Audit Committee
January 20, 2022

- 1 -
1/20/2022 10:00:00 AM
www.modestogov.com
AGENDA
City of Modesto

SPECIAL AUDIT COMMITTEE /COUNCIL WORKSHOP
Held Via Teleconference
(To Access Meeting Please See Instructions Below)
Thursday, January 20, 2022 at 10:00 AM
*Roll Call: Sue Zwahlen, Chair
David Wright, Vice-Chair
Jenny Kenoyer, Member
Alternates: Rosa Escutia-Braaton, Tony Madrigal, Chris Ricci, Bill Zoslocki * Please Note: In order to respond to COVID-19, and pursuant to AB 361, the City will hold this meeting via teleconference and Committee Members will be calling in.

THIS MEETING WILL NOT BE PHYSICALLY OPEN TO THE PUBLIC
In order to minimize the spread of the COVID-19 virus, this meeting will be conducted pursuant to AB 361, which amended the Brown Act’s teleconferencing provisions and will not be physically open to the public. You may observe and participate in the meeting via teleconference as indicated below.

PARTICIPATING IN COMMITTEE MEETINGS IN CONFORMANCE
WITH AB 361
The City of Modesto is providing alternatives to observe and participate in Committee meetings.

If you wish to make either a general public comment or to comment on a specific agenda item, you may use one of the following options:

SUBMITTING COMMENTS BY E-MAIL
Written comments may be submitted via email to: [email protected] (include Agenda Item Number in the subject line). All comments will be shared with the Committee Members and placed in the record, but will not be read aloud during the meeting. Written comments must be received by 9:00 a.m. on the day of the meeting. - 1 -
1/20/2022
- 2 -
1/20/2022 10:00:00 AM

VIRTUAL PARTICIPATION BY ZOOM VIDEO

CONFERENCING AND TELEPHONE
Joining the Committee meeting via Zoom
The City of Modesto is now offering the ability to view and participate in Committee meetings via telephonic conferencing via “Zoom” video conferencing computer technology. The meeting may be accessed through the use of Zoom using the following options:
 Enter the following link into an Internet Browser
https://us02web.zoom.us/j/86945970570,
 Enter the following link into an Internet Browser https://zoom.us/ and using the Webinar ID 869 4597 0570
 Passcode 84326
To use Zoom, please visit: https://zoom.us/ and either sign-up for a free Zoom account or continue as a guest. Once you have downloaded the app onto your mobile device, joined from your web browser, or downloaded the Zoom software on your computer you will be ready for the upcoming Committee meeting.

Joining the Committee meeting via Telephone
If you don’t have a smart phone or computer to access the meeting via Zoom, you can participate by phone, by calling 1-877-853-5257 (Toll Free) or 1-888-475-4499 (Toll Free) and enter the Webinar ID 869 4597 0570 Passcode 84326
Providing Public Comment on Zoom and by Telephone
The Committee Chairman will request public comment during the Public Comment periods on the meeting agendas and during each Regular Calendar Item on the Committee Agenda. Once the Chairman has announced the public comment period, please do one of the following.

USING A COMPUTER OR SMART PHONE APP:
 Click on the “Raise Hand” feature in the webinar controls. This will notify City staff that you have raised your hand.
 City staff will unmute your microphone when it is your turn to provide public comment.
 A prompt will appear to confirm you would like to be unmuted and then you will have three minutes to provide public comment.
 Once your public comment has ended, you will be muted again.

USING A REGULAR PHONE (not using a computer or smart phone APP):
 Dial *9 (star 9), this will notify City staff that you have “raised your hand” for public comment.
 City staff will unmute your microphone when it is your turn to provide public comment.
 You will hear “you are unmuted” and then you will have three minutes to provide public comment.
 Once your public comment has ended, you will be muted again. - 2 -
1/20/2022
- 3 -
1/20/2022 10:00:00 AM
 If your phone is unmuted, and you are unable to be heard, the host may ask that you Dial *6 to toggle mute on/off in Zoom.

Additional Zoom resources/support
Please visit Zoom’s website support page on helpful tips to prepare for the meeting:
https://support.zoom.us/hc/en-us/categories/201146643

PUBLIC COMMENTS
Please refer to special public comment instructions above.

Three minute time limit per speaker
Only interested persons in the audience may present these matters. Under State law, Committee members may respond to matters being presented under this item only as follows:
a. Briefly respond to statements made or questions raised. b. Ask a question for clarification.
c. Provide a reference to staff or other resources for factual information. d. Request staff to report back at a subsequent meeting. e. Finally, a Committee member or the Committee itself may take action to direct staff to place a matter of business on a future agenda.

CONSENT ITEMS – ROLL CALL VOTE REQUIRED:

Information concerning the consent items listed below has been forwarded to each Committee member prior to this meeting for study. Unless some member of the audience or Committee member has a question concerning an item and asks that it be withdrawn from the consent list, the Committee approves the items at one time. The action taken by the Committee in approving consent items is set forth in the explanation of this individual item.

Any and all of the following agenda items are subject to action by the Modesto City Council.

This Agenda is on file at the Modesto-Stanislaus Library Reference Room, 1500 I Street, Modesto, in the City Clerk’s Office, Sixth Floor, 10th Street Place, and is available on the City’s Web site at www.modestogov.com.

In accordance with the requirements of Title II of the Americans with Disabilities Act (“ADA”) of 1990, the Fair Employment & Housing Act (“FEHA”), the Rehabilitation Act of 1973 (as amended), Government Code section 11135 and other applicable codes, the City of Modesto (“City”) will not discriminate against individuals on the basis of disability in the City’s services, programs, or activities. For more information, please visit the City of Modesto website at https://www.modestogov.com/865/Americans-with-Disabilities-Act-ADA In compliance with the Americans with Disabilities Act, if you need special assistance to - 3 -
1/20/2022
- 4 -
1/20/2022 10:00:00 AM
participate in this meeting, please contact the City Clerk (209) 577-5396. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting.

NEW BUSINESS

1. Consider approving the audited financial statements and various audit reports for Fiscal Year 2020-2021 audited by external auditors Hudson Henderson & Company, Inc. for the City’s Annual Comprehensive Financial Report, twelve (12) Community Facilities Districts, and various Joint Powers Agencies and forwarding to Council for approval. (Funding Source: Not Applicable)
FINANCE DEPARTMENT; Maria Garnica, 209-577-5249,
[email protected]

2. Consider approving the Auditors’ Reports and Schedule of Passenger Facility Charge Revenues and Expenditures for Fiscal Year Ended June 30, 2021, and forwarding to Council for approval. (Funding Source: Not Applicable)
FINANCE DEPARTMENT; Maria Garnica, 209-577-5249,
[email protected]

3. Consider approving the Auditors’ Reports and Schedule of Measure L Program Revenues and Expenditures for Fiscal Year Ended June 30, 2021 and forwarding to Council for approval (Funding Source: Not Applicable)
FINANCE DEPARTMENT; Maria Garnica, 209-577-5249,
[email protected]

4. Consider approving the Fiscal Year 2020-2021 Single Audit Report for the City of Modesto from external auditors Hudson Henderson & Company, Inc. and forwarding to Council for approval. (Funding Source: Not Applicable) FINANCE DEPARTMENT; Maria Garnica, 209-577-5249,
[email protected]

MATTERS TOO LATE FOR THE AGENDA
These may be presented by members of the Committee and staff upon determination by a majority vote that an emergency exists, as defined by State law, or by a 2/3 vote that (1) there is a need to take immediate action, and (2) that the need for action came to the City’s attention after the agenda was posted.

ADJOURNMENT
Posted pursuant to Government Code Section 54954.2 on the bulletin board at Tenth Street Place on at by
date time signature
- 4 -
1/20/2022

CITY OF MODESTO

AUDIT COMMITTEE REPORT
DATE OF MEETING:

January 20, 2022
Date: December 6, 2021
TO: Audit Committee
Sue Zwahlen, Chair
David, Wright, Vice-Chair
Jenny Kenoyer, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: DeAnna Christensen, Director of Finance
SUBJECT: Fiscal Year 2020-2021 Comprehensive Annual Financial Report (CAFR), the Community Facility Districts Audited Financial Statements and Audit Reports; and Various Joint Power Agencies and Other Audit Reports
CONTACT: Maria Garnica, Accounting Manager, (209) 577-5249; [email protected]
DESCRIPTION:

Consider approving the audited financial statements and various audit reports for Fiscal Year 2020-2021 audited by external auditors Hudson Henderson & Company, Inc. for the City’s Annual Comprehensive Financial Report, twelve (12) Community Facilities Districts, and various Joint Powers Agencies and forwarding to Council for approval. (Funding Source: Not Applicable)
STRATEGIC PLAN ELEMENT:

This item supports the City of Modesto 2020-2025 Strategic Plan focus of Governance and Service Delivery under Goal H: Achieve Financial Sustainability.

BACKGROUND:

The Modesto City Charter requires an annual audit, which shall be presented to the Council, as follows:

SECTION 1306. INDEPENDENT AUDIT.

The Council shall employ, at the beginning of each fiscal year, an independent certified public accountant who, at such time or times as may be specified by the Council, at least annually, shall examine the books, records, inventories, and reports of all officers and employees who receive, handle or disburse public funds and all such other officers and employees and departments as the Council may direct.
#1..
- 5 -
Audit Committee, January 20, 2022
Audit Reports for FY 2020-2021

As soon as practicable after the end of the fiscal year, a final audit and report shall be submitted by such accountant to the Council, one (1) copy thereof to be distributed to each member, one (1) to the City Auditor, one (1) to the City Manager and one (1) to the City Attorney respectively, and three (3) additional copies to be placed on file in the office of the City Clerk, where they shall be available for inspection by the general public.

The City’s Annual Comprehensive Financial Report (ACFR), for the Fiscal Year ending June 30, 2021 is an annual report which includes audited financial statements with an external auditor’s opinion on the financial condition and the results of operations for the period under audit. The accounting firm of Hudson Henderson & Company, Inc. conducted the Fiscal Year 2020-2021 audit for the City.

DISCUSSION:

The independent auditors concluded for the ACFR that there was a reasonable basis for rendering an unmodified (clean) opinion and that the statements were fairly presented in accordance with generally accepted accounting principles. In conjunction with this audit, Hudson Henderson & Company, Inc. also performed certain agreed-upon procedures as applied to the Appropriations Limitation (GANN Limit) prescribed by Article XIII-B of the California Constitution. Copies of these reports are attached.

In addition, our independent auditors examined the financial statements of twelve (12) Community Facilities Districts (CFDs) and concluded that there was a reasonable basis for rendering an unmodified (clean) opinion and that the statements were fairly presented in accordance with generally accepted accounting principles. The twelve (12) CFDs examined include:

1. Community Facilities District Number 1998-2 (Carver-Bangs/Pelandale-Snyder)

2. Community Facilities District Number 2000-2 (Coffee-Claratina)

3. Community Facilities District Number 1998-1 (Enterprise Business Park)

4. Community Facilities District Number 2003-1 (Fairview Village)

5. Community Facilities District Number 2007-2 (Kiernan Business Park West)

6. Community Facilities District Number 1997-1 (North Beyer Park)

7. Community Facilities District Number 2002-1 (Northpointe)

8. Community Facilities District Number 2004-1 (Village One #2)

9. Community Facilities District Number 1996-1 (Village One)

10. Community Facilities District Number 2016-1 (Kiernan Business Park East #2)

11. Community Facilities District Number 2007-1 (North Beyer #2)

12. Community Facilities District Number 2016-2 (The Vintage) The City is the financial administrator for several joint powers agencies (JPAs) which require an independent audit of their financial statements. The joint powers agencies and mandated audit reports included in this report are:

1. Abandoned Vehicle Abatement (AVA)

2. Modesto-Ceres Fire Protection Agency

3. Tuolumne River Regional Park (TRRP)

4. Transportation Development Agency (TDA)

5. Transportation Development Agency (TDA) National Transit Database (NTD) Reporting Forms
#1..
- 6 -
Audit Committee, January 20, 2022
Audit Reports for FY 2020-2021

And finally, the City also directly receives funding from various state and federal agencies that mandate annual audit reports.

Based on the attached Auditors’ Reports, the financial statements for ACFR, GANN Limit, CFDs and JPAs were prepared and presented fairly in all material respects.

FISCAL IMPACT:

While the information contained in these reports discloses the financial performance for the City, there is no direct fiscal impact.

Approved by:

DeAnna Christensen, Director of Finance
Joseph P. Lopez, City Manager
Attachments:

1. Annual Comprehensive Financial Report FY 2020-2021

2. GANN Limit Report FY 2020-2021

3. Community Facilities District Number 1998-2 (Carver-Bangs/Pelandale-Snyder)

4. Community Facilities District Number 2000-2 (Coffee-Claratina)

5. Community Facilities District Number 1998-1 (Enterprise Business Park)

6. Community Facilities District Number 2003-1 (Fairview Village)

7. Community Facilities District Number 2007-2 (Kiernan Business Park West)

8. Community Facilities District Number 1997-1 (North Beyer Park)

9. Community Facilities District Number 2002-1 (Northpointe)

10. Community Facilities District Number 2004-1 (Village One #2)

11. Community Facilities District Number 1996-1 (Village One)

12. Community Facilities District Number 2016-1 (Kiernan Business Park East #2)

13. Community Facilities District Number 2007-1 (North Beyer #2)

14. Community Facilities District Number 2016-2 (The Vintage)

15. Abandoned Vehicle Abatement (AVA)

16. Modesto-Ceres Fire Protection Agency Financial Statements

17. Tuolumne River Regional Park (TRRP)

18. Transportation Development Agency (TDA)

19. Transportation Development Agency (TDA) National Transit Database (NTD) Reporting Forms
#1..
- 7 -
City of Modesto
Annual Comprehensive Financial Report
FY 2020-2021 | Fiscal Year Ended June 30, 2021
#1..
- 8 -
#1..
- 9 -

CITY OF
Modesto, California

ANNUAL COMPREHENSIVE FINANCIAL REPORT
Fiscal Year Ended June 30, 2021
Prepared by
Finance Department
#1..
- 10 -
#1..
- 11 -

CITY OF MODESTO
June 30, 2021

TABLE OF CONTENTS

INTRODUCTORY SECTION
Transmittal Letter ............................................................................................................................iii - xxi Certificate of Achievement for Excellence in Financial Reporting....................................................... xxii City of Modesto Organizational Chart..................................................................................................xxiii

FINANCIAL SECTION
Independent Auditors’ Report.............................................................................................................. 3-5 Management’s Discussion and Analysis ........................................................................................... 6-14 Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Position ........................................................................................................17 Statement of Activities........................................................................................................ 18-19 Fund Financial Statements:

Balance Sheet – Governmental Funds ....................................................................................20 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position – Governmental Activities.............................................................21 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds..............................................................................................................22 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities – Governmental Activities .........................................................................................................23 Statement of Net Position – Proprietary Funds........................................................................24 Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds...................................................................................................................25 Statement of Cash Flows – Proprietary Funds .................................................................. 26-27 Statement of Fiduciary Net Position ........................................................................................28 Statement of Changes in Fiduciary Net Position – Fiduciary Funds…………...…….……….…29 Notes to Basic Financial Statements ........................................................................................ 30-74 Required Supplementary Information:

Schedule of Changes in the Net Pension Liability and Related Ratios..................................... 77-78 Schedule of Plan Contributions.......................................................................................................79 Schedule of Changes in the OPEB Liability and Related Ratios ....................................................80 Schedule of Contributions...............................................................................................................81 Schedule of Revenues – Budget (GAAP Basis) and Actual – General Fund.................................82 Schedule of Expenditures by Function – Budget (GAAP Basis) and Actual – General Fund.........83 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget (GAAP Basis) and Actual – Operating Grants Special Revenue Fund ...........................................................84 Notes to Required Supplementary Information......................................................................... 85-86 Combining and Individual Fund Statements and Schedules:

Nonmajor Governmental Funds:

Combining Balance Sheet.................................................................................................. 92-94 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ................................................................................................................. 96-98

#1..
- 12 -
Schedules of Revenues, Expenditures, and Changes in Fund Balance – Budget (GAAP Basis) and Actual:

Housing and Community Development Special Revenue Fund........................................99 Local Transportation Special Revenue Fund...................................................................100 Traffic Safety Special Revenue Fund ..............................................................................101 Downtown Improvement District Special Revenue Fund.................................................102 Strategic Planning and Development Special Revenue Fund……………………………..103 Transportation Special Tax Revenue Fund………………………………………………….104 Nonmajor Enterprise Funds:

Combining Statement of Net Position ............................................................................ 106-107 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position......................................................................................................... 108-109 Combining Statement of Cash Flows............................................................................ 110-113 Internal Service Funds:

Combining Statement of Net Position ............................................................................ 116-117 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position......................................................................................................... 118-119 Combining Statement of Cash Flows............................................................................. 120-123 Custodial Funds:

Combining Statement of Fiduciary Net Position Fiduciary Funds – Other Custodial Funds…126 Combining Statements in Changes in Fiduciary Net position – Fiduciary Funds - Other Custodial Funds .........................................................................................................127

STATISTICAL SECTION
Financial Trends:

Net Position by Component ..........................................................................................................132 Changes in Net Position ....................................................................................................... 133-134 Fund Balances of Governmental Funds .......................................................................................135 Changes in Fund Balances of Governmental Funds....................................................................136 Revenue Capacity:

Water Utility System ....................................................................................................................137 Debt Capacity:

Ratio of Outstanding Debt by Type...............................................................................................138 Computation of Direct and Overlapping Debt...............................................................................139 Computation of Legal Debt Margin...............................................................................................140 Revenue Bond Coverage, Wastewater Revenue Bonds..............................................................141 Demographic and Economic Information:

Demographic and Economic Statistics .........................................................................................142 Principal Employers ......................................................................................................................143 Principal Property Taxpayers........................................................................................................144 Operating Information:

Full-Time City Government Employees by Function .....................................................................145 Operating Indicators by Function ..................................................................................................146 Capital Asset Statistics by Function/Program ...............................................................................147

CONTINUING DISCLOSURE SECTION
Continuing Disclosure Requirements Information....................................................................... 152-162 #1..
- 13 -

INTRODUCTORY TAB
#1..
- 14 -
#1..
- 15 -

INTRODUCTORY SECTION
#1..
- 16 -
#1..
- 17 -
Department of Finance
P.O. Box 642
Modesto, California 95353
209.577.5369
Modestogov.com
Hearing and Speech Impaired Only
TDD 209.526.9211
December 10, 2021
To the Honorable Mayor, Members of the City Council, and Citizens of the City of Modesto:

We are pleased to present to you the Annual Comprehensive Financial Report (ACFR) for the City of Modesto (the City). The City Charter and Municipal Code require that a complete ACFR, which is comprised of financial statements and reports on the finances of the City, be submitted to the City Council at the end of each fiscal year. This report fulfills that requirement for the year ending on June 30, 2021.

City management assumes full responsibility for the completeness and reliability of the information contained in this report. We believe the data fairly represents the financial position and results of operations of the City. The disclosures necessary to enable the reader to understand the City's financial affairs have been included. The City's accounting system has been developed and maintained with due consideration given to the adequacy of internal controls. Because the cost of internal controls should not exceed the anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. The evaluation of the costs and benefits of a particular control requires estimates and judgments by management.

The Modesto City Charter also requires an annual audit be performed by an independent certified public accountant selected by the Modesto City Council. The accounting firm of Hudson Henderson and Company, Inc. was selected in 2018 to perform the City's annual financial audits. The auditors have issued an unmodified (“clean”) opinion on the financial statements for the fiscal year ending on June 30, 2021 which is presented on page 3. In addition to meeting the City Charter audit requirements, the audit was also designed to meet the requirements of the Federal Single Audit Act Amendments of 1996 and Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). The auditors’ reports related specifically to the Single Audit will be presented separately at a later date.

Management’s discussion and analysis (MD&A) immediately follows the independent auditors’ report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A is designed to be read in conjunction with this transmittal letter.

City of Modesto Profile
Modesto is located in the heart of California's San Joaquin Valley and is the County Seat of Stanislaus County. It is also the retail, service and financial center of Stanislaus County. The City currently occupies a land area of 37.4 square miles and serves a population of 219,294. The City has a diverse economy and population with a strong sense of community pride.

Incorporated as a municipal city in 1884, the City adopted its City Charter on March 12, 1951, with a CouncilManager form of government. The Modesto City Council (Council) is the City’s legislative body and is made up of seven elected officials serving overlapping 4-year terms. The Mayor is elected at-large by the entire City, while the six Councilmembers are elected by district and are limited to two terms.

The Council sets policy and tax rates, approves budgets, and passes ordinances and resolutions, which govern the City. The Council also appoints citizens to advisory boards, committees and commissions, and iii
#1..
- 18 -
appoints the City Manager, City Attorney, City Clerk, and City Auditor. The City Manager is responsible for carrying out Council policy and managing the day-to-day affairs of the City.

The City is a “full-service” city including police and fire; public works; water and sewer; community and economic development; parks and recreation; public transportation; and cultural and convention visitor services.

The City’s financial reporting entity includes all funds and activities of the City as the primary government and its component units, which are legally separate entities that operate under the auspices of the City and provide services that supplement City services. The City’s component units are blended into the City’s funds because there is a financial benefit/burden relationship when the City or management has operational responsibility over the component unit. These component units are the Modesto Public Financing Authority and the City of Modesto Community Facilities Districts.

The annual operating budget serves as the foundation for the City’s financial planning and control. The proposed budget is adopted annually prior to July 1 by Council ordinance. The Council’s legally-adopted budget level is at the fund level. Throughout the fiscal year, the budget may be modified. The Council has also adopted fiscal policies that delineate the delegated budget control authority to the following parties:

Council, the City Manager, and the Director of Finance.

Local Economy
A major center for local commerce, the City attracts thousands to its environs for work, shopping, and entertainment. Major employment sectors include manufacturing, healthcare, education, and retail.

Modesto and its surrounding communities contain canneries, packing plants, and warehouses which ship agricultural products across the nation and the world. An active farm-to-table movement has been spearheaded by the area’s large production of nuts, dairy, poultry, and other locally grown products.

The unemployment rate within the county-wide Modesto Statistical Area (MSA) decreased then increased during the 2020-2021 fiscal year. Unemployment reached its lowest level in the City at 4.8% in September, 2019. The Coronavirus pandemic and resulting restrictive regulations began to rapidly increase the unemployment rate in March, 2020 to 6.3%, with a jump up to 17.7% in April, 2020. As of June 30, 2021, the City’s unemployment rate was recorded at 8.70%, down from the 14.3% rate of a year ago due to lessening economic impacts from COVID-19.

According to Zillow, the ZHVI (Zillow Home Value Index) for homes listed in Modesto was $389,830 (as of June 30, 2021), an increase of 21.6% over 2020. CoStar Realty Information stated the average Modesto MSA multifamily unit asking rent was $1,347, up 10.1% from $1,223 in 2020. Modesto building permit activity during fiscal year 2020-2021 ended with a total of 4,808 permits issued with a valuation of $169,409,222.

Modesto is a prime and central location for business, and has attracted both start-ups and expanding firms.

Specialized health care facilities like HealthSouth and Central Valley Specialty Hospital have chosen to expand their services and operations in Modesto. There is also a strong culture of entrepreneurship and innovation. Datapath, a technology management company with headquarters in Modesto, has been recognized by Inc. Magazine as one of the fastest-growing private companies in America. E&J Gallo Winery, also based in Modesto, is the world’s largest privately-owned winery and the leading US exporter of California wines. The Gallo Glass Company is a state-of-the-art glass manufacturer and a leading producer of wine and spirits glass bottles in the US.

As an entitlement community, the City was awarded $2,385,772 in Community Development Block GrantCARES ACT-1 (CDBG-CV-1), and CDBG-CV-3 funds and $3,928,372 in Emergency Solutions Grants – CARES ACT-1 (ESG-CV-1) and ESG-CV-2 funds to support a range of eligible activities to aid in the City’s response to COVID-19.
iv
#1..
- 19 -
The Coronavirus Aid, Relief and Economic Security (CARES) Act provides CDBG-CV funding to enable the City to prevent, prepare for, and respond to coronavirus through providing quality subsidized housing and expanding economic opportunities for low-and moderate-income persons through Department of Housing and Urban Development (HUD) programs.

Eligible CDBG-CV activities include:
 Public Service activities
 Housing-Related activities
 Public Improvements and Facilities
 Activities to acquire real property
 Economic development activities
 General administrative and planning activities
The ESG-CV funds may only be used to prevent, prepare for, and respond to the coronavirus, among individuals and families who are homeless or receiving homeless assistance, and to support additional homeless assistance and homelessness prevention activities to mitigate the impacts created by the coronavirus. People experiencing homelessness shall not be required to receive treatment or perform and other prerequisite activities as a condition for receiving assistance.

Eligible ESG-CV activities include:
 Street outreach
 Emergency shelter
 Homelessness prevention
 Rapid rehousing assistance
 Homeless Management Information System (HMIS)
 Administrative activities
In partnership with Stanislaus Regional Housing Authority and local credit unions, the City of Modesto accepted a Federal award of $6,398,150 for the Emergency Rental Assistance Program. Congress passed the Consolidated Appropriations Act of 2021 on December 21, 2020 and the Emergency Rental Assistance program made available $25 billion nationwide to assist households that are unable to pay rent and utilities due to the COVID-19 pandemic. The funds are assisting eligible households through rental assistance programs.

COVID-19 Recovery and New Growth
At the end of May 2021, the Modesto City Council approved a resolution to allocate American Rescue Plan Act of 2021 funding made available to the City in the amount of $45,897,056 to a set of programs supporting both economic vitality and quality of life, in the immediate and medium term. These programs are in development and will be introduced during FY2021-2022. During FY2020-2021, the City received 50% of the total allocation amounting to $22,948,528 and the remaining 50% is expected to be received by May 2022.
v
#1..
- 20 -
Proposed Funding for Year 1
Eligible Category Description Allocation
Economic Vitality
Business Support Small biz support with expansion and retention $1,000,000 Exp Claim / Rev Loss Revolving loan fund for attraction of downtown development $1,000,000 Exp Claim / Rev Loss Revolving loan fund for water/sewer connection fees $1,000,000 Exp Claim / Rev Loss Tuolumne River – Economic Development $750,000 Exp Claim / Rev Loss Relief Across Downtown Card $708,500 Business Support Implementation of a workforce development program $500,000 Exp Claim / Rev Loss Support for Children’s Museum $500,000 Exp Claim / Rev Loss Support for Awesome Spot Playground $500,000 Exp Claim / Rev Loss Support for Car Museum $500,000
Exp Claim / Rev Loss Support for Convention and Visitor’s Bureau $250,000 Broadband
Infrastructure
Expanded Wi-Fi downtown and available at community
facilities $200,000
Exp Claim / Rev Loss
Funding to support the development of Enhanced
Infrastructure Financing District $200,000
Nonprofit Support Nonprofit grant program $50,000
Quality of Life
Public Health/Safety
Labor COVID-19 labor expenses $4,700,000
Homeless Services Homeless Support Program $1,000,000
Behavioral Health Mental Health Clinician Program – Partnership with BHRS $800,000 Exp Claim / Rev Loss Blight Abatement $750,000
Exp Claim / Rev Loss Downtown Beautification $700,000
COVID-19
Expenditures Emergency Medical Service equipment $600,000 Revenue Loss Grants to neighborhoods $120,000
Governance and Service Delivery
Exp Claim / Rev Loss Fire Station 1 Deferred Maintenance $2,000,000 Exp Claim / Rev Loss Forestry Program Enhancements $1,850,000 Exp Claim / Rev Loss General Plan Update $700,000
Exp Claim / Rev Loss Discoverer Replacement $500,000
Exp Claim / Rev Loss Cybersecurity Mitigation $490,000
Exp Claim / Rev Loss TSP Battery Back Up System Upgrade $250,000 Exp Claim / Rev Loss Address deferred maintenance at various parks and public facilities $1,270,028
Exp Claim / Rev Loss Upgrade secure online service application software for Utility billing $60,000
TOTAL $22,948,528
Entertainment and Tourism
Modesto features vibrant arts, entertainment, sports and cultural expression. With the Convention and Visitor’s Bureau and Tourism Marketing District, Modesto is committed to attracting visitors by promoting and marketing Modesto as a convention, sports, tourism, and leisure travel destination.

COVID-19 has impacted every aspect of life in America, and Modesto is no exception. Our community continues to work together to bring virtual entertainment experiences to our neighbors and the world. We look forward to returning to a time when visitors return to Modesto to enjoy all the wonderful places and events we have to offer.
vi
#1..
- 21 -
Some examples are:
• Downtown Modesto is home to the world-class Gallo Center that brings national and international entertainment, arts and multicultural programming to the Central Valley region. Downtown, you can experience the Historic Graffiti Cruise Route, the Legends of the Cruise Walk of Fame, and the Classic Community Mural Series celebrating the cruising culture phenomenon born in Modesto and immortalized by native son George Lucas in American Graffiti. Live entertainment is a prominent feature in the Civic Plaza and nearby clubs, and a busy calendar of entertaining and educational events can be experienced just across the street at the Modesto Centre Plaza. • Baseball with the Modesto Nuts baseball team is just minutes from the city center, and golfers enjoy two-highly rated 18-hole courses and a municipal course year-round. Modesto is gaining recognition for its bike routes and trails, and is a frequent host city for the Tour-de-France rated Amgen Tour of California bicycle race. Additionally, water lovers have river parks and kayaking. • The McHenry Mansion and McHenry Museum anchor the city’s loving preservation of its historical heritage, drawing visitors from all over the world. The city’s annual Architectural Festival offers free tours, exhibits, workshops and films in the iconic State Theatre featuring one of the best collections of mid-century modernism in the nation. Arts live year-round with monthly Art Walks, and seasonal activities including the Graffiti Cruise, parades, the Modesto on Ice downtown skating rink, the Dickens Faire, ModShop arts and crafts walk, and PorchFest community music stroll bring joy to residents and visitors. Modesto truly offers something great for everyone.

Our Strategic Priorities
During 2020, the City adopted the 2020-2025 Strategic Plan to incorporate input from newly elected Councilmembers and to reaffirm our strategic priorities. Our priorities bring the City’s vision and values to life in our community and define our overall direction as a city. It also confirms our commitment to our citizens. While the priorities are individually important, they are also interconnected and cannot be addressed in isolation. In addition, they are the basis of our scorecard that measures success and upon which our performance metrics are built.
• Quality of Life: Engage partners across the community to ensure the safety, resilience, and attractiveness of Modesto.
• Economic Vitality: Retain and attract residential, commercial, and industrial development to meet the community’s needs today and for the next generation. • Governance and Service Delivery: Build community trust in City government through responsive, transparent and efficient service delivery.

Long-Term Financial Planning
The City continues to refine its 10-year forecasting model and update estimates and assumptions used to project future operations. At the end of fiscal year 2020-21, General Fund Balance was as follows:

Restricted and Nonspendable: $5.8 million; Committed: $18.4 million; Assigned: $0.3 million; and Unassigned: $6.4 million. The Committed Fund Balance allows the City to respond to unplanned circumstances and maintain adequate working capital to meet its cash flow needs.

The City’s long-term maintenance of a stable fund balance is a direct reflection of the Mayor and Council’s leadership and prudent fiscal management. With the impacts of COVID-19, the City will continue to monitor the revenue impacts and monitor the General Fund reserves to address any shortfall during the current fiscal year.
vii
#1..
- 22 -

SIGNIFICANT EVENTS / ACCOMPLISHMENTS
Quality of Life
• The Community Forestry Division resolved 2,481 broken limb issues, inspected 4,279 trees or tree sites, and completed 7,456 tree pruning activities.
• The Solid Waste Division recycled 4,501 waste tires and collected 2,898 tons of bulky items. • Completed transition of Parking Enforcement from the Modesto Police Department (MPD) to Public Works.
• Hired four full-time Homeless Outreach Workers as an alternative response to respond to homeless related calls instead of sworn police officers.
• Reduced overall collisions by 34% and injury traffic accidents by 12%. • The Homeless Engagement and Response Team (HEART) offered services to homeless individuals over 2,200 times.
• Abatement workers removed 532 abandoned homeless camps and over 283,000 lbs. of trash. • The MPD Street Gang Unit took 131 firearms off the street. • The Major Crimes Unit seized over 1.4 million dollars in illegal criminal enterprise money. • The MPD license plate reader program was expanded to five additional intersections. • MPD continued to expand the effectiveness of the Real Time Crime Center (RTCC) by adding additional cameras throughout the city, including talk-down speakers at several locations so RTCC operators could speak with the public remotely.

viii
#1..
- 23 -
• The Parks, Recreation and Neighborhoods Department coordinated the City’s volunteer efforts at 49 events, including Love Modesto, historical properties, and river trail clean-ups. Overall there were 1,825 volunteers that provided 6,821 hours of service with a total leveraged value of $206,223. • The Mary Grogan Soccer Complex resumed operations on April 5, 2021 with 133 complex rentals and 13,870 participants.
• The Economic Development division attracted a $15 million investment by Comcast in expanded highspeed fiber optic internet, a last-mile distribution center, new 108-unit and 200-unit Class-A multifamily developments, two hotel developments, two investments by UHAUL Corporation, replacement of a shuttered Sears with a new Furniture megacenter, facilitated conclusion of remediation certification for the 40-acre FMC brownfield site, and assisted DataPath in its move and expansion to Downtown Modesto, a Federal Opportunity Zone.
(DataPath’s new headquarters office in Downtown Modesto) ix
#1..
- 24 -
(New Allure at 2920 Multi-Family development)
(New Furniture City megacenter in Vintage Faire Mall)
• With the approval of the American Rescue Plan Act (ARPA) making available approximately $45.89 million to the City of Modesto, the City implemented the Modesto Forward strategy that included engaging the Council and public to identify key investment priorities for the first tranche of ARPA funds made available in 2020 to benefit the community and organization. • The Blight Abatement Committee was created, as a major step toward achieving the strategic initiatives to improve beautification efforts and the overall quality of life in the city – one of the three pillars of the x
#1..
- 25 -
Strategic Plan. This committee will serve the entire city and its core focus will be how to reduce illegal dumping, tagging, litter, illegal encampments, abandoned shopping carts and much more. Further, this Committee is intended to promote public-private partnerships with the community to ensure a longlasting blight abatement program. • Modesto Fire Department (MFD) initiated and coordinated a fuel reduction project in the Tuolumne River Regional Park. Through the use of newly purchased equipment, controlled burns and many man hours crews were able to clear 62 acres land in the park. • A Memorandum of Understanding was approved between the City of Modesto and the Stanislaus County Fire Warden’s office for hazardous materials emergency response. Through this agreement the Fire Warden’s office will provide funding that will allow MFD to upgrade to State Certified Hazmat Type I team which will allow for a greater level of specialized service for the City, County and State. • Through the removal of dead trees and brush, MFD was able to improve defensible space around the famed and historic Knights Ferry Bridge. Within the City of Oakdale, a 30’ fuel break was built between homes and the river, making the area safer for homeowners in the area. • Completed the efforts with City departments to implement Phase I of the Parking Realignment business plan which includes the transition of enforcement from the Police Department to Public Works, as well as updating City Municipal Codes, Administrative Directives, and Policies. • After a 13 months closure, the McHenry Mansion and McClatchy Square Park resumed reservations on May 1, 2021 and hosted 9 private outdoor events.
• The Parks, Recreation and Neighborhoods Department prepared a draft Memorandum of Understanding between the First Tee and the Boys and Girls Clubs of Stanislaus County to form a partnership and relocate operations to the Roselawn Avenue property adjacent to Dryden Golf Course. • In response to the cancellation of in-person recreational programming due to COVID-19, the Parks, Recreation and Neighborhoods Department converted several programs and events to a virtual platform including: a Virtual Activity Guide, children’s soccer programming, blended Learning Lifeguard Recertification, Bingo with 382 participants, Zumba Gold with 716 participants, Pilates with 236 participants, Coffee and Conversations with 500 participants, Junior Giants with 430 participants, and Spirit of Giving Run with 300 participants.
• The drive-through Celebration of Lights Reverse Parade in downtown Modesto dazzled over 2,500 cars with an estimate of 10,000 participants.
• The Virtual Recreation Center garnered almost 2,500 visits to one of its 118 sites with content for all ages with topics including education, crafts, tours, activities and resources. • The Parks, Recreation and Neighborhoods Department launched its first Backyard Learn to Swim Video Series containing basic swimming, breathing and life-saving skills that can be followed in a pool or bathtub to introduce beginners to the water.
• The Senior Meals program continued it’s “Drive-Thru” operations and served nearly 7,500 seniors over 39,700 meals. Weekly activity packets, monthly dress up themes and giveaways were also provided to keep the senior community engaged during the pandemic. Over 1,000 masks (reusable and disposable) were given out to seniors during senior meal distribution. Mask donations were provided by The Park at Modesto, Seva Hospice, and Dale Commons with an estimated value of $2,000. • After School Programming resumed in August 2020 and helped over 22,000 students in-person or virtually, depending on the school’s current policy. In this program students have built catapults, practiced digital methods of art, gone on virtual tours of museums and zoos, and had discussions of sharing, fairness, controlling emotions and time management. • The Aquatics program resumed in-person classes June 2021 with swim lessons and adult water exercise. In addition to the implementation of pandemic safety protocols, the programming was revamped in order to serve more participants, with the summer season teaching almost 1,200 children how to swim in 5 weeks.
• The City partnered with the La Loma Neighborhood Association, a member of Modesto Neighborhoods, Inc., to complete the fundraising and construction of a new playground at East La Loma Park through the Park Partners Program. The playground reopened on May 19, 2021, and features new play areas, benches, and the largest swing bay in the City’s park system. xi
#1..
- 26 -
• Improved playground safety in 21 parks with the installation of 1,760 cubic yards of fiber (wood chip) ground covering.
• The Community Development division utilized CDBG funds to assist in purchasing and renovating a property to create the Youth Navigation Center consisting of 24 new emergency low-barrier shelter beds and 16 new transitional housing beds for 18 to 24-year-old adults. • Partnered with EAH Housing Inc, to develop Archway Commons Phase II in order to construct 74 new multi-family affordable housing units.
• Launched Camp2Home in order to address homelessness from outreach, shelter operations, job training, and rapid rehousing. This program provides a path to self-sufficiency for individuals experiencing homelessness through outreach, shelter, job training, employment and permanent housing. In January 2021, the City doubled the existing Downtown Streets Team, funding a second team of 25 individuals in the inaugural Camp2Home program. Through this program, seven Camp2Home members have secured employment with employers – including the City of Modesto. xii
#1..
- 27 -
• The Homeowner Repair Program assisted 9 homeowners with Americans with Disabilities Act (ADA) improvements, energy efficiency upgrades, lead compliance and safety clearance totaling $336,000.

Provided below are Before and After images of a Homeowner Repair Program project. • Planning staff approved an annexation of 33 acres on Whitmore Avenue to allow for further industrial expansions.
• Approved two new subdivisions on Wells Avenue for 112 single-family dwellings. • Approved a 44-unit apartment complex on Dale Road.
xiii
#1..
- 28 -
• Approved a 35-unit senior and veterans housing project on Vine Street.

Economic Vitality
• Adopted legislative priorities aimed at bringing awareness to the policy issues that affect the City of Modesto related to homelessness, mental health, water infrastructure, transportation and County island infrastructure. This work required engaging the Governor’s Office, various agencies, and legislators at the state and federal level regarding the impact that legislation may have on the City of Modesto in an effort to divert or mitigate the impact to the City and its residents. Through this advocacy work with support from Senator Susan Eggman, the City is slated to receive $5 million for support with County island infrastructure.
• Continued construction on the State Route 132 Freeway/Expressway Phase 1 project. The project is anticipated to be complete in 2022 and the total construction cost is anticipated to be $117M. • The Building Services Division installed 14 replacement Heating, Ventilation, and Air Conditioning (HVAC) units throughout City facilities.
• The Solid Waste Division composted 55,245 tons of organic materials. • Completed approximately 40% of the Heavy-Duty Fleet Shop which will increase efficiencies in labor sharing and parts storage consolidation, allow ability to lift the largest and heaviest vehicles, improve safety for workers, and shorten repair times for City vehicles and equipment. • The Solid Waste Recycling staff collected and recycled 5.90 tons of California Redemption Value (CRV) keeping it out of the waste stream.
• The Streets Division completed 53.78 lane miles of crack seal applications and 137.88 lane miles of slurry seal application.
• The Traffic Electrical Division replaced 33 down/damaged street lights. • The Traffic Division secured a new sign printer to manufacturer signs in-house. xiv
#1..
- 29 -
• The Traffic Division secured a new thermoplastic striping machine to help increase productivity of the striping crew.
• Completed the Tully Road Pavement Rehabilitation Project between Yale Avenue and Briggsmore Avenue.
• Completed the Coffee Road Pavement Rehabilitation Project. xv
#1..
- 30 -
• Completed the Dry Creek Trail Maintenance Project.
• Completed design and began construction of the Right-turn Lane Southbound McHenry to Briggsmore Ave project.
• Construction of the Del Rio Tank 14, Well 68 & Pump Station Project was completed. The project will increase service reliability, correct existing supply and pressure deficiencies for the City’s Del Rio Water System.
• Construction of the Headworks and Dryden Box Project was completed. The project consists of diverse improvements at the Sutter Wastewater Treatment Plant including: screens, compactors, Parshall flume, grit basins, massive in-ground concrete structures, and sewer trunk line installations. • Construction of the Area 2 Cross Connection Removal – Roosevelt Park Project was completed. This project consisted of the removal of six existing sewer cross connections to be removed, a new underground storm drain system and renovations to Roosevelt Park. This project received a $4 million Proposition 84 grant.
• Construction of several sewer trunk line improvements were completed including: Crows Landing Trunk, Empire Trunk, and North Trunk.
• Construction of the first phase of sewer infrastructure for the Tivoli Development was completed along Sylvan Avenue.
• Construction of several water main improvement projects were completed including: Kansas Water Main, Spencer Ave Strengthen and Replace, Bermuda Way Strengthen and Replace. • Awarded $10M Proposition 1 grant from State Water Resources Control Board (SWRCB) for JM Pike Park Stormwater to Sanitary Cross Connection Removal Project. • Began construction inspections for three Florsheim subdivisions: Woodglen, Icon, and Metro. • The Water Services Division continues to maintain approximately 1,000 miles of water mains, with 77 water wells in service and 75,477 water service connections. • During FY2020-2021, Water Services Division staff performed 8,560 water quality samples, responded to 4,868 water service calls, conducted 2,051 leak checks and 431 Water Wise Consults, and issued 198 water conservation rebates.
• For FY2020-2021, the City water system has shown an average monthly water production reduction of

23.2% as compared to the State’s baseline of 2013. This reduction represents an average of 282 million gallons of water saved each month.
xvi
#1..
- 31 -
• Completed a Trash Assessment of all priority land use areas and identified opportunities to mitigate potential trash impacts to the Tuolumne River that include a mixture of full capture devices and best management practices.
• Completed 1.3 million feet of pipe cleaning.
• Installed 315 new sewer lateral clean-outs for residential customers. • Installed 11 Drywell systems to replace failing rockwell systems and alleviated routine local flooding. • Completed cleaning of 3,943 catch basins and rockwells – this equals roughly 16% of our storm system, which needs to be cleaned every 3 to 4 years to function properly. • Responded to 2,038 customer service calls – a 91% increase in call volume over FY2019-2020.

Customer service calls originate from customers that are experiencing a plugged sewer line, localized flooding, or other requests from citizens. The increase is due to the 100 year storm in January 2021 and customers spending more time at home due to COVID-19. • Environmental Compliance implemented a new pretreatment database program that meets Environmental Protection Agency (EPA) Cross-Media Electronic Reporting Rule (CROMERR) which provides the legal framework for electronic EPA reporting under EPA’s regulatory programs. • Environmental Compliance implemented a pyrethroid pesticide monitoring program for receiving water. • Completed a total of 1,836 Preventative Maintenance Work Orders on various equipment that’s utilized in the Primary Wastewater Treatment Facility at Sutter. • Completed a total of 6,372 Preventative Maintenance Work Orders on various equipment located at 66 Sanitary Sewer and Storm Lift Stations.
• The City was awarded a $2.9 million grant from the CA Trails and Greenways Grant Program. This grant will fund the TRRP Gateway to Neece Drive Trail Project, which includes 0.8 miles of riverfront trail with trailhead and parking lot, as well as ADA accessibility enhancements in the surrounding neighborhood.
• The City was awarded a grant award totaling $178,000 from the Per Capita Grant Program funded by Proposition 68. Funding from this grant program is budgeted for the renovation of the Downey Park Shade Structure Replacement ($100,000) and the restoration of the Revard Park Playground ($78,000) that was damaged by a falling tree.
• The Parks, Recreation and Neighborhood’s Department submitted 2 grant applications requesting a total of $17+ million dollars for the renovation of Mancini Park and Dr. Martin Luther King Jr Park (Formerly Mellis Park). Application results are expected in FY2021-2022. • The Parks, Recreation and Neighborhood’s Department completed Surplus Land Act requirements in preparation for future development of a new downtown hotel. • For the first time in over a decade, rounds of golf played at the City’s two municipal courses grew by 35% over last year. Close to 86,000 rounds were played, resulting in over $1.6 million in green fee revenue.

Governance and Service Delivery
• The City Manager’s Office played a critical role supporting the Charter Review Committee in developing recommendations to the City Council in four key areas including: Timing of the Mayor’s Election, City Auditor role, Audit Committee, City Manager’s Office, and other miscellaneous sections. The recommendations received by the Council now require further review through a Council workshop to determine the items (if any) that will be directed to the ballot in 2022. • Completed a robust Smart Cities Strategy focused on supporting the core areas of focus for the Citywide Strategic Plan. This completion of this plan is intended to help create and foster a data-culture that values innovation, efficiency, and community well-being through technology and data to drive priority-based decision-making to benefit our community well into the future making Modesto THE place to be.
• The City Manager’s Office procured a consultant, Moss Adams, to embark on a several month study of the various engineering divisions across the organization in an effort to find efficiencies and opportunities for improvement. The study found core areas for improvements and possible restructure, and the consultants will be bringing forward an implementation plan by Q4 of 2021. • To assist in the efforts of future financial planning, a 10-Year Financial Forecast was created. This forecast tool allows for various components to be adjusted to allow for estimations on possible impacts xvii
#1..
- 32 -
from choices that are made by the City Council. This tool will be particularly useful as the City moves forward in implementing components of the 5-year Strategic Plan. • Refunding of the City’s Clean Water State Revolving Fund (CWSRF) loan with projected savings in the amount of $7.6M.
• Amended the TOT ordinance and issued TOT Permits in an effort to increase compliance. • Updated payment gateway and merchant provider for online phone payments, cutting costs to City by approximately 40% while continuing to provide service at no extra cost to Utility customers. • Implemented secure online application process for Utility Billing Assistance Program. • Implemented DocuSign, Electronic Signatures. DocuSign is a fast and reliable way to electronically sign documents and agreements. The implementation of DocuSign has already proven to be beneficial and has increased efficiency and will eventually eliminate the need to route “paper” based documents and agreements.
• Replaced the Modesto Police Departments old eCitation software application with the new Crossroads application. The new software is more robust and utilizes department issued mobile phones, virtually eliminate all manual data entry issues for citations and accidents. The new software application also has the capability to import data into Modesto Police Department’s Records Management System (RMS).
• Replaced the IBM Power 7 to the newer IBM Power 9. The City’s Utility Billing software system was installed and running on the older IBM Power 7 server. Per the manufacturer, the Power 7 server was at end of life and would no longer be supported. The Power 7 was replaced with the newer Power 9 unit and has full manufacturer support moving forward. Part of this project was to migrate all the current software and data from the Power 7 over to the new Power 9 unit. • Completed a Cybersecurity Audit that provided a comprehensive evaluation of Information Technology, (IT) policies, procedures, and practices. This information has resulted in a mitigation action plan to address the various vulnerabilities that have come to light. • The pandemic drove a need to reduce and/or eliminate most in-person meetings and replace them with virtual meetings. IT staff escalated their efforts to implement the first phase of Microsoft Teams to accommodate virtual meetings throughout the organization. • Because of the pandemic and the Governor’s Stay-at-Home order, public meetings needed to be held without in-person attendance by the public. The City adopted a virtual meeting format that allows the public and Council / Committee members to attend meetings via Zoom and participate in public comments.
• The City began livestreaming Council meetings on the City YouTube Channel and providing archived meeting videos on this channel that can be viewed with YouTube’s Closed Captioning. • The City’s Internet connection was upgraded from 100 Mbps to 250 Mbps while reducing the cost by over $12,000 annually.
• IT Staff upgraded the City’s site-to-site communications systems increasing bandwidth between City Facilities and reducing costs by $770,000 over seven years. • To support public engagement, the City Manager’s Office implemented a virtual meeting program with closed captioning to support the City Council and Standing Committee meetings. • MPD increased online and telephone report taking as a way to reduce in-person contact during the pandemic.
• As a way to continue interacting with our community, MPD completed two virtual ride-a-longs despite the pandemic.
xviii
#1..
- 33 -
• All police officers have transitioned to new Body Worn Cameras and Tasers. • All MPD patrol officers have started virtual reality training to include empathy and de-escalation training. • The police department piloted an innovative Air Support Unit utilizing a Gyroplane platform. • Established a new MPD Recruitment Team to help with community engagement and recruitment efforts in our area.
• MPD hosted six law enforcement training courses that brought in attendees from throughout the state, with five more scheduled to occur before the end of this year. • The MPD training unit has moved to a new training day format to incorporate more reality-based training for officers.
• In partnership with Stanislaus County, the Neighborhood Center at Marshall Park was used for a COVID-19 Testing Site. The Site was open for testing for approximately 200 days, from June 8, 2020 to February 28, 2021 with over 18,000 people tested. The Site was then utilized for a COVID-19 vaccine distribution site.
xix
#1..
- 34 -
• The Parks, Recreation and Neighborhoods Department staffed and operated the COVID-19 Vaccine Site at Modesto Center Plaza. Distribution ran January 16, 2021 through May 27, 2021 via partnership with the County, MPD and MFD. The Recreation Division put in over 5,000 hours by 56 staff members to run the part time staff and coordinate logistics.
• The Forestry Division responded to 2,610 forestry service requests. • The Traffic Division converted to the Lucity online work order program giving the ability to log and track field tasks electronically.
• Planning staff initiated a comprehensive update to the City’s General Plan, the first comprehensive update since 1995.
• Initiated work on a comprehensive housing plan, which will provide a strategy to address Modesto’s on-going housing shortage.
• Approved an omnibus update to the City’s zoning regulations.

Awards / Acknowledgments

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Modesto for its annual comprehensive financial report for the fiscal year ended June 30, 2020. This was the 38th consecutive year that the government has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized annual comprehensive financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe that our current annual comprehensive financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.

The Annual Comprehensive Financial Report (ACFR) is the result of the cooperative work of many people.

We wish to convey our appreciation to all of the City departments and members of the Finance Department team who prepared and contributed to its successful completion. Without their hard work, this report would not be possible.
xx
#1..
- 35 -
The City submitted and received for the first time the distinguished Budget Presentation Award from GFOA for fiscal year ended June 30, 2020. To receive this prestigious award a government must demonstrate they meet the program criteria and excel as a policy document, financial plan, operations guide, and communication tool.

In addition, the City submitted and received an award from the GFOA for its fifth year for the Popular Annual Financial Report (PAFR) for fiscal year ended June 30, 2020. A PAFR presents financial information in a manner that appeals to the reader, is understandable and shows creativity and usefulness. The PAFR award is valid for one year and the City intends to submit its 2021 PAFR to the GFOA for consideration.

Finally, we would like to express our appreciation to the City Council, City employees, and community for their leadership and support. We look forward to the next year’s challenges and opportunities.

Respectfully submitted,

Joseph P. Lopez DeAnna Christensen
City Manager Director of Finance
xxi
#1..
- 36 -
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Modesto
California
For its Comprehensive Annual
Financial Report
For the Fiscal Year Ended
June 30, 2020
Executive Director/CEO
xxii
#1..
- 37 -
Legend
Elected
Council Appointed
City Manager Appointed

CITY CLERK
Stephanie Lopez

INFORMATION TECHNOLOGY

CHARLIE HAASE

COMMUNITY & ECONOMIC

DEVELOPMENT

JAYLEN FRENCH

FINANCE

DEANNA CHRISTENSEN FIRE DEPARTMENT

CHIEF ALAN ERNST

PUBLIC WORKS

BILL SANDHU

UTILITIES

WILLIAM WONG

CITY OF MODESTO ORGANIZATIONAL CHART

HUMAN RESOURCES

CHRISTINA ALGER

DEPUTY CITY MANAGER

SUPPORT

CALUHA BARNES

CITY ATTORNEY
Jose M. Sanchez

CITY AUDITOR
Vacant

DEPUTY CITY MANAGER

OPERATIONS

SCOTTY DOUGLASS

CITIZENS OF MODESTO

Joseph P. Lopez

MODESTO

CITY MANAGER

PARKS, RECREATION
& NEIGHBORHOODS

LAURIE SMITH

INNOVATION & PERFORMANCE

MANAGEMENT
Economic Vitality
Retain and attract residential,
commercial, and industrial
development to meet the
community's needs today and for
the next generation.

Quality of Life
Engage partners across the
community to ensure safety,
resilience, and attractiveness of
Modesto. Governance and Service
Delivery
Build community trust in City
government through
responsive, transparent and
efficient service delivery.

BUDGET

STEPHAN CHRISTENSEN

PUBLIC RELATIONS

CITY COUNCIL
SueZwahlen, Mayor
Bill Zoslocki, District 4
Jenny Kenoyer, District 5
David Wright, District 6
Rosa Ecutia-Braaton, District 1
Tony Madrigal, District 2
Chris Ricci, District 3

POLICE DEPARTMENT

INTERIM CHIEF BRANDON GILLESPIE
VACANT
xxiii
#1..
- 38 -
This page is intentionally left blank.
#1..
- 39 -

FINANCIAL SECTION TAB
#1..
- 40 -
#1..
- 41 -

FINANCIAL SECTION

1 #1..
- 42 -
#1..
- 43 -
7473 N. INGRAM AVE., SUITE 102 ⬧ FRESNO, CA 93711
_______________________________________________________________________________________________ P (559) 412-7576 ⬧ F (559) 493-5325 ⬧ WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT
To the City Council
City of Modesto, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Modesto, California (the City) as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes 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.

Auditors’ Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
#1..
- 44 -
4 Opinion
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, 2021, 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.

Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, schedule of changes in net pension liability and related ratios, schedule of plan contributions, schedule of changes in the OPEB liability and related ratios, schedule of contributions, and budgetary comparison schedules for the General Fund and Operating Grants Special Revenue Fund, as listed in the table of contents, 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.

We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other 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 introductory section, combining and individual fund statements and schedules, statistical section and the continuing disclosure section are presented for purposes of additional analysis and are not a required part of the basic financial statements.

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

The introductory section, statistical section and continuing disclosure section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.
#1..
- 45 -
5 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 10, 2021, 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 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 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.

HUDSON HENDERSON & COMPANY, INC.

Fresno, California
December 10, 2021
#1..
- 46 -
Management’s Discussion and Analysis
This section of the City of Modesto (the City) annual comprehensive financial report presents a discussion and analysis of the City’s financial performance during the fiscal year ended June 30, 2021. Please read it in conjunction with the transmittal letter at the front of this report and the basic financial statements following this section.

FINANCIAL HIGHLIGHTS
 The assets plus deferred outflows of resources of the City exceeded liabilities plus deferred inflows of resources at the close of the 2021 fiscal year by $1,217,466,272 (total net position). Of this amount, $200,361,545 is restricted for a specific purpose (restricted net position), $1,055,956,493 is invested in capital assets, net of related debt and ($38,851,766) is unrestricted (unrestricted net position).  The City’s total deferred outflows of resources decreased by $17,977,448 as compared to the prior year.  The City’s total deferred inflows of resources decreased by $7,390,391 as compared to the prior year.  The City’s total liabilities increased by $13,440,833 as compared to the prior year.  The City’s total net position increased by $111,739,752 compared to the prior year. This increase is attributed mainly to an increase in capital and operating contributions in the amount of $62,758983 as compared to prior year, an increase in intergovernmental revenues in the amount of $21,362,749 as compared to prior year, and a decrease in public safety expenses in the amount of $10,923,269 as compared to prior year.
 As of June 30, 2021, the City’s governmental funds reported combined fund balances of $172,516,643 an increase of $22,739,705 in comparison with the prior year.  As of June 30, 2021, 20.70% of the General fund balance, $6,395,913, is available to meet the City’s current and future needs (General Fund unassigned fund balance).  At the end of the fiscal year, the General Fund balance was $30,899,092 or 22.2% of total General Fund expenditures. Of this, $3,367,488 is the restricted fund balances. The unassigned fund balance of $6,395,913 represents 4.4% of total General Fund outflows. The City Council has adopted a goal of maintaining an 8% unassigned fund balance amount based on General Fund outflows.  The City’s total long-term liabilities showed a net decrease of $14,079,187 in comparison with the prior year.

This decrease was attributed to reduction in debt from the principal payments made during the fiscal year.

OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the City’s basic financial statements.

The City’s basic financial statements comprise three components 1) Government-wide financial statements; 2) Fund financial statements and 3) Notes to basic financial statements. Required Supplementary Information is included in addition to the basic financial statements.

Government-wide Financial Statements are designed to provide readers with a broad overview of the City finances, in a manner similar to a private-sector business.

The Statement of Net Position presents information on all the City assets and liabilities, deferred outflows of resources and deferred inflow of resources, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

The Statement of Activities presents information showing how net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

Both of these government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a portion of their costs through user fees and charges (business-type activities). The 6 #1..
- 47 -
Management’s Discussion and Analysis (continued)
governmental activities of the City include general government, community development, highways and streets, public works, parks and recreation, and public safety. The business-type activities of the City include the Water, Sewer, Parking, Storm Drain, Compost, Airport, Bus, Golf, Community Center and Abatement and Public Nuisance operations.

Component units are included in our basic financial statements and consist of legally separate entities for which the City is financially accountable and that have substantially the same board as the City Council, or provide services entirely to the City or the City has operational responsibility for the entities. Examples are the Community Facilities Districts, Redevelopment Successor Agency of the City of Modesto and the Modesto Public Financing Authority.

The government-wide financial statements can be found on pages 17-19 of this report.

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

Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental funds financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the City’s near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The City reports 18 individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures and changes in fund balances for the General Fund, Capital Grants Fund, and Operating Grants Fund. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report.

The governmental funds financial statements can be found on pages 20-23 of this report.

Proprietary funds are maintained two ways. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its Water, Sewer, Parking, Storm Drain, Compost, Airport, Bus, Golf, Community Center and Abatement and Public Nuisance operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its Fleet Management, Central Services, Information and Technology Services, Insurance, Employee Benefits Management and Building Services functions. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements with the exception of portions of the compensated absences that have been included within business-type activities. The rest of internal services benefiting business-type functions have been allocated as “internal balances”.

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The Water, Sewer and Bus funds are considered to be major funds of the City. The City’s six internal service funds are combined into a single, aggregated presentation in the proprietary funds financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report.

The proprietary funds financial statements can be found on pages 24-27 of this report.

Fiduciary funds are used to account for resources held for the benefit of parties outside the government.

Fiduciary funds are not reflected in the government-wide financial statements because the resources of those 7 #1..
- 48 -
Management’s Discussion and Analysis (continued)
funds are not available to support the City's own programs. Custodial funds account for assets held by the City as an agent for individuals, governmental entities and non-public organizations. The accounting used for fiduciary and custodial funds is much like that used for proprietary funds.

The fiduciary fund financial statements can be found on page 28-29 of this report.

Notes to Basic Financial Statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes can be found on pages 30- 74 of this report.

Required Supplementary Information is also presented. The City adopts an annual appropriated budget.

Budgetary comparison schedules for the major governmental funds have been provided to demonstrate compliance with this budget. This section also includes the schedules for net pension liability and OPEB.

Required supplementary information can be found on pages 77-86 of this report.

The combining and individual fund statements and schedules referred to earlier provide information for nonmajor governmental, enterprise and internal service funds and are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages 92-127 of this report.

GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets plus deferred outflows exceeded liabilities plus deferred inflows by $1,217,466,272 at the close of the most recent fiscal year.

Net Position
The largest portion of the City’s net position, $1,055,956,493 or 86.7%, reflects its investment in capital assets (e.g. land, water rights, buildings, improvements, furnishings and equipment, buses and fare boxes, pipelines, and infrastructure), less any related debt used to acquire those assets that are still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of debt and related deferred outflows and inflows, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

Another significant portion of the City’s net position represents unrestricted net position of ($38,851,766) or (3.2%).

The remaining balance of the City’s net position of $200,361,545 or 16.5% represents resources that are subject to external restrictions on how they may be used.

Governmental activities Business-type activities Total
2021 2020 2021 2020 2021 2020
Current and other assets $349,006,744 $272,631,002 $320,714,732 $284,412,811 $669,721,476 $557,043,813 Capital assets 441,036,275 410,590,070 933,364,414 940,720,640 1,374,400,689 1,351,310,710 Total assets 790,043,019 683,221,072 1,254,079,146 1,225,133,451 2,044,122,165 1,908,354,523 Deferred outflows of resources 54,764,137 63,609,490 45,736,270 54,868,365 100,500,407 118,477,855 Current and other liabilities 378,238,239 344,543,513 151,617,856 157,792,562 529,856,095 $502,336,075 Long-term liabilities 90,831,883 90,284,799 303,734,687 318,360,958 394,566,570 408,645,757 Total liabilities 469,070,122 434,828,312 455,352,543 476,153,520 924,422,665 910,981,832 Deferred inflows of resources 2,147,163 8,337,099 586,472 1,786,927 2,733,635 10,124,026 Net position:

Net investment in capital assets 407,347,307 374,618,780 648,609,186 647,695,354 1,055,956,493 1,022,314,134 Restricted net position 183,357,207 135,818,614 17,004,338 15,857,655 200,361,545 151,676,269 Unrestricted net position (217,114,643) (206,772,243) 178,262,877 138,508,360 (38,851,766) (68,263,883) Total net position $373,589,871 $303,665,151 $843,876,401 $802,061,369 $1,217,466,272 $1,105,726,520 8 #1..
- 49 -
Management’s Discussion and Analysis (continued)
The City’s net position increased by $111,739,752 during the current fiscal year was largely due to the increases in capital and operating contributions in the amount of $62,758,983 increases to intergovernmental revenues in the amount of $21,362,749 and a decrease in public safety expenses in the amount of $10,923,269.

The following table indicates the changes in net position for governmental and business-type activities, as well as comparative data for the prior year:

Changes in Net Position
Governmental activities. Governmental activities increased the City’s net position by $69,924,720. The longterm liabilities decrease was attributed to the principal payments of about $2.9 million and $20 million in claim additions made during the fiscal year. Operating and capital grants contributions increased by $47.1 million due to on-going efforts on grant funding opportunities.

Intergovernmental revenue increased by $21.4 million due to establishing the new revenue source beginning in Fiscal Year 2017-18 from the Stanislaus County county-wide, 25 year, half-cent sales tax increase known as Measure L. Measure L will be utilized to fund local transportation improvements.

Expenses in total decreased compared to the prior year by $7,763,756 this decrease is mainly attributed to a decrease in salary and benefit costs due to vacancy savings and position elimination within public safety.

Business-type activities. Business-type activities increased the City’s net position by $41,815,032. This increase is attributed to a healthy net position in our Water and Sewer Fund which generated an increase in net position by $37.6 million and increase in our business-type capital assets. The Sewer fund has been able to manage their operational revenues due to a rate increases, on January 1, 2021 of 4% to ensure they meet the debt ratio required by Council.

Governmental activities Business-type activities Total
2021 2020 2021 2020 2021 2020
Revenues:

Program revenues:

Charges for services $34,364,395 $41,844,580 $174,719,431 $163,915,962 $209,083,826 $205,760,542 Operating grants and contributions 12,010,918 16,838,122 29,310,591 21,780,920 41,321,509 38,619,042 Capital grants and contributions 57,825,011 5,894,717 8,672,597 546,375 66,497,608 6,441,092 General revenues:

Taxes 69,342,539 64,300,986 266,272 190,995 69,608,811 64,491,981 Intergovernment revenue not
restricted for specific purposes 121,422,499 100,059,750 - 121,422,499 100,059,750 - Unrestricted investment earnings (287,088) 6,044,156 (192,489) 8,082,331 (479,577) 14,126,487 Miscellaneous 2,184,677 3,660,429 1,686,667 1,390,820 3,871,344 5,051,249 Total revenues 296,862,951 238,642,740 214,463,069 195,907,403 511,326,020 434,550,143 Expenses:

General government 14,727,031 14,808,371 - 14,727,031 14,808,371 - Community development 30,782,573 25,698,343 - 30,782,573 25,698,343 - Highways and streets 25,863,042 25,858,611 - 25,863,042 25,858,611 - Public works 3,126,390 3,736,696 - 3,126,390 3,736,696 - Parks and recreation 13,750,865 14,725,590 - 13,750,865 14,725,590 - Public safety 129,785,835 140,709,104 - 129,785,835 140,709,104 - Interest on long-term debt 2,039,849 2,302,626 - 2,039,849 2,302,626 - Water - 68,792,875 69,187,391 68,792,875 69,187,391 -
Sewer - 46,500,454 45,832,671 46,500,454 45,832,671 -
Bus - 28,889,011 25,261,736 28,889,011 25,261,736 -
Parking - 1,700,607 1,905,382 1,700,607 1,905,382 -
Storm drain - 5,585,980 7,384,884 5,585,980 7,384,884 - Compost - 12,022,746 10,330,237 12,022,746 10,330,237 - Airport - 1,865,063 1,841,645 1,865,063 1,841,645 -
Golf - 2,865,795 2,939,639 2,865,795 2,939,639 -
Community center - 1,961,576 1,603,302 1,961,576 1,603,302 - Abatement and Pubic Nuisance - - 82,166 142,124 82,166 142,124 Total expenses 220,075,585 227,839,341 170,266,273 166,429,011 390,341,858 394,268,352 Change in net position before
transfers 76,787,366 10,803,399 44,196,796 29,478,392 120,984,162 40,281,791 Transfers 824,609 479,917 (824,609) (479,917) - -
Total transfers 824,609 479,917 (824,609) (479,917) - - Change in net position 77,611,975 11,283,316 43,372,187 28,998,475 120,984,162 40,281,791 Net position - beginning 303,665,151 338,056,027 802,061,369 771,387,599 1,105,726,520 1,109,443,626 Prior year adjustments (7,687,255) (45,674,192) (1,557,155) 1,675,295 (9,244,410) (43,998,897) Net position - ending $373,589,871 $303,665,151 $843,876,401 $802,061,369 $1,217,466,272 $1,105,726,520 9 #1..
- 50 -
Management’s Discussion and Analysis (continued)
FINANCIAL ANALYSIS OF THE CITY’S FUNDS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental funds. The general government functions are contained in the general, special revenue, capital projects, and debt service funds. The focus of the City’s governmental funds is to provide information on nearterm inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.

At June 30, 2021, the City’s governmental funds reported combined fund balances of $172,516,643 an increase of $22,739,705 from the prior year. The total unassigned fund balance for the governmental funds was $2,020,053 which includes a positive $6,395,913 which represents the General Fund unassigned fund balance that is available to meet the City’s current and future needs. The remainder of fund balance is nonspendable, restricted, committed and assigned to indicate that it is not available for new spending because certain constraints have been placed on the use of the balances. The unassigned fund balance for the General Fund increased by $3,988,338.

The General Fund is the chief operating fund of the City. At June 30, 2021, unassigned fund balance of the General Fund was $6,395,913 while total fund balance was $30,899,092. As a measure of the General Fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 4.6% of total General Fund expenditures, while total fund balance represents 22.23% of that same amount. The prior year ratios were 1.8% and 18.96%, respectively.

The Capital Grants fund accounts for receipts and disbursements of a variety of Governmental Fund capital grants. At June 30, 2021, total fund balance was ($1,862,352) which was an increase of $4,419,331 from prior year. During fiscal year 2020-21, construction for the State Route 132 project has been on-going. This is a large scale construction project which is funded by grants from various local and State agencies.

The Operating Grants fund accounts for receipts and disbursements of a variety of Governmental Fund Operating grants. At June 30, 2021, total fund balance was $2,103,520 this is an increase of $519,344 from prior year.

Revenues of governmental funds totaled $260,162,501 in fiscal year 2020-21, which represents an increase of $24,207,526 from fiscal year 2019-20.

Expenditures of governmental funds totaled $231,900,118 in fiscal year 2020-21, representing an increase of $14,901,486 from fiscal year 2019-20.

The following table presents governmental fund revenues from various sources, with comparisons to the prior year:

Revenues Classified by Source – Governmental Funds
 Taxes – Revenues for property and business license taxes came in higher than the prior year due to an ongoing positive upturn in the economy and the increased collection and compliance efforts by the City staff.  Licenses and Permits – Revenues increased by $65,048 due to Cannabis annual permit fees.

Revenues by Source Amount Percent Amount Percent % Change Taxes $69,342,539 26.7% $64,300,986 27.3% 7.8%
Licenses and permits $473,693 0.2% 408,645 0.2% 15.9%
Intergovernmental 154,356,852 59.3% 125,072,949 53.0% 23.4% Charges for services 28,378,842 10.9% 36,147,116 15.3% -21.5% Special assessments 4,851,750 1.9% 4,622,697 2.0% 5.0%
Interest and rent 1,320,686 0.5% 2,018,446 0.9% -34.6%
Net increase (decrease) in fair value (985,713) -0.4% 1,728,158 0.7% -157.0% Fines and forfeits 660,110 0.3% 666,120 0.3% -0.9%
Donations and contributions 370,958 0.1% - - 100.0%
Miscellaneous 1,392,784 0.5% 989,858 0.3% 40.7%
Total $260,162,501 100.0% $235,954,975 100.0% 10.3%
FY 2021 FY 2020
10 #1..
- 51 -
Management’s Discussion and Analysis (continued)
 Intergovernmental – Revenues increased by $29.3 million due to an increase in Federal and State grants awarded to the City for the mitigation efforts against the novel coronavirus (COVID-19). As well as an increase in the revenue source for the Stanislaus County county-wide, 25 year, half-cent sales tax increase known as Measure L to assist with the funding for local transportation improvements for the City.  Charges for Services – Revenues decreased by $7.8 million due primarily to the closures of parks and recreation activities due to the on-going effects of COVID-19 and the County and State COVID-19 safety guidelines.
 Interest and Net decrease in fair value – The decrease in interest earned along with the decrease in fair market value of the city’s investment portfolio is down to current market conditions. With Federal Treasuries hitting historic lows, the City’s investment returns have been lower and the yields of investments purchased with reinvested funds has reduced the fair market value of the City’s portfolio.

The following table presents expenditures by function compared to prior year amounts.

Expenditures by Function – Governmental Funds
The following provides an explanation of the expenditures by function that changed significantly over the prior year:
 Community Development – Expenditures increased by $5.3 million or 25.2% over the prior year, due to the increased costs related to the maintenance and improvements of streets, including $2,978,229 on Coffee Road pavement rehabilitation phase 1 (Sylvan Avenue to Norweigan Avenue), $1,393,776 on Tully Road pavement rehabilitation (Yale Avenue to Briggsmore Avenue), $242,542 on traffic flow and safety improvements around Orville Wright Elementary School, and $140,824 on Pelandale Neighborhood pavement maintenance projects.
 Highways and Streets – Expenditures increased by $1,113,184 or 10.1% over the prior year, due mainly to the ongoing construction of State Route 132.
 Parks and Recreations – Expenditures decreased by $310,100 or 2.6% over the prior year due to the closure of parks and facilities, in efforts of mitigation of the novel coronavirus, COVID-19.  Public safety – Expenditures decreased by $4.3 million or 3.7% over the prior year mainly due to a decrease in services that are provided based on grant fund availability that fluctuates year to year depending on grants awarded.

Other financing sources and uses are presented below to illustrate changes from the prior year:

FY 2021 FY 2020
Exp by Function Amount Percent Amount Percent % Change
General government $12,483,217 5.4% $12,028,015 5.5% 3.8% Community development 26,215,559 11.3% 20,945,194 9.7% 25.2% Highways and streets 12,152,803 5.2% 11,039,619 5.1% 10.1% Public works 2,635,907 1.1% 3,035,851 1.4% -13.2%
Parks and recreation 11,634,840 5.0% 11,944,940 5.5% -2.6% Public safety 110,275,920 47.6% 114,540,829 52.8% -3.7% Capital outlay 51,533,054 22.2% 38,425,318 17.7% 34.1%
Debt Service-principal retirement 2,931,077 1.3% 2,734,132 1.3% 7.2% Debt Service-interest charges 1,985,927 0.9% 1,996,806 0.9% -0.5% Debt Service-other 51,814 0.0% 307,928 0.1% -83.2%
Total $231,900,118 100.0% $216,998,632 100.0% 6.9%
FY 2021 FY 2020 Amount Percent
Transfers in $14,249,431 $15,292,128 ($1,042,697) -6.8% Transfers out (15,500,194) (17,397,619) 1,897,425 -10.9% Capital leases - 39,204 (39,204) -100.0%
Sale of assets 1,934 132,485 (130,551) -98.5%
Net financing (uses) ($1,248,829) ($1,933,802) $684,973 -35.4% Increase/(Decrease)
11 #1..
- 52 -
Management’s Discussion and Analysis (continued)
Transfers - The City uses interfund transfers to: (1) move resources from a fund to other funds that will utilize them in accordance with statutory and budgetary requirements, (2) utilize unrestricted resources collected in the General Fund to help finance various programs and capital projects accounted for in other funds in accordance with budgetary authorization, and (3) move cash to pay debt service to the funds that are responsible for payment as those payments become due.
 The net financing (uses) from governmental funds for 2021 were ($1,248,829) compared to ($1,933,802) in the prior year. This net transfer is to various City funds including transferring funds from the General Fund, Housing and Community Development fund, Local Transportation fund, Transportation Special Tax fund, Special Fund for Capital Outlays, Parks funds, Community Facilities Districts fund, Capital Facility Fee funds, Fleet Fund, Information Technology Services fund, and Building Services fund, to cover the debt service payments, fleet replacement, funding for capital projects and various transfers to cover City grant matches.

The fund balance of the City’s General Fund increased by $5,143,143 during the fiscal year. This result is consistent with the City Council’s budgetary direction to reduce spending and identify additional revenue sources that would allow the General Fund to retain an unrestricted reserve that meets the City Council’s adopted 8% unassigned fund balance amount based on General Fund outflows.

Proprietary funds. The City’s proprietary fund disclosures provide the same type of information found in the government-wide financial statements, but in more detail.

The following table shows actual revenues, expenses and results of operations of enterprise funds for the current fiscal year:

The Sewer fund had a rate increase of 4.0% in January 2021. Based on this rate increase the Sewer fund had an increase in its operating revenue which increased it’s net position.

A pollution remediation liability was reported for the Water and Sewer fund in the amounts of $6,063,821 and $6,958,932, respectively based on net recoveries the City has received from various settlements. Additional information regarding these liabilities can be found under Note II-N.

GENERAL FUND BUDGETARY HIGHLIGHTS
Budget to actual information for the General Fund is presented as Required Supplementary Information, beginning on page 82-83 of this report.

While the City Council amended the budget several times through the year, the differences between the original budget and the final amended budget for the General Fund were increased overall mainly due to an increase in charges for services. The estimated revenues increased about $1,427,063 while total appropriations decreased by $352,975. These amendments were to adjust the actual beginning balances and carryovers after closing the prior fiscal year, and to reflect adjustments to current estimates based on the periodic monitoring of revenue and expenditures throughout the year.

Revenues came in $7,739,310 more than final estimates. Variances in Franchise tax $123,127, Cannabis tax $1,806,954, Transient Occupancy Tax $718,084, Property tax $417,191, Sales tax $4,985,311, Intergovernmental $6,210,272, Charges for services ($1,574,064) and Interest and Rent Revenue ($434,377) were due to a decrease in collection efforts, a quicker recovery from the pandemic than was anticipated and stronger property values.

Major Funds Nonmajor Funds
Water Sewer Bus Other Total
Operating revenues 87,713,122 62,381,752 1,624,167 $21,767,465 $173,486,506 Operating expenses (64,499,543) (43,650,022) (29,320,316) (26,704,051) (164,173,932) Operating income (loss) 23,213,579 18,731,730 (27,696,149) (4,936,586) 9,312,574 Nonoperating revenues (expenses), net (4,393,961) (1,890,362) 25,635,847 2,407,824 21,759,348 Income (loss) before capital contributions
and transfers 18,819,618 16,841,368 (2,060,302) (2,528,762) 31,071,922 Contributions and transfers (1,369,000) 3,336,340 3,301,048 2,579,599 7,847,987 Changes in net position $17,450,618 $20,177,708 $1,240,746 $50,837 $38,919,909 12 #1..
- 53 -
Management’s Discussion and Analysis (continued)
Expenditures, overall, were $3,736,720 under budget, primarily due to efforts of departments to realize savings, and certain purchases being deferred to future periods.

CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital assets
The City’s investment in capital assets for its governmental and business-type activities as of June 30, 2021, amounted to $1,374,400,689 (net of accumulated depreciation). The total increase in the City’s investment in capital assets compared to 2020 was 2.0%.

Capital assets net of depreciation, for the governmental and business-type activities are presented below to illustrate changes from the prior year.

Major capital asset events during the current fiscal year included the following:
 Improvements – The Ceres Trunk Rehabilitation project was completed in fiscal year 2020-21 in the amount of $7 million. The Crows Landing Sewer Trunk was completed in fiscal year 2020-21 in the amount of $3.2 million. The Empire Trunk project was completed in fiscal year 2020-21 in the amount of $5.1 million. The Grogan Park Production Well project was completed in fiscal year 2020-21 in the amount of $2.3 million.  Water rights – Depreciation expense for fiscal year 2020-21 in the amount of $11.9 million.  Streets – The West Bound D street construction project was completed in fiscal year 2020-21 in the amount of $1.2 million. Depreciation expense for fiscal year 2020-21 in the amount of $10.3 million.  Pipelines – The Bermuda Way Water Main project was completed in fiscal year 2020-21 in the amount of $1.9 million. The Spencer Avenue Main Replacement project was completed in fiscal year 2020-21 in the amount of $1.5 million. The 2017-2018 Sewer Replacement project was completed in fiscal year 2020-21 in the amount of $1.1 million.
 Construction in progress – Ongoing water construction projects related to improvements to the City’s water infrastructure were made during fiscal year 2020-21, ongoing construction of the Jennings water quality control (WQC) entrance and Sonoma Trunk Extension, as well as the ongoing construction of the State Route 132 project. Additionally, construction of the Banks-Tully sewer water main was started in fiscal year 2020-21.

The City’s infrastructure assets are recorded at historical cost in the government-wide financial statements.

Depreciation expense is recorded using the straight-line method, based on estimated useful life of the asset.

Additional information on the City’s capital assets can be found in note II-B on pages 43-45 of this report.

The City had major capital commitments for contracts awarded for various construction projects. As of June 30, 2021, there were major ongoing contracts awarded for, State Route 132 Project, in the amount of $96.4 million and the construction of a fleet maintenance facility in the amount of $4 million. Additional information on the City’s commitments can be found in note III-D on page 64 of this report.

Governmental Business-type Total (decrease)
Percent
2021 2020 2021 2020 2021 2020 Change $ Change
Land $29,149,707 $29,149,707 $34,512,819 $34,511,762 $63,662,526 $63,661,469 $1,057 Capitalized interest - 4,979,452 - 5,484,238 4,979,452 5,484,238 -9% (504,786) Buildings 9,550,072 10,423,191 28,509,168 30,489,627 38,059,240 40,912,818 -7% (2,853,578) Improvements 53,703,767 56,628,936 232,549,815 224,168,794 286,253,582 280,797,730 2% 5,455,852 Furnishings and
equipment 2,607,785 3,053,851 4,754,283 5,122,784 7,362,068 8,176,635 -10% (814,567) Intangible assets 1,996,365 2,391,530 6,122 15,002 2,002,487 2,406,532 -17% (404,045) Equipment pool 13,965,123 16,235,225 - 13,965,123 - 16,235,225 -14% (2,270,102) Service animals 7,282 13,369 - - 7,282 -46% 13,369 (6,087) Water rights - 226,876,902 - 238,817,792 226,876,902 238,817,792 -5% (11,940,890) Streets 167,919,577 176,962,019 - 167,919,577 - 176,962,019 -5% (9,042,442) Signalization 6,463,638 6,959,175 - 6,463,638 - 6,959,175 -7% (495,537) Bridges 26,646,691 27,388,262 - 26,646,691 - 27,388,262 -3% (741,571) Buses & fareboxes 25,103 25,103 16,744,648 16,426,562 16,769,751 16,451,665 2% 318,086 Pipelines 411,418 416,989 153,869,665 150,195,902 154,281,083 150,612,891 2% 3,668,192 Construction in
progress 128,589,747 80,942,713 230,561,540 235,488,177 359,151,287 316,430,890 14% 42,720,397 Total $441,036,275 $410,590,070 $933,364,414 $940,720,640 $1,374,400,689 $1,351,310,710 2% $23,089,979 13 #1..
- 54 -
Management’s Discussion and Analysis (continued)
Long-term debt and liabilities
At June 30, 2021, the City had total long-term liabilities outstanding of $394,566,570 net of unamortized discounts and premiums, as compared to $408,645,756 in the prior year. This amount was comprised of $46,745,000 of lease revenue bonds, $44,557,540 of certificates of participation, $122,384,268 of revenue bonds payable, $105,641,454 of reimbursement agreement related to Modesto Irrigation District bonds, $12,275,660 of estimated compensated absences, $28,752,857 of claims liability, $28,040,403 of loans payable, $782,885 of developer advances, $4,104,503 of capital leases, and $1,282,000 of notes payable.

For the governmental and business activities, the long-term debt decreased was mainly due to the principal payments made during the fiscal year. Additional information on the City’s long-term debt can be found in Note II-C on pages 45-56 of this report.

The City maintains a current bond rating for the various bonds listed below.

BONDS Moody’s Rating S & P Rating Fitch Rating
2008 Lease Revenue Bonds Aa3 A/A-1 AA2008 Water Certificates of Participation Aa3 Wastewater Revenue Bonds, Series 2018A
AA+/A-1+
AA
Wastewater Revenue Bonds, Series 2020A AA
Wastewater Revenue Bonds, Series 2020B AA
With the implementation of GASB Statement No. 75 “Accounting and Financial Reporting for Postemployment Benefits Other than Pension, the City’s net OPEB liability as of June 30, 2021 was $30.4 million. Additional information on the City’s net OPEB liability and Pension can be found in Notes III-F and III-G.

Economic Factors and Next Year’s Budget and Rates
 Consumer Price Index – Growth in the CPI has been relatively stable during the past ten years and serves as a measure for the growth in the cost for supplies and services used by the City. In the fiscal year ended June 30, 2021, the CPI-Western Urban Index increased by 5.1%.  Utility Service Charges – Water rates increased by 2% effective October 1, 2021, this rate was deferred from fiscal year 2020-21 as per Council’s approval on April 6, 2021. The City is currently working on a rate study to determine future utility rate increases for Water and Sewer.

All of these factors were considered in preparing the City’s budget for fiscal year 2020-21.

During the current fiscal year, fund balance in the General Fund increased by $5,143,143, to $30,899,092 which represents 21.2% of total General Fund outflows which exceeds the City’s target value of 8% unassigned fund balance based on General fund outflows. The budget adopted for fiscal year 2020-21 reflects the Council policy reserve level of a minimum $18.4 million emergency reserve policy. This amount is reported as part of the committed fund balance.

Requests for Information
This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the City’s financial condition. Questions concerning any of the information provided in this report and requests for additional financial information should be addressed to the City of Modesto, Attention: Finance Department, P.O. Box 642, Modesto, CA 95353.
14 #1..
- 55 -

BASIC FINANCIAL STATEMENTS
15 #1..
- 56 -
16 #1..
- 57 -

CITY OF MODESTO

STATEMENT OF NET POSITION
JUNE 30, 2021
Governmental Business-type
Activities Activities Total
ASSETS
Cash and cash equivalents $ 113,367,313 $ 249,075,412 $ 362,442,725 Accounts receivable, net 1,923,095 3,560,145 5,483,240
Interest receivable 383,344 537,254 920,598
Utility billings receivable, net 1,487,719 18,568,277 20,055,996 Taxes receivable 15,803,523 15,803,523 -
Due from governments, net 45,359,941 14,708,856 60,068,797 Prepaid expenses 312,721 3,056,408 3,369,129
Internal balances 628,809 (628,809) -
Inventories 1,346,332 37,829 1,384,161
Investments in joint ventures 7,793,117 - 7,793,117
Restricted assets:

Cash and cash equivalents 78,206,000 17,004,338 95,210,338 Cash and cash equivalents with fiscal agent 9,214,294 14,795,022 24,009,316 Due from governments, net 26,978 - 26,978
Reimbursement agreement 13,556,050 13,556,050 -
Notes and loan receivable, net 59,597,508 59,597,508 -
Capital assets:

Land and construction in progress 157,739,454 265,074,359 422,813,813 Other capital assets, net of accumulated depreciation 283,296,821 668,290,055 951,586,876 Total assets 790,043,019 1,254,079,146 2,044,122,165

DEFERRED OUTFLOWS OF RESOURCES
Deferred OPEB 5,788,264 1,789,702 7,577,966
Deferred pensions 40,513,618 7,533,503 48,047,121
Loss on refunding - 579,040 579,040
Accumulated decrease in fair value of hedging derivatives 8,462,255 35,834,025 44,296,280 Total deferred outflows of resources 54,764,137 45,736,270 100,500,407 Total assets and deferred outflows of resources 844,807,156 1,299,815,416 2,144,622,572

LIABILITIES
Accounts payable 33,503,735 13,705,176 47,208,911
Accrued salaries and benefits 2,365,258 836,144 3,201,402 Approved loans payable 59,630 - 59,630
Interest payable 22,850 529,997 552,847
Unearned revenue 1,932,983 15,769,556 17,702,539
Refundable deposits 5,851,110 2,377,629 8,228,739
Derivative instrument - interest swap 8,462,255 35,834,025 44,296,280 Pollution remediation liability - 13,927,705 13,927,705 Long-term liabilities:

Due within one year 11,716,675 15,631,335 27,348,010
Due in more than one year 79,115,208 288,103,352 367,218,560 Net OPEB liability 22,968,920 7,458,480 30,427,400
Net pension liability 303,071,498 61,179,144 364,250,642 Total liabilities 469,070,122 455,352,543 924,422,665

DEFERRED INFLOWS OF RESOURCES
Deferred OPEB 1,098,517 366,744 1,465,261
Deferred pensions 1,048,646 219,728 1,268,374
Total deferred inflows of resources 2,147,163 586,472 2,733,635 Total liabilities and deferred inflows of resources 471,217,285 455,939,015 927,156,300

NET POSITION
Net investment in capital assets 407,347,307 648,609,186 1,055,956,493 Restricted for:

Capital projects 60,158,229 60,158,229 -
Housing and community development 61,116,118 61,116,118 - Pollution remediation - 14,626,709 14,626,709
Other purposes 62,082,860 2,377,629 64,460,489
Unrestricted (217,114,643) 178,262,877 (38,851,766)
Total net position $ 373,589,871 $ 843,876,401 $ 1,217,466,272 The notes to basic financial statements are an integral part of this statement. 17 #1..
- 58 -

CITY OF MODESTO

STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2021
Operating Capital
Charges for Grants and Grants and
Expenses Services Contributions Contributions
FUNCTIONS/PROGRAMS:

Governmental activities:

General government $ 14,727,031 $ 6,237,530 $ - $ -
Community development 30,782,573 16,611,118 8,462,908 - Highways and streets 25,863,042 651,061 - 57,753,051
Public works 3,126,390 2,869,808 - -
Parks and recreation 13,750,865 2,145,685 - -
Public safety 129,785,835 5,849,193 3,548,010 71,960
Interest on long-term debt 2,039,849 - - -
Total governmental activities 220,075,585 34,364,395 12,010,918 57,825,011 Business-type activities:

Water 68,792,875 87,713,122 1,714,850 520,103
Sewer 46,500,454 63,614,677 446,228 2,773,648
Bus 28,889,011 1,624,167 25,864,336 5,378,846
Parking 1,700,607 983,353 - -
Storm drain 5,585,980 6,167,491 - -
Compost 12,022,746 10,433,758 372,418 -
Airport 1,865,063 686,923 316,977 -
Golf 2,865,795 3,343,027 - -
Community center 1,961,576 36,914 595,782 -
Abatement and public nuisance 82,166 115,999 - -
Total business-type activities 170,266,273 174,719,431 29,310,591 8,672,597 Total $ 390,341,858 $ 209,083,826 $ 41,321,509 $ 66,497,608 General revenues:

Taxes:

Utility users tax
Property taxes, levied for general purposes
Property taxes, generated by and allocated to the airport Transient occupancy tax
Franchise tax
Cannabis tax
Business license tax, levied for general purposes
Business license tax, levied for downtown improvement district Intergovernmental revenue:

Sales tax (state appropriation)
Motor vehicle license fee
Transportation tax funding
Community facilities district fees
Special assessments, levied
Other
Unrestricted investment earnings
Miscellaneous
Transfers, net
Total general revenues and transfers
Changes in net position
Net position, July 1
Prior year adjustments
Net position, June 30
Program Revenues
The notes to basic financial statements are an integral part of this statement. 18 #1..
- 59 -
Governmental Business-type
Activities Activities Total
$ (8,489,501) $ $ (8,489,501) -
(5,708,547) - (5,708,547)
32,541,070 - 32,541,070
(256,582) - (256,582)
(11,605,180) - (11,605,180)
(120,316,672) (120,316,672) -
(2,039,849) - (2,039,849)
(115,875,261) (115,875,261) -
- 21,155,200 21,155,200
- 20,334,099 20,334,099
- 3,978,338 3,978,338
- (717,254) (717,254)
- 581,511 581,511
- (1,216,570) (1,216,570)
- (861,163) (861,163)
- 477,232 477,232
- (1,328,880) (1,328,880)
- 33,833 33,833
- 42,436,346 42,436,346
(115,875,261) 42,436,346 (73,438,915)
20,764,694 - 20,764,694
19,106,595 - 19,106,595
- 266,272 266,272
2,850,229 - 2,850,229
7,117,014 - 7,117,014
5,379,402 - 5,379,402
13,899,554 - 13,899,554
225,051 - 225,051
35,670,236 - 35,670,236
18,855,971 - 18,855,971
22,501,876 - 22,501,876
14,628 - 14,628
4,851,750 - 4,851,750
39,528,038 - 39,528,038
(287,088) (192,489) (479,577)
2,184,677 1,686,667 3,871,344
824,609 (824,609) -
193,487,236 935,841 194,423,077
77,611,975 43,372,187 120,984,162
303,665,151 802,061,369 1,105,726,520
(7,687,255) (1,557,155) (9,244,410)
$ 373,589,871 $ 843,876,401 $ 1,217,466,272
Changes in Net Position
Net (Expense) Revenue and
19 #1..
- 60 -

CITY OF MODESTO

BALANCE SHEET - GOVERNMENTAL FUNDS
JUNE 30, 2021
Capital Operating Other Total
General Grants Grants Governmental Governmental
ASSETS
Cash and cash equivalents $ 18,212,475 $ $ 32,388,928 - $ 32,879,470 $ 83,480,873 Receivables:

Accounts, net 337,276 - 21,374 91,813 450,463
Interest 69,242 - 34,690 180,207 284,139
Utilities, net 1,487,719 - - - 1,487,719
Taxes 15,201,259 - 93,595 508,669 15,803,523
Due from governments 662,144 21,373,058 7,984,509 15,311,328 45,331,039 Prepaid expenditures 218,854 1,518 69,760 860 290,992
Restricted assets:

Cash and cash equivalents 3,020,400 - 1,152,682 64,734,315 68,907,397 Cash and cash equivalents with
fiscal agent 347,088 2,511,990 810,899 5,403,360 9,073,337 Due from governments - - - 26,978 26,978
Notes receivable, net - - 70,179 59,527,329 59,597,508
Advances to other funds 2,169,998 - - 471,416 2,641,414 Total assets $ 41,726,455 $ 23,886,566 $ 42,626,616 $ 179,135,745 $ 287,375,382

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable $ 1,677,891 $ 25,725,139 $ 2,601,168 $ 30,514,593 510,395 Accrued salaries and benefits 1,944,491 - 80,603 149,501 2,174,595 Accrued interest payable - - 665 1,000 1,665
Approved loans payable - - - 59,630 59,630
Unearned revenue 238,210 - - 1,657,835 1,896,045
Refundable deposits 5,825,555 - - 25,555 5,851,110
Advances from other funds 1,086,973 - - 1,418,393 2,505,366 Total liabilities 10,773,120 25,725,139 591,663 5,913,082 43,003,004 Deferred inflows of resources:

Unavailable revenue 54,243 23,779 39,931,433 31,846,280 71,855,735 Fund balances:

Nonspendable 2,388,852 1,518 69,760 472,276 2,932,406
Restricted 3,367,488 2,511,990 2,033,760 106,595,778 114,509,016 Committed 18,397,817 - - - 18,397,817
Assigned 349,022 - - 34,308,329 34,657,351
Unassigned 6,395,913 (4,375,860) - - 2,020,053
Total fund balances 30,899,092 (1,862,352) 2,103,520 141,376,383 172,516,643 Total liabilities, deferred inflows of
resources, and fund balances $ 41,726,455 $ 23,886,566 $ 42,626,616 $ 179,135,745 $ 287,375,382 The notes to basic financial statements are an integral part of this statement. 20 #1..
- 61 -

CITY OF MODESTO

RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF NET POSITION - GOVERNMENTAL ACTIVITIES JUNE 30, 2021
Total fund balances - governmental funds $ 172,516,643
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.

General capital assets:

Nondepreciable $ 151,472,150
Depreciable 176,592,914
Accumulated depreciation on general capital assets (106,293,295) Infrastructure:

Depreciable 578,567,213
Accumulated depreciation on infrastructure (377,125,903) 423,213,079 Other long-term assets are not available to pay for current-period expenditures and, therefore, are:

Deferred in the governmental funds $ 71,855,735
Reimbursement agreement with Successor Agency 13,556,050 Investments in joint ventures 7,793,117 93,204,902
Derivative instruments:

Rate swaps are not reported in governmental funds. $ (8,462,255) Deferred outflows of resources used to accumulate decreases in fair value of hedging derivatives also are not reported in governmental funds. 8,462,255 - Internal service funds are used by management to charge the costs of activities to individual funds. The assets, deferred outlows of resources, liabilities, and deferred inflows of recources of internal service funds are included in governmental activities in the statement of net position. 5,240,733
Deferred outflows and inflows of resources for pension items in governmental activities are not financial resources and, therefore, are not reported in the governmental funds.

Deferred outflows of resources $ 38,775,976
Deferred inflows of resources (997,965) 37,778,011
Deferred outflows and inflows of resources for net OPEB items in governmental activities are not financial resources and, therefore, are not reported in the governmental funds.

Deferred outflows of resources $ 5,354,062
Deferred inflows of resources (1,000,836) 4,353,226
Some liabilities, are not due and payable in the current period and therefore are not reported in the funds.

Net pension liability $ (288,960,213)
Net OPEB liability (21,112,173)
Bonds payable, and other long-term debt (52,625,878)
Accrued interest (18,459) (362,716,723)
Net position - governmental activities $ 373,589,871
The notes to basic financial statements are an integral part of this statement. 21 #1..
- 62 -

CITY OF MODESTO

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES - GOVERNMENTAL FUNDS
Capital Operating Other Total
General Grants Grants Governmental Governmental
REVENUES:

Taxes $ 67,237,085 $ - $ 365,151 $ 1,740,303 $ 69,342,539 Licenses and permits 418,648 - 44,799 10,246 473,693
Intergovernmental 64,475,277 52,782,754 5,680,942 31,417,879 154,356,852 Charges for services 15,003,537 - 4,197,090 9,178,215 28,378,842 Special assessments levied 314,521 - 64,342 4,472,887 4,851,750 Interest and rent 330,952 - 75,605 914,129 1,320,686
Net (decrease) in fair value of investments (181,655) - (39,791) (764,267) (985,713) Fines and forfeits 478,113 - - 181,997 660,110
Donations and contributions - - 370,958 - 370,958
Miscellaneous 872,028 - 224,205 296,551 1,392,784
Total revenues 148,948,506 52,782,754 10,983,301 47,447,940 260,162,501 EXPENDITURES:

Current:

General government 12,259,387 - 223,830 - 12,483,217
Community development 5,947,091 1,238,286 6,189,457 12,840,725 26,215,559 Highways and streets - 1,314,838 51,287 10,786,678 12,152,803 Public works - - 2,635,907 - 2,635,907
Parks and recreation 11,564,320 - 50,582 19,938 11,634,840 Public safety 108,518,680 - 1,348,437 408,803 110,275,920 Capital outlay 98,027 47,457,477 71,960 3,905,590 51,533,054 Debt service:

Principal retirement 478,077 - - 2,453,000 2,931,077
Interest 127,466 - - 1,858,461 1,985,927
Other - - - 51,814 51,814
Total expenditures 138,993,048 50,010,601 10,571,460 32,325,009 231,900,118

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 9,955,458 2,772,153 411,841 15,122,931 28,262,383

OTHER FINANCING SOURCES
(USES):

Transfers in 1,649,785 1,647,188 215,946 10,736,512 14,249,431 Transfers out (6,462,100) (10) (210,038) (8,828,046) (15,500,194) Sale of assets - - - 1,934 1,934

TOTAL OTHER FINANCING
SOURCES (USES) (4,812,315) 1,647,178 5,908 1,910,400 (1,248,829) CHANGES IN FUND BALANCES 5,143,143 4,419,331 417,749 17,033,331 27,013,554 FUND BALANCES, JULY 1 25,755,949 (6,281,683) 1,584,176 128,718,496 149,776,938 PRIOR PERIOD ADJUSTMENTS - - 101,595 (4,375,444) (4,273,849) FUND BALANCES, JUNE 30 $ 30,899,092 $ (1,862,352) 2,103,520 $ 141,376,383 $ 172,516,643 The notes to basic financial statements are an integral part of this statement.

FISCAL YEAR ENDED JUNE 30, 2021
22 #1..
- 63 -

CITY OF MODESTO

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND

BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES - GOVERNMENTAL ACTIVITIES FISCAL YEAR ENDED JUNE 30, 2021
Net change in fund balances - governmental funds $ 27,013,554 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.

Capital outlay $ 51,533,054
Depreciation expense (18,708,359) 32,824,695
In the statement of activities, only the gain or loss on the sales and transfer of capital assets is reported, whereas in the governmental funds, the proceeds from such sales or transfer increase financial resources. Thus, the change in net position differs from the change in fund balances by the cost of the assets sold. (2,515,455) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds.

Change in unearned revenues $ 37,159,918
Change in investments in joint ventures (551,033) 36,608,885 Recognition of Successor Agency annual payment for their Reimbursement Agreement receivable associated with long-term debt. (629,300)
The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position.

Principal retirement 2,931,076
Some expenses reported in the statement of activities require the use of current financial resources and therefore are not reported as expenditures in governmental funds.

Change in accrued interest $ (2,109)
OPEB expense associated with net OPEB liability 5,352,049 Pension expense associated with net pension liability (20,504,276) (15,154,336) Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue (expense) of internal service funds is reported with governmental activities. (3,467,144) Change in net position - governmental activities $ 77,611,975 The notes to basic financial statements are an integral part of this statement. 23 #1..
- 64 -

CITY OF MODESTO

STATEMENT OF NET POSITION - PROPRIETARY FUNDS
JUNE 30, 2021
Enterprise
Other Total Internal
Water Sewer Bus Enterprise Enterprise Service
ASSETS
Current assets:

Cash and cash equivalents $ 113,709,717 $ 108,989,660 $ 8,265,827 $ 18,110,208 $ 249,075,412 $ 29,886,440 Receivables:

Accounts, net 45,663 1,657,507 304,695 1,552,280 3,560,145 1,472,632 Interest 237,470 239,459 19,897 40,428 537,254 99,205
Utilities, net 10,560,000 7,000,862 1,007,415 18,568,277 - - Prepaid expenses 2,940,452 83,019 5,582 27,355 3,056,408 21,729 Due from governments 2,629,762 701,959 9,540,773 1,836,362 14,708,856 28,902 Inventories 35,435 - - 2,394 37,829 1,346,332
Total current assets 130,158,499 118,672,466 18,136,774 22,576,442 289,544,181 32,855,240 Noncurrent assets:

Advances to other funds 4,340,000 2,200,949 - 211,523 6,752,472 - Restricted cash and cash equivalents 6,386,391 10,156,748 - 461,199 17,004,338 9,298,603 Restricted cash and cash equivalents with fiscal agent 13,671,253 465,720 - 658,049 14,795,022 140,957 Land and construction in progress 59,841,360 187,406,081 6,852,312 10,974,606 265,074,359 6,267,304 Other capital assets, net of accumulated depreciation 393,622,129 209,967,457 33,787,902 30,912,567 668,290,055 11,555,892 Total noncurrent assets 477,861,133 410,196,955 40,640,214 43,217,944 971,916,246 27,262,756 Total assets 608,019,632 528,869,421 58,776,988 65,794,386 1,261,460,427 60,117,996 Deferred OPEB 754,696 550,546 108,362 376,098 1,789,702 434,202 Deferred pensions 2,688,972 2,897,915 475,530 1,471,086 7,533,503 1,737,642 Loss on refunding 356,880 222,160 - - 579,040 -
Accumulated decrease in fair value of hedging derivatives 35,834,025 - - - 35,834,025 - Total deferred outflows of resources 39,634,573 3,670,621 583,892 1,847,184 45,736,270 2,171,844 Total assets and deferred outflows of resources $ 647,654,205 $ 532,540,042 $ 59,360,880 $ 67,641,570 $ 1,307,196,697 $ 62,289,840

LIABILITIES
Current liabilities:

Accounts payable $ 5,189,568 $ 3,882,367 $ 3,400,202 $ 1,233,039 $ 13,705,176 $ 2,989,142 Accrued salaries and benefits 275,073 294,003 88,143 178,925 836,144 190,663 Interest payable 2,894 514,201 - 12,902 529,997 2,726
Current portion - compensated absences - - - - - 990,803 Current portion - claims liability - - - - 7,775,304 -
Current portion - long-term debt 5,967,779 8,914,342 - 437,274 15,319,395 - Current portion - developer advances 84,127 - - - 84,127 - Unearned revenue 31,451 2,793,761 12,270,896 673,448 15,769,556 36,938 Total current liabilities 11,550,892 16,398,674 15,759,241 2,535,588 46,244,395 11,985,576 Noncurrent liabilities:

Payable from restricted assets -
refundable deposits 1,338,943 1,038,686 - - 2,377,629 - Advances from other funds - - 471,416 6,417,104 6,888,520 - Compensated absences - - - - 11,284,857 -
Claims liability - - - - 20,977,553 -
Derivative instrument - interest swap 35,834,025 - - - 35,834,025 - Pollution remediation liability 6,063,821 6,958,932 - 904,952 13,927,705 - Long-term debt:

Reimbursement agreement related to MID debt 100,126,454 - - - 100,126,454 - Revenue bonds payable - 114,350,154 - - 114,350,154 -
Obligations under capital lease - - - 3,351 3,351 -
Loans payable 319,307 26,313,089 - - 26,632,396 -
Certificates of participation 42,757,540 - - 940,000 43,697,540 - Developer advances 698,758 - - - 698,758 -
Net OPEB liability 3,002,240 2,223,763 466,582 1,765,895 7,458,480 1,856,747 Net pension liability 21,836,988 23,533,800 3,861,752 11,946,604 61,179,144 14,111,285 Total noncurrent liabilities 211,978,076 174,418,424 4,799,750 21,977,906 413,174,156 48,230,442 Total liabilities 223,528,968 190,817,098 20,558,991 24,513,494 459,418,551 60,216,018 Deferred OPEB 144,773 106,323 24,443 91,205 366,744 97,681 Deferred pensions 78,429 84,523 13,869 42,907 219,728 50,681 Total deferred inflows of resources 223,202 190,846 38,312 134,112 586,472 148,362

NET POSITION
Net investment in capital assets 318,320,542 248,483,833 40,640,214 41,164,597 648,609,186 17,823,196 Restricted for pollution remediation 5,047,448 9,118,062 - - 14,626,709 - Restricted for other purposes 1,338,943 1,038,686 - - 2,377,629 9,439,560 Unrestricted 99,195,102 82,891,517 (1,876,637) 1,829,367 181,578,150 (25,337,296) Total net position 423,902,035 341,532,098 38,763,577 42,993,964 847,191,674 1,925,460 Total liabilities, deferred inflows of resources, and net position $ 647,654,205 $ 532,540,042 $ 59,360,880 $ 67,641,570 $ 62,289,840 Adjustment to reflect the consolidation of internal service fund activities (3,315,273) Net position of business-type activities $ 843,876,401
The notes to basic financial statements are an integral part of this statement.

DEFERRED OUTFLOWS OF RESOURCES

DEFERRED INFLOWS OF RESOURCES
24 #1..
- 65 -

CITY OF MODESTO

STATEMENT OF REVENUES, EXPENSES, AND CHANGES

IN FUND NET POSITION - PROPRIETARY FUNDS
FISCAL YEAR ENDED JUNE 30, 2021
Other Total Internal
Water Sewer Bus Enterprise Enterprise Service
OPERATING REVENUES:

Charges for services $ 86,743,885 $ 61,868,018 $ 1,118,636 $ 20,896,716 $ 170,627,255 $ 78,231,069 Miscellaneous 969,237 513,734 505,531 870,749 2,859,251 189,772 Total operating revenues 87,713,122 62,381,752 1,624,167 21,767,465 173,486,506 78,420,841 OPERATING EXPENSES:

Salaries and wages 9,113,226 9,216,782 1,665,914 5,254,054 25,249,976 8,474,362 Cost of sales - - - - - 2,083,987
Contractual services 8,054,640 3,698,759 17,392,469 6,294,115 35,439,983 5,250,836 Utilities 2,462,054 3,449,639 197,821 611,915 6,721,429 351,972 Maintenance and supplies 5,646,890 3,992,029 3,389,110 4,860,417 17,888,446 5,760,932 Water purchases 10,653,809 - - - 10,653,809 -
Insurance 368,912 845,013 43,573 455,483 1,712,981 19,076,444 Claims - - - - - 9,778,335
Employee benefits 5,809,735 7,848,110 787,615 3,472,646 17,918,106 30,290,561 Administration services 1,230,194 2,336,236 1,850,804 3,392,977 8,810,211 787,766 Allocated indirect administrative costs 1,426,669 858,290 375,632 562,122 3,222,713 355,266 Other - - 137,652 - 137,652 -
Depreciation 19,733,414 11,405,164 3,479,726 1,800,322 36,418,626 2,953,316 Total operating expenses 64,499,543 43,650,022 29,320,316 26,704,051 164,173,932 85,163,777 OPERATING INCOME (LOSS) 23,213,579 18,731,730 (27,696,149) (4,936,586) 9,312,574 (6,742,936)

NONOPERATING REVENUES (EXPENSES)
Operating grants 1,714,850 446,228 25,864,336 1,285,177 29,310,591 - Gain (loss) on disposition of capital assets (9,673) 774 (258,569) 33,539 (233,929) (160,552) Tax revenue - - - 266,272 266,272 -
Tax expense (94,094) (61,248) - (20,896) (176,238) -
Interest income 972,327 1,018,797 - 157,603 2,148,727 366,103 Net (decrease) in fair value of investments (996,989) (1,060,447) (105,834) (177,946) (2,341,216) (437,131) Connection fees - 1,232,925 - - 1,232,925 -
Rental income 41,972 523,078 135,914 985,704 1,686,668 - Settlements and recoveries - - - - - 5,884,277
Interest expense and amortization (6,020,604) (3,985,068) - (115,674) (10,121,346) - Trustee and letter of credit fees (1,750) (5,401) - (5,955) (13,106) - Total nonoperating revenues (expenses) (4,393,961) (1,890,362) 25,635,847 2,407,824 21,759,348 5,652,697

INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS 18,819,618 16,841,368 (2,060,302) (2,528,762) 31,071,922 (1,090,239) Capital contributions 520,103 2,773,648 5,378,846 - 8,672,597 - Transfers in 162,937 727,311 29,515 2,755,241 3,675,004 2,287,073 Transfers out (2,052,040) (164,619) (2,107,313) (175,642) (4,499,614) (211,700) CHANGES IN NET POSITION 17,450,618 20,177,708 1,240,746 50,837 38,919,909 985,134 NET POSITION, JULY 1 406,451,417 321,354,390 37,522,831 44,500,282 940,326 PRIOR YEAR ADJUSTMENTS - - - (1,557,155) -
NET POSITION, JUNE 30 $ 423,902,035 $ 341,532,098 $ 38,763,577 $ 42,993,964 $ 1,925,460 Adjustment to reflect the consolidation of internal service funds 4,452,278 Change in net position of business-type activities $ 43,372,187 Enterprise
The notes to basic financial statements are an integral part of this statement. 25 #1..
- 66 -

CITY OF MODESTO

STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
FISCAL YEAR ENDED JUNE 30, 2021
Enterprise
Other Total Internal
Water Sewer Bus Enterprise Enterprise Service
CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from customers and users $ 83,992,175 $ 60,012,604 $ 1,426,891 $ 21,629,647 $ 167,061,317 $ 160,285 Receipts from interfund services provided 278,331 27,060 - - 305,391 76,602,835 Payments to suppliers (24,760,072) (9,812,388) (22,936,570) (13,890,048) (71,399,078) (33,214,287) Payment of insurance claims - - - - (7,194,601) -
Payments to employees (13,833,039) (14,177,827) (1,183,952) (8,046,855) (37,241,673) (35,978,390) Payments for interfund services used (5,549,900) (6,140,411) (8,104,824) - (19,795,135) (1,946,153) Net cash provided (used) by operating activities 40,127,495 29,909,038 (22,693,631) (8,412,080) 38,930,822 (1,570,311)

CASH FLOWS FROM NONCAPITAL FINANCING
ACTIVITIES:

Operating grants received 1,714,850 446,228 19,120,985 1,285,177 22,567,240 - Taxes received - - - 266,272 266,272 -
Settlements and recoveries - - - - - 5,884,277
Transfers in 162,937 727,311 29,515 2,755,241 3,675,004 2,287,073 Transfers out (2,052,040) (164,619) (2,107,313) (175,642) (4,499,614) (211,700) Advances from/to other funds (1,140,000) 501,562 471,416 1,158,681 991,659 - Net cash provided (used) by noncapital financing
activities (1,314,253) 1,510,482 17,514,603 5,289,729 23,000,561 7,959,650

CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:

Acquisition and construction of capital assets (10,378,086) (13,383,491) (5,495,018) (692,780) (29,949,375) (3,385,500) Proceeds from sale of capital assets 74,369 774 6,175 33,540 114,858 26,678 Proceeds of debt issues 102,739,724 - - 102,739,724 - - Repayment from refunding of long-term debt (106,812,879) - - (106,812,879) - - Principal repayments (6,299,501) (3,484,063) - (412,202) (10,195,766) - Interest paid (6,020,825) (3,985,068) - (147,151) (10,153,044) - Trustee and letter of credit fees (1,750) (5,401) - (5,955) (13,106) - Capital contributions 520,103 2,773,648 5,378,846 - 8,672,597 - Connection fees for capital purposes 1,232,925 - - - 1,232,925 - Net cash provided (used) by capital and related
financing activities (22,105,690) (20,923,831) (109,997) (1,224,548) (44,364,066) (3,358,822) CASH FLOWS FROM INVESTING ACTIVITIES:

Interest received 1,053,358 510,257 19,310 219,100 1,802,025 462,282 Net (decrease) in the fair value of investments (996,989) (1,060,447) (105,836) (177,946) (2,341,218) (442,348) Rental income received 41,972 523,078 135,914 985,704 1,686,668 - Net cash provided (used) by investing activities 98,341 (27,112) 49,388 1,026,858 19,934 1,147,475 Net increase (decrease) in cash and cash equivalents 16,805,893 10,468,577 (5,239,637) (3,320,041) 18,714,792 3,050,451 CASH AND CASH EQUIVALENTS, JULY 1 116,961,468 109,143,551 13,505,464 22,549,497 262,159,980 36,275,549 CASH AND CASH EQUIVALENTS, JUNE 30 $ 133,767,361 $ 119,612,128 $ 8,265,827 $ 19,229,456 $ 280,874,772 $ 39,326,000 RECONCILIATION TO STATEMENT OF NET POSITION:

Cash and cash equivalents $ 113,709,717 $ 108,989,660 $ 8,265,827 $ 18,110,208 $ 249,075,412 $ 29,886,440 Restricted cash and cash equivalents 6,386,391 10,156,748 - 461,199 17,004,338 9,298,603 Restricted cash and cash equivalents with fiscal agent 13,671,253 465,720 - 658,049 14,795,022 140,957 TOTAL CASH AND CASH EQUIVALENTS $ 133,767,361 $ 119,612,128 $ 8,265,827 $ 19,229,456 $ 280,874,772 $ 39,326,000 (continued)
The notes to basic financial statements are an integral part of this statement. 26 #1..
- 67 -

CITY OF MODESTO
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS (Continued) FISCAL YEAR ENDED JUNE 30, 2021
Enterprise
Other Total Internal
Water Sewer Bus Enterprise Enterprise Service

RECONCILIATION OF OPERATING INCOME (LOSS)

TO NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES:

Operating income (loss) $ 23,213,579 $ 18,731,730 $ (27,696,149) $ (4,936,586) $ 9,312,574 $ (6,742,936) Adjustments to reconcile operating income (loss) to
net cash provided (used) by operating activities:

Depreciation 19,733,414 11,405,164 3,479,726 1,800,322 36,418,626 2,953,316 Taxes paid (94,094) (61,248) - (20,896) (176,238) -
Change in assets, liabilities, and deferred resources:
(Increase) decrease in accounts receivable (40,112) (1,606,589) (197,270) 86,637 (1,757,334) (128,508) (Increase) in utilities receivable (1,460,296) (1,466,251) - (125,843) (3,052,390) - (Increase) in due from governments (1,810,549) (254,721) - (1,391,404) (3,456,674) (19,594) (Increase) decrease in prepaid expenses (560,198) (22,322) 98,910 (9,786) (493,396) 153,493 Decrease in inventories - 94 - 49,130 49,224 187,086
Increase (decrease) in accounts payable 392,021 (539,448) 1,139,190 (3,278,628) (2,286,865) (1,823,237) Increase (decrease) in accrued salaries and benefits (703) 7,858 35,851 7,342 50,348 4,007 Increase in compensated absences - - - - - 1,196,638
(Increase) in net OPEB liability and deferred resources (53,467) (38,657) (62,816) (1,591,099) (1,746,039) (31,659) Decrease in net pension liability and deferred 1,144,092 2,917,864 508,927 706,144 5,277,027 1,617,547 Increase in claims liability - - - - - 2,583,734
Increase (decrease) in pollution remediation liability (1,737,569) (149,907) - 291,157 (1,596,319) - Increase (decrease) in due to other funds 1,533,036 - - - 1,533,036 (1,533,036) Increase in unearned revenue 29,457 1,111,844 - 1,430 1,142,731 12,838 (Decrease) in refundable deposits (161,116) (126,373) - - (287,489) - Total adjustments 16,913,916 11,177,308 5,002,518 (3,475,494) 29,618,248 5,172,625 Net cash provided (used) by operating activities $ 40,127,495 $ 29,909,038 (22,693,631) $ (8,412,080) $ 38,930,822 $ (1,570,311) The notes to basic financial statements are an integral part of this statement. 27 #1..
- 68 -
Private Other
Purpose Funds Custodial Funds
ASSETS
Cash and cash equivalents $ 2,174,096 $ 1,551,009
Cash and cash equivalents held with fiscal agent 1,977,080 2,933,813 Interest receivable 4,343 5,550
Taxes receivable - 90,618
Assessments receivable - 28,818,947
Due from governments - 330,095
Land and construction in progress - 2,944,919
Other capital assets, net of accumulated depreciation - 4,580,836 Other assets - 788
Total assets $ 4,155,519 $ 41,256,575
Deferred outflows of resources:

Loss on refunding - 1,043,590

LIABILITIES
Accounts payables and other liabilities 41,890 77,915
Due to local governments 1,192,004 281,051
Interest payable - 431,596
Long-term liabilities:

Due within one year 2,148,100 981,659
Due in more than one year 16,412,950 28,839,337
Total liabilities $ 19,794,944 $ 30,611,558
Deferred inflows of resources:

Unavailable revenues - 812,680

NET POSITION
Net invested in capital assets - 7,525,755
Restricted - 2,933,813
Unrestricted (15,639,425) 416,359
Total net position (deficit) $ (15,639,425) $ 10,875,927

CITY OF MODESTO

STATEMENT OF FIDUCIARY NET POSITION
JUNE 30, 2021
The notes to basic financial statements are an integral part of this statement. 28 #1..
- 69 -
Private Other
Purpose Funds Custodial Funds
ADDITIONS:

Contributions:

Members investment pool $ $ - 385,526
Total contributions
Collections on behalf of other governments:

Special assessments - 2,611,794
Property taxes 3,210,700 349,136
Grants - 150,065
Other - 76,504
Total collections on behalf of other governments 3,210,700 3,187,499 Interest and investment earnings:

Interest earnings 14,367 19,501
Net (decrease) in fair value of investments (13,168) (18,880) Total interest and investment earnings 1,199 621
Total additions 3,211,899 3,573,646
DEDUCTIONS:

Distribution of property taxes to other taxing entities 602,998 632,288 Obligation retirements:

Principal retirement - 830,000
Interest expense 260,451 1,304,795
Trustee fees - 3,685
City administrative expenses 111,553 116,009
Other expenses - 20,779
Depreciation expense - 445,876
Operating expenses - 336,100
Total deductions 975,002 3,689,532
Net increase (decrease) in fiduciary net position 2,236,897 (115,886) Net position, July 1 - restated (17,876,322) 10,991,813 Net position (deficit), June 30 $ (15,639,425) $ 10,875,927

CITY OF MODESTO

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION -

FIDUCIARY FUNDS
FISCAL YEAR ENDED JUNE 30, 2021
The notes to basic financial statements are an integral part of this statement. 29 #1..
- 70 -

CITY OF MODESTO

NOTES TO BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2021
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. THE FINANCIAL REPORTING ENTITY
The City of Modesto (the City) was incorporated in 1884 and operates under a Council-Manager form of government as authorized by its charter adopted in 1951.  The City Council consists of seven elected members.  The following services are provided by the City to its citizens: public safety (fire and police), highways and streets, drinking water, wastewater  collection  and  treatment,  storm  drainage,  public  transit,  recreation,  public  improvements,  community development, planning and zoning, and general administrative services.

These financial statements present the financial status of the City  and its component  units.   The component units discussed  in  the  following  paragraphs  are  included  in  the  City's  reporting  entity  because  the  City  is  financially accountable for their operations.

1.  The MPFA (Modesto Public Financing Authority) was established as a separate legal entity whose sole purpose is to provide financing for various City capital projects.

2.  The  City  of  Modesto  has  established  several  Community  Facilities  (The  Districts)  to  provide  funding  and reimbursement mechanisms for public facilities and services required by each District Specific Plan.  These Districts are the vehicles used to ensure that all landowners in the Districts contribute to the cost of public improvements.

There  are  currently  twelve  active  Districts,  which  are  combined  for  presentation  in  these  financial  statements.

Individual component unit financial statements are prepared for each District.

The Redevelopment Successor Agency  (Successor Agency)  operates  under the auspices  of a legislatively formed Oversight  Board  comprised  of  representatives  of  the  local  agencies  that  serve  the  development  project  area.  The Oversight Board, in its fiduciary capacity, has authority over the operations and the timely dissolution of the former Redevelopment Agency (RDA). It is tasked with fulfilling the obligations of the former RDA, and is also responsible for revenue collection, maintaining necessary loan reserves and disposing of excess property.  This agency is reported as a private-purpose trust fund based on the generally accepted accounting standards requirement.

Although these component units are legally separate from the City, they are reported on a blended basis as part of the primary  government  because  their  boards  consist  of  all  seven  members  of  the  City  Council  and  operational responsibility. There is an operational responsibility for the City related to these component units and for the MPFA it provides services solely for the City. Component unit financial statements may be obtained from the City's Finance Department.

The joint ventures and jointly governed organizations described in Note III-E are not considered part of the reporting entity because the City is not financially accountable for their operations.

B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the primary government and its component units.  For the most part, the effect of interfund activity has been removed from these statements.  Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment, are offset by program revenues.  Direct expenses are those that are clearly identifiable with a specific function or segment.

Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions restricted to meeting the operational or capital requirements of a particular function or segment.  Taxes and other items not properly included among program revenues are reported instead as general revenues. 30 #1..
- 71 -
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even   though the latter are excluded from the government-wide financial statements.  Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

C.  BASIS OF PRESENTATION, BASIS OF ACCOUNTING, AND MEASUREMENT FOCUS The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund statements.  Property taxes are recognized as revenues in the year for which they are levied.  Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.  Agency funds have no measurement focus.   Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting.  Revenues are recognized as soon as they are both measurable and available.

Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period.  For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period.  For grant revenues, the City considers this type of revenue to be available if collected within 180 days.  Expenditures generally are recorded when a liability is incurred, as under accrual accounting.  However, principal and interest, compensated absences, claims and judgement expenditures are recorded as fund liabilities when due or when amounts have been accumulated in the debt service funds for payments to be made early in the following year.

Substantially  all  property  taxes,  taxpayer-assessed  taxes  (such  as  sales  and  use,  utility  users,  business  license, transient occupancy, franchise fees, and gas taxes), interest, special assessments levied, state and federal grants, and charges for current services are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period.  Revenues from licenses, permits, and fines and forfeits are considered to be measurable and available only when cash is received by the City.

The City reports the following major governmental funds:

The  General  Fund  is  the  City’s  primary  operating  fund.    It  accounts  for  all  financial  resources  of  the  general government, except those required to be accounted for in another fund.

The Capital Grants Fund to account for receipts and disbursements of a variety  of Governmental Fund capital grants.

The  Operating  Grants  Fund  to  account  for  a  variety  of  governmental  fund  operating  grants,  including  law enforcement grants.

The City reports the following major proprietary funds:

The Water  Fund  accounts  for  all  revenues  collected  by  the  City  for  the  purpose  of  financing  the  construction, operation, and maintenance of the City water distribution system.  Revenues are derived from water service charges and various installation fees.

The Sewer Fund accounts for revenues collected by the City for the purpose of financing the construction, operation, and maintenance of the City sewer system.  Revenues include, but are not limited to, sewer service charges and sewer lateral charges.

The Bus Fund accounts for operations, maintenance, and capital expenditures of the City’s mass transportation service.  This system operates pursuant to the terms of a Federal grant agreement.   Buses are operated by a private contractor under the terms of a supervisory agreement with the City.  A separate contract provides Dial-aRide service for the elderly and handicapped.

Additionally, the City reports the following fund types:

Private-purpose Trust Fund accounts as the fiduciary fund type used by the City to report trust arrangements under which principal and income benefit other governments.  The fund reports the assets, liabilities, and net position of the Successor Agency.
31 #1..
- 72 -
Internal  service  funds  account  for  fleet  management,  central  services,  information  and  technology  services, insurance, employee benefits management, and building services provided to other departments or agencies of the City on a cost-reimbursement basis.

Custodial  funds  account  for  cash  and  investments  held  by  the  City  as  agent  for  various  assessment  districts, governmental entities and non-public organizations.  Custodial funds cannot be major funds.

As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements.

Exceptions  to  this  general  rule  are  exchange  or  exchange-like  transactions  between  functions  of  the  government.

Eliminations of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Proprietary funds distinguish operating revenues and expenses from nonoperating items.  Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations.  The principal operating revenues of the enterprise and internal service funds are charges to customers for sales and services.  The Sewer Fund also recognize as non-operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the systems.  Operating expenses for enterprise and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets.  All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

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

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions.  These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and  expenses  during  the  reporting  period  including  the  note  disclosures.    Actual  results  could  differ  from  those estimates.

D.  ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION/FUND BALANCE

1.  Cash and Cash Equivalents
Cash and investments (including restricted assets) held in the City's investment pool are reported as cash and cash equivalents on the statement of net position and balance sheet because funds can spend cash at any time without prior notice or penalty.  All investments with fiscal agents are also considered cash equivalents because they are highly liquid and have maturities of 3 months or less at the time of purchase.  Investments are stated at fair value.

Valuations are obtained based on various levels identified further under Note II-A – Fair value measurements.

2.  Restricted Assets - Cash and Cash Equivalents
Refundable deposits which reside in the Trust Deposits of the General Fund are classified as restricted assets – cash and cash equivalents on the governmental funds balance sheet because their use is restricted for repayment of those refundable deposits. Legal or contractual obligations associated with the nonmajor governmental funds have been reported as restricted assets due to the restrictions identified on the revenue sources generated from these funds. Refundable deposits in the Water and  Sewer funds are also reported as restricted assets  on the proprietary funds statement of net position. In addition, certain proceeds of Water certificates of participation and Sewer revenue bonds are considered restricted assets because their use is limited by applicable debt covenants.

These proceeds are reported as part of “restricted assets – cash and cash equivalents” on the proprietary funds statement of net position.  The Employee Benefits Management Fund collects funds which are restricted for future payouts  for  leave  balances  due  to  employees  who  terminate  or  retire  from  the  City  as  well  as  any  severance payouts. These assets are restricted due to management’s designation of assets for future payments for employee uses.
32 #1..
- 73 -

3.  Receivables and Payables
Balances representing lending/borrowing transactions between funds outstanding at the end of the fiscal year are reported as either "due from/due to other funds" (amounts due within one year), or "advances to/from other funds" (non-current portions of interfund lending/borrowing transactions). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.”  Advances to other funds and prepaid items are offset by a nonspendable fund balance in applicable governmental funds to indicate they are not available for appropriation and are not expendable available financial resources to indicate that they are not in spendable form.

All property taxes are collected and allocated by the County of Stanislaus to the various taxing entities.  Property taxes are determined annually as of March 1 and attach as an enforceable lien on real property as of January 1.

Taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively.

The City participates in the County "Teeter Plan" method of property tax distribution.  Under the Teeter Plan, the County  remits  property  taxes  to the  City  based  on  assessments,  not  on  collections,  according  to the  following schedule:  55 percent in December, 40 percent in April, and 5 percent at the end of the fiscal year.  Property taxes are recognized in governmental funds when it is available and measurable.  The City considers property tax as available if it is received within 60 days after year-end.

Revenue from taxpayer-assessed taxes (sales and use, business license, transient occupancy, utility users, gas, and franchise fees) are accrued in the governmental funds when they are both measurable and available. The City considers  these  revenues  available  if  they  are  received  during  the  period  when  settlement  of  prior  fiscal  year accounts payable occurs.  Historically, the majority of these taxes are received within 60 days of the fiscal year end; therefore, revenue from taxpayer-assessed taxes is accrued if it is received by August 31.

Grant and entitlement revenues are recorded as receivables in the funds when they are susceptible to accrual (i.e., when all eligibility requirements have been met). The corresponding governmental fund revenues are recorded when they become available, with the differences recorded as deferred inflows of resources.  The corresponding proprietary fund revenues are recorded as nonoperating revenues when the receivables are recorded.  Some grant and entitlement revenues are not susceptible to accrual, in which case the corresponding revenues are recorded when received.   The total amount due from governments for grants, entitlements, and shared receivables and revenues at June 30, 21 is $60,095,775
Utility service accounts receivable are $20,055,996 net of an allowance for doubtful collections of $1,145,407 and include unbilled receivables using actual amounts billed in July for June services for all City funds.  City accounts receivable of $5,483,240 are reported net of an allowance for doubtful collections of $1,764,545 and are based on miscellaneous receivables from the City’s invoice system as well as other receivables accrued at year-end.

4.  Inventories and Prepaid Expenses/Expenditures
Inventories of material and supplies held by governmental and proprietary funds are stated at average cost.  Certain payments  to  vendors  reflect  costs  applicable  to  future  accounting  periods  and  are  recorded  as  prepaid expenses/expenditures.  The consumption method is used to record the prepaid expenses/expenditures.

5.  Capital Assets
Capital  assets,  which  include  property,  plant  and  equipment,  intangible  assets  and  infrastructure  assets  (e.g., streets,  bridges,  sidewalks,  and  similar  items),  are  reported  in  the  applicable  governmental  or  business-type activities columns in the government-wide financial statements.  Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year.  Such assets are recorded at historical cost or estimated historical cost if purchased or constructed.  Donated capital assets received in a service concession agreement and all other types are recorded at acquisition value rather than fair value.

In the case of the initial capitalization of infrastructure assets reported by governmental activities, the City chose to include them regardless of their acquisition date or amount.   Historical values were estimated.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized.
33 #1..
- 74 -
Major outlays for capital assets and improvements are capitalized as projects are constructed.  Interest incurred during the construction phase of capital assets of business-type activities and enterprise funds are included as part of the capitalized value of the assets constructed.  The amount of interest capitalized is determined by offsetting interest expense incurred from the date of borrowing until completion of the project, against interest earned on invested proceeds of tax-exempted debt over the same period.

Depreciation is recorded using the straight line method over the estimated useful lives of the assets, which are 75 years for pipelines, 30 years for buildings, 20 years for improvements, 12 years for buses, 10 years for furnishings and equipment, 2 to 10 years for vehicles, 5 to 15 years for intangible assets, 30 to 50 years for streets, 20 years for  signalization,  30  years  for  water  rights,  5  years  for  service  animals,  and  50  years  for  bridges.    Operating expenses include depreciation on all depreciable capital assets.

Capital leases are recorded as an asset and an obligation at an amount equal to the present value at the beginning of the lease term of minimum lease payments during the lease term.

6.  Deferred Outflows and Inflows of Resources
The Governmental Accounting Standards Board (GASB) establishes criteria for recognizing deferred outflows and inflows of resources. A deferred outflow of resources is defined as a consumption of net position by the government that is applicable to a future reporting period.  A deferred inflow of resources is defined as an acquisition of net position by the government that is applicable to a future reporting period.  Refer to Note II for a detail listing of the deferred outflows and inflows of resources the City has recognized.

7.  Compensated Absences
All  earned  vacation,  holiday,  and  compensating  time,  and  a  portion  of  accumulated  sick  leave  payable  upon termination  or  retirement,  are  accrued  in  the  Employee  Benefits  Management  Internal  Service  Fund  as compensated  absences.    Estimated  sick  leave  termination  payments  have  been  calculated  using  the  GASB Statement 16 vesting method.  Under this method, a liability is accrued for a portion of the sick leave balances of all employees who are currently eligible, or are assumed to become eligible in the future, to receive a payment for sick leave upon  termination.    As  of June 30, 2021,  the total  estimated liability  for all compensated  absences, including vacation and sick leave, is $12,275,660.

8.  Fund Balance
In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned or unassigned based primarily on the extent to which the City is bound to honor constraints on how specific amounts can be spent.
 Nonspendable fund balance – amounts that cannot be spent because they are either (a) not spendable in form or (b) legally or contractually required to be maintained intact.  Restricted fund balance – amounts with constraints placed on their use that are either (a) externally imposed  by  creditors,  grantors,  contributors,  or  laws  or  regulations  of  other  governments;  or  (b) imposed by law through constitutional provisions or enabling legislation.  Committed fund balance – amounts that can only be used for specific purposes determined by formal action of the City’s highest level of decision-making authority (City Council) and that remain binding unless removed in the same manner.  The underlying action that imposed the limitation needs to occur no later than the close of the reporting period.
 Assigned fund balance  –  amounts  that  are  constrained  by  the  City’s  intent  to  be  used  for  specific purposes. The intent can be established at either the highest level of decision making, which includes City Council or by an official designated such as the City Manager for such purpose.  Unassigned fund balance – the residual classification for the City’s General Fund that includes amounts not  contained  in  other  classifications.    In  other  funds,  the  unassigned  classification  is  used  only  if expenditures incurred for specific purposes exceed the amounts restricted, committed or assigned to those purposes.
34 #1..
- 75 -
The City establishes and modifies or rescinds fund balance commitments by passage of an ordinance.  This is typically done through adoption and amendment of the budget.  A fund balance commitment is further indicated in the  budget  as  a  commitment of  the  fund, such  as  approved  construction  contracts.    Assigned  fund  balance  is established by the City through adoption or amendment of the budget or future year budget plan as intended for a specific purpose.

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

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

The purpose of the City’s fund balance policy is to maintain a prudent level of financial resources to protect against reducing service levels or raising taxes and fees because of temporary revenue shortfalls or unpredicted one-time expenditures.

The City has adopted a policy to achieve and maintain a General Fund reserve at 8% of the fund’s total operating expenditures for fiscal year 2020-2021.

E. OTHER SIGNIFICANT ACCOUNTING POLICIES

1.  Employee Benefits
The City established the Employee Benefits Management Internal Service Fund to account for all compensated absences  and  non-insurance  benefits.    Insurance  benefits  for  current  employees  are  paid  from  the  Insurance Internal Service Fund.  The Employee Benefits Management Fund is reimbursed based on actual benefits paid and leave taken, through payroll charges to the City's operating funds.  Leave earned but not taken is being funded over a reasonable period of time.

2.  Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the California Public Employees’ Retirement System (CalPERS) Safety (police and fire) and Miscellaneous (all other) Plans and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS.  For this purpose, the benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms.  Investments are reported at fair value.  GASB 68 requires that the reported results must pertain to the liability and asset information within certain defined timeframes. For this report, the following:

Valuation Date:   June 30, 2019
Measurement Date:  June 30, 2020
Measurement Period:  July 1, 2019 to June 30, 2020

3.  Other Postemployment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related  to  OPEB,  and  OPEB  expense,  information  about  the  net  position  of  the  City’s  plan  (OPEB  Plan)  and additions to/deductions from the OPEB Plan’s net position have been determined on the same measurement basis.

For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.
35 #1..
- 76 -
GASB 75 requires that the reported results must pertain to liability information within certain defined timeframes.

For this report, the following timeframes are used:

Valuation Date: June 30, 2020
Measurement Date: June 30, 2020
Measurement Period: June 30, 2019, to June 30, 2020

4. Interfund Transactions
The City transfers resources among funds in the course of normal operations. Interfund services provided and used, such as equipment pool rental, are accounted for as revenues and expenditures or expenses. Transactions to reimburse a fund for expenditures/expenses initially made from it that are applicable to another fund are recorded as expenditures/expenses in the correct fund and as reductions of expenditures/expenses in the original fund. All other interfund transactions are reported as transfers.

5. Change in Accounting Principles
During the fiscal year ended June 30, 2021, the City adopted new accounting guidance by implementing the provisions of GASB Statement No. 84, Fiduciary Activities, which establishes criteria for identifying and reporting fiduciary activities. The implementation of this statement has resulted in changing the presentation of the financial statements for Fiduciary Funds and the restatement of net position for Custodial Funds, previously referred to as Agency Funds.

F. NEW ACCOUNTING STANDARDS
During the fiscal year ended June 30, 2021, the City implemented the following GASB Standards:

GASB Statement No. 84 – Fiduciary Activities. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.

GASB Statement No. 98 – The Annual Comprehensive Financial Report. The requirements of this statement are effective for reporting periods ending after December 15, 2021.

Released GASB Statements to be implemented in future financial statements are as follows:

GASB Statement No. 87 – Leases. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2021.

GASB Statement No. 89 – Accounting for Interest Cost Incurred before the End of a Construction Period. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2020.

GASB Statement No. 90 – Majority Equity Interests- an amendment of GASB Statements No. 14 and No 61. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.

Other
Custodial Funds
Net position, June 30, 2020, as previously reported $ - Change in Accounting Principles 10,991,813
Net position, July 1, 2020 $ 10,991,813
36 #1..
- 77 -
GASB Statement No. 91 – Conduit Debt Obligations – The requirement of these statements are effective for reporting periods  beginning  after  December  15,  2020.    Subsequent  to  issuance,  GASB  Statement  No.  95  postponed  the requirements of this statement to reporting periods beginning after December 15, 2021.

GASB Statement No. 92 – Omnibus 2020.    The  requirements  of  this  statement  are  effective  for  reporting  periods beginning after June 15, 2020.  Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2021.

GASB Statement No. 93 – Replacement off Interbank Offered Rates.  The requirements of this statements are effective for reporting periods beginning after June 15, 2021.  Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2022.

GASB Statement No. 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.

GASB Statement No. 96 – Subscription-Based Information Technology Arrangements. The  Requirements  of  this statement are effective for reporting periods beginning after June 15, 2022.

GASB Statement No. 97 – Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The  requirements  of  this  statement  are  effective  for reporting periods beginning after June 15, 2021.

II. DETAILED NOTES
A. CASH AND INVESTMENTS
The City maintains a cash and  investment pool that  is used by all funds.   Each fund’s portion of the City’s cash and investment pool is displayed on the balance sheet and proprietary and fiduciary fund statements of net position as “cash and cash equivalents.”  Each fund is allocated interest on average monthly cash balances held by the funds throughout the year. Certain deposits held in trust are displayed on the governmental funds balance sheet and the proprietary funds statement of net position as “restricted assets – cash and cash equivalents.”  The City also maintains “cash and cash equivalents with fiscal agent”, which represent monies held by fiscal agents for payment of various City debt and capital projects costs.

The City’s cash and investments are reported as follows:

Investments Authorized by the California Government Code and the City’s Investment Policy The  City’s  investment  policy  and  the  California  Government  Code  allow  the  City  to  invest  in  the  following  types  of instruments, and the table also identifies certain provisions of the California Government Code, or the City’s investment policy where it is more restrictive:

Primary Government:

Cash and cash equivalents $            362,442,725
Restricted cash and cash equivalents                  95,210,338 Cash and cash equivalents held with fiscal agent                  24,009,316 Sucessor Agency Private-Purpose Trust Fund
Cash and cash equivalents                    2,174,096
Cash and cash equivalents held with fiscal agent                    1,977,080 Custodial funds
Cash and cash equivalents                    1,551,009
Cash and cash equivalents held with fiscal agent                    2,933,813 Total cash and investments $            490,298,377
37 #1..
- 78 -
The City is a voluntary participant in the California Asset Management Program (CAMP).  CAMP is an investment pool offered by the California Asset Management Trust (the Trust).  The Trust is a joint powers authority and public agency created by the Declaration of Trust and established under the provisions of the California Joint Exercise of Powers Act (California Government Code Sections 6500 et seq., or the “Act”) for the purpose of exercising the common power of its participants to invest certain proceeds of debt issues and surplus funds.  The Pool’s investments are limited to investments permitted  by  subdivisions  (a)  to  (n),  inclusive,  of  Section  53601  of  the  California  Government  Code.    Security  types prohibited include, but are not limited to: Investments in inverse floaters, range notes, or interest only strips that are derived from  a  pool  of  mortgages.    At  June  30,  2021,  the  fair  value  approximated  the  City’s  cost.    At  June  30,  2021,  these investments range from a maximum maturity of 5 years to some maturity limits of 180 days or less.  The City reports its investments in CAMP at the fair value amounts provided by CAMP.

Investments Authorized by Debt Agreements
The City must maintain required amounts of cash and investments with trustees or fiscal agents under the terms of certain debt issues.  These funds are unexpended bond proceeds or are pledged as reserves to be used if the City fails to meet its  obligations  under  these  debt  issues.    The  California  Government  Code  requires  these  funds  to  be  invested  in accordance with City ordinance, bond indentures or State statute.

Custodial Credit Risk – Deposits
The Custodial Credit Risk for Deposits is the risk that, in the event of the failure of a depository financial institution, the City will not be able to recover deposits, or will not be able to recover collateral securities that are in the possession of an Investment Type Maximum Maturity
Maximum Specified %
of Portfolio
Maximum % per
Issuer
Minimum Quality
Requirements
Treasury Obligations 5 years None None None
State Obligations 5 years None None A rating
CA Local Agency Obligations 5 years None None A rating
Federal Agencies 5 years None None None
Supranationals 5 years 30% 5% AA
Banker’s Acceptances 180 days 40% 5%
Federal Reserve
eligible
Commercial Paper 270 days 25% 5% A1/P1 rating
Negotiable Certificates of Deposit 5 years 30% 5% A rating Certificates of Deposit 1 year 20% 5%
FDIC insured or
collateralized
Repurchase Agreements 90 days None 5% None
Reverse Repurchase Agreements 92 days
20 % of combined
base value 5% None
Medium Term Notes 5 years 30% 5% A rating
Money Market Mutual Funds N/A 20% 10% Multiple
Mortgage and Asset-backed Securities 5 years 20% 5% AA Rating CAMP N/A None None N/A
LAIF N/A N/A None N/A
38 #1..
- 79 -
outside party.  The City does not, currently, have a Custodial Credit Risk – Deposits Policy.  Under California Government Code Section 53651, depending on specific types of eligible securities, a bank must deposit eligible securities posted as collateral with its Agent having a fair value of 110% to 150% of the City’s cash on deposit.  All of the City’s deposits are either insured by the Federal Depository Insurance Corporation (FDIC), collateralized with pledged securities held by Wells Fargo, or by Letters of Credit from the Federal Home Loan Bank of San Francisco.

The City of Modesto has 6 deposit accounts at Bank of the West that are monitored for deposit collateral purposes.  As per the CA Government Code, the bank must provide collateral for the collected deposit balances at 110% for securities and 105% for letters of credit coverage. As of June 30, 2021, the City had collected deposit balances of $10,080,477.  On this amount, the FDIC insurance coverage was $250,000.

For further information, as of June 30, 2021, Bank of the West has over $8.02 billion in public fund deposits and over 3,300 accounts that are collateralized in accordance with the state’s government codes and other applicable laws.  Of the total $8.02 billion public fund deposits, the minimum collateral required is $7.49 billion and the market value of pledged securities (aka related collateral) is $9.84 billion.

Custodial Credit Risk – Investments
The Custodial Credit Risk for Investments is the risk that, in the event of the failure of the counterparty (e.g. broker-dealer) to a transaction, the City will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. The City’s investment policy limits its exposure to custodial credit risk by requiring that all security transactions entered into by the City, including collateral for repurchase agreements, be conducted on a delivery-versuspayment basis.  Securities are to be held by a third-party custodian.

The  City’s  investments  consist  of  pooled  investments,  dedicated  investments,  and  other  funds  held  by  trustees.  The dedicated investment funds represent restricted funds and relate to bond proceeds of the Water and Sewer Enterprise Funds, assessment districts (reported under Agency Funds) and the Successor Agency.  The other funds held by trustees are made either in accordance with bond covenants and are pledged for payment of principal, interest, and specified capital improvements or in accordance with trust agreements. All investments held by a custodian are in the City’s name excluding the Successor Agency.

Interest Rate Risk
Interest Rate Risk is the risk that interest rates will rise and reduce the fair value of an investment.  Long-term fixed-income securities have the greatest amount of interest rate risk, due to their duration, or sensitivity to interest rate changes, being greater.

As  of  June  30,  2021,  the  City  owned  ten  callable  bonds.  There  were  no  Federal  Agency  callables  in  the  portfolio.

Information on those bonds has been provided as follows:

Corporate Notes
Amount Maturity Date Call Date  Call Terms
$3,416,000 1/28/2026 12/28/2025 Callable on and any time after 12/28/2025 $2,213,000 11/13/2025 10/13/2025 Callable on and any time after 10/13/2025 $2,341,000 9/21/2023 9/21/2022 Callable on and any time after 09/21/2022 $4,301,000 2/6/2023 8/6/2021 Callable quarterly after 8/6/2021 $4,262,000 7/8/2024 4/15/2023 Callable on and any time after 4/15/2023 $3,664,000 3/15/2024 2/15/2024 Callable on and any time after 2/15/2024 $1,404,000 9/16/2024 9/16/2023 Callable annually after 9/16/2023 $732,000 5/15/2025 4/15/2025 Callable on and any time after 4/15/2025 $3,060,000 2/5/2024 1/5/2024 Callable on and any time after 1/5/2024 $2,363,000 2/14/2025 1/14/2025 Callable on and any time after 1/4/2025 39 #1..
- 80 -
Disclosures Related to Credit Risk
Generally, Credit Risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment.

This is measured by the assignment of a rating by a nationally recognized statistical rating organization.  The City may from time to time be invested in a security whose rating is downgraded subsequent to the date of purchase.  In the event a rating drops below the minimum allowed rating category for that given investment type, the investment advisor shall notify the Finance Director and recommend a plan of action.  The City will limit investments in any one non-government issuers, except investment pools to no more than 5% regardless of security type.

The following table summarizes the City’s investments based on maturity dates of various investments:

Investment Type Standard &
Poor's
Moody's
Investors
Service
Total 12 Months or
Less
13 to 24
Months 25 to 60 Months
U.S. Treasury Bond/Notes AA+ Aaa 105,714,176 $     $                14,957,009 - $    $      90,757,167 Supra-National Agency Bond / Note AAA Aaa 1,784,859           -                 -                 1,784,859 Municipal Bond/Notes See Below See Below 7,716,836           -                 -                 7,716,836 Federal Agencies:

Collateralized Mortgage Obligation AA+ Aaa 6,061,261                  3,007,443        1,099,979          1,953,839 Bonds/Notes AA+ Aaa 91,659,273         -                 27,923,263               63,736,010 Corporate Notes See Below See Below 38,415,197                3,546,871        2,411,999         32,456,327 Certificate of Deposits See Below See Below 14,982,613                2,351,017      12,631,596                    - Asset-Backed Securities See Below See Below 12,166,381         -                 1,723,161                 10,443,220 CAMP Pool AAAm N/A 134,424,844          134,424,844                 -                    - Total $    412,925,440 $ 143,330,175 $   60,747,007 $    208,848,258 Held By Fiscal Agent
Money Market Funds AAAm Aaa-mf 9,449,636 $        $     9,449,636 $               - $                 - CAMP AAAm N/A 9,461,689                  9,461,689                 -                    - MID – Collateral Agreement A+ Aa3 10,008,884              10,008,884                 -                    - Fiscal Agent Total $     28,920,209 $   28,920,209 $               - $                 - City of Modesto Banking Accts &
Cash on Hand A/A-1 A1/P1 34,569,453
Timing Differences for Deposit &
Electronic Vendor Payments          (3,430,448)
Fund Overdraft        17,313,723
Total Cash and Investments  $    490,298,377
Credit Rating   Remaining Maturity (in Months)
40 #1..
- 81 -
The following is a table indicating the credit ratings for the City’s investment in Municipal Bond/Notes:

The following is a table indicating the credit ratings for the City’s investment in Corporate Notes:

The following is a table indicating the credit ratings for the City’s investment in Negotiable Certificate of Deposits:

The following is a table indicating the credit ratings for the City's investment in Asset-Backed Securities:

Amount  Standard
& Poors
Moody's
Investors Service
$      620,949 AAA Aaa
AAA Aa1 99,070
925,259 AA+ Aaa
732,227 AA Aa2
1,817,945 AA Aa3
3,018,063 AA- Aa2
503,323 A+ A2
$   7,716,836
Amount  Standard
& Poors
Moody's
Investors Service
$   3,546,871  AA+ Aa1
4,262,296 AA Aa2
3,998,538 AA A1
2,362,822 AA- A1
9,131,908 A+ A1
5,876,934 A+ A2
3,416,341 A A1
5,819,487 A- A2
$ 38,415,197
Amount  Standard
& Poors
Moody's
Investors Service
$   2,351,017 A-1 P-1
1,790,546 AA- Aa2
3,505,862 AA- Aa3
3,628,569 A+ Aa2
1,852,951 A+ Aa3
1,853,668 A A1
$ 14,982,613
Amount  Standard
& Poors
Moody's
Investors Service
$   3,209,308 AAA Aaa
3,997,156 AAA NR
4,959,917 NR Aaa
$ 12,166,381
41 #1..
- 82 -
Concentration of Credit Risk
The City’s investment policy contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code.  Investments in any one issuer, other than U.S. Treasury securities, mutual funds, and external investment pools that represent 5% or more of total entity-wide investments are as follows at June 30, 2021:

Issuer  Investment Type
Reported
Amount
Percent of
Portfolio
Fannie Mae (FNMA)    Federal agency securities    $55,413,634              11.30% Freddie Mac (FHLMC)    Federal agency securities    $34,955,238    7.13% Fair Value measurements
The  Pool  categorizes  its  fair  value  measurements  within  the  fair  value  hierarchy  established  by  generally  accepted accounting principles.  These principles recognize a three-tiered fair value hierarchy, of which levels 1 & 2 apply to the City as follows:
  Level 1: Valuations are based on quoted prices in active markets for identical assets or liabilities.  Since valuations are based on quoted prices that  are readily  and regularly  available in an  active market, valuation of these products does not entail a significant degree of judgement.  Examples would be securities with prices derived from the major exchanges.   Level 2: Valuations are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuations for which all  significant  assumptions  are  observable  or  can  be  corroborated  by  observable  market  data.

Examples would be securities with prices derived from market corroborated sources such as indices and yield curves; and matrix pricing, such as for most debt securities.

Union Bank is the custodian of the City’s investments.  Union Bank utilizes pricing services that deliver current market values and security information which is input into their trust accounting systems.  A security will be valued on the basis of valuations provided by a pricing service vendor if it has a substantial public market (i.e. is not thinly traded), and is freely tradable without restriction, has a valid CUSIP or SEDOL and resides on one of the depositories.  Based on their direction, Union Bank will continue to obtain valuations for all other securities and assets, for which they do not receive a pricing feed and/or descriptive information from their pricing service vendors, from various sources independent of Union Bank.  If no current market value price is available from their pricing service vendors and their agents have provided Union Bank with pricing information, Union Bank will show the value of the asset at such value as Union Bank shall determine, such value to be for administrative purposes only and not be any indication of any market value.

The Pool has the following recurring fair value measurements as of June 30, 2021:

Fair Value Measurements Using
Investments by Fair Value Level
Quoted Prices in
Active Markets for
Identical Assets
Significant Other
Observable Inputs
Investment Type (Level 1) (Level 2)
U.S Treasury Bonds / Notes $            105,714,176 $       105,714,176 $                           - Supra-National Agency Bond / Note                    1,784,859                          -               1,784,859 Municipal Bonds / Notes                    7,716,836                          -               7,716,836 Federal Agency Collateralized Mortgage Obligation                    6,061,261                          -               6,061,261 Federal Agency Bonds / Notes                  91,659,273                          -            91,659,273 Corporate Notes                  38,415,197                          -            38,415,197 Certificate of Deposits                  14,982,613                          -            14,982,613 Asset-Backed Securities                  12,166,381                          -            12,166,381 Total Investments measured at fair value                278,500,596 $       105,714,176 $       172,786,420 Investments not subject to Fair Value hierarchy
CAMP                134,424,844
$            412,925,440
42 #1..
- 83 -

B. CAPITAL ASSETS
Capital asset activity for the fiscal year ended June 30, 2021 was as follows:

Fair Value Measurements Using (continued)
Quoted Prices in
Active Markets for
Identical Assets
Significant Other
Observable Inputs
Investments by Fair Value for Fiscal Agents (Level 1) (Level 2) Money Market Funds $ 9,449,636 $ - $ 9,449,636
Total Fiscal Agent investments measured at fair value 9,449,636 $ - $ 9,449,636 Investments not subject to Fair Value hierarchy
CAMP 9,461,689
MID Collateral Agreement 10,008,884
$ 28,920,209
Beginning Ending
Balance Additions Deletions Balance
Governmental activities:

Capital assets, not being depreciated:

Land $ 29,149,707 $ - $ 29,149,707 - $
Construction in progress 80,942,713 53,298,753 (5,651,719) 128,589,747 Total capital assets, not being depreciated: 110,092,420 53,298,753 (5,651,719) 157,739,454 Capital assets being depreciated:

Buildings 33,010,345 - 33,010,345 -
Improvements other than buildings 125,295,823 1,969,566 127,265,389 - Furnishings & equipment 14,305,080 258,890 (611,400) 13,952,570 Buses and fareboxes 278,852 - - 278,852
Service animals 45,924 - (7,412) 38,512
Intangible assets 8,337,049 13,369 (376,115) 7,974,303
Equipment pool 44,634,570 1,202,838 (1,389,027) 44,448,381 Infrastructure
Streets 514,477,328 1,263,226 515,740,559 5
Signals 25,329,952 - 25,329,952 -
Bridges 37,078,565 - 37,078,565 -
Pipeline 418,147 - 418,147
Total capital assets, being depreciated: 803,211,635 4,707,889 (2,383,949) 805,535,575 Less accumulated depreciation for:

Buildings (22,587,154) (873,119) (23,460,273) -
Improvements (68,666,887) (4,894,735) (73,561,622) -
Furnishings & equipment (11,251,229) (644,139) 550,587 (11,344,781) Buses and fareboxes (253,749) - - (253,749)
Service animals (32,555) (6,087) 7,412 (31,230)
Intangible assets (5,945,519) (408,534) 376,115 (5,977,938) Equipment pool (28,399,345) (3,286,710) 1,202,797 (30,483,258) Infrastructure
Streets (337,515,309) (10,305,673) (347,820,982) -
Signals (18,370,777) (495,537) (18,866,314) -
Bridges (9,690,303) (741,571) (10,431,874) -
Pipelines (1,158) (5,570) (5) (6,733)
Total accumulated depreciation (502,713,985) (21,661,675) 2,136,906 (522,238,754) Total capital assets being depreciated, net 300,497,650 (16,953,786) (247,043) 283,296,821 Governmental activities capital assets, net 410,590,070 $ $ 36,344,967 $ (5,898,762) $ 441,036,275 43 #1..
- 84 -
Depreciation expense was charged to functions/programs as follows:

Governmental activities:

General government    $        509,582
Community development           1,070,156
Highways and streets         12,044,451
Public works              107,601
Parks and recreation              474,451
Public safety           4,502,118
Capital assets held by the government’s internal
2,953,316
service funds are charged to the various functions
based on their usage of the assets
Total depreciation expense – Governmental activities     $   21,661,675 Business-type activities:

Water  $19,733,414
Sewer  11,405,164
Bus  3,479,726
Parking  385,570
Storm drain  411,197
Beginning
Balance Additions Deletions
Ending
Balance
Business-type activities:

Capital assets not being depreciated:

Land $ 34,511,762             $                      $ 1,057                          $ 34,512,819 - Construction in progress         235,488,177            23,667,968          (28,594,605)         230,561,540 Total capital assets, not being depreciated: 269,999,939                     23,669,025          (28,594,605)         265,074,359 Capital assets being depreciated:

Capitalized interest            19,496,181                         -                         -            19,496,181 Buildings         101,986,294                         -                         -         101,986,294 Improvements other than buildings         434,877,738            24,422,374                         -         459,300,112 Furnishings and equipment            15,502,786                 710,390                (209,099)            16,004,077 Intangible assets                 403,384                         -                         -                 403,384 Water rights         358,226,691                         -                         -         358,226,691 Buses and fareboxes            34,290,246              2,872,850                (524,631)            36,638,465 Pipelines         200,150,538              6,306,783                         -         206,457,321 Total capital assets, being depreciated:      1,164,933,858            34,312,397                (733,730)      1,198,512,525 Less accumulated depreciation for:

Capitalized interest          (14,011,943)                (504,786)                         -          (14,516,729) Buildings          (71,496,667)            (1,980,459)                         -          (73,477,126) Improvements other than buildings        (210,708,944)          (16,041,353)                         -        (226,750,297) Furnishings and equipment          (10,379,677)            (1,012,563)                 142,446          (11,249,794) Intangible assets                (388,382)                    (8,880)                         -                (397,262) Water rights        (119,408,899)          (11,940,890)                         -        (131,349,789) Buses and fareboxes          (17,864,009)            (2,296,675)                 266,867          (19,893,817) Pipelines          (49,954,636)            (2,633,020)                         -          (52,587,656) Total accumulated depreciation        (494,213,157)          (36,418,626)                 409,313        (530,222,470) Total capital assets being depreciated, net 670,720,701                     (2,106,229)                (324,417)         668,290,055 Business-type activities capital assets, net $ 940,720,640          $ 21,562,796             $ (28,919,022)           $ 933,364,414 44 #1..
- 85 -
Compost  101,610
Airport  785,141
Golf  51,655
Community center  65,149
Total depreciation expense – Business-type activities    $36,418,626 C. LONG-TERM DEBT
Loans Payable
Governmental Activities:

No-interest loan payable to the Stanislaus County Economic Development Bank loan program, to pay costs incurred by the City for the Kiernan Business Park East Project; loan intended to be repaid when the financing mechanism is established.  As of June 30, 2021, no payments have been made to the Stanislaus County Economic Development Bank.  According to the agreement, the Project will be completed as of the date the City first issues building permits within the Kiernan Business Park East area.  To date, no building permits have been issued.  Kiernan Business Park East project revenues, mainly CFD special taxes, have been pledged as collateral.

$ 500,000
Business-Type Activities:

Water Enterprise Fund:

Loan payable to State of California Department of Public Health, also known as ARRA Water Grant.

This Agreement constitutes funding in the form of a loan with forgiveness of principal made by the State under the provisions of California Safe Drinking Water State Revolving Fund Law of 1997, and the American Recovery and Reinvestment Act of 2009 (ARRA) Public Law 11 1-5. The purpose of the funding is to assist in financing construction of a project, which will enable the City to meet safe  drinking  water  standards  or  to  address  other  health  concerns,  herein  referred  to  as  the “Project”.  The total amount for the project was $1,136,656, of which 50% was to be repaid as a loan.  This original loan amount of $568,328 has a payment term of 20 years at 2.5017% interest rate.  Water Enterprise fund revenues have been pledged as collateral.

The following are significant terms that pertain to the ARRA Water Grant.  Acceleration Clause: In event of default, State may declare the Supplier's obligations immediately due and payable.  Events of  Default:  default  allows  State  to  alter  principal  forgiveness,  accelerate,  terminate  further disbursements, file lawsuit.  Termination Events: Any funds already disbursed to Supplier under the terms of this Agreement shall be an obligation immediately due and payable to State.

$ 347,087
Sewer Enterprise Fund:

Loan  payable  to  California  State Water  Resources  Control  Board,  State  Revolving  Fund.    The Project, commonly known as North Valley Regional Recycled Water Program generally consists of constructing  improvements to the City’s existing  pump station.  The City  will then distribute the recycled  water  to  the  Del  Puerto  Water  District  for  agricultural  use  increasing  recycled  water supplies by 5.4 billion gallons per year within the first 5 years of operation and 9.9 billion gallons per year at build out. Completion of construction date was established as June 30, 2018.  Project completion date was established as December 31, 2018.
45 #1..
- 86 -
The City agrees to repay all project funds at an interest rate of zero percent (0%) per annum and an administrative service charge of one percent (1%) per annum.  The total final loan amount was $29,747,008, including $68,857 of approved Construction Period Interest.  The loan repayment term is 30 years (final payment due on June 30, 2048) and after an initial payment of $1,104,284, in the fiscal year ending June 30, 2019, the annual principal and interest payment is $1,152,162 beginning in the fiscal year ending June 30, 2020.  Sewer Enterprise fund net revenues have been pledged as collateral.

The following are significant terms that pertain to the California State Water Resources Control Board, State Revolving Fund loan payable related to the North Valley Regional Recycled Water Program.  Acceleration and Termination Events Clauses: the City immediately repays to the State Water Board an amount equal to Project Funds disbursed under the Installment Sale Agreement and  Grant,  accrued  interest,  penalty  assessments,  and  Additional  Payments.  In  the  event  of termination, interest shall accrue on all amounts due at the highest legal rate of interest from the date that notice of termination is mailed to the City to the date all monies due have been received by the State Water Board.  Events of Default: default allows State Water Resources Control Board to terminate obligation, which results in acceleration.    27,193,316 Total Principal Balances – Business-Type Activities    $ 27,540,403 Annual debt service requirements to maturity for loans payable are as follows:

Governmental Activities  Business-Type Activities
Year Ending
June 30,  Principal  Interest  Principal  Interest
2022  $ -  $ -  $ 908,007  $ 280,443
2023  -   -  917,509  270,942
2024  500,000  -  927,116  261,335
2025  -  -  936,830  251,620
2026  -  -  946,653  241,798
2027-2031  -  -  4,884,489  1,057,768
2032-2036  -  -  4,995,427  801,669
2037-2041    -    -    5,212,809  548,000
2042-2046    -    -    5,478,714  282,094
2047-2048  -  -  2,332,849  35,369
Total   $ 500,000  $ -    $ 27,540,403  $ 4,031,038
Certificates of Participation:

Business-Type Activities:

Golf Enterprise Fund:
1993 Refunding Certificates of Participation issued to refund earlier certificates for the Creekside Golf Course capital project; issued with an aggregate principal of $8,130,000, with final maturity in 2023.    Annual  principal  payments  are  due  November  1st  and  beginning  in  2010  range  from $250,000 to $480,000, ending in 2023.  The certificates are repayable from any source of available funds of the City.  However, the City has elected to repay the certificates with revenues of the Golf Enterprise Fund.

46 #1..
- 87 -
The following are significant Events of Default terms that pertain to the 1993 Refunding COPs. Trust Agreement: Upon the occurrence and continuance of an Event of Default or other occasion giving rise to a right in the Trustee to represent the Bondholders, the Trustee in its discretion may, upon written request of >25% of bondholders, initiate lawsuit; Lease Agreement: In an Event of Default under the Lease Agreement, the Authority at its option may terminate the Lease Agreement and release all or any portion of the Project, and the City agrees to pay to the Authority all costs, loss or damages howsoever arising or occurring payable at the same time and in the same manner as provided in the Lease Agreement in the case of payment of Lease payments. $ 1,375,000 Water Enterprise Fund:
2008 Water Refunding Revenue Certificates of Participation issued to refund the 2006 issue, to provide funding for construction of new downstream water facilities and various water distribution system improvements in connection with Modesto Irrigation District’s expansion of the regional water treatment plant; variable rate securities maturing October 1, 2036, with interest initially calculated weekly, fluctuating according to market conditions. The Certificates may be converted to a daily, term, flexible, or fixed rate.

While the 2008 COPs are in the Weekly Mode, they are subject to optional tender and mandatory tender for purchase. Funds for the payment of the purchase price of 2008 COPs that are tendered for purchase and that are not remarketed by the Remarketing Agent will be available (subject to certain conditions) under a Standby Certificate Purchase Agreement, dated May 1, 2008 (the “Liquidity Facility”). The Liquidity Facility does not support, secure or guarantee the payments of the principal or interest with respect to the 2008 COPs. Subject to the terms and conditions of the Liquidity Facility, the Liquidity Facility Provider is to provide funds for the payment of the purchase price on each purchase of 2008 COPS up to $47,625,000 in principal amount (the “Available Principal Commitment”) and $548,014 an amount equal to 35 days’ interest on the Available Principal Commitment at an assumed rate of 12% and accrued interest on 2008 COPs subject to the Weekly Rate tendered or deemed tendered for purchase in the event that remarketing proceeds are not sufficient to pay the purchase price of such 2008 COPs.

The Liquidity Facility will not provide for the payment of principal and interest on any 2008 COPs other than with respect to the purchase price of the 2008 COPs tendered or deemed tendered and not remarketed. Barring an event of default, any such draws on the Letter of Credit will be repaid under the terms of the Reimbursement Agreement. Under the terms of the Reimbursement Agreement, the City will repay the amount drawn in ten equal semi-annual installments of principal, plus monthly interest at the Bank Rate, over a five-year period. However, the entire balance of the amount drawn shall become due immediately if the 2008 COPs are cancelled or prepaid, are remarketed, or converted to bear interest at a rate other than a daily rate or weekly rate; an alternate credit facility is secured; or an event of default occurs. The Credit Facility and Reimbursement Agreement initially expired May 29, 2011, was subsequently extended to July 14, 2017 at a commitment fee of 0.875%, then again to June 15, 2020 at a commitment fee of 0.7%, then again to June 15, 2023 at a commitment fee of 0.575%.

The City entered into a 30-year interest rate swap agreement as discussed below. The combination of the variable rate 2008 COPs and the floating rate swap creates a synthetic fixed-rate debt for the City. The average synthetic fixed-rate was 3.28% for the fiscal year ending June 30, 2021.

The following are significant terms that pertain to the 2008 COPs. Acceleration Clauses: in the event of late payment, Authority shall accelerate bond payments; in the event of other default, Authority may choose to accelerate bond payments. Events of Default: in the event of nonpayment, insolvency, or loss of bond insurance, the obligation of the Letter of Credit provider shall terminate; in the event of nonpayment of Letter of Credit fees or downgrade of Bonds to below investment grade, the Letter of Credit provider may terminate the Letter of Credit. Termination Events: The termination of the Letter of Credit triggers mandatory tender; termination of swap triggers on-time termination payment.
43,265,000
Total Principal Balances – Business-Type Activities 44,640,000 47 #1..
- 88 -
Less:

Unamortized Bond Discount – 2008 Water Refunding Certificates of Participation

(82,460)
Total Business-Type Activities – Certificates of Participation  $ 44,557,540

The City has pledged all Gross Revenues of the Water Utility System to repay the 2008 Certificates of Participation. The City has pledged future Golf Enterprise Fund revenues (net proceeds of the Certificates held in Escrow Fund and certain other moneys held under the Trust Agreement relating to the Golf Course Certificates) to pay the 1993 Certificates of Participation for the Golf Course Refinancing project.  The Water and Golf Funds combined total principal and estimated total interest remaining to be paid on the certificates is $44,825,177. The Water Fund’s principal, interest and other debt service cost paid on certificates for the current year, along with payments for the ARRA loan payable and payments to Modesto Irrigation District under the Treatment and Delivery Agreement, totaled $12,877,268, and net operating revenues of the Fund were $42,371,400, which represented coverage of 329%. The Golf Fund’s principal and interest paid on certificates totaled $488,005, and net operating revenues of the Fund were $471,259, which represented coverage of

96.6%.

Annual debt service requirements to maturity for Certificates of Participation for 2008 Water and 1993 Golf are as follows:

Business-Type Activities
Year Ending
June 30,  Principal            Interest
2022  $ 860,000  $ 66,464
2023  910,000  44,001
2024  2,780,000  20,156
2025  2,410,000  7,657
2026  2,515,000  7,160
2027-2031  14,110,000  27,659
2032-2036  17,185,000  11,885
2037-2039  3,870,000  195
Total  $ 44,640,000  $ 185,177
Lease Revenue Bonds:

Governmental Activities:

Regularly scheduled payments of principal and interest are supported by an irrevocable, direct pay Letter of Credit (the “Credit Facility”) issued by Bank of the West on June 13, 2019, which replaced a Letter of Credit previously issued by Bank of America, N.A. The Trustee can draw funds  under  the  Credit  Facility  to  pay  the  purchase  price  of  tendered  bonds  that  are  not remarketed. Barring an event of default, any such draws on the Letter of Credit will be paid under the terms of the Reimbursement Agreement. Under the terms of the Reimbursement Agreement, the City  will repay  the amount  drawn in equal quarterly  installments of principal plus monthly interest, at the Bank Rate, over a three-year amortization period. However, the entire balance of the  amount  drawn  shall  become  due  immediately  if  the  tendered  bonds  are  remarketed  or defeased, or an alternate credit facility is secured, or an event of default occurs. The Credit Facility and  Reimbursement  Agreement  are  scheduled  to  expire  June  13,  2023  and  contain  a commitment fee of 0.375%. The following are significant terms that pertain to the 2008 Lease Revenue Bonds.  Acceleration Clauses: in the event of late payment, Trustee may accelerate bond payments; in the event of an Event of Default occurring under the Lease Agreement, the Trustee may take whatever action the Authority would be entitled to take, and shall take whatever action  the  Authority  would  be  required  to  take, pursuant  to  the  Lease  Agreement  in  order  to remedy the default.  Events of Default: in Event of Default, Letter of Credit provider may declare

48 #1..
- 89 -
all unpaid amounts drawn under the Letter of Credit and the corresponding Bank Bonds, together with all interest accrued and unpaid thereon, and all other amounts payable to the Letter of Credit provider under the Reimbursement Agreement to be immediately due and payable, without presentment, demand, protest or nay notice of any kind. Termination Events: the termination of Letter of Credit triggers mandatory tender; termination of swap triggers on-time termination payment; in the event that the City files a bankruptcy petition or the City makes a general assignment for the benefit of creditors, all amounts drawn under the Letter of Credit and the corresponding Bank Bonds, together with all interest accrued thereon and all other amounts owed to the Bank under the Reimbursement Agreement shall be immediately due and payable, without notice to the City or the Authority and without presentment, demand, protest or further notice of any kind. $ 46,745,000
Annual debt service requirements to maturity for Lease Revenue Bonds are as follows:

Governmental Activities
Year Ending
June 30, Principal Interest
2022 $ 2,390,000 $ 8,952
2023 2,585,000 8,442
2024 2,785,000 7,913
2025 2,990,000 7,301
2026 3,240,000 6,661
2027-2031 19,140,000 22,257
2032-2034 13,615,000 3,272
Total $ 46,745,000 $ 64,798
Revenue Bonds
Business-Type Activities:

Sewer Enterprise Fund:

Wastewater Revenue Refunding Bonds, Series 2020 A&B; interest payable on November 1 and May 1; principal is payable in annual installments on each November 1. Principal repayments for the 2020A federally taxable bonds commence November 1, 2021 and pause November 1, 2026, with interest rates from 0.38% to 1.2%. Principal repayments for the 2020B federally tax-exempt bonds commence November 1, 2027 and end November 1, 2030, with interest rates of 5%. Principal repayments for the 2020A federally taxable bonds recommence November 1, 2031 and end November 1, 2036 with interest rates from 2.079% to 2.479%. Payment of principal and interest on the Series 2020 A&B Bonds is secured by a pledge of Net Revenues of the Sewer Enterprise Fund.

The Series 2020 A&B Bonds constitute “Parity Debt” under the Indenture.

On October 27, 2020, the City issued the Series 2020 A&B Bonds as a Parity Debt to fully payoff the loan payable to California State Water Resources Control Board, State Revolving Fund. The proceeds were used to repay the loan and cost of issuance in connection with the financing. The loan payable has been fully paid off, the City will realize annual savings of around $510,000 in cash flow with an overall economic gain of 6.61% or $7,056,050 in present value savings.

The original loan was taken out in connection with the Tertiary Treatment Phase 1B Project, generally consisting of constructing a 12.6 million gallon per day tertiary treatment plant. Completion of construction date was established as June 1, 2016, and project completion date was established as December 1, 2016.

The following are significant terms that pertain to the Wastewater Revenue Refunding Bonds, Series 49 #1..
- 90 -
2020 A&B.  Acceleration Clause: upon violation by the City of any material provision of the Project Finance  Agreement,  the  State  Water  Board  may  terminate  agreement  by  written  notice  during construction of the Project, or thereafter at any time prior to complete repayment by the City, upon which the City agrees, upon demand, to immediately repay to the State Water Board an amount equal  to  Installment  Payments  due  under  the  Project  Finance  Agreement,  including  accrued interest, and all penalty assessments due. In the event of termination, interest shall accrue on all amounts due at the highest legal rate of interest from the date that notice of termination is mailed to the Recipient to the date of full repayment by the Recipient.  Events of Default: upon violation by the  City  of  any  material  provision,  State  Water  Board  may  terminate  agreement  which  triggers acceleration.  Termination Events: upon termination of the agreement by the State Water Board, the City agrees to immediately repay to the State Water including accrued interest, and all penalty assessments due. In the event of termination, interest shall accrue on all amounts due at the highest legal rate of interest from the date that notice of termination is mailed to the Recipient to the date of full repayment by the City.

Wastewater Revenue Refunding Bonds, Series 2018A; interest payable on November 1 and May 1; principal is payable in annual installments on each November 1, commencing November 1, 2025 and ending November 1, 2036, with interest rates from 4% to 5%. Payment of principal and interest on the Series 2018A Bond is secured by a pledge of Net Revenues of the Sewer Enterprise Fund.

The Series 2018A Bond constitutes “Parity Debt” under the Indenture.

On April 19, 2018, the City issued the Series 2018A Bond as a Parity Debt to fully refund the 2006A Wastewater Revenue Bonds.  The proceeds were used to refund the 2006A Wastewater Revenue Bonds and pay cost of issuance in connection with the financing.  The Series 2006A has been fully redeemed, and the City will realize significant savings from the refunding of the 2006A bonds.

The following are significant terms that pertain to the Wastewater Revenue Refunding Bonds, Series 2018A.  Acceleration Clause: in each and every such case during the continuance of an Event of Default  (and  subject  to  any  rights  granted  to  any  insurer  of  the  Bonds  with  respect  to  the enforcement  of  remedies  upon  an  Event  of  Default  pursuant  to a  Supplemental  Indenture),  the Owners of not less than a majority in aggregate amount of Bond Obligation of the Bonds at the time Outstanding shall be entitled, upon notice in writing to the City, to declare the principal of all of the bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon  any  such  declaration  the  same  shall  become  and  shall  be  immediately  due  and  payable, anything in the Indenture  or in the  Bonds contained  to the contrary notwithstanding.  Events of Default: upon the occurrence and continuance of an Event of Default or other occasion giving rise to a right in the Trustee to represent the Bondholders, the Trustee in its discretion may, and upon written request of the Owners of not less than 25% in aggregate amount of Bond Obligation of the Bonds then Outstanding, initiate a lawsuit.

Wastewater  Revenue  Refunding  Bond  Series  2015  -  Direct  Placement;  interest  payable  on November 1 and May 1, commencing May 1, 2016. Principal is payable in annual installments on each November 1, commencing November 1, 2016 and ending November 1, 2024. The Series 2015 Bond shall bear interest at a rate equal to 2.42% per annum; The Series 2015 Bond constitutes “Parity Debt” under the Indenture; Payment of principal and interest on the Series 2015 Bond is secured by a pledge of Net Revenues of the Sewer Enterprise Fund (i.e., 1) all fees and charges received by the City for the services of the Enterprise; 2) all other income and revenue howsoever derived by the City from the ownership; 3) all sums deposited, or required under the Indenture to be deposited, in the Sewer Enterprise Fund; less the amount of Operating Expenses becoming payable during such period).

On October 30, 2015, the City issued the Series 2015 Bond, as a Parity Debt to fully refund the 2005A and partially refund the 2006A Wastewater Revenue Bonds. The proceeds were used to: 1) Refund the Wastewater Revenue Refunding Bonds, Series 2005A, which refinanced the acquisition and construction of improvements to the City’s wastewater enterprise, 2) refund a portion of the Wastewater Revenue Bonds, Series 2006A, and 3) pay cost of issuance in connection with the financing.  The Series 2005A Bonds have been fully redeemed and the 2023 and 2024 maturities of Series 2006A Bonds were redeemed.  The City will realize significant savings from the refunding of the 2005A and 2006A Bonds.
$ 94,310,000
11,340,000
50 #1..
- 91 -

Annual debt service requirements to maturity for the Wastewater Revenue Refunding Bond Series 2015 - Direct Placement are as follows:

Annual debt service requirements to maturity for total Revenue Bonds are as follows:

The following are significant terms that pertain to the Wastewater Revenue Refunding Bond Series 2015  -  Direct  Placement.    Acceleration  Clauses:  in  each  and  every  such  case  during  the continuance of an Event of Default (and subject to any rights granted to any insurer of the Bonds with respect to the enforcement of remedies upon an Event of Default pursuant to a Supplemental Indenture), the Owners of not less than a majority in the aggregate amount of Bond Obligation of the Bonds at the time Outstanding shall be entitled, upon notice in writing to the City, to declare the principal of all of the Bonds then Outstanding, and the interest accrued thereon, to be due and payable  immediately,  and  upon  any  such  declaration  the  same  shall  become  and  shall  be immediately due and payable, anything in the Indenture or in the Bonds contained to the contrary notwithstanding.  Events of Default: upon the occurrence and continuance of an Event of Default or other occasion giving rise to a right in the Trustee to represent the Bondholders, the Trustee in its discretion may, upon written request of >25% of bondholders, initiate lawsuit.   7,127,315 Total Principal Balances – Business-Type Activities    112,777,315

Add:  Unamortized Bond Premium – 2018A Wastewater Bonds Unamortized Bond Premium – 2020B Wastewater Bonds
1,739,211
7,867,742
Total Business-Type Activities Revenue Bonds

$ 122,384,268
Business-Type Activities
Year Ending
June 30,                   Principal                     Interest 2022                  $ 2,644,114                   $ 140,488 2023                     2,708,639                      75,719 2024                     876,795                      32,335 2025                     897,767                      10,862 Total  $ 7,127,315  $ 259,404
Business-Type Activities
Year Ending
June 30,                   Principal                     Interest 2022  $ 8,034,114  $ 3,042,902
2023  8,123,639  2,955,762
2024  6,316,795  2,883,412
2025  6,377,767  2,822,250
2026    6,240,000    2,743,524
2027-2031    34,725,000    10,190,981
2032-2036  41,745,000  3,158,328
2037  1,215,000  30,375
Total  $ 112,777,315  $ 27,827,534
51 #1..
- 92 -
Annual debt service requirements to maturity for this Notes Payable are as follows:

Governmental Activities
Year Ending
June 30,                       Principal                        Interest 2022                    $ 297,000                              $ 30,150 2023            312,000                                 22,838 2024            328,000                                 14,424 2025                     345,000                           4,916 Total  $ 1,282,000  $ 72,328
Reimbursement Agreement
Business-Type Activities:

Water Enterprise Fund:

In 1992, the City entered into a treatment and delivery agreement with the Modesto Irrigation District (MID) and the Del Este Water  Company  (Del  Este).  The  City  assumed  Del  Este’s  interest  and  obligations  under  the  agreement  when  it acquired Del Este in July 1995. Under the agreement, MID built and operates a surface water treatment plant on the Tuolumne River for the purpose of providing a long-term source of domestic treated water for the City. MID is the sole owner of the project, and has all management and operations responsibility. In exchange for the treated water, the City has agreed to pay: all debt service on bonds issued by MID for the construction of the project; a raw water charge as set forth in the agreement; project operation, administration, and maintenance costs; and insurance on the project.  Gross revenues  of  the  City's Water  Fund  are  irrevocably  pledged  for  the  punctual  payment of  the  MID  debt  service  and  all obligations of the City under any parity debt. Current parity debt of the City consists of the 2008 Water Revenue Certificates of Participation and the California Safe Drinking Water Act loan (as described previously). The treatment plant completed all tests and  began commercial operations on May  15, 1995,  at which time the City  began paying for raw  water  and operations.

The City and MID have agreed upon an expansion of the initial Domestic Water Project facilities beyond the existing design capacity of 36 million gallons per day (“mgd”) to a design capacity of 72 mgd. In June 2007, the MID issued $93,190,000 Notes Payable
Governmental Activities:

On  March  26,  2015,  the  City  received  notice  of  a  public  offering  to refinance  the  existing  HUD Section 108 Loan note, with an outstanding balance of $2,789,000.  The City agreed to refinance the note, as it reduced the interest on the HUD Section 108 Loan, a net savings of approximately $502,908. The public offering date was May 28, 2015. The terms of the new promissory note include semi-annual payments in August and February through the maturity date of August 1, 2024.  The interest rates range from 0.28% through 2.85%. No new security provisions were required, as the Contract  for  Fixed Rate  Note  incorporates  the  previous  additional security  provisions.    Housing revenues are pledged as collateral.

The following are significant terms that pertain to the HUD Section 108 Loan.  Acceleration Clause:
upon a Default or declaration of Default, the Secretary may accelerate the Note with respect to amounts  subject  to  Optional  Redemption.    Events  of  Default:  the  Secretary  may  withhold  the guarantee of any or all obligations not yet guaranteed on behalf of the Borrower under outstanding commitments, and/or direct the Borrower's financial institution to: refuse to honor any instruments drawn upon, or withdrawals from, the Guaranteed Loan Funds Account or the Loan Repayment Account initiated  by  the  Borrower,  and/or  refuse  to release  obligations  and  assignments  by  the Borrower from the Guaranteed Loan Funds Investment Account or the Loan Repayment Investment Account.   $ 1,282,000
52 #1..
- 93 -
Domestic Water Project revenue bonds pursuant to the terms of the existing treatment and delivery agreement. On August 14, 2013, Modesto Irrigation District Financing Authority refunded the 1998 D Bonds, with 2013 G Bonds. As of June 30, 2021, the total outstanding on the MID bonds is: $11,310,000 for the 2013 G Bonds and $93,190,000 for the 2007 F Bonds, for a total of $104,500,000. For the 2013 G Bonds, the annual principal payments began on September 1, 2014 and mature on September 1, 2022, in amounts from $3,970,000 to $5,795,000, with interest rates from 2% to 5%. For the 2007 F Bonds, the annual principal payments begin on September 1, 2023 and mature on September 1, 2037 in amounts from $4,275,000 to $11,870,000, with variable interest rates fluctuating according to market conditions.

The following are significant terms that pertain to the 2007 F Bonds. Acceleration Clause: in the event of late payment, Authority shall accelerate bond payments; in the event of other default, Authority may choose to accelerate bond payments.

In event of default, Trustee may, with consent of Bond Insurer, and shall, at the direction of Bond Insurer or the owners of >50% of the bonds (with consent of Bond Insurer) accelerate bond payments. Events of Default: in event of default, Trustee may, with consent of Bond Insurer, and shall, at the direction of Bond Insurer or the owners of >50% of the bonds (with consent of Bond Insurer) initiate a lawsuit. Termination Events: the termination of swap triggers a one-time termination payment.

The following are significant terms that pertain to the 2013 G Bonds. Acceleration and Events of Default Clauses: Trust Agreement - In the event of an Event of Default (as defined in the Trust Agreement or Installment Purchase Contract), and in each and every such case during the continuance of such event of default, the Trustee may, and shall, at the direction of the Owners of not less than a majority in aggregate principal amount of the Series 2013G Water Bonds then Outstanding, by notice in writing to the Authority, declare the principal of all Series 2013G Water bonds then Outstanding and then interest accrued thereon to be due and payable immediately, and upon any such declaration the same shall become due and  payable,  anything  contained  in  the  Trust  Agreement  or  in  the  Series  2013G  Water  Bonds  to  the  contrary notwithstanding; Installment Purchase Contract - In the event that default is made in the due and punctual payment of any Domestic Water Installment Payment or any Domestic Water Contract or Domestic Water Bond when and as the same shall be due and payable, then and in each and every such case during the continuance of such Event of Default specified, the Authority shall and for any other Event of Default, the Authority MAY, by notice in writing to the District, declare the entire principal amount of the unpaid Domestic Water Installment Payments and the accrued interest thereon to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable, anything contained in the Installment Purchase Contract notwithstanding. Termination Events: the termination of swap triggers onetime termination payment.

The City has entered into interest-rate swap agreements for the 2007F bonds to synthetically fix the rates that the City pays at 4.38% and 4.44%. Refer to the Interest Rate Swap agreement section below with more information about the debt schedule.

Annual debt service payments to maturity for the Reimbursement Agreement are as follows:

Business-Type Activities
Year Ending
June 30,                            Principal                              Interest 2022  $ 5,515,000  $ 1,085,223
2023  5,795,000   802,473
2024  4,275,000   637,095
2025  4,455,000   605,927
2026  4,650,000   576,026
2027-2031  26,740,000   2,351,489
2032-2036  33,535,000   1,266,200
2037-2038  19,535,000   120,458
Total  $ 104,500,000  $ 7,444,891
Interest Rate Swap Agreements:

Objective of the swaps – The primary objective of the swaps is to mitigate the effect of fluctuations in variable interest rates by paying a fixed-rate and receiving a floating rate on the swap.  Combining a pay-fixed receive-variable rate swap with 53 #1..
- 94 -
variable debt results in what is termed “synthetic” fixed-rate debt.  It is called synthetic because the economics are similar to fixed-rate debt, but another instrument is involved unlike regular fixed-rate debt.  Each time the City created synthetic fixed-rate debt a comparison and determination were made that the fixed-rate on regular debt would have been higher than the synthetic fixed rate on the swap.

During fiscal year 2007, the City entered into an interest swap agreement in connection with the 2006 Water Revenue Certificates of Participation.  This transaction was updated due to the refunding of the 2006 Certificates by the 2008 Water Refunding Revenue Certificates of Participation (COPs).  The swap agreement allows the City to create a synthetic fixedrate on the COPs, protecting it against increases in short-term interest rates.

During fiscal year 2008, the City entered into an interest swap agreement in connection with the 2008 Lease Revenue Bonds. The swap agreement allows the City to create a synthetic fixed rate on the Lease Revenue Bonds, protecting it against increases in short-term interest rates. The terms, fair value and credit risk of these swap agreements are disclosed below.

Additionally, in May 2007, the City approved the issuance of revenue bonds by the Modesto Irrigation District Financing Authority  related  to  the  financing  of  Phase  2  of  the  Domestic Water  Treatment  and  Delivery  System  of  the  Modesto Irrigation District.  The MID Water Refunding Bonds were issued with an interest swap feature with Bear Sterns, which was subsequently acquired by JP Morgan.  Under the agreement between MID and JP Morgan, the City must post collateral when our negative position exceeds the Pledgor’s Threshold of $20 million.  This negative position represents the present value of declining interest rates to date from issuance of bonds.  In June 2010, the City Council authorized the City to post collateral up to $18 million, which would support a negative position of $38 million.  In July 2010, the City Council increased the City’s authorization to post collateral from $18 million to up to $20 million.  At the end of fiscal year 2021, the City had posted a cumulative total of $10,008,884 million of collateral posting, which is reported in the Water Enterprise Fund cash with fiscal agent.

Terms – The terms, including the counterparty credit rating of the outstanding swaps, as of June 30, 2021 are shown in the  table  below.    The  swap  agreements  contain  scheduled  reductions  to  the  outstanding  notional  amounts  that  are expected to follow scheduled principal reductions in the associated debt issues.

Related Debt Issue
Current
Notional
Amount
Effective
Date  Counterparty
Credit
Rating
(S&P)
Fixed
Rate
Paid
Variable
Rate
Received
Termination
Date
2008 Water Refunding-
Revenue COPs  $ 43,265,000  5/30/2008
Bank of
America  A+  3.47%

63.7% of
USDLIBOR, plus
.154%  10/1/2036
2008 Lease Revenue
Refunding and Capital
Improvement   46,745,000  8/28/2008
Bank of
America  A+  3.61%

63.7% of
USDLIBOR, plus
.154%
9/1/2033
2007 MID Domestic
Water Revenue Bonds
Series 2007F  23,370,000  6/26/2007
JP Morgan
Chase Bank  A+  4.38%
67% of 3
Month
LIBOR +

0.58%  9/1/2027
2007 MID Domestic
Water Revenue Bonds
Series 2007F  69,820,000  6/26/2007
JP Morgan
Chase Bank  A+  4.44%
67% of 3
Month
LIBOR +

0.63%  9/1/2037
Based on the swap agreement the City owes interest calculated at a fixed rate to the counterparty (Bank of America and JP Morgan).  In return, the counterparty owes the City  interest based on the  variable rate that approximates the rate required by the associated COPs and lease revenue bonds.  Debt principal is not exchanged; it is only the basis on which the swap receipts and payments are calculated.

GASB Statement 53 (GASB 53) addresses the recognition measurement and disclosure of information regarding derivative instruments entered into by state and local governments.  All derivatives are to be reported on the statement of net position at fair value and all hedges must be tested for effectiveness to qualify for hedge accounting.  The tests are outlined in GASB 53.  Depending on the test results, the changes in fair value are either reported on the statement of net position as 54 #1..
- 95 -
a deferral or in the statement of activities as investment revenue or loss.

Fair value – Fair value takes into consideration the prevailing interest rate environment, the specific terms and conditions of each transaction and any upfront payments that may have been received.  Fair value was estimated using the zerocoupon discounting method, which calculates the future payments required by the swap, assuming that the current forward rates implied by the LIBOR swap yield curve are the market’s best estimate of future spot interest rates.  These payments are then discounted using the spot rates implied by the current yield curve for a hypothetical zero-coupon rate bond due on the date of each future net settlement on the swaps.

As of June 30, 2021, the fair value of the swaps was in favor of the counterparty as shown in the following table:

Bond Issue    Fair Value
2008 Water Refunding Rev. Certificates of Participation    ($ 9,463,261) 2008 Lease Revenue Bonds  ($ 8,462,255)
2007 MID Domestic Water Revenue Bonds  ($ 26,370,764)
Credit risk - As of June 30, 2021, the City was not exposed to credit risk on the swaps because the swaps had negative fair value.  However, if interest rates increase and the fair value becomes positive, the City would be exposed to credit risk.

The City will be exposed to interest rate risk only if the counterparty to the swap defaults or if the swap is terminated.

Basis risk - Basis risk is the risk that the interest rate paid by the City to the bondholders on the underlying variable rate bonds temporarily differs from the variable swap rates received from the counterparty.   The swaps have basis risk since the City receives a percentage of the LIBOR Index to offset the actual variable bond rates the City pays on the underlying certificates of participation.  The City is exposed to basis risk should the floating rate that it receives on the swap be less than the actual variable rate the City pays on the bonds.  Depending on the magnitude and duration of any basis risk shortfall, the expected cost of the basis risk may vary.

A portion of this basis risk is tax risk.  The City is exposed to tax risk when the relationship between the taxable LIBOR based swaps and tax-exempt variable rate bonds changes as a result of a reduction in federal and state income tax rates.

Should the relationship between LIBOR and the underlying tax-exempt variable rate bonds converge the City is exposed to this basis risk.

Termination risk - The City may terminate the swap contracts if the other party fails to perform under the terms of the contracts.  The City will be exposed to variable rates if the counterparty defaults or if the swap contract is terminated.  A termination of the swap contract may also result in the City’s making or receiving a termination payment based on market interest rates at the time of the termination.  If at the time of termination, the swap has a negative fair value, the City would be liable to the counterparty for a payment equal to the swap’s fair value.

Swap payments and associated debt - Using rates as of June 30, 2021, debt service requirements of the 2008 Water Refunding Revenue Certificates of Participation, the 2008 Lease Revenue Refunding Bonds, and the 2007 MID Domestic Water Revenue Bonds, including net swap payments and broker fees, are as shown in the following table assuming current interest rates remain the same for their term.  The bond interest payments and net swap payments will vary as interest rates vary.

Variable-Rate Bonds  Net Swap Payments,
Letter of Credit, &
Remarketing Fees
Year Ending
June 30,  Principal  Interest  Total
2022  $ 2,815,000  $ 675,140  $ 6,867,586  $ 10,357,726 2023  3,035,000  674,541  6,752,555  10,462,096
2024  9,360,000  653,164  6,510,796  16,523,960
2025  9,855,000  620,885  6,135,543  16,611,428
2026  10,405,000  589,847  5,745,701  16,740,548
2027-2031  59,990,000  2,401,405  22,195,575  84,586,980 2032-2036  64,335,000  1,281,357  9,888,968  75,505,325 2037-2038  23,405,000  120,653  878,398  24,404,051
Total  $ 183,200,000  $ 7,016,992  $ 64,975,122  $ 255,192,114 55 #1..
- 96 -
Changes in Long-Term Obligations
Long-term obligations activity for the year ended June 30, 2021, was as follows:

Governmental Activities:

Beginning
Balance Additions Reductions
Ending
Balance
Due Within
One Year
Loans Payable $ 500,000 $ - $ - $ 500,000 $ -
Lease Revenue Bonds 48,915,000 - (2,170,000) 46,745,000 2,390,000 Notes Payable 1,565,000 - (283,000) 1,282,000 297,000
Obligations Under Capital
Leases 4,576,954 - (478,076) 4,098,878 491,381
Total Governmental
Activities $ 55,556,954 $ - $ (2,931,076) $ 52,625,878 $ 3,178,381 Business-Type Activities:

Loans Payable $ 135,251,893 $ - $ (107,711,490) $ 27,540,403 $ 908,007 Certificates of
Participation 45,445,000 - (805,000) 44,640,000 860,000 Unamortized Discount (87,957) - (5,497) (82,460) -
Obligations under Capital
Leases 7,828 - (2,203) 5,625 2,274
MID Bonds 109,760,000 - (5,260,000) 104,500,000 5,515,000 Unamortized Premium 1,712,180 - (570,726) 1,141,454 -
Sewer Bonds 11,340,000 94,310,000 - 105,650,000 5,390,000 Unamortized Premium 1,847,912 8,429,724 (670,683) 9,606,953 - Sewer Bonds – Direct
Placement 9,704,959 - (2,577,644) 7,127,315 2,644,114
Developer Advances 858,847 8,165 (84,127) 782,885 84,127 Total Business-Type
Activities $ 315,840,662 $ 102,747,889 $ (117,676,376) $ 300,912,175 $ 15,403,522 Principal balances are reported on the government-wide and enterprise funds statements of net position, net of unamortized issuance discounts and premiums. Deferred losses on refunding are reported as deferred outflows of resources. Internal service funds, predominantly serve the governmental funds. Accordingly, any long-term liabilities for the internal service funds are included as part of the above totals for governmental activities. At year-end, internal service funds obligations were zero under notes payable, and zero in capital leases.

D. CHANGES IN OTHER LONG-TERM LIABILITIES
Other long-term liability activity for the year ended June 30, 2021, was as follows:

Governmental Activities:

Beginning
Balance Additions Reductions
Ending
Balance
Due Within
One Year
Compensated Absences $ 8,558,723 $ 9,315,796 $ 8,421,371 $ 9,453,148 $ 762,990 Claims Liability 26,169,123 10,658,615 8,074,881 28,752,857 7,775,304 Total Governmental Activities $ 34,727,846 $ 19,974,411 $ 16,496,252 $ 38,206,005 $ 8,538,294 Business-Type Activities:

Compensated Absences $ 2,520,300 $ 4,296,571 $ 3,994,359 $ 2,822,512 $ 227,813 Total Business-Type Activities $ 2,520,300 $ 4,296,571 $ 3,994,359 $ 2,822,512 $ 227,813 The compensated absences and claims liability balances relate to the internal service funds, and as such they are liquidated by the internal service funds. The predominant contributors for these internal service funds include the General Fund, Water Fund, and Sewer Fund.
56 #1..
- 97 -
E. OBLIGATIONS UNDER CAPITAL LEASES
Governmental Activities
As  of  June  30,  2021,  the  City  has  two  governmental  activities  active  capital  lease  agreements.  One  with  Pierce Manufacturing  Inc.  for  the  purchase  of  five  Velocity  Pumpers  and  two  Velocity  Tillers  valued  at  $5,883,756,  less accumulated depreciation of $2,039,165. The other with Turf Tank for the purchase of one Autonomous Robot valued at $39,204, less accumulated depreciation of $7,080.

The following is a schedule of the future minimum lease payments, as of June 30, 2021:

Year Ending
June 30,  Amount
2022            $ 605,543
2023               605,543
2024               605,543
2025               605,543
2026    598,544
2027-2028     1,552,759
Total minimum lease payments    4,573,475
Less:  amount representing interest    (474,597)
Present value of minimum lease payments  $ 4,098,878
Business-Type Activities
As  of  June  30,  2021,  the  City  has  one  business-type  activities  active  capital  lease  agreement  with  Cushman  for  the purchase of the Hauler 800 Utility Golf Cart valued at $9,079, less accumulated depreciation of $1,436.

The following is a schedule of the future minimum lease payments, as of June 30, 2021:

Year Ending
June 30,  Amount
2022  $ 2,422
2023   2,422
2024   1,009
Total minimum lease payments  5,853
Less:  amount representing interest  (229)
Present value of minimum lease payments  $ 5,625
F. DEVELOPER ADVANCES
The Del Este Water Company (Del Este) entered into various agreements with developers under which  infrastructure components  were  either  constructed  on  behalf  of  Del  Este  or  cash  was  advanced  to  the  company  to  construct  the infrastructure.  Agreements in existence at the time of the City’s acquisition of Del Este were assumed by the City.  The terms of repayment call for no interest, with principal paid over a 40-year period.  As of June 30, 2021, the total outstanding balance due under the agreements is $782,885.  The total annual payments fluctuate depending on the ending date of each agreement.  At June 30, 2021, the amount of $84,127 due during fiscal year 2022 has been reported as “current portion-developer  advances”  on  the  Water  Enterprise  Fund  statement  of  net  position.  The  remaining  $698,758  of outstanding principal has been reported under noncurrent liabilities, as “developer advances.” 57 #1..
- 98 -
G. INTERFUND BALANCES
Interfund balances as of June 30, 2021 consist of the following:

Balances reported as “advance to/advance from” were for capital projects expenditures and are either in the process of being repaid or have scheduled repayments in future years.

H. FUND BALANCE
Detailed classifications of the City’s Fund Balances, as of June 30, 2021, are provided below:

Advances from General Fund to:

Other governmental funds  $ 845,294
Other enterprise funds  1,324,704
Advances from General Fund  2,169,998
Advances from other governmental funds to Bus Fund  471,416 Advances from Water Fund to other enterprise funds  4,340,000 Advances from Sewer Fund to:

General Fund  1,086,973
Other governmental funds  361,576
Other enterprise funds  752,400
Advances from Sewer Fund  2,200,949
Advances from other enterprise funds to other governmental funds  211,523 Total Advances from/Advances to  $ 9,393,886
Total
General Capital  Operating Other  Governmental
Fund Grants Grants Governmental Funds
Nonspendable
Advances to other funds $       2,169,998 $                  - $                  - $          471,416 $       2,641,414 Prepaid Items             218,854                 1,518               69,760                    860             290,992 Total Nonspendable Fund Balance          2,388,852                 1,518               69,760             472,276          2,932,406 Restricted
Capital Facility Fees                     -                     -                      37,127,604 -                37,127,604 Cash with Fiscal Agent             347,088          2,511,990             810,899          5,403,360          9,073,337 Community Facilities District                      -                     -                      20,056,528 -                20,056,528 Grants and Donations                     -                     -          1,152,682          5,473,867          6,626,549 Notes Receivable                     -                     -               70,179        34,146,971        34,217,150 Deposits          3,020,400                     -                     -                     -          3,020,400 Traffic Fines                     -                     -                     -          4,387,448          4,387,448 Total Restricted Fund Balance          3,367,488          2,511,990          2,033,760      106,595,778      114,509,016 Committed
General Fund Set-Aside        18,397,817                     -                     -                      18,397,817 - Total Committed Fund Balance        18,397,817                     -                     -                      18,397,817 - Assigned
Encumbrances - Vendor Contracts             349,022                     -                     -                     -             349,022 Downtown Improvement District                     -                     -                     -                      40                      40 Successor Redevelopment Housing Agency                     -                     -                     -             671,627             671,627 Transportation Tax Funding                      -                     -                      32,233,774 -                32,233,774 Strategic Planning and Development                     -                     -                     -          1,401,605          1,401,605 Debt Service                     -                     -                     -                 1,283                 1,283 Total Assigned Fund Balance             349,022                     -                      34,308,329 -                34,657,351 Unassigned - General Fund          6,395,913                     -                     -                     -          6,395,913 Unassigned - Capital Project Funds                      (4,375,860) -                              -         (4,375,860) Total Unassigned Fund Balance          6,395,913         (4,375,860)                     -                     -          2,020,053 Total Fund Balance $     30,899,092 $      (1,862,352) $       2,103,520 $   141,376,383 $   172,516,643 58 #1..
- 99 -
I. DEFICIT FUND EQUITY
The Capital Grants Fund has a fund balance deficit of $1,862,352, which will be recovered through future grant revenues and local matches covered through the General Fund or other City funds.

The Compost Fund has a net position deficit of $7,259,780, due mainly to other post-employment benefit liability and net pension liability for the employees which reside in this fund, in addition to the pollution remediation liability reported for the Carpenter Landfill and Geer Road Landfill. The remediation funding has been incorporated into the utility fees related to garbage rates to cover the anticipated costs.

The Central Services Fund has a net position deficit of $25,490, which will be recovered through future overhead charges.

The Employee Benefits Management Fund has a net position deficit of $4,588,632.   It exists partially because the total compensated absences and other post-employment benefit balance for the employees which reside in this fund previously classified as debt of the governmental funds was included in this fund at its inception several years ago, and has never been fully funded.  The City is continuing to charge a higher benefit rate to help reduce this deficit.  In addition, one-time revenues having to do with employee benefits are deposited to this fund.

The Insurance Fund has a net position deficit of $9,434,056, due mainly to the recognition of settlements that were reached both  in  the  current  and  prior  fiscal  year  which have  been  reported  as  liabilities  of  the  Liability  Insurance  Fund.    Both settlements involved matters that represented city-wide policies and practices and therefore are allocable to all of the funds that make annual contributions to the liability  insurance program.  The liability  insurance program will recover the full amount of the settlement from charges to the funds that participate in the liability insurance program over a period of 5 years  based  on  this  methodology  being  factored  into  the  Internal  Service  Fund  allocation  that  is  distributed  to  City departments.

J. INTERFUND TRANSFERS
The following is a schedule of interfund transfers.

In general, the City uses interfund transfers to (1) move revenues from the funds that collect them to the funds that statute or budget requires to expend them, (2) use unrestricted revenues collected in the General Fund to help finance various programs and capital projects accounted for in other funds in accordance with budgetary authorization, and (3) move cash to debt service funds from the funds responsible for payment as debt service payments become due.

K. SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 (Bill) that provides for the dissolution of all redevelopment agencies in the State of California. This action impacted the reporting entity of the City that previously had reported a redevelopment agency blended component unit.  The Bill provides that upon dissolution of a redevelopment agency, either the City or another unit of local government will agree to serve as the “successor agency” to hold the assets until they are distributed to other units of state and local government. On January 24, 2012, the City Council elected to become the Successor Agency for the former Redevelopment Agency (RDA) in accordance with the Bill as part of County Resolution number 12-7.

Other Other
General Capital  Operating  Govern- Enterprise Internal Transfers (in) to: Fund Grants  Grants mental Water Sewer Bus Funds Service Total General Fund -                -                -                886,713 $     $      65,000 $      68,640 $    629,432 -                -                1,649,785 $ Capital Grants  -                -                -                1,625,746              11,361 -                10,081           -                -                1,647,188 Operating Grants 45,212 $       -                -                34,472           -                -                -                136,262 $             215,946 Other Governmental 4,362,808     $               210,038 10 $        6,163,656 -                -                -                -                10,736,512 Water -                -                -                105,013        -                -                -                55,680 $                  2,244         162,937 Sewer -                -                -                7,846             705,779        -                -                13,686           -                727,311 Bus            3,439 -                -                -                -                -                -                -                26,076                     29,515 Other Enterprise 2,050,641     -                -                4,600             700,000        -                -                -                -                2,755,241 Internal Service -                -                -                -                569,900                  1,467,800 95,979           106,276          47,118      2,287,073 Grand Total $ 6,462,100 $               210,038 10 $     $ 8,828,046 $ 2,052,040 $    164,619 $ 2,107,313 $    175,642 $    211,700 $ 20,211,508 Transfers from (out):
59 #1..
- 100 -
After enactment of the law, which occurred on June 28, 2011, redevelopment agencies in the State of California cannot enter  into  new  projects,  obligations  or  commitments.  Subject  to  the  control  of  a  newly  established  oversight  board, remaining assets can only be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments).

In  future  fiscal  years,  successor  agencies  will  only  be  allocated  revenue  in  the  amount  that  is  necessary  to  pay  the estimated annual installment payments on enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior redevelopment agency have been paid in full and all assets have been liquidated.

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

Management believes, in consultation with legal counsel, that the obligations of the former RDA due to the City are valid enforceable obligations payable by the Successor Agency trust under the requirements of the Bill.

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

After the date of dissolution, as allowed under Section 34176(a) of the Bill, the City elected to retain the housing assets and functions previously performed by the former RDA. The assets and activities for the Successor Agency Housing fund continue to be reported in the City’s governmental fund financial statements. The remaining assets, liabilities, and activities of the dissolved RDA, are reported in the Successor Agency fiduciary fund (private-purpose trust fund) in the financial statements of the City.

State Senate Bill (SB) 107 was then passed in 2015.  This bill included many significant changes to the operation of the Successor Agencies.  Among these changes were the Annual Recognized Obligation Payment Schedule (ROPS), the Last and Final ROPS, a single Countywide Oversight Board, and the requirement for the County Auditor-Controller to review the obligation payments made by the Successor Agency.  Some of these changes like the County Oversight Board and the  requirement  for  the  County  Auditor-Controller  to  review  the  obligation  payments  made  by  the  Successor  Agency become effective July 1, 2018.  The Modesto RDA Successor Agency has complied with all aspects of the changes that are specified in SB 107 and all ROPS starting with the ROPS submitted for the Fiscal Year 2019-20 period will now be submitted for approval by the Stanislaus Countywide Successor Agency Oversight Board.

As of June 30, 2021, one of the obligations under the Successor Agency trust is associated with the 10th Street Place Project:

Reimbursement agreement with the City totaling $19,566,862.  The original loan is from the City’s 1998 Lease Revenue Bonds and the 2007 Lease Revenue Bonds that pertain to the Successor Agency.  On August 28, 2008, the City refinanced the entire outstanding balance of the City’s 1998 Lease Revenue Bonds and the 2007 Lease Revenue Bonds with variable rate 2008 Lease Revenue Bonds.  The new balance has been provided as of June 30, 2021 that pertains to the Successor Agency.  Additional information related to the 2008 Lease Revenue bonds is provided in Note II-C under the Lease Revenue Bonds – Governmental Activities section.

$ 13,556,050
Annual debt service requirements to maturity are as follows:

Year Ending
June 30,  Principal  Interest  Total
2022  $ 693,100  $ 2,596  $ 695,696
2023    749,650    2,448    752,098
2024    807,650    2,295    809,945
2025    867,100    2,117    869,217
2026    939,600    1,932    941,532
2027-2031  5,550,600  6,455  5,557,055
2032-2034  3,948,350  949  3,949,299
Total  $ 13,556,050   $ 18,792   $ 13,574,842
60 #1..
- 101 -
The reserves for the Reimbursement Agreement are recorded in the Public Financing Authority debt service fund for the City.

No-interest loan payable to the Stanislaus County Economic Development Bank loan program, for the purpose of funding the Kansas Avenue Business Park Project’s Master Plan costs. The Agency has no obligation to begin repayment until the Project is completed and revenues begin.

Future debt service requirements to maturity for loans payable, as of June 30, 2021, are as follows:

Year Ending
June 30,  Principal  Interest  Total
2022  $ -   $ -  $ -
2023  -  -  -
2024  405,000  -  405,000
Total  $ 405,000  $ -  $ 405,000
As  of  June  30,  2021,  the  Successor  Agency  was  obligated  for  the  following  long-term  debt  in  conjunction  with  the Community Center Project:
1993 Refunding Certificates of Participation; serial certificates with annual payments on November 1 in amounts ranging from $1,090,000 to $1,610,000 beginning in 2011 with a final maturity in November 2023.      $ 4,600,000 Future debt service requirements to maturity for the Certificates of Participation, as of June 30, 2021, are as follows:

Year Ending
June 30,  Principal  Interest  Total
2022    $ 1,455,000    $ 193,625    $ 1,648,625
2023    1,535,000    118,875    1,653,875
2024    1,610,000    40,250    1,650,250
Total  $ 4,600,000  $ 352,750  $ 4,952,750
The former RDA also has a few outstanding obligations related to reimbursements for parking expenses with Westland Development Company and payments to the Tenth Street Joint Power Agency for maintenance for common areas in the Tenth Street Place.  These amounts are all reported in the Successor Agency in the Fiduciary financial statements under the Private-Purpose Trust Fund.

L. NOTES AND LOANS RECEIVABLE
The  notes  receivable  in  the  Operating  Grants  Fund  and  Other  Governmental  Funds  of  $59,597,508  net  of  $188,086 allowance  for  doubtful  accounts,  consist  of  loans  made  for  low-income  housing  rehabilitation,  first-time  homebuyers, property  improvement  and  small business  origination.  The  loans  are  collateralized  by  deeds  of  trust  on  the  improved properties or business assets, and are generally bearing annual interest at 3 or 5 percent.   Some direct loans may be subject to forgiveness, some are interest free and require no repayment of principal until the loans reach maturity, and some are subject to residual receipt payment agreements.  Loan terms range from 5 to 55 years.

M. APPROVED LOANS PAYABLE
The approved loans payable in the Housing and Community Development Special Revenue Fund of $59,630 consist of amounts being held for housing projects using funds provided by federal grants.  This liability is expected to be liquidated in less than a year.

N. POLLUTION REMEDIATION LIABILITY
The City reported a liability in the Water and Sewer Enterprise funds, which represents the recoveries the City has collected less any remediation and legal costs incurred in pursuit of mitigating damages from the manufacturers of perchlorethylene, or PCE, a common chemical used in the dry-cleaning industry.  This chemical has seeped into the groundwater through 61 #1..
- 102 -
sewer lines when improperly disposed, and threatens the City’s groundwater supplies.  Modesto has been proactive in attempting to recover damages and future cleanup costs from the dry cleaners and their insurers, and has also initiated litigation with the manufacturers.  As of June 30, 2021, the City reported a pollution remediation liability from the Water and Sewer funds in the amount of $6,063,821 and $6,958,932, respectively.

The City also records a liability for two landfill pollution remediation efforts. For the Carpenter Road Landfill Fund, a liability was reported related to the Carpenter Road Landfill which is a 39-acre City owned landfill, located on both the east and west sides of Carpenter Road between Kenneth and Robertson Roads and the Tuolumne River, which was in operation from 1956 to 1968. This landfill precedes Subtitle-D and had no liner or leachate collection or removal system.  In 1993, six methane gas monitoring wells were installed.  In December 2005, there was a spike in the methane gas level at the landfill’s Northern boundary.  The State required the City to determine the cause and develop a mitigation and monitoring plan to ensure the landfill remained in compliance with the state statutes. In November of 2010, a Corrective Action Plan was proposed for the landfill involving a hydrogen releasing compound injection. In October 2014, a revised Corrective Action Plan and post closure maintenance plan was submitted to the Central Valley Regional Water Quality Control Board (CVRWQCB). In March 2015, a Cleanup and Abatement Order was issued to the City of Modesto for the Carpenter Road Landfill by the California Regional Water Quality Control Board to complete the clean closure correction action plan by January 15, 2017.  Construction was to begin in Spring of 2017, however, due to flooding during the Winter of 2016, the groundwater level increased to a level too high to begin construction.  The City submitted a request to the CVRWQCB to delay the project until Spring of 2018. The waters receded, the project went out to bid, and was awarded to Pacific States Environmental Contractors in August 2018. A permitting delay pushed the project start but as of September 2021, all waste has been moved from the eastern fill to the western fill, a storm water retention basin is complete, and final, small or cosmetic work is being completed. The City will submit completion and permitting paperwork when the project is complete.

Monitoring  continued  throughout  the  project  on  functional  gas  and  groundwater  wells.  As  of  June  30,  2021,  the  City reported a pollution remediation liability from Carpenter Road Landfill Fund in the amount of $404,885.

For the Geer Road Landfill Mitigation Costs Fund, a liability was reported related to the Geer Road Landfill which is located in  Stanislaus  County,  8  miles  southeast  of  the  City  of  Modesto  on  the  Tuolumne  River.    The  site  is  jointly  owned  by Stanislaus County and the City of Modesto, but was formerly operated by Stanislaus County Department of Environmental Resources.  It consists of 168 acres and accepted an estimated 4.5 million tons of waste from 1970 until July of 1990.  This landfill precedes Subtitle-D and had no liner or leachate collection or removal system. The landfill closed in 1995 and a geomembrane liner was overlain by vegetative soil.  Closure was approved in July 1996, and post closure and correction action requirements, as well as requirements to maintain financial assurances and conduct monitoring, were prescribed in the  Waste  Discharge  Requirements  (WDR’s).  Pollution  was  first  identified  in  1985  and  since  that  time,  several investigations were completed.  In 1993, a groundwater extraction and treatment system of 12 extraction wells that pump water to a treatment plant, as well as 34 monitoring wells were installed.  The treated water was then released to a leach field where it was recharged to groundwater.  The landfill methane gas was monitored by 83 gas probes in and around the landfill connected to a landfill gas flare facility. To cover the potential liability, the City of Modesto established a fee within the Garbage rates to collect around $200,000 annually. As of June 30, 2021, the City reported a pollution remediation liability from the Geer Road Landfill Mitigation Costs Fund in the amount of $500,067.

O. DEFERRED INFLOWS/OUTFLOWS OF RESOURCES
Pursuant  to  GASB  Statement  No.  63,  “Financial  Reporting  of  Deferred  Outflows  of  Resources,  Deferred  Inflows  of Resources,  and  Net  Position”,  the  City  recognized  deferred  outflows  and  inflows  of  resources  in  the  entity-wide  and governmental fund statements.  These items are an acquisition of net position by the City that is applicable to a future reporting period.  The General Fund, Capital Grants, Operating Grants, and other governmental funds reported deferred inflows of resources in the amount of $54,243, $23,779, $39,931,433, and $31,846,280 for unavailable resources related to note and grant receivables not meeting the period of availability. Previous financial reporting standards do not include guidance for reporting these in the financial statements, which are distinct from assets and liabilities.   The items relate to outflows and inflows for net pension liability (Note III-G), OPEB liability (Note III-F), swap hedging (Note II-C) and loss on refunding.

III. OTHER INFORMATION
A. 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 and illnesses of employees; and natural disasters.  The City maintains the Insurance Internal Service Fund to account for and finance its risks of loss.  Under this program, the City is self-insured for the following risks up to 62 #1..
- 103 -
the maximum amount per claim/occurrence as follows:  workers' compensation $750,000; liability $1,000,000.   The City purchases commercial insurance for property loss, airport liability, miscellaneous coverage, and for claims in excess of the preceding self-insured limits.

For liability claims, the City is one of twelve members of the Authority for California Cities Excess Liability (ACCEL) risk pool.  This pool covers City claims between $1,000,000 and $5,000,000.  The purpose of the pool is to spread the adverse effect of losses among the member agencies and leverages buying power in the commercial insurance market for excess coverage.  The City contributes its pro rata share of anticipated losses to the pool.  Should actual losses among participants be greater than anticipated, the City will be assessed its pro rata share of that deficiency.  Conversely, if the actual losses are less than anticipated, the City will be refunded its pro rata share of the excess subject to the board approval and current conditions.  Commercial insurance, covers claims over $5,000,000 in two excess layers, of $10,000,000 each and five additional layers of $5,000,000 above $45,000,000; for additional total coverage of $50,000,000 per claim. Settled claims have not exceeded this commercial coverage in any of the past five fiscal years. General liability claims are currently selfadministered by risk management and litigated claims are defended by the City Attorney.

All operating funds participate in the program and make payments to the Insurance Fund based on historical cost and/or actuarial estimates of the amounts needed to pay prior and current year claims, and to allow accrual of estimated incurred but not reported claims and allocated loss adjustment expenses.  Insurance premiums to commercial insurers are also processed through the Insurance Fund. The total claims liability at June 30, 2021 is $27,052,857 consisting of $19,727,262 workers' compensation, $7,081,699 general liability, $205,480 dental, and $38,416 vision.  Workers’ compensation and general liability claims liabilities are estimated on an actuarial basis, and are reported at their net present value using an expected future investment yield assumption of 3% (general liability) and 3% (workers’ compensation).  The undiscounted workers’ compensation and liability claims totaled $21,976,469 and $7,556,423, respectively.  The actuarial liability for workers’ compensation and general liability were based on 2021 actuarial reports.

The current portion of the total liability claims, is estimated to be $6,075,304 and the balance of $20,977,353 is reported as a long-term liability on the statement of net position.  Changes in the Insurance Fund claims liability during the fiscal years ended June 30, 2021 through June 30, 2021 were:

B. COMMUNITY FACILITIES DEBT WITHOUT CITY COMMITMENT
Special  assessment  and  community  facilities  districts  have  been  established  in  various  areas  of  the  City  to  provide improvements to properties located in those districts.  Properties are assessed for the cost of the improvements; these assessments are payable solely by the property owners over the term of the debt issued to finance the improvements.  The City is not legally obligated to pay these debts or be the purchaser of last resort of foreclosed properties in the special assessment districts, nor is it obligated to advance City funds to repay this debt in the event of default by any property owners.  The City functions as an agent for the property owners by collecting assessments and forwarding collections to trustees for payment to bond holders.

At June 30, 2021, the balance of these districts’ outstanding debt was as follows:

Debt Issued    Outstanding Amount
Village One #2 Community Facilities District    $ 25,120,000 Fairview Village Community Facilities District    $ 3,690,000

C.  CONDUIT DEBT OBLIGATIONS
From time to time, the City has issued revenue bonds to provide financial assistance to private-sector entities for the acquisition and construction of industrial, commercial, health care, and multiple-family housing facilities deemed to be in the public interest.  The bonds are secured by the property financed and are payable solely from developer payments on the underlying mortgage loans.  Upon repayment of the bonds, ownership of the acquired facilities transfers to the privatesector entity served by the bond issuance.  Neither the City, the State, nor any political subdivision thereof is obligated in Claims Liability  Current-Year Claims and  Current-Year Claims Liability July 1 Changes in Estimates Claim Payments  June 30
2019-20 $23,630,560 $13,337,342 ($10,798,779) $26,169,123 2020-21                       26,169,123                       12,358,612                        (9,774,878)                       28,752,857 63 #1..
- 104 -
any manner for repayment of the bonds.  Accordingly, the bonds are considered conduit debt obligations and are not reported as liabilities in the accompanying financial statements.

As of June 30, 2021, there were two series of conduit revenue bonds outstanding. The aggregate principal amount payable for these multiple-family housing bond issues, issued between 1994 and 2002, was $4,975,000.

D. COMMITMENTS AND CONTINGENCIES
The City is involved in litigation relating to tort claims, workers' compensation claims and other claims such as contract actions and inverse condemnation actions for which  the City is self-insured, as disclosed in Note III-A.  The City is a defendant in various matters of litigation.

The  City  receives  funding  from  a  number  of  federal,  state  and  local  grant  programs,  principally  the  Federal  Highway Administration, Community Development Block Grants, and Federal Transit Administration grants.  These programs are subject  to  financial  and  compliance  review  by  the  grantors.    Accordingly,  the  City's  compliance  with  applicable  grant requirements  will  be determined at some future date.  Expenditures, if any,  which may be disallowed by  the granting agencies,  cannot  be  determined  at  this  time.    The  City  does  not  expect  the  undeterminable  amounts  of  disallowed expenditures, if any, to materially affect the basic financial statements.  Receipt of these federal, state and local grant revenues is not assured in the future.

The City has both operating and capital commitments of $47,442,041 for the City’s governmental funds as of June 30, 2021  for  contracts  awarded  but  not  completed  and  other  outstanding  purchase  requisitions  and  orders.  This  amount consists of $349,022 in the General Fund, $247,677 in the Capital Grants Fund, $98,374 in the Operating Grants Fund, and  $46,746,968  in  other  governmental  funds.  Commitments  of  the  governmental  funds  are  recorded  in  one  of  the classifications of fund balance based on the various funding restrictions on the balance sheet. As of June 30, 2021, there are major contracts for State Route 132 project (WSP USA Inc - $8,953,768, Bay Cities Paving and Grading $87,451,374), and Fleet Management (Harris Builders - $4,063,948).

In the process of completing the work mandated by the Regional Water Control Board, additional waste was discovered in the southern wall of the bank of the Tuolumne River.  The City provided this information to the Regional Water Control Board in May of 2021, they asked the City to submit a general plan and schedule to investigate and ultimately address the residual waste materials that were found in the area and appear to be on Army Corps lands.  The City is planning to complete the report into the additional waste during calendar year 2022.

Numerous lawsuits are pending against the City.  The City estimates that as of June 30, 2021, the amount of liability determined to be probable of occurrence is approximately $1,700,000.  The recorded liability is the City’s best estimate based on available information and may be revised as further information is obtained and as pending bases are litigated.

The estimated liability for claims and contingencies is based on the results of actuarial studies and includes amounts for claims incurred but not reported and allocated loss adjustment expenses.  The estimated liability is calculated considering the effects of inflation, recent claim settlement trends, including frequency and amount of payout, and other economic and social factors.

Management  has  determined  the  events  regarding  the  novel  coronavirus  require  disclosure  in  accordance  with  the accounting standards.  On March 4, 2020 Governor  Newsom issued an emergency proclamation declaring a state of emergency in California due to the novel coronavirus (COVID-19).  The COVID-19 outbreak is ongoing, and the ultimate geographic spread of the virus, the duration and severity of the outbreak and the economic and other actions that may be taken by government authorities to contain the outbreak or treat its impact are uncertain.  The ultimate impact of COVID19 on operations and finances of the City remain unknown.

E.  JOINT VENTURES AND JOINTLY GOVERNED ORGANIZATION
Tuolumne River Regional Park
The City participates with Stanislaus County and the City of Ceres in the operation and development of the Tuolumne River Regional Park (TRRP).  The governing body consists of 2 members from the County Board of Supervisors, 2 members from the Modesto City Council, and 1 member from the Ceres City Council.  The TRRP board prepares the annual budget, which must be approved by both cities' councils and the board of supervisors.  Each participant has an equity interest in the capital assets of TRRP based on the percentage of cumulative contributions paid.  The City's contribution to TRRP was $169,919 for the fiscal year ended June 30, 2021.  As of June 30, 2021, the City's investment in this joint venture was 64 #1..
- 105 -
$1,561,831, and is included in governmental activities on the statement of net position.  Financial statements for TRRP are prepared by the City of Modesto Finance Department.

City-County Capital Improvements and Financing Agency
The City and Stanislaus County formed the City-County Capital Improvements and Financing Agency (Agency) to provide for  the  design,  construction,  ownership,  operation,  management  and  financing  of  a  City-County  administration  center located in Modesto’s downtown redevelopment area.   The governing body is a commission consisting of two (2) members of the City Council, two (2) members of the County Board of Supervisors, the County Chief Executive Officer, and the City Manager.   The commission is responsible for developing an annual budget and determining the annual contribution rates, subject to approval by both the City and the County.  The Stanislaus County Auditor Controller was the fiscal administrator during the construction phase, which was final at the end of June 2003.   Starting in July 1, 2010 the County Auditor Controller became the fiscal administrator.   For the fiscal year ended June 30, 2021, the City’s payments to the Agency were $1,149,855 for operations and capital reserve. The City’s equity interest in the Agency is $6,231,286, equal to its capital asset contributions to date net of depreciation, and is reported in governmental activities as investments in joint ventures in the statement of net position.  Financial statements of the Agency are prepared by the Stanislaus County Auditor Controller office.

Stanislaus Waste-to-Energy Financing Agency
The City participates with Stanislaus County in the Stanislaus Waste-to-Energy Financing Agency (Agency).  The Agency was created to provide financing for a facility that generates power from solid waste.  The costs of operating the Agency, if any, are shared equally by the participants.  The governing body consists of 2 members each from the County Board of Supervisors and the Modesto City Council.  As of June 30, 2021, the City has no equity interest.   Stanislaus County Treasurer's office prepares the Agency's financial statements.

Consolidated Emergency Dispatch Agency
The Modesto/Stanislaus Consolidated Emergency Dispatch Agency (the MSCEDA) was created on September 1, 1999, pursuant to a joint exercise of powers agreement between the City of Modesto and the County of Stanislaus.  The MSCEDA is administered by a seven-member commission consisting of one member of the City Council, one member of the County Board of Supervisors, the County Chief Executive Officer, the City Manager, two members from the Dispatch Advisory Board, and one member from the City of Ceres’ City Council or one member selected by the City Council of another participating  City.    The  purpose  of  the  MSCEDA  is  to  consolidate  the  public  safety  communications  system.    The responsibilities of the agency include approval of annual budget, claims, liabilities, and the use of MSCEDA property as collateral.  Each participant will contribute sufficient funds to pay for all costs and expenses associated with providing Emergency  Dispatch  Services.    Upon  termination  of the  agreement,  assets  will  be  distributed  equally  to  the  City  and County,  unless  otherwise  approved.    The  financial  statements  may  be  obtained  by  writing  to  the  Modesto/Stanislaus Consolidated Emergency Dispatch, Office Manager, 3705 Oakdale Road, Modesto, California 95357.

North County Corridor Transportation Expressway Authority On April 1, 2008, the City Council approved the establishment of a Joint Powers Authority between the County and the cities  of  Modesto,  Oakdale  and  Riverbank  to  create  the  North  County  Corridor  Transportation  Expressway  Authority (NCCTEA). The purpose of the Authority is to prepare, identify, and adopt a precise alignment, and prepare and certify environmental documents for a route to improve east/west traffic circulation in the County.

The intent of the NCCTEA is to provide a high capacity high speed east-west roadway to accommodate anticipated traffic growth, alleviate traffic on parallel roads, and to accommodate multi-modal travel. Under the terms of the agreement, the County  will  incur  40%  of  the  costs  of  the  project  while  each  of  the  participating  cities  will  be  contributing  20%.  The preliminary  project  development  costs  will  be  funded  by  State  Transportation  Program  and  Public  Facility  Fees.  The NCCTEA  Board  of Directors will be comprised of two directors appointed by  the County, and one  director from each participating city. The board acts autonomously from the respective member agencies. The County of Stanislaus Public Works Director is designated as the NCCTEA’s manager. Upon completion of the agreement, all assets will be distributed to the respective parties of the agreement as determined by the Board of Directors of the Authority. Financial statements may be obtained by writing to the County of Stanislaus, Public Works Department, 1716 Morgan Road, Modesto, CA 95358.
65 #1..
- 106 -
Stanislaus Animal Services Agency
The Stanislaus Animal Services Agency (SASA) was created October 27, 2009, pursuant to a joint power’s agreement among the cities of Ceres, Hughson, Modesto, Patterson, Waterford, and the County of Stanislaus. SASA is administered by a six-member board comprised of the City Manager of each partner agency, and the Chief Executive Officer of the County. The purpose of SASA is to operate a regional agency providing animal services to their respective communities.

The SASA Executive Director is responsible for the annual budget which must be approved by the SASA Board of Directors.

Each partner agency will contribute sufficient funds to pay for all costs approved in the budget to provide animal services.

Upon termination of the agreement, assets will be distributed in accordance with the joint power’s agreement. The financial statements may be obtained by writing to the Stanislaus Animal Services Agency, Executive Director, 3647 Cornucopia Way, Modesto, CA 95358.

Regional Fire Training Center
The City has entered into an agreement with the Yosemite Community College District (YCCD) and Stanislaus County for the use and management of the regional fire training center at Modesto Junior College.  The executive board consists of the YCCD Chancellor, the President of Modesto Junior College, the City Manager of the City of Modesto, and the Chief Executive Officer of Stanislaus County.  The YCCD is responsible for accounting and for monitoring the center's budget.

All three entities share in the operating costs.  Initial construction costs were paid by the YCCD from borrowed funds, with the City and County reimbursing a portion of these costs in exchange for future use of the center.  The City has paid its share of the construction costs in full.  Title to the constructed asset is held by the YCCD; therefore, the City has no equity interest.

North Valley Regional Recycled Water Program (NVRRWP)
The City participates in the NVRRWP, which was established by the City of Modesto and Del Puerto Water District in November 2014.   The purpose of this agreement is to develop, construct, operate and maintain water supply facilities and service.  Through this agreement all partner agencies will cooperate and collaborate to use their best efforts regarding the submission of grants, loans and other funding resources to cover future cost related to the design and construction on future projects.   At the end of the fiscal year June 30, 2021, the City has no equity interest.

F.  OTHER POSTEMPLOYMENT BENEFITS (OPEB)
I. Plan Description
In addition to the pension benefits described below in Note III-G, the City provides health care benefits to employees who retire from the City based on certain criteria related to their hired and retirement dates, their employee bargaining unit, and their grandfathered sick leave at retirement.

For employees that retire from the Modesto City Firefighters Association (MCFFA) bargaining unit, the City contributes toward the cost of retiree medical coverage for the retiree's lifetime or until coverage is discontinued. MCFFA is covered by a 1995 resolution with the California Public Employees' Retirement System defining the level of the City's contribution toward the cost of medical plan premiums for employees and retirees to be the minimum employer contribution (MEC). The MEC is $143 in 2021, and $149 in 2022.

All other full-time employees hired before January 1, 2011, are eligible to convert their accumulated grandfathered sick leave towards a contribution for future health care costs at retirement (sick leave conversion). The City has no obligation to pay health insurance allowance for retirees with no grandfathered sick leave. Any employee who retires after January 1, 2017, or retirees who elect the buy-out option, receive a contribution to a Retiree Health Savings Account. Those employees are then removed from the City’s medical plan and ineligible to re-enroll.

The City has no assets accumulated in a qualified OPEB trust that meets the criteria as per GASB Statement No. 75.

II. Employees Covered
As of June 30, 2020, actuarial valuation, the following current and former City employees were covered by the OPEB plan membership:
66 #1..
- 107 -
Active employees  467
Inactive employees  351
Total  818
III. Contributions
The OPEB plan and its contribution requirements are established by Memoranda of Understanding with the applicable employee bargaining units and may be amended by the agreements between the City and the bargaining units.  The annual contribution is based on the actuarially determined contribution.  For the fiscal year ended June 30, 2021, the City’s cash contributions were $2,869,050 in payments made by the employer and no estimated subsidy was determined.

IV. Total OPEB Liability
The City’s total OPEB liability was measured as of June 30, 2020 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2020, based on the following actuarial methods and assumptions:

Actuarial Assumptions:

Discount Rate  2.21% at Jun 30, 2020. 3.50% at Jun 30, 2019 (Bond Buyer 20-Bond Index) General Inflation  2.5% annually
Salary Increases  3%
Medical Trend  5.8% for 2021, fluctuating to an ultimate rate of 4.0% in 2076 Mortality,  Retirement,
Disability, Termination  CalPERS 1997-2015 Experience Study Mortality Improvement  MacLeod Watts Scale 2020 applied generationally from 2015 V. Discount Rate
The discount rate used to measure the total OPEB liability was 2.21 percent.  The projection of the cash flows used to determine the discount rate assumed that the City contributions will be made at rates equal to the actuarially determined contribution rates.  Based on these assumptions, the OPEB City’s net position was projected to be available to make all projected OPEB payments for current active and inactive employees and beneficiaries based on the ‘pay as you go’ annual contributions.

VI. Changes in the OPEB Liability
The change in the OPEB Liability is as follows:

Total OPEB Liability
Balance at June 30, 2020 (Measurement Date June 30, 2019)  $             26,459,988 Changes recognized for the measurement period:

Service cost  836,292
Interest  903,896
Differences between actual and expected experience  1,737,964 Changes of Assumptions  3,430,611
Benefit Payments  (2,941,351)
Net Changes  3,967,412
Balance at June 30, 2021 (Measurement Date June 30, 2020)  $             30,427,400 67 #1..
- 108 -
VII. Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following presents the Net OPEB liability of the Plan as of the measurement date, calculated using the discount rate of  2.21  percent,  as  well as  what  the  Net  OPEB  liability  would  be  if  it  were calculated  using  a  discount  rate  that  is  1 percentage-point lower (2.21 percent) or 1 percentage-point higher (3.21 percent) than the current rate:

VIII. Sensitivity of the Net OPEB Liability to Changes in the Health Care Cost Trend Rates The following presents the Net OPEB liability of the Plan if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2020:

IV. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB As of the start of the measurement period (June 30, 2019), the OPEB liability was $26,459,988 For the measurement period ended June 30, 2020 (the measurement date), the City incurred an OPEB expense of $2,279,324.

Components of OPEB Expense
Service cost  $             836,292
Interest  903,896
Expensed portion of current-period changes of assumptions or other inputs   539,136 OPEB Expense  $          2,279,324
As of June 30, 2021, the City has deferred outflows and deferred inflows of resources related to the Net OPEB liability as follows:

Deferred Outflows
of Resources
Deferred Inflows
of Resources
Contributions subsequent to measurement period  $            2,869,050    $                      - Changes of assumptions or other inputs               3,294,595            1,223,707 Difference between actual and expected experience in the Total OPEB Liability  1,414,321

241,554
Total  $            7,577,966   $        1,465,261
The amounts above are net of outflows and inflows recognized in the 2019-2020 measurement period expense.  The amounts above reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2022. 1% Decrease
Current
Discount Rate 1% Increase

1.21% 2.21% 3.21%
Net OPEB Liability  $       33,244,771  $       30,427,400   $       28,053,844 1% Decrease Current Trend 1% Increase
Net OPEB Liability  $       28,510,733   $       30,427,400   $       32,887,299 68 #1..
- 109 -
Other amounts reported as deferred inflows of resources related to pensions will be recognized in future pension expense as follows:

Fiscal Year Ended
June 30,
Deferred outflows/inflows
of resources related to
OPEB expense
2022  $                          539,136
2023                 539,136
2024  778,311
2025                 1,030,947
2026                    356,125
Thereafter  $                                      -
G.  PENSION PLANS
I. General Information about the Pension Plans
Plan Descriptions
All City of Modesto qualified employees are eligible to participate in the City of Modesto separate Safety (police and fire) and Miscellaneous (all other) Plans, agent multi-employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating  member  employers.    Benefit  provisions  under  the  Plans  are  established  by  the  State  statute  and  City resolution.  CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website. This report is available online at www.calpers.ca.gov.

The California Legislature passed and the Governor signed the “Public Employees’ Pension Reform Act of 2013” (PEPRA) on September 12, 2012.  PEPRA contained a number of provisions intended to reduce future pension obligations.  PEPRA primarily affects new pension plan members who are enrolled for the first time after December 2012.  Benefit provisions and other requirements are established by State statute.

Benefits Provided
The benefits for the Plans are based on members’ years of service, age, final compensation, and benefit formula.  Benefits are provided for disability, death, and survivors of eligible members or beneficiaries.  Members become fully vested in their retirement benefits earned to date after five years of credited service.

The Plans’ provisions and benefits in effect at June 30, 2021 are summarized as follows:

Miscellaneous Plan:

Hire date
Prior to
January 17, 2012
January 17, 2012 to
December 31, 2012
On or after
January 1, 2013
Benefit formula  2% @ 55  2% @ 60 2% @ 62
Benefit vesting schedule  5 years service 5 years service 5 years service Benefit payments  monthly for life monthly for life monthly for life Retirement age  50 to 67 50 to 67 52 to 67
Monthly benefits, as a % of eligible compensation  1.426 to 2.418% 1.092 to 2.418% 1.0 to 2.5% Safety Plan:

Hire date
Prior to
September 11,
2012
September 11, 2012
to December 31, 2012
On or after
January 1,
2013
Benefit formula  3% @ 50 3% @ 55 2.7% @ 57
Benefit vesting schedule  5 years service 5 years service 5 years service Benefit payments  monthly for life monthly for life monthly for life Retirement age  50 to 55 50 to 55 50 to 57
Monthly benefits, as a % of eligible compensation  3.0% 2.4 to 3.0% 2.0 to 2.7% 69 #1..
- 110 -
Contributions
Section 20814(c) of the California Public Employees Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through the CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.   The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.

For the measurement period ended June 30, 2020 (the measurement date) for the Plans, the average active employee contribution rate was 7.00% of annual pay for Miscellaneous and 10.02% for Safety and the employer’s contribution rate is 8.32% of annual payroll for Miscellaneous and 20.75% for Safety.  The employee and employer contributions made for fiscal year June 30, 2021 was $17.008 million for the Miscellaneous plan and $25.225 million for the Safety plan. Employer contribution rates may change if plan contracts are amended.

II. Net Pension Liability
The City’s net pension liability for each Plan is measured as the total pension liability, less the pension plan’s fiduciary net position.  The net pension liability of each of the Plans is measured as of June 30, 2020, using an annual actuarial valuation as of June 30, 2019 rolled forward to June 30, 2020 using standard update procedures.

A summary of principal assumptions and methods used to determine the net pension liability is shown below:

Miscellaneous Plan Safety Plan
Actuarial Cost Method  Entry-Age Normal  Entry-Age Normal Actuarial Assumptions:

Discount Rate  7.15% 7.15%
Inflation  2.625% 2.625%
Salary Increases  Varies by Entry Age and Service Varies by Entry Age and Service Investment Rate of Return  7.25% (1) 7.25% (1)
Mortality Rate Table(2) CalPERS Membership Data  CalPERS Membership Data Post Retirement Benefit Increase  Up to 2.75% Up to 2.75% (1) Net of Pension Plan Investment and Administrative Expenses; includes inflation (2) The mortality table used was developed based on CalPERS specific data. The table includes 20 years of mortality improvements using Society of Actuaries Scale BB. For more details on this table, please refer to the 2017 experience study report.

All other actuarial assumptions used in the June 30, 2020 valuation were based on the results of an actuarial experience study for the period from 1997 to 2015, including updates to salary increase, mortality and retirement rates.  The Experience Study report can be obtained at CalPERS website under Forms and Publications.

Discount Rate
The discount rate used to measure the total pension liability was 7.15 percent. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the  tested  plans  run  out  of  assets.  Therefore,  the  current  7.15  percent  discount  rate  is  adequate  and  the  use  of  the municipal bond rate calculation is not necessary. The long-term expected discount rate of 7.15 percent is applied to all plans in the Public Employees Retirement Fund. The stress test results are presented in a detailed report called “GASB Crossover Testing Report” that can be obtained at CalPERS’ website under the GASB 68 section.

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

In determining the long-term expected rate of return CalPERS took, into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Such cash flows were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 70 #1..
- 111 -
10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one-quarter of one percent.

The table below reflects long-term expected real rate of return by asset class as of the target allocation for the June 30, 2020 measurement date. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These geometric rates of return are net of administrative expenses.

Asset Class(1) New Strategic Allocation Real Return Years 1 – 10(2) Real Return Years 11+(3) Global Equity  50.0%  4.8%  5.98%
Global Fixed Income  28.0  1.00  2.62
Inflation Sensitive   -  0.77  1.81
Private Equity  8.0  6.30  7.23
Real Assets  13.0  3.78  4.93
Liquidity  1.0  -  (0.92)
(1)  In the System's ACFR, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-term Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities. (2)  An expected inflation of 2.00% used for this period. (3)  An expected inflation of 2.92% used for this period III. Changes in the Net Pension Liability
The changes in the Net Pension Liability for each Plan follows:

Miscellaneous Plan  Increase (Decrease)
Total Pension
Liability (a)
Plan Fiduciary
Net Position
(b)
Net Pension
Liability/(Asset)
(c) = (a) - (b)
Balance at June 30, 2019 (1)
$
482,105,528
$
352,809,194
$
129,296,334
Changes Recognized for the
Measurement Period:

Service Cost   7,723,070    -    7,723,070
Interest on the Total Pension Liability   33,802,792    -    33,802,792 Differences between Expected and Actual Experience   (39,916)    -    (39,916) Contributions - Employer   -    11,857,136    (11,857,136) Contributions - Employees   -    3,522,762    (3,522,762) Net Investment Income   -    17,470,077    (17,470,077) Benefit Payments, including Refunds of Employee
Contributions
(26,321,649)   (26,321,649)   -
Administrative Expense   (497,374)   497,374
Net Change during 2019-20   15,164,297   6,030,952    9,133,345 Balance at June 30, 2020 (1)
$
497,269,825
$
358,840,146
$
138,429,679
71 #1..
- 112 -
Safety Plan  Increase (Decrease)
Total Pension
Liability (a)
Plan Fiduciary
Net Position
(b)
Net Pension
Liability/(Asset)
(c) = (a) - (b)
Balance at June 30, 2019 (1)
$
630,048,182
$
417,509,504
$
212,538,678
Changes Recognized for the
Measurement Period:

Service Cost   10,961,188    -    10,961,188
Interest on the Total Pension Liability   44,407,891    -     44,407,891 Differences between Expected and Actual Experience   2,147,305    -     2,147,305 Contributions - Employer   -     20,241,960    (20,241,960) Contributions - Employees   -    3,770,808    (3,770,808) Net Investment Income   -     20,809,917    (20,809,917) Benefit Payments, including Refunds of Employee
Contributions   (33,173,358)   (33,173,358)   -
Administrative Expense   -     (588,586)   588,586
Net Change during 2019-20   24,343,026   11,060,741    13,282,285 Balance at June 30, 2020 (1)
$
654,391,208
$
428,570,245
$
225,820,963
(1) The fiduciary net position includes receivables for employee service buybacks, deficiency reserves, fiduciary self-insurance and OPEB expense. This may differ from the plan assets reported in the funding actuarial valuation report.

Sensitivity of the Net Pension Liability to Changes in the Discount Rate

The following presents the net pension liability of the Plan as of the measurement date, calculated using the discount rate of 7.15 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (6.15 percent) or 1 percentage-point higher (8.15 percent) than the current rate:

IV. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions As of the start of the measurement period (July 1, 2019), the net pension liability was $129,296,334 for the Miscellaneous Plan and $212,538,678 for the Safety Plan.

For  the  measurement  period  ended  June  30,  2020  (the  measurement  date),  the  City  incurred  a  pension  expense  of $21,210,904 for the Miscellaneous Plan and $36,964,908 for the Safety Plan.

As of June 30, 2020, the City has deferred outflows and deferred inflows of resources related to pensions as follows:

Mis   Miscellaneous Plan Discount Rate -
1% (6.15%)
Current Discount
Rate (7.15%)
Discount Rate
+1% (8.15%)
Plan’s Net Pension Liability/(Asset)  $      200,363,668   $    138,429,679   $        86,912,305 Mis   Safety Plan Discount Rate -
1% (6.15%)
Current Discount
Rate (7.15%)
Discount Rate
+1% (8.15%)
Plan’s Net Pension Liability/(Asset)  $      312,573,086   $    225,820,963   $      153,066,587 72 #1..
- 113 -
Miscellaneous Plan  Deferred Outflows of
Resources
Deferred Inflows of
Resources
Change of Assumptions  $                            -   $            (468,666) Differences between Expected and Actual
Experiences   2,154,642    (28,511)
Net Difference between Projected and Actual
Earnings on Pension Plan Investments  2,484,666
Contributions subsequent to the measurement date              12,406,705    - Total   $            17,046,013   $           (497,177) Safety Plan  Deferred Outflows of
Resources
Deferred Inflows of
Resources
Change of Assumptions  $                  810,179   $            (695,520) Differences between Expected and Actual
Experiences   8,499,795    (75,677)
Net Difference between Projected and Actual
Earnings on Pension Plan Investments  2,945,367
Contributions subsequent to the measurement date              18,745,767    - Total   $            31,001,108   $            (771,197) The amounts above are net of outflows and inflows recognized in the 2019-2020 measurement period expense.  The amounts above reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2022.

Other amounts reported as deferred inflows and outflows of resources related to pensions will be recognized in future pension expense (not including contributions subsequent to the measurement date) as follows:

Fiscal Year
Ended June 30
Miscellaneous
Plan
Safety Plan
2021  $        (592,090)   $            2,491,015
2022          1,480,020   4,541,845
2023          1,791,432   2,619,726
2024          1,462,769    1,831,558
Total  $       4,142,131   $          11,484,144
H.  DEFICIENCY OF EXPENDITURES OVER APPROPRATIONS
For the fiscal year ended June 30, 2021, expenditures exceeded appropriations as follows:

General Fund
Expenditures                                                                              Amount Parks and recreations – Administration                                                                  $46,310 Parks and recreations - Convention visitors bureau                                      21,431

Operating Grants Special Revenue Fund
Expenditures                                                                              Amount Transfers out                                                                          $210,038 Housing and Community Development Special Revenue Fund
Expenditures                                                                              Amount

Debt Service - Other                                                                                              $863 73 #1..
- 114 -
Strategic Planning and Development Special Revenue Fund Transfers out                                                                             $4,600

I.  PRIOR YEAR ADJUSTMENTS
Governmental Activities
A prior year adjustment was made to the Governmental Activities to decrease the net position in the amount of $3,413,406 to account for the correction to Construction Work In Progress (CWIP) from prior years.

A prior period adjustment was made to the Housing and Community Development to decrease fund balance in the amount of $8,740 to correct loans booked in the prior year.

A prior period adjustment was made to the Operating Grants Fund to increase fund balance to account for a correction to prior year grant revenues in the amount of $101,595.

A prior period adjustment was made to the Community Facility Districts to reduce fund balance to account for a correction made in the prior year revenues in the amount of $77,716.

A prior year adjustment was made to Capital Facility Fees to reduce fund balance to account for a correction made in prior year overstating grant revenues in the amount of $4,288,988.

Total Governmental Activities prior year adjustments:                                                        ($7,687,255) Business-type Activities
A  prior  year  adjustment  was made  to Compost  Fund  to increase  the  liability  associated  with Carpenter  Road  Landfill Remediation in the amount of $1,557,155, which was not recorded in the prior year.

Total Business-type Activities prior year adjustments:                                                        ($1,557,155)

Total prior year adjustments:                                                                                                              ($9,244,410)

J. SUBSEQUENT EVENTS
On January 26, 2021, the Council authorized the Joint Powers Agency Agreement to form the Stanislaus Regional Transit Authority (StanRTA), which consolidated Stanislaus County’s public transportation services and City of Modesto’s public transportation services into one regionalized public transportation agency.  This consolidation is effective as of July 1, 2021, and has the potential to enhance transit service, reduce overall costs of service and will lead to a more “easy to use” public transportation option for residents by having more coordinated transit services in the County. 74 #1..
- 115 -

REQUIRED SUPPLEMENTARY INFORMATION TAB
#1..
- 116 -
#1..
- 117 -

REQUIRED SUPPLEMENTARY INFORMATION
75 #1..
- 118 -
76 #1..
- 119 -
Miscellaneous Plan
Measurement Period 2019-2020 2018-2019 2017-2018 2016-2017 2015-2016 2014-2015 2013-2014

TOTAL PENSION LIABILITY
Service Cost $ 7,723,070 $ 7,583,252 $ 7,365,767 $ 6,992,542 $ 6,092,179 $ 5,768,082 $ 6,400,912 Interest on Total Pension Liability 33,802,792 32,749,831 31,433,420 30,399,913 29,752,178 28,873,755 28,037,915 Changes of Assumptions - (2,477,241) - 24,124,929 (6,709,358) - - Difference Between Expected and Actual Experience (39,916) 3,777,379 2,514,973 (1,956,450) (2,005,545) (3,177,191) - Benefit Payments, Including Refunds of Employee Contributions (26,321,649) (24,951,032) (23,596,900) (22,727,426) (21,686,131) (20,945,229) (20,334,821) Net Change in Total Pension Liability 15,164,297 19,159,430 15,240,019 36,833,508 12,152,681 3,810,059 14,104,006 Total Pension Liability – Beginning 482,105,528 462,946,098 447,706,079 410,872,571 398,719,890 394,909,831 380,805,825 Total Pension Liability – Ending (a) $ 497,269,825 $ 482,105,528 $ 462,946,098 $ 447,706,079 $ 410,872,571 $ 398,719,890 $ 394,909,831

PLAN FIDUCIARY NET POSITION
Contributions – Employer $ 11,857,136 $ 10,158,019 $ 8,553,955 $ 8,382,192 $ 6,920,358 $ 5,632,179 $ 4,654,055 Contributions – Employee 3,522,762 3,479,149 3,393,722 3,396,338 3,349,400 3,061,157 2,853,492 Net Investment Income 17,470,077 22,333,423 27,586,156 33,859,910 1,667,540 7,093,159 48,702,803 Benefit Payments, Including Refunds of Employee Contributions (26,321,649) (24,951,032) (23,596,900) (22,727,426) (21,686,131) (20,945,229) (20,334,821) Plan to Plan Resource Movement - - (181) 505 (1,118) (188) - Administrative Expense (497,374) (244,082) (510,454) (450,482) (192,011) (355,544) - Other Miscellaneous Income/(Expense) (1) - 796 (969,360) - - - - Net Change in Fiduciary Net Position 6,030,952 10,776,273 14,456,938 22,461,037 (9,941,962) (5,514,466) 35,875,529 Plan Fiduciary Net Position – Beginning (2) 352,809,194 342,032,921 327,575,983 305,114,946 315,056,908 320,571,374 284,695,845 Plan Fiduciary Net Position – Ending (b) 358,840,146 352,809,194 342,032,921 327,575,983 305,114,946 315,056,908 320,571,374 Plan Net Pension Liability – Ending (a) - (b) $ 138,429,679 $ 129,296,334 $ 120,913,177 $ 120,130,096 $ 105,757,625 $ 83,662,982 $ 74,338,457 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 72.16% 73.18% 73.88% 73.17% 74.26% 79.02% 81.18% Covered-Employee Payroll(3) $ 53,453,630 $ 50,907,972 $ 49,812,447 $ 46,735,345 $ 45,207,621 $ 41,562,776 $ 44,125,963 Plan Net Pension Liability as a Percentage of Covered-Employee Payroll(3) 258.97% 253.98% 242.74% 257.04% 233.94% 201.29% 168.47% NOTE: There are no assets accumulated in a trust to pay related benefits for the pension plan. (1)
(2) Includes any beginning of year adjustment.
(3)
City of Modesto
Schedule of Changes in the Net Pension Liability and Related Ratios For the Year Ended June 30th
Last Ten Fiscal Years *
* The pension schedules are required to show ten years of data and the additional years’ information will be displayed as it becomes available.

During fiscal year 2017-18, as a result of Governmental Accounting Standards Board Statement (GASB) No. 75, Accounting and Financial Reporting for Postemployment Benefit Plans Other than Pensions (GASB 75), CalPERS reported its proportionate share of activity related to postemployment benefits for participation in the State of California’s agent OPEB plan. Accordingly, CalPERS recorded a one-time expense as a result of the adoption of GASB 75. Additionally, CalPERS employees participate in various State of California agent pension plans and during fiscal year 2017-18, CalPERS recorded a correction to previously reported financial statements to properly reflect its proportionate share of activity related to pensions in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68).

Includes one year’s payroll growth using 2.75% payroll growth assumption for fiscal years ended June 30, 2018-19; 3% payroll growth assumption for fiscal years ended June 30, 2014-17. 77 #1..
- 120 -
Safety Plan
Measurement Period 2019-2020 2018-2019 2017-2018 2016-2017 2015-2016 2014-2015 2013-2014

TOTAL PENSION LIABILITY
Service Cost $ 10,961,188 $ 9,984,949 $ 9,648,518 $ 9,298,519 $ 8,193,455 $ 8,633,865 $ 8,970,868 Interest on Total Pension Liability 44,407,891 42,759,837 40,490,329 39,048,366 38,004,835 36,721,112 35,310,732 Changes of Assumptions - - (2,434,317) 33,217,275 - (9,188,394) - Difference Between Expected and Actual Experience 2,147,305 12,017,379 2,992,729 (3,102,753) (2,184,871) (849,707) - Benefit Payments, Including Refunds of Employee Contributions (33,173,358) (31,487,589) (29,678,588) (28,147,381) (26,911,771) (25,426,619) (24,313,823) Net Change in Total Pension Liability 24,343,026 33,274,576 21,018,671 50,314,026 17,101,648 9,890,257 19,967,777 Total Pension Liability – Beginning 630,048,182 596,773,606 575,754,935 525,440,909 508,339,261 498,449,004 478,481,227 Total Pension Liability – Ending (a) $ 654,391,208 $ 630,048,182 $ 596,773,606 $ 575,754,935 $ 525,440,909 $ 508,339,261 $ 498,449,004

PLAN FIDUCIARY NET POSITION
Contributions – Employer $ 20,241,960 $ 16,758,148 $ 14,809,730 $ 12,812,060 $ 11,137,899 $ 10,210,101 $ 8,963,542 Contributions – Employee 3,770,808 3,402,676 3,400,369 3,165,011 2,962,566 2,800,626 2,939,117 Net Investment Income 20,809,917 26,427,421 32,428,941 39,443,735 1,898,536 8,215,387 56,385,743 Benefit Payments, Including Refunds of Employee Contributions (33,173,358) (31,487,589) (29,678,588) (28,147,381) (26,911,771) (25,426,619) (24,313,823) Plan to Plan Resource Movement - - (1,551) (505) 1,118 211 - Administrative Expense (588,586) (287,372) (597,550) (526,677) (224,190) (414,089) - Other Miscellaneous Income/(Expense) (1)
- 936 (1,134,757) - - - -
Net Change in Fiduciary Net Position 11,060,741 14,814,220 19,226,594 26,746,243 (11,135,842) (4,614,383) 43,974,579 Plan Fiduciary Net Position – Beginning (2)
417,509,504 402,695,284 383,468,690 356,722,447 367,858,289 372,472,672 328,498,093 Plan Fiduciary Net Position – Ending (b) 428,570,245 417,509,504 402,695,284 383,468,690 356,722,447 367,858,289 372,472,672 Plan Net Pension Liability – Ending (a) - (b) $ 225,820,963 $ 212,538,678 $ 194,078,322 $ 192,286,245 $ 168,718,462 $ 140,480,972 $ 125,976,332 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 65.49% 66.27% 67.48% 66.60% 67.89% 72.36% 74.73% Covered-Employee Payroll(3) $ 38,050,908 $ 33,819,770 $ 32,259,582 $ 30,608,378 $ 30,022,552 $ 31,202,983 $ 31,090,551 Plan Net Pension Liability as a Percentage of Covered-Employee Payroll(3) 593.47% 628.45% 601.61% 628.21% 561.97% 450.22% 405.19% NOTE: There are no assets accumulated in a trust to pay related benefits for the pension plan. (1)
(2) Includes any beginning of year adjustment.
(3)
City of Modesto
* The pension schedules are required to show ten years of data and the additional years’ information will be displayed as it becomes available.

During fiscal year 2017-18, as a result of Governmental Accounting Standards Board Statement (GASB) No. 75, Accounting and Financial Reporting for Postemployment Benefit Plans Other than Pensions (GASB 75), CalPERS reported its proportionate share of activity related to postemployment benefits for participation in the State of California’s agent OPEB plan. Accordingly, CalPERS recorded a one-time expense as a result of the adoption of GASB 75. Additionally, CalPERS employees participate in various State of California agent pension plans and during fiscal year 2017-18, CalPERS recorded a correction to previously reported financial statements to properly reflect its proportionate share of activity related to pensions in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68).

Includes one year’s payroll growth using 2.75% payroll growth assumption for fiscal year ended 2018-19; 3% payroll growth assumption for fiscal years ended June 30, 2014-17.

Last Ten Fiscal Years *
For the Year Ended June 30th
Schedule of Changes in the Net Pension Liability and Related Ratios (continued) 78 #1..
- 121 -
Miscellaneous Plan
Fiscal Year 2020-2021 2019-2020 2018-2019 2017-2018 2016-2017 2015-2016 2014-2015 2015-2016 Actuarially Determined Contribution (2) $ 12,406,705 $ 11,856,209 $ 10,158,019 $ 8,553,955 $ 8,382,192 $ 6,920,358 $ 5,632,179 $ 6,920,358 Contributions in Relation to the Actuarially Determined Contribution (2) (12,406,705) (11,856,209) (10,158,019) (8,553,955) (8,382,192) (6,920,358) (5,632,179) (6,920,358) Contribution Deficiency (Excess) $ - $ - $ - $ - $ - $ - $ - $ - Covered-Employee Payroll (3) $ 53,688,651 $ 53,453,630 $ 50,907,972 $ 49,812,447 $ 46,735,345 $ 45,207,621 $ 41,562,776 $ 45,207,621 Contributions as a Percentage of Covered-Employee Payroll (3) 23.11% 22.18% 19.95% 17.17% 17.94% 15.31% 13.55% 15.31% Safety Plan
Fiscal Year 2020-2021 2019-2020 2018-2019 2017-2018 2016-2017 2015-2016 2014-2015 2015-2016 Actuarially Determined Contribution (2) $ 18,745,767 $ 18,940,948 $ 16,758,148 $ 14,809,730 $ 12,812,060 $ 11,137,899 $ 10,210,101 $ 11,137,899 Contributions in Relation to the Actuarially Determined Contribution (2) (18,745,767) (18,940,948) (16,758,148) (14,809,730) (12,812,060) (11,137,899) (10,210,101) (11,137,899) Contribution Deficiency (Excess) $ - $ - $ - $ - $ - $ - $ - $ - Covered-Employee Payroll (3) $ 36,973,443 $ 38,050,908 $ 33,819,770 $ 32,259,582 $ 30,608,378 $ 30,022,552 $ 31,202,983 $ 30,022,552 Contributions as a Percentage of Covered-Employee Payroll (3) 50.70% 49.78% 49.55% 45.91% 41.86% 37.10% 32.72% 37.10% NOTE: There are no assets accumulated in a trust to pay related benefits for the pension plan. (1)
(2)
(3)
City of Modesto
Schedule of Plan Contributions (1)
Last Ten Fiscal Years*
* The pension schedules are required to show ten years of data and the additional years’ information will be displayed as it becomes available.

Includes one year’s payroll growth using 2.75% payroll assumption for fiscal year 2017- 18; 3% payroll assumption for fiscal years ended June 30, 2014-17.

Historical information is required only for fiscal year for which GASB 68 is applicable. As prescribed in GASB 68, paragraph 46, the information presented in the Schedule of Plan Contributions should also be determined as of the employer’s most recent fiscal year-end. The employer is responsible for determining this information as prescribed by the standard as this data is not available to CalPERS.

Employers are assumed to make contributions equal to the actuarially determined contributions. However, some employers may choose to make additional contributions towards their unfunded liability. Employer contributions for such plans exceed the actuarially determined contributions. 79 #1..
- 122 -
FY 2020-2021 FY 2019-2020 FY 2018-2019 FY 2017-2018
Measurement Period June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 Total OPEB liability
Service cost $ 836,292 $ 811,934 $ 963,490 $ 935,427
Interest 903,896 1,013,863 1,038,035 892,669
Differences between expected and actual experience 1,737,964 - (468,009) - Changes of assumptions 3,430,611 754,247 (1,306,633) (1,600,635) Benefit payments (2,941,351) (3,012,214) (2,733,246) (2,430,468) Net change in total OPEB liability 3,967,412 (432,170) (2,506,363) (2,203,007) Total OPEB liability ‐ beginning 26,459,988 26,892,158 29,398,521 31,601,528 Total OPEB liability ‐ ending (a) $ 30,427,400 $ 26,459,988 $ 26,892,158 $ 29,398,521 Covered-Employee Payroll $ 54,106,179 $ 50,879,818 $ 49,647,245 $ 55,637,076 Total OPEB liablity as a Percentage of Covered-Employee Payroll 56.24% 52.00% 54.17% 52.84% Notes to Schedule:
*There are no assets accumulated in a trust to pay related benefits for the OPEB plan.

City of Modesto
Schedule of Changes in the OPEB Liability and Related Ratios Last Ten Fiscal Years*
*Amounts presented above were determined as of June 30th. Additional years will be presented as they become available. *Historical information is required only for measurement periods for which GASB 75 is applicable. Future years’ information will be displayed up to 10 years as information becomes available. 80 #1..
- 123 -
Fiscal Year 2021-2022 2020-2021 2019-2020 2018-2019 2017-2018 2016-2017 Actuarially Determined Contribution (ADC) $ 2,869,050 $ 3,569,890 $ 3,012,214 $ 2,733,246 $ 2,430,468 $ 2,527,076 Contributions in Relation to the ADC (2,869,050) (3,569,890) (3,012,214) (2,733,246) (2,430,468) (2,527,076) Contribution Deficiency (Excess) $ - $ - $ - $ - $ - $ - Covered-Employee Payroll $ 52,545,565 $ 54,106,179 $ 50,879,818 $ 49,647,245 $ 55,637,076 $ 49,552,706 Contributions as a Percentage of Covered-Employee Payroll 5.46% 6.60% 5.92% 5.51% 4.37% 5.10% Notes to schedule:

The actuarial methods and assumptions used to set the actuarially determined contributions for fiscal year 2019-20 were as follows for June 30, 2019 measurement date actuarial valuations.

Actuarial Cost Method Entry Age Normal – Couldn’t find this in the 2020 report Discount Rate 2.21% at June 30, 2020 (Bond Buyer 20-Bond Index).

3.5% at June 30, 2019 (Bond Buyer 20-Bond Index).

Asset Valuation Method N/A – Couldn’t find this in the 2020 report General Inflation 2.5% annually
Salary Increases 3%
Trend 5.8% for 2021, fluctuating to an ultimate rate of 4.0% in 2076 Retirement Age CalPERS 1997-2015 Experience Study
Mortality CalPERS 1997-2015 Experience Study
Post-retirement mortality projected fully generational with MW Scale 2020 *Historical information is required only for measurement periods for which GASB 75 is applicable. Future years’ information will be displayed up to 10 years as information becomes available.

City of Modesto
Schedule of Contributions
Last Ten Fiscal Years *
81 #1..
- 124 -

CITY OF MODESTO

SCHEDULE OF REVENUES - BUDGET (GAAP BASIS) AND ACTUAL - GENERAL FUND FISCAL YEAR ENDED JUNE 30, 2021
Variance with
Original Final Actual Final Budget
TAXES
Utility users tax $ 20,794,217 $ 20,794,217 $ 20,764,694 $ (29,523) Property tax 18,689,404 18,689,404 19,106,595 417,191
Transient occupancy tax 2,132,145 2,132,145 2,850,229 718,084 Franchise tax 5,113,484 5,113,484 5,236,611 123,127
Cannabis tax 3,572,448 3,572,448 5,379,402 1,806,954
Business license tax 12,746,581 12,746,581 13,899,554 1,152,973 Total taxes 63,048,279 63,048,279 67,237,085 4,188,806
LICENSES AND PERMITS 423,906 423,906 418,648 (5,258)

INTERGOVERNMENTAL
Sales tax 30,684,925 30,684,925 35,670,236 4,985,311
Motor vehicle license fees 18,781,466 18,781,466 18,855,971 74,505 State 975,000 975,000 1,112,921 137,921
County 8,425 8,425 354,734 346,309
Federal - - 6,539 6,539
Other intergovernmental 7,815,189 7,815,189 8,474,876 659,687 Total intergovernmental 58,265,005 58,265,005 64,475,277 6,210,272

CHARGES FOR SERVICES
General government 2,732,473 2,659,704 2,246,036 (413,668) Community development 2,874,129 2,874,129 2,664,462 (209,667) Parks and recreation 2,413,102 2,413,102 1,624,268 (788,834) Public safety 3,281,285 4,654,047 4,492,153 (161,894)
Indirect cost recovery 3,976,619 3,976,619 3,976,618 (1) Total charges for services 15,277,608 16,577,601 15,003,537 (1,574,064) SPECIAL ASSESSMENT 341,000 341,000 314,521 (26,479)
INTEREST AND RENT 765,329 765,329 330,952 (434,377)

NET INCREASE IN FAIR VALUE
OF INVESTMENTS (134) (134) (181,655) (181,521)
FINES AND FORFEITS 809,615 871,685 478,113 (393,572)

MISCELLANEOUS
Mandated cost recovery 150,000 150,000 119,476 (30,524) Other 701,525 766,525 752,552 (13,973)
Total miscellaneous 851,525 916,525 872,028 (44,497)
Total revenues $ 139,782,133 $ 141,209,196 $ 148,948,506 $ 7,739,310 Budget
The notes to required supplementary information are an integral part of this schedule. 82 #1..
- 125 -
Variance with
Original Final Actual Final Budget
General government:

City council $ 449,789 $ 446,823 $ 435,914 $ 10,909
Human resources 1,641,213 1,617,623 1,537,764 79,859
City manager 2,677,308 2,650,590 2,588,121 62,469
City attorney 1,947,814 1,915,854 1,432,405 483,449
City clerk/auditor 1,628,395 1,554,975 974,967 580,008
Finance 5,488,451 5,434,079 4,998,793 435,286
Other 425,000 433,050 389,450 43,600
Total general government 14,257,970 14,052,994 12,357,414 1,695,580 Community development: 6,209,125 6,197,684 5,947,091 250,593 Parks and recreation:

Administration 711,027 713,595 759,905 (46,310)
Planning and development 770,075 750,239 739,543 10,696 Convention visitors bureau 391,168 372,654 394,085 (21,431) Operations service and maintenance 6,026,476 6,345,542 5,651,692 693,850 Facilities 1,600,004 1,594,330 1,365,453 228,877
Recreation division 3,065,747 2,746,656 2,653,642 93,014 Total parks and recreation 12,564,497 12,523,016 11,564,320 958,696 Public safety:

Fire protection 39,400,557 42,941,355 42,691,215 250,140 Police protection 70,045,049 66,409,174 65,827,465 581,709 Total public safety 109,445,606 109,350,529 108,518,680 831,849 Debt service:

Principal retirement 478,078 478,078 478,077 1
Interest expenditures 127,467 127,467 127,466 1
Total debt service 605,545 605,545 605,543 2
Total expenditures $ 143,082,743 $ 142,729,768 $ 138,993,048 $ 3,736,720 The notes to required supplementary information are an integral part of this schedule.

Budget

CITY OF MODESTO

SCHEDULE OF EXPENDITURES BY FUNCTION - BUDGET
(GAAP BASIS) AND ACTUAL - GENERAL FUND
FISCAL YEAR ENDED JUNE 30, 2021
NOTE: The expenditures by function amounts listed above include the capital outlay expenditures within each department. 83 #1..
- 126 -
Variance with
Original Final Actual Final Budget
REVENUES:

Taxes $ 380,000 $ 380,000 $ 365,151 $ (14,849)
Licenses and permits 50,000 50,000 44,799 (5,201)
Intergovernmental 9,763,007 19,534,297 5,680,942 (13,853,355) Charges for services 5,162,805 5,199,225 4,197,090 (1,002,135) Special assessments 68,974 68,974 64,342 (4,632)
Interest and rent 51,962 71,084 75,605 4,521
Net (decrease) in fair value of investments - - (39,791) (39,791) Donations and contributions 395,183 399,423 370,958 (28,465) Miscellaneous 136,262 237,449 224,205 (13,244)
Total revenues 16,008,193 25,940,452 10,983,301 (14,957,151) EXPENDITURES:

General government 272,860 273,085 223,830 49,255
Community development 5,291,653 12,557,261 6,189,457 6,367,804 Highways and streets 107,952 90,442 51,287 39,155
Public works 3,607,397 3,781,752 2,635,907 1,145,845
Parks and recreation 2,342,086 2,455,667 50,582 2,405,085 Public safety 4,505,665 8,222,519 1,420,397 6,802,122
Total expenditures 16,127,613 27,380,726 10,571,460 16,809,266

EXCESS (DEFICIT) OF REVENUES OVER
(UNDER) EXPENDITURES (119,420) (1,440,274) 411,841 1,852,115 OTHER FINANCING SOURCES (USES):

Transfers in 136,262 175,591 215,946 40,355
Transfers out - - (210,038) (210,038)
TOTAL OTHER FINANCING SOURCES (USES) 136,262 175,591 5,908 (169,683) CHANGES IN FUND BALANCE 16,842 (1,264,683) 417,749 1,682,432 FUND BALANCE, JULY 1 1,584,176 1,584,176 1,584,176 -
PRIOR PERIOD ADJUSTMENT - - 101,595 101,595
FUND BALANCE, JUNE 30 $ 1,601,018 $ 319,493 $ 2,103,520 $ 1,784,027

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE -

CITY OF MODESTO
FISCAL YEAR ENDED JUNE 30, 2021

BUDGET (GAAP BASIS) AND ACTUAL - OPERATING GRANTS SPECIAL REVENUE FUND Budget
The notes to required supplementary information are an integral part of this schedule.

NOTE: The expenditures by function amounts listed above include the capital outlay expenditures within each department. 84 #1..
- 127 -

CITY OF MODESTO

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
FISCAL YEAR ENDED JUNE 30, 2021
BUDGETARY INFORMATION - The City follows these procedures annually in establishing the budgetary data reflected in the budgetary comparison schedules for operating, non-capital multi-year, and capital budgets:

1. The City Manager submits to the City Council a proposed budget for the fiscal year commencing the following July 1. The budget includes proposed expenditures and the means of financing them for operating, non-capital multi-year and capital projects.

2. The City Council reviews the proposed budget at specially scheduled sessions, which are open to the public. The Council also conducts a public hearing on all proposed budgets to obtain comments from interested persons.

3. Prior to July 1, the budget is legally adopted through adoption of a resolution. This budget is reported as the Original Budget in the budgetary comparison schedules.

4. During the fiscal year, changes to the Adopted Budget may be authorized, as follows:
a. Authority to approve any adjustment in the amount of $25,000 or less is delegated to the Budget Manager.
b. Authority to approve any adjustment in an amount between $25,000 and $50,000 is delegated to the City Manager.
c. Authority for any budget adjustment more than $50,000 is delegated to the parties described below:
a. Items requiring City Council Action – appropriation of undesignated reserves; appropriation of new revenues; transfers of appropriations between funds (inter-fund transfers); creation of inter-fund loans; creation of, or increase in, any multi-year appropriation. b. Items delegated to the City Manager – transfer appropriations between departments within a fund; changing any capital equipment appropriation; appropriation of reserves for litigation on a case-by-case basis; appropriation of developer payments not previously budgeted. c. Items delegated to the Budget Manager – appropriation of grant interest; revise the allocation of Internal Service Fund charges between departments provided that the total allocated amount does not increase; changing any capital improvement budget line item appropriation; make technical budget corrections to implement the intent of Council approved actions and resolutions.
d. Items delegated to Department Directors – transfer appropriations within a department, within a single fund.

5. Formal budgetary accounting is employed as a management tool for all funds. Annual budgets are legally adopted and amended as required for the general, special revenue, enterprise and internal service funds. Project length budgets are adopted for the capital projects funds. All budgets are prepared on a basis consistent with generally accepted accounting principles (GAAP), and budgetary comparisons for the general and major special revenue funds are presented on this basis in the required supplementary information. A debt service payment schedule for the debt service funds is also approved as part of the budget process.

6. Budget amounts are reflected after all authorized amendments and revisions. This budget is reported as the Final Budget in the budgetary comparison schedules. 85 #1..
- 128 -

CITY OF MODESTO

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION (CONTINUED) FISCAL YEAR ENDED JUNE 30, 2021

7. For each legally adopted operating budget, expenditures may not exceed budgeted appropriations at the appropriation unit level. The legal appropriation basis is at the level called "department". A "department" for legal appropriation purposes may be a single organization (e.g., City Attorney), or an entire department having multiple organizations within the same fund (e.g., Operations and Maintenance), or an entire fund (e.g., Downtown Improvement District). All departments and funds completed the year within their legally authorized expenditures. Encumbrance accounting, under which purchase orders, contracts and other commitments are recorded to reserve the applicable appropriations, is employed in the governmental funds.

The City does, however, honor the contracts represented by year-end encumbrances and the subsequent year's appropriations provide authority to complete these transactions. 86 #1..
- 129 -

COMBINING AND INDIVIDUAL FUND

STATEMENTS AND SCHEDULES
87 #1..
- 130 -
88 #1..
- 131 -

Nonmajor Governmental Funds
Nonmajor Special Revenue Funds
Special Revenue Funds include funds which are restricted as to use by the Federal or State governments, and special purpose funds established by authority of the City Council. Nonmajor Special Revenue Funds include:

HOUSING AND COMMUNITY DEVELOPMENT FUND – To account for various grant funds received from Federal Community Development Block grants to be used for a variety of housing related programs primarily targeted at low-income housing. Additionally, this fund accounts for the City’s revolving fund, which provides housing loans to low-income individuals and accounts for emergency shelter grant revenue received from the Housing and Urban Development Department.

LOCAL TRANSPORTATION FUND – To account for revenues and expenditures of Local Transportation Fund allocations for streets, urban trails, and non-motorized facilities. Allocations for the City bus system are reported directly in the Bus Enterprise Fund.

TRAFFIC SAFETY FUND – To account for receipts and expenditures of traffic safety fines.

DOWNTOWN IMPROVEMENT DISTRICT FUND – To account for the fiscal activities of Business Improvement Area A and Downtown Modesto Community Benefit District of the City of Modesto.

STRATEGIC PLANNING AND DEVELOPMENT FUND – Established to provide a funding source for future village planning, general plan update and other large expenses related to planning and development. This fund was originally financed with an apportionment of the PERS rebate related to AB702. Subsequent funding has been provided by transfers from the General Fund. Future funding will be provided by fees imposed on private development.

TRANSPORTATION SPECIAL TAX FUND – To account for state-collected, locally-shared gas tax, 25 year, ½ cent sales tax Measure L, SB-1 (Road Repair and Accountability Act of 2017) monies. This fund may be used for all road and traffic purposes including construction, purchase of rights-of-way, and maintenance.

Nonmajor Capital Projects Funds
Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities other than those financed by proprietary funds. Nonmajor Capital Projects Funds include:

SPECIAL FUND FOR CAPITAL OUTLAYS – To account for capital outlay authorized by the City Council. No monies placed in this fund are to be disbursed except for this purpose unless authorized by a vote of the people.

PARKS FUND – To account for a discretionary transfer of General Fund property tax revenue to provide for the development of parks within the City, as directed by the City Council.

SECURITIES FOR FUTURE IMPROVEMENTS FUND – To account for the collection of impact fees for approved development projects to construct facilities needed for future development.

COMMUNITY FACILITIES DISTRICTS FUND – To account for the construction of public improvements deemed to benefit properties against which special taxes are levied.

SUCCESSOR REDEVELOPMENT HOUSING AGENCY FUND – To account for the housing redevelopment capital projects financed by the Successor Redevelopment Housing Agency of the City of Modesto. 89 #1..
- 132 -

Nonmajor Capital Projects Funds (continued)
CAPITAL FACILITY FEES FUND – To account for special fees collected on new building permits to be used for construction of certain growth related projects. The fees and related capital projects include police department expansion, fire department expansion, expressway loop, street lights, street improvements, parks, new traffic signals, City downtown, wastewater treatment, public transportation, and air quality improvements.

TRANSPORTATION SPECIAL TAX CAPITAL FUND – To account for receipts and disbursements of Governmental Fund capital projects funded through locally-shared gas tax, 25 year, ½ cent sales tax Measure L, and SB-1 (Road Repair and Accountability Act of 2017) monies.

Nonmajor Debt Service Fund
Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general longterm debt principal and interest. Nonmajor Debt Service Fund includes:

PUBLIC FINANCING AUTHORITY FUND – To account for payment of debt issued to finance projects authorized by the Modesto Public Financing Authority.
90 #1..
- 133 -
This page is intentionally left blank.
91 #1..
- 134 -
Housing and Downtown Strategic
Community Local Traffic Improvement Planning and Transportation Development Transportation Safety District Development Special Tax ASSETS
Cash and cash equivalents $ 872,179 $ 1,465,624 $ $ 28,694 $ 1,661,169 $ 27,697,208 - Receivables:

Accounts, net 61,330 - - - - 1,864
Interest 37 2,454 - 37 3,332 54,559
Taxes - - - 41,941 - 383,882
Advances to other funds - - - - - 471,416
Due from governments 3,636,349 189,759 7,645 - - 4,770,242 Prepaid expenditures 15 - - - 183 -
Restricted assets:

Cash and cash equivalents - 1,774 4,360,470 - - -
Cash and cash equivalents with fiscal agent - - - - - - Due from governments - - 26,978 - - -
Notes receivable, net 57,316,329 - - - - -
Total assets $ 61,886,239 $ 1,659,611 $ 4,395,093 $ 70,672 $ 1,664,684 $ 33,379,171

LIABILITIES AND

AND FUND BALANCES
Liabilities:

Accounts payable $ 694,407 $ $ 3,907 - $ 70,632 $ 51,373 $ 555,708 Accrued salaries and benefits 16,069 - 3,738 - - 113,514 Interest payable - - - - - -
Approved loans payable 59,630 - - - -
Unearned revenue - 1,657,835 - - - -
Payable from restricted assets:

Refundable deposits - - - - - -
Advances from other funds - - - - 211,523 -
Total liabilities 770,106 1,657,835 7,645 70,632 262,896 669,222 Deferred inflows of resources:

Unavailable revenue 26,969,147 - - - - 4,759
Fund balances:

Nonspendable 15 - - - 183 471,416
Restricted 34,146,971 1,776 4,387,448 - - -
Assigned - - - 1,401,605 40 32,233,774
Total fund balances 34,146,986 1,776 4,387,448 40 1,401,788 32,705,190 Total liabilities and fund balances $ 61,886,239 $ 1,659,611 $ 4,395,093 $ 70,672 $ 1,664,684 $ 33,379,171 Special Revenue

CITY OF MODESTO

COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2021
92 #1..
- 135 -
Capital Projects
Special Fund Securities Community Successor Capital Transportation for Capital for Future Facilities Redevelopment Facility Special Tax Outlays Parks Improvements Districts Housing Agency Fees Capital $ 384,905 $ $ (832) $ 156,755 $ - $ 336,160 - $ 267,645 - - - - - 28,619 -
5,991 2,182 - 39,543 - 72,072 -
- - - 82,846 - - -
- - - 544 1,192,004 5,514,785 -
- - - 322 - - -
2,520,494 646,341 73,604 20,026,528 - 37,105,104 -
- - - - - 22,500 -
- - - - - - -
- - - - 2,211,000 - -
$ 2,911,390 $ 647,691 $ 73,604 $ 20,306,538 $ 3,403,004 $ 43,079,240 $ 267,645 $ 29,320 $ 518 $ $ 181,387 - $ 373,650 $ 363,941 $ 267,645 - - - 16,180 - - -
- - - - 1,000 - -
- - - - - - -
- - - - - - -
- - - 25,555 - - -
361,576 - - - 145,727 699,567 -
390,896 518 - 223,122 520,377 1,063,508 267,645
- - - 56,566 - 4,815,808 -
- - - 322 - - -
2,520,494 647,173 73,604 20,026,528 2,211,000 37,199,924 - - - - - 671,627 - -
2,520,494 647,173 73,604 20,026,850 2,882,627 37,199,924 - $ 2,911,390 $ 647,691 $ 73,604 $ 20,306,538 $ 3,403,004 $ 43,079,240 $ 267,645 93 #1..
- 136 -
Debt Service
Public
Financing
Authority Total
ASSETS
Cash and cash equivalents $ $ 32,879,470 9,963
Receivables:

Accounts, net - 91,813
Interest - 180,207
Taxes - 508,669
Advances to other funds - 471,416
Due from governments - 15,311,328
Prepaid expenditures 340 860
Restricted assets:

Cash and cash equivalents - 64,734,315
Cash and cash equivalents with fiscal agent 5,380,860 5,403,360 Due from governments - 26,978
Notes receivable, net - 59,527,329
Total assets $ 5,391,163 $ 179,135,745

LIABILITIES AND FUND

BALANCES
Liabilities:

Accounts payable $ $ 2,601,168 8,680
Accrued salaries and benefits - 149,501
Interest payable - 1,000
Approved loans payable - 59,630
Unearned revenue - 1,657,835
Payable from restricted assets:

Refundable deposits - 25,555
Advances from other funds - 1,418,393
Total liabilities 8,680 5,913,082
Deferred inflows of resources:

Unavailable revenue - 31,846,280
Fund balances:

Nonspendable 340 472,276
Restricted 5,380,860 106,595,778
Assigned 1,283 34,308,329
Total fund balances 5,382,483 141,376,383
Total liabilities and fund balances $ 5,391,163 $ 179,135,745

CITY OF MODESTO
COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS (continued) JUNE 30, 2021
94 #1..
- 137 -
This page is intentionally left blank.
95 #1..
- 138 -
Housing and Downtown Strategic
Community Local Traffic Improvement Planning and Transportation Development Transportation Safety District Development Special Tax REVENUES:

Taxes $ $ - $ - $ 225,051 - $ $ 1,515,252 -
Licenses and permits - - - - - 10,246
Intergovernmental 6,519,253 286,083 - - 70,000 22,501,876 Charges for services 1,026,430 - 332,259 - 162,428 1,115,835 Special assessments levied - - - 692,372 - -
Interest and rent - 11,897 - 544 14,917 236,501
Net increase (decrease) in fair
value of investments - (12,094) - (471) (15,017) (227,607) Fines and forfeits - - 181,997 - - -
Miscellaneous 245 14 - - 100,000 163,389
Total revenues 7,545,928 285,900 514,256 917,496 332,328 25,315,492 EXPENDITURES:

Current:

Community development 4,237,659 - 1,097,368 201,717 -
Highways and streets - - - - - 10,780,721
Parks and recreation - 330 - - - -
Public safety - - 354,980 - - -
Capital outlay:

Community development - - - - - -
Highways and streets - - - - - 240,338
Parks and recreation - - - - - -
Public safety - - 49,733 - - -
Debt service:

Principal retirement 283,000 - - - - -
Interest 36,441 - - - - -
Other 863 - - - - -
Total expenditures 4,557,963 330 404,713 1,097,368 201,717 11,021,059

EXCESS (DEFICIENCY) OF

REVENUES OVER (UNDER)
EXPENDITURES 2,987,965 285,570 109,543 (179,872) 130,611 14,294,433 OTHER FINANCING SOURCES (USES):

Transfers in - - - - - 1,578,898
Transfers out (180,733) (285,568) - - (4,600) (7,294,925) Sale of assets - - - - - 1,934

TOTAL OTHER FINANCING
SOURCES (USES) (180,733) (285,568) - - (4,600) (5,714,093) CHANGES IN FUND BALANCES 2,807,232 2 109,543 (179,872) 126,011 8,580,340 FUND BALANCES, JULY 1 31,348,494 1,774 4,277,905 179,912 1,275,777 24,124,850 PRIOR PERIOD ADJUSTMENTS (8,740) - - - - -
FUND BALANCES, JUNE 30 $ 34,146,986 $ 1,776 $ 4,387,448 $ 40 $ 1,401,788 $ 32,705,190 Special Revenue

CITY OF MODESTO

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS
FISCAL YEAR ENDED JUNE 30, 2021
96 #1..
- 139 -
Capital Projects
Special Fund Securities Community Successor Capital Transportation for Capital for Future Facilities Redevelopment Facility Special Tax Outlays Parks Improvements Districts Housing Agency Fees Capital $ $ - $ - $ - $ - $ - $ - -
- - - - - - -
- - - 14,628 - 793,741 -
- 4,930 - 884,585 - 5,651,748 -
- - - 3,780,515 - - -
28,752 34,760 7,208 191,346 54,321 324,368 -
(28,676) (6,291) - (171,439) 4,986 (307,658) -
- - - - - - -
- 20,859 - 84 - 11,960 -
76 54,258 7,208 4,699,719 59,307 6,474,159 -
31,679 - - 2,908,973 - 165,173 4,198,156
- - - - - 5,957 -
- 19,608 - - - - -
53,823 - - - - - -
- - - - - 84,731 1,026,731
- - - 857 - 1,695,402 769,770
- 459 - - - 24,885 12,684
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
85,502 20,067 - 2,909,830 - 1,976,148 6,007,341
(85,426) 34,191 7,208 1,789,889 59,307 4,498,011 (6,007,341) 210,038 41,000 - - - 117,276 6,007,597
(485,885) (103,474) - (38,783) - (434,078) -
- - - - - - -
(275,847) (62,474) - (38,783) - (316,802) 6,007,597
(361,273) (28,283) 7,208 1,751,106 59,307 4,181,209 256 2,881,767 675,456 66,396 18,353,460 2,823,320 37,307,703 (256) - - - (77,716) - (4,288,988) -
$ 2,520,494 $ 647,173 $ 73,604 $ 20,026,850 $ 2,882,627 $ 37,199,924 $ - 97 #1..
- 140 -
Debt Service
Public
Financing
Authority Total
REVENUES:

Taxes $ $ 1,740,303 -
Licenses and permits - 10,246
Intergovernmental 1,232,298 31,417,879
Charges for services - 9,178,215
Special assessments levied - 4,472,887
Interest and rent 9,515 914,129
Net increase (decrease) in fair
value of investments - (764,267)
Fines and forfeits - 181,997
Miscellaneous - 296,551
Total revenues 1,241,813 47,447,940
EXPENDITURES:

Current:

Community development - 12,840,725
Highways and streets - 10,786,678
Parks and recreation - 19,938
Public safety - 408,803
Capital outlay:

Community development - 1,111,462
Highways and streets - 2,706,367
Parks and recreation - 38,028
Public safety - 49,733
Debt service:

Principal retirement 2,170,000 2,453,000
Interest 1,822,020 1,858,461
Other 50,951 51,814
Total expenditures 4,042,971 32,325,009

EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER)
EXPENDITURES (2,801,158) 15,122,931
OTHER FINANCING SOURCES (USES):

Transfers in 2,781,703 10,736,512
Transfers out - (8,828,046)
Sale of assets - 1,934

TOTAL OTHER FINANCING
SOURCES (USES) 2,781,703 1,910,400
CHANGES IN FUND BALANCES (19,455) 17,033,331
FUND BALANCES, JULY 1 5,401,938 128,718,496
PRIOR PERIOD ADJUSTMENTS - (4,375,444)
FUND BALANCES, JUNE 30 $ 5,382,483 $ 141,376,383

CITY OF MODESTO

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS (continued) FISCAL YEAR ENDED JUNE 30, 2021
98 #1..
- 141 -
Variance with
Original Final Actual Final Budget
REVENUES:

Intergovernmental - federal grants $ 7,076,777 $ 20,171,909 $ 6,519,253 $ (13,652,656) Charges for services 1,366,867 1,366,867 1,026,430 (340,437) Miscellaneous - - 245 245
Total revenues 8,443,644 21,538,776 7,545,928 (13,992,848) EXPENDITURES:

Community development 18,528,567 22,825,641 4,237,659 18,587,982 Debt service:

Principal retirement 283,000 283,000 283,000 -
Interest 36,442 36,442 36,441 1
Other - - 863 (863)
Total expenditures 18,848,009 23,145,083 4,557,963 18,587,120

EXCESS (DEFICIT) OF REVENUES OVER
(UNDER) EXPENDITURES (10,404,365) (1,606,307) 2,987,965 4,594,272 OTHER FINANCING SOURCES (USES):

Transfers out - (348,000) (180,733) 167,267
TOTAL OTHER FINANCING SOURCES (USES) - (348,000) (180,733) 167,267 CHANGES IN FUND BALANCE (10,404,365) (1,954,307) 2,807,232 4,761,539 FUND BALANCE, JULY 1 31,348,494 31,348,494 31,348,494 - PRIOR PERIOD ADJUSTMENT - - (8,740) (8,740)
FUND BALANCE, JUNE 30 $ 20,944,129 $ 29,394,187 $ 34,146,986 $ 4,752,799 NOTE: The expenditures by function amounts listed above include the capital outlay expenditures within each department.

Budget
FISCAL YEAR ENDED JUNE 30, 2021

AND COMMUNITY DEVELOPMENT SPECIAL REVENUE FUND

FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL - HOUSING

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN

CITY OF MODESTO
99 #1..
- 142 -
Variance with
Original Final Actual Final Budget
REVENUES:

Intergovernmental $ $ - $ 286,083 - $ 286,083
Interest and rent - - 11,897 11,897
Net (decrease) in fair value of investments - - (12,094) (12,094) Miscellaneous - - 14 14
Total revenues - - 285,900 285,900
EXPENDITURES:

Parks and recreation - - 330 330
Total expenditures - - 330 330
EXCESS OF REVENUES OVER EXPENDITURES - - 285,570 285,570 OTHER FINANCING SOURCES (USES):

Transfers out - (1,086,114) (285,568) 800,546
TOTAL OTHER FINANCING SOURCES (USES) - (1,086,114) (285,568) 800,546 CHANGES IN FUND BALANCE - (1,086,114) 2 1,086,116
FUND BALANCE, JULY 1 1,774 1,774 1,774 -
FUND BALANCE (DEFICIT), JUNE 30 $ 1,774 $ (1,084,340) $ 1,776 $ 1,086,116 NOTE: The expenditures by function amounts listed above include the capital outlay expenditures within each department.

FISCAL YEAR ENDED JUNE 30, 2021
Budget

BUDGET (GAAP BASIS) AND ACTUAL - LOCAL TRANSPORTATION SPECIAL REVENUE FUND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE -

CITY OF MODESTO
100
#1..
- 143 -
Variance with
Original Final Actual Final Budget
REVENUES:

Charges for services $ 220,000 $ 220,000 $ 332,259 $ 112,259 Fines and forfeits 300,000 300,000 181,997 (118,003)
Total revenues 520,000 520,000 514,256 (5,744)
EXPENDITURES:

Public safety 621,697 628,781 404,713 224,068
Total expenditures 621,697 628,781 404,713 224,068

EXCESS (DEFICIT) OF REVENUES OVER
(UNDER) EXPENDITURES (101,697) (108,781) 109,543 218,324 CHANGES IN FUND BALANCE (101,697) (108,781) 109,543 218,324 FUND BALANCE, JULY 1 4,277,905 4,277,905 4,277,905 -
FUND BALANCE, JUNE 30 $ 4,176,208 $ 4,169,124 $ 4,387,448 $ 218,324 NOTE: The expenditures by function amounts listed above include the capital outlay expenditures within each department.

FISCAL YEAR ENDED JUNE 30, 2021

BUDGET (GAAP BASIS) AND ACTUAL - TRAFFIC SAFETY SPECIAL REVENUE FUND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE -

CITY OF MODESTO
Budget
101
#1..
- 144 -
Variance with
Original Final Actual Final Budget
REVENUES:

Taxes $ 136,500 $ 136,500 $ 225,051 $ 88,551
Special assessments levied - 780,150 692,372 (87,778)
Interest and rent - - 544 544
Net (decrease) in fair value of investments - - (471) (471) Total revenues 136,500 916,650 917,496 846

EXPENDITURES:

Current:

Community development 153,715 1,168,672 1,097,368 71,304 Total expenditures 153,715 1,168,672 1,097,368 71,304

EXCESS (DEFICIENCY) OF REVENUES OVER
(UNDER) EXPENDITURES (17,215) (252,022) (179,872) 72,150 CHANGES IN FUND BALANCE (17,215) (252,022) (179,872) 72,150 FUND BALANCE, JULY 1 179,912 179,912 179,912 -
FUND BALANCE (DEFICIT), JUNE 30 $ 162,697 $ (72,110) $ $ 72,150 40 NOTE: The expenditures by function amounts listed above include the capital outlay expenditures within each department.

Budget

CITY OF MODESTO

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND

BALANCE - BUDGET (GAAP BASIS) AND ACTUAL - DOWNTOWN

IMPROVEMENT DISTRICT SPECIAL REVENUE FUND
FISCAL YEAR ENDED JUNE 30, 2021
102
#1..
- 145 -
Variance with
Original Final Actual Final Budget
REVENUES:

Charges for services $ 520,000 $ 520,000 $ 162,428 $ (357,572) Intergovernmental - 70,000 70,000 -
Interest and rent - - 14,917 14,917
Net (decrease) in fair value of investments - - (15,017) (15,017) Miscellaneous - - 100,000 100,000
Total revenues 520,000 590,000 332,328 (257,672)
EXPENDITURES:

Community development 996,530 1,062,625 201,717 860,908 Total expenditures 996,530 1,062,625 201,717 860,908

EXCESS (DEFICIT) OF REVENUES OVER
(UNDER) EXPENDITURES (476,530) (472,625) 130,611 603,236 OTHER FINANCING SOURCES:

Transfers in 405,181 405,181 - (405,181)
Transfers out - - (4,600) (4,600)
TOTAL OTHER FINANCING SOURCES (USES) 405,181 405,181 (4,600) (409,781) CHANGES IN FUND BALANCE (71,349) (67,444) 126,011 193,455 FUND BALANCE, JULY 1 1,275,777 1,275,777 1,275,777 -
FUND BALANCE, JUNE 30 $ 1,204,428 $ 1,208,333 $ 1,401,788 $ 193,455 NOTE: The expenditures by function amounts listed above include the capital outlay expenditures within each department.

Budget

CITY OF MODESTO

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN

FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL - STRATEGIC

PLANNING AND DEVELOPMENT SPECIAL REVENUE FUND
FISCAL YEAR ENDED JUNE 30, 2021
103
#1..
- 146 -
Variance with
Original Final Actual Final Budget
REVENUES:

Intergovernmental:

State $ 18,603,188 $ 23,056,288 $ 22,501,876 $ (554,412) Taxes 1,100,000 1,100,000 1,515,252 415,252
Licenses and permits - - 10,246 10,246
Charges for services 793,031 793,031 1,115,835 322,804
Interest and rent - - 236,501 236,501
Net (decrease) in fair value of investments - - (227,607) (227,607) Miscellaneous 30,000 30,000 163,389 133,389
Total revenues 20,526,219 24,979,319 25,315,492 336,173 EXPENDITURES:

Current:

Highway and streets 12,219,389 13,397,706 11,021,059 2,376,647 Total expenditures 12,219,389 13,397,706 11,021,059 2,376,647 EXCESS OF REVENUES OVER EXPENDITURES 8,306,830 11,581,613 14,294,433 2,712,820 OTHER FINANCING SOURCES (USES):

Transfers in 298,002 1,540,105 1,578,898 38,793
Transfers out - (8,100,129) (7,294,925) 805,204
Sale of assets - - 1,934 1,934
TOTAL OTHER FINANCING SOURCES (USES) 298,002 (6,560,024) (5,714,093) 845,931 CHANGES IN FUND BALANCE 8,604,832 5,021,589 8,580,340 3,558,751 FUND BALANCE, JULY 1 24,124,850 24,124,850 24,124,850 - FUND BALANCE, JUNE 30 $ 32,729,682 $ 29,146,439 $ 32,705,190 $ 3,558,751 NOTE: The expenditures by function amounts listed above include the capital outlay expenditures within each department.

Budget

CITY OF MODESTO

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN

FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL

TRANSPORTATION SPECIALTAX REVENUE FUND
FISCAL YEAR ENDED JUNE 30, 2021
104
#1..
- 147 -

Nonmajor Enterprise Funds
Enterprise Funds are established to account for activities that render services on a user-charge basis to the general public. Nonmajor Enterprise Funds include:

PARKING FUND – Revenues in this fund consist of charges for off-street parking and the downtown parking garage, as well as in-lieu parking fees. The revenue is used to develop and maintain parking facilities.

STORM DRAIN FUND – To account for storm drain improvements, operations and maintenance. The activities of the fund include street cleaning, rock well maintenance, and compliance with Federal and State water quality standards on storm water discharge.

COMPOST FUND – To account for tip fees charged at the City’s composting facility for processing various compostable materials and the sale of compost product. Excess revenues over expenses are set aside to protect the enterprise against market fluctuations, and to provide for capital improvements to the facility infrastructure.

AIRPORT FUND – To account for all airport operations as stipulated in the City-Stanislaus County agreement of January 1968. Amounts received from the Federal government, State of California, and Stanislaus County, requiring matching amounts by the City, are recorded in this fund and are appropriated to finance approved capital projects.

GOLF FUND – Revenues in this fund consist of fees charged for using the City’s golf courses. The revenue is used to improve, operate, and maintain golf courses.

COMMUNITY CENTER FUND – Accounted for in this fund are all amounts collected for the purpose of operating and maintaining the Modesto Centre Plaza Community Center. Revenues include room rental, catering fees, ticket sales, and other charges for using the center.

ABATEMENT AND PUBLIC NUISANCE FUND – To account the activity for expenses and recovery for the cost for both dangerous and unsafe building and property abatements. 105
#1..
- 148 -

CITY OF MODESTO

COMBINING STATEMENT OF NET POSITION - NONMAJOR ENTERPRISE FUNDS JUNE 30, 2021
Storm
Parking Drain Compost
Current assets:

Cash and cash equivalents $ 288,426 $ 12,001,208 $ 3,761,162 Receivables:

Accounts 14,060 15,865 1,153,968
Interest 495 23,289 11,411
Utilities, net - 547,121 460,294
Prepaid expenses 15 26,759 -
Due from governments 101,250 4,538 136,621
Inventories - - -
Total current assets 404,246 12,618,780 5,523,456
Noncurrent assets:

Advances to other funds - - -
Restricted cash and cash equivalents - - 461,199
Restricted cash and cash equivalents with fiscal agent - - - Land and construction in progress 3,131,803 1,060,067 1,140,000 Other capital assets, net of accumulated depreciation 3,392,525 13,799,142 956,892 Total noncurrent assets 6,524,328 14,859,209 2,558,091
Total assets 6,928,574 27,477,989 8,081,547
Deferred OPEB 47,380 44,704 250,800
Deferred pensions 102,636 135,894 1,024,235
Total deferred outflows of resources 150,016 180,598 1,275,035 Total assets and deferred outflows of resources $ 7,078,590 $ 27,658,587 $ 9,356,582

LIABILITIES
Current liabilities:

Accounts payable $ 20,651 $ 186,399 $ 872,447
Accrued salaries and benefits 16,811 9,998 106,132
Interest payable - - 1,446
Unearned revenue 303 - 11,619
Current portion - long-term debt - - -
Total current liabilities 37,765 196,397 991,644
Noncurrent liabilities:

Pollution remediation liability - - 904,952
Obligation under capital leases - - -
Certificates of participation - - -
Advances from other funds - 1,324,704 5,092,400
Net OPEB liability 201,190 190,715 1,213,263
Net pension liability 833,500 1,103,586 8,317,758
Total noncurrent liabilities 1,034,690 2,619,005 15,528,373 Total liabilities 1,072,455 2,815,402 16,520,017
Deferred OPEB 9,886 6,912 66,472
Deferred pensions 2,994 3,964 29,873
Total deferred inflows of resources 12,880 10,876 96,345 Net investment in capital assets 6,524,328 14,859,209 2,096,892 Unrestricted (531,073) 9,973,100 (9,356,672)
Total net position 5,993,255 24,832,309 (7,259,780)
Total liabilities, deferred inflows of resources, and net position $ 7,078,590 $ 27,658,587 $ 9,356,582

NET POSITION

DEFERRED OUTFLOWS OF RESOURCES
ASSETS

DEFERRED INFLOWS OF RESOURCES
106
#1..
- 149 -
Community Abatement and
Airport Golf Center Public Nuisance Total
$ 1,800,936 $ $ 1 $ 2 258,473 $ 18,110,208
28,252 326,134 - 14,001 1,552,280
3,505 1,278 - 450 40,428
- - - - 1,007,415
307 - 274 - 27,355
239,001 - 1,354,952 - 1,836,362
- 2,394 - - 2,394
2,072,001 329,807 1,355,228 272,924 22,576,442
- - - 211,523 211,523
- - - - 461,199
- 658,049 - - 658,049
1,352,141 623,575 3,667,020 - 10,974,606
9,180,071 968,373 2,615,564 - 30,912,567
10,532,212 2,249,997 6,282,584 211,523 43,217,944
12,604,213 2,579,804 7,637,812 484,447 65,794,386
- - 33,214 - 376,098
108,920 - 99,401 - 1,471,086
108,920 - 132,615 - 1,847,184
$ 12,713,133 $ 2,579,804 $ 7,770,427 $ 484,447 $ 67,641,570 $ 10,268 $ 59,608 $ 83,666 $ $ 1,233,039 -
10,130 21,452 14,402 - 178,925
- 11,456 - - 12,902
5,472 645,544 - 10,510 673,448
- 437,274 - - 437,274
25,870 1,175,334 98,068 10,510 2,535,588
- - - - 904,952
- 3,351 - - 3,351
- 940,000 - - 940,000
- - - - 6,417,104
- - 160,727 - 1,765,895
884,533 - 807,227 - 11,946,604
884,533 943,351 967,954 - 21,977,906
910,403 2,118,685 1,066,022 10,510 24,513,494
- - 7,935 - 91,205
3,177 - 2,899 - 42,907
3,177 - 10,834 - 134,112
10,532,212 869,372 6,282,584 - 41,164,597
1,267,341 (408,253) 410,987 473,937 1,829,367
11,799,553 461,119 6,693,571 473,937 42,993,964
$ 12,713,133 $ 2,579,804 $ 7,770,427 $ 484,447 $ 67,641,570 107
#1..
- 150 -

CITY OF MODESTO

COMBINING STATEMENT OF REVENUES, EXPENSES, AND

CHANGES IN FUND NET POSITION - NONMAJOR ENTERPRISE FUNDS FISCAL YEAR ENDED JUNE 30, 2021
Parking Storm Drain Compost
OPERATING REVENUES:

Charges for services $ 974,315 $ 6,163,870 $ 10,317,925 Miscellaneous 9,038 3,621 115,833
Total operating revenues 983,353 6,167,491 10,433,758
OPERATING EXPENSES:

Salaries and wages 398,008 346,819 3,621,227
Contractual services 189,978 228,784 3,133,556
Utilities 135,592 23,214 27,837
Maintenance and supplies 153,046 2,356,867 1,778,021
Insurance 83,870 12,337 264,478
Employee benefits 221,383 90,173 2,597,580
Administration services 127,161 2,188,429 498,260
Allocated indirect administrative costs 41,273 159,339 287,603 Depreciation 385,570 411,197 101,610
Total operating expenses 1,735,881 5,817,159 12,310,172 OPERATING INCOME (LOSS) (752,528) 350,332 (1,876,414)
NONOPERATING REVENUES (EXPENSES):

Gain on disposition of capital assets 2,517 15,865 5,657 Operating grants - - 372,418
Tax revenue - - -
Tax expense (20,774) - -
Interest income 2,568 101,553 36,461
Net (decrease) in fair value of investments (3,238) (105,737) (50,376) Rental income - - -
Interest expense - - -
Trustee fees - - -
Total nonoperating revenues (expenses) (18,927) 11,681 364,160

INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS (771,455) 362,013 (1,512,254) Transfers in 70,000 700,000 -
Transfers out - - (175,642)
CHANGES IN NET POSITION (701,455) 1,062,013 (1,687,896) NET POSITION (DEFICIT), JULY 1 6,694,710 23,770,296 (4,014,729) PRIOR PERIOD ADJUSTMENTS - - (1,557,155)
NET POSITION (DEFICIT), JUNE 30 $ 5,993,255 $ 24,832,309 $ (7,259,780) 108
#1..
- 151 -
Abatement and
Community Public Nuisance
Airport Golf Center Fund Total
$ 655,640 $ 2,632,491 $ $ 115,999 36,476 $ 20,896,716
31,283 710,536 438 - 870,749
686,923 3,343,027 36,914 115,999 21,767,465
370,290 - 517,710 - 5,254,054
55,376 2,334,801 293,182 58,438 6,294,115
108,325 53,589 263,358 - 611,915
175,324 235,011 162,148 - 4,860,417
34,135 26,335 34,328 - 455,483
330,764 - 232,746 - 3,472,646
41,307 73,818 436,039 27,963 3,392,977
25,151 48,756 - - 562,122
785,141 51,655 65,149 - 1,800,322
1,925,813 2,823,965 2,004,660 86,401 26,704,051
(1,238,890) 519,062 (1,967,746) 29,598 (4,936,586)
9,500 - - - 33,539
316,977 - 595,782 - 1,285,177
266,272 - - - 266,272
- (122) - - (20,896)
15,202 - - 1,819 157,603
(14,224) (2,479) - (1,892) (177,946)
159,505 103,049 723,150 - 985,704
- (115,674) - - (115,674)
- (5,955) - - (5,955)
753,232 (21,181) 1,318,932 (73) 2,407,824
(485,658) 497,881 (648,814) 29,525 (2,528,762)
- 193,756 1,786,885 4,600 2,755,241
- - - - (175,642)
(485,658) 691,637 1,138,071 34,125 50,837
12,285,211 (230,518) 5,555,500 439,812 44,500,282
- - - - (1,557,155)
$ 11,799,553 $ 461,119 $ 6,693,571 $ 473,937 $ 42,993,964 109
#1..
- 152 -
Storm
Parking Drain Compost
CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from customers and users $ 886,434 $ 6,104,061 $ 10,347,688 Payments to suppliers (398,088) (1,485,613) (7,110,420) Payments to employees (575,208) (595,736) (5,623,082)
Payments for interfund services used (363,646) (3,722,870) (3,029,855) Net cash provided (used) by operating activities (450,508) 299,842 (5,415,669)

CASH FLOWS FROM NONCAPITAL FINANCING
ACTIVITIES:

Operating grants received - - 372,418
Taxes received - - -
Transfers in 70,000 700,000 -
Transfers out - - (175,642)
Settlements and recoveries Advances from/to other funds -- -- 1,105,800 -
Net cash provided (used) by noncapital financing
activities 70,000 700,000 1,302,576

CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:

Acquisition and construction of capital assets - (332,368) (12,578) Proceeds from sale of capital assets 2,518 15,865 5,657 Principal repayments - - -
Interest paid - - -
Trustee fees - - -
Net cash provided (used) by capital and related
financing activities 2,518 (316,503) (6,921)
CASH FLOWS FROM INVESTING ACTIVITIES:

Interest received 4,301 115,371 54,695
Net (decrease) in the fair value of investments (3,238) (105,737) (50,376) Rental income received - - -
Net cash provided (used) by investing activities 1,063 9,634 4,319 Net increase (decrease) in cash and cash equivalents (376,927) 692,973 (4,115,695) CASH AND CASH EQUIVALENTS, JULY 1 665,353 11,308,235 8,338,056 CASH AND CASH EQUIVALENTS, JUNE 30 $ 288,426 $ 12,001,208 $ 4,222,361 RECONCILIATION TO STATEMENT OF NET POSITION:

Cash and cash equivalents $ 288,426 $ 12,001,208 $ 3,761,162 Restricted cash and cash equivalents - - 461,199
Restricted cash and cash equivalents with fiscal agent - - - TOTAL CASH AND CASH EQUIVALENTS $ 288,426 $ 12,001,208 $ 4,222,361

CITY OF MODESTO

COMBINING STATEMENT OF CASH FLOWS - NONMAJOR ENTERPRISE FUNDS FISCAL YEAR ENDED JUNE 30, 2021
110
#1..
- 153 -
Abatement and
Community Public Nuisance
Airport Golf Center Fund Total
$ 668,367 $ 3,469,306 $ 36,914 $ 116,877 $ 21,629,647
(220,703) (2,714,445) (1,902,336) (58,443) (13,890,048) (570,347) 7,710 (690,192) - (8,046,855)
(228,181) (181,287) (551,022) (27,963) (8,104,824)
(350,864) 581,284 (3,106,636) 30,471 (8,412,080)
316,977 - 595,782 - 1,285,177
266,272 - - - 266,272
- 193,756 1,786,885 4,600 2,755,241
- - - - (175,642)
-- -- -- 52,881 - 1,158,681
193,756 583,249 2,382,667 57,481 5,289,729
- (347,834) - - (692,780)
9,500 - - - 33,540
- (412,202) - - (412,202)
- (147,151) - - (147,151)
- (5,955) - - (5,955)
9,500 (913,142) - - (1,224,548)
16,309 26,355 - 2,069 219,100
(14,224) (2,479) - (1,892) (177,946)
159,505 103,049 723,150 - 985,704
161,590 126,925 723,150 177 1,026,858
403,475 (11,177) (819) 88,129 (3,320,041)
1,397,461 669,227 821 170,344 22,549,497
$ 1,800,936 $ 658,050 $ $ 258,473 $ 19,229,456 2
$ 1,800,936 $ $ 1 $ 258,473 $ 18,110,208 2
- - - - 461,199
- 658,049 - - 658,049
$ 1,800,936 $ 658,050 $ $ 258,473 $ 19,229,456 2
(continued)
111
#1..
- 154 -

CITY OF MODESTO
COMBINING STATEMENT OF CASH FLOWS - NONMAJOR ENTERPRISE FUNDS (Continued) FISCAL YEAR ENDED JUNE 30, 2021
Storm
Parking Drain Compost

RECONCILIATION OF OPERATING INCOME (LOSS)
TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:

Operating income (loss) $ (752,528) $ 350,332 $ (1,876,414) Adjustments to reconcile operating income (loss) to
net cash provided (used) by operating activities:

Depreciation 385,570 411,197 101,610
Taxes paid (20,774) - -
Change in assets, liabilities, and deferred resources:
(Increase) decrease in accounts receivable (96,919) (15,490) 58,050 (Increase) in utilities receivable - (47,730) (78,113)
Increase (decrease) in due from other governments - - 3,480 (Increase) decrease in accounts payable (10,025) (215,539) (2,885,824) Decrease in inventories - - -
(Increase) decrease in prepaid expenses (15) (23,974) 1,302 Increase (decrease) in accrued salaries and benefits 5,360 (6,382) (1,028) Increase (decrease) in net pension liability and deferred resources 42,025 (148,740) 616,030 (Increase) in net OPEB liability and deferred resources (3,505) (3,622) (1,576,432) Increase pollution remediation - - 291,157
Increase (decrease) in unearned revenue 303 (210) (69,487) Total adjustments 302,020 (50,490) (3,539,255)
Net cash provided (used) by operating activities $ (450,508) $ 299,842 $ (5,415,669) 112
#1..
- 155 -
Abatement and
Community Public Nuisance
Airport Golf Center Fund Total
$ (1,238,890) $ 519,062 $ (1,967,746) $ 29,598 $ (4,936,586) 785,141 51,655 65,149 - 1,800,322
- (122) - - (20,896)
20,218 (1,514) 63,304 58,988 86,637
- - - - (125,843)
(39,932) - (1,354,952) - (1,391,404)
(9,184) (185,687) 27,636 (5) (3,278,628)
- 49,130 - - 49,130
(82) 13,257 (274) - (9,786)
(494) 7,710 2,176 - 7,342
131,201 - 65,628 - 706,144
- - (7,540) - (1,591,099)
- - - - 291,157
1,158 127,793 (17) (58,110) 1,430
888,026 62,222 (1,138,890) 873 (3,475,494)
$ (350,864) $ 581,284 $ (3,106,636) $ 30,471 $ (8,412,080) 113
#1..
- 156 -
This page is intentionally left blank.
114
#1..
- 157 -

Internal Service Funds
Internal Service Funds are established to finance and account for services and commodities furnished by a designated agency of a governmental unit to other departments of the same governmental unit. Since the services and commodities are supplied exclusively to other departments of a governmental jurisdiction, they are distinguishable from those public services which are rendered to the public in general and which are accounted for in General, Special Revenue, or Enterprise Funds. Internal Service Funds include:

FLEET MANAGEMENT FUND – To provide the maintenance necessary for the City’s equipment pool, which serves the needs of all City departments.

CENTRAL SERVICES FUND – To provide office supplies, various maintenance and construction materials, records storage, and mail services to all City departments.

INFORMATION AND TECHNOLOGY SERVICES FUND – To finance and account for the replacement, upgrade and maintenance of the City’s network and technology infrastructure, and to develop and implement a coordinated city-wide information technology plan.

INSURANCE FUND – To finance and account for the City’s insurance and risk management programs.

EMPLOYEE BENEFITS MANAGEMENT FUND – To account for all compensated absences and other employee benefits. Insurance benefits for current employees are accounted for in the Insurance Fund.

BUILDING SERVICES FUND – To account for the true cost of occupying and maintaining office space, to better reflect the value of that space, and to accumulate amounts for future building repair costs. 115
#1..
- 158 -
Information
Fleet Central & Technology
Management Services Services
ASSETS
Current assets:

Cash and cash equivalents $ 7,379,596 $ $ 1 3,060,749
Receivables:

Accounts 10,725 - -
Interest 13,240 137 6,357
Prepaid expenses 684 - 17,345
Due from governments 4,906 - 327
Inventories - 1,346,332 -
Total current assets 7,409,151 1,346,470 3,084,778
Noncurrent assets:

Restricted assets - cash and cash equivalents - - -
Restricted assets - cash from fiscal agent - - -
Land and construction in progress 4,108,925 - 2,158,379 Other capital assets, net of accumulated depreciation 9,203,384 - 2,282,315 Total noncurrent assets 13,312,309 - 4,440,694
Total assets 20,721,460 1,346,470 7,525,472
Deferred OPEB 124,890 - 298,828
Deferred pensions 522,357 - 905,810
Total deferred outflows of resources 647,247 - 1,204,638 Total assets and deferred outflows of resources $ 21,368,707 $ 1,346,470 $ 8,730,110

LIABILITIES
Current liabilities:

Accounts payable $ 679,303 $ 1,360,680 $ 89,914
Accrued salaries and benefits 54,858 8,554 95,269
Interest payable - 2,726 -
Unearned revenue - - -
Current portion - compensated absences - - -
Current portion - claims liability - - -
Total current liabilities 734,161 1,371,960 185,183
Noncurrent liabilities:

Compensated absences - - -
Claims liability - - -
Net OPEB liability 693,075 - 1,098,879
Net pension liability 4,242,028 - 7,356,029
Total noncurrent liabilities 4,935,103 - 8,454,908
Total liabilities 5,669,264 1,371,960 8,640,091
Deferred OPEB 42,247 - 51,194
Deferred pensions 15,235 - 26,420
Total deferred inflows of resources 57,482 - 77,614

NET POSITION
Net investment in capital assets 13,312,309 - 4,440,694 Restricted - - -
Unrestricted 2,329,652 (25,490) (4,428,289)
Total net position 15,641,961 (25,490) 12,405
Total liabilities, deferred inflows of resources, and net position $ 21,368,707 $ 1,346,470 $ 8,730,110

DEFERRED OUTFLOWS OF RESOURCES

DEFERRED INFLOWS OF RESOURCES

CITY OF MODESTO

COMBINING STATEMENT OF NET POSITION - INTERNAL SERVICE FUNDS JUNE 30, 2021
116
#1..
- 159 -
Employee
Benefits Building
Insurance Management Services Total
$ 18,002,332 $ $ - 1,443,762 $ 29,886,440
1,399,487 57,480 4,940 1,472,632
60,703 16,489 2,279 99,205
567 2,063 1,070 21,729
379 27 23,263 28,902
- - - 1,346,332
19,463,468 76,059 1,475,314 32,855,240
1,298,356 8,000,247 - 9,298,603
140,957 - - 140,957
- - - 6,267,304
- - 70,193 11,555,892
1,439,313 8,000,247 70,193 27,262,756
20,902,781 8,076,306 1,545,507 60,117,996
- - 10,484 434,202
116,532 35,549 157,394 1,737,642
116,532 35,549 167,878 2,171,844
$ 21,019,313 $ 8,111,855 $ 1,713,385 $ 62,289,840
$ 703,632 $ 131,379 $ 24,234 $ 2,989,142
10,196 3,721 18,065 190,663
- - - 2,726
36,938 - - 36,938
- 990,803 - 990,803
7,775,304 - - 7,775,304
8,526,070 1,125,903 42,299 11,985,576
- 11,284,857 - 11,284,857
20,977,553 - - 20,977,553
- - 64,793 1,856,747
946,347 288,690 1,278,191 14,111,285
21,923,900 11,573,547 1,342,984 48,230,442
30,449,970 12,699,450 1,385,283 60,216,018
- - 4,240 97,681
3,399 1,037 4,590 50,681
3,399 1,037 8,830 148,362
- - 70,193 17,823,196
1,439,313 8,000,247 - 9,439,560
(10,873,369) (12,588,879) 249,079 (25,337,296)
(9,434,056) (4,588,632) 319,272 1,925,460
$ 21,019,313 $ 8,111,855 $ 1,713,385 $ 62,289,840
117
#1..
- 160 -
Information
Fleet Central & Technology
Management Services Services
OPERATING REVENUES:

Charges for services $ 8,231,776 $ 2,733,610 $ 6,404,421 Miscellaneous 8,405 - 9,669
Total operating revenues 8,240,181 2,733,610 6,414,090
OPERATING EXPENSES:

Salaries and wages 1,740,751 256,052 3,062,724
Cost of sales - 2,083,987 -
Contractual services 924,149 57,393 361,744
Utilities 4,058 - 129,207
Maintenance and supplies 3,190,932 101,478 1,957,711
Insurance 103,594 5,308 70,705
Claims - - -
Employee benefits 1,255,179 145,058 2,193,585
Administration services 224,742 46,118 3,221
Allocated indirect administrative costs 355,266 - -
Depreciation 2,376,400 - 574,003
Total operating expenses 10,175,071 2,695,394 8,352,900 OPERATING INCOME (LOSS) (1,934,890) 38,216 (1,938,810)
NONOPERATING REVENUES (EXPENSES):

Gain (loss) on disposition of capital assets (160,539) - (4,953) Settlements and recoveries - - -
Interest income 69,518 - 28,161
Net increase (decrease) in fair value of investments (67,425) 349 (30,843) Total nonoperating revenues (expenses) (158,446) 349 (7,635)

INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS (2,093,336) 38,565 (1,946,445) Transfers in 819,273 5,138 269,462
Transfers out (28,320) - (136,262)
CHANGES IN NET POSITION (1,302,383) 43,703 (1,813,245)
NET POSITION (DEFICIT), JULY 1 16,944,344 (69,193) 1,825,650 NET POSITION (DEFICIT), JUNE 30 $ 15,641,961 $ (25,490) $ 12,405

COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES

IN FUND NET POSITION - INTERNAL SERVICE FUNDS
FISCAL YEAR ENDED JUNE 30, 2021

CITY OF MODESTO
118
#1..
- 161 -
Employee
Benefits Building
Insurance Management Services Total
$ 31,804,447 $ 25,859,173 $ 3,197,642 $ 78,231,069
296 168,835 2,567 189,772
31,804,743 26,028,008 3,200,209 78,420,841
399,005 2,425,316 590,514 8,474,362
- - - 2,083,987
2,257,951 309,592 1,340,007 5,250,836
1,037 998 216,672 351,972
7,043 7,514 496,254 5,760,932
18,880,827 2,731 13,279 19,076,444
9,774,878 3,457 - 9,778,335
430,471 25,641,820 624,448 30,290,561
175,763 285,049 52,873 787,766
- - - 355,266
- - 2,913 2,953,316
31,926,975 28,676,477 3,336,960 85,163,777
(122,232) (2,648,469) (136,751) (6,742,936)
- - 4,940 (160,552)
- 5,884,277 - 5,884,277
230,932 27,972 9,520 366,103
(259,606) (70,629) (8,977) (437,131)
(28,674) 5,841,620 5,483 5,652,697
(150,906) 3,193,151 (131,268) (1,090,239)
146,142 554,630 492,428 2,287,073
- - (47,118) (211,700)
(4,764) 3,747,781 314,042 985,134
(9,429,292) (8,336,413) 5,230 940,326
$ (9,434,056) $ (4,588,632) $ 319,272 $ 1,925,460
119
#1..
- 162 -
Information
Fleet Central & Technology
Management Services Services
CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from customers and users $ $ 39,261 $ - 9,669
Receipts from interfund services provided 8,231,776 1,200,574 6,404,421 Payments to suppliers (3,812,761) (769,476) (2,795,131) Payment of insurance claims - - -
Payments to employees (2,638,923) (398,906) (4,479,517) Payments for interfund services used (966,988) (35,187) (145,778) Net cash provided (used) by operating activities 852,365 (2,995) (1,006,336) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Transfers in 819,273 5,138 269,462
Transfers out (28,320) - (136,262)
Settlements and recoveries - - -
Net cash provided (used) by noncapital financing activities 790,953 5,138 133,200

CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:

Acquisition and construction of capital assets (3,338,477) - (47,023) Proceeds from sale of capital assets 21,738 - -
Net cash provided (used) by capital and related financing activities (3,316,739) - (47,023) CASH FLOWS FROM INVESTING ACTIVITIES:

Interest received 79,038 2,726 35,047
Net increase (decrease) in the fair value of investments (67,425) (4,868) (30,843) Net cash provided (used) by investing activities 11,613 (2,142) 4,204 Net increase (decrease) in cash and cash equivalents (1,661,808) 1 (915,955) CASH AND CASH EQUIVALENTS, JULY 1 9,041,404 - 3,976,704 CASH AND CASH EQUIVALENTS, JUNE 30 $ 7,379,596 $ 1 $ 3,060,749 RECONCILIATION TO STATEMENT OF NET POSITION:

Cash and cash equivalents $ 7,379,596 $ $ 1 3,060,749
Restricted cash and cash equivalents - - -
TOTAL CASH AND CASH EQUIVALENTS $ 7,379,596 $ $ 1 3,060,749

CITY OF MODESTO

COMBINING STATEMENT OF CASH FLOWS - INTERNAL SERVICE FUNDS FISCAL YEAR ENDED JUNE 30, 2021
120
#1..
- 163 -
Employee
Benefits Building
Insurance Management Services Total
$ $ - $ 111,355 $ - 160,285
31,720,637 25,859,173 3,186,254 76,602,835
(23,572,848) (322,021) (1,942,050) (33,214,287)
(7,191,144) (3,457) - (7,194,601)
(640,817) (26,976,385) (843,842) (35,978,390)
(249,346) (361,363) (187,491) (1,946,153)
66,482 (1,692,698) 212,871 (1,570,311)
146,142 554,630 492,428 2,287,073
- - (47,118) (211,700)
- 5,884,277 - 5,884,277
146,142 6,438,907 445,310 7,959,650
- - - (3,385,500)
- - 4,940 26,678
- - 4,940 (3,358,822)
269,539 65,888 10,044 462,282
(259,606) (70,629) (8,977) (442,348)
9,933 (4,741) 1,067 19,934
222,557 4,741,468 664,188 3,050,451
19,219,088 3,258,779 779,574 36,275,549
$ 19,441,645 $ 8,000,247 $ 1,443,762 $ 39,326,000
$ 18,002,332 $ $ - 1,443,762 $ 29,886,440
1,439,313 8,000,247 - 9,439,560
$ 19,441,645 $ 8,000,247 $ 1,443,762 $ 39,326,000
121
#1..
- 164 -
Fleet Central
Management Services

RECONCILIATION OF OPERATING INCOME (LOSS) TO
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:

Operating income (loss) $ (1,934,890) $ 38,216
Adjustments to reconcile operating income (loss) to
net cash provided (used) by operating activities:

Depreciation 2,376,400 -
Change in assets, liabilities, and deferred resources:
(Increase) decrease in accounts receivable 34,291 -
(Decrease) in due from governments (4,906) -
(Increase) decrease in prepaid expenses 13,428
Decrease in inventories - 187,086
Increase (decrease) in accounts payable 14,470 1,302,535 Increase (decrease) in accrued salaries and benefits (529) 2,204 (Decrease) in due to other funds - (1,533,036)
Increase in compensated absences - -
(Increase) decrease in net OPEB liability and deferred resources (8,940) - (Increase) decrease in net pension liability and deferred resources 366,476 - Increase (decrease) in unearned revenue (3,435) -
Increase in claims liability - -
Total adjustments 2,787,255 (41,211)
Net cash provided (used) by operating activities $ 852,365 $ (2,995)

CITY OF MODESTO
COMBINING STATEMENT OF CASH FLOWS - INTERNAL SERVICE FUNDS (Continued) FISCAL YEAR ENDED JUNE 30, 2021
122
#1..
- 165 -
Information Employee
& Technology Benefits Building
Services Insurance Management Services Total
$ (1,938,810) $ (122,232) $ (2,648,469) $ (136,751) $ (6,742,936) 574,003 - - 2,913 2,953,316
- (100,379) (57,480) (4,940) (128,508)
(327) (379) (27) (13,955) (19,594)
142,876 322 (2,063) (1,070) 153,493
- - - - 187,086
(560,870) (2,499,516) (75,410) (4,446) (1,823,237)
1,801 (801) (326) 1,658 4,007
- - - - (1,533,036)
- - 1,196,638 - 1,196,638
(22,772) - - 53 (31,659)
797,763 189,460 (105,561) 369,409 1,617,547
- 16,273 - - 12,838
- 2,583,734 - - 2,583,734
932,474 188,714 955,771 349,622 5,172,625
$ (1,006,336) $ 66,482 $ (1,692,698) $ 212,871 $ (1,570,311) 123
#1..
- 166 -
This page is intentionally left blank.
124
#1..
- 167 -

Custodial Funds
Custodial Funds account for assets held by the City as an agent for individuals, governmental entities and non-public organizations.

SPECIAL DISTRICTS - To account for collection of special district assessments from property owners and forwarding these collections to trustees for payment to bondholders.

TUOLUMNE RIVER REGIONAL PARK - To account for cash and investments of the Tuolumne River Regional Park, a joint powers agency between the City of Modesto, Stanislaus County and City of Ceres.

The agency provides financing, development, and maintenance of the Tuolumne River Regional Park facilities. The cash and investments of the Park are invested as part of the City’s investment pool.

MODESTO-CERES FIRE PROTECTION AGENCY - To record and distribute the special assessments for fire protection that were established under the Industrial Fire District. This is a joint powers agency between the Modesto Regional Fire Authority, the City of Ceres, and the Industrial Fire District. Cash and investments of the Agency are invested in the City’s investment pool.

CITY/COUNTY JOINT POWERS FINANCING AUTHORITY - To account for cash and investments of the City/County Capital Improvements and Financing Agency, a joint powers agency between the City of Modesto and Stanislaus County. The agency builds and maintains a joint City-County government complex in downtown Modesto. The cash and investments of the Agency are invested as part of the City’s investment pool.
.
125
#1..
- 168 -
City/County Joint
Special Tuolumne River Modesto-Ceres Powers Financing Total Other Districts Regional Park Fire Protection Agency Authority Custodial Funds ASSETS
Cash and cash equivalents $ 1,087,831 $ 183,851 $ 257,559 $ 21,768 $ 1,551,009 Restricted cash and cash equivalents
held with fiscal agent 2,933,813 - - - 2,933,813
Receivables:

Interest receivable 4,148 279 1,080 43 5,550
Taxes receivable 68,204 - 22,414 - 90,618
Assessments receivable 28,818,947 - - - 28,818,947
Due from governments - 330,095 - - 330,095
Land and construction in progress - 2,944,919 - - 2,944,919 Other capital assets, net of accumulated
depreciation - 4,580,836 - - 4,580,836
Other assets 788 - - - 788
Total assets 32,913,731 8,039,980 281,053 21,811 41,256,575 Deferred outflows of resources:

Loss on refunding 1,043,590 - - - 1,043,590

LIABILITIES
Accounts payable and other liabilities - 77,915 - - 77,915 Unearned revenues - - - - -
Due to local governments - - 281,051 - 281,051
Interest payable 431,596 - - - 431,596
Long-term liabilities:

Due within one year 981,659 - - - 981,659
Due in more than one year 28,839,337 - - - 28,839,337
Total liabilities 30,252,592 77,915 281,051 - 30,611,558 Deferred inflows of resources:

Unavailable revenues 812,680 - - - 812,680

NET POSITION
Net invested in capital assets - 7,525,755 - - 7,525,755 Restricted 2,933,813 - - - 2,933,813
Unrestricted (41,764) 436,310 2 21,811 416,359
Total net position $ 2,892,049 $ 7,962,065 $ $ 2 $ 10,875,927 21,811

CITY OF MODESTO

COMBINING STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS - OTHER CUSTODIAL FUNDS
JUNE 30, 2021
126
#1..
- 169 -
City/County Joint
Special Tuolumne River Modesto-Ceres Powers Financing Total Other Districts Regional Park Fire Protection Agency Authority Custodial Funds ADDITIONS:

Contributions:

Members investment pool $ $ - $ 385,526 $ - $ - 385,526 Total contributions - 385,526 - - 385,526
Collections on behalf of other governments:

Special assessments 2,316,754 - 295,040 - 2,611,794
Property taxes - - 349,136 - 349,136
Grants - 150,065 - - 150,065
Other - 76,504 - - 76,504
Total collections on behalf of other governments 2,316,754 226,569 644,176 - 3,187,499 Interest and investment earnings:

Interest earnings 16,953 426 1,920 202 19,501
Net (decrease) in fair value of investments (15,753) (582) (2,343) (202) (18,880) Total interest and investment earnings 1,200 (156) (423) - 621 Total additions 2,317,954 611,939 643,753 - 3,573,646
DEDUCTIONS:

Distribution of property taxes to other taxing entities - - 632,288 - 632,288 Obligation retirements:

Principal retirement 830,000 - - - 830,000
Interest expense 1,304,795 - - - 1,304,795
Trustee fees 3,685 - - - 3,685
Debt refunding expense - - - - -
City administrative expenses 25,593 88,517 1,899 - 116,009 Other expenses 11,215 - 9,564 - 20,779
Depreciation expense - 445,876 - - 445,876
Operating expenses - 336,100 - - 336,100
Total deductions 2,175,288 870,493 643,751 - 3,689,532
Net increase (decrease) in net position 142,666 (258,554) 2 - (115,886) Net position, July 1 - restated 2,749,383 8,220,619 - 21,811 10,991,813 Prior year adjustment - - - - -
Net position, June 30 $ 2,892,049 $ $ 7,962,065 $ 2 $ 10,875,927 21,811

CITY OF MODESTO

COMBINING STATEMENTS OF CHANGES IN FIDUCIARY NET POSITION

FIDUCIARY FUNDS - OTHER CUSTODIAL FUNDS
JUNE 30, 2021
127
#1..
- 170 -
This page is intentionally left blank.
128
#1..
- 171 -

STATISTICAL SECTION TAB
#1..
- 172 -
#1..
- 173 -

STATISTIAL SECTION
129
#1..
- 174 -
130
#1..
- 175 -

Statistical Section
This part of the Annual Comprehensive Financial Report presents detailed information to aid in understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial health. In contrast to the financial section, the statistical section information is not subject to independent audit.

Financial Trends
These schedules contain trend information to help the reader understand how the City’s financial performance has changed over time:

1. Net Position by Component

2. Changes in Net Position

3. Fund Balances of Governmental Funds

4. Changes in Fund Balances of Governmental Funds
Revenue Capacity
This schedule gives information on the City’s most significant local revenue source, the water usage charges:

1. Water Utility System – Ten Largest Customers

2. Water revenues by customer class

3. Water rates
Debt Capacity
These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future:

1. Ratio of Outstanding Debt by Type

2. Computation of Direct and Overlapping Debt

3. Computation of Legal Debt Margin

4. Revenue Bond Coverage, Wastewater Revenue Bonds
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place:

1. Demographic and Economic Statistics

2. Principal Employers

3. Principal Property Taxpayers
Operating Information
These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs:

1. Full-Time City Government Employees by Function

2. Operating Indicators by Function

3. Capital Asset Statistics by Function/Program
Sources: Unless otherwise noted, the information in these schedules is derived from the Annual Comprehensive Financial Reports for the relevant year.
131
#1..
- 176 -
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Governmental activities
Net investment in capital assets $ 362,755,958 $ 361,582,237 $ 347,647,419 $ 378,145,625 $ 381,887,289 $ 376,743,556 $ 377,529,238 $ 401,515,805 $ 374,618,780 $ 407,347,307 Restricted (2) 63,498,187 63,381,356 77,564,677 121,105,182 115,619,807 123,851,082 130,192,278 127,885,787 135,818,614 183,357,207 Unrestricted (4,326,456) (1,102,658) 9,167,253 (179,570,210) (173,275,294) (191,483,628) (182,197,396) (191,345,565) (206,772,243) (217,114,643) Total governmental activities net position $ 421,927,689 $ 423,860,935 $ 434,379,349 $ 319,680,597 $ 324,231,802 $ 309,111,010 $ 325,524,120 $ 338,056,027 $ 303,665,151 $ 373,589,871 Business-type activities
Net investment in capital assets $ 473,757,198 $ 476,681,835 $ 502,684,950 $ 527,784,338 $ 539,821,175 $ 555,163,217 $ 571,811,118 $ 607,813,261 $ 647,695,354 $ 648,609,186 Restricted (2) 0 25,571,860 22,398,957 20,622,619 22,052,595 21,525,961 21,071,542 15,569,107 15,857,655 17,004,338 Unrestricted 152,003,655 162,882,299 150,187,831 99,450,370 92,324,550 113,595,981 130,146,975 148,005,231 138,508,360 178,262,877 Total business-type activities net position $ 625,760,853 $ 665,135,994 $ 675,271,738 $ 647,857,327 $ 654,198,320 $ 690,285,159 $ 723,029,635 $ 771,387,599 $ 802,061,369 $ 843,876,401 Primary government
Net investment in capital assets $ 836,513,156 $ 838,264,072 $ 850,332,369 $ 905,929,963 $ 921,708,464 $ 931,906,773 $ 949,340,356 $ 1,009,329,066 $ 1,022,314,134 $ 1,055,956,493 Restricted 63,498,187 88,953,216 99,963,634 141,727,801 137,672,402 145,377,043 151,263,820 143,454,894 151,676,269 200,361,545 Unrestricted 147,677,199 161,779,641 159,355,084 (80,119,840) (80,950,744) (77,887,647) (52,050,421) (43,340,334) (68,263,883) (38,851,766) Total primary government net position $ 1,047,688,542 $ 1,088,996,929 $ 1,109,651,087 $ 967,537,924 $ 978,430,122 $ 999,396,169 $ 1,048,553,755 $ 1,109,443,626 $ 1,105,726,520 $ 1,217,466,272 (1) Accounting standards require that net position be reported in three components in the financial statements: net investment in capital assets; restricted; and unrestricted. Net position is considered restricted when (a) externally imposed by creditors (such as debt covenants), grantors, contributors, or laws or regulations of other governments or (b) imposed by law through constitutional provisions or enabling legislation. (2) Starting in fiscal year 2015, the significant decrease in net position was due to the implementation of GASB 68 related to the City's net pension liability.

CITY OF MODESTO
NET POSITION BY COMPONENT (1)

LAST TEN FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
($100)
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
$1,100
$1,200
Net investment in capital assets Restricted Unrestricted 132
#1..
- 177 -
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Expenses
Governmental activities:

General government $ 14,236,573 $ 12,041,953 $ 11,221,704 $ 12,085,051 $ 12,838,583 $ 13,945,824 $ 15,432,617 $ 13,973,768 $ 14,808,371 $ 14,727,031 Community development 14,206,876 25,162,533 13,002,466 11,888,475 12,552,115 15,419,529 17,268,926 15,720,280 25,698,343 30,782,573 Highways and streets 21,009,521 20,525,496 21,316,315 21,269,704 20,149,011 22,481,002 22,997,140 23,937,423 25,858,611 25,863,042 Public works 6,780,882 4,064,497 3,241,135 9,810,989 10,749,465 13,169,149 8,674,538 3,472,405 3,736,696 3,126,390 Parks and recreation 11,741,352 13,036,579 11,659,816 4,641,611 3,493,743 3,947,898 4,456,508 15,680,980 14,725,590 13,750,865 Public safety 83,568,633 83,857,207 72,301,682 86,782,741 86,907,876 104,348,464 120,629,673 111,059,794 140,709,104 129,785,835 Interest on long-term debt 3,066,897 3,193,997 2,958,471 3,204,203 2,691,894 2,500,849 2,510,224 2,402,299 2,302,626 2,039,849 Total governmental activities expenses $154,610,734 $161,882,262 $135,701,589 $149,682,774 $149,382,687 $175,812,715 $191,969,626 $186,246,949 $227,839,341 $220,075,585 Business-type activities:

Water $ 1,482,640 $ 1,252,660 $ 1,605,829 $ 54,718,239 $ 59,127,625 $ 63,008,231 $ 56,526,729 $ 62,745,688 $ 69,187,391 $ 68,792,875 Sewer 53,730,665 48,656,862 63,498,896 30,281,361 33,093,921 36,248,877 41,444,220 41,216,914 45,832,671 46,500,454 Bus 29,366,025 24,155,935 31,895,568 18,614,175 19,709,745 21,979,360 20,538,934 24,276,760 25,261,736 28,889,011 Parking 6,674,100 4,239,567 6,372,418 1,513,185 1,625,943 1,628,226 1,553,258 1,899,479 1,905,382 1,700,607 Storm drain 4,426,031 4,350,079 4,951,441 3,913,204 5,312,896 6,119,472 5,202,444 7,157,290 7,384,884 5,585,980 Compost 1,640,733 1,534,242 2,291,222 7,841,048 11,998,345 9,648,481 9,652,175 8,477,947 10,330,237 12,022,746 Airport 16,944,803 18,025,010 19,618,547 2,025,146 1,787,081 1,744,557 1,578,654 1,646,800 1,841,645 1,865,063 Golf 2,279,650 2,197,368 2,845,109 2,998,505 3,130,536 2,871,167 2,616,077 3,052,785 2,939,639 2,865,795 Community center 2,352,173 1,864,996 2,031,928 1,852,585 1,981,307 1,934,179 1,780,010 1,541,592 1,603,302 1,961,576 Abatement and public nuisance 34,609 42,879 31,877 93,067 84,152 51,624 351,557 63,312 142,124 82,166 Total business-type activities expenses 118,931,429 106,319,598 135,142,835 123,850,515 137,851,551 145,234,174 141,244,058 152,078,567 166,429,011 170,266,273 Total primary government expenses $ 273,542,163 $ 268,201,860 $ 270,844,424 $ 273,533,289 $ 287,234,238 $ 321,046,889 $ 333,213,684 $ 338,325,516 $ 394,268,352 $ 390,341,858 Program revenues
Governmental activities:

Charges for services:

General government $ 6,799,202 $ 6,262,963 $ 5,825,407 $ 5,912,157 $ 6,539,908 $ 5,082,405 $ 6,544,581 $ 6,387,743 $ 5,973,621 $ 6,237,530 Community development 4,430,690 4,123,811 4,537,984 3,385,050 6,885,850 10,378,999 16,049,727 12,106,237 17,327,298 16,611,118 Highway and streets 4,178,567 761,394 873,566 1,744,505 1,154,290 1,101,813 758,952 748,319 909,580 651,061 Public works 2,936,299 3,565,048 4,146,641 6,621,704 5,469,419 5,908,332 1,637,024 2,779,546 2,921,053 2,869,808 Parks and recreation 3,221,072 3,623,647 3,004,001 1,344,923 771,733 1,614,443 2,346,211 2,450,965 3,358,983 2,145,685 Public safety 3,338,783 3,668,302 3,123,758 4,218,000 3,868,346 4,847,914 5,127,433 4,502,546 11,354,045 5,849,193 Operating grants and contributions 10,270,642 16,477,474 5,868,684 5,862,566 3,630,185 5,050,771 5,802,634 6,591,435 16,838,122 12,010,918 Capital grants and contributions 9,509,584 9,046,762 8,206,154 5,878,550 1,708,602 2,117,867 3,062,292 8,831,664 5,894,717 57,825,011 Total government activities program revenues 44,684,839 47,529,401 35,586,195 34,967,455 30,028,333 36,102,544 41,328,854 44,398,455 64,577,419 104,200,324 Business-type activities:

Charges for services:

Water $ 1,291,401 $ 1,169,293 $ 1,092,347 $ 59,800,535 $ 55,992,533 $ 69,075,873 $ 74,842,451 $ 76,806,740 $ 82,796,199 $ 87,713,122 Sewer 57,534,190 61,474,235 60,254,110 46,193,997 47,859,680 49,905,078 52,799,102 57,562,619 58,168,552 63,614,677 Bus 41,825,928 43,414,773 46,046,304 3,424,662 3,352,615 3,253,046 3,305,910 3,176,134 2,443,208 1,624,167 Parking 5,783,694 5,780,644 5,831,133 1,239,439 1,289,211 1,284,269 1,434,311 1,519,954 1,264,938 983,353 Storm drain 4,672,517 8,012,611 4,853,133 5,874,349 5,588,169 5,910,988 6,004,682 6,133,801 6,114,242 6,167,491 Compost 619,689 619,904 634,530 7,191,145 7,352,767 8,903,917 8,934,075 10,090,662 10,216,018 10,433,758 Airport 2,892,539 2,946,937 2,989,504 551,373 622,383 596,152 651,693 737,072 651,447 686,923 Golf 1,759,818 1,568,532 2,196,280 2,574,496 2,431,904 2,236,100 2,485,688 2,419,938 2,005,588 3,343,027 Community center 420,059 263,581 230,801 257,991 326,839 305,436 294,524 285,685 188,589 36,914 Abatement and public nuisance 71,567 302,563 201,825 128,636 166,641 117,677 112,199 231,167 67,181 115,999 Operating grants and contributions 12,694,058 13,766,061 13,721,179 14,223,954 14,153,568 15,975,703 17,858,762 25,668,280 21,780,920 29,310,591 Capital grants and contributions 12,021,793 4,282,549 4,971,940 13,820,127 4,753,223 19,617,513 7,196,698 5,198,721 546,375 8,672,597 Total business-type activities program revenues 141,587,253 143,601,683 143,023,086 155,280,704 143,889,533 177,181,752 175,920,095 189,830,773 186,243,257 212,702,619 Total primary government program revenues $ 186,272,092 $ 191,131,084 $ 178,609,281 $ 190,248,159 $ 173,917,866 $ 213,284,296 $ 217,248,949 $ 234,229,228 $ 250,820,676 $ 316,902,943 Net (Expense)/Revenue
Governmental activities $ (109,925,895) $ (114,352,861) $ (100,115,394) $ (114,715,319) $ (119,354,354) $ (139,710,171) $ (150,640,772) $ (141,848,494) $ (163,261,922) $ (115,875,261) Business-type activities 22,655,824 37,282,085 7,880,251 31,430,189 6,037,982 31,947,578 34,676,037 37,752,206 19,814,246 42,436,346 Total primary government net expense $ (87,270,071) $ (77,070,776) $ (92,235,143) $ (83,285,130) $ (113,316,372) $ (107,762,593) $ (115,964,735) $ (104,096,288) $ (143,447,676) $ (73,438,915) (continued)

CITY OF MODESTO

CHANGES IN NET POSITION

LAST TEN FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
133
#1..
- 178 -
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
General Revenues and Other Changes in Net Position
Governmental activities:

Taxes:

Utility users tax $ 19,230,879 $ 20,399,116 $ 20,153,653 $ 19,591,170 $ 19,564,921 $ 20,113,023 $ 20,609,874 $ 19,803,859 $ 19,803,218 $ 20,764,694 Property taxes, levied for general purposes (1) 11,863,902 11,618,481 12,304,010 13,551,827 14,552,304 15,384,518 16,356,095 17,316,735 18,113,180 19,106,595 Property taxes, generated by and allocated to the airport 2,884,357 - - - - - - - - - Transient occupancy tax 1,769,106 1,884,188 1,879,825 2,097,952 2,523,087 2,669,484 2,826,160 2,961,406 2,727,061 2,850,229 Franchise tax 4,236,705 5,785,355 5,003,130 5,768,146 6,194,733 6,431,223 6,433,869 6,762,101 6,996,152 7,117,014 Cannabis tax (5) - - - - - - - 352,208 3,201,364 5,379,402 Business license tax, levied for general purposes 9,694,722 10,176,791 10,573,820 11,421,759 11,944,291 12,255,062 13,053,199 13,715,997 13,269,468 13,899,554 Business license tax, levied for downtown improvement district 177,026 170,222 181,689 188,247 186,123 192,540 189,070 202,014 190,543 225,051 Grants and contributions not restricted to specific programs: (4) Sales tax (state appropriation) 25,958,263 27,110,911 27,651,939 28,437,594 29,878,815 30,204,125 31,302,950 31,665,700 30,534,694 35,670,236 Motor vehicle license fee 13,072,804 12,038,983 12,494,642 13,871,248 14,548,427 15,385,069 16,206,760 17,057,003 17,977,807 18,855,971 Transportation tax funding - - - 5,924,101 4,533,572 3,968,029 5,672,563 19,002,236 19,438,347 22,501,876 Community facilities district fees - - - 4,570,403 3,829 1,830 274,494 8,432 16,567 14,628 Special assessments, levied - - - 1,924,623 3,168,260 3,014,768 5,715,030 4,260,281 4,622,697 4,851,750 Proceeds from Modesto Regional Fire Authority dissolution - - - 2,500,721 - - - - - - Other 11,794,261 12,844,926 15,269,250 25,866,105 13,101,149 15,842,047 17,469,209 13,832,686 27,469,638 39,528,038 Unrestricted investment earnings (411,571) 52,893 441,383 564,314 582,565 362,856 726,199 5,753,083 6,044,156 (287,088) Miscellaneous 1,821,336 1,861,660 5,402,480 2,281,008 2,440,696 515,206 818,542 3,421,783 3,660,429 2,184,677 Transfers 2,838,873 1,055,670 (41,312) (775,377) (567,177) (1,750,401) (354,287) (1,675,373) 479,917 824,609 Total government activities 104,930,663 104,999,196 111,314,509 137,783,841 122,655,595 124,589,379 137,299,727 154,440,151 174,545,238 193,487,236 Business-type activities:

Taxes:

Property taxes, generated by and allocated to the airport 253,974 257,687 254,200 237,546 206,854 199,124 207,849 201,931 190,995 266,272 Unrestricted investment earnings 2,095,947 1,184,422 2,726,148 554,180 2,247,061 872,935 1,047,604 7,290,802 8,082,331 (192,489) Connection fees (2) - 1,200,800 524,914 - - - - - - -
Miscellaneous - - - 1,214,729 1,368,761 1,316,801 1,472,809 1,528,727 1,390,820 1,686,667 Settlements (2,838,873) (1,055,670) 41,317 13,851 - - - - - - Transfers, net 222,379 116,711 110,376 775,377 567,177 1,750,401 354,287 1,675,373 (479,917) (824,609) Special item (3) (826,133) (1,143,257) (1,356,418) - - - - - - - Total business-type activities (1,092,706) 560,693 2,300,537 2,795,683 4,389,853 4,139,261 3,082,549 10,696,833 9,184,229 935,841 Total primary government $ 103,837,957 $ 105,559,889 $ 113,615,046 $ 140,579,524 $ 127,045,448 $ 128,728,640 $ 140,382,276 $ 165,136,984 $ 183,729,467 $ 194,423,077 Change in Net Position
Governmental activities $ (4,995,232) $ (9,353,665) $ 11,199,115 $ 23,068,522 $ 3,301,241 $ (15,120,792) $ (13,341,045) $ 12,591,657 $ 11,283,316 $ 77,611,975 Business-type activities 21,563,118 37,842,778 10,180,788 34,225,872 10,427,835 36,086,839 37,758,586 48,449,039 28,998,475 43,372,187 Total primary government $ 16,567,886 $ 28,489,113 $ 21,379,903 $ 57,294,394 $ 13,729,076 $ 20,966,047 $ 24,417,541 $ 61,040,696 $ 40,281,791 $ 120,984,162 (1) Due to the dissolution of the Redevelopment agencies, no tax increments will be reported on the entity-wide statements. (2) Starting in fiscal year 2015, connection fee revenues were reported as part of program revenues for the Water fund. (3) Starting in fiscal year 2015, the special item related to pollution remediation has been reported as a liability. Any expenses incurred will be accounted for as a reduction to the liability. (4) Starting in fiscal year 2015, general revenues for grants and contributions not restricted to specific programs other related governmental activities were reclassified to provide more specific category revenue types. (5) During fiscal years 2019 and 2020, Cannabis tax was previously reported as Business license tax levied for general purposes. In fiscal year 2021 financials have been updated to report Cannabis tax as such.

City of Modesto

CHANGES IN NET POSITION

LAST TEN FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
134
#1..
- 179 -
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
General Fund
Nonspendable $ 123,061 $ 126,603 $ 102,152 $ 2,770,844 $ 2,647,692 $ 2,515,146 $ 2,881,523 $ 2,723,032 $ 2,503,547 $ 2,388,852 Restricted 3,998,539 3,713,640 3,718,682 1,341,972 2,092,126 1,970,622 2,674,200 2,209,485 2,137,896 3,367,488 Committed - - 3,000,000 3,000,000 3,000,000 15,800,000 18,397,817 18,397,817 18,397,817 18,397,817 Assigned 519,051 1,173,377 1,024,149 3,119,753 6,503,769 4,854,307 1,096,566 509,751 309,114 349,022 Unassigned 10,806,111 11,758,746 12,069,864 14,586,931 12,822,134 4,509,693 1,695,476 1,742,785 2,407,575 6,395,913 Total General Fund $ 15,446,762 $ 16,772,366 $ 19,914,847 $ 24,819,500 $ 27,065,721 $ 29,649,768 $ 26,745,582 $ 25,582,870 $ 25,755,949 $ 30,899,092 All Other Governmental Funds
Nonspendable $ 119 $ 746 $ 3,907 $ 88,057 $ 86,242 $ 81,007 $ 23,816 $ 13,290 $ 101,173 $ 543,554 Restricted 109,145,041 106,724,809 108,672,378 79,643,971 80,563,574 85,531,411 91,786,367 89,210,020 104,838,269 111,141,528 Assigned 2,604,281 3,965,851 3,700,733 14,962,522 10,063,058 7,975,865 17,126,893 19,304,837 26,193,552 34,308,329 Unassigned (18,852,239) (32,965,286) (34,656,617) (3,866,450) (724,841) (3,156,679) (1,723,380) (2,809,303) (7,112,005) (4,375,860) Total all other governmental funds 92,897,202 $ $ 77,726,120 $ 77,720,401 $ 90,828,100 $ 89,988,033 $ 90,431,604 $ 107,213,696 $ 105,718,844 $ 124,020,989 $ 141,617,551 The change in total fund balance for the General Fund and other governmental funds is explained in Management's Discussion and Analysis.

Note: The City has elected to show ten years of data for this schedule.

FUND BALANCES OF GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)

CITY OF MODESTO
135
#1..
- 180 -
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Revenues
Taxes $ 49,856,697 $ 50,034,153 $ 50,096,127 $ 52,619,101 $ 54,965,459 $ 57,045,850 $ 59,468,267 $ 61,114,320 $ 64,300,986 $ 69,342,539 Licenses and permits 131,302 175,720 174,734 149,888 186,624 201,445 153,226 344,855 408,645 473,693 Intergovernmental 68,682,778 75,737,161 67,426,885 88,906,770 76,317,229 72,069,739 85,629,758 96,174,839 125,072,949 154,356,852 Charges for services 19,897,159 19,800,718 19,457,298 22,337,357 20,429,860 24,454,286 25,467,795 23,226,714 36,147,116 28,378,842 Special assessments levied 1,860,905 1,781,896 2,063,784 1,924,623 3,168,260 3,014,768 5,715,030 4,260,281 4,622,697 4,851,750 Interest and rent 1,145,251 835,994 1,019,357 957,846 1,297,734 1,402,387 1,574,347 2,219,282 2,018,446 1,320,686 Net increase (decrease) in fair value of investments (452,987) (584,090) (423,827) (320,398) 102,422 (572,616) (645,593) 1,294,543 1,728,158 (985,713) Fines and forfeits 2,169,482 2,004,133 1,844,607 1,171,076 904,802 1,263,407 1,127,877 1,143,506 666,120 660,110 Miscellaneous 1,821,336 2,081,776 4,653,746 2,784,295 2,286,597 516,844 818,542 722,662 989,858 1,392,784 Total Revenues 145,111,923 151,867,461 146,312,711 170,530,558 159,658,987 159,396,110 179,309,249 190,501,002 235,954,975 260,162,501 Expenditures
Current:

General government 12,411,413 11,169,669 11,643,579 11,334,202 12,414,982 11,542,131 11,837,635 12,262,797 12,028,015 12,483,217 Community development 12,831,734 23,673,373 12,589,817 11,511,154 12,453,678 13,264,050 13,234,820 13,796,154 20,945,194 26,215,559 Highways and streets 8,434,681 8,560,717 8,744,899 9,672,790 8,498,783 9,240,654 8,936,163 10,102,646 11,039,619 12,152,803 Public works 5,283,123 2,993,702 3,088,701 9,228,780 10,393,169 10,919,102 6,509,418 3,017,247 3,035,851 2,635,907 Parks and recreation 9,756,888 11,299,979 11,947,862 4,212,301 3,385,484 3,269,360 3,420,453 13,843,885 11,944,940 11,634,840 Public safety 72,131,852 74,094,399 74,595,533 81,353,131 84,022,670 86,475,891 92,341,706 97,411,634 114,540,829 110,275,920 Capital outlay 20,839,517 26,616,638 12,901,002 30,339,677 19,817,025 21,431,186 19,037,250 38,522,334 38,425,318 51,533,054 Debt service:

Principal retirement 2,397,000 1,451,000 1,596,000 1,789,335 2,345,362 2,535,093 2,849,343 2,562,498 2,734,132 2,931,077 Interest 3,229,440 2,330,962 2,159,672 2,417,840 2,043,278 2,075,202 2,114,488 1,897,384 1,996,806 1,985,927 Other 48,738 932,460 872,350 783,264 697,405 430,779 396,686 506,333 307,928 51,814 Total Expenditures 147,364,386 163,122,899 140,139,415 162,642,474 156,071,836 161,183,448 160,677,962 193,922,912 216,998,632 231,900,118 Excess of revenues over
(under) expenditures (2,252,463) (11,255,438) 6,173,296 7,888,084 3,587,151 (1,787,338) 18,631,287 (3,421,910) 18,956,343 28,262,383 Other Financing Sources (Uses)
Transfers in 11,384,460 18,230,774 7,962,817 8,157,278 6,960,425 5,559,720 10,707,217 21,496,638 15,292,128 14,249,431 Transfers out (14,223,663) (18,417,413) (11,164,994) (10,682,539) (10,572,346) (6,659,759) (13,568,675) (20,760,150) (17,397,619) (15,500,194) Capital leases - - 1,070,472 - 330,947 5,883,756 - 39,204 - - Sale of assets - 72,489 200,838 94,489 106,582 31,239 154,458 87,608 132,485 1,934 Total other financing sources (uses) (2,839,203) (114,150) (3,001,339) (1,360,300) (3,174,392) 4,814,956 (2,707,000) 824,096 (1,933,802) (1,248,829) Extraordinary Items:

RDA dissolution transactions (403,850) - - - - - - - - - RDA advance receivable elimination (966,127) - - - - - - - - - Total extraordinary items (1,369,977) - - - - - - - - - Change in fund balances (6,461,643) (11,369,588) 3,171,957 6,527,784 412,759 3,027,618 15,924,287 (2,597,814) 17,022,541 27,013,554 FUND BALANCES, July 1 113,940,285 108,343,964 94,498,486 97,635,248 115,647,600 117,053,754 120,081,372 133,959,278 131,301,714 149,776,938 PRIOR PERIOD ADJUSTMENTS 865,322 (2,475,890) (35,195) 11,484,568 993,395 - (2,046,381) (59,750) 1,452,683 (4,273,849) FUND BALANCES, June 30 $108,343,964 $94,498,486 $97,635,248 $115,647,600 $117,053,754 $120,081,372 $133,959,278 $131,301,714 $149,776,938 $172,516,643 Debt service as a percentage of
noncapital expenditures 4.45% 2.77% 2.95% 3.18% 3.22% 3.30% 3.50% 2.87% 2.65% 2.73% The debt service percentage was revised to only include principal and interest.

CITY OF MODESTO

CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
136
#1..
- 181 -
Ten Largest Customers of Water Utility System, Year Ended 06/30/2021 % of Total Water Sales % of Total Water
Customer Usage (ccf) (1) Usage Revenue ($) Sales Revenue 1) Modesto City Schools 456,810 1.95% 1,241,595 $ 1.58% 2) City of Modesto 400,313 1.70% 1,222,628 1.55%
3) Foster Farms 398,550 1.70% 809,702 1.03%
4) Stanislaus Food Products 339,824 1.45% 742,086 0.94% 5) Stanislaus Housing Authority 171,186 0.73% 515,320 0.65% 6) Sunopta 234,826 1.00% 489,779 0.62%
7) E & J Gallo Winery 168,915 0.72% 471,231 0.60%
8) Modesto Irrigation District 184,987 0.79% 448,130 0.57% 9) Yosemite Community College 109,436 0.47% 325,030 0.41% 10) STANCO 88,851 0.38% 325,004 0.41%
Total Top Ten 2,553,698 10.89% 6,590,505 $ 8.36%
Total Flat/Metered Revenues (Water Sales) $ 78,702,292
(1) "ccf" means "hundred cubic feet"
Residential - Flat Rates $ 2,533,090
Commercial, Industrial and Municipal - Metered Rates 76,169,202 Total Water Sales (2) $ 78,702,292
The average monthly flat rate service charge for residential customers is: 68.08$ Commercial Accounts:

Meter Size
3/4" $ 24.94
1" 36.11
1 1/2" 64.04
2" 97.55
3" 203.66
4" 360.04
6" 734.22
8" 1,348.56
10" 2,130.44
12" 2,800.62
In addition to these minimum charges, commercial accounts are charged $1.98 per 100 cubic feet of water used. (2) Water sales only reflect the revenues in the Water Operating Fund and do not include revenue generated from developer fees and fleet replacement revenues.

Source:

City of Modesto-Utilities Division
Water Rates and Charges as of 07/01/2020
Water Sales Revenue, Year Ended 06/30/2021

CITY OF MODESTO

REVENUE CAPACITY - MOST SIGNIFICANT LOCAL REVENUE SOURCE

WATER UTILITY SYSTEM
(YEAR ENDED JUNE 30, 2021)
137
#1..
- 182 -
Lease Obligations
Fiscal Loans Revenue Notes Under
Year Payable Bonds Payable Capital Leases Total
2012 $ 500,000 $ 62,130,000 $ 3,392,000 $ 742,937 $ 66,764,937 2013 500,000 60,870,000 3,201,000 502,622 65,073,622
2014 500,000 59,475,000 3,000,000 256,945 63,231,945
2015 500,000 57,970,000 2,789,000 1,070,472 62,329,472
2016 500,000 56,305,000 2,568,000 942,057 60,315,057
2017 500,000 54,470,000 2,335,000 6,358,720 63,663,720
2018 500,000 52,775,000 2,090,000 5,449,379 60,814,379
2019 500,000 50,915,000 1,834,000 5,002,881 58,251,881
2020 500,000 48,915,000 1,565,000 4,576,954 55,556,954
2021 500,000 46,745,000 1,282,000 4,098,878 52,625,878
Certificates Reimbursement Obligations Total Percentage Fiscal Loans of Agreement Revenue Under Primary of Personal Per Year Payable (3)(6) Participation (5) related to MID (4)(5) Bonds (3)(4)(5)(6) Capital Leases Total Government Income (1) Capita (1) 2012 $ 16,098,866 $ 50,237,067 $ - $ 193,098,177 $ - $ 259,434,110 $ 326,199,047 5.18% 1,617 2013 41,921,784 49,681,357 - 187,251,865 - 278,855,006 343,928,628 7.53% 1,670 2014 88,922,403 49,634,062 - 182,792,914 - 321,349,379 384,581,324 8.15% 1,860 2015 117,690,257 48,989,556 137,055,810 39,057,561 - 342,793,184 405,122,656 8.63% 1,937 2016 125,787,342 48,330,053 132,375,084 33,945,516 - 340,437,995 400,753,052 8.21% 1,891 2017 124,280,500 47,630,552 127,484,358 31,605,936 - 331,001,346 394,665,066 8.13% 1,859 2018 147,366,700 46,916,049 122,378,632 28,090,694 73,589 344,825,664 405,640,043 7.31% 1,894 2019 141,471,062 46,146,545 117,047,906 25,522,898 19,510 330,207,921 388,459,802 7.20% 1,807 2020 135,251,891 45,357,043 111,472,183 22,892,869 7,825 314,981,811 370,538,765 6.30% 1,667 2021 27,540,403 44,557,540 105,641,454 122,384,268 5,625 300,129,290 352,755,168 5.88% 1,610 (1) See Demographic and Economic Statistics for personal income and population data. (2) In fiscal year 2012 the Loans Payable increase is from the bond reimbursements related to the State Revolving Fund loan approved for the construction of a new tertiary treatment plant. (3) Until fiscal year 2015, the MID Treatment and Delivery issued by MID on behalf of the City was reported as a City liability under Revenue Bonds. (4) In fiscal year 2015, the Reimbursement agreement with MID was reclassified from revenue bonds payable to reimbursement agreement related to MID since this long-term debt is listed under MID but is the City's liability due to nature of the treatment and delivery agreement. (5) Starting in fiscal year 2016, the amounts presented include net of unamortized premiums or discounts. (6) In fiscal year 2021 the decrease in Loans Payable and increase in Revenue Bonds is due to the issuance of Revenue Bonds to pay off the State Revolving Fund loan for the tertiary treatment plant.

CITY OF MODESTO

RATIO OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
Business-Type Activities
Governmental Activities
0 50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
400,000,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Series1 Series2
0 50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
400,000,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Total Governmental Total Business
138
#1..
- 183 -

CITY OF MODESTO

COMPUTATION OF DIRECT AND OVERLAPPING DEBT
JUNE 30, 2021
Percentage Amount
Net Debt Applicable to Applicable to
Jurisdiction Outstanding (1) City of Modesto (2) City of Modesto Direct debt:

City of Modesto $ 60,814,379 100% $ 60,814,379
Overlapping General Obligation debt - school districts:

Ceres Unified School District 85,895,317 5.37% 4,612,538 Hart-Ransom Union School District 3,500,201 31.40% 1,099,196 Modesto Elementary School District 29,340,000 77.05% 22,607,032 Modesto High School District 21,721,796 67.38% 14,635,452 Paradise Elementary School District 280,000 0.00% -
Salida Union Elementary District 2,500,000 27.86% 696,434 Stanislaus Union School District 18,970,000 75.02% 14,231,247 Sylvan School District 31,449,119 78.26% 24,612,113
Yosemite Community College District 219,060,060 33.11% 72,527,941 Total overlapping debt 412,716,493 155,021,953
Total direct and overlapping debt $ 473,530,872 $ 215,836,332 (1) Gross debt outstanding less applicable amounts in debt service funds. (2) Determined by ratio of assessed valuation of property subject to taxation in overlapping portion to valuation of all property subject to taxation in the jurisdiction.

Note: Source of data for School Districts: Stanislaus County Auditor. 139
#1..
- 184 -
Net assessed value (1)(3) $ 18,031,474,339
Plus homeowners' exemption (1)(3) 198,793,232
Gross assessed value (1)(3) $ 18,230,267,571
Debt limit - 15% of gross assessed value (2) $ 2,734,540,136 Legal debt margin $ 2,734,540,136
Total Net Debt
Applicable to the
Total Net Debt Limit as a
Applicable Legal Percentage of
Fiscal Year Debt Limit to Limit Debt Margin Debt Limit
2012 1,823,551,939 $ - $ 1,823,551,939 0%
2013 1,724,049,678 - 1,724,049,678 0%
2014 1,825,518,342 - 1,825,518,342 0%
2015 2,017,621,335 - 2,017,621,335 0%
2016 2,120,160,392 - 2,120,160,392 0%
2017 2,232,042,092 - 2,232,042,092 0%
2018(4) 2,354,367,851 - 2,354,367,851 0%
2019 2,476,468,235 - 2,476,468,235 0%
2020 2,606,133,716 - 2,606,133,716 0%
2021 2,734,540,136 - 2,734,540,136 0%
(1) Source: Stanislaus County Auditor.
(2) Section 43605 California Government Code.
(3) Figures are based on Stanislaus County.
(4) Fiscal year 2018 was updated after a discussion with Stanislaus County made apparent that the wrong Tax Year was originally pulled from their records.

Note: The City has elected to show ten years worth of data for this schedule.

CITY OF MODESTO

COMPUTATION OF LEGAL DEBT MARGIN
JUNE 30, 2021
140
#1..
- 185 -
Net Revenue Debt
Fiscal Gross Operating Available for Service
Year Revenue (1) Expenses (2)(4) Debt Service Requirements(3) Coverage 2012 $ 43,453,216 $ 19,287,894 $ 24,165,322 $ 4,014,808 6.02 2013 45,018,125 19,586,799 25,431,326 4,019,558 6.33
2014 47,233,028 19,860,430 27,372,598 4,261,980 6.42
2015 46,853,368 21,207,025 25,646,343 4,150,322 6.18
2016 50,207,559 25,418,140 24,789,419 4,570,286 5.42
2017 50,907,228 25,212,214 25,695,014 11,311,098 2.27
2018 53,770,230 27,227,948 26,542,282 13,536,703 1.96
2019 62,618,527 27,144,632 35,473,895 11,958,407 2.97
2020 64,094,389 29,019,732 35,074,657 12,706,004 2.76
2021 67,012,041 29,187,910 37,824,131 12,560,711 3.01
(1) Consists of all receipts of the Sewer fund not dedicated to capital spending purposes and including charges for services, connection fees, interest and rental income. (2) Reflects total sewer fund operating expenses less depreciation; also includes certain transfers out that are made for operational costs incurred in other funds.
and 2006 Wastewater Revenue Bonds. In fiscal year 2017, the City began the repaying State Revolving Fund loan for to Revenue Bonds.
(4) The amount reported in fiscal year 2014 was corrected from $28.20m to $19.86m. The former amount included $8.34m for the State Revolving Fund loan which should not have been included in the calculation. (3) Includes total principal and interest of Wastewater Refunding Revenue Bonds Series 2005 A and 2005 B Phase 2 - Tertiary Treatment Project debt service. In fiscal year 2021 the State Revolving Fund loan was coverted

CITY OF MODESTO

REVENUE BOND COVERAGE

WASTEWATER REVENUE BONDS
LAST TEN FISCAL YEARS (4)

0.00 1.00

2.00 3.00

4.00 5.00

6.00 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Coverage
Fiscal Year
141
#1..
- 186 -
Total Per Capita Stanislaus City
Fiscal City Personal Personal Unemployment County Population Year (1)(2) Population Income Income Rate (%) Population % of County 2012 201,761 $ 6,294,337,917 $ 31,197 15.50% 519,940 38.80% 2013 205,987 4,566,113,829 22,167 12.70% 524,124 39.30% 2014 206,785 4,719,247,270 22,822 11.00% 526,042 39.31% 2015 209,186 4,693,924,654 22,439 9.30% 532,297 39.30%
2016 211,903 4,880,973,702 23,034 9.10% 540,214 39.23%
2017 212,287 4,856,701,986 22,878 7.80% 541,466 39.21%
2018 214,181 5,549,643,891 25,911 7.20% 549,976 38.94%
2019 215,030 5,396,177,850 25,095 6.50% 554,108 38.81%
2020 218,440 5,779,485,520 26,458 13.30% 550,660 39.67% 2021 219,294 5,999,445,252 27,358 7.60% 552,878 39.66%
(1) The population for 2020 was previously overreported as 222,335 (2) In 2020, unemployment rates increased due to the effects of the novel coronarivus, COVID-19.

Source: State of California, Department of Finance (population) State of California, Employment Development Department (unemployment rate) U.S. Department of Commerce, Census Bureau (income)

CITY OF MODESTO

DEMOGRAPHIC AND ECONOMIC STATISTICS

LAST TEN FISCAL YEARS

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%
2012201320142015201620172018201920202021
Unemployment Rate (%)
$0
$1,000,000,000
$2,000,000,000
$3,000,000,000
$4,000,000,000
$5,000,000,000
$6,000,000,000
$7,000,000,000
2012201320142015201620172018201920202021
Total Personal Income
$20,000
$22,000
$24,000
$26,000
$28,000
$30,000
$32,000
$34,000
2012201320142015201620172018201920202021
Per Capita Personal Income

38.00%

38.25%

38.50%

38.75%

39.00%

39.25%

39.50%

39.75%

40.00%

40.25%

40.50%
2012201320142015201620172018201920202021
Population % of County
142
#1..
- 187 -
2020/21 2012/13
Percentage Percentage
Number of (1) of Total City Number of (1) of Total City Employer Employees Rank Employment Employees Rank Employment E & J Gallo Winery 6,700 1 2.79% 3,181 1 3.13%
Stanislaus County 3,897 2 1.62%
Modesto City Schools 3,200 3 1.33% 3,010 3 2.96%
Dotors Medical Center 2,600 4 1.08% 1,962 5 1.93%
Memorial Medical Ctr 2,087 5 0.87% 3,023 2 2.98%
Foster Farms Poultry 1,119 6 0.47%
Del Monte Foods Inc 1,972 7 0.82% 1,700 8 1.67%
Stanislaus Food Products 1,500 8 0.62% 1,784 6 1.76%
Save Mart Supermarkets 1,315 9 0.55%
Sylvan Union School District 917 10 0.38%
Seneca 2,100 4 2.07%
Kaiser Permanente 1,759 7 1.73%
Modesto Junior College 1,522 9 1.50%
City of Modesto 1,250 10 1.23%
Subtotal 25,307 10.53% 21,291 20.96%
Total Labor Force 240,300
Total City Population 219,294
Source: Stanislaus Economic Development & Workforce Alliance (1) The number of employees include both part-time and full time.

CITY OF MODESTO

PRINCIPAL EMPLOYERS
143
#1..
- 188 -
2020/21 2012/13
Employer
Taxable Assessed
Value Rank
Percentage of
Total City
Taxable
Assessed Value
Taxable Assessed
Value Rank
Percentage of
Total City
Taxable
Assessed Value
E& J Gallo Winery $ 516,230,917 1 2.83% 213,804,233 $ 4 0.56% Pacific Gas & Electric Company 410,410,212 2 2.25% 198,075,294 3 0.58% Gallo Glass Co. 396,970,472 3 2.18% 226,234,201 2 0.59% Angel's Crossing, LLC. 13,477,123 4 0.07% 15,563,392 1 0.69% Frito Lay, Inc. 213,457,740 5 1.17% 112,214,340 9 0.29% California Dairies, Inc. 189,529,285 6 1.04%
Excel Monte Vista, Lp. 145,472,777 7 0.80%
WR. Griffin Patterson, LLC. 106,331,038 8 0.58%
Doctors Med. Center of Mod., Inc. 148,022,930 9 0.81% 111,909,640 10 0.29% Bronco Wine Company 143,375,924 10 0.79% 111,784,859 7 0.30% WW Grainger, Inc 97,371,169 5 0.30%
Hunt Wesson Foods, Inc 109,754,487 6 0.30%
AT&T California 101,405,078 8 0.30%
Subtotal $ 2,283,278,418 12.52% 1,298,116,693 $ 4.20%
Total assessed value of $ $ 18,230,267,571 $ 11,493,664,521 Source: Stanislaus Country Treasurer-Tax Collector
Note: Information based on entire Stanislaus County

CITY OF MODESTO

PRINCIPAL PROPERTY TAXPAYERS
144
#1..
- 189 -
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Function
General Government 112.00 112.00 108.00 112.10 79.00 80.00 90.00 84.00 84.00 85.00 Community Development 72.20 74.00 73.80 60.75 67.00 70.00 81.00 72.00 76.00 69.00 Public Works and Utilities 69.00 69.00 60.00 83.00 107.00 78.00 157.00 56.00 56.00 53.00 Parks and Recreation 101.48 97.50 75.38 16.50 18.50 17.50 17.50 54.75 56.75 51.75 Public Safety 473.75 474.00 455.00 456.50 462.50 490.50 490.50 480.50 510.50 482.00 Parking 6.00 6.00 6.00 7.00 6.00 6.00 6.00 6.00 6.00 7.00 Water 91.00 91.00 104.00 126.00 128.00 134.00 101.00 135.00 136.00 127.00 Sewer 111.00 111.00 124.00 139.00 139.00 157.00 146.80 158.00 158.00 157.00 Storm Drain 17.00 17.00 9.00 9.00 8.00 8.00 2.00 8.00 8.00 8.00 Compost 8.00 8.00 24.80 57.80 61.80 58.80 48.00 57.80 57.80 58.00 Airport 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 Bus 18.00 20.00 20.00 23.00 24.00 24.00 16.00 24.00 24.00 24.00 Community Center 7.25 5.50 5.50 6.00 5.00 11.00 3.00 2.00 2.00 1.00 Internal Services 53.00 52.00 67.30 76.00 82.00 79.00 56.00 81.00 81.00 79.00 Total 1,145.68 1,143.00 1,138.78 1,178.65 1,193.80 1,219.80 1,220.80 1,225.05 1,262.05 1,207.75 Source: City of Modesto

CITY OF MODESTO

FULL-TIME CITY GOVERNMENT EMPLOYEES BY FUNCTION

LAST TEN FISCAL YEARS
0 100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Position Allocations
Fiscal Year
Internal Services
Community Center
Bus
Airport
Compost
Storm Drain
Sewer
Water
Parking
Public Safety
Parks and Recreation
Public Works and Utilities
Community Development
General Government
145
#1..
- 190 -
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Function/Program
Public safety:

Fire:

Fire calls for service(1) 20,970 22,846 24,281 24,712 21,135 26,288 28,444 30,341 31,415 30,741 Primary fire inspections conducted 1,618 818 989 1,050 764 1,060 1,509 2,011 2,687 1,993 Police:

Communication Center calls answered
Police calls for service 168,242 174,113 123,357 122,270 129,439 129,802 194,931 181,430 178,649 165,126 Law violations:

Part I and Part II crimes 47,175 52,272 53,032 50,729 53,609 53,142 53,543 47,141 36,898 33,067 Physical arrests (adult and juvenile) 11,536 12,418 15,039 18,634 12,303 11,760 13,247 12,388 13,302 12,360 Traffic violations 16,330 14,761 15,477 12,700 11,451 15,428 16,930 17,098 16,263 13,767 Parking violations 15,772 12,150 12,327 5,493 6,139 10,841 9,414 7,443 3,781 477 Public works
Streets:

Street resurfacing (Slurry Seal lane miles) - 6 12 8 4 12 4 8 1 123 Potholes repaired (Total # of repairs) 38,290 13,282 12,573 14,515 24,059 8,745 25,004 36,709 2,831 21,863 Water utility customer repaired (sq. ft) 112,136 81,261 29,108 611 - - - - - - Crack sealing (lane miles) - 20 33 12 37 29 48 29 23 43 Airport:

Number of passengers enplaned (2) 19,188 16,532 11,703 - - - - - - - Number of tenant aircraft 184 184 172 162 173 162 153 167 160 164 Number of hangars 118 118 118 119 119 119 119 119 119 119 Number of runways 2 2 2 2 2 2 2 2 2 2
Annual fuel consumption in gallons 645,283 653,153 682,769 582,473 443,272 582,602 580,383 631,891 511,928 540,226 Bus service:

Number of buses 55 65 55 56 60 59 57 61 61 69
Number of routes 20 20 20 21 21 21 17 17 17 19
Total route miles 362 362 362 362 362 362 245 245 245 338 Average weekday number of passengers 11,553 11,616 12,538 11,598 12,441 10,523 9,354 8,869 7,475 6,686 Total number of passengers carried 3,413,421 3,434,409 3,666,824 3,416,314 3,664,689 3,108,307 2,762,922 2,589,049 2,182,079 1,987,698 Community development
Building safety & NPU:

Permits issued 3,288 3,566 3,871 4,511 4,939 4,973 5,033 4,335 4,146 4,808 Estimated cost of construction $ 76,362,371 $ 81,095,370 $ 58,850,241 $ 137,453,763 $ 92,768,634 $ 118,527,812 $ 172,595,385 $ 112,433,029 $ 170,765,326 $ 201,953,969 Building Inspections made 25,549 27,816 30,034 31,571 23,187 36,158 42,891 39,086 34,218 34,730 Traffic electrical:

Street lights 13,765 13,765 13,761 13,764 13,764 13,764 13,764 13,764 13,764 13,764 Traffic signals 143 144 144 147 151 153 155 155 156 156 Lighted ped walks 30 28 29 28 28 28 24 26 26 26
Beacons 8 8 11 11 11 11 3 4 4 4
Four way flashers 9 10 10 10 10 10 5 3 3 3
School flashers 22 22 22 22 23 24 16 13 14 14
CCTV 38 41 41 41 41 41 30 24 24 24
Hubs 5 6 6 6 6 6 2 6 6 6
Culture and recreation:

Recreation class participants(3)
Average daily treatment (thousands of gallons) 2,072 264,670 150,514 151,323 150,091 150,500 154,000 160,656 116,131 28,240 Solid waste:

Recyclables processed (tons per year) 67,317 37,647 46,936 55,020 56,493 71,155 62,701 60,947 62,617 60,332 Yard waste 58,650 55,147 39,117 48,832 58,730 62,859 64,873 66,017 82,866 46,373 Commercial food waste 735 765 827 817 845 914 1,550 1,145 1,192 2,783 Waste tires 1,247 1,674 4,969 4,152 4,497 4,931 4,285 4,320 5,089 4,501 (1) Fiscal year 2012-2013 Fire calls for service was originally reported incorrectly due to duplicate entries found on the National Fire Incident Report System (NFIRS) reports. This figure was corrected 10/24/2014. (2) The enplanements subsided with the loss of commercial service in fiscal year 2013-2014. (3) Fiscal year 2020-2021 Recreation class participants had decreased due the COVID-19 outbreak and classes were suspended.

Source: City of Modesto - Various Departments

CITY OF MODESTO

OPERATING INDICATORS BY FUNCTION
146
#1..
- 191 -
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Function/Program
Public safety:

Fire stations 11 11 11 11 11 11 11 11 11 11
Police stations 1 1 1 1 1 1 1 1 1 1
Police patrol units 98 105 105 105 105 104 104 100 105 100 Public works
Streets:

Miles of streets (1) 684 684 691 691 692 692 692 693 693 694 Water:

Miles of water mains 1,008 1,009 1,009 914 887 887 908 908 914 916 Fire hydrants 7,566 7,584 7,596 7,748 7,845 7,859 7,921 7,974 8,026 8,043 Storage capacity (gallons) 12,300,000 12,300,000 12,300,000 12,300,000 18,300,000 18,300,000 18,300,000 22,300,000 22,300,000 22,550,000 Wastewater:

Miles of sanitary sewers 642 639 639 639 639 655 656 656 656 657 Miles of storm sewers 183 183 183 183 183 170 170 170 170 170 Number of treatment plants (2) 2 2 2 2 2 2 2 2 2 2
Treatment capacity (millions of gallons) (5) 72 70 70 70 70 19 19 19 19 19 Community services:

City parks (3) 76 76 76 76 76 76 76 76 76 76
City parks acreage 1,088 1,110 1,110 1,110 1,240 1,240 1,240 1,240 1,240 1,246 Playgrounds (6) 55 55 55 58 58 58 58 58 54 55
City trails (7) 7 7 7 6 6 6 6 6 6 9
City trails miles 14 14 14 15 15 15 16 16 17 17
Regional park acreage (8) 324 324 324 375 375 375 375 375 375 653 Regional park facilities:

Golf courses (18 holes) 2 2 2 2 2 2 2 2 2 2
Golf courses (9 holes) 1 1 1 1 1 1 1 1 1 1
Clubhouse and banquet facility 8 8 8 8 8 8 8 8 8 8
Historic house (4) 4 4 4 4 3 3 3 3 3 3
Community gardens 2 2 2 2 2 1 1 1 1 1
Community centers 6 7 7 7 7 7 7 7 7 7
Senior centers 1 1 1 1 1 1 1 1 1 1
Sports centers 1 1 1 1 1 1 1 1 1 1
Performing arts centers 1 1 1 1 1 1 1 1 1 1
Swimming pools 4 4 4 4 4 1 1 1 1 1
Tennis courts 37 37 37 37 37 37 37 37 37 37
Baseball/softball diamonds (8) 24 24 24 24 24 24 24 24 24 29 Soccer/football fields(8) 22 29 29 29 29 29 29 29 29 31 Splash play in Existing parks 10 10 10 10 10 10 10 9 9 9 (1) Information reported from the City's GIS system.
(2) The City has both a Primary and a Secondary treatment facility. (3) The number of parks for fiscal years 2013, 2014, 2015 was reported incorrectly as 77. Figures have been corrected to reflect accurately since FY 2016. (4) The number of historic houses was reduced by one due to the Crismon House burning down. There are no plans to rebuild. (5) The City has a new process and permit. Previous permit was 70 million gallons daily seasonal Oct. through May. Current permit is 19 million gallons daily year round. (6) In 2020 the number of playgrounds was reduced as playgrounds were removed to rebuild. (7) Bike trails are being combined with City trails.
(8) Starting in 2021, the full survey of Parks, Sports fields & inventory methodology was changed. Park acreage is now defined more exactly.

Source: City of Modesto - Various Departments

CITY OF MODESTO

CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
147
#1..
- 192 -
This page is intentionally left blank.
148
#1..
- 193 -

CONTINUING DISCLOSURE TAB
#1..
- 194 -
#1..
- 195 -

CONTINUING DISCLOSURE

SECTION
149
#1..
- 196 -
150
#1..
- 197 -

Continuing Disclosure Section
This part of the Annual Comprehensive Financial Report provides information in order to comply with the City’s contractual commitment established by certain continuing disclosure undertaking of the City, entered into in accordance with Securities and Exchange Commission Rule 15c2-12 (the “Rule”) for the City’s bond obligations listed below. In contrast to the financial section, the continuing disclosure section information is not subject to independent audit.

1. Wastewater Revenue Refunding Bonds, Series 2018A

2. Wastewater Revenue Refunding Bonds, Series 2020A

3. Wastewater Revenue Refunding Bonds, Series 2020B

4. Water Revenue Refinancing Certificates of Participation, 2008 Series A

5. Modesto Irrigation District Financing Authority Domestic Water Project Refunding Revenue Bonds, Series 2013G

6. Modesto Irrigation District Financing Authority Domestic Water Project Revenue Bonds, Series 2007F 151
#1..
- 198 -

CITY OF MODESTO

CONTINUING DISCLOSURE REQUIREMENTS INFORMATION
YEAR ENDED JUNE 30, 2021
Connection charge information: The Sewer Enterprise imposes connection fees on an on-time basis to new users of the sewer system and to users who significantly expand their usage. The fees have three components:

Capacity charge: $2,643 per Equivalent Dwelling Unit for residential units. Commercial and industrial property charged based on type of business.

Sub-trunk sewer charge: $645 per acre
Connection (lateral) charge: $33 per linear foot of lot frontage adjacent to the sewer line.

Customer Base by Type of Account
Number of % of Total % of Sewer Fee
Category Accounts Accounts Operating Revenue
Residential 58,907 94.7% 59.01%
Commercial 3,263 5.2% 17.36%
Industrial 52 0.1% 23.63%
Total 62,222 100.00% 100.00%
Ten Largest Users of Sewer Facilities, Year Ended 6/30/21 Sewer Fee % of Sewer Fee
User Revenue Operating Revenue
1) E & J Gallo Winery $ 2,811,068 4.88%
2) Foster Farms 1,877,780 3.26%
3) Stanislaus Food Products 1,858,353 3.22%
4) Del Monte Foods 1,416,789 2.46%
5) Frito-Lay, Inc. 1,328,563 2.31%
6) City of Ceres 1,318,754 2.29%
7) Sunopta 945,350 1.64%
8) Nestle Food Company 710,553 1.23%
9) Rizo Food Company 659,083 1.14%
10) Paleteria 431,881 0.75%
Total (Top Ten Customers) $ 13,358,174 23.18%
Total (All Customers) $ 57,636,091
The average single-family residence monthly sewer charge is: $40.17 Charge
Commercial Group Per 1,000 Gallons Fixed Charge
Group 1 (no food, just toilets or working facilities) $3.69 $4.68 Group 2 (commercial laundromats, service stations, hotels without food) $4.89 $4.68 Group 3 (industrial laundromats, hotels with food) $6.08 $4.68 Group 4 (restaurants, bakeries, auto steam, markets) $7.52 $4.68 Industrial users pay a minimum account charge of $4.68 with additional charges of: $3,657 per million gallons of flow, $256 per 1,000 pounds of excess biochemical oxygen demand (BOD), and $511 per 1,000 pounds of Total Suspended Solids (TSS).

Industrial users on the Cannery Segregation line pay a minimum account charge of $4.50 with additional charges of: $3,191 per million gallons of flow, $1.66 per 1,000 pounds of biochemical oxygen demand (BOD), and $4.81 per 1,000 pounds of Total Suspended Solids (TSS) while in production during the months of July, August and September.

The Annual Budget of the City of Modesto is available from the City of Modesto Finance Department.

Updates of other required disclosures may be found elsewhere in this report, as follows:

Statement of Revenues, Expenses and Changes in Fund Net Position Page 25 Principal Amount of Bonds and Other Parity Debt Page 49-51 (Note III-C) Historical Debt Service Coverage Page 141
(continued)
Wastewater Revenue Refunding Bonds, Series 2015,
Wastewater Revenue Refunding Bonds, Series 2018 A, and
Wastewater Revenue Refunding Bonds, Series 2020 A & B
152
#1..
- 199 -
Residential, commercial and industrial rates have increased according to the following approved schedule.

Fiscal Year Percent Increase
2011-12 8.0%
2012-13 6.0%
2013-14 6.0%
2014-15 2.0%
2015-16 3.0%
2016-17 6.0%
2017-18 6.0%
2018-19 6.0%
2019-20 6.0%
2020-21 4.0%
Comparative Monthly Wastewater Service Charges.

The City's residential charges as of July 1, 2020 are set forth below with a comparison to other Central Valley and Northern California cities.

City
Monthly
Residential
Charge
Fresno $ 25.75
Lodi 40.92
Modesto 41.78
Stockton 42.63
Tracy 34.00
Turlock 28.95

CITY OF MODESTO

WASTEWATER SYSTEM
Monthly Sewer Charge Comparison
Residential Service
As of July 1, 2020

CITY OF MODESTO

WASTEWATER COMPARISON INFORMATION
YEAR ENDED JUNE 30, 2021
Ten Year History of Rate Increases

WASTEWATER SYSTEM

CITY OF MODESTO
CONTINUING DISCLOSURE REQUIREMENTS INFORMATION (continued) 153
#1..
- 200 -

CITY OF MODESTO

WASTEWATER SYSTEM
Wastewater Connection Fees Comparison
As of July 1, 2020
City Connection Fee
Fresno (1) $ 2,671.00
Lodi (2) 5,320.00
Modesto 2,643.00
Stockton 2,264.41
Tracy 8,305.00
Turlock 2,973.30

CITY OF MODESTO
CONTINUING DISCLOSURE REQUIREMENTS INFORMATION (continued) YEAR ENDED JUNE 30, 2021
(1) Connection fees are based on the size of the lot & location. (2) Connection fees are based on the size of the water meter. 154
#1..
- 201 -
Water Revenue Refinancing Certificates of Participation, 2008 Series A Modesto Irrigation District Financing Authority Domestic Water Project Refunding Revenue Bonds, Series 2013G(1) Modesto Irrigation District Financing Authority Domestic Water Project Revenue Bonds, Series 2007F(1) Reserve Account Requirement as of 6/30/21 $ 4,011,410
Surety Policy Value: (2,082,513)
Balance in Parity Reserve Account as of 6/30/21 (1,931,230) Shortfall/(Excess) Reserve Coverage: $ (2,333)
Ten Largest Customers of Water Utility System, Year Ended 6/30/21 % of Total Water Sales % of Total Water
Customer Business Type Usage (ccf) (2) Usage Revenue ($) Sales Revenue 1) Modesto City Schools Education 456,810 1.95% 1,241,595 $ 1.58% 2) City of Modesto Local Government 400,313 1.70% 1,222,628 1.55% 3) Foster Farms Dairy Processor 398,550 1.70% 809,702 1.03% 4) Stanislaus Food Products Cannery 339,824 1.45% 742,086 0.94% 5) Stanislaus Housing Authority Housing Authority 171,186 0.73% 515,320 0.65% 6) Sunopta Cannery 234,826 1.00% 489,779 0.62%
7) E & J Gallo Winery Processor 168,915 0.72% 471,231 0.60% 8) Modesto Irrigation District Power Company 184,987 0.79% 448,130 0.57% 9) Yosemite Community College Education 109,436 0.47% 325,030 0.41% 10) STANCO Local Government 88,851 0.38% 325,004 0.41%
Total Top Ten 2,553,698 10.89% $6,590,505 8.36%
Total Flat/Metered Revenues (Water Sales) $ 78,702,292
(1) Grover Landscaping maintains City parks
(2) "ccf" means "hundred cubic feet"
Water Sales Revenue, Year Ended 6/30/2021
Residential - flat rates $ 2,533,090
Commercial, industrial and municipal - metered rates 76,169,202 Total Water Sales $ 78,702,292
The average monthly flat rate service charge for residential customers is: $ 68.08 Meter Size
3/4" $ 24.94
1" 36.11
1 1/2" 64.04
2" 97.55
3" 203.66
4" 360.04
6" 734.22
8" 1,348.56
10" 2,130.44
12" 2,800.62
In addition to these minimum charges, commercial accounts are charged $1.98 per 100 cubic feet of water used.

The Annual Budget of the City of Modesto is available from the City of Modesto Finance Department. (1)

(2) Water sales only reflect the revenues in the Water Operating Fund and do not include revenue generated from developer fees and fleet replacement revenues.

Current Water Rates as of 07/01/2020- Commercial Accounts

CITY OF MODESTO
CONTINUING DISCLOSURE REQUIREMENTS INFORMATION (continued) YEAR ENDED JUNE 30, 2021
Water Fund parity debt obligations, issued by the Modesto Irrigation District Financing Authority, on behalf of the City, and pursuant to the 1992 Treatment and Delivery Agreement between the District and the City. In fiscal year 2013- 2014 Modesto Irrigation District Financing Authority refunded the 1998 D Bond, with the 2013 G Bond. At fiscal year end 2020-2021, the balance of the 2013 G Bond was $11,310,000 and the balance of the 2007 F Bond was $93,190,000. 155
#1..
- 202 -
2012 2013 (1) 2014 (9) 2015 (7) 2016 (8) 2017 2018 (13) 2019 (14) 2020(16) 2021 Charges for services $ 53,453,708 $ 56,906,488 $ 56,940,812 $ 54,779,417 $ 51,489,077 $ 63,253,114 $ 68,928,504 $ 71,952,653 $ 76,996,091 $ 80,908,193 Connection charges 516,839 295,632 357,432 1,024,626 935,987 1,435,654 1,661,151 1,081,913 1,904,330 1,559,621 Refunds, damages & recoveries 166,522 260,802 215,271 20,988 511,063 57,533 (121,929) 95,591 92,786 (801,155) Interest and rental income 670,046 174,224 235,246 353,305 535,823 574,899 689,500 999,269 1,086,126 864,989 Service credits 2,966,465 3,201,951 2,678,999 3,033,487 3,026,911 3,304,911 3,408,238 3,309,703 3,576,012 3,654,881 Miscellaneous (15) 118,203 150,949 154,700 365,808 2,979,500 231,134 1,117,571 1,120,960 1,243,999 1,738,084 Total gross operating revenues 57,891,783 $ $ 60,990,046 $ 60,582,460 $ 59,577,631 $ 59,478,361 $ 68,857,245 $ 75,683,035 $ 78,560,089 $ 84,899,344 $ 87,924,613 Operating expenses (2) (12) $ 30,755,822 $ 28,530,554 $ 36,598,298 $ 33,773,198 $ 38,722,320 $ 35,508,887 $ 35,685,576 $ 38,806,127 $ 39,167,326 $ 42,088,154 Operating transfers (3) 1,257,406 838,421 765,000 765,000 765,954 765,000 1,239,943 3,129,583 2,241,135 3,283,246 Total operating expenses (4) $ 32,013,228 $ 29,368,975 $ 37,363,298 $ 34,538,198 $ 39,488,274 $ 36,273,887 $ 36,925,519 $ 41,935,710 $ 41,408,461 $ 45,371,400 Net operating revenues 25,878,555 $ $ 31,621,071 $ 23,219,162 $ 25,039,433 $ 19,990,087 $ 32,583,358 $ 38,757,516 $ 36,624,379 $ 43,490,883 $ 42,553,213 2008 Revenue Certificates of Participation $ 2,684,462 $ 2,632,225 $ 2,648,783 $ 2,531,179 $ 2,313,857 $ 2,468,593 $ 2,268,298 $ 2,121,410 $ 2,309,687 $ 2,130,448 MID Treatment & Delivery Agreement(5) 10,888,790 10,889,760 8,885,208 9,930,040 10,203,352 10,202,108 10,208,384 10,214,947 10,213,274 10,709,280 CDWR Loan 255,942 264,719 264,719 262,692 131,322 - - - - - ARRA Grant 5,137 36,289 36,103 36,095 36,089 36,084 36,080 37,123 39,350 37,540 Total debt service 13,834,331 $ $ 13,822,993 $ 11,834,813 $ 12,760,006 $ 12,684,620 $ 12,706,785 $ 12,512,762 $ 12,373,480 $ 12,562,311 $ 12,877,268 Debt service coverage (10) (11) 1.87 2.29 1.96 1.96 1.58 2.56 3.10 2.96 3.46 3.30 (1) In fiscal year 2012-13, the amount reported for Charges for Services was incorrectly reported in the amount of $59,906,488. The correct amount is $56,906,488 which is reflected in the table above. (2) Reduced fiscal year 2015- 2016 Operating Expenses as the $131,322 CDWR Loan payment (along with 2 dollars attributed to rounding error) were counted both in Operating Expense and in the debt service section.
(3) Includes operating transfers for building rental fee of $65,000 annually and commencing in fiscal year 2009-2010 $700,000 annual transfer to the Storm Drain Fund to actively protect the groundwater supply source from contamination. In fiscal year 2011-12 $668,610 a one time transfer for information technology internal service funds. (4) Total operating expenses excludes depreciation and amortization, as well as the debt service component under the Treatment and Delivery Agreement. fiscal year 2015-2016 Total operating expense reduced from $39,619,604 to $39,488,274 since the Operating expenses was adjusted (see note 2) (5) Increased fiscal year 2014-2015 2008 Revenue Certificates of Participation from $2,501,891 to $2,531,179 to account for actual expenditure instead of the internal transfer. (7) The sale of the Waterford-Hickman Water System for $2.6 million had a significant impact to the Water Fund debt service calculation. Without the sale of this system Water Fund debt service coverage would have been 1.35. Reduced fiscal year 2015-2016 Operating Expenses as the $131,322 Del Estate Water Company loan payment (along with $2 dollars attributed to rounding error) were counted both in Operating Expense and in the Debt service section.
(8) Del Estate Water Company (CDWR) loan payment for fiscal year 2014-2015 was reduced from $264,719 to $262,692 and fiscal year 2015-2016 reduced from $264,719 to $131,322. Loan repayment was completed in fiscal year 2015-2016.
(9) Changed fiscal year 2014-2015 ARRA Grant from $36,290 to $36,095 and changed fiscal year 2015-2016 ARRA Grant from $36,290 to $36,089. Fiscal year 2012-2013 rate was reported incorrectly in previous reports. (10) Fiscal year 2015-2016 Debt service coverage increased from 1.55 to 1.57 and fiscal year 2014-2015 Debt service coverage increased from 1.45 to 1.96 after above stated changes were made. (11) The financial figures reported only reflect net operating revenues in the Water Operating Fund. (12) Fiscal year 2017-2018 Miscellaneous revenues include $1,048,863 of one-time transfer as result of the dissolution of the Central Stores Fund. (13) Fiscal year 2018-2019 Operating Transfers of $3,129,583 includes $2,300,000 in one-time loan to fund 4893 (Carpenter Road Landfill) to be repaid over 6 years. (14) Fiscal year 2019-2020 Miscellaneous revenues include the first, interest-only payment of the fiscal year 2018-2019 Loan from the Water fund to the Carpenter Road Landfill Fund.

Year 2018-2019.
(16) Fiscal year 2020-21, Negative refunds, damages, and recoveries is due to large negative change in Fair Market Value. Operating Transfers include a new $1,540,000 loan to the Carpenter Road Landfill.

Source: City of Modesto
(6) Reduced fiscal year 2014-2015 Operating expenses from $40,349,338 to $33,773,198.

Historical Debt Service Coverage

CITY OF MODESTO

CITY WATER- HISTORICAL DEBT SERVICE COVERAGE
CONTINUING DISCLOSURE REQUIREMENTS INFORMATION (continued)

LAST TEN FISCAL YEARS

CITY WATER UTILITY SYSTEM
(15) Fiscal year 2019-2020 Operating Transfers of $2,241,135 include $900,000 in one-time loan to fund 4893 (Carpenter Road Landfill). This $900,000 is in addition to the $2,300,000 that was borrowed in Fiscal 156
#1..
- 203 -
Fiscal Year
Projected 2022
Fiscal Year
Projected 2023
Fiscal Year
Projected 2024
Fiscal Year
Projected 2025
Fiscal Year
Projected 2026
Charges for services(1) $ 81,212,000 $ 81,232,793 $ 81,232,793 $ 81,232,793 $ 81,232,793 Connection charges 1,155,567 1,178,678 1,202,251 1,226,296 1,250,822 Refunds, damages & recoveries 185,800 189,516 193,306 197,172 201,115 Interest and rental income 341,000 311,820 285,656 262,209 241,209 Service credits 2,952,335 2,981,858 3,011,676 3,041,793 3,072,211 Miscellaneous 2,000 2,040 2,080 2,122 2,164
6-year Loan Repayment from fund 4893
(Carpenter Road Landfill) 721,900 721,900 721,900 721,900 721,900 Total gross operating revenues $ 86,570,602 $ 86,618,605 $ 86,649,662 $ 86,684,285 $ 86,722,214 Operating expenses $ 52,345,545 $ 53,480,959 $ 54,641,295 $ 55,827,106 $ 57,038,957 Operating transfers 765,000 765,000 765,000 765,000 765,000 Total operating expenses $ 53,110,545 $ 54,245,959 $ 55,406,295 $ 56,592,106 $ 57,803,957 Net operating revenues $ 33,460,057 $ 32,372,646 $ 31,243,367 $ 30,092,179 $ 28,918,257 2008 Revenue Certificates of Participation $ 3,076,639 $ 3,076,639 $ 4,244,303 $ 4,240,014 $ 4,240,014 MID Treatment & Delivery Agreement 10,443,035 9,065,124 8,398,606 8,409,205 8,409,205 ARRA Grant 36,600 36,600 36,600 36,600 36,600 - - - - - Total debt service $ 13,556,274 $ 12,178,363 $ 12,679,509 $ 12,685,819 $ 12,685,819 Debt service coverage 2.47 2.66 2.46 2.37 2.28
Source: City of Modesto.

The City has prepared the following table of projections of operating results of the Water Utility System for the five fiscal years 2022-26. The projected amounts set forth below are based on certain assumptions made by the City. To the extent that actual future conditions vary from those assumed in preparing the projections, the actual results will vary.

CITY OF MODESTO

CITY WATER UTILITY SYSTEM
PROJECTED OPERATING RESULTS (1)
CONTINUING DISCLOSURE REQUIREMENTS INFORMATION (continued) 157
#1..
- 204 -
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Number of Service Accounts 76,788.0 75,357.0 75,006.0 74,665.0 72,825.0 73,135.0 73,423.0 73,591.0 73,897.0 74,094.0 Total Water Production (MG) (1) 21,765.0 21,606.0 20,630.0 17,692.0 15,155.0 15,319.5 16,782.0 16,059.0 17,141.6 17,569.0 Capacity (MGD)(2)(3) 175.2 175.2 175.2 175.2 175.2 175.2 168.0 168.2 170.3 135.0 Peak Daily Distribution (MGD) 97.2 99.8 95.3 84.6 74.7 84.3 77.5 83.5 75.1 75.9 Average Daily Distribution (MGD) 59.5 59.2 56.5 48.5 41.5 42.0 46.0 44.0 47.0 48.1 (1) "MG" means million gallons.
(2) "MGD" means million gallons daily.
(3) Capacity for FY 2021 was reported using source (wells) and surface water capacity; will be reported this way moving forward.

Well Water Total
2012 11.57 10.19 21.76
2013 10.62 10.99 21.61
2014 10.72 9.91 20.63
2015 10.63 5.85 16.48
2016 9.22 5.02 14.24
2017 8.63 5.86 14.49
2018 9.82 6.23 16.05
2019 5.45 9.86 15.31
2020 7.71 8.76 16.47
2021 7.12 9.56 16.68
City
Fresno (1)
Lodi (2)
Modesto
Stockton (1)
Tracy (2)
Turlock (1)
(1) Water is metered. Charge varies per meter size.
(2) Water is both metered and flat rate. Charge varies per meter and dwelling size.

CITY OF MODESTO
CONTINUING DISCLOSURE REQUIREMENTS INFORMATION (continued)

CITY WATER UTILITY SYSTEM
Average Monthly Water Rates Comparison
Flat Rate (1" Service)

33.90 YEAR ENDED JUNE 30, 2021

CITY WATER UTILITY SYSTEM STATISTICS
(Calendar Years 2012 through 2021)
Surface Water
Fiscal Year
Ended

CITY WATER UTILITY SYSTEM
Service Area Total Production (Billion Gallons)
(Fiscal Years 2012 through 2021)

90.85 As of July 1, 2020
Flat Rate Typical Home
$ 17.90

33.90 30.90

68.08 158
#1..
- 205 -
5/8" meter** 2,202$
1" meter 3,671
1-1/2" meter 7,341
2" meter 11,746
3" meter 25,695
4" meter 46,250
6" meter 95,437
8" meter 176,191
10" meter 278,970
12" meter 367,065
**NOTE- Single-family residences qualify for the 5/8" connection fee only under the following conditions:

Single story, single-family residences on a lot of 4,000 square feet or less.

Two-story single family residence on a lot of 4,000 square feet or less, provided the request for such a service accompanied by a report from a licensed professional engineer that certifies that the 5/8" service is adequate to meet the needs of the proposed dwelling.

A 5/8" "service" shall not be allowed for a single-family dwellings of greater than 2 stories on lots less than 4,000 square feet.

CONTINUING DISCLOSURE REQUIREMENTS INFORMATION (continued) YEAR ENDED JUNE 30, 2021

CITY OF MODESTO
Meter Size Connection Fees
Connection Fees Comparison
Except Multiple Family Units

CITY WATER UTILITY SYSTEM
(Fiscal Year 2020-2021)
The following table sets forth connection fees for all users except multi-family units by meter size for year 2020-2021:
159
#1..
- 206 -
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Revenues
Residential (Flat Rates) $14,464,689 $12,955,005 $10,723,594 $9,037,477 $7,320,096 $6,767,446 $5,506,216 $4,385,017 $3,450,868 $2,533,090 Commercial, Industrial and
Municipal (Metered) 37,162,861 42,452,862 44,093,862 43,118,855 40,242,493 51,960,729 60,113,019 62,933,627 70,175,513 76,169,202 Total Water Sales $51,627,550 $55,407,867 $54,817,456 $52,156,332 $47,562,589 $58,728,175 $65,619,235 $67,318,644 $73,626,381 $78,702,292 Lot Size 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 0-5,000 sq. ft. lot $38.69 $39.89 $40.81 $40.81 $40.81 $47.38 $48.77 $52.97 $56.11 $59.48 5,001-7,000 sq. ft. lot 43.98 45.34 46.38 46.38 46.38 54.72 56.23 60.89 64.23 68.08 7,001-11,000 sq. ft. lot 52.18 53.80 55.04 55.04 55.04 69.22 70.98 76.52 80.26 85.08 11,001-17,000 sq. ft. lot 55.40 57.12 58.43 58.43 58.43 90.88 93.00 99.87 104.22 110.47 over 17,000 sq. ft. lot 65.13 67.15 68.69 68.69 68.69 101.80 104.10 111.65 116.3 123.28 (1) Single family residential properties with water meters that are read for billing purposes, are charged the meter water rate.

NOTE: Additional financial information available at www.modestogov.com The table below sets forth the adopted single family residential flat rates effective each fiscal year

CITY WATER UTILITY SYSTEM
Monthly Single Family Residential Flat Water Rates (1)
(Year Ended June 30, 2021)

CITY OF MODESTO
CONTINUING DISCLOSURE REQUIREMENTS INFORMATION (continued) YEAR ENDED JUNE 30, 2021

CITY WATER UTILITY SYSTEM
Sale of Water
160
#1..
- 207 -

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Volume-based Rate ($/hcf) $ 1.33 $ 1.37 $ 1.40 $ 1.40 $ 1.40 $ 1.79 $ 1.82 $ 1.93 $ 1.98 $ 1.98 Fixed Monthly Meter Charge
(in addition to volume-based charges)
5/8"-3/4" meter $ 14.25 $ 14.69 $ 15.03 $ 15.03 $ 15.03 $ 20.79 $ 21.47 $ 23.34 $ 24.94 $ 24.94 1" meter 20.22 20.85 21.33 21.33 21.33 29.30 30.39 33.48 36.11 36.11 1-1/2" meter 34.99 36.07 36.90 36.90 36.90 50.58 52.71 58.83 64.04 64.04 2" meter 52.79 54.43 55.68 55.68 55.68 76.11 79.49 89.25 97.55 97.55 3" meter 100.31 103.42 105.80 105.80 105.80 156.98 164.30 185.59 203.66 203.66 4" meter 153.71 158.48 162.13 162.13 162.13 276.14 289.28 327.55 360.04 360.04 6" meter 301.95 311.31 318.47 318.47 318.47 561.28 588.33 667.24 734.22 734.22 8" meter 479.94 494.82 506.20 506.20 506.20 1,029.42 1,079.32 1,224.95 1,348.56 1,348.56 10" meter 687.63 708.95 725.26 725.26 725.26 1,625.23 1,704.21 1,934.76 2,130.44 2,130.44 12" meter 1,280.84 1,320.55 1,350.92 1,350.92 1,350.92 2,135.93 2,239.84 2,543.16 2,800.62 2,800.62 Note: Additional financial information is available at www.modestogov.com Commercial Accounts

CITY OF MODESTO
CONTINUING DISCLOSURE REQUIREMENTS INFORMATION (continued) YEAR ENDED JUNE 30, 2021

CITY WATER UTILITY SYSTEM
Water Rates and Charges
The following table sets forth the adopted monthly service charge and volume charge for commercial accounts through fiscal year 2020-21. 161
#1..
- 208 -
Bonds Moody's Rating Standard & Poor's Rating Fitch Rating 2008 Lease Revenue Bonds Aa3 A/A-1 AA2008 Water Certificates of Participation Aa3 Wastewater Revenue Bonds, Series 2018A AA
Wastewater Revenue Bonds, Series 2020A AA
Wastewater Revenue Bonds, Series 2020B AA
Sources: www.moodys.com
www.standardandpoors.com
www.Fitchratings.com

CITY OF MODESTO

BOND RATINGS
FISCAL YEAR ENDED JUNE 30, 2021
CONTINUING DISCLOSURE REQUIREMENTS INFORMATION (continued) 162
#1..
- 209 -

CITY OF MODESTO
INDEPENDENT ACCOUNTANTS’ REPORT ON APPLYING

AGREED-UPON PROCEDURES RELATED TO THE

ARTICLE XIII-B APPROPRIATIONS LIMIT

FOR THE YEAR ENDED
JUNE 30, 2021
#1..
- 210 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT ACCOUNTANTS’ REPORT ON APPLYING

AGREED-UPON PROCEDURES RELATED TO THE

ARTICLE XIII-B APPROPRIATIONS LIMIT
To the Honorable City Council
City of Modesto, California
We have performed the procedures enumerated below to the accompanying calculation of the Appropriation Limit of the City of Modesto, California (the City) for the year ended June 30, 2021. These procedures, which were agreed to by the City and recommended by the California Committee on Municipal Accounting (CCMA) (as presented in the CCMA White Paper entitled Agreed-upon Procedures Applied to the Appropriations Limitation Prescribed by Article XIII-B of the California Constitution) were performed solely to assist the City in meeting the requirements of Section

1.5 of Article XIII-B of the California Constitution. The City’s management is responsible for the Appropriations Limit Calculation.

The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose.

The procedures and associated findings are as follows:
1) We obtained the City’s calculation of the June 30, 2021 appropriations limit and compared the limit and annual adjustment factors included in the calculation to the limit and annual adjustment factors that were adopted by the resolution of the City Council. We also compared the population and inflation factors included in the aforementioned worksheet to those that were selected by a recorded vote of the City Council.

Finding: No exceptions were noted as a result of our procedures. 2) For the accompanying calculation, we added last year’s limit to the total adjustments and compared the resulting amount to this year’s limit.

Finding: No exceptions were noted as a result of our procedures. 3) We compared the current year information used to determine the current year limit to the appropriations limit calculation prepared by the City and to the information provided by the State Department of Finance.

Finding: No exceptions were noted as a result of our procedures. 4) We compared the prior year appropriations limit calculation presented in the accompanying appropriations limit calculation to the prior year appropriations limit adopted by the City Council for the prior year.

Finding: No exceptions were noted as a result of our procedures. #1..
- 211 -
2 This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an audit, the objective of which would be the expression of an opinion, on the accompanying Appropriations Limit Calculation.

Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. No procedures have been performed with respect to the determination of the appropriation limit for the base year, as defined by Article XIII-B of the California Constitution.

This report is intended solely for the use of the City Council and City’s management and should not be used by anyone other than these specified parties. However, this report is a matter of public record and its distribution is not limited.

HUDSON HENDERSON & COMPANY, INC.

Fresno, California
October 1, 2021
#1..
- 212 -
3 CITY OF MODESTO

APPROPRIATIONS LIMIT CALCULATION
FOR THE YEAR ENDED JUNE 30, 2021
Appropriations Limit, fiscal year 2020 $ 469,267,726
Adjustment Factors:

Inflation factor, as adopted (1) 1.0373
Population factor, as adopted (2) x 1.0100
Calculation of factor FY 20-21 1.0477
Annual adjustment in dollars 22,384,071
Appropriations limit, fiscal year 2021, as adopted $ 491,651,797 (1) The inflation factor is based on the current year cost of living increase, as determined by the percentage change in per capita personal income for California. The inflation factor was provided by the State of California’s Department of Finance.
(2) The population factor is based on the annual change in the City of Modesto’s population, for the calendar year preceding the beginning of the fiscal year for which the appropriations limit is to be determined. The population factor was provided by the State of California’s Department of Finance. #1..
- 213 -

COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA

BASIC FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS’ REPORT

FOR THE YEAR ENDED
JUNE 30, 2021
#1..
- 214 -

TABLE OF CONTENTS
Page
Independent Auditors’ Report ......................................................................................................................... 1 Management’s Discussion and Analysis (Unaudited) ....................................................................................... 3 Basic Financial Statements:

Statement of Net Position – Governmental Activities ........................................................................ 10 Statement of Activities – Governmental Activities ............................................................................. 11 Balance Sheet – Governmental Funds ................................................................................................ 13 Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position – Governmental Activities ........................................................................ 14 Statement of Revenues, Expenditures, and Changes in
Fund Balances – Governmental Funds ................................................................................................ 15 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of Governmental Funds to the Statement of Activities Change in Net Position of Governmental Activities ............................................................................ 16 Statement of Revenues, Expenditures, and Changes in
Fund Balance - Special Revenue Fund – Budget and Actual ................................................................ 17 Notes to Basic Financial Statements .................................................................................................................. 18 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 ...................................................................................................................... 24 #1..
- 215 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT
The Honorable City Council
of the City of Modesto, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 1998-2 (Carver-Bangs/Pelandale-Snyder) (the District), a component unit of the City of Modesto, California, as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.

Management’s Responsibility
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes 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.

Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of June 30, 2021, the respective changes in financial position thereof and the respective budgetary comparison for the special revenue fund for the year then ended in accordance with accounting principles generally accepted in the United States of America.
#1..
- 216 -
2 Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis 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. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 19, 2021, on our consideration of the District’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 District’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 District’s internal control over financial reporting and compliance.

HUDSON HENDERSON & COMPANY, INC.

Fresno, California
October 19, 2021
#1..
- 217 -
3 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
FOR THE YEAR ENDED JUNE 30, 2021
The City of Modesto Community Facilities District No. 1998-2 (Carver-Bangs/Pelandale-Snyder) (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, which requires the District to provide this overview of its financial activities for the fiscal year.

Please read this overview in conjunction with your reading of the accompanying basic financial statements.

THE PURPOSE OF THE DISTRICT
The District is a blended component unit of the City of Modesto, California (the City). It is controlled by the City, and the City Council is the District’s governing body. City employees perform most of the duties and functions required of the District, but certain tasks are provided by third parties under contract.

The District’s purpose under California law is to provide a funding mechanism for public facilities and services authorized by the District. The District is the vehicle that will be used to ensure that all landowners in the Specific Plan area contribute to the cost of the public facilities and services. Additional information on the District can be found below, and in Note 1 to the accompanying financial statements.

BACKGROUND AND MANAGEMENT’S DISCUSSION
The Carver-Bangs Specific Plan (Resolution No. 97-1 61) was adopted by the City Council on April 1, 1997, and was subsequently amended on November 4, 1997 (Resolution No. 97-633). The Carver-Bangs Specific Plan has been developed under the City’s Village Residential guidelines and should yield approximately 800 single-family residential units. On January 16, 1996, the City Council approved the Pelandale-Snyder Specific Plan (Resolution No. 95-16) and amended the Pelandale-Snyder Specific Plan on March 18, 1997 (Resolutions 97-136 and 97-139). The PelandaleSnyder Specific Plan area contains approximately 227 acres designated as single-family residential and approximately 57 acres are designated multi-family residential.

In December 1998, the City formed the District to provide a funding and reimbursement mechanism for public facilities and services required to serve the Carver-Bangs and Pelandale-Snyder Specific Plan areas in the City and to fund ongoing maintenance costs. Portions of both Specific Plan areas were included within the initial boundaries of the District and the remainder of the property within both Specific Plan areas, excluding a remainder parcel, have annexed to the District.

As a condition of development, developers are required to install various public improvements that will serve the increased population generated from the projects. Many of these improvements must be provided in the early stages of development and, therefore, the first developer(s) to build within the Specific Plan areas must install the improvements. The District was established as a funding/reimbursement for many of the improvements. Up until a few years ago, developers installed most of the improvements. The developers received a cash reimbursement or tax credit equal to the cost of that improvement(s) as set forth in the Public Report adopted in connection with the formation of the District.

Over the past several years, the City has designed and overseen the installation of the improvements. Construction of the storm drain pump stations located at the East and West Basins on Prescott Road between Pelandale and Snyder was completed in the summer of 2007 while the Snyder Avenue widening project between Prescott Road and Carver Road commenced in the spring of 2008. Design of the bike trail commenced in 2009. #1..
- 218 -
4 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:

Government-Wide:
• The District’s net position decreased to $2,036,278 for fiscal year 2021. • Total District revenues were $93,166.

Funds Basis:
• Capital Projects Fund revenues of $705 were $55,653 lower than the prior year due to a decrease in the change in fair value of investments. Expenditures of $0 were $10,530 lower than the previous year. The Capital Projects Fund ending fund balance increased by $705, with an ending fund balance of $1,622,998. • Special Revenue Fund revenues of $91,546 were $12,643 less than the prior year due to decrease in interest income and investment loss. Expenditures of $93,802 were $2,760 more than the prior year due to an increase in service expenditures. The Special Revenue Fund balance decreased by $2,256 to an ending fund balance of $412,365.

THE BASIC FINANCIAL STATEMENTS

The basic financial statements comprise the government-wide financial statements and the fund financial statements; these two sets of financial statements provide two different views of the District’s financial activities and financial position.

Government-Wide Financial Statements
The government-wide financial statements provide a long-term view of the District’s activities as a whole and are comprised of the Statement of Net Position and the Statement of Activities. The Statement of Net Position provides information about the financial position of the District as a whole, including all its capital assets and long-term liabilities. The Statement of Activities provides information about the District’s revenues and all its expenses. The Statement of Activities explains in detail the change in net position for the year.

The Statement of Net Position and the Statement of Activities present information about the following:

Governmental activities - All of the District’s basic services are considered to be governmental activities, including formation, financing, construction, and maintenance activities. These services are supported by formation deposits, special facilities taxes, and annual maintenance assessments. Government-wide financial statements are prepared on the accrual basis of accounting, which means they measure the flow of all economic resources of the District as a whole, similar to that used by the private sector.
#1..
- 219 -
5 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021

FINANCIAL ACTIVITIES OF THE DISTRICT AS A WHOLE
This analysis focuses on the net position and changes in net position of the District’s governmental activities in the government-wide financial Statement of Net Position and Statement of Activities that follow.

As of June 30, 2021, total assets of $2,042,437 were offset by liabilities of $6,159. The District’s net position from governmental activities decreased to $2,036,278 in 2021 from $2,036,914 in 2020. All of the District’s net position is restricted as follows: $1,622,998 for acquisition or construction of infrastructure and $413,280 for maintaining that infrastructure.

The following is a condensed Statement of Net Position as of June 30, 2021 and 2020:
2021 2020 Change
Cash and investments $ 2,036,580 $ 2,037,791 $ (1,211)
Assessments receivable 1,895 801 1,094
Interest receivable 3,962 6,641 (2,679)
Total assets 2,042,437 2,045,233 (2,796)
Current and other liabilities 6,159 8,319 (2,160)
Net position:

Restricted for:

Capital projects 1,622,998 1,622,293 705
District maintenance 413,280 414,621 (1,341)
Total net position $ 2,036,278 $ 2,036,914 $ (636)
Statement of Net Position - Governmental Activities
#1..
- 220 -
6 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2021 revenue came primarily from maintenance special tax of $92,523 and investment earnings of $643. Facilities special tax revenue was not collected in fiscal year 2021, as these revenues are collected at the time of building permit issuance, and no such development occurred in the District in fiscal year 2021. District expenses of $93,802 were for professional services and utilities expenses.

The following is a condensed Statement of Activities for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues:

General revenues:

Maintenance special tax $ 92,523 $ 91,492 $ 1,031
Investment earnings 643 69,055 (68,412)
Total revenues 93,166 160,547 (67,381)
Expenses:

Community development 93,802 101,572 (7,770)
Change in net position (636) 58,975 $ (59,611)
Net position, beginning of year 2,036,914 1,977,939
Net position, end of year $ 2,036,278 $ 2,036,914
Statement of Activities - Governmental Activities
Fund Financial Statements
The fund financial statements report the District’s operations in more detail than the government-wide financial statements and focus primarily on the short-term activities of the District’s two funds. The fund financial statements measure only current revenues and expenditures and fund balances; they exclude capital assets, long-term debt, and other long-term amounts.

The fund financial statements provide detailed information about each of the District’s most significant funds, called major funds. Major funds present the major activities of the District for the year and may change from year to year as a result of changes in the pattern of the District’s activities. All of the District’s funds are presented here as major funds; their purpose is explained in Note 1 to the financial statements. #1..
- 221 -
7 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
All the District’s funds are governmental funds; financial statements for these funds are prepared on the modified accrual basis of accounting, which means they measure only current financial resources and uses.

The following is a condensed Statement of Revenues, Expenditures, and Changes in Fund Balance for both the Capital Projects Fund and the Special Revenue Fund for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues $ 705 $ 56,358 $ (55,653)
Expenditures - 10,530 (10,530)
Changes in fund balances 705 45,828 $ (45,123)
Fund balances, beginning of year 1,622,293 1,576,465
Fund balances, end of year $ 1,622,998 $ 1,622,293
2021 2020 Change
Revenues $ 91,546 $ 104,189 $ (12,643)
Expenditures 93,802 91,042 2,760
Changes in fund balances (2,256) 13,147 $ (15,403)
Fund balances, beginning of year 414,621 401,474
Fund balances, end of year $ 412,365 $ 414,621
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Capital Projects Fund
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Special Revenue Fund
THE DISTRICT’S FUND FINANCIAL STATEMENTS
At June 30, 2021, the District’s governmental funds reported combined fund balances of $2,035,363, which was a $1,551 decrease from fiscal year 2020. The Capital Projects Fund realized a $705 increase, due to interest revenues, while the Special Revenue Fund realized a $2,256 decrease due to increase in professional service expenditures and investment loss.
#1..
- 222 -
8 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021

CAPITAL ASSETS
Under GASB Statement No. 34, the District is required to record all its capital assets, including infrastructure, at their historical cost, and to depreciate these assets over their estimated useful lives. However, title to all infrastructure assets acquired or constructed by the District is turned over to the City upon completion and acceptance.

Accordingly, capital outlay expenditures are reported in both the District’s fund and government-wide financial statements. Therefore, the District reports no long-term capital assets.

CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT
These basic financial statements are intended to provide citizens, taxpayers, investors, and creditors with a general overview of the District’s finances. Questions about this report should be directed to the City of Modesto, Administrator, Infrastructure Financing Programs, P.O. Box 642, Modesto, California 95353. #1..
- 223 -
9 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA

STATEMENT OF NET POSITION

AND STATEMENT OF ACTIVITIES
The Statement of Net Position and the Statement of Activities summarize the entire District’s financial activities and financial position. They are prepared on the same basis of accounting as that used by most businesses, which means they include all the District’s assets and all its liabilities, as well as all its revenues and expenses. This is known as the full accrual basis of accounting – the effect of all the District’s transactions is taken into account, regardless of whether or when cash changes hands, but all material internal transactions between District funds have been eliminated.

The Statement of Net Position reports the difference between the District’s total assets and deferred outflows of resources and the District’s total liabilities and deferred inflows of resources, including all the District’s capital assets and all its long-term debt. The Statement of Net Position focuses the reader on the composition of the District’s net position, by subtracting total liabilities from total assets. The Statement of Net Position summarizes the financial position of the District in a single column.

The Statement of Activities reports increases and decreases in the District’s net position. It is also prepared on the full accrual basis of accounting, which means it includes all the District’s revenues and all its expenses, regardless of when cash changes hands. This differs from the “modified accrual” basis of accounting used in the fund financial statements, which reflect only current assets, current liabilities, available revenues, and measurable expenditures.

The format of the Statement of Activities presents the District’s expenses, which are listed by program, first. Program revenues – that is, revenues which are generated directly by these programs – are then deducted from program expenses to arrive at the net program revenue (expense). General revenues – that is, revenues which are not generated directly by these programs – are then added to arrive at the change in net position and reconciled with the Statement of Net Position.
#1..
- 224 -
The accompanying notes are an integral part of the financial statements. 10 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES
JUNE 30, 2021
ASSETS
Cash and investments $ 2,036,580
Assessments receivable 1,895
Interest receivable 3,962
Total Assets 2,042,437

LIABILITIES
Accounts payable 6,159
Total Liabilities 6,159

NET POSITION
Restricted for:

Capital projects 1,622,998
District maintenance 413,280
Total Net Position $ 2,036,278
#1..
- 225 -
The accompanying notes are an integral part of the financial statements. 11 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA
STATEMENT OF ACTIVITIES – GOVERNMENTAL ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Operating Grants Governmental
Functions/Programs Expenses & Contributions Activities
Community Development $ 93,802 $ - $ (93,802)
$ 93,802 $ - (93,802)
General Revenues:

Maintenance special tax 92,523
Investment earnings 643
Total General Revenues 93,166
(636)
Net Position, Beginning of Year 2,036,914
Net Position, End of Year $ 2,036,278
Revenues
Change in Net Position
Program
Net (Expense)
Revenue and
Changes in Net
Position
#1..
- 226 -
12 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA

FUND FINANCIAL STATEMENTS
Major funds are defined generally as having significant activities or balances in the current year.

The District determined all its funds to be major funds. They are:

The Capital Projects Fund accounts for all financial resources and uses related to acquisition, construction, and formation/annexation activities.

The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
#1..
- 227 -
The accompanying notes are an integral part of the financial statements. 13 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA
BALANCE SHEET – GOVERNMENTAL FUNDS
JUNE 30, 2021
Capital Special
Projects Revenue
Fund Fund Total
ASSETS
Cash and investments $ 1,619,761 $ 416,819 $ 2,036,580
Assessments receivable - 1,895 1,895
Interest receivable 3,237 725 3,962
Total Assets $ 1,622,998 $ 419,439 $ 2,042,437

LIABILITIES
Accounts payable $ - $ 6,159 $ 6,159
Total Liabilities - 6,159 6,159

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - 915 915
Total Deferred Inflows of Resources - 915 915

FUND BALANCES
Restricted for:

Capital projects 1,622,998 - 1,622,998
District maintenance - 412,365 412,365
Total Fund Balances 1,622,998 412,365 2,035,363
Total Liabilities, Deferred Inflows
of Resources and Fund Balances $ 1,622,998 $ 419,439 $ 2,042,437 #1..
- 228 -
The accompanying notes are an integral part of the financial statements. 14 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA
RECONCILIATION OF THE BALANCE SHEET – GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES
JUNE 30, 2021
Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Position:

Total Fund Balances - Governmental Funds $ 2,035,363
Adjustments to the Balance Sheet of the Governmental Funds to reconcile with the Statement of Net Position:

Revenues not available for current-period expenditures are deferred in governmental funds, but are considered earned in the Statement of Net Position. 915
Total Net Position - Governmental Activities $ 2,036,278 #1..
- 229 -
The accompanying notes are an integral part of the financial statements. 15 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA

STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Capital Special
Projects Revenue
Fund Fund Total

REVENUES
Maintenance special tax $ - $ 91,608 $ 91,608
Interest income 15,092 3,256 18,348
Change in fair value of investments (14,387) (3,318) (17,705) Total Revenues 705 91,546 92,251

EXPENDITURES
Services - professional and other - 80,327 80,327
Utilities - 13,475 13,475
Total Expenditures - 93,802 93,802
Changes in Fund Balances 705 (2,256) (1,551)
Fund Balances, Beginning of Year 1,622,293 414,621 2,036,914 Fund Balances, End of Year $ 1,622,998 $ 412,365 $ 2,035,363 #1..
- 230 -
The accompanying notes are an integral part of the financial statements. 16 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT

OF ACTIVITIES CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2021
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Funds to the Statement of Activities:

Changes in Fund Balances - Governmental Funds $ (1,551) Adjustments to the Statement of Revenues, Expenditures, and changes in Fund Balances of the Governmental Funds to reconcile with the Statement of Activities:

Revenues that are considered earned in the Statement of Actvities that did not provide current financial resources in the current year were not reported as revenues in the governmental funds. 915 Change in Net Position - Governmental Activities $ (636) #1..
- 231 -
The accompanying notes are an integral part of the financial statements. 17 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – SPECIAL REVENUE FUND – BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2021
Actual Variance with
Original Final Amounts Final Budget

REVENUES
Maintenance special tax $ 85,000 $ 85,000 $ 91,608 $ 6,608 Interest income - - 3,256 3,256
Change in fair value
of investments - - (3,318) (3,318)
Total Revenues 85,000 85,000 91,546 6,546

EXPENDITURES
Services - professional
and other 87,641 87,641 80,327 7,314
Utilities 16,000 16,000 13,475 2,525
Total Expenditures 103,641 103,641 93,802 9,839
Changes in Fund Balance $ (18,641) $ (18,641) (2,256) $ 16,385 Fund Balance, Beginning of Year 414,621
Fund Balance, End of Year $ 412,365
Budgeted Amounts
#1..
- 232 -

COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
18 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity: The Community Facilities District Number 1998-2 (Carver-Bangs/Pelandale-Snyder) (the District) was formed in December 1998 by a vote of the property owners within the proposed district. The District, a separate legal entity, was formed to provide a funding and reimbursement mechanism for public facilities and services required by the District Specific Plans. The District is the vehicle that will be used to ensure that all landowners in the District pay their share of the public improvements. The District is a proposed 480-acre project bounded on the East by Carver Road, on the North by Bangs Avenue, on the West by Dale Road, and the Modesto Irrigation District canal and Snyder Avenue on the South. The District is expected to yield 3,413 residential dwelling units at buildout; in addition, 36 acres of the District will be used for an elementary school site, a City park, and a church.

The District is an integral part of the City of Modesto, California (the City) and the accompanying financial statements are included as a blended component unit of the basic financial statements prepared by the City. A component unit is a separate governmental unit, agency, or nonprofit corporation which, when combined with all other component units, constitutes the reporting entity as defined in the City’s basic financial statements.

Government-Wide and Fund Financial Statements: The government-wide financial statements (i.e., the Statement of Net Position and Statement of Activities) report information on all of the activities of the District. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities normally are supported by taxes and intergovernmental revenues.

The Statement of Activities demonstrates the degree to which direct expenses are offset by program revenues.

Direct expenses are those that are clearly identifiable with the community development function. Program revenues include grants and contributions that are restricted to meeting the operational requirements of the community development function. Investment earnings, and other items which are not properly included among program revenues, are reported instead as general revenues. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements.

Basis of Presentation, Basis of Accounting, and Measurement Focus: The government-wide 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 when a liability is incurred, regardless of the timing of related cash flows. Taxes are recognized as revenues in the year for which they are levied.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 180 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under the accrual basis of accounting. Substantially all taxes and interest, including the net increase (decrease) in the fair value of investments, are considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Miscellaneous revenues are considered to be measurable and available only when cash is received by the District.

The District reports the following major governmental funds:

The Capital Projects Fund accounts for all financial resources and uses related to acquisition, construction, and formation/annexation activities.

The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
#1..
- 233 -

COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
19 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Management’s Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Maintenance Special Taxes: The maintenance special taxes are collected by the County of Stanislaus on the property tax bill. The special taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively. The County of Stanislaus bills and collects the special taxes and remits them to the District.

The Rate and Method of Apportionment of Special Tax (RMA), set forth in the District’s Public Report, describes how the tax will be allocated among properties in the District. The Public Report was established during the formation of the District. A cost of living adjustment is applied to the special taxes annually.

Fund Balance: In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned, or unassigned based primarily on the extent to which the District is bound to honor constraints on how specific amounts can be spent.
• Nonspendable – Amounts that are not in spendable form (such as inventory) or are required either legally or contractually to be maintained intact.
• Restricted – Amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or (b) imposed by law through constitutional or enabling legislation.
• Committed - Amounts constrained to specific purposes by the District itself, using the District’s highest level of decision-making authority (the City Council). To be reported as committed, amounts cannot be used for any other purpose unless the District takes the same highest level action to remove or change the constraint. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period.
• Assigned - Amounts the District intends to use for a specific purpose. Intent can be expressed by the District at either the highest level of decision-making or by an official or body to which the District delegates the authority.
• Unassigned - The residual classification for the District that includes amounts not contained in the other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes.

The District establishes and modifies or rescinds fund balance commitments by passage of an ordinance or policy.

This is typically done through adoption or amendment of the budget. A fund balance commitment is further indicated in the budget as a designation or commitment of the fund, such as approved construction contracts.

Assigned fund balance is established by the District through adoption or amendment of the budget or future year budget plan as intended for a specific purpose.

When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, followed by the committed, assigned, and unassigned resources as they are needed. #1..
- 234 -

COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
20 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Deferred Outflows and Inflows of Resources: Pursuant to GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, the District recognizes deferred outflows and inflows of resources.

In addition to assets, the Statements of Net Position will sometimes report a separate section for deferred outflows of resources. A deferred outflow of resources is defined as a consumption of net position by the District that is applicable to a future reporting period.

In addition to liabilities, the Statement of Net Position will sometimes report section for deferred inflows of resources. A deferred inflow of resources is defined as an acquisition of net position by the District that is applicable to a future reporting period. Deferred inflows reported by the District consist of unearned deferred assessments that have been billed as of year-end, but not yet collected.

Net Position: Net position represents the residual interest in the District’s assets after liabilities are deducted. In accordance with GASB Statement No. 63, the fund equity section on the Statement of Net Position was combined to report total net position and present it in three broad components:
• Net investment in capital assets – Amount consists of capital assets, including infrastructure, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets.
• Restricted – Amount consists of net position restricted by external creditors, grantors, contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabled legislature.
• Unrestricted – Amount consists of all net position that does not meet the definition “net investment in capital assets” or “restricted” net position.

When both restricted and unrestricted net position are available, restricted resources are depleted first before unrestricted resources are used.

Governmental Accounting Standards Update: During the year ended June 30, 2021, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no financial impact:

GASB Statement No. 84 – Fiduciary Activities. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.

GASB Statement No. 89 – Accounting for Interest Cost Incurred before the End of a Construction Period. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2020.

GASB Statement No. 90 – Majority Equity Interests- an amendment of GASB Statements No. 14 and No. 61. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.
#1..
- 235 -

COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
21 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Governmental Accounting Standards Update (continued):

Released GASB Statements to be implemented in future financial statements are as follows:

GASB Statement No. 87 – Leases. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2021.

GASB Statement No. 91 – Conduit Debt Obligations. The requirements of this statement are effective for reporting periods beginning after December 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2021.

GASB Statement No. 92 – Omnibus 2020. The requirements of this statement are effective for reporting periods beginning after June 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to June 15, 2021.

GASB Statement No. 93 – Replacement of Interbank Offered Rates. The requirements of this statement are effective for reporting periods beginning after June 15, 2021. Subsequent to issuance, GASB Statement No. 95 postponed the certain requirements of this statement to reporting periods beginning after June 15, 2022.

GASB Statement No. 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.

GASB Statement No. 96 – Subscription-Based Information Technology Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022 GASB Statement No. 97 – Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The requirements of this statement are effective for reporting periods beginning after June 15, 2021
Subsequent Events: In compliance with accounting standards, management has evaluated events that have occurred after year-end to determine if these events are required to be disclosed in the financial statements. Management has determined that no events require disclosure in accordance with accounting standards. These subsequent events have been evaluated through October 19, 2021, which is the date the financial statements were available to be issued.

NOTE 2 – CASH AND INVESTMENTS
Cash and investments of the District are pooled with other City of Modesto funds. Interest earned on pooled cash and investments is credited to each participant in the pool based on each participant’s average monthly cash balance. Credit quality ratings are not available for the District’s investments as all cash is invested as part of the common cash and investment pool of the City of Modesto.

Cash in the City Pool is considered unclassified as to credit risk because it is not evidenced by securities that exist in physical or book entry form. The District does not have any deposits with financial institutions as of June 30, 2021. #1..
- 236 -

COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
22 NOTE 2 – CASH AND INVESTMENTS (continued)
Cash and investments as of June 30, 2021 are classified in the accompanying financial statements as follows:

Statement of Net Position- Governmental Activities:

Cash and investments $ 2,036,580
Total cash and investments $ 2,036,580
Deposits with City of Modesto
Cash and investment pool $ 2,036,580
Total cash and investments $ 2,036,580
Detailed information concerning the City of Modesto’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City of Modesto’s Annual Comprehensive Financial Report. As of June 30, 2021, the fair value of the District’s position in the pool is the same as the value of its pool shares.

NOTE 3 – RESTRICTED FUND BALANCES
Restrictions of Fund Balances: Fund balances are all presented in the restricted category (see Note 1 for a description of fund balance categories). As of June 30, 2021, restrictions included:

Restricted for Capital Projects - the portion of fund balance legally restricted for the acquisition, construction, and formation/annexation activities.

Restricted for District Maintenance - the portion of fund balance legally restricted for maintenance of parkways and open space within the District.

NOTE 4 – DELINQUENCIES AND FORECLOSURES
The District has made a covenant under the Trust Indenture of the Special Tax Bonds that will initiate foreclosures proceedings against delinquent parcels as follows:
a. Any parcel that is delinquent for three consecutive payments. Foreclosure against these parcels is to be initiated within the 120 days after the third delinquency. b. All parcels delinquent at June 30 when the District received Special Taxes totaling less than 95% of the total Special Tax levied for that fiscal year. Foreclosure against these parcels is to be initiated by September 1 following the end of the fiscal year.

At June 30, 2021, the District had 19 parcels that were delinquent for a total of $915, four of which were delinquent for more than three consecutive payments.

The District received 99.37% of the Special Revenue Fund maintenance special taxes levied during the year ended June 30, 2021. The delinquencies total of $534 at June 30, 2021 is included in assessments receivable on the Statement of Net Position and Balance Sheet.
#1..
- 237 -

COMMUNITY FACILITIES DISTRICT
NUMBER 1998-2 CARVER-BANGS/PELANDALE-SNYDER

CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
23 NOTE 5 – CONTINGENCY
Coronavirus Pandemic
Management has determined the events regarding the Novel Coronavirus require disclosure in accordance with accounting standards. On March 4, 2020, Governor Newsom issued an emergency proclamation declaring a state of emergency in California due to the Novel Coronavirus (COVID-19). The COVID-19 outbreak is ongoing, and the ultimate geographic spread of the virus, the duration and severity of the outbreak and the economic and other actions that may be taken by government authorities to contain the outbreak or treat its impact are uncertain. The ultimate impact of COVID-19 on the operations and finances of the District remains unknown. #1..
- 238 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
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
The Honorable City Council
of the City of Modesto, 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 and each major fund of the City of Modesto Community Facilities District Number 1998-2 (Carver-Bangs/Pelandale-Snyder) (the District), as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated October 19, 2021.

Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District’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 determination of financial statement amounts. 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. #1..
- 239 -
25 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 District’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.

HUDSON HENDERSON & COMPANY, INC.

Fresno, California
October 19, 2021
#1..
- 240 -

COMMUNITY FACILITIES DISTRICT
NUMBER 2000-2 COFFEE-CLARATINA

CITY OF MODESTO, CALIFORNIA

BASIC FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS’ REPORT

FOR THE YEAR ENDED
JUNE 30, 2021
#1..
- 241 -

TABLE OF CONTENTS
Page
Independent Auditors’ Report ......................................................................................................................... 1 Management’s Discussion and Analysis (Unaudited) ....................................................................................... 3 Basic Financial Statements:

Statement of Net Position – Governmental Activities ........................................................................ 9 Statement of Activities – Governmental Activities ............................................................................. 10 Balance Sheet – Governmental Fund .................................................................................................. 12 Statement of Revenues, Expenditures, and Changes in
Fund Balances – Governmental Fund .................................................................................................. 13 Statement of Revenues, Expenditures, and Changes in
Fund Balance - Special Revenue Fund – Budget and Actual ................................................................ 14 Notes to Basic Financial Statements .................................................................................................................. 15 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 ...................................................................................................................... 21 #1..
- 242 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT
The Honorable City Council
of the City of Modesto, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and major fund of the City of Modesto Community Facilities District Number 2000-2 (Coffee-Claratina) (the District), a component unit of the City of Modesto, California, as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.

Management’s Responsibility
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes 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.

Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the financial statements referred to above present fairly in all material respects the respective financial position of the governmental activities and major fund of the District as of June 30, 2021, the respective changes in financial position thereof and the respective budgetary comparison for the special revenue fund for the year then ended, in accordance with accounting principles generally accepted in the United States of America. #1..
- 243 -
2 Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis 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. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 19, 2021, on our consideration of the District’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 District’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 District’s internal control over financial reporting and compliance.

HUDSON HENDERSON & COMPANY, INC.

Fresno, California
October 19, 2021
#1..
- 244 -
3 COMMUNITY FACILITIES DISTRICT
NUMBER 2000-2 COFFEE-CLARATINA

CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
FOR THE YEAR ENDED JUNE 30, 2021
The City of Modesto Community Facilities District No. 2000-2 (Coffee-Claratina) (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, which requires the District to provide this overview of its financial activities for the fiscal year.

Please read this overview in conjunction with your reading of the accompanying basic financial statements.

THE PURPOSE OF THE DISTRICT
The District is a blended component unit of the City of Modesto, California (the City). It is controlled by the City, and the City Council is the District’s governing body. City employees perform most of the duties and functions required of the District, but certain tasks are provided by third parties under contract.

The District’s purpose under California law is to provide a funding mechanism for public facilities and services authorized by the District. The District is the vehicle that will be used to ensure that all landowners in the Specific Plan area contribute to the cost of the public facilities and services. Additional information on the District can be found below, and in Note 1 to the accompanying financial statements.

BACKGROUND AND MANAGEMENT’S DISCUSSION
In November 1999, the City Council approved the Coffee-Claratina Specific Plan that set forth a plan for development of 170 acres that includes up to 1,000 residential dwelling units, 40 acres of “Regional Commercial” property and 15 acres of “Mixed Community Commercial” development. The District was formed in December 2000 to provide a funding source for maintenance and repair of the storm drain basin and dual-use flood control/recreation facility and for maintenance of median, bikeway, round-about, and miscellaneous planting areas within the Coffee-Claratina Specific Plan.

FISCAL YEAR 2021 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:

Government-Wide:
• The District’s net position decreased to $166,664 for fiscal year 2021. • Total District revenues were $151,903.

Fund Basis:
• Special Revenue Fund revenues of $150,009 were $9,811 more than the prior year due to increased maintenance special tax collections. Expenditures of $156,756 were $11,287 more than the prior year due to an increase in utilities and professional service expenditures. The Special Revenue Fund balance decreased by $6,747 to an ending fund balance of $164,770. #1..
- 245 -
4 COMMUNITY FACILITIES DISTRICT
NUMBER 2000-2 COFFEE-CLARATINA

CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021

THE BASIC FINANCIAL STATEMENTS

The basic financial statements comprise the government-wide financial statements and the fund financial statements; these two sets of financial statements provide two different views of the District’s financial activities and financial position.

Government-Wide Financial Statements
The government-wide financial statements provide a long-term view of the District’s activities as a whole and are comprised of the Statement of Net Position and the Statement of Activities. The Statement of Net Position provides information about the financial position of the District as a whole, including all its capital assets and long-term liabilities. The Statement of Activities provides information about the District’s revenues and all its expenses. The Statement of Activities explains in detail the change in net position for the year.

The Statement of Net Position and the Statement of Activities present information about the following:

Governmental activities - All of the District’s basic services are considered to be governmental activities, including formation, financing, construction, and maintenance activities. These services are supported by formation deposits, special facilities taxes, and annual maintenance assessments. Government-wide financial statements are prepared on the accrual basis of accounting, which means they measure the flow of all economic resources of the District as a whole, similar to that used by the private sector.

FINANCIAL ACTIVITIES OF THE DISTRICT AS A WHOLE
This analysis focuses on the net position and changes in net position of the District’s governmental activities in the government-wide financial statement of net position and statement of activities that follow.

As of June 30, 2021, total assets of $174,039 were offset by liabilities of $7,375. The District’s net position from governmental activities decreased to $166,664 in 2021 from $171,517 in 2020. All of the District’s net position is restricted for maintenance.
#1..
- 246 -
5 COMMUNITY FACILITIES DISTRICT
NUMBER 2000-2 COFFEE-CLARATINA

CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FINANCIAL ACTIVITIES OF THE DISTRICT AS A WHOLE (continued) The following is a condensed Statement of Net Position as of June 30, 2021 and 2020:
2021 2020 Change
Cash and investments $ 169,750 $ 177,668 $ (7,918)
Assessments receivable 3,990 1,361 2,629
Interest receivable 299 592 (293)
Total assets 174,039 179,621 (5,582)
Current and other liabilities 7,375 8,104 (729)
Net position:

Restricted for:

District maintenance 166,664 171,517 (4,853)
Total net position $ 166,664 $ 171,517 $ (4,853)
Statement of Net Position - Governmental Activities
#1..
- 247 -
6 COMMUNITY FACILITIES DISTRICT
NUMBER 2000-2 COFFEE-CLARATINA

CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2021 revenue came primarily from maintenance special tax of $152,057 and investment earnings (loss) of $(154). Facilities special tax revenue was not collected in fiscal year 2021, as these revenues are collected at the time of building permit issuance, and no such development occurred in the District in fiscal year 2021. District expenses of $156,756 were for professional services and utilities.

The following is a condensed Statement of Activities for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues:

General revenues:

Maintenance special tax $ 152,057 $ 134,967 $ 17,090
Investment earnings (loss) (154) 5,231 (5,385)
Total revenues 151,903 140,198 11,705
Expenses:

Community development 156,756 145,469 11,287
Change in net position (4,853) (5,271) $ 418
Net position, beginning of year 171,517 176,788
Net position, end of year $ 166,664 $ 171,517
Statement of Activities - Governmental Activities
Fund Financial Statements
The fund financial statements report the District’s operations in more detail than the government-wide financial statements and focus primarily on the short-term activities of the District’s special revenue fund. The fund financial statements measure only current revenues and expenditures and fund balances; they exclude capital assets, longterm debt, and other long-term amounts.

The fund financial statements provide detailed information about the District’s most significant funds called major funds. Major funds present the major activities of the District for the year and may change from year to year as a result of changes in the pattern of the District’s activities. All of the District’s funds are presented here as major funds; their purpose is explained in Note 1 to the financial statements. The District’s one fund is a governmental fund; financial statements for this fund are prepared on the modified accrual basis of accounting, which means they measure only current financial resources and uses.
#1..
- 248 -
7 COMMUNITY FACILITIES DISTRICT
NUMBER 2000-2 COFFEE-CLARATINA

CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
The following is a condensed Statement of Revenues, Expenditures, and Changes in Fund Balance for the Special Revenue Fund for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues $ 150,009 $ 140,198 $ 9,811
Expenditures 156,756 145,469 11,287
Changes in fund balances (6,747) (5,271) $ (1,476)
Fund balances, beginning of year 171,517 176,788
Fund balances, end of year $ 164,770 $ 171,517
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Special Revenue Fund
THE DISTRICT’S FUND FINANCIAL STATEMENTS
At June 30, 2021, the District’s governmental fund reported a fund balance of $164,770, which was a $6,747 decrease from fiscal year 2020. The Special Revenue Fund realized a $6,747 decrease due to professional services and utilities exceeding maintenance special tax and investment revenues.

CAPITAL ASSETS
Under GASB Statement No. 34, the District is required to record all its capital assets, including infrastructure, at their historical cost, and to depreciate these assets over their estimated useful lives. However, title to all infrastructure assets acquired or constructed by the District is turned over to the City upon completion and acceptance.

Accordingly, capital outlay expenditures are reported in both the District’s fund and government-wide financial statements. Therefore, the District reports no long-term capital assets.

CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT
These basic financial statements are intended to provide citizens, taxpayers, investors, and creditors with a general overview of the District’s finances. Questions about this report should be directed to the City of Modesto, Administrator, Infrastructure Financing Programs, P.O. Box 642, Modesto, California 95353. #1..
- 249 -
8 COMMUNITY FACILITIES DISTRICT
NUMBER 2000-2 COFFEE-CLARATINA

CITY OF MODESTO, CALIFORNIA

STATEMENT OF NET POSITION

AND STATEMENT OF ACTIVITIES
The Statement of Net Position and the Statement of Activities summarize the entire District’s financial activities and financial position. They are prepared on the same basis of accounting used by most businesses, which means they include all the District’s assets and all its liabilities, as well as all its revenues and expenses. This is known as the full accrual basis of accounting – the effect of all the District’s transactions is taken into account, regardless of whether or when cash changes hands, but all material internal transactions between District funds have been eliminated.

The Statement of Net Position reports the difference between the District’s total assets and deferred outflows of resources and the District’s total liabilities and deferred inflows of resources, including all the District’s capital assets and all its long-term debt. The Statement of Net Position focuses the reader on the composition of the District’s net position, by subtracting total liabilities from total assets. The Statement of Net Position summarizes the financial position of the District in a single column.

The Statement of Activities reports increases and decreases in the District’s net position. It is also prepared on the full accrual basis of accounting, which means it includes all the District’s revenues and all its expenses, regardless of when cash changes hands. This differs from the “modified accrual” basis of accounting used in the fund financial statements, which reflect only current assets, current liabilities, available revenues, and measurable expenditures.

The format of the Statement of Activities presents the District’s expenses, which are listed by program, first. Program revenues – that is, revenues which are generated directly by these programs – are then deducted from program expenses to arrive at the net program revenue (expense). General revenues – that is, revenues which are not generated directly by these programs – are then added to arrive at the change in net position and reconciled with the Statement of Net Position.
#1..
- 250 -
The accompanying notes are an integral part of the financial statements. 9 COMMUNITY FACILITIES DISTRICT
NUMBER 2000-2 COFFEE-CLARATINA

CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES
JUNE 30, 2021
ASSETS
Cash and investments $ 169,750
Assessments receivable 3,990
Interest receivable 299
Total Assets 174,039

LIABILITIES
Accounts payable 7,375
Total Liabilities 7,375

NET POSITION
Restricted for:

District maintenance 166,664
Total Net Position $ 166,664
#1..
- 251 -
The accompanying notes are an integral part of the financial statements. 10 COMMUNITY FACILITIES DISTRICT
NUMBER 2000-2 COFFEE-CLARATINA

CITY OF MODESTO, CALIFORNIA
STATEMENT OF ACTIVITIES – GOVERNMENTAL ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Operating Grants Governmental
Functions/Programs Expenses & Contributions Activities
Community Development $ 156,756 $ - $ (156,756)
$ 156,756 $ - (156,756)
General Revenues:

Maintenance special tax 152,057
Investment earnings (loss) (154)
Total General Revenues 151,903
(4,853)
Net Position, Beginning of Year 171,517
Net Position, End of Year $ 166,664
Revenues
Change in Net Position
Program
Net (Expense)
Revenue and
Changes in Net
Position
#1..
- 252 -
11 COMMUNITY FACILITIES DISTRICT
NUMBER 2000-2 COFFEE-CLARATINA

CITY OF MODESTO, CALIFORNIA

FUND FINANCIAL STATEMENTS
Major funds are defined generally as having significant activities or balances in the current year.

The District determined all its funds to be major funds. They are:

The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
#1..
- 253 -
The accompanying notes are an integral part of the financial statements. 12 COMMUNITY FACILITIES DISTRICT
NUMBER 2000-2 COFFEE-CLARATINA

CITY OF MODESTO, CALIFORNIA
BALANCE SHEET – GOVERNMENTAL FUND
JUNE 30, 2021
Special
Revenue
Fund
ASSETS
Cash and investments $ 169,750
Assessments receivable 3,990
Interest receivable 299
Total Assets $ 174,039

LIABILITIES
Accounts payable $ 7,375
Total Liabilities 7,375

DEFERRED INFLOWS OF RESOURCES
Unavailable revenues 1,894
Total Deferred Inflows of Resources 1,894

FUND BALANCE
Restricted for:

District maintenance 164,770
Total Fund Balance 164,770
Total Liabilities, Deferred Inflows of Resources, and Fund Balance $ 174,039 Reconciliation of the Balance Sheet of the Governmental Fund to the Statement of Net Position:

Total Fund Balance - Governmental Fund $ 164,770
Adjustments to the Balance Sheet of the Governmental Fund to reconcile with the Statement of Net Position:

Revenues not available for current-period expenditures are deferred in the governmental fund, but are considered earned in the Statement of Net Position. 1,894
Total Net Position - Governmental Activities $ 166,664
#1..
- 254 -
The accompanying notes are an integral part of the financial statements. 13 COMMUNITY FACILITIES DISTRICT
NUMBER 2000-2 COFFEE-CLARATINA

CITY OF MODESTO, CALIFORNIA

STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES – GOVERNMENTAL FUND
FOR THE YEAR ENDED JUNE 30, 2021
Special
Revenue
Fund

REVENUES
Maintenance special tax $ 150,163
Interest income 1,076
Change in fair value of investments (1,230)
Total Revenues 150,009

EXPENDITURES
Services - professional and other 119,519
Utilities 37,237
Total Expenditures 156,756
Changes in Fund Balance (6,747)
Fund Balance, Beginning of Year 171,517
Fund Balance, End of Year $ 164,770
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Fund to the Statement of Activities:

Changes in Fund Balance - Governmental Fund $ (6,747)
Adjustments to the Statement of Revenues, Expenditures, and changes in Fund Balances of the Governmental Fund to reconcile with the Statement of Activities:

Revenues that are considered earned in the Statement of Activities that did not provide current financial resources in the current year were not reported as revenues in the governmental fund. 1,894 Change in Net Position - Governmental Activities $ (4,853) #1..
- 255 -
The accompanying notes are an integral part of the financial statements. 14 COMMUNITY FACILITIES DISTRICT
NUMBER 2000-2 COFFEE-CLARATINA

CITY OF MODESTO, CALIFORNIA

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – SPECIAL REVENUE FUND – BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2021
Actual Variance with
Original Final Amounts Final Budget

REVENUES
Maintenance special tax $ 135,000 $ 135,000 $ 150,163 $ 15,163 Interest income - - 1,076 1,076
Change in fair value
of investments - - (1,230) (1,230)
Total Revenues 135,000 135,000 150,009 15,009

EXPENDITURES
Services - professional
and other 109,468 111,578 119,519 (7,941)
Utilities 46,500 46,500 37,237 9,263
Total Expenditures 155,968 158,078 156,756 1,322
Changes in Fund Balance $ (20,968) $ (23,078) (6,747) $ 16,331 Fund Balance, Beginning of Year 171,517
Fund Balance, End of Year $ 164,770
Budgeted Amounts
#1..
- 256 -

COMMUNITY FACILITIES DISTRICT
NUMBER 2000-2 COFFEE-CLARATINA

CITY OF MODESTO, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
15 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity: The Community Facilities District Number 2000-2 (Coffee Claratina) (the District) was formed in October 2000 by vote of the property owners within the proposed district. The District, a separate legal entity, was formed for the purpose of setting forth a plan of rehabilitation and development for the site, which is located on the south side of Claratina Avenue, bound by Coffee Road on the East, McHenry on the West, and the Modesto City limits to the South. Coffee-Claratina is a 170-acre project designated for a maximum of 1,000 residential dwelling units, 40 acres designated “Regional Commercial,” and 15 acres of “Mixed Community Commercial.” In addition, the District is intended to fund the maintenance of median, bikeway, round-about, and miscellaneous planting areas, in addition to the funding maintenance and repair of a storm drain basin and dual-use flood control/recreation facility.

The District is an integral part of the City of Modesto, California (the City) and the accompanying financial statements are included as a blended component unit of the basic financial statements prepared by the City. A component unit is a separate governmental unit, agency, or nonprofit corporation which, when combined with all other component units, constitutes the reporting entity as defined in the City’s basic financial statements.

Government-Wide and Fund Financial Statements: The government-wide financial statements (i.e., the Statement of Net Position and Statement of Activities) report information on all of the activities of the District. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities normally are supported by taxes and intergovernmental revenues.

The Statement of Activities demonstrates the degree to which direct expenses are offset by program revenues.

Direct expenses are those that are clearly identifiable with the community development function. Program revenues include grants and contributions that are restricted to meeting the operational requirements of the community development function. Investment earnings, and other items which are not properly included among program revenues, are reported instead as general revenues. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements.

Basis of Presentation, Basis of Accounting, and Measurement Focus: The government-wide 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 when a liability is incurred, regardless of the timing of related cash flows. Taxes are recognized as revenues in the year for which they are levied.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 180 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under the accrual basis of accounting. Substantially all taxes and interest, including the net increase (decrease) in the fair value of investments, are considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Miscellaneous revenues are considered to be measurable and available only when cash is received by the District.

The District reports the following major governmental fund:

The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the District.
#1..
- 257 -

COMMUNITY FACILITIES DISTRICT
NUMBER 2000-2 COFFEE-CLARATINA

CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
16 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Management’s Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Deferred Outflows and Inflows of Resources: Pursuant to GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, the District recognizes deferred outflows and inflows of resources.

In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred outflows of resources. A deferred outflow of resources is defined as a consumption of net position by the District that is applicable to a future reporting period.

In addition to liabilities, the Statements of Net Position will sometimes report a separate section for deferred inflows of resources. A deferred inflow of resources is defined as an acquisition of net position by the District that is applicable to a future reporting period. Deferred inflows reported by the District consist of unearned deferred assessments that have been billed as of year-end, but not yet collected.

Maintenance Special Taxes: The maintenance special taxes are collected by the County of Stanislaus on the property tax bill. The special taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively. The County of Stanislaus bills and collects the special taxes and remits them to the District.

The Rate and Method of Apportionment of Special Tax (RMA), set forth in the District’s Public Report, describes how the tax will be allocated among properties in the District. The Public Report was established during the formation of the District. A cost of living adjustment is applied to the special taxes annually.

Fund Balance: In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned, or unassigned based primarily on the extent to which the District is bound to honor constraints on how specific amounts can be spent.
• Nonspendable – Amounts that are not in spendable form (such as inventory) or are required either legally or contractually to be maintained intact.
• Restricted – Amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or (b) imposed by law through constitutional or enabling legislation.
• Committed - Amounts constrained to specific purposes by the District itself, using the District’s highest level of decision-making authority (the City Council). To be reported as committed, amounts cannot be used for any other purpose unless the District takes the same highest level action to remove or change the constraint. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period.
• Assigned - Amounts the District intends to use for a specific purpose. Intent can be expressed by the District at either the highest level of decision-making or by an official or body to which the District delegates the authority.
• Unassigned - The residual classification for the District that includes amounts not contained in the other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes.

The District establishes and modifies or rescinds fund balance commitments by passage of an ordinance or policy.

This is typically done through adoption or amendment of the budget. #1..
- 258 -

COMMUNITY FACILITIES DISTRICT
NUMBER 2000-2 COFFEE-CLARATINA

CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
17 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Fund Balance (continued):

A fund balance commitment is further indicated in the budget as a designation or commitment of the fund, such as approved construction contracts. Assigned fund balance is established by the District through adoption or amendment of the budget or future year budget plan as intended for a specific purpose.

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

Net Position: Net position represents the residual interest in the District’s assets after liabilities are deducted. In accordance with GASB Statement No. 63, the fund equity section on the Statement of Net Position was combined to report total net position and present it in three broad components:
• Net investment in capital assets – Amount consists of capital assets, including infrastructure, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets.
• Restricted – Amount consists of net position restricted by external creditors, grantors, contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabled legislature.
• Unrestricted – Amount consists of all net position that does not meet the definition “net investment in capital assets” or “restricted” net position.

When both restricted and unrestricted net position are available, restricted resources are depleted first before unrestricted resources are used.

Governmental Accounting Standards Update: During the year ended June 30, 2021, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no financial impact:

GASB Statement No. 84 – Fiduciary Activities. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.

GASB Statement No. 89 – Accounting for Interest Cost Incurred before the End of a Construction Period. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2020.

GASB Statement No. 90 – Majority Equity Interests - an amendment of GASB Statements No. 14 and No 61. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2019.

Released GASB Statements to be implemented in future financial statements are as follows:

GASB Statement No. 87 – Leases. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after June 15, 2021. #1..
- 259 -

COMMUNITY FACILITIES DISTRICT
NUMBER 2000-2 COFFEE-CLARATINA

CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
18 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Governmental Accounting Standards Update (continued):

GASB Statement No. 91 – Conduit Debt Obligations. The requirements of this statement are effective for reporting periods beginning after December 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to reporting periods beginning after December 15, 2021.

GASB Statement No. 92 – Omnibus 2020. The requirements of this statement are effective for reporting periods beginning after June 15, 2020. Subsequent to issuance, GASB Statement No. 95 postponed the requirements of this statement to June 15, 2021.

GASB Statement No. 93 – Replacement of Interbank Offered Rates. The requirements of this statement are effective for reporting periods beginning after June 15, 2021. Subsequent to issuance, GASB Statement No. 95 postponed the certain requirements of this statement to reporting periods beginning after June 15, 2022.

GASB Statement No. 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.

GASB Statement No. 96 – Subscription-Based Information Technology Arrangements. The requirements of this statement are effective for reporting periods beginning after June 15, 2022.

GASB Statement No. 97 – Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The requirements of this statement are effective for reporting periods beginning after June 15, 2021.

Subsequent Events: In compliance with accounting standards, management has evaluated events that have occurred after year-end to determine if these events are required to be disclosed in the financial statements. Management has determined that no events require disclosure in accordance with accounting standards. These subsequent events have been evaluated through October 19, 2021, which is the date the financial statements were available to be issued.

NOTE 2 – CASH AND INVESTMENTS
Cash and investments of the District are pooled with other City of Modesto funds. Interest earned on pooled cash and investments is credited to each participant in the pool based on each participant’s average monthly cash balance. Credit quality ratings are not available for the District’s investments as all cash is invested as part of the common cash and investment pool of the City of Modesto.

Cash in the City Pool is considered unclassified as to credit risk because it is not evidenced by securities that exist in physical or book entry form. The District does not have any deposits with financial institutions as of June 30, 2021. #1..
- 260 -

COMMUNITY FACILITIES DISTRICT
NUMBER 2000-2 COFFEE-CLARATINA

CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
19 NOTE 2 – CASH AND INVESTMENTS (continued)
Cash and investments as of June 30, 2021 are classified in the accompanying financial statements as follows:

Statement of Net Position- Governmental Activities:

Cash and investments $ 169,750
Total cash and investments $ 169,750
Deposits with City of Modesto
Cash and investment pool $ 169,750
Total cash and investments $ 169,750
Detailed information concerning the City of Modesto’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City of Modesto’s Annual Comprehensive Financial Report. As of June 30, 2021, the fair value of the District’s position in the pool is the same as the value of its pool shares.

NOTE 3 – RESTRICTED FUND BALANCES
Restrictions of Fund Balances: Fund balances are all presented in the restricted category (see Note 1 for a description of fund balance categories). As of June 30, 2021, restrictions included:

Restricted for District Maintenance - the portion of fund balance legally restricted for maintenance of parkways and open space within the District.

NOTE 4 – DELINQUENCIES AND FORECLOSURES
The District has made a covenant under the Trust Indenture of the Special Tax Bonds that will initiate foreclosure proceedings against delinquent parcels as follows:
a. Any parcel that is delinquent for three consecutive payments. Foreclosure against these parcels is to be initiated within 120 days after the third delinquency.
b. All parcels delinquent at June 30 when the District received Special Taxes totaling less than 95% of the total Special Tax levied for that fiscal year. Foreclosure against these parcels is to be initiated by September 1 following the end of the fiscal year.

At June 30, 2021, the District had 2 parcels that were delinquent for a total of $1,894, one of which was delinquent for more than three consecutive payments.

The District received 99.83% of the Special Revenue Fund maintenance special taxes levied during the year ended June 30, 2021. The delinquencies total of $257 at June 30, 2021 is included in assessments receivable on the Statement of Net Position and Balance Sheet.
#1..
- 261 -

COMMUNITY FACILITIES DISTRICT
NUMBER 2000-2 COFFEE-CLARATINA

CITY OF MODESTO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
20 NOTE 5 – EXCESS OF EXPENDITURES OVER APPROPRIATIONS
Deficiency of expenditures over appropriations for the year ended June 30, 2021 was as follows:

Expenditures Amount
Special Revenue Fund:

Services - professional and other $ (7,941)
NOTE 6 – CONTINGENCY
Coronavirus Pandemic
Management has determined the events regarding the Novel Coronavirus require disclosure in accordance with accounting standards. On March 4, 2020, Governor Newsom issued an emergency proclamation declaring a state of emergency in California due to the Novel Coronavirus (COVID-19). The COVID-19 outbreak is ongoing, and the ultimate geographic spread of the virus, the duration and severity of the outbreak and the economic and other actions that may be taken by government authorities to contain the outbreak or treat its impact are uncertain. The ultimate impact of COVID-19 on the operations and finances of the District remains unknown. #1..
- 262 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
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
The Honorable City Council
of the City of Modesto, 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 and major fund of the City of Modesto Community Facilities District Number 2000-2 (Coffee Clarantina) (the District), as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated October 19, 2021.

Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District’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 determination of financial statement amounts. 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. #1..
- 263 -
22 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 District’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.

HUDSON HENDERSON & COMPANY, INC.

Fresno, California
October 19, 2021
#1..
- 264 -

COMMUNITY FACILITIES DISTRICT
NUMBER 1998-1 ENTERPRISE BUSINESS PARK

CITY OF MODESTO, CALIFORNIA

BASIC FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS’ REPORT

FOR THE YEAR ENDED
JUNE 30, 2021
#1..
- 265 -

TABLE OF CONTENTS
Page
Independent Auditors’ Report ......................................................................................................................... 1 Management’s Discussion and Analysis (Unaudited) ....................................................................................... 3 Basic Financial Statements:

Statement of Net Position – Governmental Activities ........................................................................ 9 Statement of Activities – Governmental Activities ............................................................................. 10 Balance Sheet – Governmental Fund .................................................................................................. 12 Statement of Revenues, Expenditures, and Changes in
Fund Balance – Governmental Fund ................................................................................................... 13 Statement of Revenues, Expenditures, and Changes in
Fund Balance - Special Revenue Fund – Budget and Actual ................................................................ 14 Notes to Basic Financial Statements .................................................................................................................. 15 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 ...................................................................................................................... 20 #1..
- 266 -
7473 N. INGRAM AVE., SUITE 102 FRESNO, CA 93711 _______________________________________________________________________________________________ P (559) 412-7576 F (559) 493-5325 WWW.HHCCPAS.COM
INDEPENDENT AUDITORS’ REPORT
The Honorable City Council
of the City of Modesto, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and major fund of the City of Modesto Community Facilities District Number 1998-1 (Enterprise Business Park) (the Park), a component unit of the City of Modesto, California, as of and for the year ended June 30, 2021, the budgetary comparison for the special revenue fund and the related notes to the financial statements, which collectively comprise the Park’s basic financial statements as listed in the table of contents.

Management’s Responsibility
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes 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.

Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and major fund of the Park, as of June 30, 2021, the respective changes in financial position thereof and the respective budgetary comparison for the special revenue fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. #1..
- 267 -
2 Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis 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. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 19, 2021, on our consideration of the Park’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 Park’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 Park’s internal control over financial reporting and compliance.

HUDSON HENDERSON & COMPANY, INC.

Fresno, California
October 19, 2021
#1..
- 268 -
3 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-1 ENTERPRISE BUSINESS PARK

CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
FOR THE YEAR ENDED JUNE 30, 2021
The City of Modesto Community Facilities District No. 1998-1 (Enterprise Business Park) (the Park) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, which requires the Park to provide this overview of its financial activities for the fiscal year.

Please read this overview in conjunction with your reading of the accompanying basic financial statements.

THE PURPOSE OF THE PARK
The Park is a blended component unit of the City of Modesto, California (the City). It is controlled by the City, and the City Council is the Park’s governing body. City employees perform most of the duties and functions required of the Park, but certain tasks are provided by third parties under contract.

The Park’s purpose under California law is to provide a funding mechanism for public facilities and services authorized by the Park. The Park is the vehicle that will be used to ensure that all landowners in the Specific Plan area contribute to the cost of the public facilities and services. Additional information on the Park can be found below, and in Note 1 to the accompanying financial statements.

BACKGROUND AND MANAGEMENT’S DISCUSSION
On April 7, 1997, the City’s Planning Commission approved a vesting tentative map for the Enterprise Business Park subdivision. The project area included two assessor’s parcels and more than 80 acres of property located in the southwestern section of the City. Upon recordation of the final map, the property was subdivided into eight parcels ranging in size from 1.12 to 24.17 acres. The parcels are zoned M-2, a heavy industrial designation allowing for development of warehouse, distribution, processing, manufacturing, and other related uses.

In July 1998, the City Council formed the Park and authorized the Park to issue up to $2.05 million in bonds to fund certain street improvements, water and sewer main extensions, and other water, sewer, and storm drainage improvements required to serve the Park. The Bonds were called in full in 2002 and all Park-funded improvements have been completed.
#1..
- 269 -
4 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-1 ENTERPRISE BUSINESS PARK

CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:

Government-Wide:
• The Park’s net position decreased to $28,951 for fiscal year 2021. • Total Park revenues were $(18).

Funds Basis:
• Special Revenue Fund revenues of $(18) were $1,547 less than the prior year due to decreased investment earnings, and expenditures of $14,481 were $2,405 more than the prior year due to an increase in service city forces interfund expenditures. The Special Revenue Fund balance decreased by $14,499 to an ending fund balance of $28,951.

THE BASIC FINANCIAL STATEMENTS

The basic financial statements comprise the government-wide financial statements and the fund financial statements; these two sets of financial statements provide two different views of the Park’s financial activities and financial position.

Government-Wide Financial Statements
The government-wide financial statements provide a long-term view of the Park’s activities as a whole and are comprised of the Statement of Net Position and the Statement of Activities. The Statement of Net Position provides information about the financial position of the Park as a whole, including all its capital assets and long-term liabilities.

The Statement of Activities provides information about the Park’s revenues and all its expenses. The Statement of Activities explains in detail the change in net position for the year.

The Statement of Net Position and the Statement of Activities present information about the following:

Governmental activities - All of the Park’s basic services are considered to be governmental activities, including formation, financing, construction, and maintenance activities. These services are supported by formation deposits, special facilities taxes, and annual maintenance assessments. Government-wide financial statements are prepared on the accrual basis of accounting, which means they measure the flow of all economic resources of the Park as a whole, similar to that used by the private sector.
#1..
- 270 -
5 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-1 ENTERPRISE BUSINESS PARK

CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021

FINANCIAL ACTIVITIES OF THE PARK AS A WHOLE
This analysis focuses on the net position and changes in net position of the Park’s governmental activities in the government-wide financial Statement of Net Position and Statement of Activities that follow.

As of June 30, 2021, total assets of $29,356 were offset by liabilities of $405. The Park’s net position from governmental activities decreased to $28,951 in 2021 from $43,450 in 2020. The Park’s net position is restricted as follows: $28,951 for acquisition or maintenance of infrastructure.

The following is a condensed Statement of Net Position as of June 30, 2021 and 2020:
2021 2020 Change
Cash and investments $ 29,303 $ 44,013 $ (14,710)
Interest receivable 53 138 (85)
Total assets 29,356 44,151 (14,795)
Current and other liabilities 405 701 (296)
Net position:

Restricted for:

Park maintenance 28,951 43,450 (14,499)
Total net position $ 28,951 $ 43,450 $ (14,499)
Statement of Net Position - Governmental Activities
#1..
- 271 -
6 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-1 ENTERPRISE BUSINESS PARK

CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
FISCAL YEAR 2021 GOVERNMENTAL ACTIVITIES
The Park’s fiscal year 2021 revenue came from investment earnings of $(18). Facilities special tax revenue was not collected in fiscal year 2021, as these revenues are collected at the time of building permit issuance, and no such development occurred in the Park in fiscal year 2021. Park expenses of $14,481 were for service city forces interfund expenditures and other expenses.

The following is a condensed Statement of Activities for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues:

General revenues:

Investment earnings (loss) $ (18) $ 1,529 $ (1,547)
Total revenues (18) 1,529 (1,547)
Expenses:

Community development 14,481 12,076 2,405
Change in net position (14,499) (10,547) $ (3,952)
Net position, beginning of year 43,450 53,997
Net position, end of year $ 28,951 $ 43,450
Statement of Activities - Governmental Activities
Fund Financial Statements
The fund financial statements report the Park’s operations in more detail than the government-wide financial statements and focus primarily on the short-term activities of the Park’s special revenue fund. The fund financial statements measure only current revenues and expenditures and fund balances; they exclude capital assets, longterm debt, and other long-term amounts.

The fund financial statements provide detailed information about each of the Park’s most significant funds, called major funds. Major funds present the major activities of the Park for the year and may change from year to year as a result of changes in the pattern of the Park’s activities. The Park’s one fund is presented here as a major fund; its purpose is explained in Note 1 to the financial statements. The Park’s Special Revenue Fund is a governmental fund; financial statements for this fund are prepared on the modified accrual basis of accounting, which means it measures only current financial resources and uses.
#1..
- 272 -
7 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-1 ENTERPRISE BUSINESS PARK

CITY OF MODESTO, CALIFORNIA
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (continued) FOR THE YEAR ENDED JUNE 30, 2021
The following is a condensed Statement of Revenues, Expenditures, and Changes in Fund Balance for the Special Revenue Fund for the years ended June 30, 2021 and 2020, and the respective changes:
2021 2020 Change
Revenues $ (18) $ 1,529 $ (1,547)
Expenditures 14,481 12,076 2,405
Changes in fund balances (14,499) (10,547) $ (3,952)
Fund balances, beginning of year 43,450 53,997
Fund balances, end of year $ 28,951 $ 43,450
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Special Revenue Fund
THE PARK’S FUND FINANCIAL STATEMENTS
At June 30, 2021, the Park’s Special Revenue Fund reported a fund balance of $28,951, which was a $14,499 decrease from fiscal year 2020 due to professional and other service expenses exceeding investment earnings revenues.

CAPITAL ASSETS
Under GASB Statement No. 34, the Park is required to record all its capital assets, including infrastructure, at their historical cost, and to depreciate these assets over their estimated useful lives. However, title to all infrastructure assets acquired or constructed by the Park is turned over to the City upon completion and acceptance. Accordingly, capital outlay expenditures are reported in both the Park’s fund and government-wide financial statements.

Therefore, the Park reports no long-term capital assets.

CONTACTING THE PARK’S FINANCIAL MANAGEMENT
These basic financial statements are intended to provide citizens, taxpayers, investors, and creditors with a general overview of the Park’s finances. Questions about this report should be directed to the City of Modesto, Administrator, Infrastructure Financing Programs, P.O. Box 642, Modesto, California 95353. #1..
- 273 -
8 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-1 ENTERPRISE BUSINESS PARK

CITY OF MODESTO, CALIFORNIA

STATEMENT OF NET POSITION

AND STATEMENT OF ACTIVITIES
The Statement of Net Position and the Statement of Activities summarize the entire Park’s financial activities and financial position. They are prepared on the same basis of accounting used by most businesses, which means they include all the Park’s assets and all its liabilities, as well as all its revenues and expenses. This is known as the full accrual basis of accounting – the effect of all the Park’s transactions is taken into account, regardless of whether or when cash changes hands, but all material internal transactions between Park funds have been eliminated.

The Statement of Net Position reports the difference between the Park’s total assets and deferred outflows of resources and the Park’s total liabilities and deferred inflows of resources, including all the Park’s capital assets and all of its long-term debt. The Statement of Net Position focuses the reader on the composition of the Park’s net position, by subtracting total liabilities from total assets. The Statement of Net Position summarizes the financial position of the Park in a single column.

The Statement of Activities reports increases and decreases in the Park’s net position. It is also prepared on the full accrual basis of accounting, which means it includes all the Park’s revenues and all its expenses, regardless of when cash changes hands. This differs from the “modified accrual” basis of accounting used in the fund financial statements, which reflect only current assets, current liabilities, available revenues, and measurable expenditures.

The format of the Statement of Activities presents the Park’s expenses, which are listed by program, first. Program revenues – that is, revenues which are generated directly by these programs – are then deducted from program expenses to arrive at the net program revenue (expense). General revenues – that is, revenues which are not generated directly by these programs – are then added to arrive at the change in net position and reconciled with the Statement of Net Position.
#1..
- 274 -
The accompanying notes are an integral part of the financial statements. 9 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-1 ENTERPRISE BUSINESS PARK

CITY OF MODESTO, CALIFORNIA
STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES
JUNE 30, 2021
ASSETS
Cash and investments $ 29,303
Interest receivable 53
Total Assets 29,356

LIABILITIES
Accounts payable 405
Total Liabilties 405

NET POSITION
Restricted for:

Park maintenance 28,951
Total Net Position $ 28,951
#1..
- 275 -
The accompanying notes are an integral part of the financial statements. 10 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-1 ENTERPRISE BUSINESS PARK

CITY OF MODESTO, CALIFORNIA
STATEMENT OF ACTIVITIES – GOVERNMENTAL ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Operating Grants Governmental
Functions/Programs Expenses & Contributions Activities
Community Development $ 14,481 $ - $ (14,481)
$ 14,481 $ - (14,481)
General Revenues:

Investment earnings (loss) (18)
Total General Revenues (18)
(14,499)
Net Position, Beginning of Year 43,450
Net Position, End of Year $ 28,951
Revenues
Change in Net Position
Program
Net (Expense)
Revenue and
Changes in Net
Position
#1..
- 276 -
11 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-1 ENTERPRISE BUSINESS PARK

CITY OF MODESTO, CALIFORNIA

FUND FINANCIAL STATEMENTS
Major funds are defined generally as having significant activities or balances in the current year.

The Park determined its fund to be a major fund. That is:

The Special Revenue Fund accounts for all financial resources and uses related to maintenance of parkways and open space within the Park.
#1..
- 277 -
The accompanying notes are an integral part of the financial statements. 12 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-1 ENTERPRISE BUSINESS PARK

CITY OF MODESTO, CALIFORNIA
BALANCE SHEET – GOVERNMENTAL FUND
JUNE 30, 2021
Special
Revenue
Fund
ASSETS
Cash and investments $ 29,303
Interest receivable 53
Total Assets $ 29,356

LIABILITIES
Accounts payable $ 405
Total Liabilities 405

FUND BALANCE
Restricted for:

Park maintenance 28,951
Total Fund Balance 28,951
$ 29,356
Reconciliation of the Balance Sheet of the Governmental Fund to the Statement of Net Position:

Total Fund Balance - Governmental Fund $ 28,951
Adjustments to the Balance Sheet of the Governmental Fund to reconcile with the Statement of Net Position: -
Total Net Position - Governmental Activities $ 28,951
Total Liabilities and Fund Balance
#1..
- 278 -
The accompanying notes are an integral part of the financial statements. 13 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-1 ENTERPRISE BUSINESS PARK

CITY OF MODESTO, CALIFORNIA

STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE – GOVERNMENTAL FUND
FOR THE YEAR ENDED JUNE 30, 2021
Special
Revenue
Fund

REVENUES
Interest income $ 272
Change in fair value of investments (290)
Total Revenues (18)

EXPENDITURES
Services - professional and other 14,481
Total Expenditures 14,481
Changes in Fund Balance (14,499)
Fund Balance, Beginning of Year 43,450
Fund Balance, End of Year $ 28,951
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of the Governmental Fund to the Statement of Activities:

Changes in Fund Balance - Governmental Fund $ (14,499)
Adjustments to the Statement of Revenues, Expenditures, and changes in Fund Balance of the Governmental Fund to reconcile with the Statement of Activities: -
Change in Net Position - Governmental Activities $ (14,499) #1..
- 279 -
The accompanying notes are an integral part of the financial statements. 14 COMMUNITY FACILITIES DISTRICT
NUMBER 1998-1 ENTERPRISE BUSINESS PARK

CITY OF MODESTO, CALIFORNIA

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – SPECIAL REVENUE FUND – BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2021
Actual Variance with
Original Final Amounts Final Budget

REVENUES
Interest income $ - $ - $ 272 $ 272
Change in fair value
of investments - - (290) (290)
Total Revenues - - (18) (18)

EXPENDITURES
Services - professional
and other 17,267 17,267 14,481 2,786
Utilities 500 500 - 500
Total Expenditures 17,767 17,767 14,481 3,286
Changes in Fund Balance $ (17,767) $ (17,767) (14,499) $ 3,268 Fund Balance, Beginning of Year 43,450
Fund Balance, End of Year $ 28,951
Budgeted Amounts
#1..
- 280 -

COMMUNITY FACILITIES DISTRICT
NUMBER 1998-1 ENTERPRISE BUSINESS PARK

CITY OF MODESTO, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
15 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity: The Community Facilities District Number 1998-1 (Enterprise Business Park) (the Park) was formed in July of 1998 by a vote of the property owners within the proposed Park. The Park, a separate legal entity, was formed to provide a financing mechanism for the purchase, construction, expansion, or rehabilitation of any real or tangible property, including public facilities and infrastructure improvements, necessary to meet increased demands placed upon local agencies as a result of development occurring within the Park. In addition, the Park can fund a variety of public services including maintenance of parks, parkways, and open space.

The Park is the vehicle that will be used to ensure that all landowners within the Park pay their share of the public improvements and services needed. The Park includes two assessor’s parcels and more than 80 acres of property located in the southwestern section of the City of Modesto, California (the City). The property is subdivided into eight parcels ranging in size from 1.12 to 24.17 acres. The parcels have been zoned M-2, which is a heavy industrial designation allowing for development of warehouse, distribution, processing, manufacturing, and other related uses.

The Park is an integral part of the City and the accompanying financial statements are included as a blended component unit of the basic financial statements prepared by the City. A component unit is a separate governmental unit, agency, or nonprofit corporation which, when combined with all other component units, constitutes the reporting entity as defined in the City’s basic financial statements.

Government-Wide and Fund Financial Statements: The government-wide financial statements (i.e., the Statement of Net Position and Statement of Activities) report information on all of the activities of the Park. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities normally are supported by taxes and intergovernmental revenues.

The Statement of Activities demonstrates the degree to which direct expenses are offset by program revenues.

Direct expenses are those that are clearly identifiable with the community development function. Program revenues include grants and contributions that are restricted to meeting the operational requirements of the community development function. Investment earnings, and other items which are not properly included among program revenues, are reported instead as general revenues. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements.