-4-
(f) Apprentices. Contractor shall comply with and be bound by the provisions of Labor Code Sections 1777.5, 1777.6, and 1777.7 and California Code of Regulations Title 8, Section 200 et seq. concerning the employment of apprentices on public works projects. Contractor shall be responsible for compliance with these aforementioned Sections for all apprenticeable occupations. Prior to commencing work under this Agreement, Contractor shall provide City with a copy of the information submitted to any applicable apprenticeship program. Within sixty (60) days after concluding work pursuant to this Agreement, Contractor and each of its subcontractors shall submit to the City a verified statement of the journeyman and apprentice hours performed under this Agreement. (g) Eight-Hour Workday. Contractor acknowledges that eight (8) hours labor constitutes a legal day’s work. Contractor shall comply with and be bound by Labor Code Section 1810. (h) Penalties for Excess Hours. Contractor shall comply with and be bound by the provisions of Labor Code Section 1813 concerning penalties for workers who work excess hours. The Contractor shall, as a penalty to the City, forfeit twenty-five dollars ($25) for each worker employed in the performance of this Agreement by the Contractor or by any subcontractor for each calendar day during which such worker is required or permitted to work more than eight (8) hours in any one calendar day and forty (40) hours in any one calendar week in violation of the provisions of Division 2, Part 7, Chapter 1, Article 3 of the Labor Code. Pursuant to Labor Code Section 1815, work performed by employees of Contractor in excess of eight (8) hours per day, and forty (40) hours during any one week shall be permitted upon public work upon compensation for all hours worked in excess of eight (8) hours per day at not less than one and one-half (1½) times the basic rate of pay. (i) Workers’ Compensation. California Labor Code Sections 1860 and 3700 provide that every employer will be required to secure the payment of compensation to its employees if it has employees. In accordance with the provisions of California Labor Code Section 1861, Contractor certifies as follows:
“I am aware of the provisions of Section 3700 of the Labor Code which require every employer to be insured against liability for workers' compensation or to undertake self-insurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the performance of the work of this contract.”
(j) Contractor’s Responsibility for Subcontractors. For every subcontractor who will perform work under this Agreement, Contractor shall be responsible for such subcontractor's compliance with Division 2, Part 7, Chapter 1 (commencing with Section 1720) of the California Labor Code and shall make such compliance a requirement in any contract with any subcontractor for work under this Agreement. Contractor shall take all actions necessary to enforce such contractual provisions and ensure subcontractor's compliance, including without limitation, conducting a review of the certified payroll records of the subcontractor on a periodic basis or upon becoming aware of the failure of the subcontractor to pay his or her workers the specified prevailing rate of wages. Contractor shall diligently take corrective action to halt or rectify any such failure by any subcontractor.
1.4 Licenses, Permits, Fees and Assessments.
Contractor shall obtain at its sole cost and expense such licenses, permits, registrations, and approvals as may be required by law for the performance of the services required by this Agreement.
Contractor shall have the sole obligation to pay for any fees, assessments and taxes, plus applicable penalties and interest, which may be imposed by law and arise from or are necessary for the Contractor’s
-5-
performance of the services required by this Agreement, and shall indemnify, defend and hold harmless City, its officers, employees or agents of City, against any such fees, assessments, taxes, penalties or interest levied, assessed or imposed against City hereunder.
1.5 Familiarity with Work.
By executing this Agreement, Contractor warrants that Contractor (i) has thoroughly investigated and considered the Scope of Work to be performed, (ii) has carefully considered how the work should be performed, and (iii) fully understands the facilities, difficulties and restrictions attending performance of the work under this Agreement. If the services involve work upon any site, Contractor warrants that Contractor has or will investigate the site and is or will be fully acquainted with the conditions there existing, prior to commencement of services hereunder.
1.6 Discovery of Unknown Conditions.
(a) Pursuant to Public Contract Code Section 7104, Contractor shall promptly, and before the following conditions are disturbed, notify the City, in writing, of any: (i) material Contractor believes may be hazardous waste as defined in Section 25117 of the Health & Safety Code required to be removed to a Class I, II, or III disposal site in accordance with existing law; (ii) subsurface, unknown, or latent physical conditions at the Project site, materially different from those indicated by information about the Project site made available to bidders prior to the deadline for submitting bids on the Project; or (iii) unknown physical conditions at the Project site of any unusual nature, different from those ordinarily encountered and generally recognized as inherent in work of the character provided for in this Agreement, that will materially affect the performance of Contractor’s services hereunder. (b) City shall promptly investigate the conditions, and if it finds that the conditions do materially differ, or do involve hazardous waste, and cause a decrease or increase in Contractor’s cost of, or the time required for, the performance of any part of the work, the City shall issue a change order in accordance with Section 1.11 of this Agreement.
(c) In the event that a dispute arises between City and Contractor whether the conditions materially differ, or involve hazardous waste, or cause a decrease or increase in Contractor's cost of, or time required for, performance of any part of the work, Contractor shall not be excused from any scheduled completion date set, but shall proceed with all work to be performed under this Agreement. Contractor shall retain any and all rights provided either by contract or by law, which pertain to the resolution of disputes and protests between the Parties.
1.7 Unidentified Utilities.
To the extent required by Government Code Section 4215, City will compensate Contractor for the cost of locating, repairing damage not due to the failure of Contractor to exercise reasonable care, and removing or relocating utility facilities not identified by City in the Contract Documents with reasonable accuracy, and for equipment on the Project necessarily idled during such work. Nothing herein shall be deemed to require City to indicate the presence of existing service laterals or appurtenances whenever the presence of such utilities on the Project site can be inferred from the presence of other visible facilities, such as buildings, meters, and junction boxes, on or adjacent to the Project site of the construction; provided, however, nothing herein shall relieve City from identifying main or trunklines in the plans and specifications. If Contractor, while performing the work, discovers utility facilities not identified by City in the plans or specifications, Contractor shall immediately notify City and the utility in writing. This Agreement is subject to Government Code Sections 4126 through 4216.9. Contractor must notify utilities
-6-
and obtain an identification number before excavation or be subject to liability for damages to subsurface installations.
1.8 Trench Excavation.
Pursuant to Labor Code Section 6705, if this Agreement is for more than $25,000 and requires the excavation of any trench or trenches five feet or more in depth, Contractor shall submit, in advance of such excavation, a detailed plan showing the design of shoring, bracing, sloping, or other provisions to be made for worker protection from the hazard of caving ground during the excavation of such trench or trenches. The plan shall be reviewed and accepted by the City, or a registered civil or structural engineer employed by the City to whom authority has been delegated, prior to the excavation. If the plan varies from the shoring system standards, the plan shall be prepared by a registered civil or structural engineer.
This Section 1.8 shall not be deemed to allow the use of a shoring, sloping, or protective system less effective than that required by the Construction Safety Orders (set forth in the California Code of Regulations, Title 8, Subchapter 4). This Section 1.8 shall not be construed to impose tort liability on the City or any of its employees. Full compensation for sheeting, shoring, bracing, sloping, and all other provisions required for worker protection shall be considered as included in the contract price shown in the appropriate Bid item in the Contract Documents, and no additional compensation will be allowed therefor.
1.9 Protection and Care of Work and Materials.
The Contractor shall adopt reasonable methods, including providing and maintaining storage facilities, during the life of this Agreement to furnish continuous protection to the work, and the equipment, materials, papers, documents, plans, studies and/or other components thereof to prevent losses or damages, and shall be responsible for all such damages, to persons or property, until acceptance of the work by City, except such losses or damages as caused by City’s own negligence. Stored materials shall be reasonably accessible for inspection. Contractor shall not, without City’s consent, assign, sell, mortgage, hypothecate, or remove equipment or materials which have been installed or delivered and which may be necessary for the completion of the work.
1.10 Warranty.
Contractor warrants all work under this Agreement (which for purposes of this Section shall be deemed to include unauthorized work which has not been removed or corrected and any non-conforming construction or materials incorporated into the work) to be of good quality and free from any defective or faulty material and workmanship. Contractor agrees that for a period of one year (or the period of time specified elsewhere in this Agreement, or the Contract Documents, or in any guarantee or warranty provided by any manufacturer or supplier of equipment or materials incorporated into the work, whichever is later) after the date of final acceptance of the Project by the City, Contractor shall within ten (10) days after being notified in writing by the City of any defect in the work or non-conformance of the work to the requirements under this Agreement, commence and prosecute with due diligence all work necessary to fulfill the terms of the warranty at its sole cost and expense. Notwithstanding the foregoing, Contractor shall act as soon as requested by the City in response to any emergency condition or situation. In addition, Contractor shall, at its sole cost and expense, repair, remove and replace any portions of the work (or work of its subcontractors) damaged by its defective work or which becomes damaged in the course of repairing or replacing defective work. For any work so corrected, Contractor's obligation hereunder to correct defective work shall be reinstated for an additional one-year period, commencing with the date of acceptance of such corrected work. Contractor shall perform such tests as the City may require to verify that any corrective actions, including, without limitation, redesign, repairs, and replacements comply with
-7-
the requirements of this Agreement. All costs associated with such corrective actions and testing, including the removal, replacement, and reinstitution of equipment and materials necessary to gain access, shall be the sole responsibility of the Contractor. All warranties and guarantees of subcontractors, suppliers, and manufacturers with respect to any portion of the work, whether express or implied, are deemed to be obtained by Contractor for the benefit of the City, regardless of whether or not such warranties and guarantees have been transferred or assigned to the City by separate agreement and Contractor agrees to enforce such warranties and guarantees, if necessary, on behalf of the City. In the event that Contractor fails to perform its obligations under this Section, or under any other warranty or guaranty under this Agreement or the Contract Documents, to the reasonable satisfaction of the City, the City shall have the right to correct and replace any defective or non-conforming work or materials at Contractor's sole expense. Contractor shall be obligated to fully reimburse the City for any expenses incurred hereunder upon demand.
1.11 Additional Work and Change Orders.
Change orders shall be processed as provided in the Standard Specifications, as may be amended by the Contract Documents and as follows:
The City Manager or their designee shall have authority to fully execute change orders up to any compensation or time extension constraints that may be imposed by the City Council, if any at the time of approval of this agreement.
1.12 Grant Fund Requirements.
(a) Federal Funds; Uniform Requirements. If the Project is funded in whole or in part by federal funds, as indicated in Contract Documents, City and Contractor shall comply with all applicable provisions of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200) (“Uniform Requirements”), which are incorporated herein by reference.
In the event of any inconsistency between the applicable Uniform Requirements and the other provisions of the Agreement, the applicable Uniform Requirements shall prevail. (b) Grant Requirements. If the Project is funded in whole or in part by any grant funds, as indicated in the Contract Documents, City and Contractor shall comply with all requirements and conditions of the grant(s), which are incorporated herein by this reference.
1.13 Special Requirements.
Additional terms and conditions of this Agreement, if any, which are made a part hereof are set forth in the “Special Requirements,” attached hereto as Exhibit B and incorporated herein by this reference. In the event of a conflict between the provisions of Exhibit B and any other provisions of this Agreement, the provisions of Exhibit B shall govern. (If REQUIRED CONTRACT PROVISIONS FOR FEDERAL-AID CONSTRUCTION CONTRACTS applies, attach as Exhibit “B”) ARTICLE 2. COMPENSATION AND METHOD OF PAYMENT.
2.1 Contract Sum.
Subject to any limitations set forth in this Agreement, City agrees to pay Contractor the amounts set forth in Contractor’s Bid, attached hereto as Exhibit A and incorporated herein by this reference.
Subject to any additions or deductions that may be made by change order or amendment, and any penalties
-8-
or damages that may be assessed against Contractor, Contractor shall receive total compensation, including reimbursement of Contractor’s expenses, of Three Hundred Twenty Thousand, One Hundred Thirty Five Dollars ($320,135). (“Contract Sum”) for completion of the work. The Contract Sum shall constitute full compensation for furnishing all materials and for doing all the work contemplated and embraced in this Agreement; and also for all loss or damage arising out of the nature of the work, or from the action of the elements, or from any unforeseen difficulties or obstructions which may arise or be encountered in the prosecution of the work until its acceptance by the City, and for all risks of every description connected with the work; also for all expenses incurred by or in consequence of the suspension or discontinuance of work and for well and faithfully completing the work, and the whole thereof, in the manner and according to the plans and specifications, and the requirements of the Contract Documents and this Agreement. The Contract Sum shall be made in the form of progress payments and a final payment as provided in this Section 2 and the Contract Documents unless the Bid or Contract Documents explicitly provide for a lump sum payment.
Compensation may include reimbursement for actual and necessary expenditures for reproduction costs, telephone expenses, and travel expenses approved by the Project Manager in advance, or actual subcontractor expenses of an approved subcontractor pursuant to Section 4.5, and only if specified in Exhibit A. The Contract Sum shall include the attendance of Contractor at all project meetings reasonably deemed necessary by the City. Coordination of the performance of the work with City is a critical component of the services. If Contractor is required to attend additional meetings to facilitate such coordination, Contractor shall not be entitled to any additional compensation for attending said meetings.
2.2 Invoices.
Each month Contractor shall furnish to City an original invoice for all work performed and expenses incurred during the preceding month in a form approved by City’s Finance Director. By submitting an invoice for payment under this Agreement, Contractor is certifying compliance with all provisions of this Agreement.
All invoices shall include a copy of Contractor’s Certified Payroll and proof that Certified Payroll has been submitted to the DIR. Contractor shall also submit a list of the prevailing wage rates (including federal prevailing wage rates, if applicable) for all employees and subcontractors providing services under this Agreement, as applicable, with Contractor’s first invoice. If these rates change at any time during the term of this Agreement, Contractor shall submit a new list of rates to the City with its first invoice following the effective date of the rate change.
2.3 Payment.
City shall, as soon as practicable, independently review each invoice submitted by the Contractor to determine whether the work performed, and expenses incurred comply with the provisions of this Agreement. Except as to any charges for work performed or expenses incurred by Contractor which are disputed by City, City will cause Contractor to be paid within thirty (30) days of receipt of Contractor’s correct and undisputed invoice; however, Contractor acknowledges and agrees that due to City warrant run procedures, the City cannot guarantee that payment will occur within this time period. In the event that City does not cause Contractor to be paid within thirty (30) days of receipt of an undisputed and properly submitted invoice, Contractor shall be entitled to the payment of interest to the extent allowed under Public Contract Code Section 20104.50. In the event any charges or expenses are disputed by City, the original invoice shall be returned by City to Contractor, not later than seven (7) days after receipt by the City, for correction and resubmission. Returned invoices shall be accompanied by a document setting forth in writing the reasons why the payment request was rejected. Review and payment by the City of
-9-
any invoice provided by the Contractor shall not constitute a waiver of any rights or remedies provided herein or any applicable law.
2.4 Retention; Substitution of Securities.
City will deduct a five percent (5%) retention from all progress payments. In accordance with Public Contract Code Section 22300, which is hereby incorporated into this Agreement, City shall permit the substitution of securities for any moneys withheld by City to ensure performance under this Agreement. The retention held by the City shall be released within sixty (60) days after the date of completion of the work and the Project, as required by Government Code Section 7107. In the event of a dispute between City and Contractor, City may withhold from the final payment an amount not to exceed one hundred fifty percent (150%) of the disputed amount.
ARTICLE 3. PERFORMANCE SCHEDULE
3.1 Schedule of Performance.
Contractor shall begin work within fifteen (15) calendar days after receiving a Notice to Proceed from the City and the work shall be completed within Ninety (90) consecutive calendar days from the date on which Contractor received the Notice to Proceed, or otherwise in accordance with any schedule contained in or required to be provided by the Contract Documents, and any revisions thereof approved by the City in writing. Time is of the essence. If the work is not completed within said time period, liquidated damages shall apply as set forth below.
3.2 Force Majeure.
The time period(s) for performance of the services rendered pursuant to this Agreement shall be extended because of any delays due to unforeseeable causes beyond the control and without the fault or negligence of the Contractor, including, but not restricted to, acts of God or of the public enemy, unusually severe weather, fires, earthquakes, floods, epidemics, quarantine restrictions, riots, strikes, freight embargoes, wars, litigation, and/or acts of any governmental agency, including the City, if the Contractor shall within ten (10) days of the commencement of such delay notify the Project Manager in writing of the causes of the delay. The Project Manager shall ascertain the facts and the extent of delay and extend the time for performing the services for the period of the enforced delay when and if in the judgment of the Project Manager such delay is justified. The Project Manager’s determination shall be final and conclusive upon the parties to this Agreement. In no event shall Contractor be entitled to recover damages against the City for any delay in the performance of this Agreement, however caused, Contractor’s sole remedy being extension of this Agreement pursuant to this Section.
3.3 Liquidated Damages.
Since the determination of actual damages for any delay in performance of this Agreement would be extremely difficult or impractical to determine in the event of a breach of this Agreement, the Contractor and its sureties shall be liable for and shall pay to the City the sum of FIVE HUNDRED DOLLARS AND ZERO CENTS ($500.00) as liquidated damages for each working day of delay in the performance of any service required hereunder. The City may withhold any accrued liquidated damages from any monies payable on account of services performed by the Contractor. To the extent required by Government Code Section 4215, Contractor shall not be assessed liquidated damages for delay in completion of the work when such delay was caused by the failure of the City or owner of the utility to provide for removal or relocation of utility facilities.
-10-
3.4 Inspection and Final Acceptance.
City may inspect and accept or reject any of Contractor’s work under this Agreement, either during performance or when completed. If City finds that Contractor’s work does not meet the requirements and standards provided in the Bid Document, Contractor shall remedy any defects in the work at Contractor’s sole expense following notice by the City. City shall accept work by a timely written acceptance, otherwise work shall be deemed to have been rejected. City’s acceptance shall be conclusive as to such work except with respect to latent defects, fraud and such gross mistakes as to amount to fraud. Acceptance of any work by City shall not constitute a waiver of any of the provisions of this Agreement including, but not limited to, Articles 1 and 5, pertaining to warranty and indemnification and insurance, respectively.
ARTICLE 4. COORDINATION OF WORK
4.1 Representatives and Personnel of Contractor.
The following principals of Contractor (“Principals”) are hereby designated as being the principals and representatives of Contractor authorized to act in its behalf with respect to the work specified herein and make all decisions in connection therewith:
(Name) (Title)
(Name) (Title)
It is expressly understood that the experience, knowledge, capability, and reputation of the foregoing Principals were a substantial inducement for City to enter into this Agreement. Therefore, the Principals shall be responsible during the term of this Agreement for directing all activities of Contractor and devoting sufficient time to personally supervise the services hereunder. All personnel of Contractor, and any authorized agents, shall at all times be under the exclusive direction and control of the Principals.
For purposes of this Agreement, the Principals may not be replaced, nor may their responsibilities be substantially reduced by Contractor without the express written approval of City. Additionally, Contractor shall make every reasonable effort to maintain the stability and continuity of Contractor’s staff and subcontractors, if any, assigned to perform the services required under this Agreement. Contractor shall notify City of any changes in Contractor’s staff and subcontractors, if any, assigned to perform the services required under this Agreement, prior to and during any such performance.
4.2 Status of Contractor.
Contractor shall have no authority to bind City in any manner, or to incur any obligation, debt, or liability of any kind on behalf of or against City, whether by contract or otherwise, unless such authority is expressly conferred under this Agreement or is otherwise expressly conferred in writing by City.
Contractor shall not at any time or in any manner represent that Contractor or any of Contractor’s officers, employees, or agents are in any manner officials, officers, employees, or agents of City. Neither Contractor, nor any of Contractor’s officers, employees, or agents, shall obtain any rights to retirement, health care or any other benefits which may otherwise accrue to City’s employees. Contractor expressly waives any claim Contractor may have to any such rights.
-11-
4.3 Project Manager.
The “Project Manager” for the City shall be the City Engineer or any other person as may be designated by the Project Manager. It shall be the Contractor’s responsibility to assure that the Project Manager is kept informed of the progress of the performance of the services and the Contractor shall refer any decisions which must be made by City to the Project Manager. Unless otherwise specified herein, any approval of City required hereunder shall mean the approval of the Project Manager. The Project Manager shall have authority, if specified in writing by the City Manager, to sign all documents on behalf of the City required hereunder to carry out the terms of this Agreement.
4.4 Independent Contractor.
Neither the City nor any of its employees shall have any control over the manner, mode or means by which Contractor, its agents or employees, perform the services required herein, except as otherwise set forth herein. City shall have no voice in, or authority over, the selection, discharge, supervision or control of Contractor’s employees, servants, representatives or agents, or in fixing their number, compensation or hours of service. Contractor shall perform all services required herein as an independent contractor of City and shall remain at all times as to City a wholly independent contractor with only such obligations as are consistent with that role. Contractor shall not at any time or in any manner represent that it or any of its agents or employees are agents or employees of City. City shall not in any way or for any purpose become or be deemed to be a partner of Contractor in its business or otherwise or a joint venturer or a member of any joint enterprise with Contractor.
4.5 Prohibition Against Subcontracting or Assignment.
The experience, knowledge, capability and reputation of Contractor, its Principals and employees were a substantial inducement for the City to enter into this Agreement. Therefore, Contractor shall not contract with any other entity to perform in whole or in part the services required hereunder without the express written approval of the City. All subcontractors shall obtain, at its or Contractor’s expense, such licenses, permits, registrations and approvals (including from the City) as may be required by law for the performance of any services or work under this Agreement. In addition, neither this Agreement nor any interest herein may be transferred, assigned, conveyed, hypothecated or encumbered voluntarily or by operation of law, whether for the benefit of creditors or otherwise, without the prior written approval of City. Transfers restricted hereunder shall include the transfer to any person or group of persons acting in concert of more than twenty five percent (25%) of the present ownership and/or control of Contractor, taking all transfers into account on a cumulative basis. In the event of any such unapproved transfer, including any bankruptcy proceeding, this Agreement shall be void. No approved transfer shall release the Contractor or any surety of Contractor of any liability hereunder without the express consent of City.
ARTICLE 5. INSURANCE, INDEMNIFICATION AND BONDS
5.1 Insurance Coverages.
Without limiting Contractor’s indemnification obligation to the City (as set forth below), and prior to commencement of any services under this Agreement, Contractor shall obtain, provide and maintain at its own expense during the term of this Agreement, policies of insurance of the type and amounts described below and, in a form, satisfactory to City.
(a) General liability insurance. Contractor shall maintain commercial general liability insurance with coverage at least as broad as Insurance Services Office form CG 00 01, in an amount not
-12-
less than $1,000,000 per occurrence, $2,000,000 general aggregate, for bodily injury, personal injury, and property damage. The policy must include contractual liability that has not been amended. Any endorsement restricting standard ISO “insured contract” language will not be accepted. (b) Automobile liability insurance. Contractor shall maintain automobile insurance at least as broad as Insurance Services Office form CA 00 01 covering bodily injury and property damage for all activities of the Contractor arising out of or in connection with Services to be performed under this Agreement, including coverage for any owned, hired, non-owned or rented vehicles, in an amount not less than $1,000,000 combined single limit for each accident. (c) Professional liability (errors & omissions) insurance. Contractor shall maintain professional liability insurance that covers the Services to be performed in connection with this Agreement, in the minimum amount of $1,000,000 per claim and in the aggregate. Any policy inception date, continuity date, or retroactive date must be before the effective date of this Agreement and Contractor agrees to maintain continuous coverage through a period no less than three (3) years after completion of the services required by this Agreement.
(d) Workers’ compensation insurance. Contractor shall maintain Workers’ Compensation Insurance (Statutory Limits) and Employer’s Liability Insurance (with limits of at least $1,000,000). (e) Builder’s Risk Insurance. Contractor shall maintain Builder’s Risk (Course of Construction) insurance utilizing an “All Risk” (Special Perils) coverage form, with limits equal to the completed value of the Project and no coinsurance penalty provisions or provisional limit provisions. The policy must include: (1) coverage for any ensuing loss from faulty workmanship, nonconforming work, omission or deficiency in design or specifications; (2) coverage against machinery accidents and operational testing; (3) coverage for removal of debris, and insuring the buildings, structures, machinery, equipment, materials, facilities, fixtures and all other properties constituting a part of the Project; (4) ordinance or law coverage for contingent rebuilding, demolition, and increased costs of construction; (5) transit coverage (unless insured by the supplier or receiving contractor), with sub-limits sufficient to insure the full replacement value of any key equipment item; (6) ocean marine cargo coverage insuring any Project materials or supplies, if applicable; (7) coverage with sub-limits sufficient to insure the full replacement value of any property or equipment stored either on or off the Project site or any staging area. (f) Pollution Liability Insurance. Contractor shall maintain Environmental Impairment Liability insurance, written on a Contractor’s Pollution Liability form or other form acceptable to City providing coverage for liability arising out of sudden, accidental, and gradual pollution and remediation.
The policy limit shall be no less than $1,000,000 per claim and in the aggregate. All activities contemplated in this Agreement shall be specifically scheduled on the policy as “covered operations.” The policy shall provide coverage for the hauling of waste from the Project site to the final disposal location, including non-owned disposal sites.
5.2 General Insurance Requirements.
(a) Subcontractors. Contractor shall include all subcontractors as insureds under its policies or shall furnish separate certificates and certified endorsements for each subcontractor. All coverages for subcontractors shall include all of the requirements stated herein. (b) Proof of Insurance. Contractor shall provide certificates of insurance to City as evidence of the insurance coverage required herein, along with a waiver of subrogation endorsement for workers’ compensation. Insurance certificates and endorsements must be approved by City’s Risk Manager prior
-13-
to commencement of performance. Current certification of insurance shall be kept on file with City at all times during the term of this Agreement. City reserves the right to require complete, certified copies of all required insurance policies, at any time.
(c) Duration of Coverage. Contractor shall procure and maintain for the duration of this Agreement insurance against claims for injuries to persons or damages to property, which may arise from or in connection with the performance of the services hereunder by Contractor, its agents, representatives, employees or subcontractors.
(d) Primary/noncontributing. Coverage provided by Contractor shall be primary and any insurance or self-insurance procured or maintained by City shall not be required to contribute with it. The limits of insurance required herein may be satisfied by a combination of primary and umbrella or excess insurance. Any umbrella or excess insurance shall contain or be endorsed to contain a provision that such coverage shall also apply on a primary and non- contributory basis for the benefit of City before the City’s own insurance or self-insurance shall be called upon to protect it as a named insured. (e) City’s Rights of Enforcement. In the event any policy of insurance required under this Agreement does not comply with these specifications or is canceled and not replaced, City has the right but not the duty to obtain the insurance it deems necessary, and any premium paid by City will be promptly reimbursed by Contractor or City will withhold amounts sufficient to pay the premium from any payments due to the Contractor. In the alternative, City may cancel this Agreement. (f) Waiver of Subrogation. All insurance coverage maintained or procured pursuant to this agreement shall be endorsed to waive subrogation against City, its elected or appointed officers, agents, officials, employees and volunteers or shall specifically allow Contractor or others providing insurance evidence in compliance with these specifications to waive their right of recovery prior to a loss. Contractor hereby waives its own right of recovery against City and shall require similar written express waivers and insurance clauses from each of its subcontractors.
(g) Enforcement of Contract Provisions (non-estoppel). Contractor acknowledges and agrees that any actual or alleged failure on the part of the City to inform Contractor of non-compliance with any requirement imposes no additional obligations on the City nor does it waive any rights hereunder. (h) Requirements Not Limiting. Requirements of specific coverage features or limits contained in this Section are not intended as a limitation on coverage, limits or other requirements, or a waiver of any coverage normally provided by any insurance. Specific reference to a given coverage feature is for purposes of clarification only as it pertains to a given issue and is not intended by any Party or insured to be all inclusive, or to the exclusion of other coverage, or a waiver of any type. If the Contractor maintains higher limits than the minimums shown above, the City requires and shall be entitled to coverage for the higher limits maintained by the Contractor. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City. (i) Notice of Cancellation. Contractor agrees to oblige its insurance agent or broker and insurers to provide to City with a thirty (30) day notice of cancellation (except for nonpayment for which a ten (10) day notice is required) or nonrenewal of coverage for each required coverage. (j) Additional Insured Status. General liability policies shall provide or be endorsed to provide that City and its officers, officials, employees, and agents, and volunteers shall be additional insureds under such policies. This provision shall also apply to any excess/umbrella liability policies.
-14-
(k) Prohibition of Undisclosed Coverage Limitations. None of the coverages required herein will be in compliance with these requirements if they include any limiting endorsement of any kind that has not been first submitted to City and approved of in writing. (l) Separation of Insureds. A severability of interests provision must apply for all additional insureds ensuring that Contractor’s insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the insurer’s limits of liability. The policy(ies) shall not contain any cross-liability exclusions.
(m) Pass Through Clause. Contractor agrees to ensure that its subconsultants, subcontractors, and any other Party involved with the Project who is brought onto or involved in the Project by Contractor, provide the same minimum insurance coverage and endorsements required of Contractor. Contractor agrees to monitor and review all such coverage and assumes all responsibility for ensuring that such coverage is provided in conformity with the requirements of this Section. Contractor agrees that upon request, all agreements with consultants, subcontractors, and others engaged in the Project will be submitted to City for review.
(n) Agency’s Right to Revise Specifications. The City reserves the right at any time during the term of this Agreement to change the amounts and types of insurance required by giving the Contractor ninety (90) days advance written notice of such change. If such change results in substantial additional cost to the Contractor, the City and Contractor may renegotiate Contractor’s compensation. (o) Self-Insured Retentions. Any self-insured retentions must be declared to and approved by City. City reserves the right to require that self-insured retentions be eliminated, lowered, or replaced by a deductible. Self-insurance will not be considered to comply with these specifications unless approved by City.
(p) Timely Notice of Claims. Contractor shall give City prompt and timely notice of claims made or suits instituted that arise out of or result from Contractor’s performance under this Agreement, and that involve or may involve coverage under any of the required liability policies. (q) Additional Insurance. Contractor shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the work.
5.3 Indemnification.
Contractor shall indemnify, defend with legal counsel approved by City, and hold harmless City, its officers, officials, employees, agents, representatives, and volunteers (collectively, “Indemnitees”) from and against all liability, loss, damage, expense, cost (including, without limitation, reasonable legal counsel fees, expert fees and all other costs and fees of litigation) of every nature arising out of or in connection with Contractor’s (or its employees’, officers’, agents’, or subcontractor’s) performance of the work hereunder or its failure to comply with any of its obligations contained in this Agreement, including any injuries to or death of any person (including, but not limited to, workers and the public), or damage to property resulting from the construction of the work or by or in consequence of any negligence regarding the work, use of improper materials or equipment in construction of the work, negligence or refusal of Contractor to faithfully perform the work and all of Contractor's obligations under this Agreement, or by or on account of any act or omission by the Contractor (or it employees /agents) or its subcontractors (or their employees / agents) during the progress of the work or at any time before the completion and final acceptance of the Project by the City, except with respect to any loss or damage
-15-
which is caused by the sole or active negligence or willful misconduct of the City as determined by a court of competent jurisdiction. Should conflict of interest principles preclude a single legal counsel from representing both City and Contractor, or should City otherwise find Contractor’s legal counsel unacceptable, then Contractor shall reimburse the City its costs of defense, including, without limitation, reasonable attorneys’ fees, expert fees and all other costs and fees of litigation. Contractor shall promptly pay any final judgment rendered against the City (and its officers, officials, employees and volunteers) with respect to claims determined by a trier of fact to have been the result of the Contractor’s negligent, reckless or wrongful performance. It is expressly understood and agreed that the foregoing provisions are intended to be as broad and inclusive as is permitted by the law of the State of California and will survive termination or expiration of this Agreement.
Contractor’s obligations under this Section apply regardless of whether or not such claim, charge, damage, demand, action, proceeding, loss, stop notice, cost, expense, judgment, civil fine or penalty, or liability was caused in part or contributed to by the City or any Indemnitees. In instances where City or its Indemnitees is shown to have been actively negligent and where City’s active negligence accounts for only a percentage of the liability involved, the obligation of Contractor will be for that entire portion or percentage of liability not attributable to the active negligence of the City.
5.4 Notification of Third-Party Claims.
City shall timely notify Contractor of the receipt of any third-Party claim relating to the work under this Agreement. City shall be entitled to recover from Contractor its reasonable costs incurred in providing such notification.
5.5 Performance and Labor Bonds.
Concurrently with execution of this Agreement Contractor shall deliver to the City, the following in the form required under the Contract Documents or otherwise by the City Clerk:
(a) A performance bond in the amount of the Contract Sum of this Agreement, which secures the faithful performance of this Agreement (“Performance Bond”). (b) A labor and materials bond in the amount of the Contract Sum of this Agreement, which secures the payment of all persons furnishing labor and/or materials in connection with the work under this Agreement (“Payment Bond”).
(c) A warranty bond, guaranteeing the Contractor’s warranty under Section 1.11 of this Agreement, in an amount not less than 5% of the Contract Sum.
The bonds shall contain the original notarized signature of an authorized officer of the surety and affixed thereto shall be a certified and current copy of his/her power of attorney. The bonds shall be unconditional and remain in force during the entire term of this Agreement.
City shall release the Performance Bond and Payment Bond when the following have occurred:
(a) Contractor has made a written request for release and provided evidence of satisfaction of all other requirements under Article 5 of this Agreement, (b) the work for the Project has be finally accepted by the City, and (c) after passage of the time within which lien claims are required to be made pursuant to applicable laws; if lien claims have been timely filed, City shall hold the Payment Bond until such claims have been resolved, Contractor has provided statutory bond, or otherwise as required by applicable law.
-16-
5.6 Sufficiency of Insurer or Surety.
Insurance and bonds required by this Agreement shall be satisfactory only if issued by companies qualified to do business in California, rated “A” or better in the most recent edition of Best’s Rating Guide, The Key Rating Guide or in the Federal Register, and only if they are of a financial category Class VII or better, unless such requirements are waived by the Risk Manager of the City (“Risk Manager”) due to unique circumstances. If this Agreement continues for more than 3 years duration, or in the event the Risk Manager determines that the work or services to be performed under this Agreement creates an increased or decreased risk of loss to the City, the Contractor agrees that the minimum limits of the insurance policies and the performance bond required under Article 5 of this Agreement may be changed accordingly upon receipt of written notice from the Risk Manager.
ARTICLE 6. RECORDS, REPORTS, AND RELEASE OF INFORMATION
6.1 Records.
Contractor shall keep, and require subcontractors to keep, such ledgers, books of accounts, invoices, vouchers, canceled checks, reports, studies, certified and accurate copies of payroll records in compliance with all applicable laws, or other documents relating to the disbursements charged to City and services performed hereunder (the “books and records”), as shall be necessary to perform the services required by this Agreement and enable the Project Manager to evaluate the performance of such services.
Any and all such documents shall be maintained in accordance with generally accepted accounting principles and shall be complete and detailed. The Project Manager shall have full and free access to such books and records at all times during normal business hours of City, including the right to inspect, copy, audit and make records and transcripts from such records. Such records shall be maintained for a period of 3 years following completion of the services hereunder, and the City shall have access to such records in the event any audit is required. In the event of dissolution of Contractor’s business, custody of the books and records may be given to City, and access shall be provided by Contractor’s successor in interest.
Notwithstanding the above, the Contractor shall fully cooperate with the City in providing access to the books and records if a public records request is made and disclosure is required by law including but not limited to the California Public Records Act.
6.2 Reports.
Contractor shall periodically prepare and submit to the Project Manager such reports concerning the performance of the services required by this Agreement as the Project Manager shall require.
Contractor hereby acknowledges that the City is greatly concerned about the cost of work and services to be performed pursuant to this Agreement. For this reason, Contractor agrees that if Contractor becomes aware of any facts, circumstances, techniques, or events that may or will materially increase or decrease the cost of the work or services contemplated herein or, if Contractor is providing design services, the cost of the project being designed, Contractor shall promptly notify the Project Manager of said fact, circumstance, technique or event and the estimated increased or decreased cost related thereto.
6.3 Ownership of Documents.
All drawings, specifications, maps, designs, photographs, studies, surveys, data, notes, computer files, reports, records, documents and other materials (the “documents and materials”) prepared by Contractor, its employees, subcontractors and agents in the performance of this Agreement shall be the property of City and shall be delivered to City upon request of the Project Manager or upon the termination of this Agreement, and Contractor shall have no claim for further employment or additional compensation
-17-
as a result of the exercise by City of its full rights of ownership use, reuse, or assignment of the documents and materials hereunder. Any use, reuse, or assignment of such completed documents for other projects and/or use of uncompleted documents without specific written authorization by the Contractor will be at the City’s sole risk and without liability to Contractor, and Contractor’s guarantee and warranties shall not extend to such use, reuse, or assignment. Contractor may retain copies of such documents for its own use. Contractor shall have an unrestricted right to use the concepts embodied therein. All subcontractors shall provide for assignment to City of any documents or materials prepared by them, and in the event Contractor fails to secure such assignment, Contractor shall indemnify City for all damages resulting therefrom. Moreover, Contractor with respect to any documents and materials that may qualify as “works made for hire” as defined in 17 U.S.C. § 101, such documents and materials are hereby deemed “works made for hire” for the City.
6.4 Confidentiality and Release of Information.
(a) Information gained or work product produced by Contractor in its performance of this Agreement shall be considered confidential unless such information is in the public domain or already known to Contractor. Contractor shall not release or disclose any such information or work product to persons or entities other than City without prior written authorization from the Project Manager. (b) Contractor, its officers, employees, agents, or subcontractors, shall not, without prior written authorization from the Project Manager or unless requested by the City Attorney, voluntarily provide documents, declarations, letters of support, testimony at depositions, response to interrogatories or other information concerning the work performed under this Agreement. Response to a subpoena or court order shall not be considered "voluntary" provided Contractor gives City notice of such court order or subpoena.
(c) If Contractor, or any officer, employee, agent, or subcontractor of Contractor, provides any information or work product in violation of this Agreement, then City shall have the right to reimbursement and indemnity from Contractor for any damages, costs and fees, including attorneys’ fees, caused by or incurred as a result of Contractor’s conduct. (d) Contractor shall promptly notify City should Contractor, its officers, employees, agents or subcontractors be served with any summons, complaint, subpoena, notice of deposition, request for documents, interrogatories, request for admissions or other discovery request, court order or subpoena from any Party regarding this Agreement and the work performed with respect to the Project. City retains the right, but has no obligation, to represent Contractor or be present at any deposition, hearing or similar proceeding. Contractor agrees to cooperate fully with City and to provide City with the opportunity to review any response to discovery requests provided by Contractor. However, this right to review any such response does not imply or mean the right by City to control, direct, or rewrite said response.
ARTICLE 7. ENFORCEMENT OF AGREEMENT AND TERMINATION
7.1 California Law.
This Agreement shall be interpreted, construed, and governed both as to validity and to performance of the Parties in accordance with the laws of the State of California. Legal actions concerning any dispute, claim or matter arising out of or in relation to this Agreement shall be instituted in the Superior Court of the County of Fresno, State of California, or any other appropriate court in such county, and Contractor covenants and agrees to submit to the personal jurisdiction of such court in the event of such action. In the event of litigation in a U.S. District Court, venue shall lie exclusively in the Central District
-18-
of California, in the County of Fresno, State of California.
7.2 Termination.
The City may terminate this Agreement and be relieved of the payment of any consideration to Contractor should Contractor fail to perform the covenants herein contained or contained in the Specifications at the time and in the manner as required. In the event of such termination, the City may proceed with the work in any manner deemed proper by the City. The cost to the City shall be deducted from any sum due the Contractor under this Agreement, and the balance, if any, shall be paid to the Contractor upon demand.
7.3 Dispute Resolution Process.
(a) Section 20104 et seq. of the California Public Contract Code prescribes a process utilizing informal conferences, non-binding judicial-supervised mediation, and judicial arbitration to resolve disputes on construction claims of $375,000 or less. Additionally, Section 9204 of the Public Contract Code prescribes a process for negotiation and mediation to resolve disputes on construction claims. The intent of this Section is to implement Sections 20104 et seq. and Section 9204 of the California Public Contract Code. This Section shall be construed to be consistent with said statutes. (b) For purposes of these procedures, “claim” means a separate demand by the Contractor, after the City has denied Contractor’s timely and duly made request for payment for extra work and/or a time extension, for (A) a time extension, (B) payment of money or damages arising from work done by or on behalf of the Contractor pursuant to this Agreement and payment of which is not otherwise expressly provided for or the Contractor is not otherwise entitled to, or (C) an amount the payment of which is disputed by the City.
(c) The following requirements apply to all claims to which this Section applies:
i. Claim Submittal. The claim shall be in writing and include the documents necessary to substantiate the claim. Claims governed by this procedure must be filed on or before the date of final payment. Nothing in this Section is intended to extend the time limit or supersede notice requirements otherwise provided in this Agreement for the filing of claims, including all requirements pertaining to compensation or payment for extra work, disputed work, and/or changed conditions. Failure to follow such contractual requirements shall bar any claims or subsequent lawsuits for compensation or payment thereon.
ii. Supporting Documentation. The Contractor shall submit all claims in the following format:
1. Summary of the claim, including references to the specific Bid Document provisions or provisions under this Agreement upon which the claim is based.
2. List of documents relating to claim: (a) Specifications, (b) Drawings, (c) Clarifications (Requests for Information), (d) Schedules, and (e) Other.
3. Chronology of events and correspondence related to the claim.
4. Statement of grounds for the claim.
-19-
5. Analysis of the claim’s cost, if any.
6. Analysis of the claim’s time/schedule impact, if any. (d) City’s Response. Upon receipt of a claim pursuant to this Section, City shall conduct a reasonable review of the claim and, within a period not to exceed 45 days, shall provide the Contractor a written statement identifying what portion of the claim is disputed and what portion is undisputed. Any payment due on an undisputed portion of the claim will be processed and made within 60 days after the City issues its written statement.
i. If the City needs approval from the City Council to provide the Contractor a written statement identifying the disputed portion and the undisputed portion of the claim, and the City Council does not meet within the 45 days or within the mutually agreed to extension of time following receipt of a claim sent by registered mail or certified mail, return receipt requested, the City shall have up to three days following the next duly publicly noticed meeting of the City Council after the 45-day period, or extension, expires to provide the Contractor a written statement identifying the disputed portion and the undisputed portion.
ii. Within 30 days of receipt of a claim, the City may request in writing additional documentation supporting the claim or relating to defenses or claims the City may have against the Contractor. If additional information is thereafter required, it shall be requested and provided pursuant to this subdivision, upon mutual agreement of City and the Contractor. iii. The City’s written response to the claim, as further documented, shall be submitted to the Contractor within 30 days (if the claim is less than $50,000, within 15 days) after receipt of the further documentation, or within a period of time no greater than that taken by the Contractor in producing the additional information or requested documentation, whichever is greater. (e) Meet and Confer. If the Contractor disputes the City’s written response, or the City fails to respond within the time prescribed, the Contractor may so notify the City, in writing, either within 15 days of receipt of the City’s response or within 15 days of the City’s failure to respond within the time prescribed, respectively, and demand an informal conference to meet and confer for settlement of the issues in dispute. Upon receipt of a demand, the City shall schedule a meet and confer conference within 30 days for settlement of the dispute.
(f) Mediation. Within 10 business days following the conclusion of the meet and confer conference, if the claim or any portion of the claim remains in dispute, the City shall provide the Contractor a written statement identifying the portion of the claim that remains in dispute and the portion that is undisputed. Any payment due on an undisputed portion of the claim shall be processed and made within 60 days after the City issues its written statement. Any disputed portion of the claim, as identified by the contractor in writing, shall be submitted to nonbinding mediation, with the City and the Contractor sharing the associated costs equally. The City and Contractor shall mutually agree to a mediator within ten (10) business days after the disputed portion of the claim has been identified in writing, unless the Parties agree to select a mediator at a later time.
i. If the Parties cannot agree upon a mediator, each Party shall select a mediator and those mediators shall select a qualified neutral third Party to mediate with regard to the disputed portion of the claim. Each Party shall bear the fees and costs charged by its respective mediator in connection with the selection of the neutral mediator.
-20-
ii. For purposes of this Section, mediation includes any nonbinding process, including, but not limited to, neutral evaluation or a dispute review board, in which an independent third Party or board assists the Parties in dispute resolution through negotiation or by issuance of an evaluation.
Any mediation utilized shall conform to the timeframes in this Section. iii. Unless otherwise agreed to by the City and the Contractor in writing, the mediation conducted pursuant to this Section shall excuse any further obligation under Public Contract Code Section 20104.4 to mediate after litigation has been commenced. iv. All unresolved claims shall be considered jointly in a single mediation, unless a new unrelated claim arises after mediation is completed. (g) City’s Responses. The City’s failure to respond to a claim from the Contractor within the time periods described in this Section or to otherwise meet the time requirements of this Section shall result in the claim being deemed rejected in its entirety. A claim that is denied by reason of the City’s failure to have responded to a claim, or its failure to otherwise meet the time requirements of this Section, shall not constitute and adverse finding with regard to the merits of the claim or the responsibility of qualifications of the Contractor. City’s failure to respond shall not waive City’s rights to any subsequent procedures for the resolution of disputed claims.
(h) Government Code Claims. If following the mediation, the claim or any portion remains in dispute, the Contractor must comply with the claim procedures set forth in Government Code Section 900 et seq. prior to filing any lawsuit against the City. Such Government Code claims and any subsequent lawsuit based upon the Government Code claims shall be limited to those matters that remain unresolved after all procedures pertaining to extra work, disputed work, construction claims, and/or changed conditions, including any required mediation, have been followed by Contractor. If no such Government Code claim is submitted, or if the prerequisite contractual requirements are not satisfied, no action against the City may be filed. A Government Code claim must be filed no earlier than the date that Contractor completes all contractual prerequisites to filing a Government Code claim, including any required mediation. A Government Code claim shall be inclusive of all unresolved claims unless a new unrelated claim arises after the Government Code claim is submitted. For purposes of Government Code Section 900 et seq., the running of the period of time within which a claim must be filed shall be tolled from the time the Contractor submits his or her written claim to the City until the time the claim is denied, including any period of time utilized by the meet and confer conference or mediation that does not result in a complete resolutions of all claims.
(i) Civil Actions for Claims of $375,000 or Less. The following procedures are established for all civil actions filed to resolve claims totaling $375,000 or less:
i. Within 60 days, but no earlier than 30 days, following the filing or responsive pleadings, the court shall submit the matter to non-binding mediation unless waived by mutual stipulation of both Parties or unless mediation was held prior to commencement of the action in accordance with Public Contract Code Section 9204 and the procedures in this Section. The mediation process shall provide for the selection within 15 days by both Parties of a disinterested third person as mediator, shall be commenced within 30 days of the submittal, and shall be concluded within 15 days from the commencement of the mediation unless a time requirement is extended upon a good cause showing to the court.
ii. If the matter remains in dispute, the case shall be submitted to judicial arbitration pursuant to Chapter 2.5 (commencing with Section 1141.10) of Title 3 of Part 3 of the Code of
-21-
Civil Procedure, notwithstanding Section 1141.11 of that code. The Civil Discovery Act of 1986 (Article 3 (commencing with Section 2016) of Chapter 3 of Title 3 of Part 4 of the Code of Civil Procedure) shall apply to any proceeding brought under this subdivision consistent with the rules pertaining to judicial arbitration.
iii. Upon stipulation of the Parties, arbitrators appointed for these purposes shall be experienced in construction law, and, upon stipulation of the Parties, mediators and arbitrators shall be paid necessary and reasonable hourly rates of pay not to exceed their customary rate, and such fees and expenses shall be paid equally by the Parties, except in the case of arbitration where the arbitrator, for good cause, determines a different division.
iv. In addition to Chapter 2.5 (commencing with Section 1141.10) of Title 3 of Part 3 of the Code of Civil Procedure, any Party who after receiving an arbitration award requests a trial de novo but does not obtain a more favorable judgment shall, in addition to payment of costs and fees under that chapter, pay the reasonable attorneys’ fees of the other Party arising out of the trial de novo.
7.4 Waiver.
Waiver by any Party to this Agreement of any term, condition, or covenant of this Agreement shall not constitute a waiver of any other term, condition, or covenant. Waiver by any Party of any breach of the provisions of this Agreement shall not constitute a waiver of any other provision or a waiver of any subsequent breach or violation of any provision of this Agreement. Acceptance by City of any work or services by Contractor shall not constitute a waiver of any of the provisions of this Agreement. No delay or omission in the exercise of any right or remedy by a non-defaulting Party on any default shall impair such right or remedy or be construed as a waiver. Any waiver by either Party of any default must be in writing and shall not be a waiver of any other default concerning the same or any other provision of this Agreement.
7.5 Rights and Remedies are Cumulative.
Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the parties are cumulative and the exercise by either Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party.
7.6 Unfair Business Practices Claims.
Pursuant to Public Contract Code Section 7103.5, in entering into this Agreement, Contractor offers and agrees to assign to the City all rights, title, and interest in and to all causes of action it may have under Section 4 of the Clayton Act (15 U.S.C. § 15) or under the Cartwright Act (Chapter 2, (commencing with Section 16700) of Part 2 of Division 7 of the Business and Professions Code), arising from purchases of goods, services or materials related to this Agreement. This assignment shall be made and become effective at the time the City tenders final payment to the Contractor without further acknowledgment by the Parties.
ARTICLE 8. CITY OFFICERS AND EMPLOYEES: NON-DISCRIMINATION
8.1 Non-liability of City Officers and Employees.
No officer or employee of the City shall be personally liable to the Contractor, or any successor in
-22-
interest, in the event of any default or breach by the City or for any amount which may become due to the Contractor or to its successor, or for breach of any obligation of the terms of this Agreement.
8.2 Conflict of Interest.
Contractor covenants that neither it, nor any officer or principal of its firm, has or shall acquire any interest, directly or indirectly, which would conflict in any manner with the interests of City or which would in any way hinder Contractor’s performance of services under this Agreement. Contractor further covenants that in the performance of this Agreement, no person having any such interest shall be employed by it as an officer, employee, agent or subcontractor without the express written consent of the Project Manager. Contractor agrees to at all times avoid conflicts of interest or the appearance of any conflicts of interest with the interests of City in the performance of this Agreement.
No officer or employee of the City shall have any financial interest, direct or indirect, in this Agreement nor shall any such officer or employee participate in any decision relating to this Agreement which effects his financial interest or the financial interest of any corporation, partnership or association in which he is, directly or indirectly, interested, in violation of any State statute or regulation. The Contractor warrants that it has not paid or given and will not pay or give any third Party any money or other consideration for obtaining this Agreement.
8.3 Covenant Against Discrimination.
Contractor covenants that, by and for itself, its heirs, executors, assigns, and all persons claiming under or through them, there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, gender, sexual orientation, marital status, national origin, ancestry, or other protected class in the performance of this Agreement. Contractor shall take affirmative action to ensure that applicants are employed and that employees are treated during employment without regard to their race, color, creed, religion, sex, gender, sexual orientation, marital status, national origin, ancestry, or other protected class.
8.4 Unauthorized Aliens.
Contractor hereby promises and agrees to comply with all of the provisions of the Federal Immigration and Nationality Act, 8 U.S.C. § 1101 et seq., as amended, and in connection therewith, shall not employ unauthorized aliens as defined therein. Should Contractor so employ such unauthorized aliens for the performance of work and/or services covered by this Agreement, and should any liability or sanctions be imposed against City for such use of unauthorized aliens, Contractor hereby agrees to and shall reimburse City for the cost of all such liabilities or sanctions imposed, together with any and all costs, including attorneys' fees, incurred by City.
ARTICLE 9. MISCELLANEOUS PROVISIONS
9.1 Provisions Required By Law.
Each and every provision of law and clause required by law to be inserted in this Agreement shall be deemed to be inserted herein, and this Agreement shall be read and enforced as though it were included herein. If through mistake or otherwise any such provision is not inserted, or is not correctly inserted, then upon application of either Party, this Agreement shall forthwith be amended to make such insertion or correction.
-23-
9.2 Notices.
Any notice, demand, request, document, consent, approval, or communication either Party desires or is required to give to the other Party or any other person shall be in writing and either served personally or sent by prepaid, first-class mail, in the case of the City, to the City Manager and to the attention of the Project Manager (with her/his name and City title), City of McFarland, 401 W Kern Ave, McFarland, CA 93250, and in the case of the Contractor, to the person at the address designated on the execution page of this Agreement. Either Party may change its address by notifying the other Party of the change of address in writing. Notice shall be deemed communicated at the time personally delivered or in seventy-two (72) hours from the time of mailing if mailed as provided in this Section. All correspondence relating to this Agreement shall be serialized consecutively.
9.3 Interpretation.
The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either Party by reason of the authorship of this Agreement or any other rule of construction which might otherwise apply.
9.4 Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed to be an original, and such counterparts shall constitute one and the same instrument.
9.5 Integration; Amendment.
This Agreement, together with the documents incorporated herein (including the Standard Specifications and the Contract Documents) and the exhibits attached hereto constitutes the entire, complete, and exclusive expression of the understanding of the Parties with respect to the subject matter hereof. It is understood that there are no oral agreements between the Parties hereto affecting this Agreement and this Agreement supersedes and cancels any and all previous negotiations, arrangements, agreements, and understandings, if any, between the Parties, and none shall be used to interpret this Agreement. No amendment to or modification of this Agreement shall be valid unless made in writing and approved by the Contractor and by the City Council. The Parties agree that this requirement for written modifications cannot be waived and that any attempted waiver shall be void.
9.6 Severability.
In the event that any one or more of the phrases, sentences, clauses, paragraphs, or sections contained in this Agreement shall be declared invalid or unenforceable by a valid judgment or decree of a court of competent jurisdiction, such invalidity or unenforceability shall not affect any of the remaining phrases, sentences, clauses, paragraphs, or sections of this Agreement which are hereby declared as severable and shall be interpreted to carry out the intent of the parties hereunder unless the invalid provision is so material that its invalidity deprives either Party of the basic benefit of their bargain or renders this Agreement meaningless.
9.7 Warranty & Representation of Non-Collusion.
No official, officer, or employee of City has any financial interest, direct or indirect, in this Agreement, nor shall any official, officer, or employee of City participate in any decision relating to this Agreement which may affect his/her financial interest or the financial interest of any corporation,
-24-
partnership, or association in which (s)he is directly or indirectly interested, or in violation of any corporation, partnership, or association in which (s)he is directly or indirectly interested, or in violation of any State or municipal statute or regulation. The determination of “financial interest” shall be consistent with State law and shall not include interests found to be “remote” or “non-interests” pursuant to Government Code Sections 1091 or 1091.5. Contractor warrants and represents that it has not paid or given, and will not pay or give, to any third Party including, but not limited to, any City official, officer, or employee, any money, consideration, or other thing of value as a result or consequence of obtaining or being awarded any agreement. Contractor further warrants and represents that (s)he/it has not engaged in any act(s), omission(s), or other conduct or collusion that would result in the payment of any money, consideration, or other thing of value to any third Party including, but not limited to, any City official, officer, or employee, as a result of consequence of obtaining or being awarded any agreement. Contractor is aware of and understands that any such act(s), omission(s) or other conduct resulting in such payment of money, consideration, or other thing of value will render this Agreement void and of no force or effect.
9.8 Corporate Authority.
The persons executing this Agreement on behalf of the parties hereto warrant that (i) such Party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Agreement on behalf of said Party, (iii) by so executing this Agreement, such Party is formally bound to the provisions of this Agreement, and (iv) the entering into this Agreement does not violate any provision of any other agreement to which said Party is bound. This Agreement shall be binding upon the heirs, executors, administrators, successors and assigns of the parties.
[SIGNATURES ON FOLLOWING PAGE]
-25-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first-above written.
CITY:
CITY OF MCFARLAND, a municipal
corporation
Saul Ayon, Mayor
ATTEST:
Erika De La Cruz, City Clerk
APPROVED AS TO FORM:
HODGES LAW GROUP
By:
Nathan M. Hodges, City Attorney
CONTRACTOR:
JOHNSON DRILLING COMPANY
By:
Name:
By:
Name:
Address:
Two corporate officer signatures required when Contractor is a corporation, with one signature required from each of the following groups: 1) Chairman of the Board, President or any Vice President; and 2) Secretary, any Assistant Secretary, Chief Financial Officer or any Assistant Treasurer. CONTRACTOR’S SIGNATURES SHALL BE DULY NOTARIZED, AND
APPROPRIATE ATTESTATIONS SHALL BE INCLUDED AS MAY BE REQUIRED BY THE
BYLAWS, ARTICLES OF INCORPORATION, OR OTHER RULES OR REGULATIONS APPLICABLE TO CONTRACTOR’S BUSINESS ENTITY.
PAGE LEFT BLANK INTENTIONALLY
EXHIBIT A
CONTRACTOR’S BID
EXHIBIT B
SPECIAL REQUIREMENTS
NONE
PERFORMANCE BOND
WHEREAS, the CITY OF MCFARLAND, (“City”), has awarded to Johnson Drilling Company, as Contractor (“Principal”), a Contract for the work entitled and described as follows:
Water System Improvement & Treatment Project – Phase 1 Drilling of a Test Water Well WHEREAS, the Contractor is required under the terms of said Contract to furnish a bond for the faithful performance of the Contract;
NOW, THEREFORE, we the undersigned Contractor and Surety, are held and firmly bound unto the City in the sum of Three Hundred Twenty Thousand, One Hundred Thirty Five Dollars ($320,135). this amount being not less than one hundred percent (100%) of the total Contract price, lawful money of the United States of America, for payment of which sum well and truly be made we bind ourselves, our heirs, executors, administrators, and successors, jointly and severally, firmly by these presents. In case suit is brought upon this bond, the Surety will pay a reasonable attorney’s fee to the City in an amount to be fixed by the court.
THE CONDITION OF THIS OBLIGATION IS SUCH THAT, if the hereby bound Contractor, or its heirs, executors, administrators, successors, or assigns, shall in all things stand and abide by, well and truly keep and perform all undertakings, terms, covenants, conditions, and agreements in the said Contract and any alteration thereof, made as therein provided, all within the time and in the manner designated and in all respects according to their true intent and meaning, then this obligation shall become null and void; otherwise it shall be and remain in full force and effect.
FURTHER, the said Surety, for value received, hereby stipulates and agrees that no change, extension of time, alteration, or modification of the Contract Documents or of the work to be performed thereunder shall in any way affect its obligations on this bond, and it does hereby waive notice of such change, extension of time, alteration, or modification of the Contract Documents or of the work to be performed thereunder.
Executed on , 2025 PRINCIPAL
By:
(Seal Of Corporation) Name:
Title:
(Attach Acknowledgment of Authorized Representative of Principal)
Any claims under this bond may be addressed to:
Name and address of Surety:
Name and address of Surety's agent for service of process in California, if different from above:
Telephone number of Surety’s Agent in California:
(Attach Acknowledgment)
SURETY
By:
(Attorney-in-Fact)
APPROVED:
(Attorney for CITY)
NOTICE:
No substitution or revision to this bond form will be accepted. Sureties must be authorized to do business in and have an agent for service of process in California. Certified copy of Power of Attorney must be attached.
PAYMENT BOND
(Labor and Material Bond)
WHEREAS, the CITY OF MCFARLAND, (“City”), has awarded to Johnson Drilling Company, as Contractor (“Principal”), a Contract for the work entitled and described as follows:
Water System Improvement & Treatment Project – Phase 1 Drilling of a Test Water Well WHEREAS, said Contractor is required to furnish a bond in conjunction with said Contract, to secure the payment of claims of laborers, mechanics, material men, and other persons as provided by law; NOW, THEREFORE, we the undersigned Contractor and Surety, are held and firmly bound unto the City in the sum of Three Hundred Twenty Thousand, One Hundred Thirty Five Dollars ($320,135). this amount being not less than one hundred percent (100%) of the total Contract price, lawful money of the United States of America, for payment of which sum well and truly be made we bind ourselves, our heirs, executors, administrators, and successors, jointly and severally, firmly by these presents. In case suit is brought upon this bond, the Surety will pay a reasonable attorney’s fee to the City in an amount to be fixed by the court.
THE CONDITION OF THIS OBLIGATION IS SUCH THAT, if said Contractor, its heirs, executors, administrators, successors, assigns, or subcontractor fails to pay: (1) for any work, materials, services, provisions, provender, or other supplies, or for the use of implements of machinery, used in, upon, for, or about the performance of the work to be done, or for any work or labor thereon of any kind; (2) for work performed by any of the persons named in Civil Code Section 9100; (3) for any amounts due under the Unemployment Insurance Code with respect to work or labor performed under the contract; and/or (4) for any amounts required to be deducted, withheld, and paid over to the Employment Development Department from the wages of employees of the Contractor and/or its subcontractors pursuant to Section 13020 of the Unemployment Insurance Code with respect to such work and labor, then the Surety herein will pay for the same in an amount not exceeding the sum specified in this bond, otherwise the above obligation shall be void.
This bond shall inure to the benefit of any of the persons named in Civil Code Section 9100 so as to give a right of action to such persons or their assigns in any suit brought upon the bond. Moreover, if the City or any entity or person entitled to file stop payment notices is required to engage the services of an attorney in connection with the enforcement of this bond, each shall be liable for the reasonable attorney's fees incurred, with or without suit, in addition to the above sum.
Said Surety, for value received, hereby stipulates and agrees that no change, extension of time, alteration, or modification of the Contract Documents or of the work to be performed thereunder shall in any way affect its obligations on this bond, and it does hereby waive notice of such change, extension of time, alteration, or modification of the Contract Documents or of the work to be performed thereunder. ///
///
///
Executed on , 2025 PRINCIPAL
By:
(Seal Of Corporation) Name:
Title:
(Attach Acknowledgment of Authorized Representative of Principal) Any claims under this bond may be addressed to:
Name and address of Surety:
Name and address of Surety's agent for service of process in California, if different from above:
Telephone number of Surety’s Agent in California:
(Attach Acknowledgment)
SURETY
By:
(Attorney-in-Fact)
APPROVED:
(Attorney for CITY)
NOTICE:
No substitution or revision to this bond form will be accepted. Sureties must be authorized to do business in and have an agent for service of process in California. Certified copy of Power of Attorney must be attached.
WORKERS COMPENSATION INSURANCE CERTIFICATE
Description of Contract:
Type of Insurance:
City of McFarland
Project: Water System Improvement & Treatment Project – Phase 1 Drilling of a Test Water Well
Workers' Compensation and Employers' Liability Insurance THIS IS TO CERTIFY that the following policy has been issued by the below-stated company in conformance with the requirements of Article 5 of the Contract and is in force at this time, and is in a form approved by the Insurance Commissioner.
The Company will give at least 30 days' written notice to the City and Engineer/Architect prior to any cancellation of said policy.
POLICY NUMBER EXPIRATION DATE LIMITS OF LIABILITY
Workers' Compensation: Statutory Limits Under
the Laws of the State of California
Employers' Liability:
$ Each Accident
$ Disease - Policy Limit
$ Disease - Each Employee
Named Insured (Contractor) Insurance Company
Street Number Street Number
City and State City and State
By:
(Company Representative)
(SEE NOTICE ON NEXT PAGE)
Insurance Company Agent for Service
of Process in California:
Name
Agency
Street Number
City and State
Telephone Number
This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not amend, extend, or alter the coverage afforded by the policy listed herein.
This is to certify that the policy has been issued to the named insured for the policy period indicated, notwithstanding any requirement, term, or condition of any contract or other document with respect to which this certificate may be issued or may pertain, the insurance afforded by the policy described herein is subject to all the terms, exclusions, and conditions of such policy.
NOTICE:
No substitution or revision to the above certificate form will be accepted. If the insurance called for is provided by more than one insurance company, a separate certificate in the exact above form shall be provided for each insurance company.
City of McFarland
City Council Meeting
STAFF REPORT
Agenda Item No. 11.
Section: ADMINISTRATIVE
AGENDA
Meeting Date: February 5,
2025
TO: Honorable Mayor and Council Members
FROM: Diego Viramontes, City Manager
Paul Saldaña , Community Development Director
SUBJECT: Approval of Resolution No. 2025-5 A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF MCFARLAND AUTHORIZING THE APPLICATION OF THE
DEVELOPMENT IMPACT FEE AND AUTHORIZING THE REIMBURSEMENT
FOR PUBLIC IMPROVEMENTS PURSUANT TO THE TERMS OF THE
AGREEMENT BETWEEN THE CITY OF MCFARLAND AND SHAFTER
MEDICAL PLAZA, LLC.
SUMMARY:
On August 17, 2021 the Planning Commission approved the site plan (Attachment A) for the construction of an 8,400 square foot medical office proposed by Shafter Medical Plaza, LLC.
The site plan approval contained a number of conditions and requirements for both the on-site and off-site development.
On April 14, 2022 the City entered into a Development Impact Fee (DIF) Credit Agreement (Attachment B) wherein the City agreed to apply the $60,651.60 DIF to the construction of certain public improvements as stipulated in the agreement. Pursuant to the agreement, the City did not collect the DIF amount at the time the building permit was issued.
Concurrent with entering into the DIF agreement, the City also entered into a Reimbursement agreement (Exhibit E of Attachment B) wherein the City agreed to reimbursement an amount not to exceed $85,439.39 for the additional costs of the public improvements.
On April 13, 2023, the City Council received a request to amend the agreement by adding an additional $47,551.94 to the amount of the reimbursement agreement. By unanimous vote, the Council tabled the item.
The project has been completed and all work has been accepted by the City. The developer has requested an additional $82,638.18 in reimbursement beyond the amount agreed to by the City. This request is also $35,086.24 higher than the amount requested in 2023. The request is based on increased costs to the off-site improvements during the construction and the developers claim that additional requests by the City increased the costs of the improvements.
Staff is recommending the City facilitate the reimbursement at the level agreed to in the reimbursement agreement.
FINANCIAL IMPACT:
$85,439.39 from the Traffic Impact development impact fee fund.
RECOMMENDATION:
City Council approve the reimbursement of $85,439.39 pursuant to the reimbursement agreement and recognize $60,051.60 in costs incurred by the developer are credited toward the DIF.
ATTACHMENTS:
1. Attachment A: Site Plan Approval & Conditions
2. Attachment B: Elmo Hwy Medical Plaza Credit Agreement
RESOLUTION NO. 2025-5
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MCFARLAND AUTHORIZING
THE APPLICATION OF THE DEVELOPMENT IMPACT FEE AND AUTHORIZING THE
REIMBURSEMENT FOR PUBLIC IMPROVEMENTS PURSUANT TO THE TERMS OF THE
AGREEMENT BETWEEN THE CITY OF MCFARLAND AND SHAFTER MEDICAL PLAZA, LLC.
WHEREAS, The Planning Commission approved a site plan and conditions of approval for an 8,400 square foot medical plaza located on Elmo Highway as proposed by Shafter Medical Plaza, LLC, and
WHEREAS, The City of McFarland entered into a Development Impact Fee Agreement to credit $60,051.60 of traffic impact fees for the construction of public improvements, and WHEREAS, the City entered into a Reimbursement Agreement to reimburse developer an additional $85,439.39 in costs associated with the public improvements, and WHEREAS, the construction of the development and associated public improvements have been completed.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of McFarland that it hereby finds and determines as follows:
1. The City Council of the City of McFarland accept the credit of $60,051.60 from the development impact fees from the associated development.
2. The City Council approves the payment of $85,439.39 pursuant to the reimbursement agreement.
3. The City Council allocate funds from the traffic development impact fee for the payment of the reimbursement.
4. The City Manager or designee is authorized to require any additional information necessary to facilitate the reimbursement.
5. This resolution takes effect immediately upon passage.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of McFarland on February 5, 2025 by the following vote:
Aye Nae Abstain Absent
Saul Ayon
Ricardo Cano
Amador Ayon
Anita Gonzalez
Maria T. Pérez
CITY OF MCFARLAND
____________________________
Saul Ayon, Mayor
ATTEST:
_____________________________
Erika De La Cruz, City Clerk
I, _________________________, City Clerk of the City of McFarland, California, DO HEREBY CERTIFY that the foregoing resolution is a true and accurate copy of the Resolution passed and adopted by the City Council of the City of McFarland on the date and by the vote indicated herein.
APPROVED AS TO FORM:
_____________________________
Nathan Hodges, City Attorney
City of McFarland
City Council Meeting
STAFF REPORT
Agenda Item No. 12.
Section: ADMINISTRATIVE
AGENDA
Meeting Date: February 5,
2025
TO: Honorable Mayor and Council Members
FROM: Diego Viramontes, City Manager
SUBJECT: RECEIVE AND FILE THE CITY OF MCFARLAND AUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 2024.
SUMMARY:
Clifton Larson Allen LLP (CLA) has prepared the Audited Financial Statements for the period ending June 30, 2024. The report has been prepared in conformity with the accounting principles generally accepted in the United States of America. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of McFarland for the fiscal year ended June 30, 2024, are free of material misstatements. The audit involved examining, on a test basis, the evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and estimates made by management; and evaluating the overall presentation of the financial statements. The independent auditors concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City of McFarland’s financial statements for the fiscal year ended June 30, 2024, are fairly presented in conformity with generally accepted accounting principles.
FINANCIAL IMPACT:
None.
RECOMMENDATION:
Staff Recommends the City Council of the City of McFarland receive and file the audited financial statements for the period ended June 30, 2024.
ATTACHMENTS:
1. 2024 Final Signed Financial Statements
2. 2024 Final Signed Single Audit Report
CITY OF MCFARLAND
FINANCIAL STATEMENTS AND
SUPPLEMENTARY INFORMATION
YEAR ENDED JUNE 30, 2024
THIS PAGE INTENTIONALLY LEFT BLANK
CITY OF MCFARLAND
TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2024
FINANCIAL SECTION
INDEPENDENT AUDITORS’ REPORT 1
BASIC FINANCIAL STATEMENTS
GOVERNMENT-WIDE – STATEMENT OF NET POSITION 4
GOVERNMENT-WIDE – STATEMENT OF ACTIVITIES 5
BALANCE SHEET – GOVERNMENTAL FUNDS 6
RECONCILIATION OF GOVERNMENTAL FUNDS – BALANCE SHEET
TO GOVERNMENT-WIDE STATEMENT OF NET POSITION –
GOVERNMENTAL ACTIVITIES 7
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCES – GOVERNMENTAL FUNDS 8
RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS TO
GOVERNMENT-WIDE STATEMENT OF ACTIVITIES – GOVERNMENTAL
ACTIVITIES 9
STATEMENT OF NET POSITION – PROPRIETARY FUNDS 10
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET
POSITION – PROPRIETARY FUNDS 11
STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS 12
STATEMENT OF FIDUCIARY NET POSITION – FIDUCIARY FUND 14 STATEMENT OF CHANGES IN FIDUCIARY NET POSITION – FIDUCIARY FUND 15
CITY OF MCFARLAND
TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2024
NOTES TO BASIC FINANCIAL STATEMENTS 16
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
BUDGETARY COMPARISON SCHEDULE – GENERAL FUND 44
BUDGETARY COMPARISON SCHEDULE – TDA-LTF – MAJOR SPECIAL REVENUE FUND 45
BUDGETARY COMPARISON SCHEDULE – GAS TAX – MAJOR
SPECIAL REVENUE FUND 46
BUDGETARY COMPARISON SCHEDULE – DEVELOPMENT IMPACT –
MAJOR SPECIAL REVENUE FUND 47
BUDGETARY COMPARISON SCHEDULE – MISCELLANEOUS GRANTS
– MAJOR SPECIAL REVENUE FUND 48
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION 49
COMBINING FUND STATEMENTS
COMBINING BALANCE SHEET – NONMAJOR GOVERNMENTAL
FUNDS 50
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES – NONMAJOR GOVERNMENTAL
FUNDS 51
FINANCIAL SECTION
CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer.
CliftonLarsonAllen LLP
CLAconnect.com
(1)
INDEPENDENT AUDITORS’ REPORT
Honorable Mayor and Members of the City Council
City of McFarland
McFarland, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the City of McFarland, California (the City), as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2024, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Emphasis of Matter
Correction of Error
As disclosed in Note 13 to the financial statements, adjustments were recorded for the correction of errors in the prior year financial statements. Our opinions are not modified with respect to this matter.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
Honorable Mayor and Members of the City Council
City of McFarland
(2)
Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the budgetary comparison information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Honorable Mayor and Members of the City Council
City of McFarland
(3)
Management has omitted management’s discussion and analysis, that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinions on the basic financial statements are not affected by this missing information.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining nonmajor governmental fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the combining nonmajor governmental fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 22, 2025, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.
CliftonLarsonAllen LLP
Roseville, California
January 22, 2025
BASIC FINANCIAL STATEMENTS
CITY OF MCFARLAND
GOVERNMENT-WIDE – STATEMENT OF NET POSITION
JUNE 30, 2024
See accompanying Notes to Basic Financial Statements.
(4)
Governmental Business-Type
Activities Activities Totals
ASSETS
Cash and Investments 12,195,209 $ 10,666,197 $ 22,861,406 $ Cash with Fiscal Agents - Restricted 3,928,049 309 3,928,358 Receivables:
Accounts 276,622 911,709 1,188,331
Intergovernmental 3,583,096 3,979 3,587,075
Interest - 1,816 1,816
Taxes 256,051 - 256,051
Leases - 97,008 97,008
Prepaids and Other Assets 51,191 28,242 79,433
Internal Balances 27,225 - (27,225)
Loans Receivable 3,833,713 - 3,833,713
Capital Assets:
Nondepreciable/Nonamortizable 7,939,246 1,367,138 9,306,384 Depreciable, Net 33,462,681 13,888,286 47,350,967
Right-to-Use Assets, Net 57,514 - 57,514
Total Assets 65,610,597 26,937,459 92,548,056
LIABILITIES
Accounts Payable 759,077 1,112,851 1,871,928
Accrued Liabilities 59,136 36,344 95,480
Interest Payable 53,667 26,614 80,281
Deposits Payable 51,167 23,089 74,256
Unearned Revenue 5,036,744 189,081 5,225,825
Long-Term Liabilities:
Due Within One Year 217,234 173,647 390,881
Due in More than One Year 4,641,625 5,038,208 9,679,833 Total Liabilities 11,171,646 6,246,838 17,418,484
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Related to Leases - 91,771 91,771
NET POSITION
Net Investment in Capital Assets 40,195,367 10,427,424 50,622,791 Restricted for:
Grants 944,728 - 944,728
Streets and Roads 679,929 - 679,929
Community Development 7,274,217 - 7,274,217
Debt Service 230,892 309 231,201
Unrestricted 5,113,818 10,171,117 15,284,935
Total Net Position 54,438,951 $ 20,598,850 $ 75,037,801 $ Primary Government
CITY OF MCFARLAND
GOVERNMENT-WIDE – STATEMENTS OF ACTIVITIES
JUNE 30, 2024
See accompanying Notes to Basic Financial Statements.
(5)
Fees, Fines, and Operating Capital BusinessCharges for Grants and Grants and Governmental Type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Primary Government:
Governmental Activities:
General Government 2,302,852 $ 1,454,710 $ $ 4,988,783 (50,500) $ 4,090,141 $ - $ 4,090,141 $ Public Safety 869,438 4,863,494 377,416 223,262 - (3,393,378) (3,393,378) Public Works 1,866,052 25,109 596,838 2,451,111 1,207,006 - 1,207,006 Community Development 720,994 1,588,520 1,253,739 - 2,121,265 - 2,121,265 Interest on Long-Term Debt 162,977 - - - - (162,977) (162,977) Total Governmental Activities 9,916,369 3,937,777 2,177,493 7,663,156 3,862,057 - 3,862,057 Business-Type Activities:
Sewer 2,222,080 2,225,480 - - - 3,400 3,400
Refuse 1,584,828 1,556,669 - - - (28,159) (28,159)
Water 3,347,323 2,608,502 - - - (738,821) (738,821)
Public Transportation 140,842 - 69,411 - - (71,431) (71,431) Total Business-Type Activities 7,295,073 6,390,651 69,411 - - (835,011) (835,011) Total Primary Government 17,211,442 $ 10,328,428 $ 2,246,904 $ 7,663,156 $ 3,862,057 3,027,046 (835,011)
GENERAL REVENUES AND TRANSFERS
General Revenues:
Taxes:
Property Taxes 955,568 - 955,568
Sales and Use Taxes 1,516,934 - 1,516,934
Franchise Taxes 234,627 - 234,627
Intergovernmental, Unrestricted:
Motor Vehicle In-Lieu Tax 1,689,611 - 1,689,611
Interest and Investment Earnings 456,076 242,790 698,866 Lease Revenue - 46,175 46,175
Miscellaneous 350,275 - 350,275
Transfers 511,383 - (511,383)
Total General Revenues and Transfers 5,714,474 5,492,056 (222,418) CHANGE IN NET POSITION 9,576,531 8,519,102 (1,057,429)
Net Position - Beginning, as Orginally Reported 44,811,920 21,656,279 66,468,199 Adjustment - Correction of an Error 50,500 - 50,500
Net Position - Beginning,as Adjusted 44,862,420 21,656,279 66,518,699 NET POSITION - END OF YEAR $ 20,598,850 54,438,951 $ 75,037,801 $ Program Revenues Primary Government
Changes in Net Position
Net Revenues (Expenses) and
CITY OF MCFARLAND
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2024
See accompanying Notes to Basic Financial Statements.
(6)
McFarland Other
General Development Miscellaneous Improvement Governmental Fund TDA-LTF Gas Tax CalHOME Impact Grants Authority Funds Total ASSETS
Cash and Investments 7,531,210 $ 72,769 $ 243,746 $ 266,449 $ 2,065,323 $ 298,249 $ 526,669 $ 1,190,794 $ 12,195,209 $ Cash with Fiscal Agent - Restricted - - - - - - 3,928,049 - 3,928,049 Receivables:
Accounts 240,955 - 32,284 - - - - 3,383 276,622
Intergovernmental 2,580,466 738,995 - 199,500 - 56,344 - 7,791 3,583,096 Taxes 226,538 - - - - - - 29,513 256,051
Prepaid Items 47,706 - - - - - - 3,485 51,191
Due from Other Funds 1,213,430 - - - 1,209,542 - - - 2,422,972 Loans Receivable - - - 3,123,807 - - - 709,906 3,833,713 Total Assets 11,840,305 $ 811,764 $ 276,030 $ 3,589,756 $ 3,274,865 $ 354,593 $ 4,454,718 $ 1,944,872 $ 26,546,903 $
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES
LIABILITIES
Accounts Payable 440,866 $ - $ - $ 300,310 $ - $ - $ - $ 17,901 $ 759,077 $ Accrued Liabilities 57,850 - - - - - - 1,286 59,136
Deposits Payable 51,167 - - - - - - - 51,167
Due to Other Funds 124,043 722,442 - - - 26,908 501,698 997,560 2,372,651 Advances from Other Funds 23,096 - - - - - - - 23,096
Unearned Revenue 5,011,668 - - - - 24,660 - 416 5,036,744 Total Liabilities 5,708,690 722,442 - 300,310 - 51,568 501,698 1,017,163 8,301,871
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue 641,703 738,996 - 3,124,208 - - - 709,906 5,214,813 Total Deferred Inflows of Resources 641,703 738,996 - 3,124,208 - - - 709,906 5,214,813
FUND BALANCES
Nonspendable 47,706 - - - - - - 3,485 51,191
Restricted - - 276,030 165,238 3,274,865 303,025 3,953,020 314,577 8,286,755 Assigned 1,903,968 - - - - - - - 1,903,968
Unassigned 3,538,238 - (649,674) - - - - 2,788,305 (100,259) Total Fund Balances 5,489,912 276,030 (649,674) 165,238 3,274,865 303,025 3,953,020 217,803 13,030,219 Total Liabilities, Deferred Inflows of Resources, and Fund Balances 11,840,305 $ 811,764 $ 276,030 $ 3,589,756 $ 3,274,865 $ 354,593 $ 4,454,718 $ 1,944,872 $ 26,546,903 $
CITY OF MCFARLAND
RECONCILIATION OF GOVERNMENTAL FUNDS
BALANCE SHEET TO GOVERNMENT-WIDE STATEMENT OF NET POSITION
GOVERNMENTAL ACTIVITIES
JUNE 30, 2024
See accompanying Notes to Basic Financial Statements.
(7)
Fund Balance - Total Governmental Funds 13,030,219 $
Amounts reported for governmental activities in the statement of net position are different because:
Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds balance sheet. 41,459,441 Some of the City’s revenue is not available to pay for current period expenditures and therefore are not reported in the governmental funds balance sheet. 5,214,813 Interest on long-term debt is recognized as it accrues, regardless of when it is due. (53,667) Long-term liabilities are not due and payable in the current period and therefore are not reported in the governmental funds.
Bonds Payable (Net of Unamortized Premium) (4,302,769)
Notes Payable (794,169)
Lease Payable (7,505)
SBITA Payable (15,911)
Compensated Absences (91,501)
Net Position of Governmental Activities 54,438,951 $
CITY OF MCFARLAND
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Basic Financial Statements.
(8)
McFarland Other
General Development Miscellaneous Improvement Governmental Fund TDA-LTF Gas Tax CalHOME Impact Grants Authority Funds Total
REVENUES
Taxes 3,876,614 $ - $ - $ - $ - $ - $ - $ 520,126 $ 4,396,740 $ Licenses and Permits 836,253 - - - 1,025,606 - - - 1,861,859 Fines and Forfeitures 107,384 - - - - - - - 107,384
Use of Money and Property - 219,819 9,363 - 60,272 - 458,142 5,936 753,532 Intergovernmental Revenues 2,491,087 - 377,992 199,500 - 2,237,093 - 582,133 5,887,805 Charges for Services 1,671,078 - - - - - - - 1,671,078
Contributions 57,995 - - - - - - - 57,995
Other Revenues 292,280 - - - - - - - 292,280
Total Revenues 9,552,510 - 387,355 199,500 1,085,878 2,237,093 458,142 1,108,195 15,028,673
EXPENDITURES
Current:
General Government 1,005,849 - - - - 116,279 - 581,055 1,703,183 Public Safety - 2,283,362 - 300,310 - 2,044,848 - - 4,628,520 Public Works 91,510 - 648,920 - - - - 211,181 951,611
Community Development 663,106 - - - - - - - 663,106
Debt Service:
Principal 97,751 - - - - - 110,000 - 207,751
Interest and Fiscal Charges 13,836 - - - - - 161,000 - 174,836 Capital Outlay 165,090 1,557,903 27,515 - 10,454 - - 842,350 2,603,312 Total Expenditures 5,713,317 165,090 676,435 300,310 10,454 2,161,127 271,000 1,634,586 10,932,319
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 3,839,193 (165,090) (289,080) 1,075,424 (100,810) 75,966 187,142 4,096,354 (526,391)
OTHER FINANCING SOURES (USES)
Transfers In 547,621 - - - - - - - 547,621
Transfers Out - - - - - (544) (9,883) (25,811) (36,238) Total Other Financing
Soures (Uses) - 547,621 - - - (544) (9,883) 511,383 (25,811) NET CHANGE IN FUND BALANCES 4,386,814 (165,090) (289,080) 1,075,424 (100,810) 75,422 177,259 4,607,737 (552,202)Fund Balance - Beginning, as Originally Reported 1,103,098 565,110 (484,584) 266,048 2,199,441 177,103 3,775,761 770,005 8,371,982 Adjustment- correction of an error - - - - - 50,500 - - 50,500 Fund Balance - Beginning, as Adjusted 1,103,098 565,110 (484,584) 266,048 2,199,441 227,603 3,775,761 770,005 8,422,482 FUND BALANCES - END OF YEAR $ 5,489,912 $ 276,030 (649,674) $ 165,238 $ 3,274,865 $ 303,025 $ 3,953,020 $ 217,803 $ 13,030,219 $
CITY OF MCFARLAND
RECONCILIATION OF STATEMENT OF REVENUES,
EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS TO GOVERNMENT-WIDE STATEMENT OF ACTIVITIES
GOVERNMENTAL ACTIVITIES
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Basic Financial Statements.
(9)
Net Change to Fund Balance - Total Governmental Funds 4,607,737 $ Amounts reported for governmental activities in the statement of activities are different because:
Governmental funds report capital outlay as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.
Expenditures for Capital Outlay 2,603,312
Capital Contributions 4,988,783
Less: Current Year Depreciation (1,686,778)
Less: Current Year Amortization (92,273)
Some revenues reported in the statement of activities will not be collected for several months after the City’s year end and do not provide current financial resources and therefore are not reported as revenues in the governmental funds. (1,035,939) Debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. Repayment of principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. Interest on long-term debt is not recognized under the modified accrual basis of accounting until due, rather than as it accrues. Also, governmental funds report the effect of premiums when debt is first issued; however, the amounts are deferred and amortized in the government-wide financial statements.
Principal Payments for Bonds, Notes, Leases, and SBITAs 207,751 Amortization of Premium 11,859
Some expenses reported in the statement of activities do not require the use of current financial resources and therefore, are not reported as expenditures in the governmental funds.
Change in Compensated Absences (27,921)
Change in Net Position of Governmental Activities 9,576,531 $
CITY OF MCFARLAND
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
JUNE 30, 2024
See accompanying Notes to Basic Financial Statements.
(10)
Nonmajor
Public
Sewer Refuse Water Transportation Total
ASSETS
Current Assets:
Cash and Investments 2,083,841 $ 172,972 $ 8,276,365 $ 133,019 $ 10,666,197 $ Cash with Fiscal Agent - Restricted 207 - 102 - 309
Receivables:
Accounts 278,742 332,435 300,532 - 911,709
Intergovernmental 3,979 - - - 3,979
Interest - - 1,816 - 1,816
Leases 97,008 - - - 97,008
Due from Other Funds 4,419 - 1,360 604 6,383
Other Assets 10,207 3,249 12,553 2,233 28,242
Total Current Assets 2,478,403 508,656 8,592,728 135,856 11,715,643 Noncurrent Assets:
Advances to Other Funds 23,096 - - - 23,096
Capital Assets:
Nondepreciable:
Land 1,120,000 - 160,063 - 1,280,063
Construction in Progress - - - 87,075 87,075
Depreciable:
Buildings, Equipment and
Infrastructure 15,080,007 309,677 12,543,818 650,896 28,584,398 Accumulated Depreciation (6,589,570) (309,463) (7,249,458) (547,621) (14,696,112) Total Noncurrent Assets 9,633,533 214 5,454,423 190,350 15,278,520 Total Assets 12,111,936 508,870 14,047,151 326,206 26,994,163
LIABILITIES
Current Liabilities:
Accounts Payable 126,651 330,564 642,568 13,068 1,112,851 Accrued Liabilities 14,627 5,058 15,297 1,362 36,344
Interest Payable 19,554 - 7,060 - 26,614
Due to Other Funds - 52,273 - 4,431 56,704
Deposits Payable - - 23,089 - 23,089
Unearned Revenue - - - 189,081 189,081
Compensated Absences 1,013 374 3,119 728 5,234
Bonds Payable 142,040 - 69,960 - 212,000
Total Current Liabilities 303,885 388,269 761,093 208,670 1,661,917 Noncurrent Liabilities:
Bonds Payable 3,092,720 - 1,523,280 - 4,616,000
Compensated Absences 11,321 6,021 7,292 991 25,625
Total Noncurrent Liabilities 3,104,041 6,021 1,530,572 991 4,641,625 Total Liabilities 3,407,926 394,290 2,291,665 209,661 6,303,542
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows of Resources - Leases 91,771 - - - 91,771 Total Deferred Inflows
of Resources 91,771 - - - 91,771
NET POSITION
Net Investment in Capital Assets 6,375,677 214 3,861,183 190,350 10,427,424 Restricted for Debt Service 207 - 102 - 309
Unrestricted 2,236,355 114,366 7,894,201 10,171,117 (73,805) Total Net Position 8,612,239 $ 114,580 $ 11,755,486 $ 116,545 $ 20,598,850 $ Enterprise Funds
CITY OF MCFARLAND
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Basic Financial Statements.
(11)
Nonmajor
Public
Sewer Refuse Water Transportation Total
OPERATING REVENUES
Charges for Services 2,225,480 $ 1,462,293 $ 2,608,502 $ - $ 6,296,275 $
OPERATING EXPENSES
Salaries and Employee Benefits 751,789 278,453 791,850 71,349 1,893,441 Services and Supplies 751,913 1,306,089 1,520,665 36,471 3,615,138 Utilities 196,845 - 510,132 - 706,977
Depreciation 391,929 286 471,774 33,022 897,011
Total Operating Expenses 2,092,476 1,584,828 3,294,421 140,842 7,112,567 OPERATING INCOME (LOSS) 133,004 (122,535) (685,919) (140,842) (816,292)
NONOPERATING REVENUES (EXPENSES)
Grants - - - 69,411 69,411
Lease Revenue 46,175 - - - 46,175
Interest Income 45,830 2,711 191,984 2,265 242,790
Interest Expense - (129,604) - (52,902) (182,506)
Other Revenues - 94,376 - - 94,376
Total Nonoperating
Revenues (Expenses) 97,087 (37,599) 139,082 71,676 270,246 INCOME (LOSS) BEFORE TRANSFERS 95,405 (25,448) (546,837) (69,166) (546,046) TRANSFERS OUT (179,603) (65,794) (251,163) (14,823) (511,383) CHANGE IN NET POSITION (84,198) (91,242) (798,000) (83,989) (1,057,429) Net Position - Beginning of Year 8,696,437 205,822 12,553,486 200,534 21,656,279 NET POSITION - END OF YEAR $ 114,580 8,612,239 $ 11,755,486 $ 116,545 $ 20,598,850 $ Enterprise Funds
CITY OF MCFARLAND
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Basic Financial Statements.
(12)
Nonmajor
Public
Sewer Refuse Water Transportation Total
CASH FLOWS FROM OPERATING
ACTIVITIES
Receipts from Customers 2,347,273 $ 1,507,126 $ 2,724,976 $ - $ 6,579,375 $ Payments to Suppliers (899,596) (1,089,812) (1,491,318) (46,293) (3,527,019) Payments to Employees (748,187) (275,635) (788,428) (72,017) (1,884,267) Net Cash Provided (Used) by
Operating Activities 699,490 141,679 445,230 1,168,089 (118,310)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Grant Proceeds - - - 85,721 85,721
Loans from Other Funds 45,769 - - - 45,769
Transfers to Other Funds (179,603) (65,794) (251,163) (14,823) (511,383) Nonoperating Receipts - 94,376 - - 94,376
Net Cash Provided (Used) by
Noncapital Financing Activities 28,582 (133,834) 70,898 (251,163) (285,517)
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Payments Related to the Acquisition of
Capital Assets - (16,450) - (12,112) (28,562)
Principal Repayments Related to Capital
Purposes - (166,160) - (81,840) (248,000)
Interest Repayments Related to Capital
Purposes - (115,488) - (56,882) (172,370)
Net Cash (Used) by
Capital and Related
Financing Activities - (298,098) (138,722) (12,112) (448,932)
CASH FLOWS FROM INVESTING
ACTIVITIES
Interest Earnings 45,830 2,711 191,984 2,265 242,790
Lease Revenue 46,175 - - - 46,175
Net Cash Provided by
Investing Activities 92,005 2,711 191,984 2,265 288,965
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 172,972 359,563 247,329 722,605 (57,259) Cash and Cash Equivalents -
Beginning of Year 1,724,485 - 8,029,138 190,278 9,943,901
CASH AND CASH EQUIVALENTS -
END OF YEAR $ 172,972 2,084,048 $ 8,276,467 $ 133,019 $ 10,666,506 $ Cash and Investments 2,083,841 $ 172,972 $ 8,276,365 $ 133,019 $ 10,666,197 $ Cash with Fiscal Agent - Restricted 207 - 102 - 309
Cash and Cash Equivalents -
per Statement of Net Position 2,084,048 $ 172,972 $ 8,276,467 $ 133,019 $ 10,666,506 $ Enterprise Funds
CITY OF MCFARLAND
STATEMENT OF CASH FLOWS (CONTINUED)
PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Basic Financial Statements.
(13)
Nonmajor
Public
Sewer Refuse Water Transportation Total
RECONCILIATION OF OPERATING
INCOME (LOSS) TO NET CASH
PROVIDED (USED) BY OPERATING
ACTIVITIES
Operating Income (Loss) $ 133,004 $ (122,535) $ (685,919) $ (140,842) $ (816,292) Adjustments to Reconcile
Operating Income (Loss) to
Net Cash Provided (Used) by
Operating Activities:
Depreciation 391,929 286 471,774 33,022 897,011
(Increase) Decrease in:
Accounts Receivable 121,935 44,833 114,524 - 281,292
Prepaid Expenses (10,207) (3,249) (7,456) (2,233) (23,145) Lease Receivable 61,781 - - - 61,781
Increase (Decrease) in:
Accounts Payable 59,369 219,526 546,935 818,241 (7,589) Accrued Liabilities 375 128 2,290 2,736 (57)
Deposits - - 1,950 - 1,950
Deferred Inflows - Lease Related - (61,923) - - (61,923) Compensated Absences 3,227 2,690 1,132 6,438 (611)
Net Cash Provided (Used) by
Operating Activities 699,490 $ 141,679 $ 445,230 $ $ 1,168,089 (118,310) $ Enterprise Funds
CITY OF MCFARLAND
STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUND
JUNE 30, 2024
See accompanying Notes to Basic Financial Statements.
(14)
Private
Purpose
Trust Fund
RDA
Successor
Agency
ASSETS
Cash and Investments $ 6,665
Total Assets 6,665
NET POSITION
Restricted for Successor Agency 6,665
Total Net Position $ 6,665
CITY OF MCFARLAND
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUND
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Basic Financial Statements.
(15)
Private
Purpose
Trust Fund
RDA
Successor
Agency
ADDITIONS
Property Taxes $ -
Total Additions -
DEDUCTIONS
Administration -
Total Deductions -
CHANGE IN NET POSITION -
Net Position - Beginning of Year 6,665
NET POSITION - END OF YEAR $ 6,665
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(16)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The City of McFarland, California (the City) was incorporated on July 18, 1957. The City is a full-service city and operates under a Council – City Administration form of government, providing the following services: general government; public safety; public works; and recreation and development. The City is located in Kern County approximately 25 miles north of Bakersfield, the County government seat.
The City has defined its reporting entity in accordance with accounting principles generally accepted in the United States of America which provide guidance for determining which governmental activities, organizations, and functions should be included in the reporting entity. The Basic Financial Statements present information on the activities of the reporting entity, including all the fund types of the City.
Accounting principles generally accepted in the United States of America require government financial statements to include the primary government and its component units. Component units of a governmental entity are legally separate entities for which the primary government is considered to be financially accountable and for which the nature and significance of their relationship with the primary government are such that exclusion would cause the combined financial statements to be misleading. The primary government is considered to be financially accountable if it appoints a majority of an organization’s governing body and is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to or impose specific financial burdens on the primary government.
Reporting for component units on the City’s financial statements can be blended or discretely presented. Blended component units are, although legally separate entities, in substance part of the City’s operations and, therefore, data from these units are combined with data of the primary government. Discretely presented component units, on the other hand, would be reported in a separate column in the government-wide financial statements to emphasize it is legally separate from the government.
Blended Component Units
Parking Authority – The McFarland Parking Authority of the City of McFarland (the Parking Authority) was formed by the City on April 12, 2012, by Resolution No. 2012-069, under Part 2 of Division 18 of the California Streets and Highways Code, Section 32650. The Parking Authority’s legislative body is the City Council as Board of Directors of the Parking Authority. The fundamental aim of the Parking Authority is to purchase property and construct a public parking lot on that property. The Parking Authority did not report any activity during the year. Separate financial statements are not available for the Authority.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(17)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) A. Reporting Entity (Continued)
Blended Component Units (Continued)
McFarland Improvement Authority – On April 12, 2012, under Resolution No. 2012-070, the Parking Authority and the City entered into a Joint Exercise of Powers Agreement to create the McFarland Improvement Authority (the Improvement Authority). The Improvement Authority’s legislative body is the City Council as Commissioners of the Improvement Authority. The fundamental aim of the Improvement Authority is to provide for the financing of capital improvements and working capital. The Improvement Authority issued bonds for the purpose of funding capital improvements. Separate financial statements are not available for the Authority.
McFarland Public Financing Corporation – On July 31, 2001, the City and the Successor Agency to the Former McFarland Redevelopment Agency entered into a Joint Exercise of Powers Agreement establishing the McFarland Public Financing Corporation (the Corporation) for the purpose of issuing its bonds to be used to provide financial assistance to the City, the Agency or any other public entity of the state of California.
The City Council of McFarland is the governing body for the Corporation. The McFarland Public Financing Corporation did not report any activity during the year. Separate financial statements are not available for the Corporation.
Discretely Presented Component Units
There are no component units of the City which meet the criteria for discrete presentation.
B. Basis of Presentation
Government-Wide Financial Statements
The statement of net position and statement of activities display information on all of the nonfiduciary activities of the City and its blended component units. These statements include the financial activities of the overall government, except fiduciary activities.
Eliminations have been made to minimize the double counting of internal activities.
Interfund services provided and used are not eliminated in the process of consolidation.
These statements distinguish between the governmental and business-type activities of the City. Governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees charged to external parties.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(18)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Basis of Presentation (Continued)
Government-Wide Financial Statements (Continued)
The statement of activities presents a comparison between direct expenses and program revenues for each different identifiable activity of the City’s business-type activities and each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and; therefore, are clearly identifiable to a particular function. Certain indirect costs, which cannot be identified and broken down are included in the program expense reported for individual functions and activities. Program revenues include 1) charges paid by the recipients of goods and services offered by the program, 2) operating grants and contributions, and 3) capital grants and contributions. Taxes and other items not properly included among program revenues are presented instead as general revenues.
Fund Financial Statements
The fund financial statements provide information about the City’s funds, including fiduciary funds and blended component units. Funds are organized into three major categories: governmental, proprietary, and fiduciary. The emphasis is placed on major funds within the governmental and proprietary categories, each is displayed in a separate column. All remaining governmental and enterprise funds are separately aggregated and reported as nonmajor funds.
The City reports the following major governmental funds:
The General Fund is used to account for all revenues and expenditures necessary to carry out basic governmental activities of the City that are not accounted for through other funds. For the City, the General fund includes such activities as general government, public safety, public works, and recreation and development.
The TDA-LTF Fund is used to account for the City’s share of the Transportation Development Allocation which is legally restricted for specific purposes, primarily street construction and maintenance and related street expenditures. This fund also accounts for other state and federal grant revenues related to street maintenance or construction.
The Gas Tax Fund is used to account for highway users tax allocated by the state of California.
The CalHOME Fund is used to account for a CalHOME Homeownership Project Development Program award.
The Development Impact Fund is used to account for impact fees. The Miscellaneous Grants Fund is used to account for grants not frequently awarded to the City.
The McFarland Improvement Authority Fund is reported as debt service fund and is used to account for the activities of the McFarland Improvement Authority, including debt repayment.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(19)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Basis of Presentation (Continued)
Fund Financial Statements (Continued)
The City reports the following major proprietary funds:
The Sewer Fund is used to account for the provisions of sewer service to the residents of the City. All activities necessary to provide such service are accounted for in this fund.
The Refuse Fund is used to account for the collection and disposal of refuse within the City. All activities necessary to provide such service are accounted for in this fund.
The Water Fund is used to account for the provisions of water service to residents of the City. All activities necessary to provide such service are accounted for in this fund.
The City reports the following additional fund type:
The RDA Successor Agency Private Purpose Trust Fund is a fiduciary fund used to account for monies received from the Kern County Auditor Controller for the repayment of the enforceable obligations of the former McFarland Redevelopment Agency. These funds are restricted for the sole purpose of payment on items on an approved Recognized Payment Obligation Schedule.
C. Basis of Accounting and Measurement Focus
The government-wide, proprietary and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting.
Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange, include property and sales tax, grants, entitlements, and donations. Under the accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenues from sales tax are recognized when the underlying transactions take place. Revenues from grants, entitlements, and donations are recognized in the fiscal year in which all eligibility requirements have been satisfied.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(20)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Basis of Accounting and Measurement Focus (Continued) Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Property and sales taxes, interest and charges for services are considered susceptible to accrual and are accrued when their receipt occurs within 60 days after the end of the fiscal year. Certain state and federal grants are considered susceptible to accrual and are accrued when their receipt occurs within 180 days after the end of the fiscal year. Expenditures are generally recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures as well as expenditures related to compensated absences and claims and judgments are recorded only when payment is due. General capital assets acquisitions are reported as expenditures in the various functions of the governmental funds.
Proceeds of governmental long-term debt and acquisitions under leases are reported as other financing sources.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation of capital assets.
All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.
D. Cash and Investments
The City pools cash resources from all funds in order to facilitate the management of cash. The balance in the pooled cash account is available to meet current operating requirements. Cash in excess of current requirements is invested in various interestbearing accounts and other investments for varying terms.
Certain disclosure requirements for deposits and investment risks were made in the following areas: Interest Rate Risk, Credit Risk, Custodial Credit Risk, and Concentrations of Credit Risk.
In addition, other disclosures are specified including use of certain methods to present deposits and investments, highly sensitive investments, credit quality at year-end, and other disclosures.
Highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Interest earned on investments is allocated using the Local Agency Fund (LAIF) factor to selected funds by the City.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(21)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Cash and Investments (Continued)
The City participates in an investment pool LAIF, which has invested a portion of the pooled funds in Structured Notes and Asset-Backed Securities. LAIF’s investments are subject to credit risk with the full faith and credit of the state of California collateralizing these investments. In addition, these Structured Notes and Asset-Backed Securities are subject to market risk as to changes in interest rates.
Cash equivalents are considered amounts in demand deposits and short-term investments with a maturity date within three months of the date acquired by the City and are presented as “Cash and Investments” in the accompanying basic financial statements.
E. Receivables
Receivables for governmental activities consist mainly of accounts, intergovernmental, and interest. Receivables for business-type activities consist mainly of user fees, intergovernmental, and interest earnings. Management believes its receivables are fully collectible and, accordingly, no allowance for doubtful accounts is required.
F. Other Assets
Prepaid Items
Payments made for services that will benefit future accounting periods are recorded as prepaid costs in both government-wide and fund financial statements. The cost of prepaid items is recorded as expenditures/expenses when consumed rather than when purchased. Prepaid costs do not reflect current appropriable resources and thus, an equivalent portion of fund balance is reported as nonspendable.
G. Loans Receivable
Loans receivable represent low interest notes and related accrued interest to finance multi-family and single family construction and rehabilitation projects, homebuyer assistance for low income families, as well as business start-up costs. Loan terms are 15 to 55 years with an interest rate at 0% to 5%. The primary source of funding for these loans comes from grants from the Community Development Block Grant (CDBG) program and Home Investment Partnerships (HOME) program. The CDBG and HOME grants contain monitoring requirements to ensure grant compliance. These requirements are reflected in the loan agreements.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(22)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) H. Capital Assets
Capital and Right-to-Use assets, which include property, plant, equipment and infrastructure assets (e.g., roads, traffic signals, drainage systems and similar items), are reported in the applicable governmental or business-type activities column in the government-wide financial statements. Capital and Right-to-Use assets are defined by the City as assets with an initial cost of more than $1,000 ($25,000 for infrastructure) and an estimated life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at the estimated acquisition value at the date of donation.
The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Upon sale or retirement of capital assets, the cost and related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the results of operations.
Land and construction in progress are not depreciated. Capital assets used in operations are depreciated or amortized using the straight line method over the assets estimated useful life in the government-wide financial statements. Right-to-use lease assets are amortized in a systematic and rational manner over the shorter of the lease term or the useful life of the underlying asset. The range of estimated useful lives by type of asset is as follows:
Depreciable/Amortizable Asset Estimated Lives
Buildings 15 to 40 Years
Improvements Other Than Buildings 15 to 40 Years
Machinery and Equipment 5 to 20 Years
Infrastructure 20 to 50 Years
I. Leases
Leases are defined by the general government as the right-to-use an underlying asset.
As lessee, the City recognizes a lease liability and an intangible right-of-use lease asset at the beginning of a lease unless the lease is considered a short-term lease or transfers ownership of the underlying asset. Right-of-use lease assets are measured based on the net present value of the future lease payments at inception, using the weighted average cost of capital, which approximate the incremental borrowing rate. Remeasurement of a lease liability occurs when there is a change in the lease term and/or other changes that are likely to have a significant impact on the lease liability. The City calculates the amortization of the discount on the lease liability and reports that amount as outflows of resources. Payments are allocated first to accrued interest liability and then to the lease liability. Variable lease payments based on the usage of the underlying assets are not included in the lease liability calculations but are recognized as outflows of resources in the period in which the obligation was incurred.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(23)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) I. Leases (Continued)
As lessor, the City recognizes a lease receivable. The lease receivable is measured using the net present value of future lease payments to be received for the lease term and deferred inflow of receivables at the beginning of the lease term. Periodic amortization of the discount on the receivable are reported as interest revenue for that period. Deferred inflows of resources are recognized as inflows on a straight-line basis over the term of the lease. This recognition does not apply to short-term leases, contracts that transfer ownership, leases of assets that are investments, or certain regulated leases. Any initial direct costs are reported as an outflow of resources for that period. Re-measurement of lease receivables occur when there are modifications, including but not limited to changes in the contract price, lease term, and adding or removing an underlying asset to the lease agreements. In the case of a partial or full lease termination, the carrying value of the lease receivable and the related deferred inflow of resources will be reduced and will include a gain or loss for the difference.
J. Property Tax
Secured property taxes are levied during September of each year for the fiscal year beginning with the preceding July 1 and ending the following June 30. They become a lien on real property on January 1 preceding the fiscal year for which taxes are levied.
The Kern County Assessor establishes the value of the property on January 1. Taxes are payable in two installments on November 1 and February 1, and are delinquent if not paid by December 10 and April 10, respectively. In 1978, a state constitutional amendment (Proposition 13) provided that the tax rate be limited to 1% of market value, levied only by the County and shared with all other jurisdictions. Such limitation on the rate may only be increased through voter approval. The County collects property taxes and distributes them to taxing jurisdictions on the basis of the taxing jurisdiction’s assessed valuations and on the tax rate for voter-approved debt.
K. Interfund Transactions
Interfund transactions are reflected as either loans, services provided or used, reimbursements or transfers.
Loans reported as receivables and payables are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the noncurrent portion of interfund loans) as appropriate and are subject to elimination upon consolidation. Any residual balances outstanding between the governmental activities and the business-type activities are reported in the government-wide financial statements as “internal balances.” Advances between funds, as reported in the fund financial statements, are offset by a nonspendable fund balance account in applicable governmental funds to indicate that they are not in spendable form.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(24)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) K. Interfund Transactions (Continued)
Services provided or used, deemed to be at market or near market rates, are treated as revenues and expenditures or expenses. These services provide information on the net cost of each government function and therefore are not eliminated in the process of preparing the government-wide statement of activities.
Reimbursements occur when the funds responsible for particular expenditures or expenses repay the funds that initially paid for them. Such reimbursements are reflected as expenditures or expenses in the reimbursing fund and reductions to expenditures or expenses in the reimbursed fund.
All other interfund transactions are treated as transfers. Transfers between funds are netted as part of the reconciliation to the government-wide presentation.
L. Unearned Revenue
Under the accrual and modified accrual basis of accounting, revenue may be recognized only when it is earned. When assets are recognized in connection with a transaction before the earnings process is complete, those assets are offset by a corresponding liability for unearned revenue.
M. Compensated Absences
It is the City’s policy to permit employees to accumulate earned but unused vacation and sick pay benefits up to certain limits. For governmental funds, compensated absences are recorded as current and noncurrent liabilities only on the government-wide financial statements. For proprietary funds, current and noncurrent liabilities for compensated absences are recorded in both the government wide financial statements and the fund financial statements. There is no liability for unpaid sick leave since the City does not pay such amounts when employees separate from service with the City.
N. Long-Term Obligations
In the government-wide financial statements and in the proprietary fund financial statements, bond premiums and discounts are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount.
Bond issuance costs are expensed when bonds are issued.
In governmental fund financial statements, bond premiums and discounts, as well as debt issuance costs are recognized in the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuance are also reported as other financing sources. Issuance costs, whether or not withheld from the actual debt proceeds, are reported as debt service expenditures.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(25)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) O. Net Position
The government-wide and business-type activities fund financial statements utilize a net position presentation. Net position is categorized as follows:
Net Investment In Capital Assets – This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce the balance in this category.
Restricted Net Position – This category presents external restrictions imposed by creditors, grantors, contributors or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation.
Unrestricted Net Position – This category represents net position of the City, not restricted for any project or other purpose or included in net investment in capital assets.
When both restricted and unrestricted net position are available for use, it is the City’s policy to use restricted net position first, and then unrestricted net position as they are needed.
P. Fund Balance
Fund balances of the governmental funds are presented in the financial statements based on classifications that comprise a hierarchy that is based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the respective governmental funds can be spent. Fund balances are classified as follows:
Nonspendable – Amounts that cannot be spent either because they are not in a spendable form or because they are legally or contractually required to be maintained intact.
Restricted – Amounts restricted by external sources (creditors, laws of other governments, etc.) or by constitutional provision or enabling legislation.
Committed – Amounts that are obligated to a specific purpose which are internally imposed by the government through formal action (Ordinances and Resolutions) at the highest level of decision making authority (City Council). These commitments can only be overturned by a like action.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(26)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) P. Fund Balance (Continued)
Assigned – Amounts that are intended to be used for specific purposes that are considered neither restricted nor committed. Undesignated excess Fund Balances may be assigned by the City Council, City Manager, or Finance Director for specific purposes through the budget process or agenda items. The assigned designation may be reversed by the City Council at any public meeting.
Unassigned – Residual positive fund balances within the General Fund, which have not been classified within the other above mentioned categories. Unassigned Fund Balances may also include negative balances for any governmental fund if expenditures exceed amounts restricted, committed, or assigned for those specific purposes.
When expenditures are incurred for purposes for which all restricted, committed, assigned, and unassigned fund balances are available, the City’s policy is to apply in the following order, except for instances wherein an ordinance specifies the fund balance to be charged: Restricted, Committed, Assigned, and Unassigned.
The City does not have a formal minimum fund balance requirement.
Q. Estimates
The preparation of basic financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(27)
NOTE 2 CASH AND INVESTMENTS
The City maintains a cash and investment pool for all funds. Certain restricted funds, which are held and invested by independent outside custodians through contractual agreements are not pooled.
Statement of Net Position:
Cash and Investments 22,861,406 $
Cash with Fiscal Agents 3,928,358
Statement of Fiduciary Net Position:
Cash and Investments 6,665
Total 26,796,429 $
Cash and investments as of June 30, 2024, consist of the following:
Deposits with Financial Institutions 6,182,501 $
Cash on Hand 3,000
Investments 20,610,928
Total 26,796,429 $
Deposits
At year-end, the carrying amount of the City’s cash deposits (including amounts in checking accounts and money market accounts) was $6,185,497 and the bank balance was $6,545,036. The difference between the bank balance and the carrying amount represents outstanding warrants and wire transfers and deposits in transit.
Custodial Credit Risk
In the case of deposits, this is the risk that in the event of a bank failure, the City’s deposits may not be returned to it. The City has no deposit policy for custodial credit risk.
The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies.
California law also allows financial institutions to secure public agency deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. As of June 30, 2024, all of the City’s deposits with financial institutions in excess of federal depository insurance limits were held in fully collateralized accounts, as permitted by the California Government Code.
Under Government Code Section 53655, the placement of securities by a bank or savings and loan association with an Agent of Depository has the effect of perfecting the security interest in the name of the local governmental agency. Accordingly, all collateral held by California Agents of Depository is considered to be held for, and in the name of, the local governmental agency.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(28)
NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Investments
The City had the following investments at June 30, 2024:
Investment Type Fair Value Maturity Date
State Treasurer's Investment Pool (LAIF) $ N/ 20,610,928 A Total Investments 20,610,928 $
Interest Rate Risk
The City’s exposure to interest rate risk is identified by the above weighted average maturities. The City has no investment policy for interest rate risk.
Credit Rating Risk
The City is required to disclose the credit quality ratings of investments in debt securities as issued by nationally recognized statistical rating organizations. At June 30, 2024, the Credit rating for investment in LAIF was not rated. The City has no investment policy for credit risk.
Concentration of Credit Risk
The City is required to disclose any investment in any one issuer that represents 5% or more of total investments. Investments issued or explicitly guaranteed by the U.S. government and investments in mutual funds, external investment pools, and other pooled investments are excluded from this requirement. As such, the City has no concentration of credit risk that exceeds 5%. The City has no investment policy for concentration of credit risk.
Custodial Credit Risk
For an investment, this is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. With respect to investments, custodial credit risk generally applies only to direct investments in marketable securities. Custodial credit risk does not apply to a local government’s indirect investment in securities through the use of mutual funds or government investment pools (such as LAIF). The City has no investment policy for custodial credit risk.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(29)
NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Investments (Continued)
Custodial Credit Risk (Continued)
The table below identifies the investment types that are authorized for the City of McFarland by the California Government Code. The table also identifies certain provisions of the California Government Code that addresses 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.
Maximum Minimum
Maximum Percentage Quality
Authorized Investment Type Maturity of Portfolio Requirements Local Agency Bonds 5 Years None None
U.S. Treasury Obligations 5 Years None None
State Obligations 5 Years None None
CA Local Agency Obligations 5 Years None None
U.S. Agency Obligations 5 Years None None
Bankers Acceptance 180 Days 40% None
Commercial Paper - Select Agencies 270 Days 25 A-1
Commercial Paper - Other Agencies 270 Days 40 A-1
Negotiable Certificates of Deposit 5 Years 30 None
CD Placement Service 5 Years 30 None
Repurchase Agreements 1 Year None None
Reverse Repurchase Agreements 92 Days 20 None
Medium-Term Notes 5 Years 30 A
Mutual and Money Market Funds N/A Multi 20 ple
Collateralized Bank Deposits 5 Years None None
Mortgage Pass-Through Securities 5 Years 20 AA
Bank/Time Deposits 5 Years None None
County Pooled Investment Funds N/A None None
Joint Powers Authority Pool N/A None Multiple
Local Agency Investment Fund (LAIF) N/A None None
Fair Value of Investments
The City measures and records its investments using fair value measurement guidelines established by accounting principles generally accepted in the United States of America.
These guidelines recognize a three-tiered fair value hierarchy, as follows:
Level 1 – Quoted prices for identical investments in active markets; Level 2 – Observable inputs other than quoted market prices; and Level 3 – Unobservable inputs.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(30)
NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Fair Value of Investments (Continued)
The City’s position in external investment pools is, in itself, regarded as a type of investment and looking through to the underlying investments of the pool is not appropriate. Therefore, the City’s investment in external investment pools is not recognized in the three-tiered fair value hierarchy described above.
Investment in External Investment Pools
The City maintains an investment in the State of California Local Agency Investment Fund (LAIF), managed by the State Treasurer. This fund is not registered with the Securities and Exchange Commission as an investment company, but is required to invest according to California State Code. The Local Investment Advisory Board (Board) has oversight responsibility for LAIF. The Board consists of five members as designated by State Statute.
At June 30, 2024, the City’s investment in LAIF valued at amortized cost was $20,610,928 and is the same as the value of the pool shares. There are no restrictions on withdrawal of funds. The total amount invested by all public agencies in LAIF on that day was $178 billion.
Of that amount, 97.00% is invested in nonderivative financial products and 3.00% in structured notes and asset-backed securities.
Restricted Cash and Investments with Fiscal Agents
Cash and investments at June 30, 2024, that are restricted by legal or contractual requirements are comprised of the following:
Governmental-Type Activities:
McFarland Improvement Authority:
Reserves for Capital Projects 3,632,242 $
Debt Service Reserves 295,807
Total McFarland Improvement Authority: 3,928,049
Business-Type Activities:
Sewer Fund:
Debt Service Reserves 207
Water Fund:
Debt Service Reserves 102
Total 309
Total Restricted Cash and Investments 3,928,358 $
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(31)
NOTE 3 CAPITAL ASSETS
Capital and right-to-use assets activity for the year ended June 30, 2024, was as follows:
Balance Transfers/ Balance
July 1, 2023 Additions Retirements Adjustments June 30, 2024 Governmental-Type Activities:
Capital Assets, Not Being Depreciated:
Land 993 $ 5 ,176 $ - ,435,376 $ - $ 6 $ ,428,552
Construction In Progress 4 1 ,396,966 - ,471,335 1 (4,357,607) ,510,694 Total Capital Assets, Not Being
Depreciated 5 6 ,390,142 - ,906,711 7 (4,357,607) ,939,246 Capital Assets, Being Depreciated:
Infrastructure 37 109 ,426,975 - ,297 4 41 ,357,607 ,893,879 Machinery and Equipment 2 234 ,253,696 - ,746 - 2 ,488,442 Vehicles 2 341 ,787,788 - ,341 - 3 ,129,129
Total Capital Assets, Being
Depreciated 42 685 ,468,459 - ,384 4 47 ,357,607 ,511,450 Less Accumulated Depreciation for:
Infrastructure (9,694,718) - (1,280,095) - (10,974,813) Machinery and Equipment (1,574,915) - (185,613) - (1,760,528) Vehicles (1,092,358) - (221,070) - (1,313,428)
Total Accumulated Depreciation (12,361,991) - (1,686,778) - (14,048,769) Total Capital Assets, Being
Depreciated, Net 30 ,106,468 - (1,001,394) 4 33 ,357,607 ,462,681 Right-to-Use Assets, Being Amortized:
Machinery and Equipment 312 - ,565 - (163,392) 149 ,173 SBITAs 40 - ,264 - - 40 ,264
Total Right-to-Use Assets, Being
Amortized 352 - ,829 - (163,392) 189 ,437
Less Accumulated Amortization for:
Machinery and Equipment (197,959) 163 (79,785) - ,392 (114,352) SBITAs (5,083) - (12,488) - (17,571)
Total Accumulated Amortization (203,042) 163 (92,273) - ,392 (131,923) Total Right-to-Use Assets, Being
Amortized, Net 149 ,787 - (92,273) - 57 ,514
Governmental-Type Activities Capital
Assets, Net 35 $ 5 ,646,397 $ - ,813,044 $ - $ 41 $ ,459,441 Balance Transfers/ Balance
July 1, 2023 Additions Retirements Adjustments June 30, 2024 Business-Type Activities:
Capital Assets, Not Being Depreciated:
Land 1 $ - ,280,063 $ - $ - $ 1 $ ,280,063
Construction In Progress 74 12 ,963 - ,112 - 87 ,075
Total Capital Assets, Not Being
Depreciated 1 12 ,355,026 - ,112 - 1 ,367,138
Capital Assets, Being Depreciated:
Infrastructure 6 - ,836,223 - - 6 ,836,223
Buildings and Improvements 8 - ,579,010 - - 8 ,579,010
Machinery and Other 16 12,092,260 - ,450 - 12 ,108,710
Vehicles 1 - ,060,455 - - 1 ,060,455
Total Capital Assets, Being
Depreciated 28,567,948 16,450 - - 28,584,398
Less Accumulated Depreciation for:
Infrastructure (894,155) - (170,905) - (1,065,060)
Buildings and Improvements (3,592,946) - (410,167) - (4,003,113) Machinery and Other (8,409,086) - (287,515) - (8,696,601) Vehicles (902,914) - (28,424) - (931,338)
Total Accumulated Depreciation (13,799,101) - (897,011) - (14,696,112) Total Capital Assets, Being
Depreciated, Net 14 ,768,847 - (880,561) - 13 ,888,286
Business-Type Activities Capital
Assets, Net 16 $ ,123,873 $ - (868,449) $ - $ 15 $ ,255,424
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(32)
NOTE 3 CAPITAL ASSETS (CONTINUED)
Depreciation
Depreciation expense was charged to governmental functions as follows at June 30, 2024:
General Government 479,475 $
Public Safety 234,974
Public Works 914,441
Community Development 57,888
Total Depreciation Expense - Governmental
Functions 1,686,778 $
Depreciation expense was charged to business-type functions as follows at June 30, 2024:
Solid Waste 391,929 $
Refuse 286
Water 471,774
Public Transit 33,022
Total Depreciation Expense - Business-Type
Functions 897,011 $
Amortization
Amortization expense was charged to governmental functions as follows at June 30, 2024:
General Government 92,273 $
Total Amortization Expense - Governmental
Functions 92,273 $
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(33)
NOTE 4 INTERFUND TRANSACTIONS
Due to/from Other Funds
During the course of operations, transactions occur between funds to account for goods received or services rendered. These receivables and payables are classified as due from or due to other funds. In addition, when funds overdraw their share of pooled cash, the receivables and payables are also classified as due from or due to other funds. The following are due from and due to balances as of June 30, 2024:
Due from Due to
Other Funds Other Funds
General Fund 1,213,430 $ 124,043 $
McFarland Improvement Authority 501,698 -
TDA - LTF - 722,442
Development Impact 1,209,542 -
Miscellaneous Grants - 26,908
Sewer 4,419 -
Refuse - 52,273
Water 1,360 -
Nonmajor Governmental Funds - 997,560
Nonmajor Enterprise Fund 604 4,431
Total 2,429,355 $ 2,429,355 $
Advances from/to Other Funds
The amount payable to the Sewer Fund relate to a loan for capital projects, including park facilities and other public infrastructure and facilities. The loan is scheduled to be repaid in 2025:
Advances to Advances from
Other Funds Other Funds
General Fund - $ 23,096 $
Sewer 23,096 -
Total 23,096 $ 23,096 $
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(34)
NOTE 4 INTERFUND TRANSACTIONS (CONTINUED)
Transfers
Transfers are indicative of funding for capital projects, and lease payments or debt service.
The following are the interfund transfer balances for the year ended June 30, 2024:
Transfer In Transfer Out
General Fund 547,621 $ - $
McFarland Improvement Authority 9,883 -
Miscellaneous Grants - 544
Sewer - 179,603
Refuse - 65,794
Water - 251,163
Nonmajor Governmental Funds - 25,811
Nonmajor Enterprise Fund - 14,823
Total 547,621 $ 547,621 $
During the year, the City transferred monies to the general fund for shared costs allocated across each of the City’s funds.
NOTE 5 UNEARNED/UNAVAILABLE REVENUE
Unearned revenue consists of moneys received where the City has not yet incurred the qualifying expenditures.
Deferred inflows of resources represents an acquisition of net position or fund balance that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. The City has transactions that qualify for reporting under this category:
unavailable revenue. Unavailable revenue is only reported in the governmental funds balance sheet under the modified accrual basis of accounting.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(35)
NOTE 5 NOTE 5 UNEARNED/UNAVAILABLE REVENUE (CONTINUED)
At June 30, 2024, components of unearned and unavailable revenues were as follows:
Unearned Unavailable
Revenue Revenue Total
General Fund:
Grant Revenue 5,011,668 $ 641,703 $ 5,653,371 $
TDA:
Grant Revenue - 738,996 738,996
CalHOME:
Grant Revenue and Loans - 3,124,208 3,124,208
Miscellaneous Grants:
Grant Revenue and Loans 24,660 - 24,660
Nonmajor Governmental Funds:
Grant Revenue and Loans 416 709,906 710,322
Total Governmental-Type
Activities 5,036,744 $ 5,214,813 $ 10,251,557 $
Public Transportation:
Grant Revenue 189,081 $
Total Business-Type
Activities 189,081 $
NOTE 6 LONG-TERM LIABILITIES
The following is a summary of changes in long-term liabilities for the year ended June 30, 2024:
Amounts
Balance Balance Due Within
Type of Indebtedness July 1, 2023 Additions Retirements Adjustments June 30, 2024 One Year Governmental-Type Activities:
Direct Placement
Revenue Bonds 4,140,000 $ - $ (110,000) $ - $ 4,030,000 $ 115,000 $ Unamortized Premiums on Bonds 284,628 - (11,859) - 272,769 - Direct Borrowing
Notes Payable 814,376 - (20,207) - 794,169 20,264
Other Liabilities
Leases 75,002 - (67,497) - 7,505 5,166
SBITAs 25,958 - (10,047) - 15,911 5,296
Compensated Absences 63,580 44,586 (16,665) - 91,501 27,921 Total Governmental-Type
Activities 5,403,544 $ 44,586 $ (236,275) $ - $ 5,211,855 $ 173,647 $ Business-Type Activities:
Direct Placement
Revenue Bonds 5,076,000 $ - $ (248,000) $ - $ 4,828,000 $ 212,000 $ Other Liabilities
Compensated Absences 24,421 11,672 (5,234) - 30,859 5,234 Total Business-Type Activities 5,100,421 $ 11,672 $ (253,234) $ - $ 4,858,859 $ 217,234 $ Compensated absences for the governmental activities are generally liquidated by the fund where the accrued liability occurred.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(36)
NOTE 6 LONG-TERM LIABILITIES (CONTINUED)
Individual issues of debt payable outstanding at June 30, 2024, are as follows:
Governmental-Type Activities:
Revenue Bonds:
Series 2017 Lease Revenue Bonds dated December 1,
2017, in the original amount of $4,450,000 at 3% to 4%
interest; principal and interest payable each March 1
and September 1 until September 2, 2047, maturity.
Bonds issued by the McFarland Improvement
Authority. Secured by a pledge of lease revenues. 4,030,000 Total Revenue Bonds 4,030,000
Notes Payable:
Note payable to the United States Department of
Agriculture in the amount of $844,700; principal and
interest at 3.375% due each October 1 through 2058. 794,169 Total Notes Payable 794,169
Total Governmental-Type Activities 4,824,169 $
Business-Type Activities:
Revenue Bonds:
Revenue Bonds dated June 15, 2023, in the
original amount of $5,076,000 at 4.410% interest;
payable semi-annually commencing October 1,
2023. Principal is due annually commencing
October 1, 2023, with final payment due October 1,
2039. Secured by a pledge of water and wastewater
net revenues. 4,828,000 $
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(37)
NOTE 6 LONG-TERM LIABILITIES (CONTINUED)
The following are schedules of debt service requirements as of June 30, 2024:
Year Ending June 30, Principal Interest Principal Interest 2025 115,000 $ 157,700 $ 20,264 $ 2,093 $
2026 115,000 154,250 20,321 2,036
2027 120,000 150,800 20,378 1,979
2028 125,000 147,200 20,436 1,922
2029 130,000 142,200 20,493 1,864
2030 - 2034 725,000 629,000 103,333 8,453
2035 - 2039 880,000 472,600 104,794 6,992
2040 - 2044 1,070,000 281,400 106,276 5,510
2045 - 2049 750,000 60,800 107,779 4,007
2050 - 2054 - - 109,304 2,483
2055 - 2058 - - 88,555 937
2059 - - 72,236 -
Total 4,030,000 $ 2,195,950 $ 794,169 $ 38,276 $
Governmental-Type Activities
Revenue Bonds Note Payable
Year Ending June 30, Principal Interest
2025 212,000 $ 208,240 $
2026 222,000 198,670
2027 232,000 188,660
2028 242,000 178,208
2029 253,000 167,293
2030 - 2034 1,449,000 654,422
2035 - 2039 1,806,000 297,014
2040 412,000 9,085
Total 4,828,000 $ 1,901,592 $
Business-Type Activities
Revenue Bonds
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(38)
NOTE 6 LONG-TERM LIABILITIES (CONTINUED)
Pledged Revenues
The City has pledged future water and wastewater utility revenue to repay revenue bonds issued in 2010. The various bonds were issued for the purchase of construction of various water or wastewater infrastructure. At June 30, 2024, $4,828,000 remains outstanding to be repaid by future water and wastewater revenues. If such revenues prove insufficient, the remainder will be repaid as a general obligation of the City. For the fiscal year ended June 30, 2024, the net revenue available for service of this debt was $594,777. The debt principal and interest paid in fiscal year 2023-2024 equals $420,369 (70.68% of available pledged net revenues).
NOTE 7 LEASES
Leases Payable
The City leases equipment as well as certain operating and office facilities for various terms under long-term, noncancelable lease agreements. The leases expire at various dates through 2027 with interest rates ranging from 7.3918 to 14.4717%.
Total future minimum lease payments under lease agreements are as follows:
Year Ending June 30, Principal Interest
2025 5,166 $ 533 $
2026 1,832 168
2027 507 18
Total Minimum Lease Payments 7,505 $ 719 $
Governmental-Type Activities
Right-to-use assets acquired through outstanding leases are shown below, by underlying asset class.
GovernmentalType Activities
Equipment 149,173 $
Less: Accumulated Amortization (114,352)
Total 34,821 $
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(39)
NOTE 7 LEASES (CONTINUED)
Leases Receivable
The City, acting as a lessor, leases various assets under long-term, noncancelable lease agreements with no interest. The leases expire at various dates through 2026. During the year ended June 30, 2024, the City recognized $14,362 for governmental activities and $61,923 for business type activities in lease revenue, pursuant to these contracts. Total minimum lease payments to be received under lease agreements are as follows:
Year Ending June 30, Principal Interest
2025 64,252 $ - $
2026 32,756 -
Total Minimum
Lease Payments 97,008 $ - $
Business-Type Activities
NOTE 8 SUBSCRIPTION-BASED INFORMATION TECHNOLOGY ARRANGEMENTS The City has entered into various long-term, non-cancellable subscription-based information technology agreements. Total future minimum lease payments under these agreements are as follows:
Year Ending June 30, Principal Interest
2025 5,296 $ 444 $
2026 5,264 296
2027 5,351 150
Total Minimum Lease Payments 15,911 $ 890 $
Governmental-Type Activities
Right-to-use assets acquired through outstanding agreements are shown below, by underlying asset class.
GovernmentalType Activities
Equipment 40,264 $
Less: Accumulated Amortization (17,571)
Total 22,693 $
NOTE 9 FUND BALANCES
As prescribed by GASB Statement No. 54, governmental funds report fund balance in classifications based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the funds can be spent.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(40)
NOTE 9 FUND BALANCES (CONTINUED)
The fund balances for all major and nonmajor governmental funds as of June 30, 2024, were distributed as follows:
McFarland Other
Development Miscellaneous Improvement Governmental
General TDA-LTF Gas Tax CalHOME Impact Grants Authority Funds Total Nonspendable:
Prepaids 47,706 $ - $ - $ - $ - $ - $ - $ 3,485 $ 51,191 $ Subtotal 47,706 - - - - - - 3,485 51,191
Restricted for:
Streets and
Transportation - - 276,030 - - - - 314,577 590,607
Impact Fees - - - - 3,274,865 - - - 3,274,865
CalHOME - - - 165,238 - - - - 165,238
Grants - - - - - 303,025 - - 303,025
Debt Service - - - - - - 284,559 - 284,559
Capital Projects - - - - - - 3,668,461 - 3,668,461
Subtotal - - 276,030 165,238 3,274,865 303,025 3,953,020 314,577 8,286,755 Assigned to:
CUP Fees for
Capital Projects 1,903,968 - - - - - - - 1,903,968
Subtotal 1,903,968 - - - - - - - 1,903,968
Unassigned 3,538,238 (649,674) - - - - - (100,259) 2,788,305 Total 5,489,912 $ (649,674) $ 276,030 $ 165,238 $ 3,274,865 $ 303,025 $ 3,953,020 $ 217,803 $ 13,030,219 $ NOTE 10 RETIREMENT PLAN
General Information About the Pension Plan
Plan Description
The City’s defined contribution plan provides for retirement benefits to plan members and beneficiaries. The plan is administrated by John Hancock Life Insurance Company.
Funding Policy
The City contributes 10% of permanent employees’ salaries who have at least three years of service. Vesting is at 33% per year over three years. In the event an employee terminates service prior to retirement, the employee is entitled to a refund of the employee’s contributions plus interest plus the vested portion of the City’s contributions.
During the current year, the City was required to make contributions to the plan in the amount of $377,533. The plan did not include any forfeitures during the current year.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(41)
NOTE 11 RISK MANAGEMENT
The City is exposed to various risks of loss related to torts: theft of, damage to and destruction of assets: errors and omissions; injuries to employees; and natural disasters.
For general liability and workers’ compensation programs, the City is a member of the Central San Joaquin Valley Risk Management Authority (the RMA). The RMA is comprised of 55 member cities and special districts and is organized under a Joint Powers Agreement pursuant to the California Government Code. The purpose of the RMA is to arrange and administer programs of insurance for the pooling of self-insured losses and to purchase excess insurance coverage. Each member has a representative on the Board of Directors with officers of the RMA being elected annually by the Board Members.
General Liability
Annual deposits are paid by members and are adjusted retrospectively to cover costs. Each member has a specific self-insured retention (SIR) level. The City of McFarland’s SIR is $25,000. The city is responsible for the first $25,000 of each occurrence. The City does not share or pay for losses of other members with SIRs under $25,000. Specific coverage includes general and automobile liability, personal injury, errors and omissions, and certain other coverage. Claims from $25,000 to $1,000,000 are covered by a special pre-funded self-insurance pool maintained by the RMA. Claims from $1,000,000 to $4,000,000 are selfinsured by the California Affiliated Risk Management Authorities (CARMA), a joint powers authority providing excess coverage to a membership consisting of six underlying joint powers authorities, representing approximately 175 cities and special districts. Claims from $4,000,000 to $39,000,000 are covered by Excess Comprehensive General Liability Policies.
Workers’ Compensation
Annual deposits are paid by members and are adjusted retrospectively to cover costs. Each member has a specific self-insured retention (SIR) level. The City of McFarland’s SIR is $25,000 per occurrence. The City is responsible for the first $25,000 of each occurrence.
The City does not share or pay for losses of other members with SIRs under $25,000.
Losses between $25,000 and $500,000 are covered by a special pre-funded self-insurance pool maintained by the RMA.
Claims from $500,000 to $5,000,000 are self-insured by the Local Agency Workers’ Compensation Excess Joint Powers Authority which is a joint powers authority providing excess coverage to 36 members including cities, special districts, and joint powers authorities. Claims in excess of $5,000,000 and a limit of $50,000,000 are self-insured by the California State Association of Counties Excess Insurance Authority, another joint powers authority.
There were no settlements in excess of insurance coverage in any of the three prior fiscal years.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(42)
NOTE 11 RISK MANAGEMENT (CONTINUED)
Workers’ Compensation (Continued)
The audited financial information from Central San Joaquin Valley Risk Management Authority for the year ended June 30, 2024, is as follows:
Total Assets 179,635,612 $
Total Liabilities 144,400,470
Net Position 35,235,142 $
Total Revenues 95,596,916 $
Total Expenses 94,324,180
Change in Net Position 1,272,736 $
Complete audited financial statements can be obtained from their office at 1750 Creekside Oaks Drive, Suite 200, Sacramento, California 95833.
NOTE 12 OTHER INFORMATION
Fund Deficits
The City has accumulated fund deficits in the following individual funds:
Governmental Funds:
TDA-LTF 649,674 $
CDBG 13,888
HOME 85,457
COPS 914
These deficits will be resolved by future charges for services and receipt of grant funds.
Commitments
The City has signed agreements to construct various capital improvements subsequent to June 30, 2024. The balance owed on the commitments at June 30, 2024, was approximately $20,967,447.
Contingencies
Federal and State Government Programs
The City participates in several federal and state grant programs. These programs are subject to audit and review by the grantor pursuant to grant provisions. Expenditures may be disallowed by the granting agencies that cannot be determined at this time. The City expects such amounts, if any, to be immaterial.
The City is involved in several lawsuits. Due to the nature of the cases, The City’s counsel is unable to estimate at this time the probability of favorable or unfavorable outcomes. Therefore, no provision has been made in the financial statements for a loss contingency.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(43)
NOTE 13 CORRECTION OF ERROR IN PREVIOUSLY ISSUED FINANCIAL STATEMENTS During the year ended June 30, 2024, beginning net position of governmental activities and the beginning fund balance of the miscellaneous grants fund was restated to record revenue that was earned during the year ended June 30, 2023. In the prior year, fund balance, net position and revenue were understated in the amount of $50,500.
Governmental Miscellaneous
Activities Grants
Net Position/Fund Balance - Beginning of Year 44,811,920 $ 177,103 $ Correction of an Error - Revenue Recognition 50,500 50,500 Net Position/Fund Balance - Beginning of Year, as
Restated $ 227,603 44,862,420 $
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
CITY OF MCFARLAND
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
YEAR ENDED JUNE 30, 2024
See accompanying Note to Required Supplementary Information (44)
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES
Taxes 3,343,813 $ 3,546,778 $ 3,876,614 $ 329,836 $
Licenses and Permits 499,047 717,910 836,253 118,343
Fines and Forfeitures 47,218 47,218 107,384 60,166
Use of Money and Property 79,517 79,517 219,819 140,302 Intergovernmental Revenues 165,510 6,864,345 2,491,087 (4,373,258) Charges for Services 935,663 1,091,264 1,671,078 579,814 Contributions 11,500 11,500 57,995 46,495
Other Revenues 21,000 101,000 292,280 191,280
Total Revenues 5,103,268 12,459,531 9,552,510 (2,907,021)
EXPENDITURES
Current:
General Government 1,361,944 1,826,889 1,005,849 821,040 Public Safety 4,492,437 4,252,655 2,283,362 2,209,075
Public Works 732,515 810,582 91,510 719,072
Community Development 617,724 787,735 663,106 124,629
Debt Service:
Principal 818,976 818,976 97,751 721,225
Interest and Other Charges - - 13,836 (13,836)
Capital Outlay 3,679,113 444,196 1,557,903 2,121,210
Total Expenditures 8,228,010 12,415,733 5,713,317 6,702,416
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
EXPENDITURES 43,799 (3,124,742) 3,839,193 3,795,394
OTHER FINANCING SOURES (USES)
Transfers In - - 547,621 547,621
Total Other Financing
Soures (Uses) - - 547,621 547,621
NET CHANGE IN FUND BALANCES 43,799 (3,124,742) 4,386,814 4,343,015 Fund Balances - Beginning of Year 1,103,098 1,103,098 1,103,098 - FUND BALANCES - END OF YEAR $ 1,146,897 (2,021,644) $ 5,489,912 $ 4,343,015 $
CITY OF MCFARLAND
BUDGETARY COMPARISON SCHEDULE
TDA-LTF
MAJOR SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 2024
See accompanying Note to Required Supplementary Information (45)
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES
Intergovernmental Revenues 211,178 $ 905,857 $ - $ $ (905,857) Total Revenues 211,178 905,857 - (905,857)
EXPENDITURES
Capital Outlay 211,178 211,178 165,090 (46,088)
Total Expenditures 211,178 211,178 165,090 (46,088)
NET CHANGE IN FUND BALANCES 694,679 - (165,090) (859,769) Fund Balances - Beginning of Year (484,584) (484,584) - (484,584) FUND BALANCES - END OF YEAR $ 210,095 (484,584) $ $ (649,674) $ (859,769)
CITY OF MCFARLAND
BUDGETARY COMPARISON SCHEDULE
GAS TAX
MAJOR SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 2024
See accompanying Note to Required Supplementary Information (46)
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES
Intergovernmental Revenues 390,726 $ 390,726 $ 377,992 $ $ (12,734) Use of Money and Property - - 9,363 9,363
Total Revenues 390,726 390,726 387,355 (3,371)
EXPENDITURES
Current:
Public Works - - 648,920 648,920
Capital Outlay - - 27,515 27,515
Total Expenditures - - 676,435 676,435
NET CHANGE IN FUND BALANCES 390,726 390,726 (289,080) (679,806) Fund Balances - Beginning of Year 565,110 565,110 565,110 - FUND BALANCES - END OF YEAR $ 955,836 955,836 $ 276,030 $ $ (679,806)
CITY OF MCFARLAND
BUDGETARY COMPARISON SCHEDULE
DEVELOPMENT IMPACT
MAJOR SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 2024
See accompanying Note to Required Supplementary Information (47)
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES
Licenses and Permits 939,676 $ 939,676 $ 1,025,606 $ 85,930 $ Use of Money and Property - - 60,272 60,272
Total Revenues 939,676 939,676 1,085,878 146,202
EXPENDITURES
Capital Outlay 78,283 - 10,454 (67,829)
Total Expenditures - 78,283 10,454 (67,829)
NET CHANGE IN FUND BALANCES 861,393 939,676 1,075,424 214,031 Fund Balances - Beginning of Year 2,199,441 2,199,441 2,199,441 - FUND BALANCES - END OF YEAR $ 3,060,834 3,139,117 $ 3,274,865 $ 214,031 $
CITY OF MCFARLAND
BUDGETARY COMPARISON SCHEDULE
MISCELLANEOUS GRANTS
MAJOR SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 2024
See accompanying Note to Required Supplementary Information (48)
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES
Intergovernmental Revenues - $ - $ 2,237,093 $ 2,237,093 $ Total Revenues - - 2,237,093 2,237,093
EXPENDITURES
Current:
General Government - 109,470 116,279 (6,809)
Public Safety 1,950,242 1,950,820 2,044,848 (94,028)
Total Expenditures 1,950,242 2,060,290 2,161,127 (100,837)
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
EXPENDITURES (2,060,290) (1,950,242) 75,966 2,136,256
OTHER FINANCING SOURES (USES)
Transfers In
Transfers Out - - (544) (544)
Total Other Financing
Soures (Uses) - - (544) (544)
NET CHANGE IN FUND BALANCES (2,060,290) (1,950,242) 75,422 2,135,712 Fund Balance - Beginning, as Originally Reported 177,103 177,103 177,103 - Adjustment- correction of an error 50,500 50,500 50,500 - Fund Balance - Beginning, as Adjusted 227,603 227,603 227,603 - FUND BALANCES - END OF YEAR $ (1,832,687) (1,722,639) $ 303,025 $ 2,135,712 $
CITY OF MCFARLAND
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2024
(49)
NOTE 1 APPROPRIATED BUDGET AND BUDGETARY CONTROL
The City Council is required to adopt an annual budget resolution by July 1 of each fiscal year for the General and Special Revenue funds. The budgets are presented for reporting purposes on a budgetary basis consistent with accounting principles generally accepted in the United States of America. The McFarland Improvement Authority does not adopt a budget.
The appropriated budget is prepared by fund, function, and department. The City had one fund, the miscellaneous grant fund, exceed its budget appropriation by $100,837. All other expenditures did not exceed the budget for the year. The City Manager may make transfers of appropriations within a department and make transfers of appropriations between departments as long as there is no increase or decrease to the overall budget. The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations) is the function level. Unexpended or unencumbered appropriations lapse at the end of the fiscal year. Encumbered appropriations are reappropriated in the ensuing year’s budget.
The City Council adopts budgets for the Enterprise funds. However, all Proprietary fund types are accounted for on a cost of service (net income), or “capital maintenance” measurement focus. As a result, budget comparisons are impractical. Additionally, the City is not legally mandated to report the results of operations for these Proprietary fund types on a budget comparison basis; therefore, budgetary data related to these funds has not been presented.
The City did not present a budgetary schedule for the CalHOME Fund since this fund did not adopt a budget this year.
COMBINING FUND STATEMENTS
CITY OF MCFARLAND
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2024
(50)
Road Community
Lighting and Maintenance Facilities
CDBG HOME Landscape COPS and Rehab District Total
ASSETS
Cash and Investments 402,547 $ - $ 118,939 $ 482,791 $ 186,517 $ - $ 1,190,794 $ Receivables:
Accounts - 3,383 - - - - 3,383
Intergovernmental 7,791 - - - - - 7,791
Taxes - - - - 29,513 - 29,513
Prepaid Expenses - - 3,485 - - - 3,485
Loans Receivable - 709,906 - - - - 709,906
Total Assets 410,338 $ 713,289 $ 122,424 $ 482,791 $ 216,030 $ - $ 1,944,872 $
LIABILITIES, DEFERRED
INFLOWS OF RESOURCES,
AND FUND BALANCES
LIABILITIES
Accounts Payable - $ - $ 17,901 $ - $ - $ - $ 17,901 $
Accrued Liabilities - - 1,286 - - - 1,286
Due to Other Funds 424,226 88,840 789 483,705 - - 997,560 Unearned Revenue - - - - 416 - 416
Total Liabilities 424,226 88,840 19,976 483,705 416 - 1,017,163
DEFERRED INFLOWS OF
RESOURCES
Unavailable Revenue - 709,906 - - - - 709,906
FUND BALANCES
Nonspendable - - 3,485 - - - 3,485
Restricted - - 98,963 - 215,614 - 314,577
Unassigned (13,888) (85,457) - (914) - - (100,259)
Total Fund Balances (13,888) (85,457) 102,448 (914) 215,614 - 217,803 Total Liabilities, Deferred
Inflows of Resources,
and Fund Balances 410,338 $ 713,289 $ 122,424 $ 482,791 $ 216,030 $ - $ 1,944,872 $ Special Revenue
CITY OF MCFARLAND
COMBINING STATEMENT OF REVENUES,
EXPENDITURES, AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2024
(51)
Road Community
Lighting and Maintenance Facilities
CDBG HOME Landscape COPS and Rehab District Total
REVENUES
Taxes - $ - $ 161,451 $ - $ 358,675 $ - $ 520,126 $
Use of Money and Property - - 2,713 - 3,223 - 5,936
Intergovernmental Revenues - - - - - 582,133 582,133
Total Revenues - - 164,164 - 361,898 582,133 1,108,195
EXPENDITURES
Current:
General Government - - - - - 581,055 581,055
Public Works - - 211,181 - - - 211,181
Capital Outlay - - 8,585 - 833,765 - 842,350
Total Expenditures - - 219,766 - 833,765 581,055 1,634,586
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
EXPENDITURES - - (55,602) - (471,867) 1,078 (526,391)
OTHER FINANCING
SOURCES (USES)
Transfers Out - - (24,733) - - (1,078) (25,811)
Total Other Financing
Soures (Uses) - - (24,733) - - (1,078) (25,811)
NET CHANGE IN FUND
BALANCES - - (80,335) - (471,867) - (552,202)
Fund Balances - Beginning
of Year (13,888) (85,457) 182,783 (914) 687,481 - 770,005
FUND BALANCES - END
OF YEAR $ (85,457) (13,888) $ 102,448 $ (914) $ 215,614 $ - $ 217,803 $ Special Revenue
CITY OF MCFARLAND
SINGLE AUDIT REPORT
YEAR ENDED JUNE 30, 2024
CITY OF MCFARLAND
TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2024
INDEPENDENT AUDITORS’ REPORT ON ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 1
INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJOR
FEDERAL PROGRAM, REPORT ON INTERNAL CONTROL OVER
COMPLIANCE, AND REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE 3
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 7
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 8
SCHEDULE OF FINDINGS AND QUESTIONED COSTS 10
CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer.
CliftonLarsonAllen LLP
CLAconnect.com
(1)
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Honorable Mayor and Members of the City Council
City of McFarland
McFarland, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of McFarland (the City) as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated January 22, 2025.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purposes described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified.
We identified a certain deficiency in internal control, described in the accompanying schedule of findings and questioned costs as item 2024-001 that we consider to be a material weakness.
Honorable City Council
City of McFarland
(2)
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
The City of McFarland’s Response to Findings
Government Auditing Standards requires the auditor to perform limited procedures on the City of McFarland’s response to the findings identified in our audit and described in the accompanying schedule of findings and questioned costs. The City of McFarland’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
CliftonLarsonAllen LLP
Roseville, California
January 22, 2025
CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer.
CliftonLarsonAllen LLP
CLAconnect.com
(3)
INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH
MAJOR FEDERAL PROGRAM, REPORT ON INTERNAL CONTROL OVER
COMPLIANCE, AND REPORT ON THE SCHEDULE OF EXPENDITURES
OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE
Honorable Mayor and Members of the City Council
City of McFarland
McFarland, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City of McFarland, California's (the City) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended June 30, 2024. The City’s major federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs.
In our opinion, the City complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2024.
Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditors’ Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above.
Honorable City Council
City of McFarland
(4)
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the City’s federal programs.
Auditors’ Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of each major federal program as a whole.
In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.
Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance. Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.
Honorable City Council
City of McFarland
(5)
Other Matters
The results of our auditing procedures disclosed an instance of noncompliance, which is required to be reported in accordance with the Uniform Guidance and which is described in the accompanying schedule of findings and questioned costs as item 2024-002. Our opinion on each major federal program is not modified with respect to this matter.
Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the noncompliance finding identified in our compliance audit described in the accompanying schedule of findings and questioned costs. The City’s response was not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
Report on Internal Control Over Compliance
Our consideration of internal control over compliance was for the limited purpose described in the Auditors’ Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance and therefore, material weaknesses or significant deficiencies may exist that were not identified. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, as discussed below, we did identify a certain deficiency in internal control over compliance that we consider to be a significant deficiency.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiency in internal control over compliance described in the accompanying schedule of findings and questioned costs as item 2024- 002 to be a significant deficiency.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.
Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the internal control over compliance findings identified in our audit described in the accompanying schedule of findings and questioned costs. The City’s response was not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Honorable City Council
City of McFarland
(6)
Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements. We have issued our report thereon, dated January 22, 2025, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements.
The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements.
The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.
CliftonLarsonAllen LLP
Roseville, California
January 22, 2025
CITY OF MCFARLAND
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Schedule of Expenditures of Federal Awards. (7)
Federal
Assistance Pass-Through Total Passed
Federal Grantor/Pass-Through Grantor/ Listing Entity Identifying Federal Through to Program/Cluster Title Number Number Expenditures Subrecipients U.S. Department of Agriculture
Direct Programs:
Community Facilities Direct Loan and Grant Program 10.766 N/A 744,229 $ - $ Total U.S. Department of Agriculture 744,229 -
U.S. Department of Housing and Urban Development
Passed-Through State of California Department of
Housing and Community Development:
HOME Investment Partnership Program
(Outstanding Loans) 14.239 N/A 709,906 -
Total U.S. Department of Housing and
Urban Development - 709,906
U.S. Department of Transportation
Passed-Through the State Department
of Transportation:
Highway Planning and Construction 20.205 H8-06-012 335,158 - Formula Grants for Rural Areas and Tribal Transit Program 20.509 N/A 51,355 - Total U.S. Department of Transportation 386,513 -
U.S. Department of Treasury
Passed-Through the State Department of Finance
COVID-19 Coronavirus
State and Local Fiscal Recovery Funds 21.027 N/A 2,162,996 - Total U.S. Department of Treasury - 2,162,996
Total Expenditures of Federal Awards 4,003,644 $ - $
CITY OF MCFARLAND
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
JUNE 30, 2024
(8)
NOTE 1 BASIS OF PRESENTATION
The accompanying schedule of expenditures of federal awards (the Schedule) presents the activity of all federal awards programs of the City of McFarland (the City) for the year ended June 30, 2024. The information in this Schedule is presented in accordance with the requirements of 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position, or cash flows of the City.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance for all awards. Under these principles, certain types of expenditures are not allowable or are limited as to reimbursement. Therefore, some amounts presented in the Schedule may differ from amounts presented in, or used in the preparation of, the financial statements.
NOTE 3 ASSISTANCE LISTING NUMBERS
The program titles and Assistance Listing Numbers were obtained from the federal or passthrough grantor.
NOTE 4 INDIRECT COST RATE
The City did not elect to use the 10 percent de minimis indirect cost rate as covered in 2 CFR §200.414.
NOTE 5 PASS-THROUGH ENTITIES’ IDENTIFYING NUMBER
When federal awards were received from a pass-through entity, the Schedule shows, if available, the identifying number assigned by the pass-through entity. When no identifying number is shown, the City determined that no identifying number is assigned for the program or the City was unable to obtain an identifying number from the pass-through entity.
CITY OF MCFARLAND
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
JUNE 30, 2024
(9)
NOTE 6 LOANS WITH CONTINUING COMPLIANCE REQUIREMENTS
The City offers property rehabilitation and first-time home buyer loans to eligible individuals as part of its HOME program. The loans have continuing compliance requirements and therefore the outstanding balances are reflected on the Schedule. No new loans were issued during the fiscal year ended June 30, 2024.
Loans with
Assistance Continuing
Listing Outstanding Compliance
Number Federal Program Loans Requirements
10.766 Community Facilities Direct Loan and Grant Program 744,229 $ 744,229 $
14.239 Home Investment Partnership Program 709,906 709,906
CITY OF MCFARLAND
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2024
(10)
Section I – Summary of Auditors’ Results
Financial Statements
1. Type of auditors’ report issued: Unmodified
2. Internal control over financial reporting:
Material weakness(es) identified? x yes no
Significant deficiency(ies) identified? yes x no
3. Noncompliance material to financial
statements noted? yes x no
Federal Awards
1. Internal control over major federal programs:
Material weakness(es) identified? yes x no
Significant deficiency(ies) identified? x yes none reported
2. Type of auditors’ report issued on
compliance for major federal programs: Unmodified
3. Any audit findings disclosed that are required
to be reported in accordance with
2 CFR 200.516(a)? x yes no
Identification of Major Federal Programs
Assistance Listing Number(s) Name of Federal Program or Cluster
21.027 COVID -19 Coronavirus State and Local Fiscal
Recovery Funds
Dollar threshold used to distinguish between
Type A and Type B programs: $ 750,000
Auditee qualified as low-risk auditee? yes x no
CITY OF MCFARLAND
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
YEAR ENDED JUNE 30, 2024
(11)
Section II – Financial Statement Findings
2024 – 001 Financial Reporting
Type of Finding: Material Weakness in Internal Control over Financial Reporting Condition: During our Audit, we determined that management does not have sufficient controls in place to ensure that the financial statement are properly presented in accordance with U.S. generally accepted accounting principles (GAAP). We specifically noted the following:
The City recognized revenue, in the amount of $5,000,000, received to build a new police station, however applicable expenditures, required to earn this revenue, were not incurred.
The City recorded revenue in the amount of $50,500 for the year ended June 30, 2024, that was earned as of June 30, 2023, and should have been reported as revenue in the prior period.
The City incorrectly accrued 2 items in the amount of $41,585 to accounts receivables and did not accrue 2 items received subsequent to year end that were for current year activity in the amount of $253,256, for a net change in receivables of $211,671. The City incorrectly identified 4 contracts as Subscription-Based Information Technology Arrangements (SBITAs) that did not qualify as SBITAs.
Criteria or specific requirement: U.S. GAAP requires that voluntary nonexchange revenue transactions cannot be recognized until all applicable eligibility requirements are met, that items be recorded in the period in which they are earned and that SBITAs with a maximum term of one year or less do not meet the requirements of a SBITA as defined in GASB Statement No. 96.
Context: During the course of our audit, we inspected one grant agreement, 24 accounts receivable items, 34 subsequent receipts and 4 SBITA additions. After our review, we determined that the grant agreement inspected did not meet the revenue recognition requirements, 2 items tested in accounts receivable were improperly recorded, 2 items in our subsequent receipts testing were improperly not reported as accounts receivable and all SBITA additions were improperly identified as a SBITA as the term was less than 12 months.
Effect: We determined that revenue was overstated by $4,838,829, unearned revenue was understated by $5,000,000, receivables were understated by $211,671, beginning net position and fund balance was understated by $50,500 and SBITA assets and liabilities were overstated by $313,145.
CITY OF MCFARLAND
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
YEAR ENDED JUNE 30, 2024
(12)
Cause: The City did not design controls with enough precision to ensure that the financial statements were presented in accordance with the requirements of U.S. GAAP for several items.
Repeat Finding: This is not a repeat finding
Recommendation: We recommend that management enhance its current controls to ensure that the controls are designed properly to ensure the financial statements are materially consistent with the requirements of U.S. GAAP.
Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with this finding. The Finance Department will establish written procedures for reconciliations of all major accounts which are to be completed the end of each month and fiscal year.
CITY OF MCFARLAND
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
YEAR ENDED JUNE 30, 2024
(13)
Section III – Findings and Questioned Costs – Major Federal Programs 2024 – 002 Procurement
Federal Agency: U.S. Department of the Treasury
Federal Program Title: COVID -19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027
Award Period: July 1, 2023 – June 30, 2024
Type of Finding:
Significant Deficiency in Internal Control over Compliance Other Noncompliance
Criteria: For purchases greater than the micro-purchase threshold recipients of federal funds must obtain quotes from an adequate number of qualified sources. Noncompetitive procurement is allowed only under specific circumstances. The recipient must maintain records documenting the history of the procurement including the method of procurement and the rationale for the method.
Condition: Our testing noted that two purchases from one vendor were made without obtaining multiple quotes. Documentation for the use of non-competitive procurement was not maintained.
Questioned Costs: None noted.
Context: CLA inspected 5 purchases and for 2 of those contracts totaling $51,201, the bid/quote process was not followed and justification for the use of non-competitive procurement was not documented prior to the disbursement of federal funds.
Cause: The city determined that the procurements were sole source, meaning the contractor used was the only option available, and were not aware that documentation of this determination was required.
Effect: The city could have been out of compliance with grant requirements.
Repeat Finding: This is not a repeat finding.
Recommendation: CLA recommends the City implement procedures to ensure that federal guidance is followed relating to procurement.
Views of responsible officials: There is no disagreement with the audit findings.
City of McFarland
City Council Meeting
STAFF REPORT
Agenda Item No. 13.
Section: ADMINISTRATIVE
AGENDA
Meeting Date: February 5,
2025
TO: Honorable Mayor and Council Members
FROM: Diego Viramontes, City Manager
Serrena McCuan, Human Resources Director
SUBJECT: Approval of Resolution No. 2025-6 A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF MCFARLAND APPROVING THE CREATION OF THE
ECONOMIC DEVELOPMENT MANAGER POSITION THROUGH JUNE 30,
2025, AND APPROVING A BUDGET ADJUSTMENT TO THE GENERAL
FUND OF $38,976.80.
SUMMARY:
The City of McFarland is committed to advancing economic growth, streamlining administrative operations, and fostering community development. The proposed Economic Development Manager position is designed to provide critical leadership and support for these goals. This role will focus on strategic planning, economic development initiatives, and administrative support to the City Manager, as well as acting as a liaison with various stakeholders.
The Economic Development Manager will:
1. Develop and implement strategic plans to promote economic and community development.
2. Act as a liaison to federal, state, and regional entities to enhance city priorities.
3. Lead and supervise assigned projects, including the General Plan Update and Zoning Ordinance Update.
4. Coordinate with City departments and stakeholders to facilitate business growth and expansion.
5. Identify and secure grant opportunities to support city initiatives.
6. Manage public relations and marketing strategies to attract investments Grant Support: Identify funding opportunities for City priorities Consultation and Coordination: Provide expertise and recommendations for enhancing economic development strategies
Reporting: Required to submit progress reports bi-weekly to City Manager.
Term of Position: This position shall be approved through the end of the fiscal year 2024- 2025 (June 30, 2025) and reevaluated at that time for potential extension.
This position aligns with the City's goals of fostering a thriving economic environment and
providing innovative solutions to complex challenges. It will also ensure the efficient administration of municipal services and promote positive community relationships.
FINANCIAL IMPACT:
The financial impact to the General Fund through June 30, 2025, is as follows:
• Base Salary: $26,346.15
• 401K Contribution: $2,634.62
• Health, Dental, Life, and Vision Benefits: $7,980.55
• Payroll Taxes: $2,015.48
Total Cost: $38,976.80
RECOMMENDATION:
Staff recommends that the City Council approve the creation of the Economic Development Manager position through the end of the fiscal year 2024-2025, as described in the attached job description, and adopt the accompanying resolution to establish the position with a reevaluation at the end of the fiscal year for potential extension.
ATTACHMENTS:
1. Economic Development Manager 2025
RESOLUTION NO. 2025-6
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MCFARLAND APPROVING
THE CREATION OF THE ECONOMIC DEVELOPMENT MANAGER POSITION THROUGH JUNE 30, 2025, AND APPROVING A BUDGET ADJUSTMENT TO THE GENERAL FUND OF $38,976.80.
WHEREAS the City Council recognizes the need to support strategic planning, economic development, and administrative operations to foster growth and sustainability WHEREAS the proposed Economic Development Manager position will enhance the City's ability to implement these priorities effectively; and
WHEREAS, the financial impact through June 30, 2025, is estimated at $38,976.80; and WHEREAS, the budgetary implications have been assessed, and a corresponding budget adjustment will be made to the planning and community development, building inspection, and code enforcement division of the general fund; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of McFarland that it hereby finds and determines as follows:
1. The City Council hereby approves the creation of the Economic Development Manager position through June 30, 2025.
2. The job description and salary has been approved in its entirety.
3. The City Council approves a budget adjustment to the general fund of $38,976.80.
4. The position shall be reevaluated before the end of the fiscal year 2024-2025 for potential extension
5. The City Clerk shall certify to the passage and adoption of this resolution.
6. This resolution is effective immediately.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of McFarland on February 5, 2025 by the following vote:
Aye Nae Abstain Absent
Saul Ayon
Ricardo Cano
Amador Ayon
Anita Gonzalez
Maria T. Pérez
CITY OF MCFARLAND
____________________________
Saul Ayon, Mayor
ATTEST:
_____________________________
Erika De La Cruz, City Clerk
I, _________________________, City Clerk of the City of McFarland, California, DO HEREBY CERTIFY that the foregoing resolution is a true and accurate copy of the Resolution passed and adopted by the City Council of the City of McFarland on the date and by the vote indicated herein.
APPROVED AS TO FORM:
_____________________________
Nathan Hodges, City Attorney
CITY OF MCFARLAND
Economic Development Manager
FLSA Status: Exempt
Salary: $68,500 annually
Term: Position ends June 30th, 2025
General Summary
Under the direction of the City Manager, this role combines strategic planning, economic development, and oversee current projects. The Economic Development Manager will manage projects, foster relationships with businesses and agencies, and oversee economic and community development initiatives in collaboration with the Community Development Director.
Essential Functions
1. Manage and supervise assigned projects as directed.
2. Build and maintain relationships with stakeholders, professional organizations, and agencies to promote economic development.
3. Serve as the City Manager’s representative in meetings, boards, and committees.
4. Analyze and recommend policies and procedures for organizational improvement.
5. Prepare detailed studies, reports, and data analysis for decision-making.
6. Act as the Business Development Team (BDT) coordinator, supporting business expansion and resources.
7. Coordinate grant research, applications, and administration in alignment with city goals.
8. Oversee communication, marketing, and public awareness initiatives.
9. Represent the city in regional, state, and national economic development activities.
10. Coordinate with departments for specific projects like infrastructure and development.
11. Support special city projects including zoning, annexation, and property developments.
Grant Support: Identify funding opportunities for City priorities Consultation and Coordination: Provide expertise and recommendations for enhancing economic development strategies
Reporting: Required to submit progress reports bi-weekly to the City Manager.
Required Knowledge, Skills, Abilities, and Minimum Qualifications • Degree in Public Administration, Urban Affairs, Business Administration, or related field.
• Expertise in public administration, economic development, and strategic planning.
• Strong skills in marketing, communications, and community engagement. • Proficiency in data analysis, budgeting, and grant management. • Ability to lead in a team-oriented, innovative environment. • Strong written and oral communication skills.
• Proficiency with technology and software tools.
• Ability to work under stress and adapt to shifting priorities.
QUALIFICATIONS:
Minimum: Associate degree in business, public administration, accounting, political science, entrepreneurship, economic development, or similar degree or a minimum of three (3) years of practical experience. Minimum - Valid California driver’s license with good driving record.
PHYSICAL ABILITIES AND WORK ENVIRONMENT:
While performing the duties of this job, the employee occasionally works in outside weather conditions.
COMPENSATION AND BENEFITS:
The City of McFarland offers an excellent benefits package including:
o Comprehensive City paid medical, dental, and vision benefits for the employee and dependents o Life insurance equal to 1-year base salary with a minimum of $50,000 o Retirement: Deferred Compensation 401(k) -The City of McFarland contributes an additional 10% of an employee's pay each pay period into a 401K plan, at no cost to the employee. The City is not a PERS (Public Employees Retirement System) Agency
o Supplemental life insurance (Optional)
o Deferred Compensation 457 Plan (Optional)
o Section 125 Plan Participation
o 12 days' vacation and 12 days sick pay accrued annually o 12 Days Holiday Pay
o Monday to Friday 8 am to 5 pm
APPLICATION: To apply, please complete and application online at www.mcfarlandcity.org. Resumes will not be accepted in lieu of a City employment application. To be considered for this position, please submit complete employment application and resume.
EQUAL OPPORTUNITY EMPLOYER: The City of McFarland is an Equal Opportunity Employer. In accordance with the Americans with Disabilities Act of 1990 (ADA), requests for special accommodations during any stage of the examination process should be made in advance to the Human Resources Department.
City of McFarland
City Council Meeting
STAFF REPORT
Agenda Item No. 14.
Section: ADMINISTRATIVE
AGENDA
Meeting Date: February 5,
2025
TO: Honorable Mayor and Council Members
FROM: Diego Viramontes, City Manager
Serrena McCuan, Human Resources Director
SUBJECT: Approval of Resolution 2025-7 A RESOLUTION OF THE CITY COUNCIL OF
CITY OF MCFARLAND APPROVING THE EMPLOYMENT AGREEMENT
BETWEEN THE CITY AND PAUL SALDANA FOR THE ECONOMIC
DEVELOPMENT MANAGER POSITION
SUMMARY:
Paul Saldana has served as the Community Development Director for the City of McFarland, overseeing a range of initiatives and projects critical to the city’s growth and development. His leadership has been instrumental in fostering community enrichment, managing development projects, and aligning city goals with community needs.
After a comprehensive review of organizational priorities and individual expertise, it has been determined that Mr. Saldana’s skills and experience are exceptionally well-suited for the role of Economic Development Manager. This strategic transition will enable the City to take a more targeted approach to economic initiatives, focusing on business attraction, fostering partnerships, and driving sustainable growth within McFarland. This role aligns with the City’s strategic goals for long-term economic sustainability and community enrichment.
In addition to his new role, Mr. Saldana will continue to assist the Community Development Department to ensure seamless collaboration and support for ongoing and upcoming projects.
His familiarity with the department’s objectives and institutional knowledge will help bridge both areas, maintaining the momentum of current initiatives while advancing new economic development opportunities.
Key responsibilities of the Economic Development Manager include:
• Identifying and implementing economic development strategies that align with the City’s vision for sustainable growth.
• Collaborating with local businesses, organizations, and stakeholders to foster a vibrant economic environment.
• Researching and applying for economic development grants to secure funding for critical projects.
• Promoting McFarland as a hub for business and commerce, enhancing its appeal to investors and entrepreneurs.
Mr. Saldana’s ongoing contributions to the Community Development Department, coupled with his leadership in economic development, underscore his vital role in driving McFarland’s growth and prosperity. This transition not only reflects the City’s commitment to strategic realignment but also leverages Mr. Saldana’s expertise to create lasting impact across both domains.
FINANCIAL IMPACT:
The annual salary for the position is proposed at $68,500, paid on a biweekly basis. The financial impact to the General Fund through June 30, 2025, is as follows:
• Base Salary: $26,346.15
• 401K Contribution: $2,634.62
• Health, Dental, Life, and Vision Benefits: $7,980.55
• Payroll Taxes: $2,015.48
Total Cost: $38,976.80
RECOMMENDATION:
It is recommended that the City Council approve the employment agreement between the City and Paul Saldana for the position of Economic Development Manager.
ATTACHMENTS:
1. Economic Development Manager Contract 01.2025rev
RESOLUTION NO. 2025-7
A RESOLUTION OF THE CITY COUNCIL OF CITY OF MCFARLAND APPROVING THE
EMPLOYMENT AGREEMENT BETWEEN THE CITY AND PAUL SALDANA FOR THE
ECONOMIC DEVELOPMENT MANAGER POSITION
WHEREAS, the City Council recognizes the need to support strategic planning, economic development, and administrative operations to foster growth and sustainability; and WHEREAS, Paul Saldana has successfully served as the Community Development Director, contributing to the growth and development of McFarland; and WHEREAS, the City Council has determined that transitioning Paul Saldana to the position of Economic Development Manager will align with the City’s strategic objectives and economic development goals; and
WHEREAS, the employment agreement outlining the terms and conditions of this transition has been reviewed and approved by the City Council.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of McFarland does hereby:
1. The City Council hereby approves the employment agreement between the City of McFarland and Paul Saldana for the Economic Development Manager position.
2. The job description and salary have been approved as described in the staff report.
3. The City Clerk shall certify to the passage and adoption of this resolution.
4. This resolution is effective immediately.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of McFarland on February 5, 2025 by the following vote:
Aye Nae Abstain Absent
Saul Ayon
Ricardo Cano
Amador Ayon
Anita Gonzalez
Maria T. Pérez
CITY OF MCFARLAND
____________________________
Saul Ayon, Mayor
ATTEST:
_____________________________
Erika De La Cruz, City Clerk
I, _________________________, City Clerk of the City of McFarland, California, DO HEREBY CERTIFY that the foregoing resolution is a true and accurate copy of the Resolution passed and adopted by the City Council of the City of McFarland on the date and by the vote indicated herein.
APPROVED AS TO FORM:
_____________________________
Nathan Hodges, City Attorney
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
This employment agreement (“Agreement”) is made on this 5ht day of February 2025, by and between the City of McFarland, a Municipal Corporation (“City”), and Paul Saldana (“Saldana”). The City and Saldana are collectively referred to as the “Parties” where appropriate.
Once effective, this Agreement shall replace and supersede any prior employment contracts or agreements between the Parties, which are hereby deemed rescinded and of no further effect, except where indicated within this Agreement.
RECITALS:
WHEREAS, the City Council now wishes to engage the services of Saldana as the City’s Economic Development Manager; and
WHEREAS, the position of Economic Development Manager is an “at will” position, not subject to the City’s personnel rules; and
NOW, THEREFORE, in consideration of the mutual covenants and conditions set forth hereinafter, the Parties mutually agree as follows:
AGREEMENT
1. Incorporation. The Parties incorporate the foregoing recitals as if fully set forth herein verbatim.
2. Hire. City acknowledges that it will hire Saldana as its Economic Development Manager as of February 10th, 2025 (“Effective Date”). Saldana and the City agree to the terms and conditions of this Agreement. Saldana shall remain in the exclusive hire of City during the term of this Agreement and shall neither accept other employment nor become employed by any other employer until the end of the Term or earlier termination of this Agreement.
Notwithstanding the foregoing sentence, Saldana shall have the right to continue his employment as an instructor for the Fresno Pacific University as long as such employment does not compete with, conflict with, or compromise the City’s interests or adversely effect job performance and the ability of Saldana to fulfill all responsibilities to the City.
3. “At-Will” Employment. Saldana’s employment with City is at the sole will, discretion, and pleasure of the City. The City Manager may fix any such additional terms and conditions of employment, as they may determine from time to time, relating to Saldana’s performance, provided such terms and conditions are not inconsistent with or in conflict with the provisions of this Agreement, the City Municipal Code, or any other law.
The terms of the City’s personnel rules, policies, procedures, ordinances, or resolutions (collectively “Personnel Policies”) shall not apply to Saldana unless made expressly applicable, except that all policies and regulations related to the prevention of harassment, discrimination and retaliation shall apply to Saldana.
EMPLOYMENT AGREEMENT
This Agreement is not intended to, or does it confer any right to any property interest in continued employment, or any due process property right to a hearing before or after a decision by the City Manager to terminate Saldana’s employment. Subject to State and Federal law, nothing contained in this Agreement shall in any way prevent, limit or otherwise interfere with the right of the City to terminate the services of Saldana.
4. Duties.
a. Economic Development Manager. Employees accept employment with the City as its Economic Development Manager and agree to perform all functions, duties, and services as promulgated by City regulations and procedures, the City Manager, and the Economic Development Manager job description, including, but not limited to the following:
1. Manage and supervise assigned projects as directed.
2. Build and maintain relationships with stakeholders, professional organizations, and agencies to promote economic development.
3. Serve as the City Manager’s representative in meetings, boards, and committees.
4. Analyze and recommend policies and procedures for organizational improvement.
5. Prepare detailed studies, reports, and data analysis for decision-making.
6. Act as the Business Development Team (BDT) coordinator, supporting business expansion and resources.
7. Coordinate grant research, applications, and administration in alignment with city goals.
8. Oversee communication, marketing, and public awareness initiatives.
9. Represent the city in regional, state, and national economic development activities.
10. Coordinate with departments for specific projects like infrastructure and development.
11. Support special city projects including zoning, annexation, and property developments.
Special Projects
• Develop and finalize the Southeast Industrial Area Specific Plan • Coordinate the General Plan updates to the Zoning Ordinance and Subdivision Ordinance.
• Facilitate Annexation 21 including addressing islands and areas north of Elmo • Support the acquisition and planning for the Dairy Land property • Assist with Harlow and Frontage Road property development initiatives • Advance McFarlan Gateway Commercial Projects (North of Elmo) • Provide guidance on ½ Sales Tax Project Implementation • Performs a variety of other duties as assigned.
Grant Support: Identify funding opportunities for City priorities Consultation and Coordination: Provide expertise and recommendations for enhancing economic development strategies
Reporting: Required to submit progress reports bi-weekly to City Manager.
EMPLOYMENT AGREEMENT
5. Term. Except as hereinafter described, the term of this Agreement shall be for five (5) months, commencing on effective date. Upon the conclusion of this term, this Agreement shall be reviewed and considered for an extension should there be a demonstrated need for its continuation. Any termination of this contract prior to the conclusion of its term shall be accomplished pursuant to the provisions of Section 6 of this Agreement.
6. Termination. Saldana’s “at-will” employment as Economic Development Manager may be terminated as follows:
a. Resignation. If Saldana elects to resign at any time during the term of this Agreement, he may do so upon giving City thirty (30) days' written notice.
Termination pursuant to such action shall occur thirty (30) calendar days after service of said notice, or on such other date as may be agreed to by the Parties. b. Retirement. If Saldana elects to retire, He shall inform City, in writing, at least thirty (30) days prior to the effective date of such retirement. City shall cooperate fully with Employee to provide all information in a timely manner. c. Termination “Without Cause.” City reserves the right to terminate this Agreement and Saldana's employment as Economic Development Manager at any time, “without cause” or advance notice.
d. Termination “With Cause.” The City reserves the right to terminate this Agreement and Saldana’s employment at any time, “with cause.” “Cause” shall include, but not be limited to:
i. Willful misconduct or gross negligence;
ii. Theft, or attempted theft, financial mismanagement, material dishonesty, willful or persistent breach of duties, engaging in conduct tending to bring embarrassment or disrepute to the City, unauthorized or excessive absences; iii. A formal investigation commissioned by the City Council and conducted by a third-party investigator hired by the City Council in which the City Council has determined that the Employee has engaged in unlawful discrimination or harassment of Employees or any third party while on City Premises or on City time. City is not required to wait until Employee has exhausted any appeal rights prior to terminating this Agreement “for cause;” iv. Conviction of any felony, or for any misdemeanor involving moral turpitude, corruption, or dishonesty. “Conviction” shall include any guilty plea, plea of nolo contendere, or any other disposition other than a dismissal of charges or acquittal. City is not required to wait until Employee has exhausted any appeal rights prior to terminating this Agreement “for cause;” v. Saldana’s death; or
vi. If Saldana is determined by a court of competent jurisdiction of the State of California’s Fair Political Practices Commission to have knowingly and unlawfully participated in a governmental decision I which he had a conflict
EMPLOYMENT AGREEMENT
of interest as defined in Government Code Section 87100 et seq. or Government Code Section 1090 et seq.;
vii. Saldana’s permanent disability if such disability precludes Saldana from performing His essential job duties for more than six (6) cumulative months after attempts at a reasonable accommodation pursuant to the Americans with Disabilities Act and/or California’s Fair Employment & Housing Act.
7. Salary and Benefits. Saldana’s salary and other benefits for all work or services called for under this Agreement shall be as follows:
A. Salary. Commencing on the Effective Date, Saldana’s annual salary shall be sixtyeight thousand five hundred dollars ($68,500), which shall be paid in bi-weekly pay periods. Any salary increases shall be implemented by written amendment to this Agreement and upon approval by the City Council.
B. Vacation. Saldana shall receive eighty (80) hours of vacation leave, commencing on the effective date. At the end of each year of Saldana’s employment, any unused vacation hours shall be cashed out prior to His accrual of an additional eighty (80) hours.
C. Sick Leave. Saldana shall accrue eight (8) hours of sick leave per month of employment. The balance of sick leave shall not exceed any maximum accrual amounts set forth in the City's Employee Handbook. Unused sick leave will not be paid out upon termination or expiration of this Agreement.
D. Administrative Leave. Saldana shall receive forty (40) hours of administrative leave per year, commencing on the first day of each year of his employment. Administrative leave will not carry over calendar years. At the end of each year of Saldana’s employment, any unused hours shall be cashed out prior to His accrual of an additional forty (40) hours.
E. Holiday and Other Leaves. Saldana shall receive the same leaves, holidays, and other time off as provided to other employees at the City.
F. Health Insurance Benefits. City shall provide health insurance coverage for Saldana and his family consistent with the health insurance benefits provided to City employees.
Saldana may waive this health insurance coverage so long as he has proof of other group coverage in accordance with the Affordable Care Act, (i.e. is not purchasing coverage from the exchange).
G. Term Life Insurance. The City shall pay the premiums for a group life insurance policy consistent with the City employee handbook. Saldana shall name the beneficiary of the life insurance policy, provided said beneficiary has and maintains an insurable interest in Saldana.
EMPLOYMENT AGREEMENT
H. Vehicle. Saldana shall be required to adhere to all City policies and procedures regarding the use of City vehicles.
I. Cell Phone. City shall provide Saldana with a cell phone purchased by City to be used by Saldana exclusively for performance of His duties under this Agreement and City shall pay the monthly charges for the cell phone data usage. Alternatively, at Saldana’s election, City will pay Saldana an allowance of $50.00 per month for use toward His personal cell phone and data plan. Saldana acknowledges that use of the City provided cell phone, or His personal cell phone, for City business may be subject to such usage to disclosure under the California Public Records Act.
J. Retirement. City represents and Saldana acknowledges that City is not a CalPERS agency for retirement purposes. The City shall contribute the equivalent of ten percent (10%) of Saldana’s salary annually to Saldana’s 401(k) or deferred compensation retirement account. Saldana shall choose whether he wants the contribution made to His 401(k) or deferred compensation account, or a combination of both.
K. Expenses. City shall reimburse Saldana for all reasonable out-of-pocket expenses incurred while performing the duties described in this Agreement, which may include travel, meals, lodging expenses, and parking fees. Saldana shall submit a receipt and a description of the expenses to the City’s Finance Director within thirty (30) days of the date each expense is incurred as a condition of obtaining reimbursement.
8. Bonding and Indemnification. City shall bear the full costs of any fidelity or other bond required of Saldana under any law or ordinance. City shall defend, save harmless and indemnify Saldana from any and all demands, claims, suits, actions, or other legal proceedings (“Claims”) brought against Him in His individual capacity or in His official capacity as Economic Development Manager, provided the Claims arise while Saldana is acting within the course and scope of His employment and provided He did not act or fail to act because of actual fraud, corruption or malice. The provision shall not extend to claims brought by City itself or where indemnity is otherwise prohibited by law.
9. Evaluation. The City Manager shall evaluate Saldana after the first six (6) months of the Term of this Agreement. The City Manager shall have the right to establish the format and the forms to be used.
10. Notices. Notices pursuant to this Agreement shall be deemed to be given when personally delivered to the party to whom directed or when deposited in the United States Mail, postage prepaid or by electronic mail (Email) or, if notice is given to City, if sent by confirmed facsimile, addressed as follows:
City Saldana
City Manager, City of McFarland Paul Saldana
401 West Kern Avenue 101 N. Anderson Road
McFarland, California 93250 Exeter, CA 93211
Email: [email protected] Email: [email protected]
EMPLOYMENT AGREEMENT
Either party may change His or its address by providing written notice to the other party in the manner described herein.
11. General Provisions.
A. Entire Agreement. This Agreement constitutes the complete understanding between the Parties, is fully integrated, and supersedes any and all prior agreements – including the Parties’ Consulting Agreement – promises, representations, or inducements, no matter their form, concerning the subject matter of this Agreement. No subsequent agreements, promises, representations, or inducements will be binding unless recorded in a written document, which specifically references this Agreement and is signed by the Parties or their authorized representatives. The Parties acknowledge that this Agreement may be used as evidence in any subsequent proceeding in which either Party alleges a breach of this Agreement or seeks to enforce its terms, provisions, obligations, or as compelled by law.
B. Captions. The headings used in this Agreement are inserted for reference purposes only and shall not be deemed to limit or affect in any way the meaning or interpretation of any of the terms or provisions of this Agreement.
C. Severability. If any provision contained in this Agreement is held invalid or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be deemed severable and shall not be affected thereby and same shall remain in full force and effect.
D. Amendment. This Agreement may only be amended by a writing executed by all parties.
E. Governing Law and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of California. Any action or motion to enforce the terms or conditions of this Agreement shall be brought only in the Superior Court of California for the County of Kern.
F. Waiver. Waiver by any party of any breach of this Agreement by the other party, whether such waiver be direct or implied, shall not be construed as a continuing waiver or consent to any subsequent breach of this Agreement on the part of the other party.
G. Further Assurances. Each party shall execute and deliver such papers, documents, and instruments, and perform such acts as are necessary or appropriate, to implement the terms of this Agreement and the intent of the parties to this Agreement.
H. Assignment. Neither this Agreement, nor any interest in it, may be assigned or transferred by any party without the prior written consent of all the parties. Any such assignment will be subject to such terms and conditions as City may choose to impose.
EMPLOYMENT AGREEMENT
I. Binding Effect. The rights and obligations of this Agreement shall inure to the benefit of, and be binding upon, the parties to the contract and their heirs, administrators, executors, personal representatives, successors and assigns, and whenever the context so requires, the masculine gender and includes the feminine and neuter, and the singular number includes the plural. This Agreement may be executed in any number of counterparts, each of which shall be considered as an original and be effective as such.
J. Merger And Modification. This contract sets forth the entire Agreement between the parties and supersedes all other oral or written representations. This contract may be modified only in writing, approved by the City Council and signed by all the parties.
K. Attorneys’ Fees. If either party commences any action or proceeding relating to this Agreement or the enforcement of any provision of this Agreement against the other party, the prevailing party, in such action or proceeding, shall be entitled to recover reasonable attorneys’ fees, costs, and all other litigation costs.
L. Execution. This Agreement is effective February 10th, 2025. It is the product of negotiation, and all parties are equally responsible for authorship of this Agreement.
Section 1654 of the California Civil Code shall not apply to the interpretation of this Agreement.
M. Non-Interest. Except for Saldana, no officer or employee of City shall hold any interest in this Agreement (California Government Code section 1090).
N. Counterparts. This Agreement may be executed in counterparts and the respective signature pages for each party may thereafter be attached to the body of this Agreement to constitute one integrated Agreement which is as fully effective and binding as if the entire document had been signed at one time.
O. Acknowledgement of Statutes That May Affect Employment Relationship. City and Employee acknowledge that, in addition to the statutes previously referenced in this Agreement, the following statutes shall govern this employment relationship under the circumstances described in the statutes:
a. Government Code section 53243 states that on or after January 1, 2012, any contract executed or renewed between a local agency, such as the City, and an officer or Employee of a local agency, such as Saldana, that provides paid leave salary offered by the local agency to the officer or Employee pending an investigation shall require that any salary provided for that purpose be fully reimbursed if the officer or Employee is convicted of a crime involving an abuse of His office or position.
b. Government Code section 53243.1 states that on or after January 1, 2012, any contract executed or renewed between a local agency, such as the City, and an officer or Employee of a local agency, such as Employee that provides funds for the legal criminal defense of an officer or Employee shall require that any funds
EMPLOYMENT AGREEMENT
provided for that purpose be fully reimbursed to the local agency if the officer or Employee is convicted of a crime involving an abuse of His office or position. c. Government Code section 53243.3 states that on or after January 1, 2012, if a local agency, such as the City, provides, in the absence of a contractual obligation, for any of the payments described in the corresponding article of the Government Code, then the Employee or officer, such as Employee, receiving any payments provided for those purposes shall fully reimburse the local agency that provided those payments in the event that the Employee or officer is convicted of a crime involving the abuse of His office or position.
d. Government Code sections 87100 et seq., section 1090 and section 1126, and all other similar statutory and administrative rules, prohibit conflicts of interest.
During the term of this Agreement, Saldana shall comply with all those requirements of law, and shall not engage in any business or transaction or maintain a financial interest which conflicts, or reasonably might be expected to conflict, with the proper discharge of Employee's duties under this Agreement.
Saldana represents that He has reviewed, is familiar with, and agrees to comply fully with each of these provisions if any of these provisions are applicable to him, including that Employee agrees that any cash settlement or severance related to a termination that Employee may receive from City shall be fully reimbursed to the local agency if Employee is convicted of a crime involving an abuse of Employee's office or position.
P. Independent Legal Advice. City and Saldana represent and warrant to each other that each has received legal advice from independent and separate legal counsel with respect to the legal effect of this Agreement or had the opportunity to do so and City and Saldana further represent and warrant that each has carefully reviewed this entire Agreement and that each term thereof is understood and that the terms of this Agreement are contractual and not a mere recital. This Agreement shall not be construed against the Party or its representatives who drafted it or who drafted any portion thereof.
[Signature Page Follows]
EMPLOYMENT AGREEMENT
IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective on the day and year first above written:
Dated: CITY OF MCFARLAND
By: _________________________
Saul Ayon
Title: Mayor
Dated: EMPLOYEE
By: _________________________
Paul Saldana
APPROVED AS TO FORM:
By:
Nathan M. Hodges, Esq.
Hodges Law Group
City Attorney
Attachments:
Exhibit A: City of McFarland Position Description – Economic Development Manager
City of McFarland
City Council Meeting
STAFF REPORT
Agenda Item No. 15.
Section: ADMINISTRATIVE
AGENDA
Meeting Date: February 5,
2025
TO: Honorable Mayor and Council Members
FROM: Diego Viramontes, City Manager
Serrena McCuan, Human Resources Director
SUBJECT: Approval of Resolution No. 2025-8 A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF MCFARLAND APPROVING THE EMPLOYMENT
AGREEMENT BETWEEN THE CITY AND MEGAN SNYDER FOR THE
COMMUNITY DEVELOPMENT DIRECTOR POSITION.
SUMMARY:
Following a thorough recruitment process, Megan Snyder has been selected for the position of Community Development Director based on her extensive experience in community development, human resources, project management, and government administration. She brings years of leadership experience in municipal operations, policy development, economic growth initiatives, and community engagement.
Mrs. Snyder has a diverse professional background that includes serving as the Human & Community Resources Manager and Acting Assistant City Manager for the City of Arvin, where she played a key role in overseeing workforce development, policy implementation, economic development initiatives, and community engagement.
Her expertise includes:
• Successfully planned and executed large-scale community events to foster civic engagement.
• Developed and implemented policies and procedures, coordinated interdepartmental collaborations, and facilitated key projects related to urban planning, economic growth, and land annexation.
• Led major citywide projects, coordinated business alliances, and worked with external stakeholders to enhance community resources and services. • Served as a liaison for safety and risk management, ensuring compliance with state and federal regulations, overseeing workers’ compensation programs, and implementing employee training initiatives.
• Acted as Public Information Officer, drafting press releases, and managing public relations to improve communication between city officials and the community.
Additionally, she has an extensive training in regulatory compliance, policy development, and leadership initiatives.
Given her strong leadership skills, municipal experience, and commitment to public service, Mrs. Snyder is well-equipped to lead the Community Development Department. Her appointment is expected to enhance McFarland’s efforts in urban planning, economic development, and community outreach, aligning with the city’s goals for sustainable growth and civic engagement.
FINANCIAL IMPACT:
The impact to the budget will be $105,000 annually plus benefits spread between planning and community development, building inspection, and code enforcement divisions of the General Fund.
RECOMMENDATION:
It is recommended that the City Council approve the employment agreement between the City and Megan Snyder for the position of Community Development Director.
ATTACHMENTS:
1. Community Development Director Agreement 02.05
RESOLUTION NO. 2025-8
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MCFARLAND APPROVING
THE EMPLOYMENT AGREEMENT BETWEEN THE CITY AND MEGAN SNYDER FOR THE COMMUNITY DEVELOPMENT DIRECTOR POSITION.
WHEREAS, the City of McFarland recognizes the need for strong leadership in community development to foster sustainable growth, improve economic opportunities, and enhance community engagement; and
WHEREAS, after a comprehensive recruitment and evaluation process, Megan Snyder, has been identified as the most qualified candidate to serve as the Community Development Director based on her extensive experience in municipal operations, economic development, and community outreach; and
WHEREAS, Megan Snyder, has demonstrated expertise in leadership, urban planning, public policy implementation, and project management, which align with the City’s strategic goals and priorities; and
WHEREAS, the Community Development Director shall receive an annual salary of $105,000, with benefits as provided under the City’s employment policies and applicable agreements.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of McFarland as follows:
1. The City Council hereby approves the employment agreement between the City of McFarland and Megan Snyder for the Community Development Director position..
2. As Community Development Director, Megan Snyder, shall oversee the City’s community development programs, economic growth initiatives, urban planning efforts, and public engagement strategies.
3. The City Clerk shall certify to the passage and adoption of this resolution.
4. This resolution shall take effect immediately upon its adoption.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of McFarland on February 5, 2025 by the following vote:
Aye Nae Abstain Absent
Saul Ayon
Ricardo Cano
Amador Ayon
Anita Gonzalez
Maria T. Pérez
CITY OF MCFARLAND
____________________________
Saul Ayon, Mayor
ATTEST:
_____________________________
Erika De La Cruz, City Clerk
I, _________________________, City Clerk of the City of McFarland, California, DO HEREBY CERTIFY that the foregoing resolution is a true and accurate copy of the Resolution passed and adopted by the City Council of the City of McFarland on the date and by the vote indicated herein.
APPROVED AS TO FORM:
_____________________________
Nathan Hodges, City Attorney
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
This employment agreement (“Agreement”) is made on this 5th day of February 2025, by and between the City of McFarland, a Municipal Corporation (“City”), and Megan Snyder (“Snyder”). The City and Snyder are collectively referred to as the “Parties” where appropriate.
Once effective, this Agreement shall replace and supersede any prior employment contracts or agreements between the Parties, which are hereby deemed rescinded and of no further effect, except where indicated within this Agreement.
RECITALS:
WHEREAS, the City Council now wishes to engage the services of Snyder as the City’s Community Development Director; and
WHEREAS, the position of Community Development Director is an “at will” position, not subject to the City’s personnel rules; and
NOW, THEREFORE, in consideration of the mutual covenants and conditions set forth hereinafter, the Parties mutually agree as follows:
AGREEMENT
1. Incorporation. The Parties incorporate the foregoing recitals as if fully set forth herein verbatim.
2. Hire. City acknowledges that it will hire Snyder as its Community Development Director as of February 10th, 2025 (“Effective Date”). Snyder and the City agree to the terms and conditions of this Agreement. Snyder shall remain in the exclusive hire of City during the term of this Agreement and shall neither accept other employment nor become employed by any other employer until the end of the Term or earlier termination of this Agreement.
3. “At-Will” Employment. Snyder’s employment with City is at the sole will, discretion, and pleasure of the City. The City Manager may fix any such additional terms and conditions of employment, as they may determine from time to time, relating to Snyder’s performance, provided such terms and conditions are not inconsistent with or in conflict with the provisions of this Agreement, the City Municipal Code, or any other law.
The terms of the City’s personnel rules, policies, procedures, ordinances, or resolutions (collectively “Personnel Policies”) shall not apply to Snyder unless made expressly applicable, except that all policies and regulations related to the prevention of harassment, discrimination and retaliation shall apply to Snyder.
This Agreement is not intended to, or does it confer any right to any property interest in continued employment, or any due process property right to a hearing before or after a decision by the City Manager to terminate Snyder’s employment. Subject to State and
EMPLOYMENT AGREEMENT
Federal law, nothing contained in this Agreement shall in any way prevent, limit or otherwise interfere with the right of the City to terminate the services of Snyder.
4. Duties.
a. Community Development Director. Employee accepts employment with the City as its Community Development Director and agrees to perform all functions, duties, and services as promulgated by City regulations and procedures, the City Manager, and the Community Development Director job description, including, but not limited to the following:
• Manage and direct all aspects of the Community Development Department, including planning, building, code enforcement, housing, grants, and economic development. • Act as the City’s Public Information Officer, ensuring consistent and transparent communication with the public and media.
• Supervise and mentor department staff, providing clear directions and evaluating performance to ensure quality outcomes.
• Develop and implement departmental policies, procedures, and objectives. • Administer and monitor the department’s annual operating budget, ensuring financial efficiency and compliance.
• Direct the preparation and implementation of city-wide plans and policies related to development, housing, and zoning.
• Build relationships with businesses at all stages of development, conducting retention and expansion interviews to support growth and sustainability. • Lead efforts to attract and retain businesses by identifying market opportunities and coordinating resources such as workforce training, financing, and business planning. • Oversee grant applications and administration, ensuring alignment with community goals and compliance with funding requirements.
• Serve as the City’s representative in meetings with the City Council, Planning Commission, and community organizations.
• Facilitate public workshops and community engagement sessions to ensure projects align with residents’ needs and priorities.
• Collaborate with regional partners to advance city initiatives and secure funding opportunities.
• Act as the City’s Building Official, overseeing inspections and ensuring adherence to safety standards and codes.
• Prepare and present staff reports, analysis, and recommendations to the City Manager, City Council, and other stakeholders.
• Manage contracts for major projects such as General Plan updates and other long-term planning initiatives.
• Performs a variety of other duties as assigned.
.
5. Term. Except as hereinafter described, the term of this Agreement shall be for one (1) year, annually thereafter. The term of this contract shall automatically renew for an additional one (1) year on the effective date of each subsequent year, unless mutually agreed by both parties to renegotiate the terms of this contract. The termination of this contract may be accomplished pursuant to the provisions of Section 6 of this Agreement.
EMPLOYMENT AGREEMENT
6. Termination. Snyder’s “at-will” employment as Community Development Director may be terminated as follows:
a. Resignation. If Snyder elects to resign at any time during the term of this Agreement, she may do so upon giving City thirty (30) days' written notice.
Termination pursuant to such action shall occur thirty (30) calendar days after service of said notice, or on such other date as may be agreed to by the Parties. b. Retirement. If Snyder elects to retire, she shall inform City, in writing, at least thirty (30) days prior to the effective date of such retirement. City shall cooperate fully with Employee to provide all information in a timely manner. c. Termination “Without Cause.” City reserves the right to terminate this Agreement and Snyder's employment as Community Development Director at any time, “without cause” or advance notice.
d. Termination “With Cause.” The City reserves the right to terminate this Agreement and Snyder’s employment at any time, “with cause.” “Cause” shall include, but not be limited to:
i. Willful misconduct or gross negligence;
ii. Theft, or attempted theft, financial mismanagement, material dishonesty, willful or persistent breach of duties, engaging in conduct tending to bring embarrassment or disrepute to the City, unauthorized or excessive absences; iii. A formal investigation commissioned by the City Council and conducted by a third-party investigator hired by the City Council in which the City Council has determined that the Employee has engaged in unlawful discrimination or harassment of Employees or any third party while on City Premises or on City time. City is not required to wait until Employee has exhausted any appeal rights prior to terminating this Agreement “for cause;” iv. Conviction of any felony, or for any misdemeanor involving moral turpitude, corruption, or dishonesty. “Conviction” shall include any guilty plea, plea of nolo contendere, or any other disposition other than a dismissal of charges or acquittal. City is not required to wait until Employee has exhausted any appeal rights prior to terminating this Agreement “for cause;” v. Snyder’s death; or
vi. If Snyder is determined by a court of competent jurisdiction of the State of California’s Fair Political Practices Commission to have knowingly and unlawfully participated in a governmental decision I which he had a conflict of interest as defined in Government Code Section 87100 et seq. or Government Code Section 1090 et seq.;
vii. Snyder’s permanent disability if such disability precludes Snyder from performing His essential job duties for more than six (6) cumulative months after attempts at a reasonable accommodation pursuant to the Americans with Disabilities Act and/or California’s Fair Employment & Housing Act.
EMPLOYMENT AGREEMENT
7. Salary and Benefits. Snyder’s salary and other benefits for all work or services called for under this Agreement shall be as follows:
A. Salary. Commencing on the Effective Date, Snyder’s annual salary shall be one hundred and five thousand dollars ($105,000), which shall be paid in bi-weekly pay periods. Any salary increases shall be implemented by written amendment to this Agreement and upon approval by the City Council.
B. Vacation. Snyder shall receive eighty (80) hours of vacation leave, commencing on the effective date. At the end of each year of Snyder’s employment, any unused vacation hours shall be cashed out prior to her accrual of an additional eighty (80) hours.
C. Sick Leave. Snyder shall accrue eight (8) hours of sick leave per month of employment.
The balance of sick leave shall not exceed any maximum accrual amounts set forth in the City's Employee Handbook. Unused sick leave will not be paid out upon termination or expiration of this Agreement.
D. Administrative Leave. Snyder shall receive forty (40) hours of administrative leave per year, commencing on the first day of each year of his employment. Administrative leave will not carry over calendar years. At the end of each year of Snyder’s employment, any unused hours shall be cashed out prior to her accrual of an additional forty (40) hours.
E. Holiday and Other Leaves. Snyder shall receive the same leaves, holidays, and other time off as provided to other employees at the City.
F. Health Insurance Benefits. City shall provide health insurance coverage for Snyder and her family consistent with the health insurance benefits provided to City employees. Snyder may waive this health insurance coverage so long as she has proof of other group coverage in accordance with the Affordable Care Act, (i.e. is not purchasing coverage from the exchange).
G. Term Life Insurance. The City shall pay the premiums for a group life insurance policy consistent with the City employee handbook. Snyder shall name the beneficiary of the life insurance policy, provided said beneficiary has and maintains an insurable interest in Snyder.
H. Vehicle. Snyder shall be required to adhere to all City policies and procedures regarding the use of City vehicles.
I. Cell Phone. City shall provide Snyder with a cell phone purchased by City to be used by Snyder exclusively for performance of her duties under this Agreement and City shall pay the monthly charges for the cell phone data usage. Alternatively, at Snyder’s election, City will pay Snyder an allowance of $50.00 per month for use toward her personal cell phone and data plan. Snyder acknowledges that use of the City provided
EMPLOYMENT AGREEMENT
cell phone, or her personal cell phone, for City business may be subject to such usage to disclosure under the California Public Records Act.
J. Retirement. City represents and Snyder acknowledges that City is not a CalPERS agency for retirement purposes. The City shall contribute the equivalent of ten percent (10%) of Snyder’s salary annually to Snyder’s 401(k) or deferred compensation retirement account. Snyder shall choose whether she wants the contribution made to her 401(k) or deferred compensation account, or a combination of both.
K. Expenses. City shall reimburse Snyder for all reasonable out-of-pocket expenses incurred while performing the duties described in this Agreement, which may include travel, meals, lodging expenses, and parking fees. Snyder shall submit a receipt and a description of the expenses to the City’s Finance Director within thirty (30) days of the date each expense is incurred as a condition of obtaining reimbursement.
8. Bonding and Indemnification. City shall bear the full costs of any fidelity or other bond required of Snyder under any law or ordinance. City shall defend, save harmless and indemnify Snyder from any and all demands, claims, suits, actions, or other legal proceedings (“Claims”) brought against her in her individual capacity or in her official capacity as Community Development Director, provided the Claims arise while Snyder is acting within the course and scope of her employment and provided she did not act or fail to act because of actual fraud, corruption or malice. The provision shall not extend to claims brought by City itself or where indemnity is otherwise prohibited by law.
9. Evaluation. The City Manager shall evaluate Snyder after the first six (6) months of the Term of this Agreement. The City Manager shall have the right to establish the format and the forms to be used.
10. Notices. Notices pursuant to this Agreement shall be deemed to be given when personally delivered to the party to whom directed or when deposited in the United States Mail, postage prepaid or by electronic mail (Email) or, if notice is given to City, if sent by confirmed facsimile, addressed as follows:
City Snyder
City Manager, City of McFarland Megan Snyder
401 West Kern Avenue 12009 Palm Avenue
McFarland, California 93250 Bakersfield, CA 93312
Email: [email protected] Email: [email protected] Either party may change her or its address by providing written notice to the other party in the manner described herein.
11. General Provisions.
EMPLOYMENT AGREEMENT
A. Entire Agreement. This Agreement constitutes the complete understanding between the Parties, is fully integrated, and supersedes any and all prior agreements – including the Parties’ Consulting Agreement – promises, representations, or inducements, no matter their form, concerning the subject matter of this Agreement. No subsequent agreements, promises, representations, or inducements will be binding unless recorded in a written document, which specifically references this Agreement and is signed by the Parties or their authorized representatives. The Parties acknowledge that this Agreement may be used as evidence in any subsequent proceeding in which either Party alleges a breach of this Agreement or seeks to enforce its terms, provisions, obligations, or as compelled by law.
B. Captions. The headings used in this Agreement are inserted for reference purposes only and shall not be deemed to limit or affect in any way the meaning or interpretation of any of the terms or provisions of this Agreement.
C. Severability. If any provision contained in this Agreement is held invalid or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be deemed severable and shall not be affected thereby and same shall remain in full force and effect.
D. Amendment. This Agreement may only be amended by a writing executed by all parties.
E. Governing Law and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of California. Any action or motion to enforce the terms or conditions of this Agreement shall be brought only in the Superior Court of California for the County of Kern.
F. Waiver. Waiver by any party of any breach of this Agreement by the other party, whether such waiver be direct or implied, shall not be construed as a continuing waiver or consent to any subsequent breach of this Agreement on the part of the other party.
G. Further Assurances. Each party shall execute and deliver such papers, documents, and instruments, and perform such acts as are necessary or appropriate, to implement the terms of this Agreement and the intent of the parties to this Agreement.
H. Assignment. Neither this Agreement, nor any interest in it, may be assigned or transferred by any party without the prior written consent of all the parties. Any such assignment will be subject to such terms and conditions as City may choose to impose.
I. Binding Effect. The rights and obligations of this Agreement shall inure to the benefit of, and be binding upon, the parties to the contract and their heirs, administrators, executors, personal representatives, successors and assigns, and whenever the context so requires, the masculine gender and includes the feminine and neuter, and the singular number includes the plural. This Agreement may be executed in any number of counterparts, each of which shall be considered as an original and be effective as such.
EMPLOYMENT AGREEMENT
J. Merger And Modification. This contract sets forth the entire Agreement between the parties and supersedes all other oral or written representations. This contract may be modified only in writing, approved by the City Council and signed by all the parties.
K. Attorneys’ Fees. If either party commences any action or proceeding relating to this Agreement or the enforcement of any provision of this Agreement against the other party, the prevailing party, in such action or proceeding, shall be entitled to recover reasonable attorneys’ fees, costs, and all other litigation costs.
L. Execution. This Agreement is effective February 10th, 2025. It is the product of negotiation, and all parties are equally responsible for authorship of this Agreement.
Section 1654 of the California Civil Code shall not apply to the interpretation of this Agreement.
M. Non-Interest. Except for Snyder, no officer or employee of City shall hold any interest in this Agreement (California Government Code section 1090).
N. Counterparts. This Agreement may be executed in counterparts and the respective signature pages for each party may thereafter be attached to the body of this Agreement to constitute one integrated Agreement which is as fully effective and binding as if the entire document had been signed at one time.
O. Acknowledgement of Statutes That May Affect Employment Relationship. City and Employee acknowledge that, in addition to the statutes previously referenced in this Agreement, the following statutes shall govern this employment relationship under the circumstances described in the statutes:
a. Government Code section 53243 states that on or after January 1, 2012, any contract executed or renewed between a local agency, such as the City, and an officer or Employee of a local agency, such as Snyder, that provides paid leave salary offered by the local agency to the officer or Employee pending an investigation shall require that any salary provided for that purpose be fully reimbursed if the officer or Employee is convicted of a crime involving an abuse of her office or position.
b. Government Code section 53243.1 states that on or after January 1, 2012, any contract executed or renewed between a local agency, such as the City, and an officer or Employee of a local agency, such as Employee that provides funds for the legal criminal defense of an officer or Employee shall require that any funds provided for that purpose be fully reimbursed to the local agency if the officer or Employee is convicted of a crime involving an abuse of her office or position. c. Government Code section 53243.3 states that on or after January 1, 2012, if a local agency, such as the City, provides, in the absence of a contractual obligation, for any of the payments described in the corresponding article of the Government
EMPLOYMENT AGREEMENT
Code, then the Employee or officer, such as Employee, receiving any payments provided for those purposes shall fully reimburse the local agency that provided those payments in the event that the Employee or officer is convicted of a crime involving the abuse of His office or position.
d. Government Code sections 87100 et seq., section 1090 and section 1126, and all other similar statutory and administrative rules, prohibit conflicts of interest.
During the term of this Agreement, Snyder shall comply with all those requirements of law, and shall not engage in any business or transaction or maintain a financial interest which conflicts, or reasonably might be expected to conflict, with the proper discharge of Employee's duties under this Agreement.
Snyder represents that she has reviewed, is familiar with, and agrees to comply fully with each of these provisions if any of these provisions are applicable to her, including that Employee agrees that any cash settlement or severance related to a termination that Employee may receive from City shall be fully reimbursed to the local agency if Employee is convicted of a crime involving an abuse of Employee's office or position.
P. Independent Legal Advice. City and Snyder represent and warrant to each other that each has received legal advice from independent and separate legal counsel with respect to the legal effect of this Agreement or had the opportunity to do so and City and Snyder further represent and warrant that each has carefully reviewed this entire Agreement and that each term thereof is understood and that the terms of this Agreement are contractual and not a mere recital. This Agreement shall not be construed against the Party or its representatives who drafted it or who drafted any portion thereof.
[Signature Page Follows]
EMPLOYMENT AGREEMENT
IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective on the day and year first above written:
Dated: CITY OF MCFARLAND
By: _________________________
Saul Ayon
Title: Mayor
Dated: EMPLOYEE
By: _________________________
Megan Snyder
APPROVED AS TO FORM:
By:
Nathan M. Hodges, Esq.
Hodges Law Group
City Attorney
Attachments:
Exhibit A: City of McFarland Position Description – Community Development Director