Lindsay City Council
September 25, 2023

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
28 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued C. Assets, Deferred Outflows, Liabilities, Deferred Inflows, Net Position, or Equity (Continued) Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position and balance sheet of governmental funds will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period and so will not be recognized as an outflow of resources (expense/ expenditure) until then. The City has three types of items that qualify for reporting in this category. The first item is the deferred gain on debt refunding which is reported in the fiduciary funds statement of net position. A deferred gain on debt refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The second item is the deferred assets of the City’s pension plans investments as determined by California Public Employees’ Retirement System (CalPERS) in accordance with GASB Statement No. 68, which is reported in the government-wide statement of net position and the proprietary fund statement of net position. The third item is the deferred inflows/outflows associated with the City’s OPEB plan in accordance with GASB Statement No. 75, which is reported in the government-wide statement of net position. Please see the accompanying Notes 10 and 12 to the financial statements for more details on these amounts.

In addition to liabilities, the statement of net position and balance sheet of governmental funds will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. The City has several items that meet the criterion for this category - property taxes receivable, leases, and pension and OPEB deferrals.

Under the modified accrual basis of accounting, it is not enough that revenue has been earned if it is to be recognized as revenue of the current period. Revenue must also be susceptible to accrual; it must be both measurable and available to finance expenditures of the current fiscal period. If assets are recognized in connection with a transaction, but those assets are not yet available to finance expenditures of the current fiscal period, then the assets must be offset by a corresponding deferred inflow of resources. This type of deferred inflow is unique to governmental funds, since it is tied to the modified accrual basis of accounting, which is used only in connection with governmental funds.

Compensated Absences
Accumulated vested unpaid employee vacation and compensatory time-off benefits are recognized as liabilities of the City. Governmental funds recognize the current portion of the liabilities at fiscal year-end, while the noncurrent portion of these liabilities is recognized in the general long-term debt account group. Proprietary funds record the full liability as the vested benefits to the employees accrue.

Sick leave benefits are accumulated without limit for each employee. The employees do not gain a vested right to accumulated sick leave. Accumulated employee sick leave benefits are not recognized as liabilities of the City since payment of such benefits is not probable. Therefore, sick leave benefits are recorded as expenditures in the period that the sick leave is taken.

September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
29 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued C. Assets, Deferred Outflows, Liabilities, Deferred Inflows, Net Position, or Equity (Continued) Long-Term Debt
Government-Wide Financial Statements – Long-term debt and other long-term obligations are reported as liabilities in the appropriate activities.

Bond premiums and discounts are amortized over the life of the bonds using the effective interest method. Bonds payable is reported net of the applicable bond premium or discount. Bond issuance costs, except any portion related to prepaid insurance costs, are recognized as an expense in the period incurred.

Fund Financial Statements – The governmental fund financial statements do not present long-term debt. As such, long-term debt is shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position.

Bond premiums and discounts are recognized during the current period as other financing sources or uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Bond proceeds are reported as other financing sources.

Proprietary Fund and Fiduciary Fund Financial Statements use the same principles as those used in the GovernmentWide Financial Statements.

Self-Insurance
The City is a member of the Central San Joaquin Valley Risk Management Authority (CSJVRMA). The purpose of this group is to minimize liability and workers’ compensation expenses for cities in the central San Joaquin Valley.

CSJVRMA provides statutory coverage for the City's workers' compensation risks. The City retains liability risks up to $25,000 and shares risk with the pool to $10,000.

Net Position
GASB Statement No. 63 requires that the difference between assets added to the deferred outflows of resources and liabilities added to the deferred inflows of resources be reported as net position. Net position is classified as either net investment in capital assets, restricted, or unrestricted.

In the government-wide financial statements, proprietary fund financial statements, and fiduciary fund financial statements, net position is reported in three categories: net investment in capital assets, restricted, and unrestricted.

Net position that is net investment in capital assets consists of capital assets, net of accumulated depreciation, and reduced by the outstanding principal of related debt. Restricted net position represents the portion of net position that has external constraints placed on it by parties outside of the City, such as creditors, grantors, contributors, or laws and regulations of other governments, or through constitutional provisions or enabling legislation. Unrestricted net position consists of net position that does not meet the definition of net investment in capital assets or restricted net position.

September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
30 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued C. Assets, Deferred Outflows, Liabilities, Deferred Inflows, Net Position, or Equity (Continued) Fund Balance
In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned, or unassigned based primarily on the extent to which the City is bound to honor constraints on how specific amounts can be spent.

Nonspendable - Amounts that are not in spendable form (such as inventory) or are required either legally or contractually to be maintained intact.

Restricted - Amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or (b) imposed by law through constitutional or enabling legislation.

Committed - Amounts constrained to specific purposes by the City itself, using the City’s highest level of decisionmaking authority (the City Council). To be reported as committed, amounts cannot be used for any other purpose unless the City takes the same highest level action to remove or change the constraint. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period.

Assigned - Amounts the City intends to use for a specific purpose. Intent can be expressed by the City at either the highest level of decision-making authority or by an official or body to which the City delegates the authority. This is also the classification for residual funds in the City’s special revenue funds.

Unassigned - The residual classification for the City’s General Fund that includes amounts not contained in the other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes.

The City establishes and modifies or rescinds fund balance commitments by passage of an ordinance or policy. This is typically done through adoption and amendment of the budget. A fund balance commitment is further indicated in the budget as a designation or commitment of the fund, such as approved construction contracts. Assigned fund balance is established by the City through adoption or amendment of the budget or future year budget plan as intended for a specific purpose.

When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, followed by the unrestricted committed, assigned, and unassigned resources as they are needed.

The City believes that sound financial management principles require that sufficient funds be retained by the City to provide a stable financial base at all times. To retain this stable financial base, the City needs to maintain unrestricted fund balance in its funds sufficient to fund cash flows of the City and to provide financial reserves for unanticipated expenditures and/or revenue shortfalls of an emergency nature. Committed, assigned, and unassigned fund balances are considered unrestricted.

The City strives to achieve and maintain unrestricted fund balance in the General Fund sufficient to cover approximately 6 months of working capital at the close of each fiscal year, which exceeds the recommended level (approximately 60 days working capital) promulgated by the Government Finance Officers Association (GFOA).

However, as of June 30, 2022, the City had a deficit fund balance in its General Fund.

September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
31 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued C. Assets, Deferred Outflows, Liabilities, Deferred Inflows, Net Position, or Equity (Continued) Use of Estimates
The preparation of the Basic Financial Statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. In addition, estimates affect the reported amounts of revenues and expenses. Actual results could differ from these estimates and assumptions.

New Accounting Pronouncements
Governmental Accounting Standard Board Statement No. 87 “Leases” GASB issued Statement No. 87, “Leases” to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease asset and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities. The City implemented GASB No. 87 “Leases” as of July 1, 2021, resulting in the recognition of a lease receivable of $1,162,460, a deferred inflow lease receivable of $1,162,460, right to use leased assets of $704,343, and a lease liability of $704,343. There was no impact upon net position. The City has elected not to restate the prior period financial statements.

Future Accounting Pronouncements
The City will implement the following GASB pronouncements in future fiscal years:

The provisions of Statement Number 94 “Public-Private and Public-Public Partnerships and Availability Payment Arrangements” are effective for fiscal years beginning after June 15, 2022.

The provisions of Statement Number 96 “Subscription-Based Information Technology Arrangements” are effective for fiscal years beginning after June 15, 2022.

The provisions of Statement Number 99 “Omnibus 2022” are effective for fiscal years beginning after June 15, 2023.

The provisions of Statement Number 100 “Accounting Changes and Error Corrections – an amendment of GASB Statement No. 62” are effective for fiscal years beginning after June 15, 2023.

The provisions of Statement No. 101 “Compensated Absences” are effective for fiscal years beginning after December 15, 2023.

September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
32 2. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
Budgetary Control and Accounting
The City Council is required to adopt an annual budget resolution by July 1st of each fiscal year for the General Fund, special revenue, capital projects, debt service, and enterprise funds. These budgets are adopted and presented for reporting purposes on a basis consistent with generally accepted accounting principles.

The appropriated budget is prepared by fund, function, and department. The legal level of budgetary control (i.e. the level at which expenditures may not legally exceed appropriations) is the department level. The City Council made several supplemental budgetary appropriations throughout the fiscal year.

Budgeted appropriations for various governmental funds become effective each July 1. The City Council may amend the budget during the fiscal year. Appropriations generally lapse at the end of the fiscal year to the extent they have not been expended or encumbered.

Excess Expenditures over Appropriations
Excess of expenditures over appropriations in individual funds are as follows:

Deficit Fund Balances
The General Fund has a deficit fund balance of $1,306,438, the City’s plan to address the deficit is described in Note

17. The State parks special revenue fund has a deficit fund balance of $228,919 that should be alleviated as reimbursement received from the State.

Final
Budget Expenditures Excess
Major Fund:

General fund:

Current:

General government $ 971,111 $ 1,304,688 $ 333,577
Public safety 3,168,100 3,506,984 338,884
Public works 540,058 777,757 237,699
Streets and roads 643,900 763,683 119,783
Community development 59,300 97,173 37,873
Capital outlay 1,757,383 1,788,103 30,720
Principal retirement 281,400 357,780 76,380
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
33 3. CASH AND INVESTMENTS
Cash and investments as of June 30, 2022 are classified in the accompanying financial statements as follows:

Cash and investments as of June 30, 2022 consist of the following:

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.

A. Investments Authorized by the California Government Code and the City’s Investment Policy The investment policy allows for the above investments which have equal safety and liquidity as all other allowed investments. Maturity depends on the cash needs of the City.

Statement of net position:

Cash and investments $ 12,658,677
Fiduciary funds:

Cash and investments 769,623
Total cash and investments $ 13,428,300
Cash on hand $ 700
Deposits with financial institutions 5,171,280
Investments 8,256,320
Total cash and investments $ 13,428,300
Maximum Maximum
Maximum Percentage of Investment In
Authorized Investment Type Maturity Portfolio One Issuer U.S. Treasury Obligations 5 years Unlimited None
U.S. Government Agency Issues 5 years Unlimited None
Certificates of Deposits 5 years 25% 25%
State of California Local Agency
Investment Fund (State Pool) N/A Unlimited 75,000,000 $ Rated Debt Security of State of
California or California Local Agency 5 years 25% 25%
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
34 3. CASH AND INVESTMENTS (Continued)
B. Investments Authorized by Debt Agreements
Investment of debt proceeds held by bond trustees are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City’s investment policy. The table below identifies the Investment types that are authorized for investments held by bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.

C. 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. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity:

Maximum Maximum
Maximum Percentage of Investment In
Authorized Investment Type Maturity Portfolio One Issuer U.S. Treasury Obligations None None None
U.S. Government Sponsored
Enterprise Securities None None None
Bankers Acceptances 180 days 40% 10%
Commercial Paper 270 days 25% 10%
Money Market Funds N/A None None
Investment Contracts 30 years None None
Tulare County Pooled Fund N/A 10% None
State of California Local Agency
Investment Fund (State Pool) N/A Unlimited None
12 Months 13 to 24 25-60 More Than
Totals or Less Months Months 60 Months
Certificates of Deposit $ 2,444,561 $ 2,444,561 - $ $ - $ - State Investment Pool 5,811,759 5,811,759 - - - Total $ 8,256,320 $ 5,811,759 $ 2,444,561 $ - $ -
Investment Type
Remaining maturity (in Months)
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
35 3. CASH AND INVESTMENTS (Continued)
D. Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations The City has no investments (including investments held by bond trustees) that are highly sensitive to interest rate fluctuations (to a greater degree than already indicated in the information provided above).

E. 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 fiscal year end for each investment type.

F. Concentration of Credit Risk
The investment policy of the City contains limitations on the amount that can be invested in any one issuer. 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. Since the City pooled all of its investments, there were no investments in any one issuer that represented 5% or more of total investments by reporting unit.

G. Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g. broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits; the California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the government unit). The fair 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 the City’s deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

As of June 30, 2022, all of the City’s deposits with financial institutions were covered by federal depository insurance limits or were held in collateralized accounts.

Minimum
Legal Not
Amount Rating AAA AA A Rated
Certificates of Deposit $ N/A 2,444,561 $ - $ - $ 2,444,561 - $ State Investment Pool N/A 5,811,759 - - 5,811,759 -
Total $ 8,256,320 $ - $ - $ 8,256,320 - $
Rating as of Fiscal Year End
Investment Type
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
36 3. CASH AND INVESTMENTS (Continued)
H. 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.

I. Fair Value Measurements
The City categorizes its fair value measurements within the fair value hierarchy established by accounting principles generally accepted in the United States of America. These principles recognize a three-tiered fair value hierarchy, as follows:
 Level 1: Investments reflect prices quoted in active markets;  Level 2: Investments reflect prices that are based on a similar observable asset either directly or indirectly, which may include inputs in markets that are not considered active; and,  Level 3: Investments reflect prices based upon unobservable sources.

The City has the following recurring fair value measurements as of June 30, 2022:

The City also had investments in LAIF, however, these investments are not required to be measured under Level 1, 2, or 3.

Totals
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Certificates of deposit $ 2,444,561 $ - $ 2,444,561 $ - Investments by fair value
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
37 4. INTERFUND TRANSACTIONS
The following represents the interfund activity of the City for the fiscal year ended June 30, 2022:

A. Due To/ From Other Funds
Current interfund balances arise in the normal course of business and to assist funds with negative cash balance at the fiscal year end. They are expected to be repaid shortly after the end of the fiscal year.

The City allocates negative interest to funds that have a negative cash balance.

B. Transfers
With council approval, resources may be transferred from one City fund to another. The purpose of the majority of transfers is to reimburse a fund that has made expenditures on behalf of another fund.

Interfund Interfund
Receivables Payables
General fund $ 301,032 $ - Wellness center fund - 72,113 Nonmajor governmental funds
State park special revenue fund - 228,919
Totals $ 301,032 $ 301,032
Fund
Major governmental fund
Major enterprise fund
Transfers-in Transfers-out
General fund $ 728,602 $ 329,407
Street improvement fund - 328,266
Water fund 99,647 516
Sewer fund - 116,366
Wellness center fund 227,769 - Nonmajor governmental funds Gas Tax special revenue fund - 86,001
State park special revenue fund - 195,462
Totals $ 1,056,018 $ 1,056,018
Major governmental funds
Major enterprise funds
Fund
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
38 4. INTERFUND TRANSACTIONS (Continued)
C. Advances To/ From Other Funds
As of June 30, 2022, the City had the following advances to/from other funds.

On August 26, 2021, the State Auditor issued Report 2020-804 regarding the City of Lindsay which was conducted as part of the high-risk local government agency audit program. The report recommends that by February 2022, the City should address the $6.3 million transferred to its general fund, re-establish the loans to its restricted funds, and develop and implement a plan to fully repay those funds.

In response to the State Audit Report and in accordance with the City of Lindsay Corrective Action Plan, City staff have prepared a Formal Repayment Plan for consideration of the Lindsay City Council. This plan will record the advances to and from previously vacated at their originally vacated amounts. While the total amount remains unchanged, the amortization terms and schedules have been modified to allow the City to begin making annual payments based on priority beginning in Fiscal Year 2022-2023.

The City Council adopted Resolution 22-09 to formalize the advances and repayment schedules for funds borrowed prior to 2017.

The advances bear no interest and are expected to be repaid in the following priority: 1) Water Fund 2) Sewer Fund 3) Street Improvement Fund 4) Refuse Fund 5) Wastewater Capital Reserve Fund (included with Sewer Fund in the financial statements) 6) Storm Drain Fund (included with Sewer Fund in the financial statements) 7) Parks Fund and 8) Curb and Gutter Fund.

Advance to Advance from
other funds other funds
General fund $ - $ 6,332,305
Street improvement fund 1,557,120 - Water fund 1,906,797 - Sewer fund 2,341,466 - Electric fund 401,922 - Nonmajor governmental funds Park improvement special revenue fund 90,000 - Curb and Gutter capital projects fund 35,000 - Totals $ 6,332,305 $ 6,332,305
Fund
Major governmental funds
Major enterprise funds
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
39 5. LOANS AND NOTES RECEIVABLE
A. Notes Receivable
At June 30, 2022, the City’s loans and notes receivable consisted of the following:

B. Loans Assigned to State of California Department of Housing and Community Development The City previously used Housing and Community Development Block Grant funds to provide housing rehabilitation loans and HOME Investment Partnerships Program (HOME) grant funds to provide first- time homebuyer assistance loans and housing rehabilitation loans to eligible applicants. Rehabilitation loans are used to improve, rehabilitate, or replace residences. All loans were made to low and moderate income persons or landlords benefiting these same persons. As part of a settlement agreement with the State of California Department of Housing and Community Development (HCD), the outstanding balances of these loans were assigned to HCD, and the City is responsible for collecting and distributing loan repayments to HCD.

The City accounts for these loans in the custodial fund. This fund’s primary assets consist of notes receivable from participants, which originated from U.S. Department of Housing and Urban Development (HUD) funds.

C. Related Party Transactions
The City has entered into various loan agreements with City employees and relatives of City employees, under its First-Time Homebuyer and Micro–Loan Programs. The various loan types provided included Deferred Payment Loans (DPL), Deferred No Interest Loans (DNIL), No Interest Loans (NIL), and Below Market Interest Rate Loans (BMIR). All of the loan types mentioned are allowed under the programs. However, as discussed in Note 8(A), some of the loans were not compliant with the programs requirements, the loans are now assigned to HCD.

Community Curb and PrivateDevelopment Gutter Purpose Custodial Fund Fund Trust Fund Fund Total
$ - $ 3,769 $ - $ - $ 3,769
57,960 846,729 - 11,064,506 11,969,195
$ 57,960 $ 3,769 $ 846,729 $ 11,064,506 $ 11,972,964
Non-Major Governmental Funds
Non-interest and below market rate
secured notes with deferred
payments of monthly principal and
interest. Collateralized by trust deeds
on improved property.

Individuals 7% unsecured notes with
annual principal and interest
payments
Fiduciary Funds
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
40 6. CAPITAL ASSETS
The City has reported all capital assets including infrastructure in the government-wide Statement of Net Position.

The City elected to use the basic approach as defined by GASB Statement No. 34 for all infrastructure reporting, whereby depreciation expense and accumulated depreciation have been recorded.

A summary of changes in capital assets for the City’s governmental activities for the fiscal year ended June 30, 2022 is as follows:

Depreciation was charged to functions/programs of the primary government as follows:

Balance at
July 1, 2021 Additions Deletions
Balance at
June 30, 2022
Governmental Activities:

Capital assets, not being depreciated:

Land $ 2,934,112 $ - $ 2,934,112 - $
Construction in progress 1,404,986 - 1,404,986 -
Total capital assets,
not being depreciated 2,934,112 1,404,986 4,339,098 - Capital assets, being depreciated:

Buildings 26,972,939 - 26,972,939 -
Infrastructure 43,566,752 63,210 43,629,962 -
Machinery and equipment 5,973,136 220,455 6,193,591 -
Total capital assets, being depreciated 76,512,827 283,665 76,796,492 - Less accumulated depreciation for:

Buildings (7,080,849) (539,890) (7,620,739) -
Infrastructure (22,294,595) (855,281) (23,149,876) -
Machinery and equipment (5,294,844) (139,085) (5,433,929) - Total accumulated depreciation (34,670,288) (1,534,256) (36,204,544) - Total capital assets,
being depreciated, net 41,842,539 (1,250,591) 40,591,948 - Governmental activities
capital assets, net $ 44,776,651 $ 154,395 $ 44,931,046 - $ Governmental Activities Amount
Unallocated $ 1,534,256
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
41 6. CAPITAL ASSETS (Continued)
A summary of changes in capital assets for the City’s business-type activities for the fiscal year ended June 30, 2022 is as follows:

Depreciation was charged to functions/programs of the primary government as follows:

Balance at
July 1, 2021
Prior period
adjustment Additions Deletions
Balance at
June 30, 2022
Business-types activities:

Capital assets, not being depreciated:

Land $ 479,846 $ (27,176) $ - $ - $ 452,670
Construction in progress 12,198 - - - 12,198
Total capital assets, not being depreciated 492,044 (27,176) - - 464,868 Capital assets, being depreciated:

Buildings 20,536,861 - - 20,536,861 -
Infrastructure 24,042,722 - 15,410 24,058,132 -
Machinery and equipment 440,129 - 33,787 - 473,916
Total capital assets, being depreciated 45,019,712 - 49,197 45,068,909 - Less accumulated depreciation for:

Buildings (7,824,206) (411,468) - (8,235,674) -
Infrastructure (11,611,309) (459,250) - (12,070,559) -
Machinery and equipment (281,976) - (53,066) (335,042) - Total accumulated depreciation (19,717,491) (923,784) - (20,641,275) - Total capital assets, being depreciated, net 25,302,221 (874,587) - 24,427,634 - Business-type activities capital assets, net 25,794,265 $ $ (27,176) $ (874,587) $ 24,892,502 - $ Business-type Activities Amount
Water $ 300,604
Sewer 425,383
Wellness Center 197,797
Total $ 923,784
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
42 7. RIGHT TO USE LEASED ASSETS
The City has recorded one right to use leased asset. The asset is right to use asset for leased equipment. The related lease is discussed in the Leases subsection of the Liabilities section of this note. The right to use lease asset is amortized on a straight-line basis over the term of the related lease.

Right to use asset activity for the Primary Government for the fiscal year ended June 30, 2022, was as follows:

8. LONG-TERM DEBT
A schedule of changes in long-term debt for the fiscal year ended June 30, 2022, is shown below.

Balance at
July 1, 2021 Additions Deletions
Balance at
June 30, 2022
Right to use assets
Leased properties $ 704,343 - $ $ 704,343 - $
Total right to use assets 704,343 - 704,343 - Less accumulated amortization for:

Leased properties (18,576) - (18,576) -
Total accumulated amortization (18,576) - (18,576) - Right to use assets, net $ 685,767 - $ $ 685,767 - $ Balance at Balance at Due Within
July 1, 2021 Additions Deletions June 30, 2022 One Year Governmental activities:

Direct borrowings and direct placements
Certificates of Participation (COP)
2008 USDA RD Roads COP $ 802,786 $ (86,182) - $ $ 716,604 $ 89,844 2010 USDA RD Library COP 372,242 (21,543) - 350,699 22,405 Capital leases payable 539,643 (67,560) - 472,083 70,513 Total direct borrowings and direct placements 1,714,671 (175,285) - 1,539,386 182,762 Other debt
965,000 (140,000) - 825,000 145,000
(15,661) - 3,481 (12,180) (3,481)
949,339 (136,519) - 812,820 141,519
629,066 (39,317) - 589,749 52,422
249,310 (49,861) - 199,449 49,861
3,780,786 (89,360) - 3,691,426 89,360
Total other debt 5,608,501 4,978,387 - 5,293,444 333,162 Total governmental long-term debt $ 7,323,172 $ 4,803,102 - $ $ 6,832,830 $ 515,924 Caltrans settlement
HCD settlement
Bonds
2012 Taxable Lease Revenue Refunding Bonds
Bond Issuance Discounts
Total bonds
TCTA settlement
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
43 8. LONG-TERM DEBT (Continued)
A. Governmental Activities
Revenue Bonds Payable
On November 1, 2012, the City entered into a refunding bond with US Bank National Association for refunding of the City’s $1,500,000 Mid Valley Services, Inc., promissory note dated November 19, 2009. The annual principal payments are due annually beginning on January 1, 2014. Interest ranging from 4.0% to 6.4% on the bonds is payable on January 1st and July 1st of each fisal year, commencing on July 1, 2013. As of June 30, 2022, the balance due was $825,000. These bonds were reclassified from business-type activities to governmental activities due to the transfer of assets and liabilities held in the McDermont Sports Complex Fund.

The annual service debt service requirements for the 2012 Taxable Lease Revenue Refunding Bonds are as follow:

Balance at Balance at Due Within
July 1, 2021 Additions Deletions June 30, 2022 One Year Business-type activities:

Direct borrowings and direct placements
Certificates of Participation (COP)
2007 USDA RD Wellness Center COP $ 1,888,754 $ (51,117) - $ $ 1,837,637 $ 53,289 Bonds
1999 USDA RD Wastewater Expansion 4,530,492 (176,229) - 4,354,263 181,956 2000 USDA RD Water Line Project 1,552,373 (59,462) - 1,492,911 61,394 2004 USDA RD Wastewater Project 356,507 (10,026) - 346,481 10,464 Total direct borrowings and direct placements 8,328,126 (296,834) - 8,031,292 307,103 Other debt
Lindsay Olive Growers Pond Closure 2,570,981 - 2,570,981 - - Lease liabilities 704,343 - (10,407) 693,936 8,395 Total other debt 2,570,981 704,343 (10,407) 3,264,917 8,395 Total business-type long-term debt $ 10,899,107 $ 704,343 $ (307,241) $ 11,296,209 $ 315,498 Fiscal Year Principal Interest Total
2023 $ 145,000 $ 50,813 $ 195,813
2024 155,000 42,113 197,113
2025 165,000 32,813 197,813
2026 175,000 22,500 197,500
2027 185,000 11,563 196,563
Totals $ 825,000 $ 159,802 $ 984,802
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
44 8. LONG-TERM DEBT (Continued)
A. Governmental Activities (Continued)
Certificates of Participation (COP)
On October 1, 2008, the City entered into a COP with the United States Department of Agriculture Rural Development Agency (USDA RD) for Tulare Road in the amount of $1,600,000. The COP has annual principal and interest approximately $120,000 a year at 4.5% through 2029. As of June 30, 2022, the balance of the COP was $716,604.

The annual debt service requirements for the 2008 USDA RD Roads COP are as follows:

On May 12, 2010, the City entered into a COP with the USDA RD for the construction of the Library Project in the amount of $750,000. The COP has annual principal and interest payments of approximately $37,000 a year at 4.125% through 2036. As of June 30, 2022, the balance of the COP was $350,699.

The annual debt service requirements for the 2010 USDA RD Library COP are as follows:

Fiscal Year Principal Interest Total
2023 $ 89,844 $ 32,248 $ 122,092
2024 93,663 28,204 121,867
2025 97,643 23,990 121,633
2026 101,793 19,596 121,389
2027 106,119 15,014 121,133
2028-2029 227,542 15,502 243,044
Totals $ 716,604 $ 134,554 $ 851,158
Fiscal Year Principal Interest Total
2023 $ 22,405 $ 14,466 $ 36,871
2024 23,301 13,542 36,843
2025 24,233 12,581 36,814
2026 25,202 11,581 36,783
2027 26,210 10,542 36,752
2028-2032 147,642 35,600 183,242
2033-2035 81,706 2,613 84,319
Totals $ 350,699 $ 100,925 $ 451,624
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
45 8. LONG-TERM DEBT (Continued)
A. Governmental Activities (Continued)
Finance Purchase Agreement – Fire Truck
On January 25, 2018, the City entered into a master purchase agreement with PNC Equipment Finance for purchase of a fire truck. The total amount financed by the bank was approximately $725,819 with interest rate of 4.37%. The payments will be made over a 10-year period. As of June 30, 2022, the balance of the lease was $472,083.

The annual debt service requirements for the lease are as follows:

TCTA Settlement Liability
On April 24, 2012, the City reached a settlement with the Tulare County Transportation Authority (TCTA) in the total amount of $1,048,443 for repayment of improperly accounted for Measure R funds. Pursuant to the settlement, the City agreed to a 21-year repayment plan. The agreement was later revised in 2019 to remove required interest payments, and require 80 installment payments of $13,105 to be made on a quarterly basis. As of June 30, 2022, the balance of the TCTA settlement liability was $589,749.

The annual payment requirements for the agreement are as follows:

Fiscal Year Principal Interest Total
2023 $ 70,513 $ 20,630 $ 91,143
2024 73,594 17,549 91,143
2025 76,810 14,333 91,143
2026 80,167 10,976 91,143
2027 83,670 7,473 91,143
2028 87,329 3,814 91,143
Totals $ 472,083 $ 74,775 $ 546,858
Fiscal Year Principal Interest Total
2023 $ 52,422 $ - $ 52,422
2024 52,422 - 52,422
2025 52,422 - 52,422
2026 52,422 - 52,422
2027 52,422 - 52,422
2028-2032 262,110 262,110 - 2033-2034 65,529 - 65,529
Totals $ 589,749 $ 589,749 - $
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
46 8. LONG-TERM DEBT (Continued)
A. Governmental Activities (Continued)
Caltrans Settlement Liability
Caltrans provides state funding for construction projects. The City did multiple projects in the 2000’s. Caltrans alleged the City did not properly account for Downtown project and the Safe Routes to School project, and it demanded repayment of approximately $1,000,000. On October 7, 2019, the City reached a settlement with the California Department of Transportation (Caltrans) in the total amount of $349,032 for repayment of improperly accounted for funds. Pursuant to the settlement, the City agreed to a 7-year repayment plan based on the apportionment of fuel tax revenues from the State to the City, with annual payments calculated to approximately 10 percent of those fuel tax apportionments. As of June 30, 2022, the balance of the Caltrans settlement liability was $199,449.

The annual payment requirements for the agreement are as follows:

HCD Settlement Liability
The City provides home and business loans using grant funds from the Housing and Urban Development (HUD) department, specifically Community Development Block Grants (CDBG) and HOME Program grant funds through the California Housing and Community Development Department, a sub-division of HUD. Based on monitoring visits conducted and previous audits, the City had three distinct issues related to grant funds from HUD via HCD.

These matters are discussed below.

Issue #1 Borrowing of grant funds for the City’s general operations: Between 2008 and 2018, the City experienced annual deficits in its General Fund, McDermont Sports Complex Fund, and the Wellness Center Fund.

In order to fund the overspending, the City borrowed grant funds from HCD programs through due to/from transactions at the end of each fiscal year. This was common practice between fiscal year 2003 and fiscal year 2009, but the transactions were not reversed, compounding and confusing the actual balances. In fiscal year 2015, the City reversed the transactions and established temporary transactions. These transactions were reversed each fiscal year, but the funds were not repaid. As a result, the cash balances in the General Fund, McDermont Sports Complex Fund, and the Wellness Center Fund continued to increase in the negative direction.

Fiscal Year Principal Interest Total
2023 $ 49,861 $ 326 $ 50,187
2024 49,861 1,451 51,312
2025 49,861 1,451 51,312
2026 49,866 1,452 51,318
Totals $ 199,449 $ 4,681 $ 204,130
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
47 8. LONG-TERM DEBT (Continued)
A. Governmental Activities (Continued)
HCD Settlement Liability (Continued)
Issue #2 Home Loans to City employees and relatives of employees: Prior to May 2011, the City did not have a formal loan committee to review home and business loans thru the HCD program funding. During the administration that ended November 9, 2010, the City authorized home loans to some City employees and relatives of employees who did not qualify for the program. The following administration requested the District Attorney investigate to determine if there was criminal wrongdoing. The District Attorney found no criminal wrongdoing. The City then (1) created a loan committee to review each loan prior to funding and (2) contracted with Self Help Enterprises to manage the loan application process to ensure full transparency and program compliance. As a result, there have been no new issues. The City complies with all new related-party transactions. The City considers this matter to no longer be an issue. The reference to this past issue is contained in this disclosure note to give context to the reader.

Issue #3 Freeze Relief Funds: In 2005, the City experienced a devastating freeze, which damaged the orange crops that are vital to the economy. HCD sent the City freeze relief funds, which the City used to put people to work with permission from HCD. After the City spent the money as approved by HCD, HCD reversed its permission and demanded the City repay $900,000 in the freeze relief funds. Due to a fire that destroyed important records associated with the use of the freeze relief funds and turnover at HCD, the City does not have a complete record to demonstrate its compliance with HCD authorized uses.

On September 8, 2020, the City reached a settlement with the California Housing and Community Development Department (HCD) in the total amount of $3,790,786 for repayment of improperly accounted for funds.

Significant terms and conditions of the agreement are as follows:
- The City is required to make an initial payment of $10,000 on the date of the agreement, and will make annual payments of $89,360 until the balance outstanding on the agreement equals $1,100,000. - Interest on the outstanding balance will accrue at an annual rate of 9%. - If all payments are made timely, the outstanding balance of $1,100,000 and any accrued interest will be forgiven by HCD.
- In breach of contract (either due to failure to make payments or other), the City and HCD will meet and confer to resolve the breach, otherwise HCD will seek judicial enforcement of the agreement. - All unspent program funds held as cash as of the date of the agreement will be remitted to HCD. - Any program income received subsequent to the date of the agreement will be remitted to HCD. - Any equipment acquired with program funds will be returned to HCD. - Loans receivable related to the programs will be assigned to HCD. - The City is temporarily barred from participating in any HCD programs for a period of five years.

As of June 30, 2022, the balance of the HCD settlement liability was $3,691,426. $1,100,000 is forgivable contingent on timely payments. Annual interest accrued on outstanding principal is forgivable.

September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
48 8. LONG-TERM DEBT (Continued)
A. Governmental Activities (Continued)
HCD Settlement Liability (Continued)
The annual payment requirements for the agreement are as follows:

Fiscal Year Principal Interest Total
2023 $ 89,360 $ - $ 89,360
2024 89,360 - 89,360
2025 89,360 - 89,360
2026 89,360 - 89,360
2027 89,360 - 89,360
2028-2032 446,800 446,800 - 2033-2037 446,800 446,800 - 2038-2042 446,800 446,800 - 2043-2047 446,800 446,800 - 2048-2052 446,800 446,800 - 2053-2057 446,800 446,800 - 2058-2062 446,800 446,800 - 2063-2066 117,026 117,026 - -
Totals $ 3,691,426 $ 3,691,426 - $
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
49 8. LONG-TERM DEBT (Continued)
B. Business-Type Activities
Certification of Participation (COP)
On June 20, 2007, the City entered into a COP with USDA RD for the Wellness Center in the amount of $1,130,689.

The total amount of the COP will be $3,000,000 if totally drawn. The Wellness Center Fund has annual principal and interest payments of approximately $129,000 a year at 4.25% through 2047. As of June 30, 2022, the balance of the COP was $1,837,637.

The annual debt service requirements for the 2007 USDA RD Wellness Center COP are as follows:

Revenue Bonds Payable
On November 5, 1999, the City entered into a revenue bond with the USDA RD for the Waste Water Treatment Plant Project for $7,000,000. The annual principal and interest payments of $323,470 at 3.25% are through November 27, 2039. As of June 30, 2022, the balance due was $4,354,263.

The annual debt service requirements for the 1999 USDA RD Waste Water expansion bond are as follows:

Fiscal Year Principal Interest Total
2023 $ 53,289 $ 75,835 $ 129,124
2024 55,554 73,474 129,028
2025 57,915 71,012 128,927
2026 60,376 68,446 128,822
2027 62,942 65,771 128,713
2028-2032 357,186 284,578 641,764
2033-2037 439,820 198,432 638,252
2038-2042 541,571 92,357 633,928
2043-2047 208,984 38,258 247,242
Totals $ 1,837,637 $ 968,163 $ 2,805,800
Fiscal Year Principal Interest Total
2023 $ 181,956 $ 141,514 $ 323,470
2024 187,870 135,600 323,470
2025 193,976 129,494 323,470
2026 200,280 123,190 323,470
2027 206,789 116,681 323,470
2028-2032 1,139,232 478,118 1,617,350
2033-2037 1,336,787 280,563 1,617,350
2038-2040 907,373 59,495 966,868
Totals $ 4,354,263 $ 1,464,655 $ 5,818,918
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
50 8. LONG-TERM DEBT (Continued)
B. Business-Type Activities (Continued)
Revenue Bonds Payable (Continued)
On December 11, 2000, the City entered into a revenue bond with the USDA RD for the Water Line Project for $2,440,000. The annual principal and interest payments of $109,874 at 3.25% are through December 11, 2040. As of June 30, 2022, the balance due was $1,492,911.

The annual debt service requirements for 2000 USDA RD Water Line Project bond are as follows:

On June 22, 2004, the City entered into a revenue bond with the USDA RD for the Waste Water Project for $480,000.

The annual principal and interest payments of $25,623 at 4.375% are through June 28, 2044. As of June 30, 2022, the balance due was $346,481.

The annual debt service requirements for 2004 USDA RD Waste Water Project are as follows:

Fiscal Year Principal Interest Total
2023 $ 61,394 $ 48,480 $ 109,874
2024 63,389 46,485 109,874
2025 65,449 44,425 109,874
2026 67,577 42,297 109,874
2027 69,773 40,101 109,874
2028-2032 384,389 164,981 549,370
2033-2037 451,046 98,324 549,370
2038-2040 329,894 18,140 348,034
Totals $ 1,492,911 $ 503,233 $ 1,996,144
Fiscal Year Principal Interest Total
2023 $ 10,464 $ 15,159 $ 25,623
2024 10,922 14,701 25,623
2025 11,400 14,223 25,623
2026 11,899 13,724 25,623
2027 12,419 13,204 25,623
2028-2032 70,739 57,376 128,115
2033-2037 87,627 40,488 128,115
2038-2042 108,548 19,567 128,115
2043-2044 22,463 983 23,446
Totals $ 346,481 $ 189,425 $ 535,906
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
51 8. LONG-TERM DEBT (Continued)
B. Business-Type Activities (Continued)
Leases
The City has entered into agreements to lease certain equipment. The lease agreements qualify as other than shortterm leases under GASB Statement No. 87 and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception.

The first agreement was executed on October 8, 2008 to lease 144 acres of land and requires 455 monthly payments of $3,000. There are no variable payment components of the lease. The lease liability is measured at a discount rate of 4%. As a result of the lease, the City has recorded a right to use asset with a net book value of $693,936 at June 30, 2022. The right to use asset is discussed in more detail in Note 1.C.

The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2022, were as follows:

Remediation Liability
The City’s Sewer Fund is responsible for the contamination of two water basins at the City’s sewer plant. The preliminary cost of the clean-up referred to as the Lindsay Olive Growers (LOG) Pond Closure liability is estimated at $2,570,981. This amount has been accrued as of June 30, 2022. However, additional amounts might be needed in the future in order to clean up the site, and the issue will be reviewed in fiscal year 2022-23 to ascertain if any additional amounts should be accrued.

Fiscal Year Principal Interest Total
2023 $ 8,395 $ 27,605 $ 36,000
2024 8,737 27,263 36,000
2025 9,093 26,907 36,000
2026 9,464 26,536 36,000
2027 9,849 26,151 36,000
2028-2032 55,603 124,397 180,000
2033-2037 67,891 112,109 180,000
2038-2042 82,895 97,105 180,000
2043-2047 101,215 78,785 180,000
2048-2052 123,583 56,417 180,000
2053-2057 150,894 29,106 180,000
2058-2062 66,317 2,683 69,000
Totals $ 693,936 $ 635,064 $ 1,329,000
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
52 9. COMPENSATED LEAVES PAYABLE
Employees accrue vacation, annual leave, earned time off, and holiday leave up to certain maximums, based on the employee’s bargaining unit.

The City accrues the liability for compensated leave as it is earned by employees. The amount of compensated leave payable outstanding was $394,176 as of June 30, 2022.

The amount due within one year of $220,348 for Governmental Activities and $60,501 for Business-Type Activities represents the estimated amount for anticipated retirees. The City typically uses the General Fund to liquidate the liability for compensated absences for governmental funds.

10. CITY EMPLOYEES’ RETIREMENT PLAN
Plan Description
All qualified permanent and probationary employees are eligible to participate in the Public Agency Cost- Sharing Multiple-Employer Defined Benefit Pension Plan (Plan) administered by the California Public Employees’ Retirement System (CalPERS). The Plan consists of individual rate plans (benefit tiers) within a safety risk pool (police and fire) and a miscellaneous risk pool (all other). Plan assets may be used to pay benefits for any employer rate plan of the safety and miscellaneous risk pools. Accordingly, rate plans within the safety or miscellaneous pools are not separate plans under GASB Statement No. 68. Individual employers may sponsor more than one rate plan in the miscellaneous or safety risk pools. The City sponsors four rate plans (two miscellaneous and two safety). Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions, and membership information that can be found on the CalPERS’ website.

Benefit Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employee’s Retirement Law.

September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
53 10. CITY EMPLOYEES’ RETIREMENT PLAN (Continued)
Benefit Provided (Continued)
The rate plan provisions and benefits in effect at June 30, 2022 are summarized as follows:

Contributions – Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers are to be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plan is 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.

Miscellaneous and safety Plan employees agreed to pay an additional three and five percentage points, respectively, towards the City’s contributions to the Plan. The City has not updated its contract with CalPERS to reflect these changes, hence these payments are considered to be employer contributions.

Miscellaneous Miscellaneous
Classic Member PEPRA
Hire date Prior to December
16, 2012
On or after
January 1, 2013
Benefit formula 2.5% @ 55 2% @ 62
Benefit vesting schedule 5 years service 5 years service Benefit payments monthly for life monthly for life
Retirement age 55 62
Monthly benefits, as a % of eligible compensation 2.7% 2% Required employee contribution rates 8% 6.25%
Required employer contribution rates 14.02% 7.59%
Required unfunded liability payment $407,958 $5,035
Safety
Safety PEPRA
Hire date Prior to January 1,
2013
On and after
January 1, 2013
Benefit formula 3% @ 50 2.7% @ 57
Benefit vesting schedule 5 years service 5 years service Benefit payments monthly for life monthly for life
Retirement age 50 57
Monthly benefits, as a % of eligible compensation 3% 2.7% Required employee contribution rates 9% 11.5%
Required employer contribution rates 21.79% 13.13%
Required unfunded liability payment $328,247 $2,163
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
54 10. CITY EMPLOYEES’ RETIREMENT PLAN (Continued)
For the fiscal year ended June 30, 2022, the contributions recognized as part of pension expense for the Plan were as follows:

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 the Plan as follows:

The City’s net pension liability for the Plan is measured as the proportionate share of the total net pension liability of the Plan. The net pension liability of the Plan is measured as of June 30, 2021, and the total pension liability for the Plan used to calculate the net pension liability was determined by actuarial valuations as of June 30, 2020 rolled forward to June 30, 2021 using standard update procedures. The City’s proportionate share of the net pension liability was based on the City’s plan liability and asset-related information where available, and proportional allocations of individual plan amounts as of the valuation date where not available. The City’s proportionate share of the net pension liability for each Plan as of June 30, 2020 and 2021 were as follows:

For the fiscal year ended June 30, 2022, the City recognized pension expense of $1,782,134. At June 30, 2022, the City reported deferred outflow of resources and deferred inflows of resources related to pension from the following sources:

Miscellaneous Safety Total
Contributions - employer $ 501,029 $ 528,530 $ 1,029,559 Proportionate Share of
Net Pension Liability
Miscellaneous $ 3,421,071
Safety 2,521,100
Total $ 5,942,171
Proportion - June 30, 2020 0.08955%
Proportion - June 30, 2021 0.10987%
Change - Increase (Decrease) 0.02032%
Deferred Outflows Deferred Inflows
of Resources of Resources
Changes of Assumptions $ - $ - Differences between Expected and Actual Experience 814,364 - Net differences between projected and actual earnings on plan investments - 4,486,953
Differences between employer's contributions and the
employer's proportionate share of contributions 23,636 479,253 Change in Employer's Proportion 189,168 160,212
Pension Contributions Made Subsequent to Measurement Date 1,158,701 - Total $ 2,185,869 $ 5,126,418 September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
55 10. CITY EMPLOYEES’ RETIREMENT PLAN (Continued)
Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued) Deferred outflows of resources were reported as $1,158,701 related to contributions subsequent to the measurement date and will be recognized as a reduction of the net pension liability in the fiscal year ended June 30, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions and will be recognized as pension expense as follows:

Actuarial Assumptions - The total pension liabilities in the June 30, 2020 actuarial valuations were determined using the following actuarial assumptions:
(1) Depending on age, service and type of employment
(2) Net of pension plan investment expenses, including inflation All other actuarial assumptions used in the June 30, 2020 valuation were based on the results of an actuarial experience study for the fiscal years 1997 to 2015, including updates to salary increase, mortality, and retirement rates. The experience study report can be obtained at CalPERS’ website under Forms and Publications.

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

Fiscal Year Ended
June 30 Amount
2023 $ (891,157)
2024 (950,307)
2025 (1,019,567)
2026 (1,238,219)
Total $ (4,099,250)
Valuation Date June 30, 2020
Measurement Date June 30, 2021
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:

Discount Rate 7.15%
Inflation 2.50%
Payroll Growth 2.75%
Projected Salary Increase Varies By Age & Length of Service (1) Investment Rate of Return 7.50% (2)
Mortality Derived using CalPERS' Membership
Data for all Funds
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
56 10. CITY EMPLOYEES’ RETIREMENT PLAN (Continued)
Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued) In determining the long-term expected rate of return, staff took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Such cash flows were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the shortterm (first 10 years) and the long-term (11-60 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 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 rounded down to the nearest one quarter of one percent.

The table below reflects long-term expected real rate 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. These geometric rates of return are net of administrative expenses.

Discount Rate
The discount rate used to measure the total pension liability 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.

Assumed Asset
Allocation
Real Return
Years 1-10(b)
Real Return
Years 11+(c)
Global Equity 50.00% 4.80% 5.98%
Fixed Income 28.00% 1.00% 2.62%
Inflation Sensitive 0.00% 0.77% 1.81%
Private Equity 8.00% 6.30% 7.23%
Real Estate 13.00% 3.75% 4.93%
Liquidity 1.00% 0.00% -0.92%
Total 100.00%
(a) In the CalPERS's system, 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. (b) An expected inflation of 2.0% was used for this period (c) An expected inflation of 2.92% was used for this period Asset Class (a)
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
57 10. CITY EMPLOYEES’ RETIREMENT PLAN (Continued)
Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued) Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate – The following presents the City’s proportionate share of the net pension liability for the Plan, calculated using the discount rate for the 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 or 1-percentage point higher than the current rate:

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 reported no amount payable for outstanding amount of contributions to the pension plan required for the fiscal year ended June 30, 2022.

11. JOINT VENTURE – SELF-INSURANCE PROGRAM
The City is a member of the Central San Joaquin Valley Risk Management Authority (CSJVRMA). CSJVRMA is a consortium of fifty-four (54) cities in the San Joaquin Valley, California, established under the provisions of California Government Code Section 6500, et seq. CSJVRMA provides risk coverage for its members through the pooling of risks and purchased insurance. This coverage extends to workers’ compensation and general liability. CSJVRMA is governed by a board consisting of one board member appointed by each member agency and meets three to four times a year. The board has contracted with a management group to supervise and conduct CSJVRMA affairs.

The relationship between the City and CSJVRMA is such that CSJVRMA is not a component unit of the City for financial reporting purposes.

In the event of termination and after all claims have been settled, any excess or deficit will be divided among the agencies in accordance with an approved formula.

General Liability Insurance: Annual deposits are paid by member cities and are adjusted retrospectively to cover costs.

The City is covered for the first $1,000,000 of each general liability claim. The City has the right to receive dividends or the obligation to pay assessments based on a formula, which among other expenses, charges the City’s account for liability under $25,000. CSJVRMA participates in an excess pool that provides general liability coverage from $1,000,000 to $10,000,000.

Discount Rate -1% Current Discount Rate Discount Rate +1%

6.15% 7.15% 8.15%
Net Pension Liability - Misc $ 5,980,835 $ 3,421,071 $ 1,304,950 Net Pension Liability - Safety 4,959,750 2,521,100 518,051 Net Pension Liability - Total $ 10,940,585 $ 5,942,171 $ 1,823,001 September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
58 11. JOINT VENTURE – SELF-INSURANCE PROGRAM (Continued) Workers’ Compensation: The workers’ compensation program includes pooling of retained losses plus excess insurance. Annual deposits are paid by member cities and are adjusted retrospectively on an annual basis to cover costs and reflect claims experience of both the individual member and the pool. The City is covered for the first $250,000 of each workers’ compensation claim through CSJVRMA. The City has the right to receive dividends or the obligation to pay assessments based on a formula, which among other expenses, charges the City’s account for workers’ compensation losses under $250,000. CSJVRMA participates in an excess pool that provides workers’ compensation coverage from $250,000 to $500,000 and purchases excess insurance above the statutory limit.

There have been no significant changes in insurance coverage as compared to last year, and settlements have not exceeded coverage in each of the past three fiscal years.

12. POST-RETIREMENT HEALTH CARE DEFINED BENEFIT PLAN
The City reports the following total OPEB liability as of the June 30, 2022 measurement date:

A. Plan Description
The City administers the City’s retired employees’ healthcare plan, a single employer defined benefit health care plan. The plan provides continuation of medical, dental, and vision coverage to qualifying retiring employees. City resolutions and agreements assign the authority to establish and amend benefit provisions to the City. A separate OPEB trust account has not been established by the City for the plan.

Governmental Business-type
Activities Activities
Total OPEB liability: $ 1,400,476 $ 597,972
Total total OPEB liability $ 1,400,476 $ 597,972
Deferred outflows of resources:

Differences between expected and
actual experiences $ 93,915 $ 40,096
Changes in assumptions $ 112,751 $ 48,147
Total deferred outflows of resources $ 206,666 $ 88,243 Deferred inflows of resources:

Differences between expected and
actual experiences $ 1,204 $ 521
Changes in assumptions $ 237,634 $ 101,456
Total deferred inflows of resources $ 238,838 $ 101,977 September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
59 12. POST-RETIREMENT HEALTH CARE DEFINED BENEFIT PLAN (Continued) B. Employees Covered
As of the June 30, 2022 actuarial valuation, the following current and former employees were covered by the benefit terms under the Plan:

C. Contribution
The contribution requirements of plan members and the City are established and may be amended by the City. The required contribution is based on a projected pay-as-you-go financing requirements, with additional amounts to prefund benefits determined annually by the City Council. For the fiscal year ended June 30, 2022, the City contributed $49,617 (including implicit subsidy) and zero to prefund benefits. Plan members receiving benefits contributed no amounts to the total premiums. The General Fund has typically been used to liquidate OPEB liabilities for governmental funds.

D. Total OPEB Liability
The City’s total OPEB liability was measured as of June 30, 2022 and the total OPEB liability used to calculate the total OPEB liability was determined by actuarial valuation dated June 30, 2022. The total OPEB liability in the June 30, 2022 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:

Discount Rate
The discount rate estimates investment earnings for assets earmarked to cover retiree health benefit liabilities. The discount rate depends on the nature of underlying assets for funded plans. The rate used for a funded plan is the real rate of return expected for plan assets plus long term inflation assumption. For an unfunded plan, the discount rate is based on an index of 20-year General Obligation municipal bonds. For partially funded plans, the discount rate is a blend of the funded and unfunded rates. The discount rate used to measure the total OPEB liability was 3.54 percent.

Active employees 39
Inactive employees or beneficiaries currently receiving benefits 3 Total 42
Actuarial Assumptions: June 30, 2022 Measurement Date
Discount Rate 3.54% (Bond Buyer 20-Bond Index)
Inflation 2.50% annually
Salary Increases 2.75% per annum, in aggregate
Mortality Rate CalPERS 2017 Experience Study
Mortality Improvement Mortality projected fully generational with Scale MP-2021 Medical Participation at Retirement Currently covered - 50%, Currently waived - 0% Healthcare Trend Rate 4% per annum
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
60 12. POST-RETIREMENT HEALTH CARE DEFINED BENEFIT PLAN (Continued) D. Total OPEB Liability
Sensitivity to the total OPEB Liability to Changes in the Discount Rate and Healthcare Trend Rate The following presents the total OPEB liability of the City if it were calculated using discount rate and health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for the measurement period ending June 30, 2022:

Recognition of Deferred Outflows and Deferred Inflows of Resources and OPEB expense For the fiscal year ended June 30, 2022, the City recognized OPEB expense of $222,446. The City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Total
OPEB
Liability
Balance at June 30, 2021 $ 2,161,090
Service Cost 161,511
Interest 47,888
Assumption Changes (322,425)
Benefit Payments (49,617)
Net Change during 2021-22 (162,643)
Balance at June 30, 2022 $ 1,998,447
Changes in Total OPEB Liability as of June 30, 2022
Current
1% Lower
Discount Rate
(3.54%) 1% Higher
Total OPEB Liability 2,234,229 $ $ 1,998,447 $ 1,820,167 1% Lower
Current Trend
(4%) 1% Higher
Total OPEB Liability 1,686,902 $ $ 1,998,447 $ 2,362,077 Discount Rate
Healthcare Trend Rate
Deferred Outflows Deferred Inflows
of Resources of Resources
Changes in assumption $ 160,898 $ 339,090
Differences between expected
and actual experience 134,011 1,725
Total $ 294,909 $ 340,815
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
61 12. POST-RETIREMENT HEALTH CARE DEFINED BENEFIT PLAN (Continued) Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB and will be recognized as pension expense as follows:

13. NET POSITION AND FUND BALANCES
GASB Statement No. 34, modified by GASB Statement No. 63, adds the concept of Net Position, which is measured on the full accrual basis, to the concept of Fund Balance, which is measured on the modified accrual basis.

Net Position
Net position is divided into three captions under GASB Statement No. 34. These captions apply only to net position as determined at the government-wide level, and are described below:

Net Investment in Capital Assets describes the portion of net assets which is represented by the current net book value of the City’s capital assets, less the outstanding balance of any debt issued to finance these assets.

Restricted describes the portion of net position which is restricted as to use by the terms and conditions of agreements with outside parties, governmental regulations, laws, or other restrictions which the City cannot unilaterally alter. These principally include debt service requirements, and redevelopment funds restricted to low and moderate income housing purposes.

Unrestricted describes the portion of net position which is not restricted as to use.

The government-wide statement of net position reports $9,016,293 of restricted net position.

For the Recognized Net
Fiscal Year Deferred Outflows
Ending June 30, (Inflows) of Resources
2023 $ 13,047
2024 13,047
2025 13,047
2026 13,047
2027 13,047
Thereafter (111,141)
Total $ (45,906)
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
62 13. NET POSITION AND FUND BALANCES (Continued)
Fund balance is classified as nonspendable, restricted, committed, assigned, and/or unassigned based primarily on the extent to which the City is bound to observe constraints imposed upon the use of the resources in the government funds. The constraints placed on fund balance for the major governmental funds and all other governmental funds are presented as follows:

14. COMMITMENTS AND CONTINGENCIES
There are pending claims and litigation against the City other than what has been accrued, which are considered normal to the City’s operation. City management is of the opinion that potential claims against the City not covered by insurance resulting from such litigation would not materially affect the basic financial statements of the City beyond funded reserves.

Under certain circumstances, such as default or bankruptcy of other participants, the City may also be liable to pay a portion of the debt of these joint ventures on behalf of the other participants.

15. SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY On December 29, 2011, the California Supreme Court upheld Assembly Bill X1 26 (the Bill) that provides for the dissolution of all redevelopment agencies in the State of California. This action impacted the City that previously had reported a redevelopment agency blended component unit.

The Bill provides that upon dissolution of a redevelopment agency, either the county or another unit of local government will agree to serve as the “successor agency” to hold the assets until they are distributed to other units of state and local government. On January 10, 2012, the Lindsay City Council adopted a resolution affirming that the City would serve as the successor agency to the former Lindsay Redevelopment Agency (the Agency).

After enactment of the law, which occurred on June 28, 2011, redevelopment agencies in the State of California cannot enter into new projects, obligations, or commitments. Subject to the control of a newly established oversight board, remaining assets can only be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments).

Fund Balances General
Street
Improvement
Fund
Local
Transportation
Fund
Nonmajor
Governmental
Funds Total
Restricted for:

Road construction and maintenance $ 3,469,130 - $ $ 3,733,006 $ 7,202,136 - $ Community development - - 80,832 - 80,832
Curb and gutter - - 48,681 - 48,681
Transit - - - 7,457 7,457
Park projects - - 99,535 - 99,535
Street and roads - - 1,577,652 - 1,577,652
Total Restricted 3,469,130 - 3,733,006 1,814,157 9,016,293 Unassigned: (1,306,438) - (228,919) - (1,535,357)
Total Fund Balances $ (1,306,438) $ 3,469,130 $ 3,733,006 $ 1,585,238 $ 7,480,936 September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
63 15. SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY (Continued) In future fiscal years, successor agencies are only to be allocated tax increment revenue in the amount that is necessary to pay the estimated annual installment payments on enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior redevelopment agency have been paid in full.

The Bill directs the State Controller of the State of California to review the propriety of any transfers of assets between redevelopment agencies and other public bodies that occurred after January 1, 2011. If the public body that received such transfers is not contractually committed to a third party for the expenditure or encumbrance of those assets, the State Controller is required to order the available assets to be transferred to the public body designated as the successor agency by the Bill.

Management believes, in consultation with legal counsel, that the obligations of the former redevelopment agency due to the City are valid enforceable obligations payable by the successor agency trust under the requirements of the Bill. The City’s position on this issue is not a position of settled law and there is considerable legal uncertainty regarding this issue. It is reasonably possible that a legal determination may be made at a later date by an appropriate judicial authority that would resolve this issue unfavorably to the City.

In accordance with the timeline set forth in the Bill (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies in the State of California were dissolved and ceased to operate as legal entities as of February 1, 2012.

After the date of dissolution, as allowed under Section 341716(a) of the Bill, the City elected to transfer the housing assets and functions previously performed by the Agency. The remaining assets, liabilities, and activities of the dissolved Agency are reported in the Successor Agency fiduciary fund (private- purpose trust fund) in the financial statements of the City.

Successor Agency Long-Term Debt
In accordance with the provisions of the Bill and the court case, the obligations of the former redevelopment agency became vested with the funds established for the successor agency upon the date of dissolution, February 1, 2012. Tax increment revenue is pledged to fund the debts of the Successor Agency Trust subject to the reapportionment of such revenues as provided by the Bill.

Successor Agency long-term debt activity for the fiscal year ended June 30, 2022 was as follows:

Balance at Balance at Due Within
July 1, 2021 Additions Reductions June 30, 2022 One Year Tax Allocation Bonds:
2015 Refunding $ 11,010,000 $ (465,000) - $ $ 10,545,000 $ 485,000 Total other long-term debt 11,010,000 $ $ (465,000) - $ $ 10,545,000 $ 485,000 September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
64 15. SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY (Continued) A. Tax Allocation Bonds Payable
On June 1, 2015, the Successor Agency refunded the 2005, 2007, and 2008 tax allocation bonds in the amounts of $3,925,000, $6,895,000, and $3,270,000, respectively, with the refunding issue of 2015 in the amount of $13,000,000.

The bonds have principal payments each August 1 through 2037 and accrue interest at 3.0% – 5.0%, which is payable semiannually. The bonds are payable solely from pledged tax revenues allocated and paid to the Successor Agency from properties in the project area. As of June 30,2022, the balance on the bonds was $10,545,000.

The annual debt service requirements for 2015 Tax Allocation Refunding Bond are as follows:

16. PRIOR PERIOD ADJUSTMENTS
The City restated its Net Position and Fund Balances at July 1, 2021 as follows:

Fiscal Year Principal Interest Total
2023 $ 485,000 $ 392,381 $ 877,381
2024 510,000 367,606 877,606
2025 535,000 341,481 876,481
2026 565,000 319,631 884,631
2027 585,000 302,016 887,016
2028-2032 3,190,000 1,204,426 4,394,426
2033-2037 3,815,000 561,476 4,376,476
2038 860,000 17,200 877,200
Totals $ 10,545,000 $ 3,506,217 $ 14,051,217
Reason for adjustments
Governmental
Activities
Business-type
Activities
Overstatement of land $ - $ (27,176)
Understatement (Overstatement) of accounts receivable (92,669) 50,064 $ (92,669) $ 22,888 Governmental
Nonmajor Fund
Water Sewer Refuse Curb and
Enterprise Enterprise Enterprise Gutter Capital Private-Purpose Custodial Reason for adjustments Fund Fund Fund Project Fund Trust Fund Fund Overstatement of land $ (27,176) - $ $ - $ - $ - $ - Understatement (Overstatement) of accounts receivable 112,520 (36,557) (25,899) (92,669) - - Understatement of loans and notes receivable - - - -- 34,410 - 158,733 - $ 112,520 $ (63,733) $ (25,899) $ (92,669) $ 34,410 $ 158,733 Proprietary Funds Fiduciary Funds
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Notes to Basic Financial Statements
June 30, 2022
65 17. GOING CONCERN
The accompanying financial statements have been prepared assuming the City will continue as a going concern. The City’s General Fund after reinstatement of interfund loans has a deficit fund balance of $1,306,438. In addition, the City’s enterprise unrestricted net position mostly derives from the significant receivables owed by the General Fund, which are to be collected over a lengthy period. The ability of the City to continue as a going concern and meet its obligations as they become due is dependent on the City’s ability to develop and implement a plan that will successfully eliminate the current deficit in the General Fund and repay amounts owed to the enterprise funds. The financial statements do not include any adjustments that might be necessary if the City is unable to continue as a going concern.

Staff is dedicated to continuing the work needed to correct the financial position of the City, which continues to be negatively impacted by the damaging effects of operational mismanagement from decades prior. Successful tax revenue generating measures in recent years have helped to bring needed resources to the City. Additional tax revenue is expected in future years with the addition of a second retail cannabis location and the completion of a 54-unit low-income housing development. Cost studies are underway for all City fees and rates, including fees and rates for the water and sewer enterprise funds.

Staff is also working with the State Auditor’s Office to follow a formal Corrective Action Plan for the City that will meet both short-term operating needs and build long term fiscal sustainability. To this end, Management has agreed to follow all recommendations made by the State Auditor and has already implemented several financial policies including policies for grant management and fund reserve levels.

The City has adopted a long-range financial plan in conformity with GFOA best practices to provide a guide for dealing with future financial matters systematically.

18. SUBSEQUENT EVENTS
The City sold McDermont Fieldhouse on December 27, 2022 in the amount of $900,000.

September 25, 2023 Special Meeting of the Lindsay City Council

Page Intentionally Left Blank
66 September 25, 2023 Special Meeting of the Lindsay City Council

REQUIRED SUPPLEMENTAL INFORMATION

September 25, 2023 Special Meeting of the Lindsay City Council

CITY OF LINDSAY

SCHEDULE OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL

GENERAL FUND
For the Fiscal Year Ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)

REVENUES
Property taxes $ 452,600 $ 452,600 $ 391,653 $ (60,947) Sales taxes 1,279,400 1,279,400 1,568,150 288,750
Measure O taxes 1,316,700 1,316,700 1,689,595 372,895
Utilities users' taxes 1,050,000 1,050,000 996,296 (53,704) Other taxes 1,728,000 1,728,000 2,181,224 453,224
Intergovernmental 486,600 486,600 1,806,794 1,320,194
Fines and forfeitures 110,000 110,000 184,384 74,384
License and permits 224,700 224,700 585,683 360,983
Use of money and property 600 600 (63,020) (63,620)
Charges for services 6,800 6,800 23,937 17,137
Other, donations, and reimbursements 1,271,800 1,271,800 268,714 (1,003,086) Total Revenues 7,927,200 7,927,200 9,633,410 1,706,210

EXPENDITURES
Current:

General government 971,111 971,111 1,304,688 (333,577)
Public safety 3,168,100 3,168,100 3,506,984 (338,884)
Parks and recreation 209,800 209,800 207,565 2,235
Public works 540,058 540,058 777,757 (237,699)
Streets and roads 643,900 643,900 763,683 (119,783)
Community development 59,300 59,300 97,173 (37,873)
Capital outlay 1,757,383 1,757,383 1,788,103 (30,720)
Debt service:

Principal retirement 281,400 281,400 357,780 (76,380)
Interest and fiscal charges 101,600 101,600 68,369 33,231 Total Expenditures 7,732,652 7,732,652 8,872,102 (1,139,450) Excess of Revenues over
(under) Expenditures 194,548 194,548 761,308 566,760

OTHER FINANCING SOURCES
(USES)
Transfers in 925,883 925,883 728,602 (197,281)
Transfers out (1,480,000) (1,480,000) (329,407) 1,150,593 Total Other Financing
Sources (Uses) (554,117) (554,117) 399,195 953,312
Net Change in Fund Balance (359,569) (359,569) 1,160,503 1,520,072 Fund Balance (deficit), Beginning of Fiscal Year (2,466,941) (2,466,941) (2,466,941) Fund Balance (deficit), End of Fiscal Year $ (2,826,510) $ (2,826,510) $ (1,306,438) $ 1,520,072 Budgeted Amounts
67 September 25, 2023 Special Meeting of the Lindsay City Council

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL

STREET IMPROVEMENT SPECIAL REVENUE FUND
For the Fiscal Year Ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)

REVENUES
Street improvement program $ 925,883 $ 925,883 $ 833,070 $ (92,813) Use of money and property 1,500 1,500 (17,143) (18,643) Total Revenues 927,383 927,383 815,927 (111,456)

EXPENDITURES
Current:

Streets and roads 20,084 20,084 20,084 -
Debt service:

Principal retirement 49,861 49,861 49,861 -
Total Expenditures 69,945 69,945 69,945 -
Excess of Revenues over
(under) Expenditures 857,438 857,438 745,982 (111,456)

OTHER FINANCING

SOURCES (USES)
Transfers out (855,938) (855,938) (328,266) 527,672
Total Other Financing
Sources (Uses) (855,938) (855,938) (328,266) 527,672
Net Change in Fund Balance 1,500 1,500 417,716 416,216
Fund Balance, Beginning of Fiscal Year 3,051,414 3,051,414 3,051,414 Fund Balance, End of Fiscal Year $ 3,052,914 $ 3,052,914 $ 3,469,130 $ 416,216

CITY OF LINDSAY
Budgeted Amounts
68 September 25, 2023 Special Meeting of the Lindsay City Council

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL

LOCAL TRANSPORTATION FUND
For the Fiscal Year Ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)

REVENUES
Intergovernmental $ 1,596,657 $ 1,596,657 $ 1,126,840 $ (469,817) Use of money and property 850 850 (15,283) (16,133)
Total Revenues 1,597,507 1,597,507 1,111,557 (485,950)

EXPENDITURES
Current:

Streets and roads 121,811 121,811 78,746 43,065
Capital outlay 200,000 200,000 177,442 22,558
Debt service:

Principal retirement 86,182 86,182 86,182 -
ervices: Interest and Fiscal Charges Interest and fiscal charges 36,126 36,126 34,186 1,940 Total Expenditures 444,119 444,119 376,556 67,563
Excess of Revenues over
(under) Expenditures 1,153,388 1,153,388 735,001 (418,387)

OTHER FINANCING

SOURCES (USES)
Transfers out (919,000) (919,000) - 919,000
Total Other Financing
Sources (Uses) (919,000) (919,000) - 919,000
Net Change in Fund Balance 234,388 234,388 735,001 500,613 Fund Balance, Beginning of Fiscal Year 2,998,005 2,998,005 2,998,005 - Fund Balance, End of Fiscal Year $ 3,232,393 $ 3,232,393 $ 3,733,006 $ 500,613

CITY OF LINDSAY
Budgeted Amounts
69 September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Required Supplementary Information
For the fiscal year ended June 30, 2022
70 Schedule of the Local Government’s Proportionate Share of the Net Pension Liability – Last 10 Years* Notes to the Schedule:

Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes which occurred after the June 30, 2016 valuation date. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes).

Changes in Assumptions: In 2017, the discount rate changed from 7.65% to 7.15%. *Fiscal year 2015 was the 1st year of implementation, therefore only eight years are shown.

Proportionate Plan Fiduciary
Proportionate Share of the Net Net Position as a
Proportion of the Net Share of Net Covered Pension Liability % of the Total Measurement Date Pension Liability Pension Liability Payroll as a % of Payroll Pension Liability 2021 0.10987% $ 5,942,171 $ 2,717,288 218.68% 69.89%
2020 0.08955% 9,743,120 2,489,675 391.34% 75.10%
2019 0.09039% 9,262,536 2,385,716 388.25% 75.26%
2018 0.09174% 8,840,660 2,572,760 343.63% 75.26%
2017 0.09245% 9,168,480 2,907,772 315.31% 73.31%
2016 0.09544% 8,258,639 2,689,271 307.10% 74.06%
2015 0.09928% 6,814,687 2,799,950 243.39% 78.40%
2014 0.09999% 6,216,207 2,769,950 224.42% 79.82%
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Required Supplementary Information
For the fiscal year ended June 30, 2022
71 Schedule of Pension Contributions – Last 10 Years*
*Fiscal year 2015 was the 1st year of implementation, therefore only eight years are shown.

Contributions in
Contractually Relation to the Contribution Contribution as a Required Actuarially Determined Deficiency/ Covered % of Covered Fiscal Year Contributions Contributions (Excess) Payroll Payroll 2022 $ 4,808,270 $ (4,808,270) $ 3,094,614 - $ 155.38%
2021 1,029,559 (1,029,559) 2,717,288 - 37.89%
2020 922,615 (922,615) 2,489,675 - 37.06%
2019 1,128,405 (1,128,405) 2,385,716 - 47.30%
2018 1,021,760 (1,021,760) 2,572,760 - 39.71%
2017 1,207,603 (1,207,603) 2,907,772 - 41.53%
2016 726,038 (726,038) 2,689,271 - 27.00%
2015 700,907 (700,907) 2,799,950 - 25.03%
September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Required Supplementary Information
For the fiscal year ended June 30, 2022
72 Schedule of the Change in Net OPEB Liability and Related Ratios - Last 10 Fiscal Years* MEASUREMENT PERIOD 2022 2021 2020 2019 2018

TOTAL OPEB LIABILITY
Service Cost $ 161,511 $ 102,491 $ 99,506 $ 76,602 $ 79,370 Interest on the Total OPEB Liability 47,888 43,900 42,590 58,378 52,405 Difference between Expected and Actual Experience - 98,985 73,023 (2,879) 1,127 Changes of Assumptions (322,425) (14,499) 175,866 72,921 (52,488) Benefit Payments (49,617) (28,027) (40,536) (37,872) (31,041) Net Change in Total OPEB Liability (162,643) 202,850 350,449 167,150 49,373 Total OPEB Liability - Beginning 2,161,090 1,958,240 1,607,791 1,440,641 1,391,268 Total OPEB Liability - Ending $ 1,998,447 $ 2,161,090 $ 1,958,240 $ 1,607,791 $ 1,440,641 Plan Net OPEB Liability - Ending $ 1,998,447 $ 2,161,090 $ 1,958,240 $ 1,607,791 $ 1,440,641 Plan Fiduciary Net Position as
a Percentage of the Total OPEB Liability n/a n/a n/a n/a n/a Covered Payroll $ 16,715,521 $ 2,897,502 $ 2,912,375 $ 2,637,580 $ 2,560,757 Net OPEB liability as a percentage of covered payroll 11.96% 74.58% 67.24% 60.96% 56.26% *Fiscal year 2018 was the first year of implementation, therefore only five years are shown.

September 25, 2023 Special Meeting of the Lindsay City Council

City of Lindsay
Required Supplementary Information
For the fiscal year ended June 30, 2022
73 Schedule of OPEB Contribution - Last 10 Fiscal Years Per GASB 75 paragraph 57c., these disclosures are only required if the employer calculates an Actuarially Determined Contribution (ADC). The City does not currently calculate an ADC.

September 25, 2023 Special Meeting of the Lindsay City Council

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74 September 25, 2023 Special Meeting of the Lindsay City Council

OTHER SUPPLEMENTARY INFORMATION
September 25, 2023 Special Meeting of the Lindsay City Council

75 NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS
Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes.

Special Assessment Districts Fund accounts for the activities of the special assessment housing districts in the City. Property owners in these districts pay additional property tax to fund special landscaping and other services in the district.

Community Development Fund accounts for all financial transactions having to do with CHFA-HELP LHBP mortgage assistance loans.

Gas Tax Fund accounts for transportation funding from the State’s gas tax. It includes funds for construction, maintenance, engineering, congestion relief, and road rehabilitation. The City uses Gas Tax funds on streets and transportation projects.

Park Improvement Fund accounts for monies received from developers restricted for park improvements.

Transit Fund accounts for revenues from bus fare token. The City does not operate the bus system in Lindsay, but does sell bus fare tokens. Transit Funds are used in conjunction with transit projects.

State Parks Fund accounts for state grant revenues restricted for parks.

CAPITAL PROJECTS FUND
Curb and Gutter Fund is part of Sewer Fund. It accounts for funds for some street and sidewalk repairs.

September 25, 2023 Special Meeting of the Lindsay City Council

Special
Assessment Community Park State
Districts Development Gas Tax Improvement Transit Parks ASSETS
Cash and investments $ 92,161 $ 22,872 $ 1,439,170 $ 50,474 $ 7,457 $ - Receivables:

Accounts and taxes - - - - - -
Interest - - 1,158 - - -
Intergovernmental 925 - 67,943 - - 195,462
Advance to other funds - - - 90,000 - -
Loans and notes receivable - 57,960 - - - -
Total Assets $ 93,086 $ 80,832 $ 1,508,271 $ 140,474 $ 7,457 $ 195,462

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable $ 7,892 $ - $ 8,325 $ 40,939 $ - $ -
Accrued wages - - 7,488 - - -
Due to other funds - - - - - 228,919
Total Liabilities 7,892 - 15,813 40,939 - 228,919
Deferred inflow of resources:

Unavailable revenue - - - - - 195,462
Total deferred inflows of resources - - - - - 195,462
Fund Balances:

Restricted 85,194 80,832 1,492,458 99,535 7,457 -
Unassigned - - - - - (228,919)
Total Fund Balances (Deficits) 85,194 80,832 1,492,458 99,535 7,457 (228,919) Total Liabilities, Deferred inflows of
Resources and Fund Balances $ 93,086 $ 80,832 $ 1,508,271 $ 140,474 $ 7,457 $ 195,462

CITY OF LINDSAY

COMBINING BALANCE SHEET

NONMAJOR GOVERNMENTAL FUNDS
June 30, 2022
Special Revenue Funds
76 September 25, 2023 Special Meeting of the Lindsay City Council

Total
Nonmajor
Curb and Governmental
Gutter Funds
$ 9,670 $ 1,621,804
229 229
13 1,171
- 264,330
35,000 125,000
3,769 61,729
$ 48,681 $ 2,074,263
$ - $ 57,156
- 7,488
- 228,919
- 293,563
- 195,462
- 195,462
48,681 1,814,157
- (228,919)
48,681 1,585,238
$ 48,681 $ 2,074,263
Capital Projects
Fund
77 September 25, 2023 Special Meeting of the Lindsay City Council

Special
Assessment Community Park State
Districts Development Gas Tax Improvement Transit Parks

REVENUES
Other taxes $ 72,628 $ - $ - $ - $ - $ -
Intergovernmental - - 572,145 - - -
License and permits - - - 36,250 - -
Use of money and property - 3,288 (5,147) 30 9 -
Other, donations, and reimbursements - 5,143 - - - 449
Total Revenues 72,628 8,431 566,998 36,280 9 449

EXPENDITURES
Current:

General government 78,522 - - - - -
Parks and recreation - 41,065 - -
Streets and roads - - 280,107 - - -
Community development - - - - - 1,609
Capital outlay - - 25,097 - - -
Total Expenditures 78,522 305,204 41,065 1,609
Excess of Revenues Over
(Under) Expenditures (5,894) 8,431 261,794 (4,785) 9 (1,160)

OTHER FINANCING SOURCES (USES)
Transfers out - - (86,001) - - (195,462)
Total Other Financing
Sources (Uses) - - (86,001) - - (195,462)
Net Change in Fund Balances (5,894) 8,431 175,793 (4,785) 9 (196,622) Fund Balances (deficits), Beginning of Fiscal Year 91,088 72,401 1,316,665 104,320 7,448 (32,297) Prior Period Adjustments - - - - - -
Fund Balances (deficits), Beginning of Fiscal
Year(restated) 91,088 72,401 1,316,665 104,320 7,448 (32,297) Fund Balances (deficits), End of Fiscal Year $ 85,194 $ 80,832 $ 1,492,458 $ 99,535 $ 7,457 $ (228,919)

CITY OF LINDSAY

COMBINING STATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDS
For the Fiscal Year Ended June 30, 2022
Special Revenue Funds
78 September 25, 2023 Special Meeting of the Lindsay City Council

Fund Total
Nonmajor
Curb and Governmental
Gutter Funds
$ - $ 72,628
- 572,145
- 36,250
(86) (1,906)
3,543 9,135
3,457 688,252
- 78,522
- 41,065
- 280,107
- 1,609
10,376 35,473
10,376 436,776
(6,919) 251,476
- (281,463)
- (281,463)
(6,919) (29,987)
148,269 1,707,894
(92,669) (92,669)
55,600 1,615,225
$ 48,681 $ 1,585,238
Captial Projects
79 September 25, 2023 Special Meeting of the Lindsay City Council