have been made to minimize the double counting of internal activities. These statements distinguish between the governmental and business-type activities of the City and between the City and its discretely presented component unit. Governmental activities, which normally are supported by taxes and inter-governmental revenues, are reported separately from business-type activities, which rely significantly on fees charged to external parties.
The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the City and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and are clearly identifiable to a particular function. Program revenues include 1) charges paid by the recipients of goods or services offered by the programs and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Net position are restricted when constraints placed on them are either externally imposed or are imposed by constitutional provisions or enabling legislation. Internally imposed designations of resources are not presented as restricted net position. When both restricted and unrestricted resources are available for use, generally, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed.
Governmental Fund Financial Statements - The Governmental Fund Financial Statements provide information about the City’s funds, including fiduciary funds. Separate statements for each fund category - governmental, proprietary and fiduciary - are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental funds are separately aggregated and reported as non-major funds. 17 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 1 – Summary of Significant Accounting Policies (Continued) Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non-operating revenues, such as subsidies and investment earnings, result from non-exchange transactions or ancillary activities.
The City reports the following major governmental funds:
General Fund – The General Fund is the general operating fund of the City. It is used for all financial resources except those required legally, or by sound financial management to be accounted for in another fund. Generally, the General Fund is used to account for those traditional governmental services of the City, such as police and fire protection, planning and general administrative services. American Rescue Plan Act – This fund is used to account for American Rescue Plan Act funding received from the State.
HOME Grant Fund – The fund is used to account for receipts and expenditures for the Home Investment Partnerships Program for the City to fund a wide range of activities including building, buying, and/or rehabilitating affordable housing for rent or homeownership or providing direct rental assistance to low-income people.
CDBG Grant Fund – The fund is used to account for receipts and expenditures for the Community Block Grant Program for the City to fund a wide range of activities including building, buying, and/or rehabilitating affordable housing for rent or homeownership or providing direct rental assistance to low-income people.
Development Impact Fees Fund – The fund is used to account for mitigation fees received from new construction which are to be used according to the City’s approved Master Facilities Plan. Measure X Fund – The fund is used to account for the City’s Transportation Safety and Investment Plan activities, which include transportation safety and mobility projects such as the Bishop Street project and the slurry application project.
The City reports the following major proprietary fund:
Sewer Fund – The fund accounts for the maintenance, operation and capital improvements of the municipal sewage system. Financing is provided by user fees from residences, businesses, and industries.
Community Power Fund – The fund provides electricity and special programs with the common goal of utilizing cleaner energy and lower rates to the City.
The City reports the following additional fund types:
Private-Purpose Trust Fund – The Private-Purpose Trust Fund accounts for assets held by the City as trustee for the Successor Agency.
18 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 1 – Summary of Significant Accounting Policies (Continued) Basis of Accounting
The Government-Wide and Proprietary Fund Financial Statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange, include property and sales taxes, grants, entitlements and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenues from sales tax are recognized when the underlying transactions take place.
Revenues from grants, entitlements and donations are recognized in the fiscal year in which all eligible requirements have been satisfied.
Governmental Funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Property and sales taxes, interest, certain state and federal grants and charges for services are accrued when their receipt occurs within sixty days after the end of the accounting period so as to be both measurable and available. Expenditures are generally recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and capital leases are reported as other financing sources.
Proprietary Funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a Proprietary Fund’s principal ongoing operations. Revenues and expenses not meeting this definition are reported as non-operating.
Financial Statement Amounts
Cash and Investments – Cash and investments represent the City's cash bank accounts including but not limited to certificates of deposit, money market funds and cash management pools for reporting purposes in the Statement of Cash Flows.
The City maintains a cash and investment pool that is available for use by all funds, except for assets held by fiscal agents. Interest earnings as a result of this pooling are distributed to the appropriate funds based on month end cash balances in each fund.
Investments of the pool include only those investments authorized by the California Government Code such as, United States Treasury securities, agencies guaranteed by the United States Government, registered state warrants, and other investments. Investments primarily consist of deposits in the State of California Local Agency Investment Fund and certificates of deposit. Investments are recorded at amortized cost or fair value. Fair value is based upon quoted market prices.
Accounts Receivable – Billed but unpaid services provided to individuals or non-governmental entities are recorded as accounts receivable. The Proprietary Funds include a year end accrual for services through June 30, 2022, which have not yet been billed. Accounts receivable are reported net of an allowance for uncollectibles.
19 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 1 – Summary of Significant Accounting Policies (Continued) Monterey County is responsible for the assessment, collection and apportionment of property taxes for all taxing jurisdictions. Property taxes are levied in equal installments on November 1 and February 1. They become delinquent on December 10 and April 10, respectively. The lien date is March 1 of each year.
Property taxes are accounted for in the General Fund. Property tax revenues are recognized when they become measurable and available to finance current liabilities. The City considers property taxes as available if they are collected within 60 days after year end. Property tax on the unsecured roll are due on the March 1 lien date and become delinquent if unpaid on August 31. However, unsecured property taxes are not susceptible to year end accrual.
The City is permitted by Article XIIIA of the State of California Constitution (known as Proposition 13) to levy a maximum tax of $1.00 per $100 of full cash value.
Interfund Receivables/Payables – Items classified as interfund receivable/payable represent short-term lending/borrowing transactions between funds. This classification also includes the current portion of an advance to or from another fund.
Advances To/From Other Funds – This classification represents non-current portions of any long-term lending/borrowing transactions between funds. This amount will be equally offset by a reserve of fund balance which indicates that it does not represent available financial resources and therefore, is not available for appropriation. The current portion of any interfund long-term loan (advance) is included as an interfund receivable/payable.
Restricted Assets – Certain proceeds of the King City Public Financing Authority’s Certificates of Participation, as well as certain resources set aside for their repayment, are classified as restricted assets on the Statement of Net Position because they are maintained in separate bank accounts and their use is limited by debt covenants.
Capital Assets – Capital outlays are recorded as expenditures of the General, Special Revenue, and Capital Projects Funds and as assets in the Government-Wide Financial Statements to the extent the City’s capitalization threshold are met.
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 government as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.
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. Betterments and major improvements which significantly increase values, change capacities or extend useful lives are capitalized. Upon sale or retirement of fixed assets, the cost and related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the results of operations.
20 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 1 – Summary of Significant Accounting Policies (Continued) Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed.
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:
Years
Infrastructure 20 - 50
Structures and Improvements 10 - 50
Equipment 5 - 30
Compensated Absences – Vacation time may be accumulated up to two years entitlement plus the current years’ leave allowance. Cash compensation for accrued vacations is generally not payable until the employee terminates employment with the City. Cash compensation for unused sick leave is payable to an employee only upon termination of employment with the City. At that time, the employee is compensated at the rate of 50% of their daily rate.
All accumulated vacation leave and applicable sick leave is accrued when incurred in the governmentwide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured; for example, as a result of employee resignations and retirements. Leave benefits are generally liquidated by the general fund.
Leases – The City is a lessee for a noncancellable lease of equipment. The City recognizes a lease liability and an intangible right-to-use lease asset (lease asset) in the government-wide and enterprise fund financial statements. The City recognizes lease liabilities with an initial, individual value of $5,000 or more.
At the commencement of a lease, the City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight-line basis over its useful life.
Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments. The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for leases.
The lease term includes the noncancellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise.
The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability.
21 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 1 – Summary of Significant Accounting Policies (Continued) Long-Term Obligations – In the Government-Wide Financial Statements, and Proprietary Fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or Proprietary Fund Type Statement of Net Position. Debt principal payments of both government and business-type activities are reported as decreases in the balance of the liability on the Statement of Net Position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount.
In the fund financial statements, however, debt principal payments of Governmental Funds are recognized as expenditures when paid. Governmental Fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.
Pension – For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s California Public Employee Retirement System (CalPERS) plan and additions to/deduction from the Plan’s fiduciary net position have been determined on the same basis as they are reported by CalPERS.
For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
Non-Current Governmental Assets/Liabilities – GASB Statement No. 34 eliminates the presentation of account groups, but provides for these records to be maintained and incorporates the information into the Governmental Activities column in the Government-Wide Statement of Net Position.
Net Position – The government-wide and business-type activities fund financial statements utilize a net position presentation. Net position are categorized as net investment in capital assets, restricted and unrestricted.
Net Investment in Capital Assets - This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce the balance in this category.
Restricted Net Position - This category presents external restrictions on net position imposed by creditors, grantors, contributors or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. Unrestricted Net Position - This category represents net position of the City, not restricted for any project or other purpose.
22 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 1 – Summary of Significant Accounting Policies (Continued) Fund Balance – In the fund financial statements, governmental fund balance is made up of the following components:
Nonspendable fund balance typically includes inventories, prepaid items, and other items that must be maintained intact pursuant to legal or contractual requirements, such as endowments. Restricted fund balance category includes amounts that can be spent only for specific purposes imposed by creditors, grantors, contributors, or laws or regulations of other governments or through enabling legislations.
Committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the City Council. The City Council has the authority to establish, modify, or rescind a fund balance commitment. Assigned fund balance are amounts designated by the City Council for specific purposes and do not meet the criteria to be classified as restricted or committed. Unassigned fund balance is the residual classification that includes all spendable amounts in the General Fund not contained in other classifications.
When expenditures are incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) fund balances are available, the City’s policy is to apply restricted first. When expenditures are incurred for purposes for which committed, assigned, or unassigned fund balances are available, the City’s policy is to apply committed fund balance first, then assigned fund balance, and finally unassigned fund balance.
Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. 23 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 2 – Stewardship, Compliance and Accountability
California law authorizes the City to invest in obligations of the United States Treasury, agencies and instrumentalities, certificates of deposit of time deposits in banks and savings and loan associations which are insured by the Federal Deposit Insurance Corporation.
In accordance with applicable sections of the California Government Code and the King City Municipal Code, the City prepares and legally adopts an annual balanced budget on a basis consistent with accounting principles generally accepted in the United States of America. Annual appropriated budgets are adopted for the General Fund, specific Special Revenue Funds, and specific Capital Projects Funds.
Budget plans are adopted for Proprietary Funds. A proposed budget is presented to the City Council during June of each year for review. The Council holds public hearings and may add to, subtract from, or change appropriations within the revenues and reserves estimated as available. Expenditures may not legally exceed budgeted appropriations at the fund level. Supplementary appropriations which alter the total expenditures of any fund, or expenditures in excess of total budgeted fund appropriations, must be approved by the City Council. All annual appropriations lapse at fiscal year end to the extent they have not been expended or encumbered.
Note 3 – Cash and Investments
The City pools all of its cash and investments except those funds required to be held by outside fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash is allocated to the various funds on average cash balances. Interest income from cash investments held with fiscal agents is credited directly to the related funds.
Cash and investments as of June 30, 2022 are classified in the accompanying financial statements as follows:
Statement of Net Position:
Cash and Investments 16,986,281 $
Fiduciary Funds:
Cash and Investments 424,860
Cash and Investments with fiscal agent 1,005,446
Total Cash and Investments $ 18,420,090
Cash and investments as of June 30, 2022 consist of the following:
Cash on hand $ 905
Deposits with Financial Institutions 14,983,456
Local Agency Investment Fund 2,426,779
Held by Fiscal Agent:
Money Market Mutual Funds 319,518
US Government Issues 689,432
Total Cash and Investments $ 18,420,090
24 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 3 – Cash and Investments (Continued)
Fair Value Measurements
The framework for measuring fair value provides a fair value hierarchy that categorizes the inputs to valuation techniques used to measure fair value into three levels. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described as follows:
Level 1: Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets that a government can access at the measurement date.
Level 2: Inputs to valuation methodology include inputs – other than quoted prices included within Level 1 – that are observable for an asset or liability, either directly or indirectly.
Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The asset’s or liability’s fair value measurement level within a fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. 25 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 3 – Cash and Investments (Continued)
Following is a description of the valuation methodologies used for assets measured at fair value.
LAIF is valued based on the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (Level 2 input).
The City had the following recurring fair value measurements as of June 30, 2022:
Level 1 Level 2 Level 3
June 30, 2022
Balance
Investments by fair value level:
Debt Securities:
U.S. Treasury Obligations - $ $ 689,432 $ - $ 689,432
Total Debt Securities - 689,432 - 689,432
Equity Securities:
LAIF - 2,426,779 - 2,426,779
Total Equity Securities - 2,426,779 - 2,426,779
Cash and cash equivalents carried at amortized cost:
Deposits 14,984,361
Money Market Mutual Funds 319,518
Total Investments amortized at cost 15,303,879
Total Cash and Investments 18,420,090 $
Investments Authorized by the California Government Code and the City’s Investment Policy The table below identifies the investment types that are authorized for the City by the California Government Code (or the City’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City’s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy.
26 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 3 – Cash and Investments (Continued)
Minimum Maximum
Maximum Credit Percentage
Maturity Quality Allowed
U.S. Treasury Obligations None None None
U.S. Agency Securities None AAA None
Banker's Acceptances 1 year None None
Commercial Paper None A-1 None
Money Market Mutual Funds None A None
Investment Contracts None None None
Certificates of Deposits 1 year A-1 None
Repurchase Agreements 30 days None None
Local Agency Investment Fund (LAIF) N/A None None
Municipal Bonds None None None
Authorized Investment Type
Investments Authorized by Debt Agreements
Investments of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City’s investment policy.
The table below identifies the investment types that are authorized for investments held by the bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.
Minimum Maximum
Maximum Percentage Percentage
Maturity of Portfolio of Portfolio
Local Agency Bonds 1 year None None
U.S. Treasury Obligations 1 year A None
U.S. Agency Securities 1 year None None
Banker's Acceptances 180 days None 40%
Commercial Paper 270 days None 25%
Negotiable Certificates of Deposit 1 year None 30%
Repurchase Agreements 90 days None None
Reverse Repurchase Agreements 92 days None 20% of base value Medium-Term Notes 5 years A 30%
Mutual Funds N/A A 20%
Money Market Mutual Funds N/A A 20%
Mortgage Pass-Through Securities 5 years AA 20%
Authorized Investment Type
27 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 3 – Cash and Investments (Continued)
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. As of June 30, 2022 the City had the following investments:
12 Months 13 to 24 25 to 84
or less Months Months Total
LAIF 2,426,779 $ - $ - $ 2,426,779 $
US Government Issues - 689,432 - 689,432
Total Investments $ - 3,116,211 $ - $ 3,116,211
Cash in bank and on hand 15,303,879
Total Cash and Investments $ 18,420,090
Investment Type
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy, or debt agreements, and the actual rating as of year-end for each investment type.
Not rated:
LAIF $ 2,426,779
US Government Issues 689,432
Cash in bank and on hand 15,303,879
Total Cash and Investments $ 18,420,090
Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. There are no investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total City investments.
28 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 3 – Cash and Investments (Continued)
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 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, 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 custodial risk for investments is the risk that, in the event of the failure of the counterparty 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 investments. With respect to investments, custodial credit risk generally applies only to direct investments in marketable securities. Custodial credit risk does not apply to a local government’s indirect investment in securities through the use of mutual funds or government investment pools (such as LAIF).
GASB Statement No. 40 requires that the following disclosures be made with respect to custodial credit risks relating to deposits and investments: The City did not have any deposits with financial institutions in excess of federal depository insurance limits and held in uncollateralized accounts. As of June 30, 2022, the City investments in the following investment types were held by the broker-dealer that was used by the City to buy the securities:
Reported Amount
US Government Issues 689,432 $
Investment Type
Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. 29 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 4 – Interfund Receivables and Payables, and Transfers Interfund Receivables and Payables
Interfund receivables and payables consist of short-term loans resulting from regular transactions. These loans are expected to be repaid as soon as the borrowing fund has cash, and carry an interest rate equal to the rate earned on pooled cash.
Individual fund interfund receivables and payables balances as of June 30, 2022 are as follows:
Due From Due To
General Fund $ - 1,501,193 $
CDBG Grant - 1,078,218
CDBG Pro Youth - 141,005
SB 2 Planning Land Use Element Grant - 35,992
Transportation - 7,984
Gas Tax - 9,721
Prop 68 Grant - 228,273
$ 1,501,193 1,501,193 $
The interfund payable balance due to the General Fund, CDBG Grant, CDBG Pro Youth, SB 2 Planning Land Use Element Grant, Transportation, Gas Tax, and Prop 68 Grant is a result of deficits in certain funds and temporary cash flow assistance in others. The balances due will be repaid as funds are available.
Transfers
In general, the City uses interfund transfers to (1) move revenues from the funds that collect them to the funds’ that statute or budget requires to expend them, (2) use unrestricted revenues collected in the General Fund to help finance various programs and capital projects accounted for in other funds in accordance with budgetary authorization, and (3) move cash to debt service funds from the funds responsible for payment as debt service payments become due. In general, the effect of the interfund activity has been eliminated from the government-wide financial statements.
Transfers In Transfers Out
Major Governmental Funds:
General Fund $ - 212,635 $
Enterprise Funds:
Sewer Fund - (200,000)
Nonmajor Governmental Funds:
SB 2 Planning Land Use Element Grant 12,080 -
Gas Tax Fund - 150,000
SB1 Multimodal Grant Fund 199,166 -
Prop 1B - (12,080)
UUT-Public Safety Fund - (361,801)
$ (573,881) 573,881 $
30 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 5 – Capital Assets
Capital asset activities for the year ended June 30, 2022 were as follows:
Restated
Balance Balance
July 1, 2021 Additions Retirements June 30, 2022
Governmental Activities
Capital assets, not being depreciated
Land 653,060 $ - $ - $ 653,060 $
Construction in progress - 853,627 (853,627) -
Total capital assets, not being depreciated - 1,506,687 (853,627) 653,060 Capital assets, being depreciated
Buildings and improvements 9,945,608 150,000 - 10,095,608 Infrastructure 15,463,395 2,594,925 - 18,058,320
Machinery and equipment 398,320 4,020,613 - 4,418,933
Total capital assets, being depreciated 3,143,245 29,429,616 - 32,572,861 Less accumulated depreciation for:
Buildings and improvements (7,278,321) (230,112) - (7,508,433) Infrastructure (8,052,348) (534,900) - (8,587,248)
Machinery and equipment (150,167) (3,175,155) - (3,325,322) Total accumulated depreciation (915,179) (18,505,824) - (19,421,003) Total capital assets, being depreciated, net 2,228,066 10,923,792 - 13,151,858 Right of use assets, being amortized
Vehicles 269,960 - - 269,960
Less: accumulated amortization (53,999) (85,332) - (139,331) Total right of use assets, net of amortization (53,999) 184,628 - 130,629 Governmental activities capital assets, net $ 2,174,067 12,615,107 $ (853,627) $ 13,935,547 $ Business-Type Activities
Capital assets, not being depreciated
Land $ - 764,093 $ - $ 764,093 $
Total capital assets, not being depreciated - 764,093 - 764,093 Capital assets, being depreciated
Building and improvements 14,027,574 - - 14,027,574
Plant and equipment 42,212 1,531,967 - 1,574,179
Total capital assets, being depreciated 42,212 15,559,541 - 15,601,753 Less: accumulated depreciation (327,056) (6,978,852) - (7,305,908) Total capital assets, being depreciated, net (284,844) 8,580,689 - 8,295,845 Right of use assets, being amortized
Vehicles 76,951 - - 76,951
Accumulated amortization (15,390) (7,695) - (23,085)
Total right of use assets, net of amortization (15,390) 69,256 - 53,866 Business-type activities capital assets, net $ (300,234) 9,414,038 $ - $ 9,113,804 $ 31 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 5 – Capital Assets (Continued)
Depreciation and amortization expense was charged to the following functions in the Statement of Activities:
Governmental Functions:
General Government 55,741 $
Public Safety 249,150
Public Works 535,845
Culture and Recreation 128,442
$ 969,178
Business-Type Functions:
Sewer $ 342,446
Note 6 – Notes Receivables
Notes receivable and deferred loans consisted of the following at June 30, 2022:
King City Pacific Associates, L.P. - The HOME Investment Partnership Grant program approved $3,000,000 of grant funds to be made available for local development of an affordable housing project.
The City entered into an agreement with King City Pacific Associates, L.P. to loan such funds for the construction of the San Antonio Apartments. Funds were provided in the form of a deferred payment loan.
If not paid sooner, the unpaid principal balance of this note, plus any unpaid interest thereon shall be due and payable in full fifty-five years from the date of the note. The note bears 3% interest and the face amount of the note at June 30, 2022 was $3,000,000. Accrued interest receivable at June 30, 2022 was $840,000.
Note 7 – Long-Term Debt
The City generally incurs long-term debt to finance projects or purchase assets which will have useful lives equal to or greater than the related debt. The City’s debt transactions are summarized below and discussed in detail thereafter:
Balance Balance Current
July 1, 2021 Additions Retirements June 30, 2022 Portion Governmental Activities Long Term Debt
Direct Borrowings:
2019 Street Sweeper Financed Purchase 155,272 $ - $ (31,666) $ 123,606 $ 33,223 $ Solar Energy Financed Purchase - 826,456 (64,059) 762,397 70,143 Total Governmental Activities Long-term Debt $ - 981,728 $ (95,725) $ 886,003 $ 103,366 $ 32 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 7 – Long-Term Debt (Continued)
Long-term debt payable at June 30, 2022 was comprised of the following individual issues:
Balance Balance Current
July 1, 2021 Additions Retirements June 30, 2022 Portion Business-Type Activities Long Term Debt
Direct Borrowings:
Solar Energy Financed Purchase 1,237,174 $ - $ (95,892) $ 1,141,282 $ 105,001 $ Direct Placements:
2021 Wastewater Revenue Refunding Bonds - 4,012,670 (178,330) 3,834,340 187,650 Total Business-Type Activities Debt $ - 5,249,844 $ (274,222) $ 4,975,622 $ 292,651 $ Compensated Absences
Governmental Activities $ 53,178 345,373 $ - $ 398,551 $ Net Pension Liability
Governmental Activities $ (2,876,367) 6,471,599 $ - $ 3,595,232 $ Business-Type Activities $ (50,696) 112,926 $ - $ 62,230 $ 2019 Street Sweeper Financed Purchase – On March 15, 2019, the City entered into a purchase agreement for a street sweeper. The lease bears an interest rate of 4.829% and terminates on December 1, 2025.
Solar Energy Financed Purchase – On July 10, 2016, the City started making payments on a solar lease arrangement. The amount financed was $2,644,187. Annual payments are from $94,649 to $156,907 and terminates on January 10, 2030. Interest rate is 3.231%. 2021 WasteWater Revenue Refunding Bonds - In May 2021, the City issued the 2021 WasteWater Revenue Refunding Bonds for the principal amount of $4,012,670. The issuance was to refund the outstanding principal balance of the 2018 Enterprise Revenue Bonds described above. The reacquistion price exceeded the net carrying amount of the old debt by $77,193. The City refunded the above debts to reduce its total debt service over 17 years by $99,551 and to obtain an economic gain (difference between the present values of debt service payments on the old and new debt) of $310,178. The bonds bear interest
2.250% and are payable semi-annually commencing September 2021 through March 2038.
Debt service is secured by a pledge of net revenues of the City’s WasteWater Systems. The City covenants that it shall prescribe, revise and collect such charges for the services and facilities of the wastewater systems which shall produce revenues sufficient in each fiscal year to provide gross revenues which are sufficient to pay all wastewater operation and maintenance costs and all bond installment payments and produce net wastewater revenues equal to at least 1.15 times debt service coming due and payable during such fiscal year. The City is in compliance with those covenants as of June 30, 2022.
Cash basis debt service paid during the fiscal year ended June 30, 2022 totaled $245,041. Total wastewater system net revenues and net revenue available for debt was 7.67 at June 30, 2022. 33 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 7 – Long-Term Debt (Continued)
2021 WasteWater Revenue Refunding Bonds (continued)
The annual requirement to amortize the principal and interest on all long-term debt at June 30, 2022 was:
Years ending June 30, Principal Interest Principal Interest 2023 103,366 $ 29,444 $ 292,651 $ 120,195 $
2024 111,435 25,493 306,515 112,456
2025 119,954 21,250 321,011 104,304
2026 109,529 16,817 336,196 95,721
2027 98,171 13,485 352,078 86,685
2028-2032 343,548 19,980 1,611,233 290,254
2033-2037 - - 1,226,040 129,805
2038-2039 - - 529,898 11,988
$ 126,469 886,003 $ 4,975,622 $ 951,408 $
Government-Wide Activities Business-Type Activities
Note 8 – Lease Liability
Balance Balance Current
July 1, 2021 Additions Retirements June 30, 2022 Portion Lease Liabilities:
Governmental Activities 188,422 $ - $ (53,139) $ 135,283 $ 54,755 $ Business-Type Activities 70,777 - (14,664) 56,113 15,110 $ - 259,199 $ (67,803) $ 191,396 $ 69,865 $
The City entered into several sixty (60) month lease agreements as lessee for the acquisition and use of vehicles. An initial lease liability was recorded in the amount of $346,911 during the year the lease was entered. As of June 30, 2022, the value of the lease liability was $191,396. The City is required to make monthly principal and interest payments of $335 to $857. The lease has an interest rate of 3%. The equipment has a five-year estimated useful life. The value of the right-to-use asset as of the end of the current fiscal year was $184,495 and had accumulated amortization of $162,416.
The future principal and interest lease payments as of June 30, 2022, were as follows:
Years ending June 30, Principal Interest Principal Interest 2023 54,755 $ 3,310 $ 15,110 $ 1,477 $
2024 56,421 1,644 15,570 1,017
2025 24,107 246 16,043 544
2026 - - 9,390 94
$ 5,200 135,283 $ 56,113 $ 3,132 $
Government-Wide Activities Business-Type Activities
34 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 9 – Deficit Fund Balances
Fund Balance Deficits - The following is a summary of deficit fund balances as of June 30, 2022:
Governmental Funds
Prop 68 Grant (54,721) $
These deficits are are expected to be relieved from future revenues or transfers from other funds.
Note 10 – Deferred Outflows and Deferred Inflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial element, deferred outflows of resources, represents a consumption of net position or fund balance that applies to future period(s) and thus, will not be recognized as an outflow of resources (expense/expenditure) until then. The City has two items to report in this category:
The City has $1,507,305 in pension related items that qualify to be reported in deferred outflows of resources. The pension related deferred outflows of resources are described in Note
10. The City has $176,901 in unamortized deferred amount of refunding related to the 2022 Wastewater Revenue Refunding Bonds.
In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represent an acquisition of net position or fund balance 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 one item to report in this category:
The City has $3,158,072 in pension related items that qualify to be reported in deferred inflows of resources. The pension related deferred inflows of resources are described in Note 10.
The City also has one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting as deferred inflows of resources. Accordingly, that item, deferred loans, is reported only in the governmental funds balance sheet. The City reports in the HOME Grant fund, $3,000,000, deferred loans and accrued interest of $840,000.
Note 11 – City Employees’ Retirement Plan (Defined Benefit Pension Plan) Plan Description - The City contributes to the California Public Employees' Retirement System (PERS), an agent multiple-employer public employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of PERS' annual financial report may be obtained from their Executive Office - 400 P Street - Sacramento, CA 95814.
35 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 11 – City Employees’ Retirement Plan (Defined Benefit Pension Plan) (Continued) Funding Policy – The City pays 7.590% - 18.190% of annual covered salary for active plan members in the City’s defined pension plan. The City is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are those adopted by the CalPERS Board of Administration. The contribution requirements of plan members are established by State statute and the employer contribution is established and may be amended by PERS.
The Plans’ provisions and benefits in effect at June 30, 2022, are summarized as follows:
Miscellaneous Safety
Hire Date
Prior to
January 1, 2013
Prior to
January 1, 2013
Benefit Formula 2.0% at 55;
maximum 2%
COLA
2.0% at 50;
maximum 2%
COLA
Benefit Vesting Schedule 5 years service 5 years service Benefit Payments monthly for life monthly for life
Retirement Age 55 50
Monthly Benefits, as a % of Eligible Compensation 2.00% 2.00% Required Employee Contribution Rates 7.00% 9.00%
Required Employer Contribution Rates 10.340% 18.190%
PEPRA
Miscellaneous PEPRA Safety
Hire Date
On or after
January 1, 2013
On or after
January 1, 2013
Benefit Formula 2.0% at 62;
maximum 2%
COLA
2.7% at 57;
maximum 2%
COLA
Benefit Vesting Schedule 5 years service 5 years service Benefit Payments monthly for life monthly for life
Retirement Age 62 57
Monthly Benefits, as a % of Eligible Compensation 2.00% 2.00% Required Employee Contribution Rates 6.25% 11.50%
Required Employer Contribution Rates 7.590% 13.130%
Contributions – Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on July 1 following notice of a change in the rate. Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. 36 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 11 – City Employees’ Retirement Plan (Defined Benefit Pension Plan) (Continued) For the year ended June 30, 2022, the contributions recognized as part of the pension expense is as follows:
Contributions – employer $ 803,029
Contributions – employee $ 261,448
Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions
As of June 30, 2022, the City reported net pension liabilities for its proportionate shares of the net pension liability of each Plan as follows:
Proportionate Share of
Net Pension Liability
Miscellaneous $1,944,690
Safety $1,712,772
The City’s net pension liability for each Plan is measured as the proportionate share of the net pension liability. The net pension liability of each of the Plan is measured as of June 30, 2020, and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2020 rolled forward to June 30, 2021 using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The City’s proportionate share of the net pension liability for each Plan as of June 30, 2021 and 2022 was as follows:
Miscellaneous Safety
Proportion - June 30, 2021 0.08366% 0.04586%
Proportion - June 30, 2022 0.10242% 0.04880%
Change 0.01876% 0.00294%
37 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 11 – City Employees’ Retirement Plan (Defined Benefit Pension Plan) (Continued) For the year ended June 30, 2022, the City recognized pension expense of $709,116. At June 30, 2022, the City reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources:
Deferred Outflows
of Resources
Deferred Inflows of
Resources
Pension contributions subsequent to $ - 803,029 $
measurement date
Differences in expected and actual experience - 510,701 Change in employer's proportion (84,048) 193,575
Changes of assumptions - -
Differences between employer's contributions and
proporationate share of contributions (356,983) -
Differences between projected and actual
investment earnings (2,717,041) -
Total $ (3,158,072) 1,507,305 $
The $803,029 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Year Ended
June 30
2023 (514,744) $
2024 (555,127)
2025 (634,258)
2026 (749,664)
Total (2,453,793) $
38 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 11 – City Employees’ Retirement Plan (Defined Benefit Pension Plan) (Continued) Actuarial Methods and Assumptions – The collective total pension liability for the June 30, 2021 measurement period was determined by an actuarial valuation as of June 30, 2020, with update procedures used to roll forward the total pension liability to June 30, 2021. The collective total pension liability was based on the following assumptions:
Valuation Date June 30, 2020
Measurement Date June 30, 2021
Actuarial Cost Method Entry-Age Normal Cost Method in
accordance with the requirements of
GASB Statement No. 68
Actuarial Assumptions:
Discount Rate 7.15%
Inflation 2.50%
Payroll Growth 2.50%
Salary Increases Varies by Entry Age and Service
Mortality Rate Table Derived using CalPERS' Membership
Data for all Funds
1 Post Retirement Benefit IncreasContract COLA up to 2.5% until Purchasing Power Protection
Allowance Floor on Purchasing Power
applies
1 The mortality table used was developed based on CalPERS-specific data. The table includes 15 years of mortality improvements using Society of Actuaries Scale 90% of scale MP 2016. For more details on this table, please refer to the December 2017 experience study report (based on CalPERS demographic data from 1997 to 2015) that can be found on the CalPERS website.
All other actuarial assumptions used in the June 30, 2017 valuation was based on the results of an December 2017 experience study report (based on CalPERS demographic data from 1997 to 2015), including updates to salary increase, mortality and retirement rates. The Experience Study can be obtained at CalPERS’ website.
Change of assumptions – None.
39 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 11 – City Employees’ Retirement Plan (Defined Benefit Pension Plan) (Continued) Discount rate – The discount rate used to measure the total pension liability for PERF C was 7.15%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability. The long-term expected rate of return on pension plan investments was determined using a building-block method in which bestestimate ranges of expected future real rates of return (expected rate of returns, net of pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both short-term and longterm market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.
The long-term expected real rates of return by asset class can be found in CalPERS’ Comprehensive Annual Financial Report for the fiscal year ended June 30, 2021.
The table below reflects long-term expected real rates of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. The geometric rates of return are net of administrative expenses.
Asset Class 1
New Strategic
Allocation
Real Return
Years 1-10 2
Real Return
Years 11+ 3
Global Equity 50% 4.80% 5.98%
Fixed Income 28% 1.00% 2.62%
Inflation Assets 0% 0.77% 1.81%
Private Equity 8% 6.30% 7.23%
Real Estate 13% 3.75% 4.93%
Infrastructure and Forestland 0% 0.00% 0.00%
Liquidity 1% 0.00% -0.92%
Total 100%
1 In the System’s CAFR, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-term Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities
2 An expected inflation of 2.0% used for this period
3 An expected inflation of 2.92% used for this period
40 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 11 – City Employees’ Retirement Plan (Defined Benefit Pension Plan) (Continued) Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the City’s proportionate share of the net pension liability for each Plan, calculating using the discount rate of each Plan, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower (6.15%) or 1-percentage point higher (8.15%) than the current rate:
1% Decrease
(6.15%)
Current Discount
Rate
(7.15%)
1% Increase
(8.15%)
Miscellaneous 3,826,753 $ 1,944,690 $ 388,815 $
Safety 3,427,800 $ 1,712,772 $ 304,087 $
Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.
Payable to the Pension Plan
At June 30, 2022, the City has no outstanding amount of contributions to the pension plan required for the year ended June 30, 2022.
Note 12 – Risk Management
The City provides for workers' compensation and liability through a self-funded joint powers agency, Monterey Bay Area Self Insurance Authorities. Joint Powers Agreement (JPA) accounts are not separately maintained for each participant.
Description of Self-Insurance Pool Pursuant to Joint Powers Agreement The City is a member of the Monterey Bay Area Self Insurance Authority (MBASIA). MBASIA is composed of 10 California public entities and is organized under a joint powers agreement pursuant to California Government Code 6500 et seq. The purpose of MBASIA is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group-purchased insurance for property and other coverage.
General Liability: The City has a deductible of $10,000 for each liability claim. Claims above $10,000 up to $1,000,000 are paid by MBASIA. Claims above $1,000,000 up to $29,000,000 are covered by insurance purchased by MBASIA.
Workers’ Compensation: The City does not retain deductible for workers’ compensation claims. Annual premiums for coverage up to statutory levels are paid to MBASIA based on a Board approved Budget methodology. A third party claims administrator is contracted by MBASIA to manage claims activity. 41 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 12 – Risk Management (Continued)
Adequacy of Protection
During the past three fiscal (claims) years none of the above programs of protection have had settlements or judgments that exceeded insured coverage. There have been no significant reductions in insured liability coverage from coverage in the prior year. Audited financial statements for MBASIA can be obtained from their management at 100 Pine Street, 11th Floor, San Francisco, CA 94111.
Note 13 – Contingencies
Federal and State Government Programs - The City participates in several federal and state grant programs. These programs have been audited, as needed, in accordance with the provisions of the federal Single Audit Act of 1984 and applicable state requirements. No cost disallowances were proposed as a result of these audits. However, these programs are still subject to further examination by the grantors and the amount, if any, of expenditures, which may be disallowed by the granting agencies, cannot be determined at this time. The City expects such amounts, if any, to be immaterial.
Landfill Postclosure Costs – Since the closure of the City’s landfill in 1976, the City has been incurring postclosure care costs, and annual monitoring tests since 1996. The City is planning to initiate the process with regulators to stop the semi-annual testing and have the former landfill officially declared as closed. The City expects the process to be completed within the next few years.
Note 14 – Excess of Expenditures over Appropriations
The excess of expenditures over appropriations are as follows:
General Fund:
Current:
General government $ 22,692
Public safety $ 1,375,846
Community development $ 178,698
Debt Service
Principal $ 3,721
American Rescue Plan Act:
Current:
General Government $ 27,980
Capital outlay $ 342,612
CDBG Grant:
Current:
Community development $ 242,733
Development Impact Fees
Current:
Community development $ 19,717
The excess of expenditures over appropriations are covered by the available fund balance in the corresponding funds.
42 CITY OF KING CITY
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 15 – Subsequent Events
The City evaluated subsequent events for recognition and disclosure through June 13, 2023, the date which these financial statements were available to be issued. Management concluded that no material subsequent events have occurred since June 30, 2022 that required recognition or disclosure in such financial statements.
REQUIRED SUPPLEMENTARY INFORMATION
43 CITY OF KING CITY
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
YEAR ENDED JUNE 30, 2022
Variance with
Final Budget
Budgeted Amounts Actual Positive/
Original Final Amounts (Negative)
Revenue
Taxes 6,755,843 $ 6,755,843 $ 8,421,055 $ 1,665,212 $
Intergovernmental 199,500 308,359 1,306,157 997,798
Charges for services 13,500 13,500 20,662 7,162
Licenses and permits 1,129,900 1,129,900 1,665,535 535,635 Fines and forfeitures 36,000 36,000 18,088 (17,912)
Interest and rents 3,000 3,000 39,471 36,471
Other - - 198,903 198,903
Total revenue 8,246,602 8,137,743 11,669,871 3,423,269
Expenditures
Current
General government 1,092,827 1,161,327 1,184,019 (22,692) Public safety 4,291,577 4,322,577 5,698,423 (1,375,846) Public works 1,206,847 1,206,847 875,201 331,646
Culture and recreation 574,777 574,777 543,543 31,234
Community development 1,388,018 1,388,018 1,566,416 (178,398) Debt service
Principal 71,814 71,814 75,535 (3,721)
Interest and fiscal charges 23,344 23,344 22,962 382
Total expenditures 8,748,704 8,649,204 9,966,099 (1,217,395) Revenue over (under) expenditures (511,461) (502,102) 1,703,772 2,205,874 Other Financing Sources
Sale of property - - 17,966 17,966
Transfers in (out), net 260,000 260,000 212,635 (47,365) Total other financing sources/(uses) 260,000 260,000 230,601 (29,399) Net Change in Fund Balance $ (242,102) (251,461) $ 1,934,373 $ 2,158,509 Fund Balance
Beginning of year 1,765,115
End of year $ 3,699,488
44 CITY OF KING CITY
BUDGETARY COMPARISON SCHEDULE
AMERICAN RESCUE PLAN ACT
YEAR ENDED JUNE 30, 2022
Variance with
Final Budget
Budgeted Amounts Actual Positive/
Original Final Amounts (Negative)
Revenue
Intergovernmental - $ 1,683,759 $ 1,683,759 $ - $
Interest and rents - - 854 854
Total revenue 1,683,759 - 1,684,613 854
Expenditures
Current
General government - - 27,980 (27,980)
Capital outlay - - 342,612 (342,612)
Total expenditures - - 370,592 (370,592)
Net Change in Fund Balance $ 1,683,759 - $ 1,314,021 $ (369,738) Fund Balance
Beginning of year -
End of year $ 1,314,021
45 CITY OF KING CITY
BUDGETARY COMPARISON SCHEDULE
CDBG GRANT
YEAR ENDED JUNE 30, 2022
Variance with
Final Budget
Budgeted Amounts Actual Positive/
Original Final Amounts (Negative)
Revenue
Intergovernmental 3,360,000 $ 3,360,000 $ 2,237,791 $ (1,122,209) $ Interest and rents - - 93 93
Total revenue 3,360,000 3,360,000 2,237,884 (1,122,116) Expenditures
Current
Community development - - 242,733 (242,733)
Capital outlay 3,360,000 3,360,000 1,923,040 1,436,960
Total expenditures 3,360,000 3,360,000 2,165,773 1,194,227 Net Change in Fund Balance $ - - $ 72,111 $ 72,111
Fund Balance
Beginning of year 121,058
End of year $ 193,169
46 CITY OF KING CITY
BUDGETARY COMPARISON SCHEDULE
DEVELOPMENT IMPACT FEES FUND
YEAR ENDED JUNE 30, 2022
Variance with
Final Budget
Actual Positive/
Original Final Amounts (Negative)
Revenue
Intergovernmental - $ 3,096,730 $ - $ (3,096,730) $
Charges for services 25,000 25,000 30,021 5,021
Licenses, permits and impact fees 214,000 214,000 295,090 81,090 Interest and rent - - 1,000 1,000
Total revenue 239,000 3,335,730 326,111 (3,009,619)
Expenditures
Current
Public works 65,000 65,000 19,987 45,013
Culture and recreation 80,000 80,000 70 79,930
Community development 25,000 25,000 44,717 (19,717)
Capital outlay 75,000 75,000 23,966 51,034
Total expenditures 245,000 245,000 88,740 156,260
Revenue over/(under)
expenditures $ 3,090,730 (6,000) $ 237,371 $ (2,853,359) Fund Balance
Beginning of year 1,655,665
End of year $ 1,893,036
Budgeted Amounts
47 CITY OF KING CITY
BUDGETARY COMPARISON SCHEDULE
MEASURE X FUND
YEAR ENDED JUNE 30, 2022
Variance with
Final Budget
Budgeted Amounts Actual Positive/
Original Final Amounts (Negative)
Revenue
Taxes $ 432,329 432,329 $ 562,041 $ 129,712 $
Interest and rent - - 207 207
Total revenue 432,329 432,329 562,248 129,919
Expenditures
Current
Public works 432,329 432,329 388,340 43,989
Total expenditures 432,329 432,329 388,340 43,989
Revenue over (under) expenditures - - 173,908 173,908
Net Change in Fund Balance $ - - $ 173,908 $ 173,908
Fund Balance
Beginning of year 469,108
End of year $ 643,016
48 CITY OF KING CITY SCHEDULE OF THE CITY’S PROPORTIONATE SHARE OF NET PENSION LIABILITY LAST 10 YEARS* YEAR ENDED JUNE 30, 2022 Proportion of the net
pension liability
Proportionate share
of the net pension
liability
Covered - employee
payroll
Proportionate share of the net
pension liability as a
percentage of coveredemployee payroll Plan's fiduciary net position Plan's fiduciary net position
as a percentage of the Total
Pension Liability
2015 0.09668% 2,389,457 $ 834,582 $ 286.31% 7,090,204 $ 77.58% 2016 0.08862% 2,431,259 $ 936,886 $ 259.50% 8,223,238 $ 77.18% 2017 0.08541% 2,967,126 $ 978,018 $ 303.38% 7,817,932 $ 72.49% 2018 0.08489% 3,346,536 $ 1,019,404 $ 328.28% 8,822,837 $ 72.50% 2019 0.08484% 3,197,346 $ 763,963 $ 418.52% 9,315,620 $ 74.45% 2020 0.08418% 3,371,043 $ 845,215 $ 398.84% 9,771,801 $ 74.35% 2021 0.08366% 3,528,942 $ 1,077,863 $ 327.40% 10,124,046 $ 74.15% 2022 0.10242% 1,944,690 $ 1,058,867 $ 183.66% 12,310,030 $ 86.36% Proportion of the net
pension liability
Proportionate share
of the net pension
liability
Covered - employee
payroll
Proportionate share of the net
pension liability as a
percentage of coveredemployee payroll Plan's fiduciary net position Plan's fiduciary net position
as a percentage of the Total
Pension Liability
2015 0.04336% 1,626,559 $ 1,087,897 $ 149.51% 6,567,188 $ 80.15% 2016 0.04014% 1,653,870 $ 939,684 $ 176.00% 6,832,315 $ 80.51% 2017 0.04024% 2,084,204 $ 829,185 $ 251.36% 6,292,887 $ 75.12% 2018 0.04119% 2,461,421 $ 1,262,109 $ 195.02% 7,510,467 $ 75.32% 2019 0.04242% 2,488,981 $ 1,298,268 $ 191.72% 8,149,726 $ 76.60% 2020 0.04381% 2,860,960 $ 1,359,578 $ 210.43% 8,489,785 $ 74.79% 2021 0.04586% 3,055,582 $ 1,346,512 $ 226.93% 8,944,101 $ 74.54% 2022 0.04880% 1,712,772 $ 1,270,072 $ 134.86% 11,028,079 $ 86.56% Miscellaneous
Safety
* Fiscal year 2014-15 was the first year of implementation, therefore only eight years are shown. Changes of Assumptions: None 49 CITY OF KING CITY SCHEDULE OF CONTRIBUTIONS LAST 10 YEARS* YEAR ENDED JUNE 30, 2022 Contractually required
contribution
(actuarially
determined)
Contributions in
relation to the
actuarially determined
contributions
Contributions
deficiency (excess) Covered-employee payroll
Contributions as a
percentage of coveredemployee payroll
2015 145,093 $ (145,093) $ - $ 834,582 $ 17.39%2016 187,302 $ (187,302) $ - $ 936,886 $ 19.99%2017 257,596 $ (257,596) $ - $ 978,018 $ 26.34%2018 257,638 $ (257,638) $ - $ 1,019,404 $ 25.27%2019 306,385 $ (306,385) $ - $ 763,963 $ 40.10%2020 345,470 $ (345,470) $ - $ 845,215 $ 40.87%2021 402,008 $ (402,008) $ - $ 1,077,863 $ 37.30%2022 309,017 $ (309,017) $ - $ 1,058,867 $ 29.18% Contractually required
contribution
(actuarially
determined)
Contributions in
relation to the
actuarially determined
contributions
Contributions
deficiency (excess) Covered-employee payroll
Contributions as a
percentage of coveredemployee payroll
2015 279,368 $ (279,368) $ - $ 1,087,897 $ 25.68%2016 213,094 $ (213,094) $ - $ 939,684 $ 22.68%2017 182,185 $ (182,185) $ - $ 829,185 $ 21.97%2018 219,036 $ (219,036) $ - $ 1,262,109 $ 17.35%2019 285,131 $ (285,131) $ - $ 1,298,268 $ 21.96%2020 306,024 $ (306,024) $ - $ 1,359,578 $ 22.51%2021 384,434 $ (384,434) $ - $ 1,346,512 $ 28.55%2022 397,596 $ (397,596) $ - $ 1,270,072 $ 31.30% Safety
Miscellaneous
* Fiscal year 2014-15 was the first year of implementation, therefore only eight years are shown.
SUPPLEMENTAL ONLY INFORMATION
50 CITY OF KING CITY COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS JUNE 30, 2022 Riverview
SLESF/COPS Asset Gardens Prop SB1 Road Traffic
Grant Seizure Landscape 1B Maintenance Safety
ASSETS
Cash and investments 144,939 $ 11,272 $ 8,830 $ 14 $ 277,810 $ 23,026 $ Accounts receivable - - - - - -
Due from other governments 16,667 - - - 46,897 -
Interest receivable 3 34 2 - 61 1
Total assets $ 11,275 161,640 $ 8,832 $ 14 $ 324,768 $ 23,027 $
LIABILITIES
Accounts payable and accrued expense 19,044 $ - $ 1,415 $ - $ - $ - $ Due to other funds - - - - - -
Total liabilities - 19,044 1,415 - - -
FUND BALANCE
Restricted
Circulation improvements - - - - 324,768 23,027
Capital improvement projects - - - 14 - -
Public safety 142,596 11,275 - - - -
Landscape maintenance - - 7,417 - - -
Unassigned - - - - - -
Total fund balance 142,596 11,275 7,417 14 324,768 23,027 Total liabilities, deferred inflows of
resources, and fund balance $ 11,275 161,640 $ 8,832 $ 14 $ 324,768 $ 23,027 $ Special Revenue Funds
51 CITY OF KING CITY COMBINING BALANCE SHEET (CONTINUED) NON-MAJOR GOVERNMENTAL FUNDS JUNE 30, 2022 SB2
Planning
LEAP SB1 Land Use Gas
Grant Multimodal Grant Element Grant Transportation Tax ASSETS
Cash and investments 214 $ 2,711 $ - $ - $ - $
Accounts receivable - - - - 85,844Due from other governments - 82,920 37,908 7,984 -Interest receivable - - - - - Total assets $ 85,631 214 $ 37,908 $ 7,984 $ 85,844 $
LIABILITIES
Accounts payable and accrued expense - $ 2,185 $ 1,916 $ - $ 28,908 $ Due to other funds - - 35,992 7,984 9,721 Total liabilities - 2,185 37,908 7,984 38,629
FUND BALANCE
Restricted
Circulation improvements - - - - 47,215Capital improvement projects - - - - -Public safety - - - - -Landscape maintenance - - - - - Unassigned 83,446 214 - - -
Total fund balance 214 83,446 - - 47,215
Total liabilities, deferred inflows of
resources, and fund balance $ 85,631 214 $ 37,908 $ 7,984 $ 85,844 $ Special Revenue Funds
52 CITY OF KING CITY COMBINING BALANCE SHEET (CONTINUED) NON-MAJOR GOVERNMENTAL FUNDS JUNE 30, 2022 Total
Non-major
CDBG Airport Prop 68 UUT-Public Governmental
Pro Youth Operations Grant Safety Funds
ASSETS
Cash and investments - $ 192,103 $ - $ 24,962 $ 685,881 $ Accounts receivable - 46,722 - 1,500 134,066
Due from other governments 329,541 62 175,615 30,215 727,809 Interest receivable - 29 - 85 215
Total assets $ 238,916 329,541 $ 175,615 $ 56,762 $ 1,547,971 $
LIABILITIES
Accounts payable and accrued expense 188,536 $ 250 $ 2,063 $ - $ 244,317 $ Due to other funds - 141,005 228,273 - 422,975 Total liabilities 250 329,541 230,336 - 667,292
FUND BALANCE
Restricted
Circulation improvements - - - - 395,010Capital improvement projects - - - - 14Public safety - 238,666 - 56,762 449,299Landscape maintenance - - - - 7,417 Unassigned - - (54,721) - 28,939
Total fund balance - 238,666 (54,721) 56,762 880,679
Total liabilities, deferred inflows of
resources, and fund balance $ 238,916 329,541 $ 175,615 $ 56,762 $ 1,547,971 $ Special Revenue Funds
53 CITY OF KING CITY COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE NON-MAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2022 Riverview
SLESF/COPS Asset Gardens Prop SB1 Traffic
Grant Seizure Landscape 1B Road Maintenace Safety
Revenue
Taxes - $ - $ 18,693 $ - $ - $ - $
Intergovernmental 161,285 - - - 293,820 47,525
Charges for services - - - - - -
Fines and forfeitures - - - - - -
Interest and rent 99 6 3 - 94 2
Total revenue 161,384 6 18,696 - 293,914 47,527
Expenditures
Public safety 204,414 - - - - -
Public works - - 8,766 - - -
Culture and recreation - - - - - -
Community development - - - - - 27,361
Debt service
Principal 49,420 - - - - -
Interest - - - - - -
Total expenditures 253,834 - 8,766 - - 27,361
Revenue over (under) expenditures (92,450) 6 9,930 - 293,914 20,166 Other financing sources/(uses)
Transfers in/(out), net - - - (12,080) - -
Total other financing sources (uses) - - - (12,080) - - Change in Fund Balance 6 (92,450) 9,930 (12,080) 293,914 20,166 Fund Balance
Beginning of year 235,046 11,269 (2,513) 12,094 30,854 2,861 End of year 142,596 $ 11,275 $ 7,417 $ 14 $ 324,768 $ 23,027 $ Special Revenue Funds
54 CITY OF KING CITY COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE NON-MAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2022 SB2
Planning
LEAP SB1 Land Use Gas
Grants Multimodal Grant Element Grant Transportation Tax Revenue
Taxes - $ - $ - $ - $ 341,838 $
Intergovernmental 579 - 13,587 - -Charges for services - - - - -Other revenues - - - - 61,411Fines and forfeitures - - - - -Interest and rent - - - - - Total revenue - 579 13,587 - 403,249
Expenditures
Public safety - - - - -Public works - 115,720 25,667 - 480,931Culture and recreation - - - - -Community development 365 - - - -Debt service Principal - - - - 23,909
Interest - - - - 9,775
Total expenditures 115,720 365 25,667 - 514,615
Revenue over (under) expenditures 214 (115,720) (12,080) - (111,366) Other financing sources/(uses)
Transfers in/(out), net 199,166 - 12,080 - 150,000
Total other financing sources (uses) - 199,166 12,080 - 150,000 Change in Fund Balance 83,446 214 - - 38,634Fund Balance Beginning of year - - - - 8,581
End of year $ 214 83,446 $ - $ - $ 47,215 $
Special Revenue Funds
55 CITY OF KING CITY COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE NON-MAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2022 Total
Non-major
CDBG Airport Prop 68 UUT-Public Governmental
Youth Operations Grant Safety Funds
Revenue
Taxes - $ - $ - $ 391,883 $ 752,414 $
Intergovernmental 229,540 60,065 319 - 806,720
Charges for services - 184,217 - - 184,217
Other revenue 326 - - - 61,737
Interest and rent - 58 - 133 395
Total revenue 244,340 229,866 319 392,016 1,805,483
Expenditures
Public safety - - - - 204,414
Public works - 59,399 54,721 - 745,204
Culture and recreation - - 322 - 322
Community development 229,866 - - - 257,592
Debt service
Principal - - - - 73,329
Interest - - - - 9,775Total expenditures 59,399 229,866 55,043 - 1,290,636 Revenue over (under) expenditures - 184,941 (54,724) 392,016 514,847 Other financing sources/(uses)
Transfers in/(out), net - - 3 (361,801) (12,632)
Total other financing sources (uses) - - 3 (361,801) (12,632) Change in Fund Balance 184,941 - (54,721) 30,215 502,215 Fund Balance
Beginning of year - 53,725 - 26,547 378,464
End of year - $ 238,666 $ (54,721) $ 56,762 $ 880,679 $ Special Revenue Funds
BRYANT L. JOLLEY
CERTIFIED PUBLIC ACCOUNTANTS Bryant L. Jolley C.P.A.
Ryan P. Jolley C.P.A.
Darryl L. Smith C.P.A.
Luis A. Perez C.P.A.
Lan T. Kimoto
901 “N” STREET, SUITE 104 FIREBAUGH, CALIFORNIA 93622 PHONE 559.659.3045 FAX 559.659.0615 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and City Council
City of King City, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of King City (the “City”), California, as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise City’s basic financial statements, and have issued our report thereon dated June 13, 2023.
Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements, on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements.
However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of This Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
June 13, 2023
BRYANT L. JOLLEY
CERTIFIED PUBLIC ACCOUNTANTS Bryant L. Jolley C.P.A.
Ryan P. Jolley C.P.A.
Darryl L. Smith C.P.A.
Luis A. Perez C.P.A.
Lan T. Kimoto
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM
AND ON INTERNAL CONTROL OVER COMPLIANCE
REQUIRED BY THE UNIFORM GUIDANCE
To the Honorable Mayor and City Council
City of King City, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited City of King City (the “City”), California’s compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended June 30, 2022. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.
In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2022.
Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S.
Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with 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 opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City’s federal programs.
59 Auditor’s Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about City’s compliance with the requirements of each major federal program as a whole.
In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance.
Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.
Report on Internal Control over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, 60 as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
June 13, 2023
61 CITY OF KING CITY
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2022
Federal Agency or
Federal Grantor/Pass-through CFDA Pass-through Federal
Grantor/Program Title Number Number Expenditures
U.S. Department of Housing and Community Development
Passed through State Department of Housing and
Communiy Development
14.228 20-CDBG-12002 2,151,095 $
14.228 17-CDBG-12024 229,866
14.228 20-CDBG-CV1-00018 1,500
14.228 20-CDBG-CV2-3-00014 13,178
Total U.S. Department of Housing and Community Development 2,395,639 U.S. Department of the Treasury
Passed through United Way Monterey County
Coronavirus Relief Fund 21.019 N/A 527,270
Passed through California Department of Finance
Coronavirus State and Local Fiscal Recovery Funds
America Rescue Plan Act 21.027 N/A 370,591
Total U.S. Department of the Treasury 897,861
Total Federal Expenditures $ 3,293,500
Community Development Block Grants/ State's Program and Non-Entitlement Grants in Hawaii
62 CITY OF KING CITY
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2022
Note 1 – Significant Accounting Policies
The accompanying Schedule of Expenditures of Federal Awards (SEFA) presents the activity of all federal award programs of the City of King City, California (the City). Federal awards received directly from federal agencies as well as federal awards passed through other nonfederal agencies, primarily the State of California, are included in the SEFA. The City’s reporting entity is defined in Note 1 to the City’s basic financial statements.
Note 2 – Basis of Accounting
The accompanying SEFA is presented using the modified accrual basis of accounting for grants accounted for in the governmental fund types and the accrual basis of accounting for grants accounted for in the proprietary fund types, as described in Note 1 to the City’s basic financial statements. The information in the SEFA is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Therefore, some amounts presented in, or used in the preparation of, the SEFA may differ from amounts presented in the basic financial statements.
Note 3 – Catalog of Federal Domestic Assistance (CFDA) Numbers The CFDA numbers included in the accompanying SEFA were determined based on program name, review of grant contract information, and the Office of Management and Budget’s Catalog of Federal Domestic Assistance.
Note 4 – Relationship to the Financial Statements
Expenditures of federal awards are reported in the City’s basic financial statements as expenditures/expenses in the General Fund, nonmajor special revenue funds, nonmajor capital project funds, and the enterprise funds.
Note 5 – Indirect Cost Rate
The City did not elect to use the 10% de minimus cost rate as covered in 2 CFR §200.414. 63 CITY OF KING CITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2022
A. Summary of Auditor’s Results
Financial Statements
Type of auditor’s report issued: Unmodified
Internal control over financial reporting:
Material weaknesses identified? Yes No
Significant deficiencies identified that are
not considered to be material weaknesses? Yes None reported Non-compliance material to financial
statements noted? Yes No
Federal Awards
Internal control over major programs:
Material weaknesses identified? Yes No
Significant deficiencies identified that are
not considered to be material weaknesses? Yes None reported Type of auditor’s report issued on compliance for
major programs: Unmodified
Any audit findings disclosed that are required to
be reported in accordance with 2CFR section
200.516? Yes No
Identification of Major Programs
CFDA Number Name of Federal Program or Cluster
14.228 Community Development Block Grants
Dollar threshold used to distinguish between
Type A and Type B programs: $750,000
Auditee qualified as low-risk auditee? Yes No
B. Findings – Financial Statements Audit
None noted.
C. Findings and Questioned Costs – Major Federal Award Programs Audit None noted.
64 CITY OF KING CITY
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
YEAR ENDED JUNE 30, 2022
Summary Schedule of Prior Audit Findings
2012-02 Landfill Postclosure Costs – Implemented.
CITY OF KING CITY
MANAGEMENT REPORT
FOR THE YEAR ENDED JUNE 30, 2022
Exhibit 2
TABLE OF
CONTENTS
Page
Required Communications 1 – 3
BRYANT L. JOLLEY
CERTIFIED PUBLIC ACCOUNTANTS Bryant L. Jolley C.P.A.
Ryan P. Jolley C.P.A.
Darryl L. Smith C.P.A.
Luis A. Perez C.P.A.
Lan T. Kimoto
901 “N” STREET, SUITE 104 FIREBAUGH, CALIFORNIA 93622 PHONE 559.659.3045 FAX 559.659.0615 To the Honorable Mayor and City Council
City of King City, California
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of King City (the “City”) for the year ended June 30, 2022. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and, if applicable, Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated July 1, 2020.
Professional standards also require that we communicate to you the following information related to our audit.
Significant Audit Matters
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements.
As described in Note 1 to the financial statements, the City changed accounting policies related to leases by adopting Statement of Governmental Accounting Standards (GASB Statement) No. 87, Leases, in 2022. Accordingly, the cumulative effect of the accounting change as of the beginning of the year is reported in the Government-wide and Sewer Fund financials. We noted no transactions entered into by the City during the year that were both significant and unusual, and of which, under professional standards, we are required to inform you, or transactions for which there is a lack of authoritative guidance and consensus. All significant transactions have been recognized in the financial statements in the proper period.
We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements were:
Management has determined the economic useful lives of fixed assets based on past history of similar types of assets, future plans as to their use, and other factors that impact their economic value to the City. We evaluated the key factors and assumptions used by management in computing depreciation expense and believe that it is reasonable in relation to the financial statements taken as a whole.
2 Management’s estimate of the net pension liability and related deferrals is based on actuarial valuations which include significant assumptions regarding discount rate, inflation, payroll growth, projected salary increases and investment rate of return. We evaluated the key factors and assumptions used to develop the liability and related deferrals in determining that it is reasonable in relation to the financial statements taken as a whole.
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation letter dated June 13, 2023.
Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. 3 Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as City of King City’s auditors.
However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
Other Matters
We applied certain limited procedures to the Budgetary Comparison Schedules, Proportionate Share of Net Pension Liability, and Schedule of Contributions which are required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on supplementary information, as listed in the table of contents, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.
Restriction on Use
This information is intended solely for the information and use of the City Council and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties.
Very truly yours,
June 13 2023