Agenda packet — Audit Committee, January 24, 2024 (part 2 of 3)

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.

Net Position
Net position represents the residual interest in the District’s assets after liabilities are deducted.

In accordance with GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, 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. #3..
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Community Facilities District
Number 2000-2 Coffee-Claratina
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
30 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net Position (Continued)
• 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, 2023, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no effect on the financial statements:

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. 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 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.
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Community Facilities District
Number 2000-2 Coffee-Claratina
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
31 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. 100 – Accounting Changes and Error Corrections. The requirements of this statement are effective for reporting periods beginning after June 15, 2023.

GASB Statement No. 101 – Compensated Absences. The requirements of this statement are effective for reporting periods beginning after December 15, 2023.

NOTE 2 CASH AND INVESTMENTS
Cash and investments of the District are pooled with other City 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.

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, 2023.
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Community Facilities District
Number 2000-2 Coffee-Claratina
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
32 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Cash and investments as of June 30, 2023 are classified in the accompanying financial statements as follows:

Statement of Net Position - Governmental Activities:

Cash and investments $228,150
Total cash and investments $228,150
Deposits with the City
Cash and investment pool $228,150
Total cash and investments $228,150
Detailed information regarding the City’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City’s Annual Comprehensive Financial Report. As of June 30, 2023, 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 BALANCE
Restriction of Fund Balance
Fund balance is presented in the restricted category (see Note 1 for a description of fund balance categories). As of June 30, 2023, restriction included:

Restricted for District Maintenance - the portion of fund balance legally restricted for maintenance of parkways and open space within the District. #3..
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Community Facilities District
Number 2000-2 Coffee-Claratina
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
33 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 1st following the end of the fiscal year.

At June 30, 2023, the District had 8 parcels that were delinquent for a total of $2,134, none of which were delinquent for more than three consecutive payments.

The District received 99.33% of the Special Revenue Fund maintenance special taxes levied during the year ended June 30, 2023. The delinquencies total of $2,134 at June 30, 2023 is included in assessments receivable on the Statement of Net Position and Balance Sheet.

NOTE 5 DEFICIENCY OF EXPENDITURES OVER APPROPRIATIONS
Deficiency of expenditures over appropriations for the year ended June 30, 2023 was as follows:

Expenditure Amount
Special Revenue Fund:

Services – professional and other $(6,100)
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Community Facilities District
Number 2000-2 Coffee-Claratina
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
34 NOTE 6 SUBSEQUENT EVENTS
The District has evaluated events subsequent to the balance sheet date through November 17, 2023, the date the financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the financial statements.
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35 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards The Honorable Members of the City Council
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 (Government Auditing Standards), the financial statements of the governmental activities and major fund of the City of Modesto Community Facilities District Number 2000-2 Coffee-Claratina (the District), as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated November 17, 2023.

Report on 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) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
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36 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 District’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses.

However, material weaknesses or significant deficiencies may exist that were not identified.

Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the 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 financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #3..
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37 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 District’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Glendale, California
November 17, 2023
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www.vasquez.cpa
Vasquez & Company LLP has over 50 years of experience in performing audit, accounting & consulting services for all types of nonprofit organizations, for-profit companies, governmental entities and publicly traded companies. Vasquez is a member of the RSM US Alliance. RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM™ logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
655 N Central Avenue, Suite 1550 • Glendale, California 91203-1437 • Ph. (213) 873-1700 • Fax (213) 873-1777
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Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
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Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
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Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Table of Contents
PAGE
Independent Auditor’s Report 1
Management’s Discussion and Analysis (Unaudited) 6
Basic Financial Statements
Statement of Net Position – Governmental Activities 15
Statement of Activities – Governmental Activities 16
Balance Sheet – Governmental Fund 18
Statement of Revenues, Expenditures, and Changes in Fund Balance – Governmental Fund 19
Statement of Revenues, Expenditures, and Changes in Fund Balance – Special Revenue Fund – Budget and Actual 20
Notes to Basic Financial Statements 21
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 29 #3..
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1 Independent Auditor’s Report
The Honorable Members of the City Council
City of Modesto, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities and major fund of the City of Modesto Community Facilities Park 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, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023 and the related notes to the financial statements, which collectively comprise the Park’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and major fund of the Park as of June 30, 2023, and the respective changes in financial position, and the 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. #3..
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2 Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Park and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

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

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Park’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. #3..
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3 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Park’s internal control. Accordingly, no such opinion is expressed.
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4 • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Park’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 6-13 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
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5 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 17, 2023, 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.

Glendale, California
November 17, 2023
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6 Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
The City of Modesto Community Facilities District Number 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, Basic Financial Statements— and Management’s Discussion and Analysis—for State and Local Governments, 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. #3..
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Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
7 BACKGROUND AND MANAGEMENT’S DISCUSSION (CONTINUED)
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.

FISCAL YEAR 2023 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:

Government-Wide:
• The revenues increased from $(428) in the prior year to $1,485 for fiscal year 2023 and expenses decreased from $17,962 in the prior year to $14,356 for fiscal year 2023. The increase in revenues is attributed to the collection of maintenance special tax, and the decrease in expenses is attributed to the decrease in activity in community development.

The net position (deficit) decreased by $12,871 to an ending balance of $(2,310).

Funds Basis:
• Special Revenue Fund revenues of $1,485 were $1,913 higher than the prior year due to the collection of maintenance special tax, and expenditures of $14,356 were $3,606 lower than the prior year due to the decrease in service city forces interfund expenditures. The Special Revenue Fund balance decreased by $12,871 to an ending fund balance of $(2,310).
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Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
8 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.
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Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
9 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, 2023, total liabilities amounted to $2,310. The Park’s net position from governmental activities decreased to $(2,310) in 2023 from $10,561 in 2022. The Park’s net deficit is unrestricted amounting to $(2,310).

The following summarizes the Statements of Net Position as of June 30, 2023 and 2022:

Statements of Net Position – Governmental Activities
Description 2023 2022 Change
Assets:

Cash and investments $- $10,926 $(10,926)
Interest receivable - 21 (21)
Total assets - 10,947 (10,947)
Liabilities:

Current and other liabilities 2,310 386 1,924
Net position (deficit):

Restricted for:

Park maintenance - 10,561 (10,561)
Unrestricted (2,310) - (2,310)
Total net position (deficit) $(2,310) $10,561 $(12,871) #3..
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Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
10 FISCAL YEAR 2023 GOVERNMENTAL ACTIVITIES
The Park’s fiscal year 2023 revenue came primarily from collection of maintenance special tax of $1,580 net of investment loss of $(95). Park expenses of $14,356 were primarily for community development.

The following summarizes the Statements of Activities for the years ended June 30, 2023 and 2022, and the respective changes:

Statements of Activities – Governmental Activities
Description 2023 2022 Change
Revenues:

General revenues:

Maintenance special tax $1,580 $- $1,580
Investment loss (95) (428) 333
Total revenues 1,485 (428) 1,913
Expenses:

Community development 14,356 17,962 (3,606)
Changes in net position (12,871) (18,390) $5,519
Net position, beginning of year 10,561 28,951
Net position (deficit), end of year $(2,310) $10,561
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Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
11 Fund Financial Statements
The fund financial statements report the Park’s operations in more detail than the governmentwide 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, long-term 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.

The following summarizes the Balance Sheets and Statements of Revenues, Expenditures, and Changes in Fund Balance for the Special Revenue Fund for the years ended June 30, 2023 and 2022, and the respective changes:
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Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
12 Balance Sheets – Special Revenue Fund
Description 2023 2022 Change
Assets:

Cash and investments $- $10,926 $(10,926)
Interest receivable - 21 (21)
Total assets $- $10,947 $(10,947)
Liabilities:

Accounts payable $644 $386 $258
Due to other fund 1,666 - 1,666
Total liabilities 2,310 386 1,924
Fund Balance:

Unassigned (2,310) 10,561 (12,871)
Total fund balance (2,310) 10,561 (12,871)
Total liabilities and fund balances $- $10,947 $(10,947) Statements of Revenues, Expenditures, and Changes in Fund Balance – Special Revenue Fund
Description 2023 2022 Change
Revenues $1,485 $(428) $1,913
Expenditures 14,356 17,962 (3,606)
Changes in fund balance (12,871) (18,390) $5,519
Fund balance, beginning of year 10,561 28,951
Fund balance (deficit), end of year $(2,310) $10,561
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Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
13 THE PARK’S FUND FINANCIAL STATEMENTS
At June 30, 2023, the Park’s governmental fund reported a fund deficit of $(2,310), a decrease of $12,871 compared with last year. This decrease was primarily due to community development expenditures exceeding the revenues.

CAPITAL ASSETS
Under GASB Statement No. 34, Basic Financial Statements— and Management’s Discussion and Analysis—for State and Local Governments, 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 DISTRICT’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.
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14 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 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.
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See notes to basic financial statements.
15 Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Statement of Net Position – Governmental Activities
June 30, 2023
ASSETS
Cash and investments $-
Total Assets -

LIABILITIES
Accounts payable 644
Due to other fund 1,666
Total Liabilities 2,310

NET DEFICIT
Unrestricted (2,310)
Total Net Deficit $(2,310)
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See notes to basic financial statements.
16 Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Statement of Activities – Governmental Activities
Year Ended June 30, 2023
Program
Revenues
Net
(Expense)
Revenue and
Changes in
Net Position
Functions/Programs Expenses
Operating
Grants and
Contributions
Governmental
Activities
Community development $14,356 $- $(14,356)
$14,356 $- (14,356)
General Revenues:

Maintenance special tax 1,580
Investment loss (95)
Total General Revenues 1,485
Changes in Net Position (12,871)
Net Position, Beginning of Year 10,561
Net Position (Deficit), End of Year $(2,310)
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17 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. #3..
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See notes to basic financial statements.
18 Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Balance Sheet – Governmental Fund
June 30, 2023
Special
Revenue
Fund
ASSETS
Cash and investments $-
Total Assets $-

LIABILITIES
Accounts payable $644
Due to other fund 1,666
Total Liabilities 2,310

FUND DEFICIT
Unassigned (2,310)
Total Fund Deficit (2,310)
Total Liabilities and Fund Deficit $-
Note: There were no differences between the Governmental Fund Balance Sheet and the Governmental Activities Statement of Net Position as of June 30, 2023. #3..
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See notes to basic financial statements.
19 Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Statement of Revenues, Expenditures, and
Changes in Fund Balance – Governmental Fund
Year Ended June 30, 2023
Special
Revenue
Fund

REVENUES
Maintenance special tax $1,580
Interest income 34
Change in fair value of investments (129)
Total Revenues 1,485

EXPENDITURES
Services – professional and other 14,356
Total Expenditures 14,356
Changes in Fund Balance (12,871)
Fund Balance, Beginning of Year 10,561
Fund Balance (Deficit), End of Year $(2,310)
Note: There were no differences between the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balance and the Governmental Activities Statement of Activities for the year ended June 30, 2023.
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See notes to basic financial statements.
20 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 Year Ended June 30, 2023
Original
Budgeted
Amounts
Final
Budgeted
Amounts
Actual
Amounts
Variance
with
Final
Budget

REVENUES
Maintenance special tax $- $1,580 $1,580 $-
Interest income - - 34 34
Change in fair value of
investments - - (129) (129)
Total Revenues - 1,580 1,485 (95)

EXPENDITURES
Services - professional and other 12,561 14,141 14,356 (215) Utilities 600 600 - 600
Total Expenditures 13,161 14,741 14,356 385
Changes in Fund Balance $(13,161) $(13,161) (12,871) $290 Fund Balance, Beginning of Year 10,561
Fund Balance (Deficit), End of Year $(2,310)
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21 Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
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 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.
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Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
22 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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.

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. #3..
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Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
23 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of Presentation, Basis of Accounting, and Measurement Focus (Continued) 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 Park 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 Park.

The Park 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 Park.

Management’s Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) 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.
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Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
24 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Balance
In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned, or unassigned based primarily on the extent to which the Park 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 Park itself, using the Park’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 Park 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 Park intends to use for a specific purpose. Intent can be expressed by the Park at either the highest level of decision-making or by an official or body to which the Park delegates the authority.
• Unassigned - The residual classification for the Park 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.
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Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
25 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Balance (Continued)
The Park 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 Park 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 Park’s policy to use restricted resources first, followed by the committed, assigned, and unassigned resources as they are needed.

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 Park recognizes deferred outflows and inflows of resources.

In addition to liabilities, the Statements of Net Position and Balance Sheet will sometimes report a separate section for deferred inflows of resources. A deferred inflow of resources is defined as an acquisition of net assets by the Park that is applicable to a future reporting period.

Deferred inflows reported by the Park consist of unearned deferred assessments that have been billed as of year-end, but not yet collected.
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Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
26 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net Position
Net position represents the residual interest in the Park’s assets after liabilities are deducted.

In accordance with GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, the fund equity section on the Statement of Net Position was combined to report the 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.
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Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
27 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Governmental Accounting Standards Update
During the year ended June 30, 2023, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no effect on the financial statements:

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 certain requirements of this statement to 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.
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Community Facilities District
Number 1998-1 Enterprise Business Park
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
28 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. 100 – Accounting Changes and Error Corrections. The requirements of this statement are effective for reporting periods beginning after June 15, 2023.

GASB Statement No. 101 – Compensated Absences. The requirements of this statement are effective for reporting periods beginning after December 15, 2023.

NOTE 2 DEFICIENCY OF EXPENDITURES OVER APPROPRIATIONS
Deficiency of expenditures over appropriations for the year ended June 30, 2023 was as follows:

Expenditures Amount
Special Revenue Fund:

Services – professional and other $(215)
NOTE 3 SUBSEQUENT EVENTS
The Park has evaluated events subsequent to the balance sheet date through November 17, 2023, the date the financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the financial statements.
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29 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards The Honorable Members of the City Council
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 (Government Auditing Standards), the 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), as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the Park’s basic financial statements, and have issued our report thereon dated November 17, 2023.

Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Park’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Park’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Park’s internal control.
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30 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.

However, material weaknesses or significant deficiencies may exist that were not identified.

Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Park’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #3..
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31 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 Park’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.

Glendale, California
November 17, 2023
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www.vasquez.cpa
Vasquez & Company LLP has over 50 years of experience in performing audit, accounting & consulting services for all types of nonprofit organizations, for-profit companies, governmental entities and publicly traded companies. Vasquez is a member of the RSM US Alliance. RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM™ logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
655 N Central Avenue, Suite 1550 • Glendale, California 91203-1437 • Ph. (213) 873-1700 • Fax (213) 873-1777
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Community Facilities District
Number 2003-1 Fairview Village
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
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Community Facilities District
Number 2003-1 Fairview Village
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
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Community Facilities District
Number 2003-1 Fairview Village
City of Modesto, California
Table of Contents
PAGE
Independent Auditor’s Report 1
Management’s Discussion and Analysis (Unaudited) 6
Basic Financial Statement
Statement of Net Position – Governmental Activities 21
Statement of Activities – Governmental Activities 22
Balance Sheet – Governmental Funds 24
Reconciliation of the Governmental Funds Balance Sheet to the Governmental Activities Statement of Net Position 25
Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 26
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Governmental Activities Statement of Activities 27
Statement of Revenues, Expenditures, and Changes in Fund Balance – Special Revenue Fund – Budget and Actual 29
Notes to Basic Financial Statements 30
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With
Government Auditing Standards 43
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1 Independent Auditor’s Report
The Honorable Members of the City Council
City of Modesto, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2003-1 Fairview Village (the District), a component unit of the City of Modesto, California (the City), as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023 and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of June 30, 2023, and the respective changes in financial position, and the 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. #3..
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2 Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
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3 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed.
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4 • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 6-19 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
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5 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 17, 2023, 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.

Glendale, California
November 17, 2023
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6 Community Facilities District
Number 2003-1 Fairview Village
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
The City of Modesto Community Facilities District Number 2003-1 Fairview Village (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements— and Management’s Discussion and Analysis—for State and Local Governments, 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.

BACKGROUND AND MANAGEMENT’S DISCUSSION
In 1989, the City adopted the Urban Growth Management Strategy, which requires that any future development within the “Urban Reserve” be planned and annexed as “villages” under the auspices of Specific Plans. This action was seen as necessary to prevent new development from occurring in undeveloped areas prior to there being adequate consideration for public facilities such as roadways, parks, schools, and utility improvements. #3..
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Community Facilities District
Number 2003-1 Fairview Village
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
7 Fairview Village is a proposed planned community with an expected population of 5,000 people living in approximately 2,250 homes. The project is to be developed on a 364-acre site located just outside the southwest edge of the City in Stanislaus County. The Fairview Village Plan Area is essentially square with each edge approximately three-quarters of a mile in length. It is contiguous to the Bret Harte neighborhood on the east, and is bounded by the expanded Hatch Road to the north, Carpenter Road to the west, and Whitmore Avenue to the south. The District is designed around a large central neighborhood park and new elementary school that forms the center of the new community. Fairview Village will also include a secondary elementary school and a commercial center with shops, offices, and apartments.

In December 2003, the City Council formed the District and authorized the District to issue up to $25 million in bonded indebtedness to acquire or construct certain water, storm drain, and sewer system improvements and a bike trail and all appurtenances and appurtenant work in connection therewith. The only qualified voter eligible to vote during the formation of the District was Del Valle Corporation (the Developer), the owner of approximately 81.66 acres. A final map was recorded subdividing the Developer’s 81.66 acres into 382 single-family residential lots.

In September 2005, the District issued Special Tax Bonds, Series 2005 in the principal amount of $5 million. The majority of the net construction proceeds were used to reimburse the Developer for the District-funded infrastructure it will install pursuant to the Acquisition & Shortfall Agreements entered into with the District. In October 2005, supplemental information concerning the bond issue was distributed to the repositories. This supplemental information advised the bondholders and market of the amendments to the Acquisition & Shortfall Agreement that allow the issuance of certain occupancy permits prior to the completion of the infrastructure projects specified in the Acquisition & Shortfall Agreement. #3..
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Community Facilities District
Number 2003-1 Fairview Village
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
8 Matters related to the Developer’s subdivision located in the District were first memorialized in an Acquisition & Shortfall Agreement between the City and Norman Galas, etc. in December 1997. On January 9, 2003, the Acquisition & Shortfall Agreement was amended and named Del Valle Capital Corporation, Inc., as a party to the Acquisition & Shortfall Agreement. Since that time, two subsequent amendments have occurred, and additional agreements have been executed between the City and the District. The chronology of the agreements related to the Developer’s subdivision follows:
• The Acquisition & Shortfall Agreement between the City and Norman Galas, June Galas, Stanley Galas, and Bonnie K. Galas dated as of September 16, 1997, as amended by the First Amendment to the Acquisition & Shortfall Agreement between the City and Norman Galas, June Galas, Stanley Galas, Bonnie K. Galas, and Del Valle Capital Corporation, Inc., dated as of January 9, 2003, and as further amended by the Second Amendment to the Acquisition & Shortfall Agreement between the City and Norman Galas, June Galas, Stanley Galas, Bonnie K. Galas, and Del Valle Capital Corporation, Inc., dated as of June 10, 2003, and as finally amended by the Third Amendment to the Acquisition & Shortfall Agreement between the City and Norman Galas, June Galas, Stanley Galas, Bonnie K.

Galas, Del Valle Capital Corporation, Inc., dated as of June 22, 2004. • Advanced Funding Agreement for the District dated as of October 28, 2003, Subdivision Agreement, dated as of December 23, 2003, pertaining to Galas Brothers Subdivision Unit No. 1.
• Subdivision Agreement, dated as of December 23, 2003, pertaining to Galas Brothers Subdivision Unit No. 2.
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Community Facilities District
Number 2003-1 Fairview Village
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
9 • Agreement to Complete Necessary Infrastructure Prior to Final Inspection or Occupancy, dated as of December 23, 2003, as amended by the Amendment to Agreement dated as of January 25, 2005, and as further amended by the Second Amendment to Agreement dated as of November 9, 2005, and as further amended by the Third Amendment to Agreement dated as of December 14, 2005, and as finally amended by the Fourth Amendment to Agreement, dated as of June 27, 2006.
• Two Acquisition & Shortfall Agreements between the District and Del Valle Homes, each dated as of June 22, 2004.
• Agreement by and between the City, Del Valle Capital Corporation, Inc., D.R. Horton, Inc., and Pulte Home Corporation Regarding the Funding and Construction of Certain Interim Water Improvements in Return for City’s Issuance of Certain Permits, dated as of September 30, 2005.
• Letter of Agreement between the City and Del Valle Homes dated as of February 2, 2007. • Agreement for the Acceptance of Completed Public Improvements and Partial Release of Security dated June 12, 2007.

On November 25, 2008, the City Council approved a Settlement Agreement and Mutual Release with the Developer. The City agreed to accept the infrastructure improvements remaining to be accepted such as the well, storage, booster pumps, wellhead treatment system, and some in-tract subdivision improvements. In return, the Developer received a gross payment of $1.3 million minus $452,365 that was withheld pursuant to the terms of the Settlement Agreement, of which approximately $99,000 will be utilized by City crews to complete repairs to the accepted infrastructure. The Developer received a net payment of $847,635.
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Community Facilities District
Number 2003-1 Fairview Village
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
10 FISCAL YEAR 2023 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:

Government-Wide:
• At June 30, 2023, the District’s net position increased to $1,001,257. • Total District revenues were $451,614.
• Total District expenses were $365,532.

Funds Basis:
• Special Revenue Fund revenues of $221,704 were $33,868 higher than the prior year which was primarily due to the increase in facilities and maintenance special tax and expenditures of $197,222 were $9,892 more than the prior year due to an increase in utilities. The Special Revenue Fund balance increased by $24,482 to an ending fund balance of $422,094.
• Debt Service Fund revenues of $388,719 were $76,968 higher than the prior year primarily due to the increases in facilities and maintenance special tax and change in fair value of investments. The expenditures of $317,437 were $178 higher than the prior year due to an increase in principal payment expenditures. The Debt Service Fund balance increased by $71,282 to an ending fund balance of $523,336.

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. #3..
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Community Facilities District
Number 2003-1 Fairview Village
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
11 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.

As of June 30, 2023, total assets of $4,356,873 and deferred outflows of resources of $97,238 were offset by liabilities of $3,452,854. The District’s net position from governmental activities increased to $1,001,257 in 2023 from $915,175 in 2022. All of the District’s net position is restricted as follows: $420,647 for District maintenance and $580,610 for debt service. #3..
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Community Facilities District
Number 2003-1 Fairview Village
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
12 The following summarizes the Statements of Net Position as of June 30, 2023 and 2022:

Statements of Net Position – Governmental Activities
Description 2023 2022 Change
Assets:

Cash and investments $752,260 $662,143 $90,117
Cash and investments with fiscal agent
taxes receivable 198,752 195,219 3,533
Taxes receivable 9,033 10,310 (1,277)
Assessments receivable 3,395,000 3,550,000 (155,000)
Interest receivable 1,828 1,724 104
Total assets 4,356,873 4,419,396 (62,523)
Deferred outflows of resources:

Deferred loss on refunding 97,238 105,230 (7,992)
Total deferred outflows of resources 97,238 105,230 (7,792) Liabilities:

Current and other liabilities 57,854 59,451 (1,597)
Long-term debt 3,395,000 3,550,000 (155,000)
Total liabilities 3,452,854 3,609,451 (156,597)
Net position:

Restricted for:

District maintenance 420,647 400,996 19,651
Debt service 580,610 514,179 66,431
Total net position $1,001,257 $915,175 $86,082
#3..
- 377 -
Community Facilities District
Number 2003-1 Fairview Village
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
13 FISCAL YEAR 2023 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2023 revenue came from facilities and maintenance special tax of $437,924 and investment earnings of $13,690. District expenses of $365,532 were for professional services, utilities, and interest.

The following summarizes the Statements of Activities for the years ended June 30, 2023 and 2022, and the respective changes:

Statements of Activities – Governmental Activities
Description 2023 2022 Change
Revenues:

General revenues:

Facilities and maintenance special tax $437,924 $523,774 $(85,850) Investment earnings (loss) 13,690 (21,418) 35,108
Total revenues 451,614 502,356 (50,742)
Expenses:

Community development 215,526 354,021 (138,495)
Interest on long-term debt 150,006 156,647 (6,641)
Total expenses 365,532 510,668 (145,136)
Changes in net position 86,082 (8,312) $94,394
Net position, beginning of year 915,175 923,487
Net position, end of year $1,001,257 $915,175
#3..
- 378 -
Community Facilities District
Number 2003-1 Fairview Village
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
14 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 longterm amounts.

The following summarizes the Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balance for both the Special Revenue Fund and the Debt Service Fund for the years ended June 30, 2023 and 2022, and the respective changes:
#3..
- 379 -
Community Facilities District
Number 2003-1 Fairview Village
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
15 Balance Sheets – Special Revenue Fund
Description 2023 2022 Change
Assets:

Cash and investments $430,859 $404,613 $26,246
Taxes receivable 3,527 3,960 (433)
Interest receivable 1,101 857 244
Total assets $435,487 $409,430 $26,057
Liabilities:

Accounts payable $11,456 $8,434 $3,022
Total liabilities 11,456 8,434 3,022
Deferred inflows of resources:

Unavailable revenues 1,937 3,384 (1,447)
Total deferred inflows of resources 1,937 3,384 (1,447) Fund balance:

Restricted:

District maintenance 422,094 397,612 24,482
Total fund balance 422,094 397,612 24,482
Total liabilities, deferred inflows of
resources, and fund balances $435,487 $409,430 $26,057
#3..
- 380 -
Community Facilities District
Number 2003-1 Fairview Village
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
16 Balance Sheets – Debt Service Fund
Description 2023 2022 Change
Assets:

Cash and investments $321,401 $257,530 $63,871
Cash and investments with fiscal agent 198,752 195,219 3,533 Taxes receivable 5,506 6,350 (844)
Assessments receivable 3,395,000 3,550,000 (155,000)
Interest receivable 727 867 (140)
Total assets $3,921,386 $4,009,966 $(88,580)
Liabilities:

Accounts payable $- $2,500 $(2,500)
Total liabilities - 2,500 (2,500)
Deferred inflows of resources:

Unavailable revenues 3,398,050 3,555,412 (157,362)
Total deferred inflows of resources 3,398,050 3,555,412 (157,362) Fund balances:

Restricted:

Debt service 523,336 452,054 71,282
Total fund balance 523,336 452,054 71,282
Total liabilities, deferred inflows of
resources and fund balances $3,921,386 $4,009,966 $(88,580) #3..
- 381 -
Community Facilities District
Number 2003-1 Fairview Village
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
17 Statements of Revenues, Expenditures, and Changes in Fund Balance – Special Revenue Fund
Description 2023 2022 Change
Revenues $221,704 $187,836 $33,868
Expenditures 197,222 187,330 9,892
Changes in fund balance 24,482 506 $23,976
Fund balance, beginning of year 397,612 397,106
Fund balance, end of year $422,094 $397,612
Statements of Revenues, Expenditures, and Changes in Fund Balance – Debt Service Fund
Description 2023 2022 Change
Revenues $388,719 $311,751 $76,968
Expenditures 317,437 317,259 178
Changes in fund balance 71,282 (5,508) $76,790
Fund balance, beginning of year 452,054 457,562
Fund balance, end of year $523,336 $452,054
#3..
- 382 -
Community Facilities District
Number 2003-1 Fairview Village
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
18 THE DISTRICT’S FUND FINANCIAL STATEMENTS
At June 30, 2023, the District’s governmental funds reported combined fund balances of $945,430, which was a $95,764 increase from fiscal year 2022. The Special Revenue Fund realized a $24,482 increase and the Debt Service Fund realized an increase of $71,282 due to increases in facilities and maintenance special tax and change in fair value of investments.

CAPITAL ASSETS
Under GASB Statement No. 34, Basic Financial Statements— and Management’s Discussion and Analysis—for State and Local Governments, 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.

DEBT ADMINISTRATION
The District issued Special Tax Bonds, Series 2005 in the principal amount of $5 million in September 2005. Except for approximately $20,000 that was used to reimburse the City’s water fund for work performed by its crews, the proceeds were used to reimburse the Developer for infrastructure it installed pursuant to the Acquisition & Shortfall Agreements entered into between Developer and the District.
#3..
- 383 -
Community Facilities District
Number 2003-1 Fairview Village
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
19 The District issued Refunding Special Tax Bonds, Series 2014 in the principal amount of $4.4 million in December 2014 to refund the outstanding Special Tax Bonds, Series 2005.

The balance of the long-term debt at June 30, 2023, is $3.4 million. Additional details can be found in Note 3 to the financial statements.

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.
#3..
- 384 -
20 Community Facilities District
Number 2003-1 Fairview Village
City of Modesto, California

STATEMENT OF NET POSITION AND STATEMENTS 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 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.
#3..
- 385 -
See notes to basic financial statements.
21 Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Statement of Net Position – Governmental Activities
June 30, 2023
ASSETS
Cash and investments $752,260
Cash and investments with fiscal agent 198,752
Taxes receivable 9,033
Assessments receivable 3,395,000
Interest receivable 1,828
Total Assets 4,356,873

DEFERRED OUTFLOWS OF RESOURCES
Loss on refunding of debt 97,238
Total Deferred Outflows of Resources 97,238

LIABILITIES
Accounts payable 11,456
Interest payable 46,398
Long-term debt:

Due within one year 165,000
Due in more than one year 3,230,000
Total Liabilities 3,452,854

NET POSITION
Restricted for:

District maintenance 420,647
Debt service 580,610
Total Net Position $1,001,257

#3..
- 386 -
See notes to basic financial statements.
22 Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Statement of Activities – Governmental Activities
Year Ended June 30, 2023
Program
Revenues
Net
(Expense)
Revenue and
Changes in
Net Position
Functions/Programs Expenses
Operating
Grants &
Contributions
Governmental
Activities
Community development $215,526 $- $(215,526)
Interest on long-term debt 150,006 - (150,006)
$365,532 $- (365,532)
General Revenues:

Facilities and maintenance special tax 437,924
Investment earnings 13,690
Total General Revenues 451,614
Changes in Net Position 86,082
Net Position, Beginning of Year 915,175
Net Position, End of Year $1,001,257
#3..
- 387 -

23 Community Facilities District
Number 2003-1 Fairview Valley
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.

The Debt Service Fund accounts for the payment of principal and interest on the 2014 Refunding Special Tax Bonds.
#3..
- 388 -
See notes to basic financial statements.
24 Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Balance Sheet – Governmental Funds
June 30, 2023
Special
Revenue
Fund
Debt Service
Fund Total
ASSETS
Cash and investments $430,859 $321,401 $752,260
Cash and investments with fiscal agent - 198,752 198,752 Taxes receivable 3,527 5,506 9,033
Assessments receivable - 3,395,000 3,395,000
Interest receivable 1,101 727 1,828
Total Assets $435,487 $3,921,386 $4,356,873

LIABILITIES
Accounts payable $11,456 $- $11,456
Total Liabilities 11,456 - 11,456

DEFERRED INFLOWS OF RESOURCES
Unavailable revenues 1,937 3,398,050 3,399,987
Total Deferred Inflows of Resources 1,937 3,398,050 3,399,987

FUND BALANCES
Restricted:

District maintenance 422,094 - 422,094
Debt service - 523,336 523,336
Total Fund Balances 422,094 523,336 945,430
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances $435,487 $ 3,921,386 $4,356,873 #3..
- 389 -
See notes to basic financial statements.
25 Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Reconciliation of the Governmental Funds Balance Sheet
to the Governmental Activities Statement of Net Position June 30, 2023
Total Fund Balances - Governmental Funds $945,430
Amounts reported for governmental activities in the Statement of Net Position are different because:

Other long-term assets are not available to pay for the current period expenditures and therefore are deferred in the funds. 3,395,000 Revenues not available for current period expenditures are deferred in governmental funds, but are considered earned in the Statement of Net Position 4,987
Long-term liabilities, and the related deferred loss on refunding, are not due and payable in the current period and therefore are not reported in the funds.

Long-term debt (3,395,000)
Deferred loss on refunding 97,238
Interest payable (46,398)
Total Net Position - Governmental Activities $1,001,257 #3..
- 390 -
See notes to basic financial statements.
26 Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Statement of Revenues, Expenditures, and
Changes in Fund Balances – Governmental Funds
Year Ended June 30, 2023
Special
Revenue
Fund
Debt
Service
Fund Total

REVENUES
Facilities and maintenance special tax $219,208 $377,525 $596,733 Interest income 6,073 11,036 17,109
Change in fair value of investments (3,577) 158 (3,419) Total Revenues 221,704 388,719 610,423

EXPENDITURES
Services - professional and other 167,084 18,304 185,388 Utilities 30,138 - 30,138
Debt service:

Principal payments - 155,000 155,000
Interest and fiscal charges - 144,133 144,133
Total Expenditures 197,222 317,437 514,659
Changes in Fund Balances 24,482 71,282 95,764
Fund Balances, Beginning of Year 397,612 452,054 849,666 Fund Balances, End of Year $422,094 $523,336 $945,430
#3..
- 391 -
See notes to basic financial statements.
27 Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the
Governmental Activities Statement of Activities
Year Ended June 30, 2023
Changes in Fund Balances - Governmental Funds $95,764
Amounts reported for governmental activities in the Statement of Activities are different because:

Revenues previously recognized in the Statement of Activities that did not provide current financial resources and therefore were not reported as revenues in the funds are reported as revenues in the funds this year when received. (155,000)
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 funds. (3,809)
The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal long term debt and the payment to refunding escrow consumes current financial resources of governmental funds. Neither transaction, however, has any effect on net position:

Repayment of the principal of long-term debt 155,000
(Continued)
#3..
- 392 -
Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the
Governmental Activities Statement of Activities (Continued) Year Ended June 30, 2023
See notes to basic financial statements.
28 Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds:

Amortization of deferred loss on refunding $(7,992)
Interest payable 2,119
Changes in Net Position - Governmental Activities $86,082 #3..
- 393 -
See notes to basic financial statements.
29 Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Statement of Revenues, Expenditures, and Changes in
Fund Balance – Special Revenue Fund – Budget and Actual Year Ended June 30, 2023
Original
Budgeted
Amounts
Final
Budgeted
Amounts
Actual
Amounts
Variance
with
Amounts

REVENUES
Facilities and maintenance special
tax $210,000 $210,000 $219,208 $9,208
Interest income - - 6,073 6,073
Change in fair value of investments - - (3,577) (3,577) Total Revenues 210,000 210,000 221,704 11,704

EXPENDITURES
Services - professional and other 159,734 159,734 167,084 (7,350) Utilities 44,200 44,200 30,138 14,062
Total Expenditures 203,934 203,934 197,222 6,712
Changes in Fund Balance $6,066 $6,066 24,482 $18,416
Fund Balance, Beginning of Year 397,612
Fund Balance, End of Year $422,094
#3..
- 394 -
30 Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity
The Community Facilities District Number 2003-1 Fairview Village (the District) was formed in December 2003 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 Plan. The District encompasses approximately 359 gross acres of land located in the southwest area of the City of Modesto, California (the City), the south side of Hatch Road and east of Carpenter Road. The District is expected to yield 383 single-family residential lots, a water well, storm drainage basin, water tank, sewer outfall line, and a portion of the central neighborhood park site and related infrastructure on 81.66 acres located in the northeast portion of the District. The remaining properties with 359 acres are expected to annex to the District in the future, as the area develops.

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.
#3..
- 395 -
Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
31 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Government-Wide and Fund Financial Statements (Continued) 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.

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.
#3..
- 396 -
Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
32 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of Presentation, Basis of Accounting, and Measurement Focus (Continued) 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 Special Revenue Fund accounts for all financial resources and uses related to maintenance of infrastructure within the District.

The Debt Service Fund accounts for the payment of principal and interest on the 2014 Refunding Special Tax Bonds.

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 1st and February 1st and are delinquent if not paid by December 10th and April 10th, 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. #3..
- 397 -
Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
33 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.

Deferred outflows reported by the District consist of unamortized loss on bond defeasance to be amortized over the life of the refunding debt.

In addition to liabilities, the Statement of Net Position and Balance Sheet will sometimes report a separate section for deferred inflows of resources. A deferred inflow of resources is defined as an acquisition of net assets 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.

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. #3..
- 398 -
Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
34 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Balance (Continued)
• 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.
#3..
- 399 -
Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
35 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Balance (Continued)
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, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, 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.
#3..
- 400 -
Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
36 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Governmental Accounting Standards Update
During the year ended June 30, 2023, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no effect on financial statements:

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 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.

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

GASB Statement No. 100 - Accounting Changes and Error Corrections. The requirements of this statement are effective for reporting periods beginning after June 15, 2023.
#3..
- 401 -
Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
37 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Governmental Accounting Standards Update (Continued)
GASB Statement No. 101 - Compensated Absences. The requirements of this statement are effective for reporting periods beginning after December 15, 2023.

NOTE 2 CASH AND INVESTMENTS
Cash and investments of the District, with the exception of cash and investments with fiscal agents, are pooled with other City 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.

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.

Cash and investments as of June 30, 2023 are classified in the accompanying financial statements as follows:

Statement of Net Position- Governmental Activities:

Cash and investments $752,260
Cash and investments with fiscal agent 198,752
Total cash and investments $951,012
Deposits with the City
Cash and investment pool $752,260
Money market fund 198,752
Total cash and investments $951,012
#3..
- 402 -
Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
38 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Concentration of Credit Risk
The District is required to disclose investments that represent a concentration of five percent (5%) or more of investments in any one issuer held by individual funds in the securities of issuers other than U.S. Treasury securities, mutual funds, and external investment pools. At June 30, 2023, the Debt Service Fund did not hold any other investments.

Detailed information regarding the City’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City’s Annual Comprehensive Financial Report. As of June 30, 2023, the fair value of the District’s position in the pool is the same as the value of its pool shares.
#3..
- 403 -
Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
39 NOTE 3 LONG-TERM DEBT
On December 16, 2014, the District issued Refunding Special Tax Bonds (refunding bonds) with a par amount of $4,420,000 to refund the District’s $4,660,000 outstanding Special Tax Bonds (refunded bonds) issued on September 1, 2005, which were issued primarily to finance various public improvements needed to develop property located within the District. Interest on the refunding bonds is payable semiannually on March 1st and September 1st through September 1, 2035. The refunding bonds were issued with an interest rate of 4.1% and are payable solely from revenues derived from the assessment of annual special taxes to be levied on the taxable property within the District and from certain other funds pledged under the Trust Indenture. The principal payments of these bonds are not subject to acceleration.

Any one or more of the following events shall constitute an “event of default” for these bonds:
(a) Default in the due and punctual payment of the principal of or redemption premium, if any, on any bond when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise.
(b) Default in the due and punctual payment of the interest on any bond when and as the same shall become due and payable.
(c) Except as described in (a) or (b), default shall be made by the District in the observance of any of the agreements, conditions, or covenants for a period of thirty (30) days after the District shall have been given notice in writing of such default by the Trustee or the owners of twenty-five percent (25%) in aggregate principal amount of the outstanding bonds. #3..
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Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
40 NOTE 3 LONG-TERM DEBT (CONTINUED)
The long-term debt activity for the year ended June 30, 2023 was as follows:

Description
Beginning
Balance Additions Reductions
Ending
Balance
Due
Within
One Year
Refunding Special
Tax Bonds $3,550,000 $- $(155,000) $3,395,000 $165,000
Annual debt service requirements for the refunding bonds are shown below:

Year Ended June 30 Principal Interest
2024 $165,000 $135,813
2025 180,000 128,740
2026 195,000 121,053
2027 205,000 112,853
2028 225,000 104,038
2029-2033 1,370,000 363,875
2034-2036 1,055,000 66,728
$3,395,000 $1,033,100
Interest expense for the year ended June 30, 2023 was $150,006. #3..
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Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
41 NOTE 4 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, 2023, restrictions included:

Restricted for District Maintenance - the portion of fund balance legally restricted for maintenance of parkways and open space within the District.

Restricted for Debt Service - the portion of fund balance legally restricted to the payment of principal and interest on long-term liabilities.

NOTE 5 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, 2023, the District had six parcels that were delinquent for a total of $4,987, one of which was delinquent for more than three consecutive payments.

The District received 99.44% of the Special Revenue Fund and Debt Service Fund facilities and maintenance special taxes levied during the year ended June 30, 2023. The delinquencies total of $4,987 at June 30, 2023 is included in taxes receivable on the Statement of Net Position and Balance Sheet.
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Community Facilities District
Number 2003-1 Fairview Valley
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
42 NOTE 6 DEFICIENCY OF EXPENDITURES OVER APPROPRIATIONS Deficiency of expenditures over appropriations for the year ended June 30, 2023 was as follows:

Expenditures Amount
Special Revenue Fund:

Services – professional and other $(7,350)
NOTE 7 SUBSEQUENT EVENTS
The District has evaluated events subsequent to the balance sheet date through November 17, 2023, the date the financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the financial statements.
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43 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards The Honorable Members of the City Council
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 (Government Auditing Standards), the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2003-1 Fairview Village (the District), as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023 and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated November 17, 2023.

Report on 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) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
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44 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 District’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.

However, material weaknesses or significant deficiencies may exist that were not identified.

Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the 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 financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #3..
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45 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 District’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Glendale, California
November 17, 2023
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www.vasquez.cpa
Vasquez & Company LLP has over 50 years of experience in performing audit, accounting & consulting services for all types of nonprofit organizations, for-profit companies, governmental entities and publicly traded companies. Vasquez is a member of the RSM US Alliance. RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM™ logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
655 N Central Avenue, Suite 1550 • Glendale, California 91203-1437 • Ph. (213) 873-1700 • Fax (213) 873-1777
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Table of Contents
PAGE
Independent Auditor’s Report 1
Management’s Discussion and Analysis (Unaudited) 6
Basic Financial Statements
Statement of Net Position – Governmental Activities 17
Statement of Activities – Governmental Activities 18
Balance Sheet – Governmental Funds 20
Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 21
Statement of Revenues, Expenditures, and Changes in Fund Balance – Special Revenue Fund – Budget and Actual 22
Notes to Basic Financial Statements 23
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 34 #3..
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1 Independent Auditor’s Report
The Honorable Members of the City Council
City of Modesto, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2007-2 Kiernan Business Park West (the District), a component unit of the City of Modesto, California, as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023 and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of June 30, 2023, and the respective changes in financial position, and the 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. #3..
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2 Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
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3 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed.
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4 • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 6-15 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
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5 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 17, 2023, 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 District’s internal control over financial reporting and compliance.

Glendale, California
November 17, 2023
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6 Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
The City of Modesto Community Facilities District Number 2007-2 Kiernan Business Park West (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements— and Management’s Discussion and Analysis—for State and Local Governments, 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 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.
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
7 BACKGROUND AND MANAGEMENT’S DISCUSSION
On April 1, 1997, the City Council approved the Kiernan Business Park Specific Plan that set forth a plan of development for approximately 614 acres that were, at that time, located adjacent to the City’s northern border, east of Highway 99 and south of Kiernan Avenue in a portion of unincorporated Stanislaus County. To date, approximately 250 acres within the Kiernan Business Park Specific Plan have been annexed into the City. Approximately 88 of the City annexed acres will ultimately be included within the District. The Kiernan Business Park Specific Plan is intended to provide for the development of a new business park, commercial and industrial uses that will assist in implementing the City’s long-range objectives to enhance its local economy, generate jobs for residents and create a better job housing balance.

The District was formed by the City Council in September 2007 to generate funding for construction of certain roadway improvements and the ongoing maintenance of landscaped medians, a bike path, well site, storm drainage pump and basin and related facilities.

FISCAL YEAR 2023 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:

Government-Wide:
• At June 30, 2023, the District’s net position was $257,235. • At June 30, 2023, total assets were $263,113 while total liabilities were $5,878. • Total District revenues were $112,242 and expenses were $50,183. #3..
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
8 FISCAL YEAR 2023 FINANCIAL HIGHLIGHTS (CONTINUED)
Funds Basis:
• Capital Projects Fund revenues decreased from $30,449 in the prior year to $0 for fiscal year 2023 and expenditures of $0 were the same as in the previous year. The decrease in revenues is attributed to a decrease in annual facilities special tax. • Special Revenue Fund revenues increased from $86,724 in the prior year to $112,242 for fiscal year 2023 and expenditures decreased from $52,783 in the prior year to $50,183 for fiscal year 2023. The increase in revenue is due to an increase in the annual maintenance special tax, and the decrease in expenditure is due primarily to a decrease in services and utilities expenditures. Special Revenue Fund ending fund balance increased from $122,392 in the prior year to $184,451 in the current year.

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. #3..
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
9 THE BASIC FINANCIAL STATEMENTS (CONTINUED)
The Statement of Net Position and the Statement of Activities present information about the following:

As of June 30, 2023, total assets of $263,113 were offset by liabilities of $5,878. The District’s net position from governmental activities increased to $257,235 in 2023 from $195,176 in 2022.

The District’s net position has restrictions as follows: $72,784 for acquisition or construction of infrastructure and $184,451 for District maintenance.
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
10 The following summarizes the Statement of Net Position as of June 30, 2023 and 2022:

Statement of Net Position – Governmental Activities
Description 2023 2022 Change
Assets:

Cash and investments $ 257,844 $ 192,641 $ 65,203
Taxes receivable 4,623 7,095 (2,472)
Interest receivable 646 421 225
Total assets 263,113 200,157 62,956
Liabilities:

Current and other liabilities 5,878 4,981 897
Net position:

Restricted for:

Capital projects 72,784 72,784 -
District maintenance 184,451 122,392 62,059
Total net position $ 257,235 $ 195,176 $ 62,059
FISCAL YEAR 2023 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2023 revenue came primarily from maintenance special taxes, which amounted to $110,622, along with investment earnings of $1,620. District expenses of $50,183 were for professional services and utilities.
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
11 The following summarizes the Statement of Activities for the years ended June 30, 2023 and 2022, and the respective changes:

Statement of Activities – Governmental Activities
Description 2023 2022 Change
Revenues:

General revenues:

Facilities special tax $ - $ 30,449 $ (30,449)
Maintenance special tax 110,622 76,391 34,231
Investment earnings (loss) 1,620 (4,273) 5,893
Total revenues 112,242 102,567 9,675
Expenses:

Community development 50,183 52,783 (2,600)
Change in net position 62,059 49,784 $ 12,275
Net position, beginning of year 195,176 145,392
Net position, end of year $ 257,235 $ 195,176
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 funds. The fund financial statements measure only current revenues and expenditures and fund balance; they exclude capital assets, long-term debt, and other long-term amounts. #3..
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
12 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. All of 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 summarizes the Balance Sheet and the Statement of Revenues, Expenditures, and Changes in Fund Balances for both the Capital Projects Fund and the Special Revenue Fund as of and for the years ended June 30, 2023 and 2022, and the respective changes:

Balance Sheet – Capital Projects Fund
Description 2023 2022 Change
Assets:

Cash and investments $ 72,784 $ 72,784 $ -
Total Assets $ 72,784 $ 72,784 $ -
Fund Balances:

Restricted for:

Capital projects $ 72,784 $ 72,784 $ -
Total Fund Balances $ 72,784 $ 72,784 $ -
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
13 Balance Sheet – Special Revenue Fund
Description 2023 2022 Change
Assets:

Cash and investments $ 185,060 $ 119,857 $ 65,203
Taxes receivable 4,623 7,095 (2,472)
Interest receivable 646 421 225
Total Assets $ 190,329 $ 127,373 $ 62,956
Liabilities:

Accounts payable $ 5,878 $ 4,981 $ 897
Total Liabilities 5,878 4,981 897
Fund Balances:

Restricted for:

District maintenance 184,451 122,392 -
Total Fund Balances 184,451 122,392 62,059
Total Liabilities, and Fund Balances $ 190,329 $ 127,373 $ 62,956 #3..
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
14 Statement of Revenues, Expenditures, and Changes in Fund Balances – Capital Projects Fund
Description 2023 2022 Change
Revenues $ - $ 30,449 $ (30,449)
Expenditures - - -
Changes in fund balances - 30,449 $ (30,449)
Fund balances, beginning of year 72,784 42,335
Fund balances, end of year $ 72,784 $ 72,784
Statement of Revenues, Expenditures, and Changes in Fund Balances – Special Revenue Fund
Description 2023 2022 Change
Revenues $ 112,242 $ 86,724 $ 25,518
Expenditures 50,183 52,783 (2,600)
Changes in fund balances 62,059 33,941 $ 28,118
Fund balances, beginning of year 122,392 88,451
Fund balances, end of year $ 184,451 $ 122,392
THE DISTRICT’S FUND FINANCIAL STATEMENTS
At June 30, 2023, the District’s governmental funds reported combined fund balances of $257,235, an increase of $62,059 from the fiscal year 2022. The Capital Projects Fund’s fund balance did not change from the prior fiscal year, while the Special Revenue Fund realized a $62,059 increase due to annual maintenance special tax revenues exceeding professional services and utilities expenditures.
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
15 CAPITAL ASSETS
Under GASB Statement No. 34, Basic Financial Statements— and Management’s Discussion and Analysis—for State and Local Governments, 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.
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16 Community Facilities District
Number 2007-2 Kiernan Business Park West
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 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.
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See notes to basic financial statements.
17 Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Statement of Net Position – Governmental Activities
June 30, 2023
ASSETS
Cash and investments $ 257,844
Taxes receivable 4,623
Interest receivable 646
Total Assets 263,113

LIABILITIES
Accounts payable 5,878
Total Liabilities 5,878

NET POSITION
Restricted for:

Capital projects 72,784
District maintenance 184,451
Total Net Position $ 257,235
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See notes to basic financial statements.
18 Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Statement of Activities – Governmental Activities
Year Ended June 30, 2023
Program
Revenues
Net (Expense)
Revenue and
Changes in Net
Position
Functions/Programs Expenses
Operating Grants
and Contributions
Governmental
Activities
Community development $ 50,183 $ - $ (50,183)
$ 50,183 $ - (50,183)
General Revenues:

Maintenance special taxes 110,622
Investment earnings 1,620
Total General Revenues 112,242
Change in Net Position 62,059
Net Position, Beginning of Year 195,176
Net Position, End of Year $257,235
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
19 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 the maintenance of parkways and open space within the District. #3..
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See notes to financial statements.
20 Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Balance Sheet – Governmental Funds
June 30, 2023
Capital
Projects
Fund
Special
Revenue
Fund Total
ASSETS
Cash and investments $ 72,784 $ 185,060 $ 257,844
Taxes receivable - 4,623 4,623
Interest receivable - 646 646
Total Assets $ 72,784 $ 190,329 $ 263,113

LIABILITIES
Accounts payable - 5,878 5,878
Total Liabilities - 5,878 5,878

FUND BALANCES
Restricted for:

Capital project 72,784 - 72,784
District maintenance - 184,451 184,451
Total Fund Balances 72,784 184,451 257,235
Total Liabilities, and Fund Balances $ 72,784 $ 190,329 $ 263,113 Note: There are no differences between the Governmental Funds Balance Sheet and the Governmental Activities Statement of Net Position as of June 30, 2023. #3..
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See notes to financial statements.
21 Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Statement of Revenues, Expenditures, and
Changes in Fund Balances – Governmental Funds
Year Ended June 30, 2023
Capital
Projects
Fund
Special
Revenue
Fund Total

REVENUES
Maintenance special tax $ - $ 110,622 $110,622
Interest income - 3,418 3,418
Change in fair value of investments - (1,798) (1,798)
Total Revenues - 112,242 112,242

EXPENDITURES
Services – professional and other - 47,828 47,828
Utilities - 2,355 2,355
Total Expenditures - 50,183 50,183
Changes in Fund Balances - 62,059 62,059
Fund Balances, Beginning of Year 72,784 122,392 195,176 Fund Balances, End of Year $72,784 $184,451 $257,235
Note: There are no differences between the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances and the Governmental Activities Statement of Activities for the fiscal year ended June 30, 2023.
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See notes to financial statements.
22 Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Statement of Revenues, Expenditures, and Changes in
Fund Balance – Special Revenue Fund – Budget and Actual Year Ended June 30, 2023
Original
Budgeted
Amounts
Final
Budgeted
Amounts
Actual
Amounts
Variance
with Final
Budget

REVENUES
Maintenance special tax $ 95,000 $ 95,000 $ 110,622 $ 15,622 Interest income - - 3,418 3,418
Change in fair value of investments - - (1,798) (1,798) Total Revenues 95,000 95,000 112,242 17,242

EXPENDITURES
Services - professional and other 67,463 67,463 47,828 19,635 Utilities 5,200 5,200 2,355 2,845
Total Expenditures 72,663 72,663 50,183 22,480
Changes in Fund Balance $ 22,337 $ 22,337 62,059 $ 39,722 Fund Balance, Beginning of Year 122,392
Fund Balance, End of Year $ 184,451
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23 Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity
The Community Facilities District Number 2007-2 Kiernan Business Park West (the District) was formed in October 2007 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 88-acre project, a portion of the KiernanCarver Comprehensive Planning District, and bounded on the North by Kiernan Avenue, on the East by Dale Road, on the South by Bangs Avenue, and on the West by Modesto’s City Limits.

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.
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
24 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Government-Wide and Fund Financial Statements (Continued) 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.

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. #3..
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
25 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of Presentation, Basis of Accounting, and Measurement Focus (Continued) 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.

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 liabilities, the Statements of Net Position and Balance Sheet will sometimes report a separate section for deferred inflows of resources. A deferred inflow of resources is defined as an acquisition of net assets 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.
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
27 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Balance
In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned, or unassigned based primarily on the extent to which the 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.
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
28 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Balance (Continued)
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.

Net Position
Net position represents the residual interest in the District’s assets after liabilities are deducted.

In accordance with GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, 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. #3..
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
29 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net Position (Continued)
• 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, 2023, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no financial impact:

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 certain requirements of this statement to 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.
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
30 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. 100 - Accounting Changes and Error Corrections. The requirements of this statement are effective for reporting periods beginning after June 15, 2023.

GASB Statement No. 101 - Compensated Absences. The requirements of this statement are effective for reporting periods beginning after December 15, 2023.

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, 2023.
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
31 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Cash and investments as of June 30, 2023 are classified in the accompanying financial statements as follows:

Statement of Net Position- Governmental Activities:

Cash and investments $ 257,844
Total cash and investments $ 257,844
Deposits with the City
Cash and investment pool $ 257,844
Total cash and investments $ 257,844
Detailed information concerning the City's pooled cash and investments, including information regarding the fair value of investments, may be found in the City's Annual Comprehensive Financial Report. As of June 30, 2023, the fair value of the District’s position in the pool is the same as the value of its pool shares.

Concentration of Credit Risk
The District is required to disclose investments that represent a concentration of five percent (5%) or more of investments in any one issuer held by individual funds in the securities of issuers other than U.S. Treasury securities, mutual funds, and external investment pools. At June 30, 2023, no investments represented a concentration of five percent or more of investments in any one issuer held by the District in the securities of issuers other than U.S.

Treasury securities, mutual funds, and external investment pools. #3..
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
32 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Fair Value Hierarchy
The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the assets. Level 1 inputs are quoted prices in an active market for identical assets; level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The inputs and techniques used for valuing securities are not necessarily an indication of risk associated with investing in those securities.

The District’s investment in the City’s pool and money market fund are exempt from fair value measurement disclosures.

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, 2023, 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. #3..
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Community Facilities District
Number 2007-2 Kiernan Business Park West
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
33 NOTE 4 SUBSEQUENT EVENTS
The District has evaluated events subsequent to the balance sheet date through November 17, 2023, the date the financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the financial statements.
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34 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards The Honorable Members of the City Council
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 (Government Auditing Standards), the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2007-2 Kiernan Business Park West (the District), as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated November 17, 2023.

Report on 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) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
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35 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.

However, material weaknesses or significant deficiencies may exist that were not identified.

Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the 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 financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #3..
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36 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.

Glendale, California
November 17, 2023
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www.vasquez.cpa
Vasquez & Company LLP has over 50 years of experience in performing audit, accounting & consulting services for all types of nonprofit organizations, for-profit companies, governmental entities and publicly traded companies. Vasquez is a member of the RSM US Alliance. RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM™ logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
655 N Central Avenue, Suite 1550 • Glendale, California 91203-1437 • Ph. (213) 873-1700 • Fax (213) 873-1777
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Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
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Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
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Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Table of Contents
PAGE
Independent Auditor’s Report 1
Management’s Discussion and Analysis (Unaudited) 6
Basic Financial Statements
Statement of Net Position – Governmental Activities 17
Statement of Activities – Governmental Activities 18
Balance Sheet – Governmental Funds 20
Statement of Revenues, Expenditures, and Changes in Fund Balance – Governmental Funds 21
Statement of Revenues, Expenditures, and Changes in Fund Balances – Special Revenue Fund – Budget and Actual 22
Notes to Basic Financial Statements 23
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 31 #3..
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1 Independent Auditor’s Report
The Honorable Members of the City Council
City of Modesto, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 1997-1 North Beyer Park (the District), a component unit of the City of Modesto, California, as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of June 30, 2023, and the respective changes in financial position, and the 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. #3..
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2 Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
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3 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed.
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4 • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 6-15 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
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5 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 17, 2023, 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.

Glendale, California
November 17, 2023
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6 Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
The City of Modesto Community Facilities District Number 1997-1 North Beyer Park (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements— and Management’s Discussion and Analysis—for State and Local Governments, 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 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.
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Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
7 BACKGROUND AND MANAGEMENT’S DISCUSSION
On November 26, 1996, the City Council of the City approved the North Beyer Park Specific Plan, allowing for a maximum of 1,200 residential units to be developed on 160 acres within the Specific Plan area. In addition, three areas within the Specific Plan were designated “Mixed Use,” two of which were expected to develop as neighborhood commercial shopping centers and the third which was expected to develop as office space. At the same meeting at which the City Council approved the Specific Plan, a residential subdivision was approved for 263 dwelling units to be built on 55 acres within the Specific Plan. One condition of the tentative map of this subdivision required formation of or annexation into a Mello-Roos Community Facilities District (CFD) to fund maintenance of parkways and open space within the development.

In order to comply with the condition of the tentative map, in June 1997 the District was formed and authorized to levy a special tax to pay for capital improvements (medians on Coffee and Oakdale Roads) and ongoing maintenance costs. Subsequent development has annexed to this CFD.

To date, the CFD has been unable to construct the medians. This is because (1) insufficient tax monies have been collected for the construction projects and (2) the medians cannot be installed until the property owners on both sides of Coffee and Oakdale Roads dedicate the necessary right-of-way to construct the full street width. However, the CFD has levied and collected taxes sufficient for the ongoing maintenance expenses. In fact, the CFD has built sufficient reserves that the levy of the annual maintenance tax ceased as of fiscal year 2003- 2004 and is not expected to be reinstated until the authorized improvements have been installed.
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Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
8 FISCAL YEAR 2023 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:

Government-Wide:
• The District’s net position decreased by $4,452 in fiscal year 2023. • At June 30, 2023, net position was $ 49,814.
• Total general revenues were investment earnings of $271. • Total expenses were $4,723.

Funds Basis:
• Capital Projects Fund revenues were $267. This is an increase of $1,564 from the prior year. The revenues are attributed to interest earnings and change in fair value of investments.
• Capital Projects Fund ending fund balance increased by $267 to $ 44,403. • Special Revenue Fund revenues of $4 was $334 more than last year. Revenues are attributed to interest earnings and change in fair value of investments. Expenditures of $4,723 were $8,743 less than the prior year.
• Special Revenue Fund ending fund balance decreased by $4,719 to $5,411. #3..
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Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
9 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.

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. Formation deposits, special facilities taxes, and annual maintenance assessments support these services. 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. #3..
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Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Management’s Discussion and Analysis (Unaudited) (Continued) Year Ended June 30, 2023
10 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, 2023, total assets were $49,814. The District’s net position from governmental activities decreased to $49,814 in 2023 from $54,266 in 2022. All of the District’s net position is restricted as follows: $44,404 for capital projects and $5,410 for District maintenance.

Following summarizes the Statements of Net Position as of June 30, 2023 and 2022:

Statements of Net Position – Governmental Activities
Description 2023 2022 Change
Assets:

Cash and investments $49,681 $54,152 $(4,471)
Interest receivable 133 114 19
Total assets 49,814 54,266 (4,452)
Net position:

Restricted for:

Capital projects 44,404 44,136 268
District maintenance 5,410 10,130 (4,720)
Total net position $49,814 $54,266 $(4,452)
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Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Management’s Discussion and Analysis (Unaudited) (Continued) Year Ended June 30, 2023
11 FISCAL YEAR 2023 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2023 recognized investment earnings of $271. Community Development expenses decreased by $8,473 due to a decrease in salaries and benefits by City employees providing administrative and program services charged to the District.

Following summarizes the Statements of Activities:

Statements of Activities – Governmental Activities
Description 2023 2022 Change
Revenues:

General revenues:

Investment earnings (loss) $271 $(1,627) $1,898
Expenses:

Community development 4,723 13,196 (8,473)
Changes in net position (4,452) (14,823) $10,371
Net position, beginning of year 54,266 69,089
Net position, end of year $49,814 $54,266
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 longterm amounts. #3..
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Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Management’s Discussion and Analysis (Unaudited) (Continued) Year Ended June 30, 2023
12 FISCAL YEAR 2023 GOVERNMENTAL ACTIVITIES (CONTINUED) Fund Financial Statements (Continued)
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 purposes are explained in Note 1 to the financial statements. All of 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.

Following summarizes the Balance Sheets and Statements of Revenues, Expenditures, and Changes in Fund Balances for the Capital Projects Fund and the Special Revenue Fund for the years ended June 30, 2023 and 2022:

Balance Sheets – Capital Projects Fund
Description 2023 2022 Change
Assets:

Cash and investments $44,285 $44,038 $247
Interest receivable 118 98 21
Total assets $44,403 $44,136 $268
Fund balances:

Restricted for:

Capital projects $44,403 $44,136 $267
Total fund balances $44,403 $44,136 $267
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Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Management’s Discussion and Analysis (Unaudited) (Continued) Year Ended June 30, 2023
13 Balance Sheets – Special Revenue Fund
Description 2023 2022 Change
Assets:

Cash and investments $5,396 $10,114 $(4,718)
Interest receivable 14 16 (2)
Total assets $5,410 $10,130 $(4,720)
Fund balances:

Restricted for:

District maintenance $5,410 $10,130 $(4,720)
Total fund balances $5,410 $10,130 $(4,720)
Statements of Revenues, Expenditures, and Changes in Fund Balances – Capital Projects Fund
Description 2023 2022 Change
Revenues $267 $(1,297) $1,564
Expenditures - - -
Changes in fund balance 267 (1,297) $1,564
Fund balance, beginning of year 44,136 45,433
Fund balance, end of year $44,403 $44,136
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Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Management’s Discussion and Analysis (Unaudited) (Continued) Year Ended June 30, 2023
14 Statement of Revenues, Expenditures, and Changes in Fund Balances – Special Revenue Fund
Description 2023 2022 Change
Revenues $3 $(330) $334
Expenditures 4,723 13,196 (8,473)
Changes in fund balance (4,720) (13,526) $8,807
Fund balance, beginning of year 10,130 23,656
Fund balance, end of year $5,410 $10,130
THE DISTRICT’S FUND FINANCIAL STATEMENTS
At June 30, 2023, the District’s governmental funds reported combined fund balances of $49,814, which is a decrease of $4,452 compared with last year. The Capital Projects Fund had a $267 increase in fund balance due to the increase in fair value of investments, while the Special Revenue Fund had a $4,719 decrease in fund balance due to professional services expenditures exceeding the reported revenues.

Therefore, the District reports no long-term capital assets. #3..
- 468 -
Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Management’s Discussion and Analysis (Unaudited) (Continued) Year Ended June 30, 2023
15 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.
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16 Community Facilities District
Number 1997-1 North Beyer 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 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 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.
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- 470 -
See notes to basic financial statements.
17 Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Statement of Net Position – Governmental Activities
June 30, 2023
ASSETS
Cash and investments $49,681
Interest receivable 133
Total Assets 49,814

NET POSITION
Restricted for:

Capital projects 44,404
District maintenance 5,410
Total Net Position $49,814
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- 471 -
See notes to basic financial statements.
18 Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Statement of Activities – Governmental Activities
Year Ended June 30, 2023
Program
Revenues
Net (Expense)
Revenue and
Changes in Net
Position
Functions/Programs Expenses
Operating
Grants and
Contributions
Governmental
Activities
Community development $4,723 $- $(4,723)
$4,723 $- (4,723)
General Revenues:

Investment earnings 270
Total General Revenues 270
Change in Net Position (4,453)
Net Position, Beginning of Year 54,266
Net Position, End of Year $49,813
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- 472 -
19 Community Facilities District
Number 1997-1 North Beyer Park
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. #3..
- 473 -
See notes to basic financial statements.
20 Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Balance Sheet – Governmental Funds
June 30, 2023
Capital Projects
Fund
Special Revenue
Fund Total
ASSETS
Cash and investments $ 44,285 $ 5,396 $ 49,681
Interest receivable 118 14 132
Total Assets $ 44,403 $ 5,410 $ 49,813

FUND BALANCES
Restricted for:

Capital projects $ 44,403 $- $ 44,403
District maintenance - 5,410 5,410
Total Fund Balances $ 44,403 $ 5,410 $ 49,813
There are no differences between the Governmental Funds Balance Sheet and the Governmental Activities Statement of Net Position as of June 30, 2023. #3..
- 474 -
See notes to basic financial statements.
21 Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Statement of Revenues, Expenditures, and Changes in Fund Balance – Governmental Funds
Year Ended June 30, 2023
Capital
Projects
Fund
Special
Revenue
Fund Total

REVENUES
Interest income $ 685 $ 105 $ 790
Change in fair value of investments (418) (102) (520)
Total Revenues 267 3 270

EXPENDITURES
Services – professional and other - 4,723 4,723
Total Expenditures - 4,723 4,723
Changes in fund balances 267 (4,720) (4,453)
Fund balances, beginning of year 44,136 10,130 54,266
Fund balances, end of year $ 44,403 $ 5,410 $ 49,813
There are no differences between the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances and the Governmental Activities Statement of Activities for the fiscal year ended June 30, 2023.
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- 475 -
See notes to basic financial statements.
22 Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Statement of Revenues, Expenditures, and Changes in Fund Balances – Special Revenue Fund – Budget and Actual
Year Ended June 30, 2023
Original
Budgeted
Amounts
Final
Budgeted
Amounts Actual
Variance
with Final
Budget

REVENUES
Interest income $ - $- $ 105 $ 105
Change in fair value of investments - - (102) (102)
Total Revenues - - 3 3

EXPENDITURES
Services – professional and other 6,411 6,411 4,723 1,688 Utilities 100 100 - 100
Total Expenditures 6,511 6,511 4,723 1,788
Changes in fund balances $ (6,511) $ (6,511) (4,720) $ 1,791 Fund balances, beginning of year 10,130
Fund balances, end of year $ 5,410
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23 Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Notes to Basic Financial Statements
Year ended June 30, 2023
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity
The Community Facilities District Number 1997-1 North Beyer Park (the District) was formed in June 1997 by a vote of the property owners within the proposed District. The District, a separate legal entity, was formed to provide a funding mechanism for public facilities and services as required by the District Specific Plan. The District is a 160-acre project, the boundaries of which are recorded in Book 2, page 80 of the Book of Assessment District Maps in the Stanislaus County Recorder’s Office.

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.
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- 477 -
Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
24 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Government-Wide and Fund Financial Statements (Continued) Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements.

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.
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- 478 -
Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
25 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of Presentation, Basis of Accounting, and Measurement Focus (Continued) 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.

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. #3..
- 479 -
Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
26 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Balance (Continued)
• 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.
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- 480 -
Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
27 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Balance (Continued)
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, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, 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.
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- 481 -
Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
28 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Governmental Accounting Standards Update
During the year ended June 30, 2023, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no financial impact:

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 certain requirements of this statement to 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.

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

GASB Statement No. 100 - Accounting Changes and Error Corrections. The requirements of this statement are effective for reporting periods beginning after June 15, 2023.
#3..
- 482 -
Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
29 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Governmental Accounting Standards Update (Continued)
GASB Statement No. 101 - Compensated Absences. The requirements of this statement are effective for reporting periods beginning after December 15, 2023.

Cash and investments as of June 30, 2023 are classified in the accompanying financial statements as follows:

Statement of Net Position- Governmental Activities:

Cash and investments $ 49,681
Total cash and investments $ 49,681
Deposits with the City
Cash and investment pool $ 49,681
Total cash and investments $ 49,681
#3..
- 483 -
Community Facilities District
Number 1997-1 North Beyer Park
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
30 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Detailed information regarding the City’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City’s Annual Comprehensive Financial Report. As of June 30, 2023, the fair value of the District’s position in the pool is the same as the value of its pool shares.

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 SUBSEQUENT EVENTS
The District has evaluated events subsequent to the balance sheet date through November 17, 2023, the date the financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the financial statements.
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- 484 -
31 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards The Honorable Members of the City Council
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 (Government Auditing Standards), the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 1997-1 North Beyer Park (the District), as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated November 17, 2023.

Report on 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) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
#3..
- 485 -
32 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 District’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.

However, material weaknesses or significant deficiencies may exist that were not identified.

Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the 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 financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #3..
- 486 -
33 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 District’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Glendale, California
November 17, 2023
#3..
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www.vasquez.cpa
Vasquez & Company LLP has over 50 years of experience in performing audit, accounting & consulting services for all types of nonprofit organizations, for-profit companies, governmental entities and publicly traded companies. Vasquez is a member of the RSM US Alliance. RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM™ logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
655 N Central Avenue, Suite 1550 • Glendale, California 91203-1437 • Ph. (213) 873-1700 • Fax (213) 873-1777
#3..
- 488 -
Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
#3..
- 489 -
Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
#3..
- 490 -
Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Table of Contents
PAGE
Independent Auditor’s Report 1
Management’s Discussion and Analysis (Unaudited) 6
Basic Financial Statements
Statement of Net Position – Governmental Activities 20
Statement of Activities – Governmental Activities 21
Balance Sheet – Governmental Funds 23
Reconciliation of the Governmental Funds Balance Sheet to the Governmental Activities Statement of Net Position 24
Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 25
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Governmental Activities Statement of Activities 26
Statement of Revenues Expenditures and Changes in Fund Balance – Special Revenue Fund – Budget and Actual 27
Notes to Basic Financial Statements 28
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 41 #3..
- 491 -
1 Independent Auditor’s Report
The Honorable Members of the City Council
City of Modesto, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2002-1 Northpointe (the District), a component unit of the City of Modesto, California (the City), as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023 and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of June 30, 2023, and the respective changes in financial position, and the 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. #3..
- 492 -
2 Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
#3..
- 493 -
3 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed.
#3..
- 494 -
4 • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 6-18 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
#3..
- 495 -
5 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 17, 2023, 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 District’s internal control over financial reporting and compliance.

Glendale, California
November 17, 2023
#3..
- 496 -
6 Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
The City of Modesto Community Facilities District Number 2002-1 Northpointe (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements— and Management’s Discussion and Analysis—for State and Local Governments, 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 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.
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- 497 -
Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
7 BACKGROUND AND MANAGEMENT’S DISCUSSION
On April 1, 1997, the City Council approved the Kiernan Business Park Specific Plan that set forth a plan of development for approximately 614 acres that were, at that time, located adjacent to the City’s northern border, east of Highway 99 and south of Kiernan Avenue in a portion of unincorporated Stanislaus County. To date, approximately 250 acres within the Kiernan Business Park Specific Plan have been annexed into the City. Approximately 55 of the City-annexed acres are included within the District. The Kiernan Business Park Specific Plan is intended to provide for the development of a new business park, commercial and industrial uses that will assist in implementing the City’s long-range objectives to enhance its local economy, generate jobs for residents, and create a better jobs/housing balance.

The District was formed by the City Council in February 2002 in order to generate funding for landscaping improvements, a variety of maintenance responsibilities (weed control, litter removal, landscape maintenance, and general maintenance and replacement of storm drainage facilities), and improvement and replacement costs necessitated by development of the projects within the District. The Capital Projects Fund, earmarked to fund the storm drain basin landscape improvements, will be utilized once the final configuration of the storm drain basin has been determined.
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- 498 -
Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
8 FISCAL YEAR 2023 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:

Government-Wide:
• At June 30, 2023, the District’s net position increased to $515,235. • Total District revenues were $89,426 and expenses were $33,763.

Funds Basis:
• Capital Projects Fund revenues of $267 were $1,564 higher than the prior year due to the increase in interest income and decrease in investment loss. Expenditures of $0 were the same as the previous year. The Capital Projects Fund ending fund balance increased by $267, with an ending fund balance of $44,437. • Special Revenue Fund revenues of $89,159 were $24,693 higher than the prior year primarily due to the increase in maintenance special tax and interest income and decrease in investment loss in the current year. Expenditures of $34,078 were $7,181 lower than the prior year primarily due to the decrease in services expenditures. The special revenue fund balance increased by $55,081 to an ending fund balance of $470,172.
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- 499 -
Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
9 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.

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. #3..
- 500 -
Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
10 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, 2023, total assets of $772,150 were offset by liabilities of $1,135 and deferred inflows of resources of $255,780. The District’s net position from governmental activities increased to $515,235 in 2023 from $459,572 in 2022. All of the District’s net position is restricted as follows: $626 for right-to-use asset net of lease liability, $44,437 for acquisition or construction of infrastructure and $470,172 for maintaining that infrastructure.

Presented in the succeeding page is the summary of the Statements of Net Position as of June 30, 2023 and 2022:
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- 501 -
Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
11 Statements of Net Position – Governmental Activities Description 2023 2022 Change
Assets:

Cash and investments $502,888 $452,502 $50,386
Assessments receivable − 293 (293)
Interest receivable 1,308 979 329
Right-to-use asset, net of accumulated
amortization 626 1,560 (934)
Lease receivable, current 7,804 7,957 (153)
Lease receivable, noncurrent 259,524 249,233 10,291
Total assets 772,150 712,524 59,626
Liabilities:

Current and other liabilities 1,135 1,194 (59)
Lease liability − 1,249 (1,249)
Total liabilities 1,135 2,443 (1,308)
Deferred inflows of resources:

Unavailable assessments − 293 (293)
Leases 255,780 250,216 5,564
Total deferred inflows of resources 255,780 250,509 5,271 Net position:

Net investment in capital assets 626 311 315
Restricted for:

Capital projects 44,437 44,170 267
District maintenance 470,172 415,091 55,081
Total net position $515,235 $459,572 $55,663
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- 502 -
Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
12 FISCAL YEAR 2023 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2023 revenue came primarily from maintenance special tax of $70,012 and lease revenue of $11,990. District expenses of $33,763 were for professional services and utilities expenses.

Presented in the succeeding page is the summary of the Statements of Activities for the years ended June 30, 2023 and 2022, and the respective changes:

Statements of Activities – Governmental Activities
Description 2023 2022 Change
Revenues:

General revenues:

Maintenance special tax $70,012 $59,722 $10,290
Investment earnings 3,080 (12,487) 15,567
Interest revenue - leases 4,344 3,972 372
Lease revenue 11,990 11,962 28
Total revenues 89,426 63,169 26,257
Expenses:

Community development 33,763 38,452 (4,689)
Changes in net position 55,663 24,717 $30,946
Net position, beginning of year 459,572 434,855
Net position, end of year $515,235 $459,572
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- 503 -
Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
13 FISCAL YEAR 2023 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 longterm amounts.

All of 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.
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- 504 -
Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
14 FISCAL YEAR 2023 GOVERNMENTAL ACTIVITIES
Fund Financial Statements (Continued)
The following summarizes the Balance Sheets and Statements of Revenues, Expenditures, and Changes in Fund Balances for both the Capital Projects Fund and the Special Revenue Fund for the years ended June 30, 2023 and 2022, and the respective changes:

Balance Sheets – Capital Projects Fund
Description 2023 2022 Change
Assets:

Cash and investments $44,319 $44,072 $247
Interest receivable 118 98 20
Total assets $44,437 $44,170 $267
Fund balances:

Restricted for:

Capital projects $44,437 $44,170 $267
Total fund balances $44,437 $44,170 $267
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- 505 -
Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
15 Balance Sheets - Special Revenue Fund
Description 2023 2022 Change
Assets:

Cash and investment $458,569 $408,430 $50,139
Assessments receivable - 293 (293)
Interest receivable 1,190 881 309
Lease receivable 267,328 257,190 10,138
Total assets $727,087 $666,794 $60,293
Liabilities:

Accounts payable $1,135 $1,194 $(59)
Total liabilities 1,135 1,194 (59)
Deferred inflows of resources:

Unavailable assessments - 293 (293)
Leases 255,780 250,216 5,564
Total deferred inflows of resources 255,780 250,509 5,271 Fund balances:

Restricted for:

District maintenance 470,172 415,091 55,081
Total fund balances 470,172 415,091 55,081
Total liabilities, deferred inflows of
resources, and fund balances $727,087 $666,794 $60,293
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- 506 -
Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
16 Statements of Revenues, Expenditures, and Changes in Fund Balances – Capital Projects Fund
Description 2023 2022 Change
Revenues $267 $(1,297) $1,564
Expenditures - - -
Changes in fund balance 267 (1,297) $1,564
Fund balance, beginning of year 44,170 45,467
Fund balance, end of year $44,437 $44,170
Statements of Revenues, Expenditures, and Changes in Fund Balances – Special Revenue Fund
Description 2023 2022 Change
Revenues $89,159 $64,466 $24,693
Expenditures (34,078) (41,259) 7,181
Other financing sources - 2,496 (2,496)
Changes in fund balance 55,081 25,703 $29,378
Fund balance, beginning of year 415,091 389,388
Fund balance, end of year $470,172 $415,091
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- 507 -
Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
17 THE DISTRICT’S FUND FINANCIAL STATEMENTS
At June 30, 2023, the District’s governmental funds reported combined fund balances of $514,609, which was a $55,348 increase from fiscal year 2022. The Capital Projects Fund realized a $267 increase, due to net investment income, while the Special Revenue Fund realized a $55,081 increase due to maintenance special tax exceeding professional services and utilities.

Therefore, the District reports no long-term capital assets besides the intangible right-to-use asset.

LEASES
Under GASB Statement No. 87, the District is required to record all leases that meets the definition of a lease as defined in GASB Statement No. 87. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflows of resources. Accordingly, the lease liability of $0 and the right-to-use asset, net of accumulated amortization of $626 is reported on the government-wide financial statements. The District recognized a lease receivable of $267,328 and deferred inflows of resources of $255,780 in both the District’s fund and government-wide financial statements as of June 30, 2023. #3..
- 508 -
Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
18 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.
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- 509 -
19 Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California

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.
#3..
- 510 -
See notes to basic financial statements.
20 Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Statement of Net Position – Governmental Activities
June 30, 2023
ASSETS
Cash and investments $502,888
Interest receivable 1,308
Right-to-use asset, net of accumulated amortization 626 Lease receivable, current 7,804
Lease receivable, noncurrent 259,524
Total Assets 772,150

LIABILITIES
Accounts payable 1,135
Total Liabilities 1,135

DEFERRED INFLOWS OF RESOURCES
Leases 255,780
Total Deferred Inflows of Resources 255,780

NET POSITION
Net investment in capital assets 626
Restricted for:

Capital projects 44,437
District maintenance 470,172
Total Net Position $515,235
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- 511 -
See notes to basic financial statements.
21 Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Statement of Activities – Governmental Activities
Year Ended June 30, 2023
Program
Revenues
Net (Expense)
Revenue and
Changes in Net
Position
Functions/Programs Expenses
Operating
Grants and
Contributions
Governmental
Activities
Community development $33,763 $- $(33,763)
$33,763 $- (33,763)
General Revenues:

Maintenance special tax 70,012
Investment earnings 3,080
Interest revenue – leases 4,344
Lease revenue 11,990
Total General Revenues 89,426
Changes in Net Position 55,663
Net Position, Beginning of Year 459,572
Net Position, End of Year $515,235
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- 512 -
22 Community Facilities District
Number 2002-1 Northpointe
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. #3..
- 513 -
See notes to basic financial statements.
23 Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Balance Sheet – Governmental Funds
June 30, 2023
Capital
Projects
Fund
Special
Revenue
Fund Total
ASSETS
Cash and investments $44,319 $458,569 $502,888
Interest receivable 118 1,190 1,308
Lease receivable − 267,328 267,328
Total Assets $44,437 $727,087 $771,524

LIABILITIES
Accounts payable $− $1,135 $1,135
Total Liabilities − 1,135 1,135

DEFERRED INFLOWS OF RESOURCES
Leases, net of accumulated amortization − 255,780 255,780 Total Deferred Inflows of Resources − 255,780 255,780

FUND BALANCES
Restricted for:

Capital projects 44,437 - 44,437
District maintenance - 470,172 470,172
Total Fund Balances 44,437 470,172 514,609
Total Liabilities, Deferred Inflows of
Resources and Fund Balances $44,437 $727,087 $771,524
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- 514 -
See notes to basic financial statements.
24 Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Reconciliation of the Governmental Funds Balance Sheet to the Governmental Activities Statement of Net Position
June 30, 2023
Total Fund Balances - Governmental Funds $514,609
Amounts reported for governmental activities in the Statement of Net Position are different because:

Right-to-use asset used in governmental activities are not financial resources and, therefore, are not reported in the funds (net of accumulated amortization $1,872). 626
Total Net Position - Governmental Activities $515,235
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- 515 -
See notes to basic financial statements.
25 Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Statement of Revenues, Expenditures, and
Changes in Fund Balances – Governmental Funds
Year Ended June 30, 2023
Capital
Projects
Fund
Special
Revenue
Fund Total

REVENUES
Maintenance special tax $- $70,012 $70,012
Interest income 686 6,684 7,370
Change in fair value of investments (419) (3,871) (4,290) Interest revenue - leases - 4,344 4,344
Lease revenue - 11,990 11,990
Total Revenues 267 89,159 89,426

EXPENDITURES
Services – professional and other - 27,132 27,132
Utilities - 5,695 5,695
Debt service:

Principal retirement - 1,251 1,251
Total Expenditures - 34,078 34,078
Changes in Fund Balances 267 55,081 55,348
Fund Balances, Beginning of Year 44,170 415,091 459,261 Fund Balances, End of Year $44,437 $470,172 $514,609
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- 516 -
See notes to basic financial statements.
26 Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Governmental Activities Statement of Activities Year Ended June 30, 2023
Changes in Fund Balances - Governmental Funds $55,348
Amounts reported for governmental activities in the Statement of Activities are different because:

Governmental funds report capital outlays as expenditure. However, in the Statement of Activities, the lease is capitalized as a right-to-use asset along with a corresponding lease liability to reflect the future obligation. The cost of these right-to-use asset are amortized ($936) over the life of the lease. (936)
Long-term liabilities are not due during the current year and, therefore, the changes are not recorded in the governmental fund. 1,251 Changes in Net Position – Governmental Activities $55,663 #3..
- 517 -
See notes to basic financial statements.
27 Community Facilities District
Number 2002-1 Northpointe
City of Modesto, California
Statement of Revenues Expenditures and Changes in
Fund Balance – Special Revenue Fund – Budget and Actual Year Ended June 30, 2023
Description
Original
Budgeted
Amounts
Final
Budgeted
Amounts
Actual
Amounts
Variance
with
Final
Budget

REVENUES
Maintenance special tax $65,000 $70,013 $70,012 $(1)
Interest income - - 6,684 6,684
Change in fair value of investments - - (3,871) (3,871) Interest revenue - leases - - 4,344 4,344
Lease revenue - - 11,990 11,990
Total Revenues 65,000 70,013 89,159 19,146

EXPENDITURES
Services - professional and other 27,476 31,238 27,132 4,106 Utilities 6,000 6,000 5,695 305
Debt service:

Principal retirement - 1,251 1,251 -
Total Expenditures 33,476 38,489 34,078 4,411
Changes in Fund Balance $31,524 $31,524 55,081 $23,557
Fund Balance, Beginning of Year 415,091
Fund Balance, End of Year $470,172
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- 518 -
28 Community Facilities District
Number 2002-1 Northpointe
City Of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity
The Community Facilities District Number 2002-1 Northpointe (the District) was formed in February 2002 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 used to ensure that all landowners in the Specific Plans pay their fair share of the public improvements. The District is a 55-acre project bounded on the East by Highway 99, and by Pelandale Avenue on the South. The District will provide for the development of new business park and industrial uses and includes such tenants as Costco, Lowe’s, and Union Safe Deposit Bank.

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. #3..
- 519 -
Community Facilities District
Number 2002-1 Northpointe
City Of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
29 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. #3..
- 520 -
Community Facilities District
Number 2002-1 Northpointe
City Of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
30 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of Presentation, Basis of Accounting, and Measurement Focus (Continued) 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.

Lease Receivable
The District’s lease receivable, recorded as a result of implementing GASB 87, Leases, is measured at the present value of lease payments expected to be received during the lease term. There are no variable components under the lease agreement. A deferred inflow of resources is recorded for the lease. The deferred inflow of resources is recorded at the initiation of the lease in an amount equal to the initial recording of the lease receivable. The deferred inflow of resources is amortized on a straight-line basis over the term of the lease.

Right-to-Use Asset
The District has recorded right to use lease assets as a result of implementing GASB 87, Leases. The right-to-use assets are initially measured at an amount equal to the initial measurement of the related lease liability plus any lease payments made prior to the lease term, less lease incentives, and plus ancillary charges necessary to place the lease into service. The right-to-use assets are intangible capital assets and are amortized on a straight-line basis over the life of the related lease.
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- 522 -
Community Facilities District
Number 2002-1 Northpointe
City Of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
32 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Lease Liability
The District’s lease liability is measured at the present value of payments expected to be made by the District during the lease term. As lease payments are made, the District will reduce the liability (principal portion of payment) and recognize interest expense.

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. #3..
- 523 -
Community Facilities District
Number 2002-1 Northpointe
City Of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
33 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Balance (Continued)
• 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.

Net Position
Net position represents the residual interest in the District’s assets after liabilities are deducted. In accordance with GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, the fund equity section on the Statement of Net Position was combined to report total net position and present it in three broad components:
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- 524 -
Community Facilities District
Number 2002-1 Northpointe
City Of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
34 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net Position (Continued)
• Net investment in capital assets – Amount consists of capital assets, including infrastructure and right-to-use asset, net of accumulated depreciation, accumulated amortization 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.

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 liabilities, the Statement 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 assets by the District that is applicable to a future reporting period. Deferred inflows of resources reported by the District is from the lease, which is measured at the present value of future lease payments and recognized as revenue over the lease term.

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. 96 – Subscription-Based Information Technology Arrangements.

The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
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- 526 -
Community Facilities District
Number 2002-1 Northpointe
City Of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
36 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. 100 – Accounting Changes and Error Corrections. The requirements of this statement are effective for reporting periods beginning after June 15, 2023.

GASB Statement No. 101 – Compensated Absences. The requirements of this statement are effective for reporting periods beginning after December 15, 2023.

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, 2023.
#3..
- 527 -
Community Facilities District
Number 2002-1 Northpointe
City Of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
37 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Cash and investments as of June 30, 2023 are classified in the accompanying financial statement as follows:

Statement of Net Position – Governmental Activities
Cash and investments $502,888
Total cash and investments $502,888
Deposits with the City
Cash and investment pool $502,888
Total cash and investments $502,888
Detailed information regarding the City’s pooled cash and investments, including information regarding the fair values of investments, may be found in the City’s Annual Comprehensive Financial Report. As of June 30, 2023, the fair value of the District’s position in the pool is the same as the value of its pool shares.

NOTE 3 LEASE RECEIVABLE
On May 28, 2013 the District, lessor, and Horizon Towers LLC, lessee, entered into a land lease agreement for the purpose of installing, operating, and maintaining a communications facility and other improvements. The initial lease term will be for five years with a monthly rental payment of $750 for the first subtenant and $400 for each subsequent subtenant that occupies the premises. The lease agreement will automatically renew for five additional five-year terms (extension term). Monthly rent will increase by 10% at year one of each extension terms. #3..
- 528 -
Community Facilities District
Number 2002-1 Northpointe
City Of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
38 NOTE 3 LEASE RECEIVABLE (CONTINUED)
Lease revenue recognized under the lease agreement was $11,990 for the year ended June 30, 2023. Interest revenue recognized under the lease agreement was $4,344 for the year ended June 30, 2023.

Future minimum lease and interest payments to be received are as follows:

Year Ending June 30 Principal Interest Total
2024 $7,804 $3,956 $11,760
2025 8,709 3,835 12,544
2026 9,237 3,699 12,936
2027 9,377 3,559 12,936
2028 9,518 3,418 12,936
2029-2033 54,664 14,759 69,423
2034-2038 66,119 10,247 76,366
2039-2043 79,185 4,817 84,002
2044-2045 22,715 242 22,957
$267,328 $48,532 $315,860
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- 529 -
Community Facilities District
Number 2002-1 Northpointe
City Of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
39 NOTE 4 RIGHT-TO-USE ASSET
The District has recorded one right-to-use leased asset. The asset is a right-to-use asset for leased land. The District entered into a land lease agreement for the purpose of preventing damage to and stabilizing the east side of the Northpointe Basin by controlling the rodent population in and on the lease area. The lease commenced on February 25, 2014 and terminates on February 28, 2024. The right-to-use leased asset is amortized on a straight-line basis over the terms of the related lease.

Right-to-use asset activity related to governmental activities for the year ended June 30, 2023 was as follows:

Beginning
Balance Additions
Deletions/
Adjustments
Ending
Balance
Intangible Assets
Right-to-use land $2,496 $- $- $2,496
Total intangible assets 2,496 - - 2,496
Less Accumulated Amortization (936) (936) 2 (1,870)
Total $1,560 $(936) $2 $626
Amortization expense charged to the governmental activities for the year ended June 30, 2023 was $936.
#3..
- 530 -
Community Facilities District
Number 2002-1 Northpointe
City Of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
40 NOTE 5 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, 2023, 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 6 SUBSEQUENT EVENTS
The District has evaluated events subsequent to the balance sheet date through November 17, 2023, the date the financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the financial statements.
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- 531 -
41 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards
The Honorable Members of the City Council
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 (Government Auditing Standards), the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2002-1 Northpointe (the District), as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023 and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated November 17, 2023.

Report on 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) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
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42 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 District’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.

However, material weaknesses or significant deficiencies may exist that were not identified.

Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the 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 financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #3..
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43 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 District’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Glendale, California
November 17, 2023
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www.vasquez.cpa
Vasquez & Company LLP has over 50 years of experience in performing audit, accounting & consulting services for all types of nonprofit organizations, for-profit companies, governmental entities and publicly traded companies. Vasquez is a member of the RSM US Alliance. RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM™ logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
655 N Central Avenue, Suite 1550 • Glendale, California 91203-1437 • Ph. (213) 873-1700 • Fax (213) 873-1777
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Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
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Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
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Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Table of Contents
PAGE
Independent Auditor’s Report 1
Management’s Discussion and Analysis (Unaudited) 6
Basic Financial Statements
Statement of Net Position – Governmental Activities 22
Statement of Activities – Governmental Activities 24
Balance Sheet – Governmental Funds 26
Reconciliation of the Governmental Funds Balance Sheet to the Governmental Activities Statement of Net Position 28
Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 29
Reconciliation of the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances to the Governmental Activities Statement of Activities Change in Net Position 30
Statement of Revenues, Expenditures, and Changes in Fund Balance – Special Revenue Fund – Budget and Actual 32
Notes to Basic Financial Statements 33
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 49 #3..
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1 Independent Auditor’s Report
The Honorable Members of the City Council
City of Modesto, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2004-1 Village One #2 (the District), a component unit of the City of Modesto, California (the City), as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023 and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of June 30, 2023, and the respective changes in financial position, and the 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. #3..
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2 Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
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3 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed.
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4 • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 6-20 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
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5 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 17, 2023, 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.

Glendale, California
November 17, 2023
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6 Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
The City of Modesto Community Facilities District Number 2004-1 Village One #2 (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements— and Management’s Discussion and Analysis—for State and Local Governments, 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 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.
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Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
7 BACKGROUND AND MANAGEMENT’S DISCUSSION
The Village One #2 Specific Plan encompasses approximately 1,840 gross acres of land within the City, on which a pedestrian-oriented, mixed-use, planned community is anticipated to be developed. In 1996 the City Council formed City of Modesto Community Facilities District (CFD) No. 1996-1 to provide funding for the acquisition or construction of certain road, storm drainage, and park improvements. In 2004 it was determined that the tax rates set forth in CFD No. 1996- 1 would be insufficient to fund the required infrastructure; therefore, in early 2004, the City Council formed the District to assist in the financing of the remaining required infrastructure.

The District includes a one-time facilities special tax, an annual facilities special tax, and an annual maintenance special tax. The District, in conjunction with CFD No. 1996-1, will provide the funding needed to complete the District funded core infrastructure needed for the Village One #2 area.

In fiscal year 2022-2023, the District did not have funded infrastructure that was under design, construction or constructed/acquired for the Village One #2 area using tax monies and bond proceeds from the District.

FISCAL YEAR 2023 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:

Government-Wide:
• At June 30, 2023, the District’s net position was $18.8 million. • At June 30, 2023, total assets and deferred outflows of resources were $45.2 million while total liabilities and total deferred inflows of resources were $26.4 million. • Total District revenues were $2.8 million, and expenses were $1.9 million. #3..
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Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
8 Funds Basis:
• Capital Projects Fund revenues decreased from $725K in the prior year to $91K for fiscal year 2023 and expenditures increased from $0 in the prior year to $477K for fiscal year 2023. The decrease in revenues is attributed to a decrease in facilities special tax and change in fair value of investments, and the increase in expenditures is attributed to an increase in activity in development of capital projects. • Capital Projects Fund ending fund balance for fiscal year 2023 decreased from $15.0 million to $14.6 million. This decrease is primarily attributed to an increase in expenditures related to the activity in development of capital projects.
• Special Revenue Fund revenues increased from $1.1 million in the prior year to $1.2 million for fiscal year 2023 and expenditures increased from $780K in the prior year to $807K for fiscal year 2023. The increase in revenue is due to an increase in the maintenance special tax, and the increase in expenditures is due primarily to an increase in professional and other contractual services.
• Special Revenue Fund ending fund balance increased from $516K in the prior year to $942K in the current year.
• Debt Service Fund revenues increased by $335K to $2.3 million in fiscal year 2023 and expenditures increased from $1.9 million in the prior year to $2.0 million for fiscal year 2023.

The increase in the revenue is due to an increase in the facilities special tax, and the increase in expenditures is attributed to the increase in debt service payments as compared to the prior year.
• Debt Service Fund ending fund balance increased for fiscal year 2023 from $2.8 million to $3.1 million.
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Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
9 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 comprise 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:

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.
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Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
10 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, 2023, total assets and deferred outflows of resources of $45.2 million were offset by total liabilities and deferred inflows of resources of $26.4 million. The District’s net position from governmental activities increased to $18.8 million in 2023 from $17.9 million in 2022. This increase was due to an increase in maintenance special tax revenue and interest income. The District’s net position has restrictions as follows: $15.1 million for acquisition or construction of infrastructure, $2.8 million for debt service, and $943K for District maintenance.

The following summarizes the Statement of Net Position as of June 30, 2023 and 2022:

Statement of Net Position – Governmental Activities
Description 2023 2022 Change
Assets:

Cash and investments $16,478,955 $16,306,146 $172,809
Cash and investments with fiscal agent 3,375,271 2,743,305 631,966 Taxes receivable 94,718 102,206 (7,488)
Assessments receivable 23,485,000 24,345,000 (860,000)
Interest receivable 42,677 37,894 4,783
Lease receivable, current 9,888 9,576 312
Lease receivable, noncurrent 403,855 407,626 (3,771)
Nondepreciable capital asset 477,126 - 477,126
Total assets 44,367,490 43,951,753 415,737
(Continued)
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Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
11 Description 2023 2022 Change
Deferred outflow of resources:

Deferred loss on refunding $807,682 $869,025 $(61,343)
Total deferred outflow of resources 807,682 869,025 (61,343) Liabilities:

Current and other liabilities 911,309 423,009 488,300
Long-term debt 24,362,678 25,289,337 (926,659)
Total liabilities 25,273,987 25,712,346 (438,359)
Deferred inflows of resources:

Unavailable assessments 705,514 759,098 (53,584)
Leases 396,820 413,114 (16,294)
Total deferred inflows of resources 1,102,334 1,172,212 (69,878) Net position:

Restricted for:

Capital projects 15,072,544 14,981,914 90,630
Debt service 2,783,288 2,435,149 348,139
District maintenance 943,019 519,157 423,862
Total net position $18,798,851 $17,936,220 $862,631
FISCAL YEAR 2023 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2023 revenue came primarily from annual facilities and maintenance special taxes, which amounted to $2.5 million along with investment earnings of $228K. District expenses of $1.9 million were primarily for district maintenance including professional services and utilities, and interest on long-term debt.
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Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
12 The following summarizes the Statement of Activities for the years ended June 30, 2023 and 2022:

Statement of Activities – Governmental Activities
Description 2023 2022 Change
Revenues:

General revenues:

Facilities special tax $1,298,270 $2,386,135 $(1,087,865) Maintenance special tax 1,198,526 1,049,074 149,452
Investment earnings (loss) 227,727 (484,961) 712,688
Interest income from leases 11,306 3,888 7,418
Lease revenue 17,668 7,328 10,340
Total revenues 2,753,497 2,961,464 (207,967)
Expenses:

Community development 825,265 804,402 20,863
Interest on long-term debt 1,065,601 1,108,046 (42,445) Total expenses 1,890,866 1,912,448 (21,582)
Change in net position 862,631 1,049,016 $(186,385)
Net position, beginning of year 17,936,220 16,887,204
Net position, end of year $18,798,851 $17,936,220
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Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
13 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 three funds. The fund financial statements measure only current revenues and expenditures and fund balances; they exclude capital assets, long-term debt, and other longterm amounts.

The following summarizes the Balance Sheet and the Statement of Revenues, Expenditures, and Changes in Fund Balances for the Capital Projects Fund, the Special Revenue Fund and the Debt Service Fund for the years ended June 30, 2023 and 2022, and the respective changes:
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Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
14 Balance Sheet – Capital Project Fund
Description 2023 2022 Change
Assets:

Cash and investments $15,032,458 $14,948,636 $83,822
Interest receivable 40,086 33,278 6,808
Total assets $15,072,544 $14,981,914 $90,630
Liabilities:

Accounts payable $477,126 $- $477,126
Total liabilities 477,126 - 477,126
Fund balances:

Restricted for:

Capital projects 14,595,418 14,981,914 (386,496)
Total fund balances 14,595,418 14,981,914 (386,496)
Total liabilities and fund balances $15,072,544 $14,981,914 $90,630 #3..
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Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
15 Balance Sheet – Special Revenue Fund
Description 2023 2022 Change
Assets:

Cash and investments $995,043 $555,931 $439,112
Taxes receivable 30,126 31,943 (1,817)
Interest receivable 2,261 776 1,485
Lease receivable 413,743 417,202 (3,459)
Total assets $1,441,173 $1,005,852 $435,321
Liabilities:

Accounts payable $80,266 $54,759 $25,507
Total liabilities 80,266 54,759 25,507
Deferred inflows of resources:

Leases 396,820 413,114 (16,294)
Unavailable revenues 22,286 21,068 1,218
Total deferred inflows of resources 419,106 434,182 (15,076) Fund balances:

Restricted for:

District maintenance 941,801 516,911 424,890
Total fund balances 941,801 516,911 424,890
Total liabilities, deferred inflows of
resources and fund balances $1,441,173 $1,005,852 $435,321 #3..
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Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
16 Balance Sheet – Debt Service Fund
Description 2023 2022 Change
Assets:

Cash and investments $451,454 $801,579 $(350,125)
Cash and investments with fiscal agent 3,375,271 2,743,305 631,966 Taxes receivable 64,592 70,263 (5,671)
Assessments receivable 23,485,000 24,345,000 (860,000)
Interest receivable 330 3,840 (3,510)
Total assets $27,376,647 $27,963,987 $(587,340)
Deferred inflow of resources:

Unavailable assessments 705,514 759,098 (53,584)
Unavailable revenues 23,532,943 24,391,245 (858,302)
Total deferred inflows of resources 24,238,457 25,150,343 (911,886) Fund balance:

Restricted for:

Debt service 3,138,190 2,813,644 324,546
Total fund balances 3,138,190 2,813,644 324,546
Total deferred inflows of resources and
fund balances $27,376,647 $27,963,987 $(587,340)
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Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
17 Statement of Revenues, Expenditures, and Changes in Fund Balances – Capital Projects Fund
Description 2023 2022 Change
Revenues $90,630 $724,934 $(634,304)
Expenditures (477,126) - (477,126)
Change in fund balance (386,496) 724,934 $(1,111,430)
Fund balance, beginning of year 14,981,914 14,256,980
Fund balance, end of year $14,595,418 $14,981,914
Statement of Revenues, Expenditures, and Changes in Fund Balances – Special Revenue Fund
Description 2023 2022 Change
Revenues $1,232,384 $1,053,215 $179,169
Expenditures (807,494) (779,702) (27,792)
Change in fund balance 424,890 273,513 $151,377
Fund balance, beginning of year 516,911 243,398
Fund balance, end of year $941,801 $516,911
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Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
18 Statement of Revenues, Expenditures, and Changes in Fund Balances – Debt Service Fund
Description 2023 2022 Change
Revenues $2,287,567 $1,952,693 $334,874
Expenditures (1,963,021) (1,925,979) (37,042)
Change in fund balance 324,546 26,714 $297,832
Fund balance, beginning of year 2,813,644 2,786,930
Fund balance, end of year $3,138,190 $2,813,644
THE DISTRICT’S FUND FINANCIAL STATEMENTS
The District’s fiscal year 2023 revenues primarily came from facilities special taxes in the amount of $2.2 million and maintenance special taxes in the amount of $1.2 million.

District expenditures of $3.2 million in fiscal year 2023 consisted of $477K in Capital Projects Fund expenditures for capital outlay, $807K in Special Revenue Fund expenditures for maintenance of District facilities and ongoing administrative expenditures, and $2.0 million in Debt Service Fund expenditures.

At June 30, 2023, the District’s governmental funds reported combined fund balances of $18.7 million, an increase of $363K compared with last year. This increase was primarily due to a combination of increased maintenance special tax and interest income revenues and decreased utilities and debt service interest and fiscal charges expenditures for the decrease in activity in development of capital projects.
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Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
19 CAPITAL ASSETS
Under GASB Statement No. 34, Basic Financial Statements— and Management’s Discussion and Analysis—for State and Local Governments, 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.

The District reports $477K of nondepreciable capital assets related to the construction of a selfstorage facility as of June 30, 2023.

LEASES
Under GASB Statement No. 87, the District is required to record all leases that meet the definition of a lease as defined in GASB Statement No. 87. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. The District recognized a lease receivable of $414k and deferred inflow of resources of $397k in both the District’s fund and government-wide financial statements as of June 30, 2023.

DEBT ADMINISTRATION
The District issued Special Tax Bonds, Series 2006 in the principal amount of $31.1 million in March 2006. The proceeds have been and will continue to be used to reimburse developers for the infrastructure they install pursuant to the Acquisition & Shortfall Agreements entered into between developers and the District as well as to fund authorized facilities installed by the District.
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Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
20 The District issued Refunding Special Tax Bonds, Series 2014 in the principal amount of $29.3 million with a premium of $1.5 million in July 2014 to refund the outstanding Special Tax Bonds, Series 2006.

The balance of the long-term debt at June 30, 2023, is $24.4 million. Additional details can be found in Note 4 to the financial statements.

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.
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21 Community Facilities District
Number 2004-1 Village One #2
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 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 change in net position and reconciled with the Statement of Net Position.
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See notes to basic financial statements.
22 Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Statement of Net Position – Governmental Activities
June 30, 2023
ASSETS
Cash and investments $16,478,955
Cash and investments with fiscal agent 3,375,271
Taxes receivable 94,718
Assessments receivable 23,485,000
Interest receivable 42,677
Lease receivable, current 9,888
Lease receivable, noncurrent 403,855
Nondepreciable capital asset 477,126
Total Assets 44,367,490

DEFERRED OUTFLOW OF RESOURCES
Deferred loss on refunding 807,682
Total Deferred Outflow of Resources 807,682

LIABILITIES
Accounts payable 557,392
Interest payable 353,917
Long-term debt:

Due in one year 1,011,659
Due in more than one year 23,351,019
Total Liabilities 25,273,987
(Continued)
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Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Statement of Net Position – Governmental Activities (Continued) June 30, 2023
See notes to basic financial statements.
23 DEFERRED INFLOWS OF RESOURCES
Unavailable assessments $705,514
Leases 396,820
Total Deferred Inflows of Resources 1,102,334

NET POSITION
Restricted for:

Capital projects $15,072,544
Debt service 2,783,288
District maintenance 943,019
Total Net Position $18,798,851
#3..
- 561 -
See notes to basic financial statements.
24 Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Statement of Activities – Governmental Activities
Year Ended June 30, 2023
Program
Revenues
Net (Expense)
Revenue and
Changes in Net
Position
Functions/Programs Expenses
Operating Grants
and Contributions
Governmental
Activities
Community development $825,265 $- $(825,265)
Interest on long-term debt 1,065,601 - (1,065,601)
$1,890,866 $- (1,890,866)
General Revenues:

Facilities special tax 1,298,270
Maintenance special tax 1,198,526
Investment earnings 227,727
Interest income from leases 11,306
Lease revenue 17,668
Total General Revenues 2,753,497
Change in Net Position 862,631
Net Position, Beginning of Year 17,936,220
Net Position, End of Year $18,798,851
#3..
- 562 -
25 Community Facilities District
Number 2004-1 Village One #2
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.

The Debt Service Fund accounts for the payment of principal and interest on the 2014 Refunding Special Tax bonds.
#3..
- 563 -
See notes to basic financial statements.
26 Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Balance Sheet – Governmental Funds
June 30, 2023
Capital
Projects
Fund
Special
Revenue
Fund
Debt
Service
Fund Total
ASSETS
Cash and investments $15,032,458 $ 995,043 $451,454 $16,478,955 Cash and investments with fiscal
agent - - 3,375,271 3,375,271
Taxes receivable - 30,126 64,592 94,718
Assessments receivable - - 23,485,000 23,485,000
Interest receivable 40,086 2,261 330 42,677
Lease receivable - 413,743 - 413,743
Total Assets $15,072,544 $1,441,173 $27,376,647 $43,890,364

LIABILITIES
Accounts payable 477,126 80,266 - 557,392
Total Liabilities 477,126 80,266 - 557,392

DEFERRED INFLOWS OF

RESOURCES
Unavailable assessments - - 705,514 705,514
Leases - 396,820 - 396,820
Unavailable revenues - 22,286 23,532,943 23,555,229
Total Deferred Inflows of
Resources - 419,106 24,238,457 24,657,563
(Continued)
#3..
- 564 -
Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Balance Sheet – Governmental Funds (Continued)
June 30, 2023
See notes to basic financial statements.
27 Capital
Projects
Fund
Special
Revenue
Fund
Debt
Service
Fund Total

FUND BALANCES
Restricted for:

Capital projects $14,595,418 $- $- $14,595,418
District maintenance - 941,801 - 941,801
Debt service - - 3,138,190 3,138,190
Total Fund Balances 14,595,418 941,801 3,138,190 18,675,409 Total Liabilities, Deferred Inflows
of Resources and Fund Balances $15,072,544 $1,441,173 $27,376,647 $43,890,364 #3..
- 565 -
See notes to basic financial statements.
28 Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Reconciliation of the Governmental Funds Balance Sheet to the Governmental Activities Statement of Net Position
June 30, 2023
Total Fund Balances - Governmental Funds $18,675,409
Amounts reported for governmental activities in the Statement of Net Position are different because:

Other long-term assets are not available to pay for the current period expenditures and therefore are deferred in the funds. 23,485,000 Revenues not available for current-period expenditures are deferred in governmental funds but are considered earned in the Statement of Net Position. 70,229
Capital assets used in governmental activities are not current assets or financial resources and, therefore, are not reported in the governmental funds. 477,126
Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds:

Long-term debt (24,362,678)
Deferred loss on refunding 807,682
Interest payable (353,917)
Total Net Position - Governmental Activities $18,798,851 #3..
- 566 -
See notes to basic financial statements.
29 Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Statement of Revenues, Expenditures,
and Changes in Fund Balances – Governmental Funds
Year Ended June 30, 2023
Capital
Projects
Fund
Special
Revenue
Fund
Debt
Service
Fund Total

REVENUES
Facilities special tax $- $- $2,156,572 $2,156,572
Maintenance special tax - 1,197,308 - 1,197,308
Interest income 232,754 10,211 121,204 364,169
Interest income from leases - 11,306 - 11,306
Change in fair value of investments (142,124) (4,109) 9,791 (136,442) Lease revenue - 17,668 - 17,668
Total Revenues 90,630 1,232,384 2,287,567 3,610,581

EXPENDITURES
Services – professional and other - 597,863 17,771 615,634 Utilities - 209,631 - 209,631
Capital outlay 477,126 - - 477,126
Debt service:

Principal - - 860,000 860,000
Interest and fiscal charges - - 1,085,250 1,085,250
Total Expenditures 477,126 807,494 1,963,021 3,247,641
Changes in Fund Balances (386,496) 424,890 324,546 362,940 Fund Balances, Beginning of Year 14,981,914 516,911 2,813,644 18,312,469 Fund Balances, End of Year $14,595,418 $941,801 $3,138,190 $18,675,409 #3..
- 567 -
See notes to basic financial statements.
30 Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Reconciliation of the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances to the Governmental Activities Statement of Activities Change in Net Position
Year Ended June 30, 2023
Changes in Fund Balances - Governmental Funds $362,940
Amounts reported for governmental activities in the Statement of Activities are different because:

Revenues previously recognized in the Statement of Activities that did not provide current financial resources and therefore were not reported as revenues in the funds are reported as revenues in the funds when received. (860,000)
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 funds. 2,916 Governmental funds report capital outlay expenditures. However, in the Statement of Activities, the costs of those assets are capitalized. 477,126 The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt and the payment to refunding escrow consumes current financial resources of governmental funds.

Neither transactions, however, has any effect on net position:

Repayment of the principal of long-term debt. 860,000
(Continued)
#3..
- 568 -
Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Reconciliation of the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances to the Governmental Activities Statement of Activities Change in Net Position (Continued) Year Ended June 30, 2023
See notes to basic financial statements.
31 Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds:

Amortization of bond premium $66,659
Amortization of deferred loss on refunding (61,343)
Interest payable 14,333
Change in Net Position - Governmental Activities $862,631 #3..
- 569 -
See notes to basic financial statements.
32 Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Statement of Revenues, Expenditures, and Changes in
Fund Balance – Special Revenue Fund – Budget and Actual Year Ended June 30, 2023
Original
Budgeted
Amounts
Final
Budgeted
Amounts
Actual
Amounts
Variance
with Final
Budget

REVENUES
Maintenance special tax $1,100,000 $1,100,000 $1,197,308 $97,308 Interest income - - 10,211 10,211
Interest income from leases - - 11,306 11,306
Change in fair value of investments - - (4,109) (4,109) Lease revenue - - 17,668 17,668
Total Revenues 1,100,000 1,100,000 1,232,384 132,384

EXPENDITURES
Services – professional and other 600,995 600,995 597,863 3,132 Utilities 293,500 293,500 209,631 83,869
Total Expenditures 894,495 894,495 807,494 87,001
Excess of Revenues Over Expenditures 205,505 205,505 424,890 219,385

OTHER FINANCING USE
Transfers out to City funds 29,000 29,000 - 29,000
Total Other Financing Use 29,000 29,000 - 29,000
Change in Fund Balance $176,505 $176,505 424,890 $248,385 Fund Balance, Beginning of Year 516,911
Fund Balance, End of Year $941,801
#3..
- 570 -
33 Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity
The Community Facilities District Number 2004-1 Village One #2 (the District) was formed in April 2004 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 Plan. The District is the vehicle used to ensure that all landowners in the Specific Plan area contribute to the cost of public improvements. The District encompasses approximately 1,840 gross acres of land on which a pedestrian-oriented, mixed-use, planned community is anticipated to be developed. The District is located in the North Eastern portion of the City of Modesto, California (the City), bordered by Sylvan Avenue to the North, Claus Road to the East, Briggsmore to the South, and Oakdale Road to the West.

The District is expected to yield 6,186 residential dwelling units at buildout; in addition to 15 acres of commercial property and 220 acres of industrial property.

The District 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 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.
#3..
- 571 -
Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
34 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Government-Wide and Fund Financial Statements (Continued) 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.

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 to 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. However, principal and interest expenditures are recorded as fund liabilities when due or when amounts have been accumulated in the Debt Service Fund for payments early in the following year.
#3..
- 572 -
Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
35 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of Presentation, Basis of Accounting, and Measurement Focus (Continued) 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 infrastructure within the District.

The Debt Service Fund accounts for the payment of principal and interest on the 2014 Refunding Special Tax Bonds.

Facilities and Maintenance Special Taxes
The facilities and maintenance special taxes are collected by the County of Stanislaus on the property tax bill. The special taxes are due November 1st and February 1st and are delinquent if not paid by December 10th and April 10th, 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 special taxes 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.
#3..
- 573 -
Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
36 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 (U.S. GAAP) 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.

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. #3..
- 574 -
Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
37 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Balance (Continued)
• 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.

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.
#3..
- 575 -
Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
38 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net Position
Net position represents the residual interest in the District’s assets after liabilities are deducted.

In accordance with GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, 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.

Lease Receivable
The District’s lease receivable is measured at the present value of lease payments expected to be received during the lease term. There are no variable components under the lease agreement. A deferred inflow of resources is recorded for the lease. The deferred inflow of resources is recorded at the initiation of the lease in an amount equal to the initial recording of the lease receivable. The deferred inflow of resources is amortized on a straight-line basis over the term of the lease.
#3..
- 576 -
Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
39 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 liabilities, the Statement 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 assets by the District that is applicable to a future reporting period. Deferred inflows reported by the District consist of deferred assessments that have been billed as of year-end, but not yet collected and leases.

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.
#3..
- 577 -
Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
40 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Governmental Accounting Standards Update (Continued)
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 certain requirements of this statement to 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.

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

GASB Statement No. 100 - Accounting Changes and Error Corrections. The requirements of this statement are effective for reporting periods beginning after June 15, 2023.

GASB Statement No. 101 - Compensated Absences. The requirements of this statement are effective for reporting periods beginning after December 15, 2023. #3..
- 578 -
Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
41 NOTE 2 CASH AND INVESTMENTS
Cash and investments of the District, with the exception of cash and investments with fiscal agents, are pooled with other City 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.

The District is a voluntary participant in the California Asset Management Program (CAMP), a California Joint Powers Authority that falls under California Government Code Section 53601(p), which is directed by a Board of Trustees that is made up of experienced local government finance directors and treasurers. The District reports its investments in CAMP at the fair value amounts provided by CAMP, which is the same as the value of the pool share. #3..
- 579 -
Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
42 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Cash and investments as of June 30, 2023 are classified in the accompanying financial statements as follows:

Statement of Net Position - Governmental Activities:

Description Amount
Cash and investments $16,478,955
Cash and investments with fiscal agent 3,375,271
Total cash and investments $19,854,226
Deposits with the City
Cash and investment pool $16,478,955
Deposits with fiscal agents
CAMP 3,375,271
Total cash and investments $19,854,226
Concentration of Credit Risk
The District is required to disclose investments that represent a concentration of five percent (5%) or more of investments in any one issuer held by individual funds in the securities of issuers other than U.S. Treasury securities, mutual funds, and external investment pools. At June 30, 2023, no investments represented a concentration of five percent (5%) or more of investments in any one issuer held by the District in the securities of issuers other than U.S.

Treasury securities, mutual funds, and external investment pools. #3..
- 580 -
Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
43 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Fair Value Hierarchy
The District categorizes its fair value measurements within the fair value hierarchy established by U.S. GAAP. The hierarchy is based on the valuation inputs used to measure the fair value of the assets. Level 1 inputs are quoted prices in an active market for identical assets; level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The inputs and techniques used for valuing securities are not necessarily an indication of risk associated with investing in those securities. The District’s investment in the City’s pool and money market fund are exempt from fair value measurement disclosures.

Detailed information concerning the City pooled cash and investments, including information regarding the fair value of investments, may be found in the City’s Annual Comprehensive Financial Report. As of June 30, 2023, the fair value of the District’s position in the pool is the same as the value of its pool shares.

NOTE 3 LEASE RECEIVABLE
On December 16, 2021, the District, lessor, and New Cingular Wireless PSC, LLC, lessee, entered into a land lease agreement for the purpose of installing, operating, and maintaining a communication facility and other improvements. The initial term lease will be for five years and will automatically renew for four additional five-year terms. The lessee will pay the District a base rent of $1,600 with an increase of 3% each year on the anniversary of the rent commencement date, including throughout the extension terms. Upon execution of the agreement, a one-time fee of $10,000 was paid in full by the lessee for the Camera Fee to enable the District to purchase and install a live-feed security camera. Lease revenue recognized under the lease agreement was $4,836 for the year ended June 30, 2023. Interest revenue recognized under the lease agreement was $3,804 for the year ended June 30, 2023. #3..
- 581 -
Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
44 NOTE 3 LEASE RECEIVABLE
On July 8, 2014, the District, lessor, and Sacramento-Valley Limited Partnership d/b/a Verizon Wireless, lessee, entered into a land lease agreement in which the lessee is granted the right and option to lease the premises, including a right-of-way for access. The initial term of the lease will be for five years with a total annual rent of $14,000 to be paid by the lessee in equal monthly installments on the first day of the month. The lease will be automatically extended for five additional five-year terms. Annual rent for each additional five-year terms will increase 10% at the beginning of each five-year term. Lease revenue recognized under the lease agreement was $12,832 for the year ended June 30, 2023. Interest revenue recognized under the lease agreement was $7,502 for the year ended June 30, 2023.

Future minimum lease and interest payments to be received are as follows:

Year Ending June 30 Principal Interest Total
2024 $9,888 $6,138 $16,026
2025 10,662 5,986 16,648
2026 11,455 5,819 17,274
2027 11,911 5,644 17,555
2028 12,379 5,463 17,842
2029-2033 72,333 24,254 96,587
2034-2038 91,261 18,151 109,412
2039-2043 113,522 10,508 124,030
2044-2047 80,332 2,227 82,559
$413,743 $84,190 $497,933
#3..
- 582 -
Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
45 NOTE 4 LONG-TERM DEBT
On July 30, 2014, the District issued Refunding Special Tax Bonds (refunding bonds) with a par amount of $29,320,000 to refund the District’s $29,925,000 outstanding Special Tax Bonds (refunded bonds) issued on March 8, 2006, which were issued primarily to finance various public improvements needed to develop property located within the District. Interest on the refunding bonds is payable semiannually on March 1st and September 1st through September 1, 2036. The refunding bonds were issued with interest rates varying from 2% to 5% and are payable solely from revenues derived from the assessment of annual special taxes to be levied on the taxable property within the District and from certain other funds pledged under the Trust Indenture. The principal of these bonds is not subject to acceleration.

Any one or more of the following events shall constitute an “event of default” for these bonds:
(a) Default in the due and punctual payment of the principal of or redemption premium, if any, on any bond when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise.
(b) Default in the due and punctual payment of the interest on any bond when and as the same shall become due and payable.
(c) Except as described in (a) or (b), default shall be made by the District in the observance of any of the agreements, conditions, or covenants for a period of thirty (30) days after the District shall have been given notice in writing of such default by the Trustee or the owners of twenty-five percent (25%) in aggregate principal amount of the outstanding bonds. #3..
- 583 -
Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
46 NOTE 4 LONG-TERM DEBT (CONTINUED)
The long-term debt activities for the year ended June 30, 2023 were as follows:

Beginning
Balance Additions Reductions
Ending
Balance
Due Within
One Year
Refunding Special
Tax Bonds $24,345,000 $- $(860,000) $23,485,000 $945,000 Premium on
Refunding Bonds 944,337 - (66,659) 877,678 66,659
Total $25,289,337 $- $(926,659) $24,362,678 $1,011,659
Annual debt service requirements for the bonds are shown below:

Year Ending June 30 Principal Interest
2024 $945,000 $1,038,125
2025 1,035,000 988,625
2026 1,130,000 934,500
2027 1,230,000 875,500
2028 1,335,000 811,375
2029-2033 6,560,000 2,937,750
2034-2037 11,250,000 1,575,000
$23,485,000 $9,160,875
Interest expense for the year ended June 30, 2023 was $1,083,250. #3..
- 584 -
Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
47 NOTE 5 RESTRICTED FUND BALANCES
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, 2023, 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.

Restricted for Debt Service – the portion of fund balance legally restricted to the payment of principal and interest on long-term liabilities.

NOTE 6 DELINQUENCIES AND FORECLOSURES
The District has made a covenant under the Trust Indenture of the Special Tax Bonds discussed in Note 4 that it 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 30th 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 1st following the end of the fiscal year. #3..
- 585 -
Community Facilities District
Number 2004-1 Village One #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
48 NOTE 6 DELINQUENCIES AND FORECLOSURES (CONTINUED)
At June 30, 2023, the District had 18 parcels that were delinquent for a total of $70,229, one of which was delinquent for more than three consecutive payments.

The District received 99.60% of the Special Revenue Fund and Debt Service Fund facilities and maintenance special taxes levied during the year ended June 30, 2023. The delinquencies total of $47,943 at June 30, 2023 is included in assessments receivable on the Statement of Net Position and Balance Sheet.

NOTE 7 SUBSEQUENT EVENTS
The District has evaluated events subsequent to the balance sheet date through November 17, 2023, the date the financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the financial statements.
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49 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards The Honorable Members of the City Council
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 (Government Auditing Standards), the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2004-1 Village One #2 (the District), as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023 and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated November 17, 2023.

Report on 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) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
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50 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 District’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.

However, material weaknesses or significant deficiencies may exist that were not identified.

Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the 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 financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #3..
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51 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 District’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Glendale, California
November 17, 2023
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www.vasquez.cpa
Vasquez & Company LLP has over 50 years of experience in performing audit, accounting & consulting services for all types of nonprofit organizations, for-profit companies, governmental entities and publicly traded companies. Vasquez is a member of the RSM US Alliance. RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM™ logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
655 N Central Avenue, Suite 1550 • Glendale, California 91203-1437 • Ph. (213) 873-1700 • Fax (213) 873-1777
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Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
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Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
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Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Table of Contents
PAGE
Independent Auditor’s Report 1
Management’s Discussion and Analysis (Unaudited) 6
Basic Financial Statements
Statement of Net Position – Governmental Activities 17
Statement of Activities – Governmental Activities 18
Balance Sheet – Governmental Funds 20
Reconciliation of the Governmental Funds Balance Sheet to the Governmental Activities Statement of Net Position 21
Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 22
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Governmental Activities Statement of Activities 23
Statement of Revenues, Expenditures, and Changes in Fund Balances – Special Revenue Fund – Budget and Actual 24
Notes to Basic Financial Statements 25
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed In Accordance With Government Auditing Standards 37 #3..
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1 Independent Auditor’s Report
The Honorable Members of the City Council
City of Modesto, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 1996-1 Village One (the District), a component unit of the City of Modesto, California (the City), as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023 and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of June 30, 2023, and the respective changes in financial position, and the 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. #3..
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2 Basis For Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
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3 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed.
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4 • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 6-15 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
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5 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 17, 2023, 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.

Glendale, California
November 17, 2023
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6 Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
The City of Modesto Community Facilities District Number 1996-1 Village One (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements— and Management’s Discussion and Analysis—for State and Local Governments, 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.

BACKGROUND AND MANAGEMENT’S DISCUSSION
In 1989-1990, the City initiated planning of the area now known as Village One. The original Village One plan contemplated a pedestrian oriented, self-contained neighborhood concept that offered housing to accommodate various income levels. In addition, the original plan called for a number of landscaped areas as well as other amenities. Over the years, substantial revisions to the original plan occurred, including a reconfiguration of streets, a reduction of landscaped areas, and modification of the financing strategy. At the close of fiscal year 2003- #3..
- 599 -
Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
7 2004, the Village One area was based on the Specific Plan, the Infrastructure Financing Plan, and the Facilities Master Plan adopted in April 2003. The 2003 Infrastructure Financing Plan calls for a combination of funding sources, including the City’s Capital Facilities Fees (CFF) program and a Mello-Roos Community Facilities District (CFD).

FISCAL YEAR 2023 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:

Government-Wide:
• During the year ended June 30, 2023, the District’s net position increased by $485,036. • Total District revenues were $1,239,122 and expenses were $754,086.

Funds Basis:
• Capital Projects Fund revenues of $1,058 were $16,102 lower than the prior year due to a decrease in investment income from the City. The Capital Projects Fund ending fund balance increased by $1,058, with an ending fund balance of $177,511. • Special Revenue Fund revenues of $1,236,985 was $206,912 greater than the prior year due to increased maintenance special tax collections and expenditures of $754,086 were $33,768 more than the prior year due to an increase in services and utilities expenditures. The Special Revenue Fund balance increased by $482,899 to an ending fund balance of $1,761,782.
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Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
8 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.

The Statement of Net Position and the Statement of Activities present information about the following:

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.
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Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
9 As of June 30, 2023, total assets of $2,426,803 were offset by liabilities of $80,134 and deferred inflows of resources of $396,820. The District’s net position from governmental activities increased to $1,949,849 in 2023 from $1,464,813 in 2022. All of the District’s net position is restricted as follows: $177,511 for acquisition of infrastructure and $1,772,338 for maintaining that infrastructure.

The following summarizes the Statement of Net Position as of June 30, 2023 and 2022:

Statement of Net Position – Governmental Activities
Description 2023 2022 Change
Assets:

Cash and investments $1,982,386 $1,490,559 $491,827
Assessments receivable 25,733 22,305 3,428
Interest receivable 4,941 2,995 1,946
Less receivable, current 9,888 9,576 312
Less receivable, noncurrent 403,855 407,626 (3,771)
Total assets 2,426,803 1,933,061 493,742
Liabilities:

Current and other liabilities 80,134 55,134 25,000
Deferred inflows - leases 396,820 413,114 (16,294)
Net position:

Restricted for:

Capital projects 177,511 176,453 1,058
District maintenance 1,772,338 1,288,360 483,978
Total net position $1,949,849 $1,464,813 $485,036
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Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
10 FISCAL YEAR 2023 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2023 revenues came primarily from maintenance special tax of $1,197,200. District expenses of $754,086 were for professional services and utilities.

The following summarizes the Statement of Activities for the years ended June 30, 2023 and 2022, and the respective changes:

Statement of Activities – Governmental Activities
Description 2023 2022 Change
Revenues:

General revenues:

Facilities special tax $- $22,041 $(22,041)
Maintenance special tax 1,197,200 1,047,613 149,587
Investment earnings (loss) 12,948 (33,738) 46,686
Interest revenue - leases 11,306 3,888 7,418
Lease revenue 17,668 7,328 10,340
Transfers, net - (326) 326
Total revenues 1,239,122 1,046,806 192,316
Expenses:

Community development 754,086 720,318 33,768
Change in net position 485,036 326,488 $158,548
Net position, beginning of year 1,464,813 1,138,325
Net position, end of year $1,949,849 $1,464,813
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Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
11 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 longterm 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. 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. #3..
- 604 -
Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
12 The following summarizes the Balance Sheet and the Statement of Revenues, Expenditures, and Changes in Fund Balances for both the Capital Projects Fund and the Special Revenue Fund as of and for the years ended June 30, 2023 and 2022, and the respective changes:

Balance Sheet – Capital Project Fund
Description 2023 2022 Change
Assets:

Cash and investments $177,040 $176,053 $987
Interest receivable 471 400 71
Total assets $177,511 $176,453 $1,058
Fund Balances:

Restricted for:

Capital projects 177,511 176,453 1,058
Total fund balances 177,511 176,453 1,058
Total liabilities, deferred inflows of
resources and fund balances $177,511 $176,453 $1,058
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Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
13 Balance Sheet – Special Revenue Fund
Description 2023 2022 Change
Assets:

Cash and investments $1,805,346 $1,314,506 $490,840
Assessments receivable 25,733 22,305 3,428
Interest receivable 4,470 2,595 1,875
Least receivable 413,743 417,202 (3,459)
Total assets $2,249,292 $1,756,608 $492,684
Liabilities:

Accounts payable $80,134 $55,134 $25,000
Total liabilities 80,134 55,134 25,000
Deferred inflows of resources:

Unavailable revenues 10,556 9,477 1,079
Leases 396,820 413,114 (16,294)
Total deferred inflows of resources 407,376 422,591 (15,215) Fund balances:

Restricted for:

District maintenance 1,761,782 1,278,883 482,899
Total fund balances 1,761,782 1,278,883 482,899
Total liabilities, deferred inflows of
resources and fund balances $2,249,292 $1,756,608 $492,684 #3..
- 606 -
Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
14 Statement of Revenues, Expenditures, and Changes in Fund Balance – Capital Projects Fund
Description 2023 2022 Change
Revenues $1,058 $ 17,160 $(16,102)
Expenditures - - -
Change in fund balance 1,058 17,160 $(16,102)
Fund balance, beginning of year 176,453 159,293
Fund balance, end of year $177,511 $176,453
Statement of Revenues, Expenditures, and Changes in Fund Balances – Special Revenue Fund
Description 2023 2022 Change
Revenues $1,236,985 $1,030,073 $206,912
Expenditures (754,086) (720,318) (33,768)
Other financing uses - (326) 326
Change in fund balance 482,899 309,429 $173,470
Fund balance, beginning of year 1,278,883 969,454
Fund balance, end of year $1,761,782 $1,278,883
THE DISTRICT’S FUND FINANCIAL STATEMENTS
At June 30, 2023, the District’s governmental funds reported combined fund balances of $1,939,293, which was a $483,957 increase from fiscal year 2022. The Capital Projects Fund realized a $1,058 increase during 2023, while the Special Revenue Fund realized a $482,899 increase due to maintenance special tax, lease revenues and interest income being more than professional services and utilities.
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Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
15 CAPITAL ASSETS
Under GASB Statement No. 34, Basic Financial Statements— and Management’s Discussion and Analysis—for State and Local Governments, 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.

LEASES
Under GASB Statement No. 87, Leases, the District is required to record all leases that meets the definition of a lease as defined in GASB Statement No. 87. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. Accordingly, the District recognized a lease receivable of $413,743 and deferred inflow of resources of $396,820 in both the District’s fund and government-wide financial statements as of June 30, 2023.

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.
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16 Community Facilities District
Number 1996-1 Village One
City of Modesto, California

STATEMENT OF NET POSITION AND STATEMENT OF ACTIVITES
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 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.
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See notes to basic financial statements.
17 Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Statement of Net Position – Governmental Activities
June 30, 2023
ASSETS
Cash and investments $1,982,386
Assessments receivable 25,733
Interest receivable 4,941
Lease receivable, current 9,888
Lease receivable, noncurrent 403,855
Total Assets 2,426,803

LIABILITIES
Accounts payable 80,134
Total Liabilities 80,134

DEFERRED INFLOWS OF RESOURCES
Lease 396,820
Total Deferred Inflows of Resources Liabilities 396,820

NET POSITION
Restricted for:

Capital projects 177,511
District maintenance 1,772,338
Total Net Position $1,949,849
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See notes to basic financial statements.
18 Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Statement of Activities – Governmental Activities
Year Ended June 30, 2023
Program
Revenues
Net (Expense)
Revenue and
Changes in Net
Position
Functions/Programs Expenses
Operating Grants
and
Contributions
Governmental
Activities
Community development $754,086 $- $(754,086)
$754,086 $- (754,086)
General Revenues:

Maintenance special tax 1,197,200
Investment earnings 12,948
Interest revenue - leases 11,306
Lease revenue 17,668
Total General Revenues 1,239,122
Change in Net Position 485,036
Net Position, Beginning of Year 1,464,813
Net Position, End of Year $1,949,849
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See notes to basic financial statements.
19 Community Facilities District
Number 1996-1 Village One
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. #3..
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See notes to basic financial statements.
20 Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Balance Sheet – Governmental Funds
June 30, 2023
Capital
Projects
Fund
Special
Revenue
Fund Total
ASSETS
Cash and investments $177,040 $1,805,346 $1,982,386
Assessments receivable - 25,733 25,733
Interest receivable 471 4,470 4,941
Lease receivable - 413,743 413,743
Total Assets $177,511 $2,249,292 $2,426,803

LIABILITIES
Accounts payable $- $80,134 $80,134
Total Liabilities - 80,134 80,134

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - 10,556 10,556
Leases - 396,820 396,820
Total Deferred Inflows of Resources - 407,376 407,376

FUND BALANCES
Restricted for:

District maintenance - 1,761,782 1,761,782
Capital projects 177,511 - 177,511
Total Fund Balances 177,511 1,761,782 1,939,293
Total Liabilities, Deferred Inflows of
Resources and Fund Balances $177,511 $2,249,292 $2,426,803 #3..
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See notes to basic financial statements.
21 Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Reconciliation of the Governmental Funds Balance Sheet to the Governmental Activities Statement of Net Position
June 30, 2023
Total Fund Balances - Governmental Funds $1,939,293
Amounts reported for governmental activities in the Statement of Net Position are different because:

Revenues not available for current-period expenditures are deferred in governmental funds but are considered earned in the Statement of Net Position. 10,556
Total Net Position - Governmental Activities $1,949,849 #3..
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See notes to basic financial statements.
22 Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Statement of Revenues, Expenditures, and
Changes in Fund Balances – Governmental Funds
Year ended June 30, 2023
Capital
Projects
Fund
Special
Revenue
Fund Total

REVENUES
Maintenance special tax $- $1,196,121 $1,196,121
Interest income 2,731 22,946 25,677
Change in fair value of investments (1,673) (11,056) (12,729) Interest revenue - leases - 11,306 11,306
Lease revenue - 17,668 17,668
Total Revenues 1,058 1,236,985 1,238,043

EXPENDITURES
Services – professional and other - 559,605 559,605
Utilities - 194,481 194,481
Total Expenditures - 754,086 754,086
Changes in Fund Balances 1,058 482,899 483,957
Fund Balances, Beginning of Year 176,453 1,278,883 1,455,336 Fund Balances, End of Year $177,511 $1,761,782 $1,939,293 #3..
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See notes to basic financial statements.
23 Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Governmental Activities Statement of Activities
Year ended June 30, 2023
Changes in Fund Balances - Governmental Funds $483,957
Amounts reported for governmental activities in the Statement of Activities are different because:

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 funds. 1,079 Change in Net Position - Governmental Activities $485,036 #3..
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See notes to basic financial statements.
24 Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Statement of Revenues, Expenditures, and Changes in
Fund Balances – Special Revenue Fund – Budget and Actual Year Ended June 30, 2023
Description
Original
Budgeted
Amounts
Final
Budgeted
Amounts
Actual
Amounts
Variance
with Final
Budget

REVENUES
Maintenance special tax $1,100,000 $1,100,000 $1,196,121 $96,121 Interest income - - 22,946 22,946
Change in fair value of investments - - (11,056) (11,056) Interest revenue - leases - - 11,306 11,306
Lease revenue - - 17,668 17,668
Total Revenues 1,100,000 1,100,000 1,236,985 136,985

EXPENDITURES
Services – professional and other 557,960 557,960 559,605 (1,645) Utilities 281,100 281,100 194,481 86,619
Total Expenditures 839,060 839,060 754,086 84,974
Excess of Revenues Over
Expenditures 260,940 260,940 482,899 221,959

OTHER FINANCING USE
Transfers out to City funds (29,000) (29,000) - 29,000
Total Other Financing Use (29,000) (29,000) - 29,000
Changes in Fund Balance $231,940 $231,940 482,899 $250,959 Fund Balance, Beginning of Year 1,278,883
Fund Balance, End of Year $1,761,782
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25 Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity
The Community Facilities District Number 1996-1 Village One (the District) was formed in October 1996 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 Plan. The District is the vehicle used to ensure that all landowners in the Specific Plan area contribute to the cost of public improvements. The District encompasses approximately 1,840 gross acres of land. The District is located in the North Eastern portion of the City of Modesto, California (the City), bordered by Sylvan Avenue to the North, Claus Road to the East, Briggsmore to the South, and Oakdale Road to the West. The District is expected to yield 6,186 residential dwelling units at buildout, in addition to 15 acres of commercial property and 220 acres of industrial property.

The District 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.

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.
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Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
26 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Government-Wide and Fund Financial Statements (Continued) 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.

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 investment, are considered to be susceptible to accrued 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.
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Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
27 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of Presentation, Basis of Accounting, and Measurement Focus (Continued) 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.

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 1st and February 1st and are delinquent if not paid by December 10th and April 10th, 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. #3..
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Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
28 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Lease Receivable
The District’s lease receivable is measured at the present value of lease payments expected to be received during the lease term. There are no variable components under the lease agreement. A deferred inflow of resources is recorded for the lease. The deferred inflow of resources is recorded at the initiation of the lease in an amount equal to the initial recording of the lease receivable. The deferred inflow of resources is amortized on a straight-line basis over the term of the lease.

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 liabilities, the Statement 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 assets by the District that is applicable to a future reporting period. Deferred inflows of resources reported by the District consist of unearned deferred assessments that have been billed as of year-end, but not yet collected, and the initial recording of the lease receivable.

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. #3..
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Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
29 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Balance (Continued)
• 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.
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Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
30 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Balance (Continued)
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.

Net Position
Net position represents the residual interest in the District’s assets after liabilities are deducted.

In accordance with GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, 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. #3..
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Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
31 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) When both restricted and unrestricted net position are available, restricted resources are depleted first before unrestricted resources are used.

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. 96 – Subscription-Based Information Technology Arrangements.

The requirements of this statement are effective for reporting periods beginning after June 15, 2022.
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Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
32 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. 100 - Accounting Changes and Error Corrections. The requirements of this statement are effective for reporting periods beginning after June 15, 2023.

GASB Statement No. 101 - Compensated Absences. The requirements of this statement are effective for reporting periods beginning after December 15, 2023.

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, 2023.
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Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
33 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Cash and investments as of June 30, 2023 are classified in the accompanying financial statement as follows:

Statement of Net Position – Governmental Activities
Cash and investments $1,982,386
Total cash and investments $1,982,386
Deposits with the City
Cash and investment pool $1,982,386
Total cash and investments $1,982,386
Detailed information regarding the City’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City’s Annual Comprehensive Financial Report. As of June 30, 2023, the fair value of the District’s position in the pool is the same as the value of its pool shares.

NOTE 3 LEASE RECEIVABLE
On December 16, 2021, the District, lessor, and New Cingular Wireless PSC, LLC, lessee, entered into a land lease agreement for the purpose of installing, operating, and maintaining a communication facility and other improvements. The initial term lease will be for five years and will automatically renew for four additional five-year terms. The lessee will pay the District a base rent of $1,600 with an increase of 3% each year on the anniversary of the rent commencement date, including throughout the extension terms. Upon execution of the agreement, a one- time fee of $10,000 was paid in full by the lessee for the Camera Fee to enable the District to purchase and install a live-feed security camera. Lease revenue recognized under the lease agreement was $4,836 for the year ended June 30, 2023. Interest revenue recognized under the lease agreement was $3,804 for the year ended June 30, 2023. #3..
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Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
34 NOTE 3 LEASE RECEIVABLE (CONTINUED)
One July 8, 2014, the District, lessor, and Sacramento-Valley Limited Partnership d/b/a Verizon Wireless, lessee, entered into a land lease agreement in which the lessee is granted the right and option to lease the premises, including a right-of-way for access. The initial term of the lease will be for five years with a total annual rent of $14,000 to be paid by the lessee in equal monthly installments on the first day of the month. The lease will be automatically extended for five additional five-year terms. Annual rent for each additional five-year terms will increase 10% at the beginning of each five-year term. Lease revenue recognized under the lease agreement was $12,832 for the year ended June 30, 2023. Interest revenue recognized under the lease agreement was $7,502 for the year ended June 30, 2023.

Future minimum lease and interest payments to be received are as follows:

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 5 DELINQUENCIES AND FORECLOSURES
The District has made a covenant under the Trust Indenture of the Special Tax Bonds that it 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 30th 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 1st following the end of the fiscal year.

At June 30, 2023, the District had 24 parcels that were delinquent for a total of $10,556, three of which were delinquent for more than three consecutive payments.

The District received 99.67% of the Special Revenue Fund maintenance special taxes levied during the year ended June 30, 2023. The delinquencies total of $3,912 at June 30, 2023 is included in assessments receivable on the Statement of Net Position and Balance Sheet. #3..
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Community Facilities District
Number 1996-1 Village One
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
36 NOTE 6 EXCESS OF EXPENDITURES OVER APPROPRIATIONS
Excess of expenditures over appropriations for the year ended June 30, 2023 was as follows:

Expenditures Amount
Special Revenue Fund:

Services – professional and other $1,645
NOTE 7 SUBSEQUENT EVENTS
The District has evaluated events subsequent to the balance sheet date through November 17, 2023, the date the financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the financial statements.
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37 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed In Accordance With Government Auditing Standards The Honorable Members of the City Council
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 (Government Auditing Standards), the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 1996-1 Village One (the District), as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023 and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated November 17, 2023.

Report on 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) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
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38 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 District’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.

Report on 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 financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
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39 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 District’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Glendale, California
November 17, 2023
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www.vasquez.cpa
Vasquez & Company LLP has over 50 years of experience in performing audit, accounting & consulting services for all types of nonprofit organizations, for-profit companies, governmental entities and publicly traded companies. Vasquez is a member of the RSM US Alliance. RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP.

RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM™ logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
655 N Central Avenue, Suite 1550 • Glendale, California 91203-1437 • Ph. (213) 873-1700 • Fax (213) 873-1777
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- 633 -
Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
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Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
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Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Table of Contents
Independent Auditor’s Report 1
Management’s Discussion and Analysis (Unaudited) 6
Basic Financial Statements
Statement of Net Position – Governmental Activities 17
Statement of Activities – Governmental Activities 18
Balance Sheet – Governmental Funds 20
Reconciliation of the Governmental Funds Balance Sheet to the Governmental Activities Statement of Net Position 21
Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 22
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Governmental Activities Statement of Activities 23
Statement of Revenues, Expenditures, and Changes in Fund Balance – Special Revenue Fund – Budget and Actual 24
Notes to Basic Financial Statements 25
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 36 #3..
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1 Independent Auditor’s Report
The Honorable Members of the City Council
Modesto, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2016-1 Kiernan Business Park East #2 (the District), a component unit of the City of Modesto, California, as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023 and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of June 30, 2023, and the respective changes in financial position, and the 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. #3..
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2 Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
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3 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed.
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4 • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 6-15 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
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5 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 17, 2023, 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 District’s internal control over financial reporting and compliance.

Glendale, California
November 17, 2023
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6 Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year ended June 30, 2023
The City of Modesto Community Facilities District Number 2016-1 Kiernan Business Park East #2 (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements— and Management’s Discussion and Analysis—for State and Local Governments, 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.

BACKGROUND AND MANAGEMENT’S DISCUSSION
The Kiernan Business Park Specific Plan Area encompasses approximately 614 acres and is comprised of regional commercial, office, medical campus, mixed use, and medium high density residential and business park land uses. Within this specific plan area, there are three distinct sub-areas: Kiernan Business Park West, Kiernan Business Park South and Kiernan Business Park East #2 (KBP East).
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Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year ended June 30, 2023
7 BACKGROUND AND MANAGEMENT’S DISCUSSION (CONTINUED)
KBP East covers approximately 160 acres and is bound by Kiernan Avenue to the North, Pelandale Avenue to the South, Dale Road to the West, and American Avenue to the East.

On January 26, 2016, the City formed the City of Modesto Community Facilities District No. 2016-1(CFD No. 2016-1). The authorized services to be funded by special tax revenues include repair and replacement of parkways, landscaped medians, storm drainage pump and basin facilities, catch basins, manholes, underground infiltration trenches and pipes, landscaped bioswale lots and medians, storm water treatment devices and filters, shrubs, vines, ground cover, and irrigation systems. The services to be provided include, but are not limited to, litter and debris removal, pruning, staking, fertilizing, mowing, plant replacement and restoration, fire and weed control, erosion control, trimming of vegetation, and storm drain system and bioswale maintenance.

FISCAL YEAR 2023 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:

Government-Wide:
• At June 30, 2023, the District’s total net position was $776,986. • Total District’s revenues were $139,770 and expenses were $42,559. • At June 30, 2023, total assets were $782,883 while total liabilities were $5,897. #3..
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Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year ended June 30, 2023
8 FISCAL YEAR 2023 FINANCIAL HIGHLIGHTS (CONTINUED)
Funds Basis:
• Capital Projects Fund revenues of $1,936 were $11,203 higher than in the prior year due to increase in fair value of investments for fiscal year 2023 and expenditures of $0 were the same as the previous year. The Capital Projects Fund ending fund balance was $320,893. • Special Revenue Fund revenues increased from $117,913 in the prior year to $149,531 for fiscal year 2023 and expenditures decreased from $44,627 in the prior year to $42,559 for fiscal year 2023. The increase in revenue is due to an increase in the maintenance special tax and change in fair value of investments, and the decrease in expenditures is due primarily to a decrease in community development expenditures. The Special Revenue Fund ending fund balance was $451,463.

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. #3..
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Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year ended June 30, 2023
9 THE BASIC FINANCIAL STATEMENTS (CONTINUED)
The Statement of Net Position and the Statement of Activities present information about the following:

As of June 30, 2023, total assets of $782,883 were offset by liabilities of $5,897. The District’s net position from governmental activities increased to $776,986 in 2023 from $679,775 in 2022.

The District’s net position has restrictions as follows: $320,893 for acquisition or construction of infrastructure, and $456,093 for District maintenance. #3..
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Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year ended June 30, 2023
10 FINANCIAL ACTIVITIES OF THE DISTRICT AS A WHOLE (CONTINUED) The following summarizes the Statements of Net Position as of June 30, 2023 and 2022:

Statements of Net Position – Governmental Activities
Description 2023 2022 Change
Assets:

Cash and investments $768,876 $666,114 $102,762
Assessments receivable 12,033 16,327 (4,294)
Interest receivable 1,974 1,448 526
Total assets 782,883 683,889 98,994
Liabilities:

Current and other liabilities 5,897 4,114 1,783
Net position:

Restricted for:

Capital projects 320,893 318,957 1,936
District maintenance 456,093 360,818 95,275
Total net position $776,986 $679,775 $97,211
FISCAL YEAR 2023 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2023 revenues of $139,770 came primarily from maintenance special tax, which amounted to $135,255 along with investments earnings of $4,515. District expenses of $42,559 were primarily for professional services and utilities expenses.

The following summarizes the Statements of Activities for the years ended June 30, 2023 and 2022, and the respective changes:
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Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year ended June 30, 2023
11 FISCAL YEAR 2023 GOVERNMENTAL ACTIVITIES (CONTINUED) Statements of Activities – Governmental Activities
Description 2023 2022 Change
Revenues:

General revenues:

Maintenance special tax $135,255 $136,345 $(1,090)
Investment earnings (loss) 4,515 (18,162) 22,677
Total revenues 139,770 118,183 21,587
Expenses:

Community development 42,559 44,627 (2,068)
Changes in net position 97,211 73,556 $23,655
Net position, beginning of year 679,775 606,219
Net position, end of year $776,986 $679,775
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 longterm amounts.

The fund financial statements provide detailed information about each of the District’s 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.
#3..
- 647 -
Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year ended June 30, 2023
12 FISCAL YEAR 2023 GOVERNMENTAL ACTIVITIES (CONTINUED) Fund Financial Statements (Continued)
All of the District’s funds are governmental funds; financial statements for these funds are prepared on the modified accrual basis of accounting, which means it measures only current financial resources and uses.

Balance Sheets – Capital Projects Fund
Description 2023 2022 Change
Assets:

Cash and investments $320,039 $318,256 $1,783
Interest receivable 854 701 153
Total assets $320,893 $318,957 $1,936
Fund balances:

Restricted for:

Capital projects $320,893 $318,957 $1,936
Total fund balances 320,893 318,957 1,936
Total liabilities, deferred inflows of
resources and fund balances $320,893 $318,957 $1,936
#3..
- 648 -
Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year ended June 30, 2023
13 Balance Sheets – Special Revenue Fund
Description 2023 2022 Change
Assets:

Cash and investments $448,837 $347,858 $100,979
Assessments receivable 12,033 16,327 (4,294)
Interest receivable 1,120 747 373
Total assets $461,990 $364,932 $97,058
Liabilities:

Accounts payable $5,897 $4,114 $1,783
Total liabilities 5,897 4,114 1,783
Deferred inflows of resources:

Unavailable revenue 4,630 16,327 (11,697)
Total deferred inflows of resources 4,630 16,327 (11,697) Fund balances:

Restricted for:

District maintenance 451,463 344,491 106,972
Total fund balances 451,463 344,491 106,972
Total liabilities, deferred inflows of
resources and fund balances $461,990 $364,932 $97,058
#3..
- 649 -
Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year ended June 30, 2023
14 Statements of Revenues, Expenditures, and Changes in Fund Balances – Capital Projects Fund
Description 2023 2022 Change
Revenues $1,936 $(9,267) $11,203
Expenditures - - -
Changes in fund balance 1,936 (9,267) $11,203
Fund balance, beginning of year 318,957 328,224
Fund balance, end of year $320,893 $318,957
Statements of Revenues, Expenditures, and Changes in Fund Balances – Special Revenue Fund
Description 2023 2022 Change
Revenues $149,531 $117,913 $31,618
Expenditures 42,559 44,627 (2,068)
Changes in fund balance 106,972 73,286 $33,686
Fund balance, beginning of year 344,491 271,205
Fund balance, end of year $451,463 $344,491
THE DISTRICT’S FUND FINANCIAL STATEMENTS
At June 30, 2023, the District’s governmental funds reported combined fund balances of $772,356, an increase of $108,908 compared with last year. This increase was primarily due to an increased maintenance special tax revenues and decreased maintenance expenditures. #3..
- 650 -
Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year ended June 30, 2023
15 CAPITAL ASSETS
Under GASB Statement No. 34, Basic Financial Statements— and Management’s Discussion and Analysis—for State and Local Governments, 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.
#3..
- 651 -
16 Community Facilities District
Number 2016-1 Kiernan Business Park East #2
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 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.
#3..
- 652 -
See notes to basic financial statements.
17 Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Statement of Net Position – Governmental Activities
June 30, 2023
ASSETS
Cash and investments $768,876
Assessments receivable 12,033
Interest receivable 1,974
Total Assets 782,883

LIABILITIES
Accounts payable 5,897
Total Liabilities 5,897

NET POSITION
Restricted for:

Capital projects 320,893
District maintenance 456,093
Total Net Position $776,986
#3..
- 653 -
See notes to basic financial statements.
18 Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Statement of Activities – Governmental Activities
Year ended June 30, 2023
Program
Revenues
Net (Expense)
Revenue and
Changes in Net
Position
Functions/Programs Expenses
Operating
Grants and
Contributions
Governmental
Activities
Community development $42,559 $- $(42,559)
$42,559 $- (42,559)
General Revenues:

Maintenance special tax 135,255
Investment earnings 4,515
Total General Revenues 139,770
Changes in Net Position 97,211
Net Position, Beginning of Year 679,775
Net Position, End of Year $776,986
#3..
- 654 -
19 Community Facilities District
Number 2016-1 Kiernan Business Park East #2
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. #3..
- 655 -
See notes to basic financial statements.
20 Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Balance Sheet – Governmental Funds
June 30, 2023
Capital
Projects
Fund
Special
Revenue
Fund Total
ASSETS
Cash and investments $320,039 $448,837 $768,876
Assessments receivable - 12,033 12,033
Interest receivable 854 1,120 1,974
Total Assets $320,893 $461,990 $782,883

LIABILITIES
Accounts payable $ - $5,897 $5,897
Total Liabilities - 5,897 5,897

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - 4,630 4,630
Total Deferred Inflows of Resources - 4,630 4,630

FUND BALANCES
Restricted for:

Capital projects 320,893 - 320,893
District maintenance - 451,463 451,463
Total Fund Balances 320,893 451,463 772,356
Total Liabilities, Deferred Inflows of
Resources and Fund Balances $320,893 $461,990 $782,883
#3..
- 656 -
See notes to basic financial statements.
21 Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Reconciliation of the Governmental Funds Balance Sheet
to the Governmental Activities Statement of Net Position June 30, 2023
Total Fund Balances - Governmental Funds $772,356
Amounts reported for governmental activities in the Statement of Net Position are different because:

Revenues not available for current-period expenditures are deferred in governmental funds but are considered earned in the Statement of Net Position. 4,630
Total Net Position - Governmental Activities $776,986
#3..
- 657 -
See notes to basic financial statements.
22 Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Statement of Revenues, Expenditures, and
Changes in Fund Balances – Governmental Funds
Year ended June 30, 2023
Capital
Projects
Fund
Special
Revenue
Fund Total

REVENUES
Maintenance special tax $- $146,952 $146,952
Interest income 4,960 5,969 10,929
Change in fair value of investments (3,024) (3,390) (6,414) Total Revenues 1,936 149,531 151,467

EXPENDITURES
Services – professional and other - 41,341 41,341
Utilities - 1,218 1,218
Total Expenditures - 42,559 42,559
Changes in Fund Balances 1,936 106,972 108,908
Fund Balances, Beginning of Year 318,957 344,491 663,448 Fund Balances, End of Year $320,893 $451,463 $772,356
#3..
- 658 -
See notes to basic financial statements.
23 Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Governmental Activities Statement of Activities Year ended June 30, 2023
Changes in Fund Balances - Governmental Funds $108,908
Amounts reported for governmental activities in the Statement of Activities are different because:

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 funds. (11,697) Changes in Net Position - Governmental Activities $97,211 #3..
- 659 -
See notes to basic financial statements.
24 Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Statement of Revenues, Expenditures, and Changes in Fund Balance – Special Revenue Fund – Budget and Actual
Year Ended June 30, 2023
Original
Budgeted
Amounts
Final
Budgeted
Amounts
Actual
Amounts
Variance
with Final
Budget

REVENUES
Maintenance special tax $145,000 $145,000 $146,952 $1,952 Interest income - - 5,969 5,969
Change in fair value of investments - - (3,390) (3,390) Total Revenues 145,000 145,000 149,531 4,531

EXPENDITURES
Services - professional and other 66,739 66,739 41,341 25,398 Utilities 1,600 1,600 1,218 382
Total Expenditures 68,339 68,339 42,559 25,780
Changes in Fund Balance $76,661 $76,661 106,972 $30,311 Fund Balance, Beginning of Year 344,491
Fund Balance, End of Year $451,463
#3..
- 660 -
25 Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity
The Community Facilities District Number 2016-1 Kiernan Business Park East #2 (the District) was formed in January 2016 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 covers approximately 160 acres and is bound by Kiernan Avenue to the North, Pelandale Avenue to the South, Dale Road to the West, and American Avenue to the East.

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.
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- 661 -
Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
26 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Government-Wide and Fund Financial Statements (Continued) 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.

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.
#3..
- 662 -
Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
27 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of Presentation, Basis of Accounting, and Measurement Focus (Continued) 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.

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 and Balance Sheet will sometimes report a separate section for deferred outflows of resources. A deferred outflow of resources is defined as a consumption of net assets by the District that is applicable to a future reporting period. #3..
- 663 -
Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
28 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Deferred Outflows and Inflows of Resources (Continued)
In addition to liabilities, the Statements of Net Position and Balance Sheet will sometimes report a separate section for deferred inflows of resources. A deferred inflow of resources is defined as an acquisition of net assets 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. #3..
- 664 -
Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
29 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Balance (Continued)
• 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.

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.
#3..
- 665 -
Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
30 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net Position
Net position represents the residual interest in the District’s assets after liabilities are deducted.

In accordance with GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position 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.
#3..
- 666 -
Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
31 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Governmental Accounting Standards Update
During the year ended June 30, 2023, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no financial impact:

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. 96 – Subscription-Based Information Technology Arrangements.

The requirements of this statement are effective for reporting periods beginning after June 15, 2022.

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

GASB Statement No. 100 - Accounting Changes and Error Corrections. The requirements of this statement are effective for reporting periods beginning after June 15, 2023.

GASB Statement No. 101 - Compensated Absences. The requirements of this statement are effective for reporting periods beginning after December 15, 2023. #3..
- 667 -
Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
32 NOTE 2 CASH AND INVESTMENTS
Cash and investments of the District are pooled with other City 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.

Cash and investments as of June 30, 2023 are classified in the accompanying financial statements as follows:

Statement of Net Position- Governmental Activities:

Cash and investments $768,876
Total cash and investments $768,876
Deposits with the City
Cash and investment pool $768,876
Total cash and investments $768,876
#3..
- 668 -
Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
33 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Detailed information regarding the City’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City’s Annual Comprehensive Financial Report. As of June 30, 2023, the fair value of the District’s position in the pool is the same as the value of its pool shares.

Concentration of Credit Risk
The District is required to disclose investments that represent a concentration of five percent (5%) or more of investments in any one issuer held by individual funds in the securities of issuers other than U.S. Treasury securities, mutual funds, and external investment pools. At June 30, 2023, no investments represented a concentration of five percent (5%) or more of investments in any one issuer held by the District in the securities of issuers other than U.S.

Treasury securities, mutual funds, and external investment pools.

Fair Value Hierarchy
The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the assets. Level 1 inputs are quoted prices in an active market for identical assets; level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The inputs and techniques used for valuing securities are not necessarily an indication of risk associated with investing in those securities.

The District’s investment in the City’s pool and money market fund are exempt from fair value measurement disclosures.
#3..
- 669 -
Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
34 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, 2023, 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.

At June 30, 2023, the District had 3 parcels that were delinquent for a total of $4,630, none of which was delinquent for more than three consecutive payments.

The District received 98.97% of the Special Revenue Fund and maintenance special taxes levied during the year ended June 30, 2023. The delinquencies total of $4,630 at June 30, 2023 is included in assessments receivable on the Statement of Net Position and Balance Sheet. #3..
- 670 -
Community Facilities District
Number 2016-1 Kiernan Business Park East #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
35 NOTE 5 SUBSEQUENT EVENTS
The District has evaluated events subsequent to the balance sheet date through November 17, 2023, the date the financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the financial statements.
#3..
- 671 -
36 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards The Honorable Members of the City Council
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 (Government Auditing Standards), the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2016-1 Kiernan Business Park East #2 (the District), as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023 and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated November 17, 2023.

Report on 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) as a basis for designing 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.
#3..
- 672 -
37 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.

However, material weaknesses or significant deficiencies may exist that were not identified.

Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the 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 financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #3..
- 673 -
38 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 District’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Glendale, California
November 17, 2023
#3..
- 674 -
www.vasquez.cpa
Vasquez & Company LLP has over 50 years of experience in performing audit, accounting & consulting services for all types of nonprofit organizations, for-profit companies, governmental entities and publicly traded companies. Vasquez is a member of the RSM US Alliance. RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM™ logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
655 N Central Avenue, Suite 1550 • Glendale, California 91203-1437 • Ph. (213) 873-1700 • Fax (213) 873-1777
#3..
- 675 -
Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
#3..
- 676 -
Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
#3..
- 677 -
Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Table of Contents
PAGE
Independent Auditor’s Report 1
Management’s Discussion and Analysis (Unaudited) 6
Basic Financial Statements
Statement of Net Position – Governmental Activities 18
Statement of Activities – Governmental Activities 19
Balance Sheet – Governmental Funds 21
Reconciliation of the Governmental Funds Balance Sheet to the Governmental Activities Statement of Net Position 22
Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 23
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Governmental Activities Statement of Activities 24
Statement of Revenues, Expenditures, and Changes in Fund Balance – Special Revenue Fund – Budget and Actual 25
Notes to Basic Financial Statements 26
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 36 #3..
- 678 -
1 Independent Auditor’s Report
The Honorable Members of the City Council
City of Modesto, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2007-1 North Beyer Park #2 (the District), a component unit of the City of Modesto, California, as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of June 30, 2023, and the respective changes in financial position, and the 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. #3..
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2 Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
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3 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS and Government Auditing Standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed.
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4 • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 6-16 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
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5 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 17, 2023, 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 District’s internal control over financial reporting and compliance.

Glendale, California
November 17, 2023
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6 Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
The City of Modesto Community Facilities District Number 2007-1 (North Beyer Park #2) (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements— and Management’s Discussion and Analysis—for State and Local Governments, 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 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.
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Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
7 BACKGROUND AND MANAGEMENT’S DISCUSSION
The North Beyer Specific Plan Area encompasses approximately 160 gross acres of land and is comprised of a variety of residential, commercial, and office land uses. On June 24, 1997, Community Facilities District Number 1997-1 (North Beyer Park) (“CFD 1997-1”) was formed and the levy of special taxes was authorized. At this time, approximately 124+/-acres of residential property, representing 464 residential units or lots have already been developed and 15 +/-commercial acres and 26+/-residential acres remain to be developed. CFD 1997-1 was previously formed to fund and maintain the construction and maintenance of the street and landscape medians on Coffee and Oakdale Roads between Claratina and Mable Avenues.

On May 8, 2007, the City formed City of Modesto Community Facilities District Number 2007- 1 (CFD No. 2007-1). The authorized services to be funded by special tax revenues include maintenance and repair of parks, landscaped medians, storm drainage basins, and related facilities, including but not limited to, concrete curbs and walks, trees, shrubs, vines, ground cover, turf, lights and irrigation systems. The services to be provided include, but are not limited to, litter and debris removal, graffiti abatement, painting repairs to landscape structures, building maintenance and repairs, pruning, staking, fertilizing, plant replacement and restoration, fire and weed control, erosion control, mowing of lawns, trimming of vegetation, and maintenance, repair and replacement of lighting systems within the parks.

The facilities authorized to be funded by special tax revenues include installation of the landscaped medians on Oakdale and Coffee Roads, which may but will not necessarily include, concrete curbs and walks, trees, shrubs, ground cover, lights, and irrigation systems. #3..
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Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
8 FISCAL YEAR 2023 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:

Government-Wide:
• At June 30, 2023, the District’s net position was $655,603. • For the year ended June 30, 2023, total revenues were $108,343 and total expenses were $80,103.

Funds Basis:
• Capital Projects Fund revenues of $3,032 were $17,620 higher than in the prior year due to an increase in change in fair value of investments for fiscal year 2023 and expenditures of $0 were the same as the previous year.
• Special Revenue Fund revenues increased from $ 91,863 in the prior year to $105,187 for fiscal year 2023 and expenditures increased from $75,805 in the prior year to $80,103 for fiscal year 2023. The increase in revenues is due to an increase in the maintenance special tax, and the increase in expenditures is due primarily to an increase in community development expenditures.

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. #3..
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Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
9 THE BASIC FINANCIAL STATEMENTS (CONTINUED)
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 and the Statement of Activities present information about the following:

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.
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Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
10 As of June 30, 2023, total assets of $ 668,038 were offset by liabilities of $ 12,435. The District’s net position from governmental activities increased to $655,603 in 2023 from $627,363 in 2022.

The District’s net position has restrictions as follows: $503,317 for acquisition or construction of infrastructure, and $152,286 for District maintenance.

The following summarizes the Statements of Net Position as of June 30, 2023 and 2022:

Statements of Net Position – Governmental Activities
Description 2023 2022 Change
Asset:

Cash and investments $ 663,990 $ 633,390 $ 30,600
Assessments receivable 2,305 744 1,561
Interest receivable 1,743 1,390 353
Total assets 668,038 635,524 32,514
Liabilities:

Current and other liabilities 12,435 8,161 4,274
Net position:

Restricted for:

Capital projects 503,317 500,285 3,032
District maintenance 152,286 127,078 25,208
Total net position $ 655,603 $ 627,363 $ 28,240
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Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
11 FISCAL YEAR 2023 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2023 revenues of $108,343 came primarily from maintenance special tax, which amounted to $104,387 along with investments earnings of $3,956. District expenses of $80,103 were primarily for professional services and utilities expenses.

The following summarizes the Statements of Activities for the years ended June 30, 2023 and 2022, and the respective changes:

Statements of Activities – Governmental Activities
Description 2023 2022 Change
Revenues:

General revenues:

Maintenance special tax $ 104,387 $ 95,172 $ 9,215
Investment earnings (loss) 3,956 (17,897) 21,853
Total revenues 108,343 77,275 $ 31,068
Expenses:

Community development 80,103 75,805 4,298
Changes in net position 28,240 1,470 $ 26,770
Net position, beginning of year 627,363 625,893
Net position, end of year $ 655,603 $ 627,363
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Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
12 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 longterm amounts.

The following summarizes the Balance Sheets and Statements 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, 2023 and 2022, and the respective changes:
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Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
13 Balance Sheets - Capital Projects Fund
Description 2023 2022 Change
Assets:

Cash and investments $ 501,978 $ 499,181 $ 2,797
Interest receivable 1,139 1,104 235
Total assets $ 503,317 $ 500,285 $ 3,032
Fund balances:

Restricted for:

Capital projects $ 503,317 $ 500,285 $ 3,032
Total Fund Balances 503,317 500,285 3,032
Total liabilities and Fund Balances $ 503,317 $ 500,285 $ 3,032 #3..
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Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
14 Balance Sheets – Special Revenue Fund
Description 2023 2022 Change
Assets:

Cash and investments $ 162,012 $ 134,209 $ 27,803
Assessments receivable 2,305 744 1,561
Interest receivable 404 286 118
Total assets $ 164,721 $ 135,239 $ 29,482
Liabilities:

Accounts payable $ 12,435 $ 8,161 $ 4,274
Total liabilities 12,435 8,161 4,274
Deferred inflows of resources:

Unavailable revenue 868 744 124
Total deferred inflows of resources 868 744 124
Fund balances
Restricted for:

District maintenance 151,418 126,334 25,084
Total fund balances 151,418 126,334 25,084
Total liabilities, deferred inflows of
resources and fund balances $ 164,721 $ 135,239 $ 29,482 #3..
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Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
15 Statements of Revenues, Expenditures, and Changes in Fund Balances – Capital Projects Fund
Description 2023 2022 Change
Revenues $ 3,032 $ (14,588) $ 17,620
Expenditures - - -
Changes in fund balance 3,032 (14,588) $ 17,620
Fund balance, beginning of year 500,285 514,873
Fund balance, end of year $ 503,317 $ 500,285
Statements of Revenues, Expenditures, and Changes in Fund Balances – Special Revenue Fund
Description 2023 2022 Change
Revenues $ 105,187 $ 91,863 $ 13,324
Expenditures 80,103 75,805 4,298
Changes in fund balance 25,084 16,058 $ 9,026
Fund balance, beginning of year 126,334 110,276
Fund balance, end of year $ 151,418 $ 126,334
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Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
16 THE DISTRICT’S FUND FINANCIAL STATEMENTS
At June 30, 2023, the District’s governmental funds reported combined fund balances of $654,735, an increase of $28,116 compared with last year. This increase was primarily due to higher maintenance special tax revenues and investment earnings recognized during the year.

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.
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17 Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California

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.
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See notes to basic financial statements.
18 Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Statement of Net Position – Governmental Activities
June 30, 2023
ASSETS
Cash and investments $ 663,990
Assessments receivable 2,305
Interest receivable 1,743
Total Assets 668,038

LIABILITIES
Accounts payable 12,435
Total Liabilities 12,435

NET POSITION
Restricted for:

Capital projects 503,317
District maintenance 152,286
Total Net Position $ 655,603
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See notes to basic financial statements.
19 Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Statement of Activities – Governmental Activities
Year Ended June 30, 2023
Program
Revenues
Net (Expense)
Revenue and
Changes in Net
Position
Functions/Programs Expenses
Operating
Grants and
Contributions
Governmental
Activities
Community development $ 80,103 $- $ (80,103)
$ 80,103 $- (80,103)
General Revenues:

Maintenance special tax 104,387
Investment earnings 3,956
Total General Revenues 108,343
Changes in net position 28,240
Net Position, Beginning of Year 627,363
Net Position, End of Year 655,603
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20 Community Facilities District
Number 2007-1 North Beyer Park #2
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. #3..
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See notes to basic financial statements.
21 Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Balance Sheet – Governmental Funds
June 30, 2023
Capital
Projects
Fund
Special
Revenue
Fund Total
ASSETS
Cash and investments $ 501,978 $ 162,012 $ 663,990
Assessments receivable - 2,305 2,305
Interest receivable 1,339 404 1,743
Total Assets $ 503,317 $ 164,721 $ 668,038

LIABILITIES
Accounts payable $ - $ 12,435 $ 12,435
Total Liabilities - 12,435 12,435

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - 868 868
Total Deferred Inflows of Resources - 868 868

FUND BALANCES
Restricted for:

Capital projects 503,317 - 503,317
District maintenance - 151,418 151,418
Total Fund Balances 503,317 151,418 654,735
Total Liabilities, Deferred Inflows of
Resources and Fund Balances $ 503,317 $ 164,721 $ 668,038 #3..
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See notes to basic financial statements.
22 Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Reconciliation of the Governmental Funds Balance Sheet to the Governmental Activities Statement of Net Position
June 30, 2023
Total Fund Balances - Governmental Funds $ 654,735
Amounts reported for governmental activities in the Statement of Net Position are different because:

Revenues not available for current-period expenditures are deferred in governmental funds but are considered earned in the Statement of Net Position. 868
Total Net Position - Governmental Activities $ 655,603
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See notes to basic financial statements.
23 Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Statement of Revenues, Expenditures, and
Changes in Fund Balances – Governmental Funds
Year Ended June 30, 2023
Capital
Projects
Fund
Special
Revenue
Fund Total

REVENUES
Maintenance special tax $ - $ 104,263 $ 104,263
Interest income 7,775 2,096 9,871
Change in fair value of
investments (4,743) (1,172) (5,915)
Total Revenues 3,032 105,187 108,219

EXPENDITURES
Services – professional and other - 66,179 66,179
Utilities - 13,924 13,924
Total Expenditures - 80,103 80,103
Changes in Fund Balances 3,032 25,084 28,116
Fund Balances, Beginning of Year 500,285 126,334 626,619 Fund Balances, End of Year $ 503,317 $ 151,418 $ 654,735 #3..
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See notes to basic financial statements.
24 Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Governmental Activities Statement of Activities Year Ended June 30, 2023
Changes in Fund Balances - Governmental Funds $ 28,116
Amounts reported for governmental activities in the Statement of Activities are different because:

Revenues not available for current-period expenditures are deferred in the governmental fund but are considered earned in the Statement of Activities. 124 Changes in Net Position - Governmental Activities $ 28,240 #3..
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See notes to basic financial statements.
25 Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Statement of Revenues, Expenditures, and Changes in
Fund Balance – Special Revenue Fund – Budget and Actual Year Ended June 30, 2023
Original
Budgeted
Amounts
Final
Budgeted
Amounts
Actual
Amounts
Variance
with Final
Budget

REVENUES
Maintenance special tax $ 100,000 $ 100,000 $ 104,263 $ 4,263 Interest income - - 2,096 2,096
Change in fair value of investments - - (1,172) (1,172) Total Revenues 100,000 100,000 105,187 5,187

EXPENDITURES
Services - professional and other 72,881 72,881 66,179 6,702 Utilities 21,100 21,100 13,924 7,176
Total Expenditures 93,981 93,981 80,103 13,878
Changes in fund balance $ 6,019 $ 6,019 25,084 $ 19,065 Fund Balance, Beginning of Year 126,334
Fund Balance, End of Year $ 151,418
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26 Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity
The Community Facilities District Number 2007-1 North Beyer Park #2 (the District) was formed in May 2007 by a vote of the property owners within the proposed District. The District, a separate legal entity, was formed to provide a funding mechanism for public facilities and services as required by the District Specific Plan. The District is a 160-acre project, the boundaries of which are recorded in Book 2, page 80 of the Book of Assessment District Maps in the Stanislaus County Recorder’s Office.

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.
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Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
27 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Government-Wide and Fund Financial Statements (Continued) Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements.

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.
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Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
28 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of Presentation, Basis of Accounting, and Measurement Focus (Continued) 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.

A cost of living adjustment is applied to the special taxes annually. #3..
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Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
29 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 Statement of Net Position and Fund Balance Sheet will sometimes report a separate section for deferred outflows of resources. A deferred outflow of resources is defined as a consumption of net assets by the District that is applicable to a future reporting period.

In addition to liabilities, the Statements of Net Position and Fund Balance Sheet will sometimes report a separate section for deferred inflows of resources. A deferred inflow of resources is defined as an acquisition of net assets 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.

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. #3..
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Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
30 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Balance (Continued)
• 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.

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.
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Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
31 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net Position
Net position represents the residual interest in the District’s assets after liabilities are deducted.

In accordance with GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, 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.
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Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
32 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Governmental Accounting Standards Update
During the year ended June 30, 2023, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no financial impact:

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. 96 – Subscription-Based Information Technology Arrangements.

The requirements of this statement are effective for reporting periods beginning after June 15, 2022.

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

GASB Statement No. 100 - Accounting Changes and Error Corrections. The requirements of this statement are effective for reporting periods beginning after June 15, 2023.
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Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
33 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Governmental Accounting Standards Update (Continued)
GASB Statement No. 101 - Compensated Absences. The requirements of this statement are effective for reporting periods beginning after December 15, 2023.

Cash and investments as of June 30, 2023 are classified in the accompanying financial statements as follows:

Statement of Net Position- Governmental Activities:

Cash and investments $ 663,990
Total cash and investments $ 663,990
Deposits with the City
Cash and investment pool $ 663,990
Total cash and investments $ 663,990
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- 711 -
Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
34 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Detailed information regarding the City’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City’s Annual Comprehensive Financial Report. As of June 30, 2023, the fair value of the District’s position in the pool is the same as the value of its pool shares.

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 120 days after the third delinquency. b. All parcels delinquent at June 30 when the District received Special Taxes totaling less that 95% of the total Special Tax levied for that fiscal year. Foreclosure against these parcels is to be imitated by September 1 following the end of the fiscal year. #3..
- 712 -
Community Facilities District
Number 2007-1 North Beyer Park #2
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
35 NOTE 4 DELINQUENCIES AND FORECLOSURES (CONTINUED)
At June 30, 2023, the District had 3 parcels that were delinquent for a total of $868, none of which were delinquent for more than three consecutive payments.

The District received 99.54% of the Special Revenue Fund maintenance special taxes levied during the year ended June 30, 2023. The delinquencies total of $868 at June 30, 2023 is included in assessments receivable in the Statement of Net Position and Balance Sheet.

NOTE 5 SUBSEQUENT EVENTS
The District has evaluated events subsequent to the balance sheet date through November 17, 2023, the date the financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the financial statements.
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- 713 -
36 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards The Honorable Members of the City Council
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 (Government Auditing Standards), the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2007-1 North Beyer Park #2 (the District), as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023 and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated November 17, 2023.

Report on 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) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
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- 714 -
37 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 District’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses.

However, material weaknesses or significant deficiencies may exist that were not identified.

Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the 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 financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #3..
- 715 -
38 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 District’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Glendale, California
November 17, 2023
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- 716 -
www.vasquez.cpa
Vasquez & Company LLP has over 50 years of experience in performing audit, accounting & consulting services for all types of nonprofit organizations, for-profit companies, governmental entities and publicly traded companies. Vasquez is a member of the RSM US Alliance. RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM™ logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
655 N Central Avenue, Suite 1550 • Glendale, California 91203-1437 • Ph. (213) 873-1700 • Fax (213) 873-1777
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- 717 -
Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
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- 718 -
Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
#3..
- 719 -
Community Facilities District
Number 2016-2The Vintage
City of Modesto, California
Table of Contents
PAGE
Independent Auditor’s Report 1
Management’s Discussion and Analysis (Unaudited) 6
Basic Financial Statements
Statement of Net Position – Governmental Activities 16
Statement of Activities – Governmental Activities 17
Balance Sheet – Governmental Funds 19
Reconciliation of the Governmental Fund Balance Sheet to the Governmental Activities Statement of Net Position 20
Statement of Revenues, Expenditures, and Changes in Fund Balance – Governmental Funds 21
Reconciliation of the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balance to the Governmental Activities Statement of Activities 22
Statement of Revenues, Expenditures, and Changes in Fund Balance – Special Revenue Fund – Budget and Actual 23
Notes to Basic Financial Statements 24
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 35 #3..
- 720 -
1 Independent Auditor’s Report
The Honorable Members of the City Council
City of Modesto, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities and major fund of the City of Modesto Community Facilities District Number 2016-2 The Vintage (the District), a component unit of the City of Modesto, California, as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities and major fund of the District as of June 30, 2023, and the respective changes in financial position, and the 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. #3..
- 721 -
2 Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
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- 722 -
3 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
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- 723 -
4 • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 6-14 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
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- 724 -
5 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 17, 2023 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.

Glendale, California
November 17, 2023
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- 725 -
6 Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
The City of Modesto Community Facilities District Number 2016-2 The Vintage (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements— and Management’s Discussion and Analysis—for State and Local Governments, 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.

BACKGROUND AND MANAGEMENT’S DISCUSSION
On January 26, 2016, the City Council approved the Vintage Specific Plan that set forth a plan of development for approximately 45 acres that were, at that time, located west of Dale Road and north of Vintage Faire Mall.
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- 726 -
Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
7 The Vintage Specific Plan is intended to provide for the development of 170 single-family residential lots, 6.05 acres of multi-family residential development, and approximately 10 acres for commercial development that will assist in implementing the City’s long-range objectives to enhance its local economy, generate jobs for residents, and create a better jobs housing balance.

The District was formed by the City Council in January 2016 to generate funding for construction of certain roadway improvements and the ongoing maintenance of landscaped medians, a bike path, well site, storm drainage pump and basin, and related facilities.

FISCAL YEAR 2023 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:

Government-Wide:
• At June 30, 2023, the District’s total net position was $303,905. • Total District revenues were $155,328 and expenses were $50,343.

Funds Basis:
• Special Revenue Fund revenues increased from $136,048 in the prior year to $155,260 for fiscal year 2023 and expenditures increased from $47,226 in the prior year to $50,343 for fiscal year 2023. The increase in revenues is attributed to an increase in maintenance special tax and the increase in expenditures is attributed to an increase in activity in community development. The Special Revenue Fund balance increased by $104,917 to an ending balance of $303,106.
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- 727 -
Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
8 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.

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. #3..
- 728 -
Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
9 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, 2023, total assets of $311,927 were offset by liabilities of $8,022. The District’s net position from governmental activities increased to $303,905 in 2023 from $198,920 in 2022.

This increase was due to higher maintenance special tax revenue. The District’s net position has restrictions as follows: $303,905 for District maintenance.

The following summarizes the Statement of Net Position as of June 30, 2023 and 2022:

Statement of Net Position – Governmental Activities
Description 2023 2022 Change
Assets:

Cash and investments $309,919 $201,196 $108,723
Interest receivable 768 411 357
Taxes receivable 1,240 1,749 (509)
Total assets 311,927 203,356 108,571
Liabilities:

Current and other liabilities 8,022 4,436 3,586
Net position:

Restricted for:

District maintenance 303,905 198,920 104,985
Total net position $303,905 $198,920 $104,985
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- 729 -
Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
10 FISCAL YEAR 2023 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2023 revenue came primarily from annual facilities and maintenance special taxes of $153,135 and investment earnings of $2,193. District expenses of $50,343 were primarily for community development.

The following summarizes the Statement of Activities for the years ended June 30, 2023 and 2022, and the respective changes:

Statement of Activities – Governmental Activities
Description 2023 2022 Change
Revenues:

General revenues:

Maintenance special tax $153,135 $140,221 $12,914
Investment earnings (loss) 2,193 (4,331) 6,524
Total revenues 155,328 135,890 19,438
Expenses:

Community development 50,343 47,226 3,117
Change in net position 104,985 88,664 $16,321
Net position, beginning of year 198,920 110,256
Net position, end of year $303,905 $198,920
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- 730 -
Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
11 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 fund. The fund financial statements measure only current revenues and expenditures and fund balance; they exclude capital assets, long-term debt, and other long-term amounts.

The fund financial statements provide detailed information about the District’s 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. The District’s one fund is presented here as a major fund; its purpose is explained in Note 1 to the financial statements. The District’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.

The following summarizes the Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balance for the Special Revenue Fund as of and for the years ended June 30, 2023 and 2022, and the respective changes:
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- 731 -
Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
12 Balance Sheet – Special Revenue Fund
Description 2023 2022 Change
Assets:

Cash and investments $309,919 $201,196 $108,723
Interest receivable 768 411 357
Taxes receivable 1,240 1,749 (509)
Total assets $311,927 $203,356 $108,571
Liabilities:

Accounts payable $8,022 $4,436 $3,586
Total liabilities 8,022 4,436 3,586
Deferred inflows of resources:

Unavailable revenues 799 731 68
Total deferred inflows of resources 799 731 68
Fund balance:

Restricted for:

District maintenance 303,106 198,189 104,917
Total fund balance 303,106 198,189 104,917
Total liabilities, deferred inflows of
resources, and fund balance $311,927 $203,356 $108,571
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- 732 -
Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
13 Statement of Revenues, Expenditures, and Changes in Fund Balances – Special Revenue Fund
Description 2023 2022 Change
Revenues $155,260 $136,048 $19,212
Expenditures 50,343 47,226 3,117
Changes in fund balances 104,917 88,822 $16,095
Fund balances, beginning of year 198,189 109,367
Fund balances, end of year $303,106 $198,189
THE DISTRICT’S FUND FINANCIAL STATEMENTS
At June 30, 2023, the District’s governmental fund reported a fund balance of $303,106, an increase of $104,917 compared with last year. This increase was primarily due to increased maintenance special tax revenues and increased activity in community development.

Therefore, the District reports no long-term capital assets. #3..
- 733 -
Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
14 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.
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- 734 -
15 Community Facilities District
Number 2016-2 The Vintage
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 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.
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- 735 -
See notes to basic financial statements.
16 Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Statement of Net Position – Governmental Activities
June 30, 2023
ASSETS
Cash and investments $309,919
Interest receivable 768
Taxes receivable 1,240
Total Assets 311,927

LIABILITIES
Accounts payable 8,022
Total Liabilities 8,022

NET POSITION
Restricted for:

District maintenance 303,905
Total Net Position $303,905
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- 736 -
See notes to basic financial statements.
17 Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Statement of Activities – Governmental Activities
Year Ended June 30, 2023
Program
Revenues
Net
(Expense)
Revenue and
Changes in
Net Position
Functions/Programs Expenses
Operating
Grants and
Contributions
Governmental
Activities
Community development $50,343 $- $(50,343)
$50,343 $- (50,343)
General Revenues:

Maintenance special tax 153,135
Investment earnings 2,193
Total General Revenues 155,328
Change in Net Position 104,985
Net Position, Beginning of Year 198,920
Net Position, End of Year $303,905
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- 737 -
18 Community Facilities District
Number 2016-2 The Vintage
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 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 District. #3..
- 738 -
See notes to basic financial statements.
19 Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Balance Sheet – Governmental Funds
June 30, 2023
Special
Revenue Fund
ASSETS
Cash and investments $309,919
Interest receivable 768
Taxes receivable 1,240
Total Assets $311,927

LIABILITIES
Accounts payable $8,022
Total Liabilities 8,022

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 799
Total Deferred Inflows of Resources 799

FUND BALANCE
Restricted for:

District maintenance 303,106
Total Fund Balance 303,106
Total Liabilities, Deferred Inflows of Resources and Fund Balance $311,927 #3..
- 739 -
See notes to basic financial statements.
20 Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Reconciliation of the Governmental Fund Balance Sheet to the Governmental Activities Statement of Net Position
June 30, 2023
Total Fund Balances - Governmental Funds $303,106
Amounts reported for governmental activities in the Statement of Net Position are different because:

Revenues not available for current-period expenditures are deferred in governmental funds but are considered earned in the Statement of Net Position. 799
Total Net Position - Governmental Activities $303,905
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- 740 -
See notes to basic financial statements.
21 Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Statement of Revenues, Expenditures, and
Changes in Fund Balance – Governmental Funds
Year Ended June 30, 2023
Special
Revenue Fund

REVENUES
Maintenance special tax $153,067
Interest income 3,947
Change in fair value of investments (1,754)
Total Revenues 155,260

EXPENDITURES
Services – professional and other 49,757
Utilities 586
Total Expenditures 50,343
Change in Fund Balance 104,917
Fund Balance, Beginning of Year 198,189
Fund Balance, End of Year $303,106
#3..
- 741 -
See notes to basic financial statements.
22 Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Reconciliation of the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balance to the Governmental Activities Statement of Activities Year Ended June 30, 2023
Changes in Fund Balances - Governmental Funds $104,917
Amounts reported for governmental activities in the Statement of Activities are different because:

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 funds. 68 Change in Net Position - Governmental Activities $104,985 #3..
- 742 -
See notes to basic financial statements.
23 Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Statement of Revenues, Expenditures, and Changes in Fund Balance – Special Revenue Fund – Budget and Actual
Year Ended June 30, 2023
Original
Budgeted
Amounts
Final
Budgeted
Amounts
Actual
Amounts
Variance
with Final
Budget

REVENUES
Maintenance special tax $147,000 $147,000 $153,067 $6,067 Interest income - - 3,947 3,947
Change in fair value of investments - - (1,754) (1,754) Total Revenues 147,000 147,000 155,260 8,260

EXPENDITURES
Services - professional and other 65,745 65,745 49,757 15,988 Utilities 3,100 3,100 586 2,514
Total Expenditures 68,845 68,845 50,343 18,502
Changes in Fund Balance $78,155 $78,155 104,917 $26,762 Fund Balance, Beginning of Year 198,189
Fund Balance, End of Year $303,106
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- 743 -
24 Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity
The Community Facilities District Number 2016-2 The Vintage (the District) was formed in January 2016 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 45-acre project, west of Dale Road and north of Vintage Faire Mall.

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.
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- 744 -
Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
25 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Government-Wide and Fund Financial Statements (Continued) Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements.

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.
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- 745 -
Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
26 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of Presentation, Basis of Accounting, and Measurement Focus (Continued) 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.

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 assets by the District that is applicable to a future reporting period. #3..
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Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
27 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Deferred Outflows and Inflows of Resources (Continued)
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 assets by the District that is applicable to a future reporting period. Deferred inflows reported by the District consist of deferred assessments that have been billed as of year-end, but not yet collected.

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. #3..
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Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
28 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Balance (Continued)
• 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.

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.
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Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
29 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net Position
Net position represents the residual interest in the District’s assets after liabilities are deducted.

In accordance with GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, 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.
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Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
30 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Governmental Accounting Standards Update
During the year ended June 30, 2023, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no financial impact:

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 certain requirements of this statement to 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.

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

GASB Statement No. 100 - Accounting Changes and Error Corrections. The requirements of this statement are effective for reporting periods beginning after June 15, 2023.
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Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
31 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Governmental Accounting Standards Update (Continued)
GASB Statement No. 101 - Compensated Absences. The requirements of this statement are effective for reporting periods beginning after December 15, 2023.

Cash and investments as of June 30, 2023 are classified in the accompanying financial statements as follows:

Statement of Net Position – Governmental Activities
Cash and investments $309,919
Total cash and investments $309,919
Deposits with the City
Cash and investment pool $309,919
Total cash and investments $309,919
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Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
32 NOTE 2 CASH AND INVESTMENTS
Detailed information concerning the City’s pooled cash and investments, including information regarding the fair value of investments, may be found in the City’s Annual Comprehensive Financial Report. As of June 30, 2023, the fair value of the District’s position in the pool is the same as the value of its pool shares.

Concentration of Credit Risk
The District is required to disclose investments that represent a concentration of five percent (5%) or more of investments in any one issuer held by individual funds in the securities of issuers other than U.S. Treasury securities, mutual funds, and external investment pools. At June 30, 2023, no investments represented a concentration of five percent (5%) or more of investments in any one issuer held by the District in the securities of issuers other than U.S.

Treasury securities, mutual funds, and external investment pools.

Fair Value Hierarchy
The District categorizes its fair value measurements within the fair value hierarchy established by U.S. GAAP. The hierarchy is based on the valuation inputs used to measure the fair value of the assets. Level 1 inputs are quoted prices in an active market for identical assets; level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The inputs and techniques used for valuing securities are not necessarily an indication of risk associated with investing in those securities. The District’s investment in the City’s pool and money market fund are exempt from fair value measurement disclosures. #3..
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Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
33 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, 2023, 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 it 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, 2023, the District had 2 parcels that were delinquent for a total of $799, none of which were delinquent for more than three consecutive payments. The District received 99.72% of the Special Revenue Fund maintenance special taxes levied during the year ended June 30, 2023. The delinquencies total of $799 at June 30, 2023 is included in taxes receivable on the Statement of Net Position and Balance Sheet.
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Community Facilities District
Number 2016-2 The Vintage
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2023
34 NOTE 5 SUBSEQUENT EVENTS
The District has evaluated events subsequent to the balance sheet date through November 17, 2023, the date the financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the financial statements.
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35 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards The Honorable Members of the City Council
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 (Government Auditing Standards), the financial statements of the governmental activities and major fund of the City of Modesto Community Facilities District Number 2016-2 The Vintage (the District), as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023 and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated November 17, 2023.

Report on 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) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
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36 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.

However, material weaknesses or significant deficiencies may exist that were not identified.

Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the 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 financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. #3..
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37 Purpose of This Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Glendale, California
November 17, 2023
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www.vasquez.cpa
Vasquez & Company LLP has over 50 years of experience in performing audit, accounting & consulting services for all types of nonprofit organizations, for-profit companies, governmental entities and publicly traded companies. Vasquez is a member of the RSM US Alliance. RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM™ logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
655 N Central Avenue, Suite 1550 • Glendale, California 91203-1437 • Ph. (213) 873-1700 • Fax (213) 873-1777
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- 758 -
Community Facilities District
Number 2021-1 Woodglen
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
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Community Facilities District
Number 2021-1 Woodglen
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2023
With Independent Auditor’s Report
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Community Facilities District
Number 2021-1 Woodglen
City of Modesto, California
Table of Contents
PAGE
Independent Auditor’s Report 1
Management's Discussion and Analysis (Unaudited) 6
Basic Financial Statements
Statement of Net Position – Governmental Activities 17
Statement of Activities – Governmental Activities 18
Balance Sheet – Governmental Funds 20
Reconciliation of Governmental Funds Balance Sheet to Governmental Activities Statement of Net Position 21
Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 22
Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to Governmental Activities Statement of Activities 23 Statement of Revenues, Expenditures, and Changes in Fund Balance – Special Revenue Fund – Budget and Actual 24
Notes to Basic Financial Statements 25
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 36 #3..
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1 Independent Auditor’s Report
The Honorable Members of the City Council
City of Modesto, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities and each major fund of the City of Modesto Community Facilities District Number 2021-1 Woodglen (the District), a component unit of the City of Modesto, California, as of and for the year ended June 30, 2023, the budgetary comparison for the special revenue fund for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the District as of June 30, 2023, and the respective changes in financial position, and the 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. #3..
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2 Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
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3 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
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4 • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 6-15 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
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5 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 17, 2023 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.

Glendale, California
November 17, 2023
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6 Community Facilities District
Number 2021-1 Woodglen
City of Modesto, California
Management's Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
The City of Modesto Community Facilities District Number 2021-1 (Woodglen) (the District) has issued its financial statements in the format prescribed by the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements— and Management’s Discussion and Analysis—for State and Local Governments, 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 District’s purpose under California law is to encompass maintenance for landscaped lots, tree pruning, masonry wall maintenance, neighborhood park maintenance, storm drain basin maintenance, and other services including but not limited to litter and debris removal, pruning, staking, fertilizing, plant replacement and restoration, fire and weed control, erosion control, trimming of vegetation, and storm drain system maintenance. Additional information on the District can be found below and in Note 1 to the accompanying financial statements. #3..
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Community Facilities District
Number 2021-1 Woodglen
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
7 BACKGROUND AND MANAGEMENT’S DISCUSSION
In July 2013, the City Council approved the Woodglen Specific Plan Area that set forth a plan to facilitate 367 single-family residential lots, two open space/storm basin lots, one park lot, and ten landscape lots. Resolution No. 2021-196 was adopted by the City Council on June 1, 2021, stating its intention to establish Community Facilities District No. 2021-1 (Woodglen) and to authorize the levy of a special tax within Woodglen to provide a funding source for maintenance of landscaped lots, tree pruning, masonry wall maintenance, neighborhood park maintenance, storm drain basin maintenance and other services. On July 6, 2021, the City Council through Resolution No. 2021-268 formally declared its formation.

FISCAL YEAR 2023 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following:

Government-Wide:
• At June 30, 2023, the District’s net position increased to $272,456. • Total District revenues were $202,290 and expenses were $21,809.

Funds Basis:
• Capital Projects Fund revenues increased from $89,951 in the prior year to $107,547 for fiscal year 2023 and expenditures of $0 had no change from the prior year. The increase in revenues is attributed to the increase in maintenance special tax. • Special Revenue Fund revenues of $94,231 were $87,330 more than the prior year primarily due to an increase in maintenance special tax. Expenditures of $21,809 were $15,608 more than the prior year due to an increase in service expenditures. The Special Revenue Fund balance increased by $72,422 to an ending fund balance of $74,446. #3..
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Community Facilities District
Number 2021-1 Woodglen
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2023
8 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.

Audit CommitteeJanuary 24, 2024

Audit Committee
January 24, 2024