The City’s Annual Comprehensive Financial Report (ACFR), for the Fiscal Year ending June 30, 2025, is an annual report which includes audited financial statements with an external auditor’s opinion on the financial condition and the results of operations for the period under audit. The accounting firm Vasquez & Company, LLP. conducted the Fiscal Year 2024-2025 audit for the City.
Federal Single Audit
The City of Modesto Single Audit report is federally mandated by the provisions of the Federal Single Audit Act Amendments of 1996 and Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), which requires an audit to be conducted for any non-Federal entity that expends $750,000 or more a year in Federal awards. This audit was conducted by the City’s external auditor, Vasquez & Company, LLP. and the main objectives were to ensure a fair presentation of the basic financial statements and the schedule of expenditures of Federal Awards, and to also audit the City's internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards expended during the fiscal year.
DISCUSSION:
Annual Comprehensive Financial Report (ACFR)
The independent auditors concluded, for the ACFR, that there was a reasonable basis for rendering an unmodified (clean) opinion and that the statements were fairly presented in accordance with generally accepted accounting principles. In conjunction with this audit, Vasquez & Company, LLP. also performed certain agreed-upon procedures as applied to the Appropriations Limitation (GANN Limit) prescribed by Article XIII-B of the California Constitution.
Copies of these reports are attached.
Community Facilities Districts (CFDs)
In addition, our independent auditors examined the financial statements of thirteen (13) Community Facilities Districts (CFDs) and concluded that there was a reasonable basis for rendering an unmodified (clean) opinion and that the statements were fairly presented in accordance with generally accepted accounting principles. The thirteen (13) CFDs examined include:
1. Community Facilities District Number 1998-2 (Carver-Bangs/Pelandale-Snyder)
2. Community Facilities District Number 2000-2 (Coffee-Claratina)
3. Community Facilities District Number 1998-1 (Enterprise Business Park)
4. Community Facilities District Number 2003-1 (Fairview Village)
5. Community Facilities District Number 2007-2 (Kiernan Business Park West)
6. Community Facilities District Number 1997-1 (North Beyer Park)
7. Community Facilities District Number 2002-1 (Northpointe)
8. Community Facilities District Number 2004-1 (Village One #2)
9. Community Facilities District Number 1996-1 (Village One)
10. Community Facilities District Number 2016-1 (Kiernan Business Park East #2)
11. Community Facilities District Number 2007-1 (North Beyer #2)
12. Community Facilities District Number 2016-2 (The Vintage)
13. Community Facilities District Number 2021-1 (Woodglen) #7..
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City Council, February 10, 2026
Fiscal Year 2024-2025 Audited Financial Statements
Joint Powers Agencies (JPAs) and Smaller Programs
The City is the financial administrator for several joint powers agencies (JPAs) which require an independent audit of their financial statements.
The joint powers agencies and mandated audit reports included in this report are:
1. Abandoned Vehicle Abatement (AVA)
2. Modesto-Ceres Fire Protection Agency
3. Tuolumne River Regional Park (TRRP)
4. Transportation Development Agency (TDA)
On November 8, 2022, the Modesto Voters approved Measure H, a one-cent local sales tax for general city services. On November 29, 2022, by Resolution No. 2022-453 The Modesto City Council certified the election results. The City began collecting sales tax revenue in April of 2023, this sales tax revenue can be used for any general city purposes. Language under this ordinance identifies examples of expenditures that allow the City to proactively develop a plan to improve City services and the quality of life in Modesto, such as funding to address public safety, and homelessness. Additionally, the ordinance also requires an annual financial report be performed by an independent auditor and establishes a Citizen Oversight Board to audit the revenues and expenditures of Measure H to ensure that funds are being spent appropriately by the City and for the purposes approved by Council.
Based on the attached Auditors’ Reports, the financial statements for ACFR, GANN Limit, Measure H, CFDs and JPAs were prepared and presented fairly in all material respects.
Furthermore, the required communication to the City Council report, related to the City’s audit of the basic financial statements of the City also attached, summarizes certain matters required by professional standards to be communicated to the City Council and Management.
Federal Single Audit
And finally, the City also directly receives funding from various state and federal agencies that mandate annual audit reports. On an annual basis the auditors select a number of programs based on specific criteria in accordance with auditing standards which are deemed Major Programs which require auditing. For Fiscal Year 2024-2025, the Major Programs selected were:
Public Safety Partnership and Community Policing Grants (COPS) Home Investment Partnership Program (HOME)
As part of the City’s Fiscal Year 2024-2025 Single Audit report, no findings were reported for any of the grant funding received from the various federal agencies.
Internal Controls Over Financial reporting
In the planning and performing of the financial statements as of the year ended June 30, 2025 and in accordance with auditing standards generally accepted, applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General, the City’s internal controls over financial reporting (internal controls) were considered as a basis for designing audit procedures that are appropriate for the purposes of expressing an opinion over the financial statements. Separate communication describing matters and deficiencies in internal control were determined to not constitute significant or material weaknesses in internal #7..
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City Council, February 10, 2026
Fiscal Year 2024-2025 Audited Financial Statements
control over financial reporting during the audit of the basic financial statement as required by the Government Auditing Standards, the communication was provided to Management for review.
FISCAL IMPACT:
While the information contained in these reports discloses the financial performance for the City, there is no direct fiscal impact. The annual audit and ACFR preparation services cost for FY 2024-2025 were $164,700.
COMMITTEE RECOMMENDATION:
This item was accepted by the Audit Committee on January 21, 2026, and the Committee approved forwarding the item to Council for approval.
RECOMMENDED COUNCIL ACTION:
Staff Recommendations:
Resolution accepting the Audited Financial Statements and various Audit Reports for Fiscal Year 2024-2025 audited by external auditors Vasquez & Company, LLP. for the City’s Annual Comprehensive Financial Report (ACFR), thirteen (13) Community Facilities Districts (CFDs), Measure H and various Joint Powers Agencies (JPAs).
Resolution accepting the audited Fiscal Year 2024-2025 Federal Single Audit report for the City of Modesto from external auditors Vasquez & Company, LLP.
Approved by:
DeAnna Christensen, Director of Finance
Joseph P. Lopez, City Manager
Attachments:
1. Resolution audited financial statements FY 2024-2025
2. Resolution Single Audit FY 2024-2025
3. Annual Comprehensive Financial Report FY 2024-2025
4. GANN Limit Report FY 2024-2025
5. Community Facilities District Number 1998-2 (Carver-Bangs/Pelandale-Snyder)
6. Community Facilities District Number 2000-2 (Coffee-Claratina)
7. Community Facilities District Number 1998-1 (Enterprise Business Park)
8. Community Facilities District Number 2003-1 (Fairview Village)
9. Community Facilities District Number 2007-2 (Kiernan Business Park West)
10. Community Facilities District Number 1997-1 (North Beyer Park)
11. Community Facilities District Number 2002-1 (Northpointe)
12. Community Facilities District Number 2004-1 (Village One #2) #7..
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City Council, February 10, 2026
Fiscal Year 2024-2025 Audited Financial Statements
13. Community Facilities District Number 1996-1 (Village One)
14. Community Facilities District Number 2016-1 (Kiernan Business Park East #2)
15. Community Facilities District Number 2007-1 (North Beyer #2)
16. Community Facilities District Number 2016-2 (The Vintage)
17. Community Facilities District Number 2021-1 (Woodglen)
18. Abandoned Vehicle Abatement (AVA)
19. Modesto-Ceres Fire Protection Agency Financial Statements
20. Tuolumne River Regional Park (TRRP)
21. Transportation Development Agency (TDA)
22. Federal Single Audit Report FY 2024-2025
23. Measure H Audited Report FY 2024-2025
24. CoM Audit Presentation
25. City of Modesto SAS 114 Conclusion 2025
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02/10/2026/FIN/MGarnica/Item X 1 2026-XX
MODESTO CITY COUNCIL
RESOLUTION NO. 2026-?
RESOLUTION ACCEPTING THE AUDITED FINANCIAL STATEMENTS AND VARIOUS AUDIT REPORTS FOR FISCAL YEAR 2024-2025 AUDITED BY EXTERNAL AUDITORS VASQUEZ & COMPANY, LLP. FOR THE CITY’S ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR), THIRTEEN (13)
COMMUNITY FACILITIES DISTRICTS (CFDS), MEASURE H, AND VARIOUS
JOINT POWERS AGENCIES (JPAS)
WHEREAS, pursuant to Section 1306 of the Charter of the City of Modesto, the City Council shall employ an independent certified public accountant who, at least annually, shall audit the books and records of the City of Modesto, and submit a final audit and report to the City Council as soon as practicable after the end of the fiscal year, and
WHEREAS, the accounting firm Vasquez & Company, LLP., has completed their audit of the City’s financial statements for the fiscal year ended June 30, 2025, and has provided its opinion on these financial statements based on that audit, and WHEREAS, the independent auditors also audited financial statements of twelve Community Facilities Districts and various Joint Powers Agencies, as required by their respective enabling legislations, and for which the City of Modesto serves as the financial administrator, and
WHEREAS, by the Council of the City of Modesto it hereby accepts the Fiscal Year 2024-2025 annual audit reports for the City of Modesto, Community Facilities Districts, Measure H, and various Joint Powers Agencies, as listed in Exhibit A, which is incorporated by reference herein.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby accepts the Fiscal Year 2024-2025 annual audit reports for the City of #7..
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02/10/2026/FIN/MGarnica/Item X 2 2026-XX
Modesto and other Joint Power Agencies, as listed in Exhibit A, which is incorporated by reference herein.
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02/10/2026/FIN/MGarnica/Item X 3 2026-XX
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 10th day of February, 2026, by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:
AYES: Councilmembers: ?
NOES: Councilmembers: ?
ABSENT: Councilmembers: ?
ATTEST: _ ___________________________
DIANE NAYARES-PEREZ, City Clerk
(SEAL)
APPROVED AS TO FORM:
By: ____________________________________
JOSE M SANCHEZ, City Attorney
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02/10/2026/FIN/MGarnica/Item X 4 2026-XX
MODESTO CITY COUNCIL
RESOLUTION NO. 2026-?
RESOLUTION ACCEPTING THE FISCAL YEAR 2024-2025 ANNUAL AUDIT
REPORTS
EXHIBIT A
City of Modesto:
1. Annual Comprehensive Financial Report FY 2024-2025
2. GANN Limit Report FY 2024-2025
3. Community Facilities District Number 1998-2 (Carver-Bangs/Pelandale-Snyder)
4. Community Facilities District Number 2000-2 (Coffee-Claratina)
5. Community Facilities District Number 1998-1 (Enterprise Business Park)
6. Community Facilities District Number 2003-1 (Fairview Village)
7. Community Facilities District Number 2007-2 (Kiernan Business Park West)
8. Community Facilities District Number 1997-1 (North Beyer Park)
9. Community Facilities District Number 2002-1 (Northpointe)
10. Community Facilities District Number 2004-1 (Village One #2)
11. Community Facilities District Number 1996-1 (Village One)
12. Community Facilities District Number 2016-2 (Kiernan Business Park East #2)
13. Community Facilities District Number 2007-1 (North Beyer #2)
14. Community Facilities District Number 2016-2 (The Vintage)
15. Community Facilities District Number 2021-1 (Woodglen)
16. Measure H 2024-2025
Other Agencies:
17. Abandoned Vehicle Abatement (AVA)
18. Modesto-Ceres Fire Protection Agency Financial Statements
19. Tuolumne River Regional Park (TRRP)
20. Transportation Development Agency (TDA)
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02/10/2026/FIN/MGarnica/Item X 1 2026-XX
MODESTO CITY COUNCIL
RESOLUTION NO. 2026-
RESOLUTION ACCEPTING THE AUDITED FISCAL YEAR 2024-2025
FEDERAL SINGLE AUDIT REPORT FOR THE CITY OF MODESTO FROM EXTERNAL AUDITORS VASQUEZ & COMPANY, LLP.
WHEREAS, the City of Modesto Single Audit reports are federally mandated by the provisions of the Federal Single Audit Act Amendments of 1996 and Title 2 U.S.
Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), which requires an audit to be conducted for any non-Federal entity that expends $750,000 or more a year in Federal awards, and
WHEREAS, this audit was conducted by the City’s external auditors, Vasquez & Company, LLP, and the main objectives were to ensure a fair presentation of the basic financial statements and the schedule of expenditures of Federal awards, and to also audit the City's internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards expended during the fiscal year, and
WHEREAS, as part of the City’s Fiscal Year 2024-2025 Single Audit report, no findings were reported.
NOW, THEREFORE, BE IT RESOLVED, by the Council of the City of Modesto that it hereby accepts the Fiscal Year 2024-2025 Single Audit report for the City of Modesto.
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02/10/2026/FIN/MGarnica/Item X 2 2026-XX
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 10th day of February, 2026, by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:
AYES: Councilmembers: ?
NOES: Councilmembers: ?
ABSENT: Councilmembers: ?
ATTEST: _ ___________________________
DIANE NAYARES-PEREZ, City Clerk
(SEAL)
APPROVED AS TO FORM:
By: ____________________________________
JOSE M. SANCHEZ, City Attorney
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MODESTO
CITY OF
2024-2025
Annual Comprehensive
Financial Report
Fiscal Year Ended
June 30, 2025
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CITY OF
Modesto, California
ANNUAL COMPREHENSIVE FINANCIAL REPORT
Fiscal Year Ended June 30, 2025
Prepared By
Finance Department
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City of Modesto
Table of Contents
PAGE
INTRODUCTORY SECTION
Letter of Transmittal i-xlix
GFOA Certificate of Achievement for Excellence in Financial Reporting l City of Modesto Organizational Chart li-lii
FINANCIAL SECTION
Independent Auditor’s Report 1-4
Management’s Discussion and Analysis 5-17
Basic Financial Statements
Government-wide Financial Statements:
Statement of Net Position 18
Statement of Activities 19
Fund Financial Statements:
Balance Sheet – Governmental Funds 20
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position – Governmental Activities 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 Statement of Activities – Governmental Activities 23
Statement of Net Position – Proprietary Funds 24-25
Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds 26
Statement of Cash Flows – Proprietary Funds 27-28
Statement of Fiduciary Net Position – Fiduciary Funds 29 Statement of Changes in Fiduciary Net Position – Fiduciary Funds 30 Notes to Basic Financial Statements 31-101
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Changes in the Net Pension Liability and Related Ratios 102-103 Schedule of Pension Plan Contributions 104
Schedule of Changes in the Net OPEB Liability and Related Ratios 105 Schedule of OPEB Plan Contributions 106
Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget (GAAP Basis) and Actual – General Fund 107-108
Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget (GAAP Basis) and Actual – Operating Grants Special Revenue Fund 109 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget (GAAP Basis) and Actual – Housing and Community Development Special Revenue Fund 110
Notes to Required Supplementary Information 111-112
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City of Modesto
Table of Contents
PAGE
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES
Nonmajor Governmental Funds:
Description of Nonmajor Governmental Funds 113-114
Combining Balance Sheet 115-118
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 119-122
Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual
Local Transportation Special Revenue Fund 123
Traffic Safety Special Revenue Fund 124
Downtown Improvement District Special Revenue Fund 125
Strategic Planning and Development Special Revenue Fund 126 Transportation Special Tax Special Revenue Fund 127
Cannabis Special Revenue Fund 128
Nonmajor Enterprise Funds:
Description of Nonmajor Enterprise Funds 129
Combining Statement of Net Position 130-131
Combining Statement of Revenues, Expenses, and Changes in Net Position 132-133
Combining Statement of Cash Flows 134-137
Internal Service Funds:
Description of Internal Service Funds 138
Combining Statement of Net Position 139-140
Combining Statement of Revenues, Expenses, and Changes in Net Position 141-142 Combining Statement of Cash Flows 143-146
Fiduciary Funds:
Description of Private–Purpose Trust Funds and Investment Trust Funds 147 Combining Statement of Fiduciary Net Position – Fiduciary Funds – Private–Purpose Trust Funds 148
Combining Statement of Changes in Fiduciary Net Position – Fiduciary Funds – Private–Purpose Trust Funds 149
Combining Statement of Fiduciary Net Position Fiduciary Funds – Investment Trust Funds 150
Combining Statement of Changes in Fiduciary Net Position – Fiduciary Funds – Investment Trust Funds 151
STATISTICAL SECTION
Description of Statistical Section Contents 152
Financial Trends
Net Position by Component – Last Ten Fiscal Years 153
Changes in Net Position – Last Ten Fiscal Years 154-155 Fund Balances – Governmental Funds – Last Ten Fiscal Years 156 Changes in Fund Balances – Governmental Funds – Last Ten Fiscal Years 157 #7..
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City of Modesto
Table of Contents
PAGE
STATISTICAL SECTION (CONTINUED)
Revenue Capacity
Water Utility System 158
Debt Capacity
Ratio of Outstanding Debt by Type – Last Ten Fiscal Years 159 Computation of Direct and Overlapping Debt – Last Ten Fiscal Years 160 Computation of Legal Debt Margin – Last Ten Fiscal Years 161 Revenue Bond Coverage – Wastewater Revenue Bonds –
Last Ten Fiscal Years 162
Demographic and Economic Information
Demographic and Economic Statistics – Last Ten Fiscal Years 163 Principal Employers – Current and Nine Years Ago 164
Principal Property Taxpayers – Current and Nine Years Ago 165 Operating Information
Full-time City Government Employees by Function – Last Ten Fiscal Years 166 Operating Indicators by Function – Last Ten Fiscal Years 167 Capital Assets Statistics by Function Program – Last Ten Fiscal Years 168
CONTINUING DISCLOSURE SECTION
Continuing Disclosure Requirements Information 169-180
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Department of Finance
P.O. Box 642
Modesto, California 95353
209.577.5369
Modestogov.com
Hearing and Speech Impaired Only
TDD 209.526.9211
December 08, 2025
To the Honorable Mayor, Members of the City Council, and Citizens of the City of Modesto:
We are pleased to present to you the Annual Comprehensive Financial Report (ACFR) for the City of Modesto (the City). The City Charter and Municipal Code require that a complete ACFR, which is comprised of financial statements and reports on the finances of the City, be submitted to the City Council at the end of each fiscal year. This report fulfills that requirement for the year ending on June 30, 2025.
City management assumes full responsibility for the completeness and reliability of the information contained in this report. We believe the data fairly represent the financial position and results of operations of the City. The disclosures necessary to enable the reader to understand the City's financial affairs have been included. The City's accounting system has been developed and maintained with due consideration given to the adequacy of internal controls. Because the cost of internal controls should not exceed the anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. The evaluation of the costs and benefits of a particular control requires estimates and judgments by management.
The Modesto City Charter also requires an annual audit to be performed by an independent certified public accountant selected by the Modesto City Council. The accounting firm of Vasquez + Company, LLP was selected in 2023 to perform the City's annual financial audits. The auditors have issued an unmodified (“clean”) opinion on the financial statements for the fiscal year ending on June 30, 2025, which is presented on page 1. In addition to meeting the City Charter audit requirements, the audit was also designed to meet the requirements of the Federal Single Audit Act Amendments of 1996 and Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, (Uniform Guidance). The auditor’s reports related specifically to the Single Audit will be presented separately at a later date.
Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A is designed to be read in conjunction with this transmittal letter.
City of Modesto Profile
Modesto is located in the heart of California's San Joaquin Valley and is the County Seat of Stanislaus County. It is also the retail, service, and financial center of Stanislaus County and the #7..
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Northern San Joaquin Valley. The City currently occupies a land area of 37.8 square miles and serves a population of 219,765. The City has a diverse economy and population with a strong sense of community pride.
Incorporated as a municipal city in 1884, the City adopted its City Charter on March 12, 1951, with a Council-Manager form of government. The Modesto City Council (Council) is the City’s legislative body and is made up of seven elected officials serving overlapping 4-year terms. The Mayor is elected at-large by the entire City, while the six Councilmembers are elected by district and are limited to two terms.
The Council sets policy and tax rates, approves budgets, and passes ordinances and resolutions that govern the City. The Council also appoints citizens to advisory boards, committees, and commissions, and appoints the City Manager, City Attorney, City Clerk, and City Auditor. The City Manager is responsible for carrying out Council policy and managing the day-to-day affairs of the City.
The City is a “full-service” city providing services that include police and fire protection; public works; water and sewer; community and economic development; parks and recreation; and cultural and convention visitor services.
The City’s financial reporting entity includes all funds and activities of the City as the primary government and its component units, which are legally separate entities that operate under the auspices of the City and provide services that supplement City services. The City’s component units are blended into the City’s funds because there is a financial benefit/burden relationship when the City or management has operational responsibility over the component unit. These component units are the Modesto Public Financing Authority and the City of Modesto Community Facilities Districts.
The annual operating budget serves as the foundation for the City’s financial planning and control.
The proposed budget is adopted annually prior to July 1 by Council ordinance. The Council’s legally adopted budget level is at the fund level. Throughout the fiscal year, the budget may be modified. The Council has also adopted fiscal policies that delineate the delegated budget control authority to the following parties: Council, the City Manager, and the Office of Performance Management and Budget (OPMB) Director.
Local Economy
A major center for local commerce, the City attracts thousands for work, shopping, and entertainment. Key industry sectors include manufacturing, healthcare, education, retail, and bioindustrial. Modesto and its surrounding communities contain canneries, packing plants, and warehouses that ship agricultural products across the nation and the world. An active farm-totable movement has been spearheaded by the area’s large production of nuts, dairy, poultry, and other locally grown products. Modesto plays a pivotal role in a growing, vibrant regional economy that tops $1 trillion within a 100-mile radius. More growth lies ahead, thanks in part to the region’s abundant biomass and leading role in emerging multi-trillion-dollar circular economy initiatives.
The unemployment rate within the county-wide Modesto Statistical Area (MSA) increased during the 2024-2025 fiscal year. As of June 30, 2025, the City’s unemployment rate was recorded at
5.4%, up from the 5.20% rate of a year ago as employers adjusted to higher inflation and interest rates.
According to Zillow, the ZHVI (Zillow Home Value Index) for homes listed in Modesto was $451,075 (as of June 30, 2025), a decrease of 3.8% from 2024. CoStar Realty Information stated #7..
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the average Modesto MSA multifamily unit asking rent was $1,583, up 2.3% from $1,548 in 2024.
Modesto building permit activity during fiscal year 2024-2025 ended with a total of 4,585 permits issued with a valuation of $241,208,491.
Modesto sits at the center of California’s Central Valley, a strategic spot that makes it a nexus for agriculture and industry. Modesto is a prime and central location for business and has attracted both start-ups and expanding firms. Regional Kaiser and Sutter Health facilities are expanding, and specialized health care facilities like HealthSouth and Central Valley Specialty Hospital have chosen to locate in Modesto. There is also a strong culture of entrepreneurship and innovation.
Datapath, a technology management company with headquarters in Modesto, has been recognized by Inc. Magazine as one of the fastest-growing private companies in America. E&J Gallo Winery, also based in Modesto, is the world’s largest privately-owned winery and the leading US exporter of California wines. The Gallo Glass Company is a state-of-the-art glass manufacturer and a leading producer of wine and spirits glass bottles in the US.
New Growth
In April 2021, President Biden signed into law the American Rescue Plan Act (ARPA), a $1.9 trillion emergency relief measure intended to address the impact of COVID-19. Key allocations from the American Rescue Plan have been made available directly from the federal government for the community, including direct support for businesses, homeowners, renters, and non-profit organizations. This legislation made a historic investment into local governments that includes $45,897,056 available to the City of Modesto to help address the local impact of COVID-19. The $45.89 million is being made available by the U.S Treasury directly to the City in two tranches: 50 percent was made available in May 2021, and the remaining 50 percent was received on June 6, 2022.
The Modesto Forward strategy was approved by Resolution 2021-194 on May 25, 2021, and was later modified by Resolution 2022-104 on February 8, 2022, Resolution 2022-237 on July 12, 2022, Resolution 2023-97 on March 7, 2023, Resolution 2023-254 on June 6, 2023, and Resolution 2024-194 on June 4, 2024. It included various allocations of funding approved by Council identified in the 2021 spending plan, totaling $45.89 million. At the time of this report, the full allocation of funds, $45.89 million, has been expended and obligated.
To arrive at the Year 2 expenditure plan, staff solicited priorities from the public and the Council at the three standing City Council Committees: Economic Development, Safety and Communities, and Finance. Staff also released a 10-question survey intended to gauge the priority areas of the community and received approximately 700 responses to the survey. Key priorities identified in the survey and in the standing committees include the following: housing stability/ homeownership, neighborhood safety, and improvements to roads and sidewalks. The Council and community expressed an interest in continuing many of the pilot initiatives that were launched as part of the 2021 spending plan and expressed a desire to extend the program periods with funds made available from the second allotment of ARPA funds.
In fiscal year 2024-2025, as of December 31, 2024, the City of Modesto successfully obligated the full $45.89 million allocation of ARPA funds, meeting the federal deadline. City staff continues to manage the spending plan, ensuring that ongoing program expenditures remain aligned with U.S. Treasury guidelines and are fully expended by the December 31, 2026, deadline. #7..
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ARPA Funds Spending Plan – Economic Vitality
Eligible Category Year Description - ACFR Allocation
Negative Economic Impact 1 Affordable Housing Trust $500,000 Negative Economic Impact 1 Relief Across Downtown Card 708,500 Negative Economic Impact 1 Revolving loan fund for water/sewer connection fees 90,000 Negative Economic Impact 1 Support for Awesome Spot Playground 500,000 Negative Economic Impact 1 Support for Car Museum 500,000 Negative Economic Impact 1 Support for Children’s Museum 500,000 Negative Economic Impact 1 Support for the Arts 200,000 Negative Economic Impact 1 Tuolumne River – Economic Development 574,785 Public Health-Negative Economic Impact 1 Implementation of a workforce development program 500,000 Public Health-Negative Economic Impact 1 Opportunity Stanislaus 100,000 Public Health-Negative Economic Impact 1 Small biz support with expansion and retention 610,000 Public Health-Negative Economic Impact 1 Stanislaus 2030 Initiative 90,000 Negative Economic Impact 2 Support for Convention and Visitor's Bureau 750,000 Negative Economic Impact Reall. Business Incentives - Expand outside of Downtown 500,000 Negative Economic Impact Reall. Dryden Clubhouse Renovation (Design) 400,000 Negative Economic Impact Reall. First Tee and Boys and Girls Club - Funding Contribution 500,000 Negative Economic Impact Reall. Stanislaus County Library - Funding Contribution 500,000 Negative Economic Impact Reall. Support for Awesome Spot Playground (2nd Allocation) 600,000 Negative Economic Impact Reall. Support for Car Museum (2nd Allocation) 350,000 Negative Economic Impact Reall. Support for Gallo Arts Center 50,000 Negative Economic Impact Reall. Support for Modesto Area Partners in Science 50,000 Negative Economic Impact Reall. Support for Modesto Sister Cities 35,000 Negative Economic Impact Reall. Support for State Theatre 75,000 Public Health-Negative Economic Impact Reall. Opportunity Stanislaus (2nd Allocation) 200,000 Public Health-Negative Economic Impact Reall. Support for Central Valley Opportunity Center 25,000 Total $8,908,285
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ARPA Funds Spending Plan - Governance and Service Delivery Eligible Category Year Description – ACFR Allocation
Public Health 1 Address deferred maintenance at various parks and public facilities
138,665
Revenue Replacement 1 Address deferred maintenance at various parks and public facilities
377,621
Revenue Replacement 1 Cybersecurity Mitigation 490,000
Revenue Replacement 1 Discoverer Replacement 500,000
Revenue Replacement 1 Fire Station 1 Deferred Maintenance 2,000,000 Revenue Replacement 1 Forestry Program Enhancements 1,000,000 Water, Sewer, and Broadband
Infrastructure
1 Address deferred maintenance at various parks and public facilities
225,000
Negative Economic Impact 2 911 Dispatch Services 63,116 Public Health-Negative Economic Impact 2 Reserve Funding [2022-2023 Deficit] 1,317,160 Premium Pay Reall. Employee Hazard Pay 6,552,810
Public Health-Negative Economic Impact Reall. Reserve Funding [2024-2025 Deficit] 2,000,000 Total $14,664,372
ARPA Funds Spending Plan - Quality of Life
Eligible Category Year Description - ACFR Allocation
Negative Economic Impact 1 Blight Abatement 565,720
Negative Economic Impact 1 Grants to neighborhoods 120,000 Negative Economic Impact 1 Homeless Support Program 885,722 Public Health 1 Emergency Medical Service Equipment 600,000 Revenue Replacement 1 Reserve Funding [2021-2022 Deficit] 4,630,000 Revenue Replacement 1 Downtown Beautification 700,000
Negative Economic Impact 2 Community Assistance Team 400,000 Negative Economic Impact 2 Downtown Streets Team 1,800,000 Negative Economic Impact 2 Multifamily Bulky Item Program 180,000 Negative Economic Impact 2 West Modesto Collaborative 43,000 Revenue Replacement 2 Park Improvements (including turf at Mary Grogan) 9,343 Negative Economic Impact Reall. Cesar Chavez Renovation Project 5,448,883 Negative Economic Impact Reall. Homeless Services (Day Center, Safe Park, Bridge Housing) 1,514,278 Public Health-Negative Economic Impact Reall. Covid-19 labor expenses 4,694,417 Revenue Replacement Reall. Downey Shade Structure 233,036 Revenue Replacement Reall. Expand Downtown Beautification 500,000 Total $22,324,399
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Passage of Measure H, a One-Cent Sales Tax for General City Services On November 8, 2022, the Modesto voters approved Measure H, a one-cent local sales tax for general city services. On November 29, 2022, by Resolution No. 2022-453, the Modesto City Council certified the election results.
With the passage of Measure H, the City began collecting sales tax revenue in April of 2023.
While the sales tax revenue generated by Measure H can be used for any general city purpose, the ordinance language did identify examples of expenditures that allow the City to proactively develop a plan to improve City services and the quality of life in Modesto. The expenditures include:
• Funding to address police patrols, gang, drug, and crime prevention. • Funding to address fire protection, paramedic, and 911 emergency response. • Funding to address homelessness.
• Funding for cleaning up trash and illegal dumping.
• Funding for keeping streets, parks, sidewalks, landscapes, and infrastructure safe, clean, and well-maintained.
As part of the ordinance language that was passed with Measure H, a citizen Oversight Board was created to audit the revenues and expenditures of the new sales tax to ensure that funds are being spent appropriately by the City and for the purposes approved by Council.
Measure H Sales Tax is estimated to bring in an additional amount estimated at over $42.8 million annually. This funding will be critical in the City’s ability to provide improved and sustainable services to the citizens of Modesto.
Impact of Measure H Additional Funding
• Park Improvements such as playground replacements, sport court renovations, park lighting, restroom replacements, concrete repairs, tree trimming and site furnishings. • Large Park renovations at Cesar E. Chavez and Dr. Martin Luther King Jr. Parks. • Facility improvements at Maddux Youth Center.
• Security services at Community Centers and Historical Properties. • Additional funding for Outside Contractors for forestry pruning, stump removal, and stump grinding.
• Funding for the Reforestation of City Trees program.
• Funding for outside contractors to continue to address curbs, gutters, and sidewalks. • Funding for a Revolving Loan Fund for Accessory Dwelling Unit (ADU) development. • Funding for Interim Housing Program via a Motel Voucher Program. #7..
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• Additional funding for a Marketing Program geared towards Measure H related programs/projects.
• Purchase of additional Fire Department equipment such as 6 LifePak 15’s and 6 Lucas Devices.
• Additional positions for the Police Department’s Real Time Crime Center (RTCC): Police Technicians, a Senior Police Technician, and a Police Civilian Manager. • Additional positions for the Police Department: Code Enforcement Officers and Police Civilian Investigators.
• Additional positions for Parks, Recreation and Neighborhoods: Maintenance Workers. • Funding for the Pelandale Street Landscape Project design work. • Funding for the Parks Master Plan Project.
• Funding for the Parking Access Revenue Control Systems at the three Downtown Garages: 9th, 10th, and 11th Street garages.
Entertainment and Tourism
Modesto features vibrant arts, entertainment, sports, and cultural expression. With the partnership with Visit Modesto, Modesto is committed to attracting visitors by promoting and marketing Modesto as a convention, sports, tourism, and leisure travel destination. The City provides prime access to major highways and a municipal airport — as well as proximity to abundant lifestyle attractions.
Annually, the community supports some of its treasured events like the Celebration of Lights Parade, Historic Graffiti Cruise Route Parade, Fourth of July Parade, Music in the Plaza, and MoBand summer concert series at Mancini Bowl. Visit Modesto’s Almond Blossom Cruise has attracted attention from tourism blogs and magazines as far away as Great Britain and Japan. It is nice to see visitors return each year to Modesto to enjoy all the wonderful places and events we have to offer.
Some examples of the places and events are:
• Downtown Modesto is home to the world-class Gallo Center for the Arts, which brings national and international entertainment, arts, and multicultural programming to the Central Valley region. Downtown, you can experience the Historic Graffiti Cruise Route, the Legends of the Cruise Walk of Fame, and the Classic Community Mural Series celebrating the cruising culture phenomenon born in Modesto and immortalized by native son George Lucas in American Graffiti. Live entertainment is a prominent feature in the Civic Plaza and nearby clubs, and a busy calendar of entertaining and educational events can be experienced just across the street at the Modesto Centre Plaza. • Baseball with the Modesto Nuts baseball team is just minutes from the city center (2025 marked the last baseball season for the Modesto Nuts), and golfers enjoy two highly rated 18-hole courses. Modesto continues to gain recognition for its bike routes and trails and recently opened a new boat launch site that will increase non-motorized recreational use of the Tuolumne River regional park.
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• The McHenry Mansion and McHenry Museum anchor the city’s loving preservation of its historical heritage, drawing visitors from all over the world. The iconic State Theatre hosts countless non-profit events and provides an enhanced cinematic experience. The entertainment continues with monthly Art Walks in downtown, Mod Shop Arts and Crafts Walks, and seasonal activities including the Spirit of Giving 5K Run, Graffiti Cruise, Modesto on Ice skating rink, and Porchfest Community Music Stroll for residents and visitors to enjoy. Modesto truly offers something great for everyone. • Modesto also hosts a myriad of outdoor and recreational attractions throughout the city.
The Tuolumne River Regional Park was recently enhanced with a new boat launch site to support non-motorized recreational activities. The Virginia Corridor Trail is a well-loved multi-use recreational path that plays a key role in the city’s parks system. The trail is part of a broader network that links neighborhoods, parks, and schools, making it a vital corridor for both recreation and non-motorized commuting. Modesto’s bike routes and trails also play a vital role in this connectivity, and we continue to gain recognition for our cycling infrastructure.
Our Strategic Priorities
On June 3, 2025, under Resolution Number 2025-169, the City adopted the 2025-2026 Strategic Plan to incorporate input from the public, City staff, and the City Council and to reaffirm our goals and strategies. Our goals bring the City’s vision and values to life in our community and define our overall direction as a city, confirming our commitment to our citizens. While the strategies are individually important, they are also interconnected amongst all goals and cannot be addressed in isolation. In addition, they are the basis of our scorecard that measures success and upon which our key performance metrics are built. Within the 2025-2026 Strategic Plan, the City has adopted the following Vision, Mission and main Areas of Focus:
Vision Statement:
Modesto will be a welcoming and well-maintained home for residents with a downtown that serves as the heart of our community; a regional hub for economic development with easy access for visitors to the best the region has to offer.
Mission Statement:
We are committed to the delivery of exceptional public services and building partnerships that promote economic prosperity and engaged neighborhoods.
• Quality of Life: Engage partners across the community to ensure the safety, resilience, and attractiveness of Modesto.
• Economic Vitality: Retain and attract residential, commercial, and industrial development to meet the community’s needs today and for the next generation. • Governance and Service Delivery: Build community trust in City government through responsive, transparent, and efficient service delivery. #7..
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Long-Term Financial Planning
The City continues to refine its 10-year forecasting model and updates estimates and assumptions used to project future operations. At the end of fiscal year 2024-2025, General Fund Balance was as follows: Restricted and Non-spendable: $13.1 million; Committed: $18.4 million; Assigned: $2.7 million; and Unassigned: $54.1 million. The Committed Fund Balance allows the City to respond to unplanned circumstances and maintain adequate working capital to meet its cash flow needs.
The City’s long-term maintenance of a stable fund balance is a direct reflection of the Mayor and Council’s leadership and prudent fiscal management. The City will continue to monitor the revenue impacts and monitor the General Fund reserves to address any shortfall during the current fiscal year.
Significant Events / Accomplishments
Quality of Life:
• The Forestry Division resolved 2,980 broken limb issues and completed 11,807 tree pruning activities.
• The Forestry Division removed 772 trees and 634 stumps. #7..
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• The Forestry Division pruned 812 trees for mistletoe. • The Solid Waste Division recycled 4,511 waste tires and 5,826 mattresses. • The Solid Waste – Blight Abatement Team collected over 465.28 tons of illegal dumping. • The Modesto Senior Citizens Center continues to provide a wide array of programming, with over 35,000 participants attending this past year. This 7,000-visitor increase is due in part to new programs including Barre for Fitness, CyberSenior technology education, and Older Americans Month festivities. The Center even received a donation to enhance senior technology learning. The facility has become a popular rental venue for the general public to utilize for a variety of celebrations and events. #7..
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• Recreation programs had over 4,700 registered participants. Programs include camps, Adaptive Bowling, Adaptive Friday Night Out, Dance Lessons, Tennis Lessons, Crime Scene Investigation (CSI) Camp, Driver’s Education, Swim Classes and Lessons, and Soccer Lessons – to name a few. New to this year was disc golf. Due to overwhelming demand, we doubled our soccer lesson offerings by adding a second location. Our Toddler Music Class filled so quickly that a second class was added. • In the fiscal year 2024-2025, the Adult Softball Program hosted 152 adult softball teams totaling over 1,700 registered players in men’s, women’s and coed leagues at Beyer and Davis Park.
• The Aquatics program was in full force with participants for swim lessons, adult water exercise, and certification courses at five different pool locations, with almost 4,000 participants.
• The Parks, Recreation and Neighborhoods (PRN) Department now manages the Special Event Permit process. Staff reviewed and revised the application process to provide a smooth experience for the public.
• Park’s Recreation and Neighborhood’s held 38 events with over 41,000 participants and partnered on an additional 21 events with almost 9,000 participants. #7..
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The Department’s holiday events include:
o The Celebration of Lights Parade in downtown Modesto, which entertained an estimated 30,000 spectators with 93 wonderfully decorated float entries celebrating the “Downtown Disco” theme.
o The Breakfast with Santa event was held in partnership with the North Modesto Kiwanis spread cheer to over 700 participants and raised $10,000 for Leisure Bucks scholarship program.
o The Modesto Spirit of Giving 5K had roughly 1,100 participants and raised over $24,000 for the Leisure Bucks scholarship program.
• The PRN Department attended 27 events throughout the City with over 15,000 participants to reach out to the community, answer questions and offer programming and resource information and water safety education.
• Mary Grogan Park was visited by over 120,000 players and spectators, with the 7 fields rented over 2,000 times, generating over $330,000 in revenue. #7..
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• The PRN Department coordinated the City’s volunteer efforts at 558 events, including Love Modesto and river trail clean-ups. Overall, there were 3,083 volunteers that provided 17,695 hours of service with a total leveraged value of $695,958. • The PRN Department increased its website and social media presence utilizing Instagram and Facebook platforms to connect directly with the community and have another form of communication to answer questions.
o Facebook followers increased by 1,347 followers.
o Instagram followers increased by 1,013 followers.
• The After School Education and Safety (ASES) program took place at four school sites with a total of 20,722 students for the year. The program has increased to include Expanded Learning Opportunities Programming (ELOP) during winter, spring, and summer breaks.
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• The City of Modesto’s Youth Commission had a busy 2024-2025 term! They partnered with the Parks, Recreation and Neighborhoods Department for community outreach opportunities at their events and participated in the Hope Blooms Love Modesto project. • Neighborhood Center at Marshall Park enriched 4,114 youth for a variety of programs and fun activities including All Sports Camp, After-School Activities, creative projects, homework assistance and fitness/nutrition classes.
• The Modesto Junior Giants league added 2 softball teams to their program, bringing the total to 12 softball teams with 183 players. The program also has 38 baseball teams with 597 players, giving us a total of 50 teams this summer. In total, we served around 790 players throughout the season! Junior Giants is a completely free, youth baseball and softball league that focuses on the fundamentals of baseball while teaching children the importance of confidence, integrity, leadership, and teamwork. • The California Violence Intervention & Prevention (CalVIP) Grant held 9 events serving over 500 members of the community.
• Our Guest Services Team managed 264 picnic area reservations and over 300 Facility bookings.
• The McHenry Mansion partnered with the Stanislaus County Library to host Spooktacular, a family Storytime and trick-or-treat event, where over 800 community members attended. #7..
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• The McHenry Mansion held its annual Candlelight Tours in December. Over the course of two nights, 976 individuals were led through the Mansion by tour guides. There were 30 volunteers, 12 part-time recreation staff and 3 full-time staff who helped make the event successful.
• The elevator at the Mansion underwent a complete modernization, with replacement of control and drive systems including power supply, hydraulics, communication devices and more.
While the public facing aesthetics of the elevator did not change, the internal upgrade provided much needed safety enhancements. The complete upgrade costs a total of $100,000. • The McHenry Museum hosted the Night at the Museum event where 598 guests had the opportunity to explore the Museum, interact with historical figures, and participate in activities to win prizes. 39 community members and 8 staff helped make the event a success. #7..
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• The McHenry Museum curated and displayed 6 exhibitions this year, most notably, Legacy of Lowriding (Summer 2024), Diamonds in the Dust (Winter 2024), and 150 Years of Modesto Fire Department (Spring 2025). 4,867 guests viewed the exhibitions on display when they visited during open hours.
• The McHenry Museum had some upgrades this year including 3 HVAC units replaced at a value of $54,000 and painting of temporary exhibition rooms at a value of approximately $20,000.
• The sound system was upgraded for improved audio and connectivity to the upstairs large halls of the Modesto Centre Plaza. Sound can now be configured collectively for all rooms or separately. Music is now played in the main lobby.
• Disability Resources Agency for Independent Living (DRAIL) held its Second Annual Disability Awareness Day event in October 2024. The event served over 500 community members to help connect them with services and support teams to increase their independence and advocate for their rights. **Pictured below is a free lunch being served to the attendees by DRAILS’ volunteers.
• Healthy Aging was held in October 2024, to keep the health of the community at the forefront and to reach even more older adults. The annual event allows community organizations to distribute resources and goodies to help them live longer, healthier lives. ο Health Screenings & Services that were provided at the event. ο Diabetes & Cholesterol Screenings
ο Blood Pressure Checks Bone Density
ο Depression Screening
ο Oral Cancer Screening
ο Foot Care Screening
ο Skin Health Assessments
ο Vision Screenings
ο Senior Fitness Tests
ο Drop the Drugs
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ο Flu Shots (quantity limited)
ο Home Modification Display
• On October 22, 2024, the City Council approved the purchase of five fire engines and two trucks. These new apparatuses represent a shared investment in public safety, firefighter health, and operational readiness. The purchase was made possible through the support of our City Council and the citizens of Modesto, whose approval of Measure H has had a direct impact on our ability to modernize and strengthen our emergency response capabilities. With expected delivery in 2028, our department ensures that our fleet will remain ready and reliable as our city continues to grow.
• Through a partnership with the Engineering Services Department, the City Council approved an architectural services agreement with RED Inc. Architects for the Fire Station 1 rehabilitation and tenant improvements project. The building, originally constructed in 1939, needs various interior and exterior improvements. The design process is well underway, and construction is set to begin in Fall 2026. Along with addressing the needs and preserving the look of the historical art deco building, this project will also provide Modesto Fire Department personnel with the necessary amenities to carry out their daily tasks for many years to come. #7..
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• The completion of a standards of coverage study by Fitch and Associates aided in ensuring the Modesto Fire Department’s (MFD) response capabilities align with the community’s risk, need, and service expectations. The study identified an increase in calls for service while realizing staffing reductions since 2008. MFD acknowledges the recent study and is committed to carefully reviewing its findings and recommendations to ensure we continue delivering the highest level of service and protection to our community. • MFD’s Emergency Medical Services (EMS) Division made significant strides through training and operational improvements:
o 5,319 hours of training provided to 323 personnel across Modesto, Stanislaus Consolidated, and Turlock.
o Acquired two new simulation mannequins featuring advanced technology to enhance realism and improve scenario-based learning.
o Medic 1 responded to more than 700 calls for service. o The new Medic 1 vehicle was put into service.
• Construction was completed on Phase 1 of the Turf Reduction project that removed turf at 4 parks in an effort to save water.
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• Construction was completed on the renovation of Tuolumne River Regional Park (TRRP) Picnic Area B.
• Construction was completed on the TRRP River Pavilion and Learning Theatre, which provides a couple of new venues to enjoy the Tuolumne River Regional Park. #7..
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• With additional funding from Measure H, work on Year 2 of a 5-year plan to address deferred and preventative maintenance began:
o Construction was completed on the replacement of playground structures at six parks: Aqueduct Park, City Gate Children’s Park, Mildred Perkins Park, Lakewood Park, Riverside Park, and Orchard Park.
o New Park signs were installed at six parks: Mildred Perkins Park, Graceada Park, Robertson Road Park, Sipherd Park, Catherine Everett Park, and Brewer’s Rose Park.
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o Basketball and volleyball courts were sealed and striped at 9 parks. o Concrete repairs were completed at 13 parks.
o The parking lots at McHenry Museum, Mark Twain Park, Mary E. Grogan Park and at Thurman Soccer Fields were repaved and restriped.
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o The restroom at Graceada Park was replaced. Work on the restroom replacements at Robertson Road and Mark Twain Park continues.
• The Golf Courses had record-breaking financial performance with total revenues of $3.5 million and net income of $2.1 million. These figures represent the highest on record for the City’s municipal golf courses. A testament to the dedication and performance of the Golf Course staff.
• This year, Creekside Golf Course launched PGA HOPE (Professional Golfers Association Helping Our Patriots Everywhere). This impactful program was embraced enthusiastically by both participants and the broader golf community. PGA HOPE is the flagship military program of PGA REACH, aimed at introducing golf to Veterans and Active-Duty Military to enhance their physical, mental, social, and emotional well-being. • Conducted over a 6–8-week curriculum led by our PGA Class A Professionals, Larry Alvarado and Chris Mendes, who have been trained in adaptive golf and military cultural competency. • Free of charge to all Veterans, supported by PGA REACH and PGA Section Foundations. #7..
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• Continuing the tradition of community outreach, the Golf Courses partnered with the Modesto Gospel Mission for the Annual Christmas Toy Drive. Thanks to the generosity of staff and customers, they successfully delivered toys to underprivileged children throughout the community – spreading joy and making the holiday season brighter for many local families. • Mancini Park ballfield underwent a complete renovation. Improvements made include new edging of infield material and turf, and refurbishment of the backstop with new backboards and paint.
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• New Kiosk Community sign has been installed at Lakewood Park. Neighborhood community group requested a sign for park reservations and neighborhood notices. Park staff installed concrete pads and walkway of the park.
• Needham at 13th St. Median was renovated. Previously, this median was a bare ground median. Park staff saw a need to improve and enhance the median by installing new plantings and upgrading the irrigation.
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• Park Operations staff renovated 3 ballfields including Davis Park, Downey Park and Enslen Park. Improvements included a new infield and pitcher mounds. • Riverside Park’s sports fields underwent a complete renovation. The ballfield and soccer field were renovated by bringing in sand to level the fields and then seeding the turf for improved playing conditions.
• Annual playground surfacing (Playground wood chips) installed at more than 20 parks. A total of 1,980 cubic yards of playground wood chips was purchased and installed. • Weekly preparation and coordination for 6 weeks of MoBand. Preparation included pressure washing, painting, and lighting checks, as well as portable restrooms for each event. #7..
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• Park Operations poured concrete pads and installed new Park signs ordered by Parks Planning for Graceada, Roberts Road and Everett Parks.
• New soccer goals are installed at Riverside and Aqueduct parks. • Replaced cable at TRRP Boat Ramp with a more secure cable with clamps to discourage theft.
• The City of Modesto formed three (3) Community Facilities Districts (CFDs) in fiscal year 2024-2025. CFDs are special taxing districts that are formed upon a petition by landowners and a majority vote approving the formation of the district. CFDs are a mechanism to fund the installation and ongoing maintenance of needed infrastructure improvements required by new development projects, as well as for services that include police and fire services. o CFD No.2024-1 Tivoli was formed on September 24, 2024. Currently, projects supported by the Tivoli CFD are moving through the City of Modesto entitlement process that would result in the construction of over 1,000 single-family dwelling units. o CFD No.2024-2 Fairview Village #2 was formed on October 22, 2024, and will support the necessary infrastructure improvements needed for 217 proposed single-family dwellings. o CFD No.2025-2 Kiernan Business Park South #2 was formed on March 11, 2025, to replace the previous Kiernan Business Park South CFD. The improvements funded through this CFD will support 312 multifamily units, commercial and church uses, as well as single-family developments.
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• Received an award for a State of California Homekey 3.0 award in the amount of $15.8 million dollars for the acquisition and rehab of the Traveler’s Motel into Jenny’s Place, 53 units of permanent supportive housing and one manager’s unit in partnership with Modesto Homekey LP and completed in Spring 2025.
• Partnered with the Housing Authority to construct 34 units of affordable housing in two separate housing complexes and installed road improvements and associated infrastructure along Vine Street.
• King Kennedy Cottages, 23 units, serves as permanent supportive housing for Behavioral Health clients and veterans with income restrictions for designated units at or below 30% of the area median income (AMI).
• Helen White provides 12 units to low-income seniors. The project was completed in the Fall of 2024.
• Partnered with Stanislaus County Affordable Housing Corporation for the acquisition of 835 California Ave, Modesto, to house COVID-19 vulnerable individuals. The project provides seven permanent supportive housing units for Very Low-Income families with family members with serious mental illness. The project was completed in the Fall of 2024. #7..
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• The City of Modesto was awarded $33 million for the development of Seventh Street Village from the State of California’s Affordable Housing and Sustainable Communities (AHSC) Grant in partnership with Visionary Home Builders. This project will develop a mixed-use apartment of 79 units of affordable housing anticipated groundbreaking in Fall 2025. • The City of Modesto received an Encampment Resolution Funding award in the amount of $5.7 million, to bolster the City’s Camp2Home initiative and will make strategic investments in outreach, congregate and non-congregate shelter, and housing support. • The City of Modesto has continued the Camp2Home initiative. Our priorities have been to focus on the developed approach to our comprehensive homelessness action plan that reduces encampments in public spaces, ensures the provision of supportive services, and identifies strategies for permanent housing through the following program components:
o Street Outreach: Through the street outreach component, the Community Health and Assistance Team (CHAT) has continued to engage and build relationships with unsheltered individuals and provide immediate support, intervention, and connections with mainstream social services, shelters, and housing programs. During the program year, CHAT has made 5,920 outreach contacts and provided 4,940 services to homeless individuals. o Emergency Shelter: The Salvation Army’s Berberian Shelter assisted 786 unduplicated homeless individuals with case management and shelter services for the program year. o Job Training: The Downtown Streets Team (DST) program aims to end homelessness through workforce training, employment and employer pipelines. DST assisted Camp2Home program has assisted 381,173 individuals with job and housing readiness services for the program year.
o Permanent Employment: DST and workforce development have partnered to train Camp2Home participants with obtaining permanent employment. For the program year, 31 individuals obtained employment and housed a total of 50 individuals. #7..
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o Permanent Housing: Camp2Home considers that securing stable employment is a priority to ensure housing success. Therefore, as individuals graduate from the job training program and obtain gainful and sustainable employment, they are eligible for the next step in the process – rapid rehousing assistance. DST provides case management as part of the rapid rehousing assistance to help individuals connect to resources that improve their safety and well-being, as well as achieve long-term housing and employment success.
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• A total of $217,968 was distributed in loans and grants through the City's Homeowner Rehabilitation Program. A total of eight (8) eligible households were served through this program. The City assisted eligible households with health and safety repairs including, but not limited to installation of energy efficient windows, energy efficient HVAC systems, re-roof, electrical and plumbing repairs, lead testing, exterior doors, new fencing, porch repairs, American with Disabilities (ADA) bathroom improvements, and ADA ramps. Provided below are before and after images of a Homeowner Repair Program Project.
Before
After
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Economic Vitality
• The Compost Division processed over 44,925 tons of residential and commercial organics into compost.
• The Solid Waste Division collected and recycled 4,809 pounds of California Redemption Value (CRV) keeping it out of the waste stream.
• The Streets Division completed 42.29 lane miles of crack seal application and 223.79 lane miles of slurry seal application.
• The Streets Division completed 55,533 square feet of sidewalk repair and 11,651 linear feet of curb and gutter repair.
• The Traffic Operations Division replaced and repaired 1,544 traffic signs and completed 184,252 square feet of striping for legends and crosswalks. • The Traffic Electrical Division converted 89 high voltage lights to low voltage light-emitting diode (LED) streetlights.
• The Traffic Division installed two High Intensity Activated Crosswalk (HAWK) beacons at the Modesto Farmers Market.
• The Traffic Division installed 32 vehicle detection cameras at 8 intersections within the City of Modesto.
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• The Planning Division updated the City’s Accessory Dwelling Unit (ADU) regulations to comply with and exceed State requirements.
• The Planning Division prepared a Programmatic Environmental Impact Report for the General Plan, which will facilitate a more efficient and expeditious environmental review of future projects in the City of Modesto. Along with this update was the implementation of programs from the City’s Housing Element that was found in compliance by the California Department of Housing and Community Development in April of 2024, including the update of residential densities, and allowance for duplexes on all low-density residential (R-1) lots in the City.
Implementation of these programs keeps the City’s Housing Element in compliance ahead of future State review and follows through on the commitments made in that document. • The Planning Division processed and approved several subdivision projects, including but not limited to 554 homes for the Solana Subdivision, 189 homes for the Bridges, 185 homes for the Martin Project, and 74 homes for Olivewood.
• The Planning Division received 261 planning applications. • The Planning Division approved 117 staff level planning projects. • The Planning Division held 31 Hearings between Planning Commission, Board of Zoning Adjustment and Landmark Preservation Commission.
• 798 building plan checks referred to the Planning Division. • Ribbon cutting and grand opening of Jenny’s Place, 54 units of permanent supportive housing at the former Travelers Motel at 710 9th Street.
• The Building Safety Division contacted 25 commercial building owners and 107 residential building owners under the newly enhanced Vacant Building program. • The Building Safety Division brought 173 unpermitted or substandard buildings into compliance with the applicable building codes.
• During fiscal year 2024-2025, Building Safety registered 4,973 rental units. • 1,528 rental code enforcement cases were initiated, 101 of those cases were tenant-driven complaints and 1,427 were City generated.
• 2,702 rental inspections were completed.
• 588 rental units had violations that were brought into compliance by our dedicated Code Enforcement Officers.
• The Economic Development Division’s 5-year Economic Development Strategic Plan and Action Plan was approved by City Council in June 2025. The plan, in alignment with the General Plan 2050 update, guides economic development efforts across 22 focus action areas with 122 program action steps with key performance indicators (KPIs). Community engagement included a Stakeholders Summit; Forums on workforce development, entrepreneurial development, state policies and legislative agenda, urban design and zoning; the Central Valley Real Estate Summit, a community workshop, and a public listening session. #7..
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• Economic Development Division Business Attraction assembled a list of more than 400 opportunity sites and worked on 15 commercial and industrial opportunities, with six wins to date. Wins include two Vallarta Supermarkets, an SF Supermarket, Corrugated Supplies Company, a national leader in sustainable cardboard products; Aggreplex, an innovator in cement materials for buildings and roadways; and Sage Plastics, a plastics packaging manufacturer. These wins represent 568 new jobs. The division has also worked to attract retail and hospitality brands. Recent efforts are reflected in the Modesto Development Projects map.
• Economic Development Business Retention and Expansion – is ahead of plan to survey 250 businesses in the coming year to determine their satisfaction with Modesto services and as a business location. Modesto’s survey ratings for Net Promoter Score (NPS) and Customer Satisfaction (CSAT) are outperforming municipal benchmarks by 15% (NPS) and 33% (CSAT).
• The division is in the second phase of an Enhanced Infrastructure Financing District (EIFD) Feasibility Study that begun in 2022. If approved, an EIFD could help accelerate development in and around downtown in alignment with the Downtown Master Plan and a planned Entertainment District. An EIFD will help attract private investment, additional grant funding and build a capacity to support bonds.
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• The Economic Development division supported investment in downtown as a regional destination with occupancy incentive grants to Con Azucar coffee shop and Penny University, and a grease interceptor rebate to Con Azucar.
• Economic Development is working with the Building Safety Division to track and market vacant properties. In the past year, six prospects have been introduced to 2700 Sisk Road (former ToysRUs) and 2800 Sisk Road (former Orchard Supply Hardware), and the division is working on an opportunity for a long-vacant lot at 3824 McHenry Ave. The Planning Division has supported this effort by rezoning 2800 Sisk from a restrictive Planned Development that allowed limited uses to Mixed-Use Highway, which allows a broad potential user base and aligns with the surrounding corridor’s zoning.
• Economic Development Division marketing:
o Attended the International Council of Shopping Centers in Las Vegas, with more than 20 prospect engagements, the International Asset Management Council, with more than 20 prospect engagements, MDM West, a large regional manufacturing and packaging conference, and the UC Merced Innovate to Grow Spring Expo. o Created a business attraction flyer “Grow in California’s Heartland, now working on Volume Two for the coming year. The Division is also working on brochures and flyers, including a Small Business Guide and an Incentives guide.
o Social Media impressions increased 360% from fiscal year 2024 to fiscal year 2025, clickthru rate on Modesto Economic Development’s LinkedIn increased 220% #7..
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o Economic Development division Partner Collaboration and Support: American Rescue Plan Act (ARPA) funding and management – Economic Development manages and coordinates more than $3 million of ARPA grants to partners for programs including licensed childcare expansion, behavioral health workforce development, downtown quiet zones, downtown beautification and blight remediation, youth technical training and career development, farmworker training, revolving loan funds for beautification and development. • Downtown Modesto (DoMo) Partnership – American Rescue Plan Act (ARPA) funding for beautification, lighting, signs and bike lanes.
• Opportunity Stanislaus – increase training and assistance to local businesses. • Visit Modesto – support programs to attract visitors, increase hotel stays and local spending.
• Modesto Chamber of Commerce – ARPA funding for Shop Greater Modesto Online, joint City-Chamber business walks, ribbon cuttings, mixers, and community events. • Stanislaus Latino Chamber of Commerce – ARPA funding for free-access SizeUp business intelligence platform for local businesses, joint business networking events, resource fairs, and workshops to empower entrepreneurs and small business owners. #7..
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• Workforce Development – hosted a job fair hiring event supporting manufacturing, logistics and hospitality, part of connecting 500 local residents with new employment opportunities and assisting more than 100 businesses with recruitment and workforce development opportunities.
• Bioeconomy Agriculture Manufacturing (BEAM) Circular – submitted a site proposal for the BEAM Circular Innovation Center Campus; promoted BEAM programs and outreach including an AgTech and FoodTech Pitch Day, Circular Economy, and Research and Commercialization Grants.
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The Utilities Engineering water, wastewater/storm groups, completed the following projects:
o Empire Yosemite Blvd. Water Main Crossings – the project installed approximately 1,350 LF of new 8” & 12” Water Mains along Yosemite Blvd. in the Community of Empire (Project Cost: $1.2 million).
o Colorado Water Main Upgrade – this project upgraded the water main from a 4” main to an 8” main on Colorado Avenue from South Ave to Garden Avenue as part of the River Trunk Realignment (Project Cost: $650 thousand).
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o Sylvan Water Main Upgrade – this project installed approximately 3,625 LF of new 8” & 12” Water Main on Sylvan Ave. from Oakdale Rd. to Aria Way and on the entirety of Lydia Lane (Project Cost: $1.63 million).
o La Loma Phase 3A Strengthen & Replace Water Mains – this project replaced old, deteriorating water mains by installing approximately 16,400 LF of new 8” & 12” Water Mains in the Trask Ln., Encina Ave., El Vista Ave, and Yosemite Blvd. part of the La Loma Neighborhood (Project Cost: $6.94 million).
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o La Loma Phase 2C Strengthen & Replace Water Mains - Project replaced old, deteriorating water mains by installing approximately 23,000 LF of new 8” & 12” Water Mains in the Encina Ave., Yosemite Blvd., San Juan Dr., and Rowland Ave. part of the La Loma Neighborhood (Project Cost: $9.06 million).
o Grayson Well 69 Surface Improvements – this project provided above ground improvements that included a 400 GPM well, backup generator, and flush line along Brenner Way (Project Cost: $4.25 million).
o J.M. Pike Park Strengthen & Replace Water Mains – this project replaced old, deteriorating water mains in the J.M. Pike Park Neighborhood (Project Cost: $10 million).
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o Sonoma Trunk Extension and Lift station. This project installed new sewer main on Oakdale Road, Sylvan Avenue and Lydia Way. (Project Cost: $7.74 million). o J.M. Pike Park Cross Connection Removal - the project removed nonfunctional rock wells and stormwater to sanitary sewer cross-connections and installed a new storm drain piping and inlets and underground stormwater storage system and at J.M. Pike Park (Project Cost: $27.9 million).
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o River Trunk Realignment Gravity System - this Project addressed the hydraulic flow capacity and aging infrastructure for the River Trunk (Project Cost: $27.2 million).
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o Sutter Trunk Rehabilitation Phase 2 - the project replaced outdated and inefficient pipes, repairing existing ones where feasible, and decommissioning an old sewer Lift.
The following Utilities Engineering projects (water, wastewater/storm) are still under construction:
o Well 312 Treatment System & Flush Line Project – this project will install Granulated Activated Carbon (GAC) treatment & a flush line to address water quality issues associated with Well 312. Improvements will allow for the well to be brought back online (Project Cost: $5.1 million).
o Bret Harte Neighborhood Phase 1 Strengthen & Replace Water Mains - this project will replace old, deteriorating existing water mains in a portion of the Bret Harte Elementary Neighborhood (Project Cost: $2.3 million).
o Coffee Road Strengthen & Replace Water Mains – this project will replace old, deteriorating water mains in a portion of the Coffee Road Neighborhood (Project Cost:
$3.2 million).
o River Trunk Realignment – Shackelford Pump Station: this project will construct a new Pump Station that will pump the sewer through the Shackelford Siphon (Project Cost:
$14.59 million).
o Plant Structural Improvements - this project will provide diverse improvements at the Sutter Wastewater Treatment Plant (WWTP) as well as a new concrete vault for the existing valves and recoating of existing digestors (Project Cost: $3.25 million). #7..
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o Sutter Campus Parking Lot and Security Upgrade - this project will enhance security and rectify traffic and parking issues in the roadway in front of the plant, the plant entrance, parking area, septage station, and Vac-con facility (Project Cost: $8.27 million).
o La Loma Sewer Trunk Replacement Phase 1 - this project will replace all degraded and undersized sewer mains, in addition to installing new sewer laterals and manholes where necessary (Project Cost: $6.84 million).
o Jennings Campus Corrosion Control Measures - the objective of this project is to replace the old lined Ductile Iron Pipe and Coated Steel pipe, which are susceptible to corrosion caused by high levels of H2S and line UV Channels (Project Cost: $5.84 million).
o West Trunk Sewer Rehabilitation - the project involves rehabilitating existing sewer trunks using the Cast in Place Pipe (CIPP) process at various locations throughout the City (Project Cost: $22.58 million).
o Jennings Well Treatment Improvements - this project will address water quality concerns related to the Jennings Well, which provides drinking water to the City's Regional Water Recycling Facility - Jennings Campus (Project Cost: $1.8 million). o Woodland Lift Station Rehabilitation - the project is providing multiple enhancements to the existing sewer lift station including structural, electrical, and piping upgrades (Project Cost: $4.91 million).
Water Construction, Service, and System Maintenance:
o Responded to 1,021 City water leaks.
o 145 large meters replaced with ultrasonic units.
o 56 new water service connections are installed.
o Maintained an average response time of 24 minutes and completed 38,397 service orders.
o Completed Strengthen & Replace projects at Anita Court, Cox Street, Dee Court, Jeff Court, Lane Street, Max Court, and Morada Court.
Water Conservation:
o Facilitated water conservation outreach events at Earth Day, Love Modesto, RecFest, Johansen Future Fair, Beyer Trades Night, Modesto Farmers Market, National Night Out, Imagine a Day Without Water, Modesto On Ice, Holiday of Lights, Occupational Olympics, Home Show, Touch a Truck at Modesto Junior College. #7..
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o Responded to 1,634 reports of water waste, conducted 239 Water Wise Consultations with customers, received 468 rebate applications and reimbursed customers $202,000 for water saving measures like turf replacement, drip irrigation, and energy-efficient appliances.
Water Quality:
o Monitored 6,989 backflow prevention assemblies.
o Collected 5,560 water samples and produced 16.27 billion gallons of safe, clean water. o Completed sampling for 5th Unregulated Contaminant Monitoring Rule (UCMR-5), which requires monitoring for 29 per- and polyfluoroalkyl substances (PFAS) and lithium in drinking water.
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Water Wells and Tanks:
o Painting was completed for Grayson Tank Station 9, including the tank, pump houses and containers, and all pipes.
o Completed carbon change-out on Wells 1, 212, 225, and 279. o Performed inspections and tank cleaning at Tanks 4, 5, 7, and 8. o Performed significant repairs at Tanks 6 and 13, and Wells 33, 46, 49, 56, 57, 62, 68, 214, 217, 241.
o Pump efficiency testing completed at 79 Wells and 12 Tanks.
The City of Modesto Wastewater Division accomplishments included:
Operations & Maintenance:
o Completion of the Reclamation District (RD) 2091 Levee Enhancement Project. o Completion of the Cannery Segregation and Domestic Outfall Siphon Inspections. o 7,153,830,000 total gallons treated.
o 6,183,620,000 gallons recycled.
o 23,020,767 pounds of Biochemical oxygen demand (BOD) treated. o 16,522,000 pounds of biosolids applied (include pond dredging). o North Valley Regional Recycled Water Program delivery rate of 70%. #7..
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Collections:
o Four consecutive months with no Sanitary Sewer spills (SSS). o West Trunk Linning project completed.
o 19,969 work orders completed.
o Completed 2,267 customer service calls.
o Cleaned 347 miles of sewer lines.
Environmental Compliance & Lab:
o Successfully completed the California Environmental Laboratory Accreditation Program (ELAP) amendment application to add the EPA Method Update Rule (MUR) methods to the lab’s existing Fields of Accreditation (FOAs). o Successfully completed the ELAP Onsite assessment (OSA) and has received its renewed laboratory accreditation certificate.
o All Significant Industrial Users (SIUs) were issued new wastewater discharge permits with an expiration date of December 31, 2026.
o Wastewater staff completed all required data requests from Larry Walker Associates (LWA) on August 16th. We are well ahead of schedule for meeting the Regional Board’s Annual Stormwater Report deadline of October 1st. #7..
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o Environmental Compliance, through various public outreach opportunities, made 8,398,548 impressions on how to prevent stormwater pollution.
Governance and Service Delivery
• Implemented a new public bidding solution, OpenGov, to manage the lifecycle of the City’s bidding solicitation process for goods and services. This solution allows all vendors to solicit electronic bids for goods or services needed for City business. • The Purchasing Division provided a Vendor Management training to all City prospective bidders on how to submit bid proposals.
• Implemented a new financial reporting tool, Oracle Analytics Cloud, to manage the extraction of financial data for the City’s ERP system, Oracle.
• Implemented the new Courtesy Leak Adjustment program via electronic submission through the City’s website.
• The Modesto Police Department launched a comprehensive citywide initiative to combat organized retail theft (ORT) and motor vehicle accessory theft (MVAT), funded by a $6 million grant from the Board of State and Community Corrections. The program combines proactive enforcement, enhanced technology, and strong business engagement to address rising concerns from retailers and community members. At the heart of the effort is a commitment to real-time crime monitoring, with strategic investments in mobile surveillance units, license plate readers, and a robust upgrade to the department’s Real Time Crime Center (RTCC). A full-time civilian investigator was also added to lead case development and strengthen partnerships with local retailers. Through consistent bi-monthly operations, MPD has executed 48 enforcement actions resulting in 364 arrests and nearly $91,000 in recovered #7..
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stolen property. These efforts are informed by crime data and direct feedback from business partners, ensuring that deployments target the areas of greatest need. More than 45% of arrests involved non-residents, underscoring Modesto's role as a regional deterrent for organized theft crews.
• Citywide property crime dropped by 13.8%, and several major retail centers experienced double-digit reductions in theft, including a more than 50% drop in holiday-season losses.
These outcomes reflect a clear shift in how Modesto is perceived—not as an easy target, but as a city prepared to respond with coordination and resolve. • The Modesto Police Department made history as the first police department in California to become Autism Certified through the International Board of Credentialing and Continuing Education Standards (IBCCES), ensuring our officers are better equipped to connect with every member of our diverse community.
• The Modesto Police Department welcomed over 70 new team members, bringing fresh talent, dedication, and a shared commitment to serving our community with integrity and professionalism. This growth reflects not only our department’s progress but also the incredible support we receive from the Modesto community. Together, we’re building a stronger team to keep Modesto safe and thriving.
• Fiscal year 2024-2025 marked the first full year of service for Sky 1, Modesto Police Department’s dedicated air support unit — and the impact has been outstanding. Sky 1 logged over 930 flight hours, responded to more than 2,900 calls for service, and was first on scene over 2,000 times, providing critical support to officers on the ground. In addition to patrol efforts, Sky 1 assisted in 40 DUI arrests, assisted with the search for missing persons, and played a key role in 214 felony arrests. Sky 1 continues to enhance our ability to respond quickly, increase officer safety, and support community policing efforts from the air. • In terms of crime trends, violent crime remained steady, with 7 homicides reported in calendar year (CY) 2024, mirroring the total from the previous year. The number of aggravated assaults decreased, from 903 in CY 2023 to 894 in CY 2024, reflecting our ongoing efforts to prevent and intervene in violent incidents. Property crimes showed notable reductions. MPD investigated 556 burglaries and 718 vehicle thefts, both of which were down from CY 2023 totals, signaling progress in our crime prevention strategies, increased patrols, and investigative follow-up. These results demonstrate our department’s commitment to making Modesto a safer place to live, work, and visit.
• The Modesto Police Department strengthened its commitment to innovation by deploying new technologies designed to enhance public safety and operational efficiency. This year marked the full integration of the Taser 10, providing officers with advanced tools for safer outcomes in the field. We expanded the use of pursuit mitigation technologies, including StarChase and MobileSpike, allowing officers to resolve dangerous incidents with greater control and less risk to the public. Our Real-Time Crime Center and Citywide Camera System continued to provide real-time intelligence, giving officers critical information when seconds matter most.
With these investments, along with the expansion of our Automated License Plate Reader network, MPD remains at the forefront of modern policing, using innovation to build a safer Modesto.
• The Forestry Division received 2,558 forestry requests and conducted 3,404 inspections. • The Forestry Division received 819 GoModesto requests and completed 560 requests. #7..
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Awards / Acknowledgments
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Modesto for its annual comprehensive financial report for the fiscal year ended June 30, 2024. This was the 42nd consecutive year that the government has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized annual comprehensive financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current annual comprehensive financial report continues to meet the Certificate of Achievement Program’s requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate.
The Annual Comprehensive Financial Report (ACFR) is the result of the cooperative work of many people. We wish to convey our appreciation to all of the City departments and members of the Finance Department Accounting team who prepared and contributed to its successful completion.
Without their hard work, this report would not be possible.
The City submitted and received for the fifth time the distinguished Budget Presentation Award from GFOA for the fiscal year ended June 30, 2025. To receive this prestigious award, a government must demonstrate that they meet the program criteria and excel as a policy document, financial plan, operations guide, and communication tool.
In addition, the City submitted and received an award from the GFOA for its eighth year for the Popular Annual Financial Report (PAFR) for the fiscal year ended June 30, 2024. A PAFR presents financial information in a manner that appeals to the reader, is understandable and shows creativity and usefulness. The PAFR award is valid for one year, and the City intends to submit its 2025 PAFR to the GFOA for consideration.
As a result of receiving the GFOA awards for PAFR, ACFR and Budget Presentation for the fiscal year ended June 30, 2024, the City received GFOA’s Triple Crown Award for the fifth time. The GFOA’s Triple Crown designation recognizes governments that meet the high standards of all three separate award programs. The City will continue to strive to achieve these awards for future fiscal years.
Finally, we would like to express our appreciation to the City Council, City employees, and community for their leadership and support. We look forward to next year’s challenges and opportunities.
Respectfully submitted,
Joseph P. Lopez DeAnna Christensen
City Manager Director of Finance
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Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Modesto
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2024
Executive Director/CEO
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Sue Zwahlen Mayor Rosa EscutiaBraaton
District 1 Eric Alvarez District 2 Chris Ricci District 3 Nick Bavaro District 4 Jeremiah Williams
District 5 David Wright District 6
Modesto Voters
Modesto City Council
The Charter Officers are hired by the City Council.
Joe Lopez
City Manager
Charter Officers
ORGANIZATIONAL CHART
THE CITY OF MODESTO
Jose Sanchez
City Attorney
Diane NayaresPerez
City Clerk
Baker Tilly
City Auditor
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City Manager
Joe Lopez
ORGANIZATIONAL CHART
THE CITY OF MODESTO
Deputy City Manager
Operations
Allison Van Guilder
Deputy City Manager
Support
Scotty Douglass
Community &
Economic Development
Jessica Hill
Engineering Services
Toby Wells
Parks, Recreation &
Neighborhoods
Jeremy Rogers
Public Works
Bill Sandhu
Utilities
Will Wong
Police Department
Chief Brandon Gillespie
Fire Department
Chief Kevin Wise
Performance
Management & Budget
Steve Christensen
Public Relations &
Legislative Affairs
Sonya Severo
Finance
DeAnna Christensen
Human Resources
Christina Alger
Information Technology
Dameon Booker
Economic Vitality
Retain and attract residential,
commercial, and industrial
development to meet the
community’s need today and
for the next generation.
Quality of Life
Engage partners across the
community to ensure safety,
resilience, and the
attractiveness of Modesto.
Governance and Service
Delivery
Build community trust in City
government through
responsive, transparent and
efficient service delivery.
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FINANCIAL SECTION TAB
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FINANCIAL SECTION
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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, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Modesto, California (the City), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.
In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2025, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (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 City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Emphasis of Matter
Implementation of a New Accounting Standard
As discussed in Notes 1 and 19, the City implemented the provisions of Governmental Accounting Standards Board Statement No. 101, Compensated Absences, during the fiscal year ended June 30, 2025. Our opinion is not modified with respect to this matter. #7..
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2 Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
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 City’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time. #7..
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3 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, schedule of changes in the net pension liability and related ratios, schedule of pension plan contributions, schedule of changes in the net OPEB liability and related ratios, schedule of OPEB plan contributions, and budgetary comparison information for the General Fund, Operating Grants Special Revenue Fund and Housing and Community Development Special Revenue Fund, as listed in the table of contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual fund financial statements and budgetary comparison schedules listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the annual report. The other information comprises the introductory, statistical and continuing disclosure sections but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.
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4 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report dated December 8, 2025 on our consideration of the City’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.
Glendale, California
December 8, 2025
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City of Modesto
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2025
5 This section of the City of Modesto (the City) annual comprehensive financial report presents a discussion and analysis of the City’s financial performance during the fiscal year ended June 30, 2025. Please read it in conjunction with the transmittal letter at the front of this report and the basic financial statements following this section.
FINANCIAL HIGHLIGHTS
• The assets plus deferred outflows of resources of the City exceeded liabilities plus deferred inflows of resources at the close of the 2025 fiscal year by $1,251,937,912 (total net position). Of this amount, $234,079,873 is restricted for a specific purpose (restricted net position), $1,030,704,255 is net investment in capital assets, and $(12,846,216) is unrestricted (unrestricted net position). • The City’s total deferred outflows of resources decreased by $25,773,660 as compared to the prior year due to a decrease in deferred pension.
• The City’s total deferred inflows of resources increased by $1,988,916 as compared to the prior year due to an increase in deferred OPEB and deferred leases.
• The City’s total liabilities increased by $20,995,239 as compared to the prior year, mainly due to an increase in pollution remediation liability.
• The City’s total net position increased by $29,872,820 compared to the prior year. This increase is attributed mainly to an increase in charges for services, an increase in operating grants and contributions, and an increase in unrestricted investment earnings as a result of the careful management of the investment portfolio for the City’s investment funds.
• As of June 30, 2025, the City’s governmental funds reported combined fund balances of $279,519,944 an increase of $24,392,641 in comparison with the prior year’s amount of $255,127,303, as restated, due mainly to revenues generated higher than expenditures incurred during the fiscal year. • As of June 30, 2025, 61.3% of the General fund balance or $54,106,955 is available to meet the City’s current and future needs (General Fund unassigned fund balance). • At the end of the fiscal year, the General Fund balance was $88,252,272 or 40.9% of total General Fund expenditures. Of this, $1,621,755 is the restricted fund balance. The unassigned fund balance of $54,106,955 represents 25.1% of total General Fund outflows. The City Council has adopted a goal of maintaining a General Fund reserve at a minimum level of no less than the average of two months of General Fund operating expenditures.
• The City’s total long-term liabilities showed a net decrease of $28,280,629 in comparison with the prior year. This decrease was attributed to a reduction in debt from the principal payments made during the fiscal year and net pension liabilities, net of an increase in OPEB liabilities. #7..
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City of Modesto
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2025
6 OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the City’s basic financial statements.
The City’s basic financial statements comprise three components 1) Government-wide financial statements; 2) Fund financial statements and 3) Notes to basic financial statements. Required Supplementary Information is included in addition to the basic financial statements.
Government-wide Financial Statements are designed to provide readers with a broad overview of the City finances, in a manner similar to a private-sector business.
The Statement of Net Position presents information on all the City assets and deferred outflows of resources and liabilities and deferred inflow of resources, with the difference between the two reported as net position.
Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.
The Statement of Activities presents information showing how net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
Both of these government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a portion of their costs through user fees and charges (business-type activities).
The governmental activities of the City include general government, community development, highways and streets, public works, parks and recreation, and public safety. The business-type activities of the City include the Water, Sewer, Parking, Storm Drain, Compost, Airport, Golf, Community Center and Abatement and Public Nuisance operations.
Component units are included in our basic financial statements and consist of legally separate entities for which the City is financially accountable and that have substantially the same board as the City Council, or provide services entirely to the City or the City has operational responsibility for the entities. Examples are the Community Facilities Districts, Redevelopment Successor Agency of the City of Modesto and the Modesto Public Financing Authority.
The government-wide financial statements can be found on pages 18-19 of this report.
Fund Financial Statements are groupings of related accounts that are used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate finance-related legal compliance. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds and fiduciary funds.
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City of Modesto
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2025
7 Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental funds financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the City’s near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.
The City reports 19 individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures and changes in fund balances for the General Fund, Operating Grants Fund, and Housing and Community Development Fund. Data from the other governmental funds are combined into a single, aggregated presentation.
Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report.
The governmental funds financial statements can be found on pages 20-23 of this report.
Proprietary funds are maintained in two ways. Enterprise funds are used to report on the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its Water, Sewer, Parking, Storm Drain, Compost, Airport, Golf, Community Center and Abatement and Public Nuisance operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its Fleet Management, Central Services, Information and Technology Services, Insurance, Employee Benefits Management and Building Services functions. Because these services predominantly benefit governmental functions rather than business-type functions, they have been included within governmental activities in the government-wide financial statements except for portions of the compensated absences that have been included within business-type activities. The rest of internal services benefiting business-type functions have been allocated as “internal balances”.
Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The Water and Sewer funds are major funds of the City. The City’s six internal service funds are combined into a single, aggregated presentation in the proprietary funds’ financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report.
The proprietary funds financial statements can be found on pages 24-28 of this report.
Fiduciary funds are used to account for resources held for the benefit of parties outside the government.
Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City's own programs. Private-Purpose and Investment trust funds account for assets held by the City as an agent for individuals, governmental entities and non-public organizations. The accounting used for fiduciary, private-purpose, and investment trust funds is much like that used for proprietary funds.
The fiduciary fund financial statements can be found on page 29-30 of this report. #7..
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City of Modesto
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2025
8 Notes to Basic Financial Statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.
The notes can be found on pages 31-101 of this report.
Required Supplementary Information is also presented. The City adopts an annual appropriated budget.
Budgetary comparison schedules for the General Fund, Operating Grants Fund, and Housing and Community Development Fund have been provided to demonstrate compliance with this budget. This section also includes the schedules for net pension liability and net OPEB liability.
Required supplementary information can be found on pages 102-112 of this report.
The combining and individual fund statements and schedules referred to earlier provide information for nonmajor governmental, enterprise and internal service funds and are presented immediately following the required supplementary information.
Combining and individual fund statements and schedules can be found on pages 113-151 of this report.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of a government’s financial position.
In the case of the City, assets plus deferred outflows exceeded liabilities plus deferred inflows by $1,251,937,912 at the close of the most recent fiscal year.
Statements of Net Position
The largest portion of the City’s net position, $1,030,704,255 or 82.3%, reflects its investment in capital assets (e.g. land, water rights, buildings, improvements, furnishings and equipment, fare boxes, pipelines, leases – right to use, SBITAs – right to use and infrastructure), less any related debt used to acquire those assets that are still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s net investment in capital assets is reported net of debt and related deferred outflows and inflows, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
Governmental activities Business-type activities Total
2025 2024 2025 2024 2025 2024
(Restated) (Restated) (Restated)
Current and other assets $ 432,540,746 $ 420,559,054 $ 372,220,517 $ 344,726,281 $ 804,761,263 $ 765,285,335 Capital assets 357,164,141 359,164,501 920,905,221 879,750,154 1,278,069,362 1,238,914,655 Total assets 789,704,887 779,723,555 1,293,125,738 1,224,476,435 2,082,830,625 2,004,199,990 Deferred outflows of resources 77,314,160 97,922,459 22,946,145 28,111,506 100,260,305 126,033,965 Current and other liabilities 51,977,961 45,792,067 82,493,186 39,403,212 134,471,147 $85,195,279 Long-term liabilities 459,207,486 468,171,785 306,185,387 325,501,717 765,392,873 793,673,502 Total liabilities 511,185,447 513,963,852 388,678,573 364,904,929 899,864,020 878,868,781 Deferred inflows of resources 14,088,461 15,368,153 17,200,537 13,931,929 31,288,998 29,300,082 Net position:
Net investment in capital assets 348,311,958 347,825,273 682,392,297 628,224,368 1,030,704,255 976,049,641 Restricted net position 230,262,278 83,916,553 3,817,595 15,883,497 234,079,873 99,800,050 Unrestricted net position (236,829,097) (83,427,817) 223,982,881 229,643,218 (12,846,216) 146,215,401 Total net position $ 341,745,139 $ 348,314,009 $ 910,192,773 $ 873,751,083 $ 1,251,937,912 $ 1,222,065,092
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City of Modesto
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2025
9 Another significant portion of the City’s net position, $234,079,873 or 18.7%, represents resources that are subject to external restrictions on how these may be used and are reported as restricted net position.
The remaining balance of $(12,846,216) or -1.0% represents the City’s unrestricted net position.
The City’s net position increased by $29,872,820 during the current fiscal year, largely due to an increase in unrestricted investment earnings of $17,017,211, charges for services $13,620,203, taxes in the amount of $3,437,849, and operating and capital grants and contributions $4,040,779.
The following table indicates the changes in net position for governmental and business-type activities, as well as comparative data for the prior year:
Statements of Activities
The City’s 2024 financial statements have been restated to correct previously reported balances. Refer to Note 19.
Governmental activities Business-type activities Total
2025 2024 2025 2024 2025 2024
(Restated) (Restated) (Restated)
Revenues:
Program revenues:
Charges for services $ 34,235,480 $ 34,824,430 $ 199,240,499 $ 185,031,346 $ 233,475,979 $ 219,855,776 Operating grants and contributions 16,658,746 15,527,564 2,561,079 844,097 19,219,825 16,371,661 Capital grants and contributions 8,827,153 6,838,419 7,222,643 8,018,762 16,049,796 14,857,181 General revenues:
Taxes 78,702,418 75,311,597 406,150 359,122 79,108,568 75,670,719 Intergovernment revenue not
restricted for specific purposes 154,500,389 164,878,012 - - 154,500,389 164,878,012 Special assessments, levied 5,487,466 5,436,061 - - 5,487,466 5,436,061 Unrestricted investment earnings 23,589,103 10,274,601 16,712,360 13,009,651 40,301,463 23,284,252 Settlements and recoveries - - - 3,620,125 - 3,620,125
Miscellaneous 2,212,563 1,156,335 1,897,429 1,479,611 4,109,992 2,635,946 Total revenues 324,213,318 314,247,019 228,040,160 212,362,714 552,253,478 526,609,733 Expenses:
General government 19,507,887 17,445,366 - - 19,507,887 17,445,366 Community development 50,662,150 50,217,253 - - 50,662,150 50,217,253 Highways and streets 36,489,700 41,002,788 - - 36,489,700 41,002,788 Public works 15,001,365 14,023,462 - - 15,001,365 14,023,462 Parks and recreation 26,118,626 21,734,430 - - 26,118,626 21,734,430 Public safety 184,103,949 172,211,096 - - 184,103,949 172,211,096 Interest on long-term debt 1,122,442 1,276,737 - - 1,122,442 1,276,737 Water - - 92,737,199 89,753,239 92,737,199 89,753,239
Sewer - - 64,696,457 54,102,497 64,696,457 54,102,497
Other Enterprise - - 31,940,883 31,982,029 31,940,883 31,982,029 Total expenses 333,006,119 317,911,132 189,374,539 175,837,765 522,380,658 493,748,897 Change in net position before
transfers (8,792,801) (3,664,113) 38,665,621 36,524,949 29,872,820 32,860,836 Transfers 2,223,931 1,975,368 (2,223,931) (1,975,368) - - Total transfers 2,223,931 1,975,368 (2,223,931) (1,975,368) - - Change in net position (6,568,870) (1,688,745) 36,441,690 34,549,581 29,872,820 32,860,836 Net position - beginning 348,314,009 350,002,754 873,751,083 839,201,502 1,222,065,092 1,189,204,256 Net position - ending $ 341,745,139 $ 348,314,009 $ 910,192,773 $ 873,751,083 $ 1,251,937,912 $ 1,222,065,092 #7..
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City of Modesto
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2025
10 Governmental activities. Governmental activities decreased the City’s net position by $6,568,870, mainly due to expenditures exceeding the revenues and transfers during the fiscal year. Operating and capital grants and contributions increased by $3,119,916, and investment earnings increased by $13,314,502 as compared to the prior fiscal year. However, intergovernmental revenues decreased by $10,377,623 as compared to the prior fiscal year.
Total expenses increased compared to the prior year by $15,094,987. This increase is mainly attributed to an increase in salary and benefit costs, along with an increase in hiring previously vacant positions and the addition of new administrative support positions throughout City Departments. Additionally, a large increase is attributed to expenditures within public safety, such as the purchase of five (5) new fire trucks.
Business-type activities. Business-type activities increased the City’s net position by $36,441,690. The increase was mainly attributed to increases in operating and capital grants and contributions in the amount of $920,863, an increase in charges for services in the amount of $14,209,153, and an increase in unrestricted investment earnings in the amount of $3,702,709, offset by the increase in expenses in the amount of $13,536,774 as compared to the prior year.
FINANCIAL ANALYSIS OF THE CITY’S FUNDS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
Governmental funds. The general government functions are contained in general, special revenue, capital projects, and debt service funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.
At June 30, 2025, the City’s governmental funds reported combined fund balances of $279,519,944, an increase of $24,392,641 from the prior year. The total unassigned fund balance for the governmental funds was $48,834,816, which includes a positive $54,106,955 General Fund unassigned fund balance that is available to meet the City’s current and future needs. The remainder of the fund balance is nonspendable, restricted, committed and assigned to indicate that it is not available for new spending because certain constraints have been placed on the use of the balances. The unassigned fund balance for the General Fund increased by $6,046,703 from the prior fiscal year.
The General Fund is the chief operating fund of the City. At June 30, 2025, the unassigned fund balance of the General Fund was $54,106,955, while the total fund balance was $88,252,272. As a measure of the General Fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 25.1% of total General Fund expenditures, while total fund balance represents 40.9% of that same amount. The prior year’s ratios were 25.1% and
43.4%, respectively.
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City of Modesto
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2025
11 The Operating Grants fund accounts for receipts and disbursements of a variety of Governmental Fund Operating grants. At June 30, 2025, the total fund balance was $2,484,373, which is an increase of $1,625,281 from the prior year.
The Housing and Community Development fund accounts for the grants and funds received to disburse for projects developed and administered under the Housing and Community Development Act. At June 30, 2025, the total fund balance was $28,946,839, an increase of $1,167,996 from the prior year.
Revenues of governmental funds totaled $348,770,058 in fiscal year 2024-25, which represents an increase of $26,680,179 from fiscal year 2023-24.
Expenditures of governmental funds totaled $324,580,630 in fiscal year 2024-25, representing an increase of $32,939,508 from fiscal year 2023-24.
The following table presents governmental fund revenues from various sources, with comparisons to the prior year:
Revenues Classified by Source – Governmental Funds
• Taxes – Revenues for property and business license taxes came in higher than the prior year due to an ongoing positive upturn in the economy and the increased collection and compliance efforts by the City staff.
• Intergovernmental – Revenues increased by $10,442,916, mainly due to a large-scale project, Travelers Homekey, funded by State grant funding in the amount of $9,384,562. • Charges for Services – Revenues decreased by $1,568,130 primarily due to a drop in revenues in the Capital Facility Fees.
Increase
(Decrease)
Revenues by Source Amount Percent Amount Percent Amount % Change Taxes $78,702,418 22.5% $75,311,597 23.4% $3,390,821 4.5% Licenses and permits 344,834 0.1% 399,698 0.1% (54,864) -13.7% Intergovernmental 206,581,980 59.2% 196,139,064 60.9% 10,442,916 5.3% Charges for services 32,280,429 9.3% 33,848,559 10.5% (1,568,130) -4.6% Special assessments 5,487,466 1.6% 5,436,061 1.7% 51,405 0.9% Interest and rent 17,462,701 5.0% 5,468,374 1.7% 11,994,327 219.3% Net increase (decrease) in fair value 4,144,945 1.2% 3,807,834 1.2% 337,111 8.9% Fines and forfeits 1,610,217 0.5% 576,173 0.2% 1,034,044 179.5% Miscellaneous 2,155,068 0.6% 1,102,519 0.3% 1,052,549 95.5% Total $348,770,058 100.0% $322,089,879 100.0% $26,680,179 8.3% FY 2025 FY 2024
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City of Modesto
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2025
12 • Interest and rent, and net increase in fair value of investments – The increase in interest earned along with the increase in fair market value of the City’s investment portfolio is showing a positive outturn due to the current market conditions and continuous on-going improvements to the City’s investment strategy which has increased our return on investment in the City’s portfolio.
The following table presents expenditures by function compared to prior year amounts.
Expenditures by Function – Governmental Funds
The following provides an explanation of the expenditure by function that changed significantly over the prior year:
• Highways and streets – Expenditures decreased by $3,217,393 or 12.2% over the prior year due to a large-scale project, State Route 132 being completed during Fiscal Year 2023-24 which resulted in less construction expenditures during this fiscal year as compared to the prior year. • Public works – Expenditures decrease by $5,735,684 or 45.1% over the prior year due to increase in projects being undertaken by City staff due to increase in available funding and decrease in number of projects during Fiscal Year 2024-25 as a result of decreased level of funding available. • Parks and recreation – Expenditures increased by $4,869,898 or 25.0% over the prior year due to an increase in recreational activities as well as park renovations including basketball and volleyball improvements, restroom replacements and playground replacements. • Public safety – Expenditures increased by $19,055,400 or 12.3% over the prior year mainly due to an increase in services that are provided and equipment purchases, and the purchase of five (5) fire trucks, based on grant fund availability that fluctuates year to year depending on grants awarded. • Capital outlay – Expenditures increased in the amount of $12,420,439 or 116.7% due to large-scale multi-year projects, including the renovations to Cesar E. Chavez Park and Mary Grogan Park.
FY 2025 FY 2024
Increase
(Decrease)
Exp by Function Amount Percent Amount Percent Amount % Change General government $17,949,967 5.5% $15,228,776 5.2% $2,721,191 17.9% Community development 48,024,246 14.9% 45,142,072 15.4% 2,882,174 6.4% Highways and streets 23,203,685 7.1% 26,421,078 9.1% (3,217,393) -12.2% Public works 6,975,832 2.1% 12,711,516 4.4% (5,735,684) -45.1% Parks and recreation 24,349,411 7.5% 19,479,513 6.7% 4,869,898 25.0% Public safety 173,714,370 53.5% 154,658,970 53.0% 19,055,400 12.3% Capital outlay 23,067,120 7.1% 10,646,681 3.7% 12,420,439 116.7% Debt Service-principal retirement 5,504,467 1.7% 5,598,966 1.9% (94,499) -1.7% Debt Service-interest charges 1,302,044 0.4% 1,280,380 0.4% 21,664 1.7% Debt Service-other 489,488 0.2% 473,170 0.2% 16,318 3.4% Total $324,580,630 100.0% $291,641,122 100.0% $32,939,508 11.3% #7..
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City of Modesto
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2025
13 Other financing sources and uses are presented below to illustrate changes from the prior year:
Transfers - The City uses interfund transfers to: (1) move resources from a fund to other funds that will utilize them in accordance with statutory and budgetary requirements, (2) utilize unrestricted resources collected in the General Fund to help finance various programs and capital projects accounted for in other funds in accordance with budgetary authorization, and (3) move cash to pay debt service to the funds that are responsible for payment as those payments become due.
• The net financing sources from governmental funds for 2025 were $203,213 compared to $1,454,977 in the prior year. The net transfer is to various City funds including transferring funds from the General Fund, Housing and Community Development fund, Local Transportation fund, Transportation Special Tax fund, Special Fund for Capital Outlays, Parks funds, Community Facilities Districts fund, Capital Facility Fee funds, Fleet Fund, Information Technology Services fund, and Building Services fund, to cover the debt service payments, fleet replacement, funding for capital projects and various transfers to cover City grant matches. The other financing proceeds decreased by $3,229,473 due to decrease in the number of new SBITAs and leases in the current year.
The fund balance of the City’s General Fund increased by $5,193,652 during the fiscal year. This result is consistent with the City Council’s budgetary direction to reduce spending and identify additional revenue sources that would allow the General Fund to retain an unrestricted reserve that meets the City Council’s adopted reserve requirements level of no less than the average of two months of regular General Fund expenditures.
Proprietary funds. The City’s proprietary fund disclosures provide the same type of information found in the government-wide financial statements, but in more detail.
The following table shows actual revenues, expenses, and results of operations of enterprise funds for the current fiscal year:
FY 2025 FY 2024 Amount Percent
Transfers in $27,968,242 $26,873,392 $1,094,850 4.1%
Transfers out (28,635,725) (29,514,905) 879,180 -3.0%
Other financing proceeds 813,201 4,042,674 (3,229,473) -79.9% Sale of assets 57,495 53,816 3,679 6.8%
Net financing sources $203,213 $1,454,977 ($1,251,764) -86.0% Increase/(Decrease)
Major Funds Nonmajor Funds
Water Sewer Other Enterprise Total
Operating revenues $90,925,358 $71,191,003 $36,590,220 $198,706,581 Operating expenses (87,286,552) (62,619,305) (31,847,725) (181,753,582) Operating income 3,638,806 8,571,698 4,742,495 16,952,999 Nonoperating revenues, net 3,767,258 6,789,047 4,294,068 14,850,373 Income before capital contributions
and transfers 7,406,064 15,360,745 9,036,563 31,803,372 Contributions and transfers (226,179) 4,313,195 911,696 4,998,712 Changes in net position $7,179,885 $19,673,940 $9,948,259 $36,802,084 #7..
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City of Modesto
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2025
14 The Water fund had a rate increase of 4.5% effective January 1, 2025. This rate was approved on August 22, 2023.
The Sewer fund had a rate increase of 3.5% effective July 1, 2024. This rate was approved on April 12, 2022.
Pollution remediation liability was reported for the Water, Sewer, and other Enterprise fund in the amounts of $40,000,476, $10,511,114, and $3,170,994, respectively, based on net recoveries the City has received from various settlements and future cleanup costs. Additional information regarding these liabilities can be found under Note 17.
GENERAL FUND BUDGETARY HIGHLIGHTS
Budget to actual information for the General Fund is presented as Required Supplementary Information, beginning on page 107 of this report.
While the City Council amended the budget several times throughout the year, the differences between the original budget and the final amended budget for the General Fund decreased overall, mainly due to a decrease in intergovernmental revenues and an increase in public safety expenditures. The estimated revenues decreased by $1,755,521, while total appropriations increased by $12,608,217. These amendments were to adjust the actual beginning balances and carryovers after closing the prior fiscal year, to reflect adjustments to current estimates based on the periodic monitoring of revenue and expenditures throughout the year and to factor in the much-anticipated increase to sales tax by 1% to a total 8.875% sales tax rate, approved by Citizens on November 2022, under Measure H which went into effect on April 1, 2023.
Revenues came in $9,701,712 more than final estimates. Variances in Utility Users Tax $738,713, Property Tax $528,092, and Intergovernmental $5,090,645, were due to an increase in collection efforts, new grants received, and a quicker recovery from the pandemic than was anticipated and stronger property values.
Expenditures, overall, were $29,367,739 under budget, primarily due to efforts of departments to realize savings, and certain purchases being deferred to future periods, as well as positions approved and budgeted but not yet filled.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital assets
The City’s investment in capital assets for its governmental and business-type activities as of June 30, 2025, amounted to $1,278,069,362 (net of accumulated depreciation and amortization). The total increase in the City’s investment in capital assets compared to 2024 was 3.2%. #7..
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City of Modesto
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2025
15 Capital assets net of depreciation, for the governmental and business-type activities, are presented below to illustrate changes from the prior year.
Major capital asset events during the current fiscal year included the following:
• Pipelines – Construction of the La Loma – El Vista to Riverside project was completed in fiscal year 2024-25 in the amount of $7.0 million, La Loma Phase 2C Strengthen & Replace Mains project was completed in the amount of $9.1 million, Grayson Well 274 was completed in the amount of $4.2 million and River Trunk Gravity was completed in the amount of $26.1 million. . • Water rights – Depreciation expense for fiscal year 2024-25 in the amount of $11.9 million. • Construction in progress – Ongoing water and sewer construction projects related to improvements to the City’s water and sewer infrastructure were made during fiscal year 2024-25, ongoing construction of the Pike Park Neighborhood Strengthen & Replace Mains project, Well 312 Treatment and Flush line, Bret Harte Strengthen & Replace watermains and replacement of the SCADA system. West Trunk Rehabilitation project, La Loma Sewer project.
The City’s infrastructure assets are recorded at historical cost in the government-wide financial statements.
Depreciation expense is recorded using the straight-line method, based on estimated useful life of the asset.
Additional information on the City’s capital assets can be found in Note 3 on pages 50-52 of this report.
Additional information on the City’s commitments can be found in Note 19 on page 84 of this report.
Increase
(decrease)
Governmental Business-type Total Percent
2025 2024 2025 2024 2025 2024 Change $ Change
Land $ 42,653,318 $ 42,653,318 $ 30,647,169 $ 30,647,169 $ 73,300,487 $ 73,300,487 0.0% $ - Capitalized interest - - 2,960,308 3,465,094 2,960,308 3,465,094 -14.6% (504,786) Buildings 17,020,339 18,622,500 25,804,685 27,458,329 42,825,024 46,080,829 -7.1% (3,255,805) Improvements 48,912,026 54,076,028 214,606,406 225,808,192 263,518,432 279,884,220 -5.8% (16,365,788) Furnishings and
equipment 2,222,821 2,210,388 1,844,383 2,149,526 4,067,204 4,359,914 -6.7% (292,710) Buses & fareboxes 25,103 25,103 - - 25,103 25,103 0.0% - Intangible assets 385,584 780,536 3 3 385,587 780,539 -50.6% (394,952) Equipment pool 24,586,735 23,787,508 - - 24,586,735 23,787,508 3.4% 799,227 Service animals 12,815 19,611 - - 12,815 19,611 -34.7% (6,796) Water rights - - 179,113,342 191,054,232 179,113,342 191,054,232 -6.3% (11,940,890) Streets 133,189,507 143,643,347 - - 133,189,507 143,643,347 -7.3% (10,453,840) Signalization 5,947,151 6,458,205 - - 5,947,151 6,458,205 -7.9% (511,054) Bridges 23,680,407 24,421,978 - - 23,680,407 24,421,978 -3.0% (741,571) Pipelines 389,119 394,694 327,696,085 286,149,600 328,085,204 286,544,294 14.5% 41,540,910 Construction in
progress 52,873,203 34,968,291 135,607,154 112,476,485 188,480,357 147,444,776 27.8% 41,035,581 Right to use
SBITAS 4,913,731 6,698,754 113,002 153,925 5,026,733 6,852,679 -26.6% (1,825,946) Right to use Leases
Buildings 208,319 219,922 - - 208,319 219,922 -5.3% (11,603) Equipment 1 - 224,104 297,335 224,105 297,335 -24.6% (73,230) Land 143,962 184,318 2,288,580 90,264 2,432,542 274,582 785.9% 2,157,960 Total $ 357,164,141 $ 359,164,501 $ 920,905,221 $ 879,750,154 $ 1,278,069,362 $ 1,238,914,655 3.2% 39,154,707 $ #7..
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City of Modesto
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2025
16 Long-term debt and liabilities
At June 30, 2025, the City had total long-term liabilities outstanding of $338,394,039, net of unamortized discounts and premiums, as compared to $350,548,810, as restated, in the prior year. This amount was comprised of $35,995,000 of lease revenue bonds, $37,619,528 of certificates of participation, $89,725,262 of revenue bonds payable, $84,460,000 of reimbursement agreement related to Modesto Irrigation District bonds, $21,076,038 of estimated compensated absences, $33,196,178 of claims liability, $24,350,939 of loans payable, $410,681 of developer advances, $4,978,519 of finance purchase obligations, $2,980,251 of lease payable and $3,601,643 of SBITAs liability.
For the governmental and business activities, the long-term debt decrease was mainly due to the principal payments made during the fiscal year. Additional information on the City’s long-term debt and liabilities can be found in Notes 6-10 on pages 55-74 of this report.
The City maintains a current bond rating for the various bonds listed below.
BONDS Moody’s Rating S & P Rating Fitch Rating
2008 Lease Revenue Bonds Aa3 A+/A-1 AA+
2008 Water Certificates of Participation Aa2 AA/A-1
Wastewater Revenue Bonds, Series 2018A AA
Wastewater Revenue Bonds, Series 2020A AA
Wastewater Revenue Bonds, Series 2020B AA
With the implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, the City's Net pension liability as of June 30, 2025 was $405,314,909.
With the implementation of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pension, the City’s net OPEB liability due in more than one year as of June 30, 2025 was $21,683,925. Additional information on the City’s net OPEB liability and Pension can be found in Note 19.
With the implementation of GASB Statement No. 87, Leases, the City reported lease receivables in the amount of $27,562,158, deferred inflows of resources-leases in the amount of $25,861,420, and lease payable in the amount of $2,980,251 as of June 30, 2025.
With the implementation of GASB Statement No 96, Subscription-Based Information Technology Arrangements, (SBITA), the City reported SBITA liability in the amount of $3,601,643 as of June 30, 2025.
Economic Factors and Next Year’s Budget and Rates
• Consumer Price Index – Growth in the CPI had been relatively stable during the previous ten year, however, as a result of the COVID pandemic the CPI became volatile. During fiscal year 2024 CPI begin to stabilize but it has not been as low as in prior years before the COVID-19 pandemic, due to factors such as inflation and higher rates approved by the Federal Government. CPI serves as a measure for the growth in the cost for supplies and services used by the City. In the second half of fiscal year ended June 30, 2025, the CPI-Western Urban Index did see a continuous increase up to 2.7%. #7..
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City of Modesto
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2025
17 • Utility Service Charges – Wastewater rates increased by 3.5% for residential, commercial, industrial, and septage sewer and 2.5% for cannery segregation, effective July 1, 2023 to fiscal year 2026-2027. Rate increases were approved by the City Council on April 12, 2022. Water rates increased by 4.5% annually effective October 1, 2023 to fiscal year 2027-2028 were approved by the Council on August 22, 2023.
All of these factors were considered in preparing the City’s budget for fiscal year 2024-25.
During the current fiscal year, fund balance in the General Fund increased by $5,193,652 to $88,252,272, which represents 40.9% of total General Fund outflows and exceeds the City’s target value of a minimal level of no less than the average of two months of regular general fund operating outflows as unassigned fund. The budget adopted for fiscal year 2024-2025 reflects the Council policy reserve level of a minimum $18,397,817 emergency reserve policy. This amount is reported as part of the committed fund balance.
Requests for Information
This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the City’s financial condition. Questions concerning any of the information provided in this report and requests for additional financial information should be addressed to the City of Modesto, Attention:
Finance Department, P.O. Box 642, Modesto, CA 95353.
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BASIC FINANCIAL STATEMENTS
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City of Modesto
Statement of Net Position
June 30, 2025
See Notes to Basic Financial Statements.
18 Governmental Business-type
Activities Activities Total
ASSETS
Cash and investments $ 107,610,844 $ 261,430,326 $ 369,041,170 Accounts receivable, net 1,512,499 3,987,172 5,499,671
Interest receivable 927,439 1,460,094 2,387,533
Utility billings receivable, net 1,922,957 20,067,776 21,990,733 Taxes receivable 23,405,698 - 23,405,698
Leases receivable 10,467,608 17,094,550 27,562,158
Due from governments 15,711,797 8,351,420 24,063,217
Prepaid expenses 10,903,724 4,990,926 15,894,650
Internal balances (459,394) 459,394 -
Inventories 7,498,689 49,674 7,548,363
Investments in joint ventures 6,974,299 - 6,974,299
Restricted assets:
Cash and investments 150,093,410 51,658,650 201,752,060 Cash and investments with fiscal agent 12,344,421 2,670,535 15,014,956 Accounts receivable, net 837,888 - 837,888
Interest receivable 297,069 - 297,069
Due from governments 6,346,834 - 6,346,834
Due from Successor Agency 1,192,004 - 1,192,004
Reimbursement agreement 10,438,550 - 10,438,550
Notes and loan receivable, net 64,514,410 - 64,514,410
Capital assets:
Land and construction in progress 95,526,521 166,254,323 261,780,844 Other capital assets, net of accumulated depreciation 255,986,023 752,025,209 1,008,011,232 Intangible assets, net of accumulated amortization 5,651,597 2,625,689 8,277,286 Total assets 789,704,887 1,293,125,738 2,082,830,625
DEFERRED OUTFLOWS OF RESOURCES
Deferred OPEB 5,060,008 1,410,300 6,470,308
Deferred pensions 70,529,986 11,727,386 82,257,372
Loss on refunding - 261,716 261,716
Accumulated decrease in fair value of hedging derivatives 1,724,166 9,546,743 11,270,909 Total deferred outflows of resources 77,314,160 22,946,145 100,260,305
LIABILITIES
Accounts payable 15,856,667 13,081,797 28,938,464
Accrued salaries and benefits 5,601,918 1,267,057 6,868,975 Approved loans payable 5,914,221 - 5,914,221
Due to fiduciary funds 26,974 - 26,974
Due to other governments 41,144 - 41,144
Interest payable 38,546 485,822 524,368
Unearned revenue 15,342,362 1,782,795 17,125,157
Refundable deposits 7,431,963 2,646,388 10,078,351
Derivative instrument - interest swap 1,724,166 9,546,743 11,270,909 Pollution remediation liability - 53,682,584 53,682,584 Long-term liabilities:
Due Within one year 19,442,750 15,880,528 35,323,278
Due in more than one year 76,542,974 226,527,787 303,070,761 Net OPEB liability due in more than one year 16,533,819 5,150,106 21,683,925 Net pension liability due in more than one year 346,687,943 58,626,966 405,314,909 Total liabilities 511,185,447 388,678,573 899,864,020
DEFERRED INFLOWS OF RESOURCES
Deferred OPEB 3,631,889 997,367 4,629,256
Deferred pensions 753,937 44,385 798,322
Deferred leases 9,702,635 16,158,785 25,861,420
Total deferred inflows of resources 14,088,461 17,200,537 31,288,998
NET POSITION
Net investment in capital assets 348,311,958 682,392,297 1,030,704,255 Restricted for:
Grants purposes 74,673,446 - 74,673,446
Housing and community development 53,556,775 - 53,556,775 Pollution remediation - 1,147,060 1,147,060
Health and human services 197,274 - 197,274
Public safety 4,735,722 - 4,735,722
General government and support services 10,620,603 - 10,620,603 Capital projects 80,635,495 - 80,635,495
Debt service payments 5,842,963 2,670,535 8,513,498
Unrestricted (236,829,097) 223,982,881 (12,846,216)
Total net position $ 341,745,139 $ 910,192,773 $ 1,251,937,912
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City of Modesto
Statement of Activities
Fiscal Year Ended June 30, 2025
See Notes to Basic Financial Statements.
19 Operating Capital
Charges for Grants and Grants and Governmental Business-type Expenses Services Contributions Contributions Activities Activities Total FUNCTIONS/PROGRAMS:
Governmental activities:
General government $ 19,507,887 $ 9,458,727 $ 153,301 $ - $ (9,895,859) $ - $ (9,895,859) Community development 50,662,150 8,011,784 10,233,822 47,363 (32,369,181) - (32,369,181) Highways and streets 36,489,700 1,889,103 - 5,774,215 (28,826,382) - (28,826,382) Public works 15,001,365 5,049,886 336,054 605,807 (9,009,618) - (9,009,618) Parks and recreation 26,118,626 2,253,950 - 2,399,768 (21,464,908) - (21,464,908) Public safety 184,103,949 7,572,030 5,935,569 - (170,596,350) - (170,596,350) Interest on long-term debt 1,122,442 - - - (1,122,442) - (1,122,442) Total governmental
activities 333,006,119 34,235,480 16,658,746 8,827,153 (273,284,740) - (273,284,740) Business-type activities:
Water 92,737,199 90,925,358 203,049 1,232,226 - (376,566) (376,566) Sewer 64,696,457 71,724,921 1,819,221 5,990,417 - 14,838,102 14,838,102 Other enterprise 31,940,883 36,590,220 538,809 - - 5,188,146 5,188,146 Total business-type
activities 189,374,539 199,240,499 2,561,079 7,222,643 - 19,649,682 19,649,682 Total $ 522,380,658 $ 233,475,979 $ 19,219,825 $ 16,049,796 (273,284,740) 19,649,682 (253,635,058) General revenues:
Taxes:
Utility users tax 23,446,327 - 23,446,327
Property taxes, levied for general purposes 24,284,092 - 24,284,092 Property taxes, generated by and allocated to the airport - 406,150 406,150 Transient occupancy tax 3,488,165 - 3,488,165
Franchise tax 7,661,231 - 7,661,231
Cannabis tax 3,279,809 - 3,279,809
Business license tax, levied for general purposes 16,334,395 - 16,334,395 Business license tax, levied for downtown improvement district 208,399 - 208,399 Special assessments, levied 5,487,466 - 5,487,466
Intergovernmental revenues:
Sales tax (state appropriation) 36,595,971 - 36,595,971 Sales tax Measure H 47,211,026 - 47,211,026
Motor vehicle license fee 23,850,552 - 23,850,552
Transportation tax funding 26,022,667 - 26,022,667
Other 20,820,173 - 20,820,173
Unrestricted investment earnings and rent 23,589,103 16,712,360 40,301,463 Miscellaneous 2,212,563 1,897,429 4,109,992
Transfers 2,223,931 (2,223,931) -
Total general revenues and transfers 266,715,870 16,792,008 283,507,878 Change in net position (6,568,870) 36,441,690 29,872,820 Net position, July 1, as previously reported 353,579,350 873,883,400 1,227,462,750 Restatements (Note 19) (5,265,341) (132,317) (5,397,658) Net position, July 1, as restated 348,314,009 873,751,083 1,222,065,092 Net position, June 30 $ 341,745,139 $ 910,192,773 $ 1,251,937,912
Program Revenues
Net (Expense) Revenue and
Changes in Net Position
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City of Modesto
Balance Sheet
Governmental Funds
June 30, 2025
See Notes to Basic Financial Statements.
20 Housing and
Operating Community Other Total
General Grants Development Governmental Governmental
ASSETS
Cash and investments $ 55,756,978 $ 11,313,539 $ $ 4,586,943 10,004,333 $ 81,661,793 Receivables:
Accounts, net 396,098 64,596 3,333 322,223 786,250
Interest 383,154 20,732 1,018 355,346 760,250
Utilities, net 1,922,957 - - - 1,922,957
Taxes 23,238,354 1,872 - 165,472 23,405,698
Leases 9,065,337 - - 1,385,557 10,450,894
Due from governments 1,388,496 1,881,720 1,426,045 7,745,492 12,441,753 Due from other funds 926,179 - - - 926,179
Prepaid expenditures 9,278,052 55,648 1,545 185,399 9,520,644 Restricted assets:
Cash and investments 3,875,246 - - 137,800,243 141,675,489 Cash and investments with
fiscal agent 5,087,150 833,381 - 5,842,963 11,763,494
Accounts receivable, net - - - 837,888 837,888
Interest receivable - - - 297,069 297,069
Due from governments - - - 6,346,834 6,346,834
Due from Successor Agency - - - 1,192,004 1,192,004
Notes receivable, net - - 53,588,383 10,926,027 64,514,410 Advances to other funds 2,167,745 - - - 2,167,745
Total assets $ 113,485,746 $ 14,171,488 $ 59,607,267 $ 183,406,850 $ 370,671,351
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES
Liabilities:
Accounts payable $ $ 3,991,712 $ 669,440 $ 105,385 $ 5,468,097 10,234,634 Accrued salaries and benefits 4,716,631 195,907 29,341 273,779 5,215,658 Interest payable - 7,608 - 4,187 11,795
Approved loans payable - - 5,914,221 - 5,914,221
Due to other funds - - - 926,179 926,179
Due to fiduciary funds - - - 26,974 26,974
Due to other governments 41,144 - - - 41,144
Unearned revenue 445,526 8,932,440 - 5,928,769 15,306,735 Refundable deposits 7,340,641 - - 91,322 7,431,963
Advances from other funds - - - 843,041 843,041
Total liabilities 16,535,654 9,805,395 6,048,947 13,562,348 45,952,344 Deferred inflows of resources:
Unavailable revenue 295,750 1,881,720 24,611,481 8,723,245 35,512,196 Leases 8,402,070 - - 1,284,797 9,686,867
Total deferred inflows of resources 8,697,820 1,881,720 24,611,481 10,008,042 45,199,063 Fund balances:
Nonspendable 11,445,797 55,648 1,545 185,399 11,688,389 Restricted 1,621,755 2,428,725 28,945,294 160,835,203 193,830,977 Committed 18,397,817 - - - 18,397,817
Assigned 2,679,948 - - 4,087,997 6,767,945
Unassigned 54,106,955 - - (5,272,139) 48,834,816
Total fund balances 88,252,272 2,484,373 28,946,839 159,836,460 279,519,944 Total liabilities, deferred inflows of
resources, and fund balances $ 113,485,746 $ 14,171,488 $ 59,607,267 $ 183,406,850 $ 370,671,351 #7..
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City of Modesto
Reconciliation of the Governmental Funds Balance Sheet
to the Governmental Activities Statement of Net Position June 30, 2025
See Notes to Basic Financial Statements.
21 Total fund balances - governmental funds $ 279,519,944 Amounts reported for governmental activities in the statement of net position are different because:
Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds.
General capital assets:
Nondepreciable $ 85,545,786
Depreciable 189,068,280
Accumulated depreciation on general capital assets (135,121,524) Lease assets and SBITAS - right-of-use 7,053,862
Accumulated amortization on lease assets, right-of-use (3,044,120) Infrastructure:
Depreciable 586,996,952
Accumulated depreciation on infrastructure (423,790,768) 306,708,468 Other long-term assets are not available to pay for current-period expenditures and, therefore, are not reported in the governmental funds.
Deferred in the governmental funds $ 35,512,196
Reimbursement agreement with Successor Agency 10,438,550 Investments in joint ventures 6,974,299 52,925,045
Derivative instruments:
Rate swaps are not reported in governmental funds. $ (1,724,166) Deferred outflows of resources used to accumulate decreases in fair value of hedging derivatives also are not reported in governmental funds. 1,724,166 - Internal service funds are used by management to charge the costs of activities to individual funds. The assets, deferred outflows of resources, liabilities, and deferred inflows of resources of internal service funds are included in governmental activities in the statement of net position. 23,784,208 Deferred outflows and inflows of resources for pension items in governmental activities are not financial resources and, therefore, are not reported in the governmental funds.
Deferred outflows of resources $ 66,893,521
Deferred inflows of resources (740,173) 66,153,348
Deferred outflows and inflows of resources for net OPEB items in governmental activities are not financial resources and, therefore, are not reported in the governmental funds.
Deferred outflows of resources $ 4,780,452
Deferred inflows of resources (3,298,567) 1,481,885
Some liabilities, are not due and payable in the current period and therefore are not reported in the funds.
Net pension liability $ (328,508,703)
Net OPEB liability (15,379,073)
Bonds payable, and other long-term debt (44,939,983) (388,827,759) Net position - governmental activities $ 341,745,139
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City of Modesto
Statements of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
Fiscal Year Ended June 30, 2025
See Notes to Basic Financial Statements.
22 Housing and
Operating Community Transportation Other Total
General Grants Development Special Tax Governmental Governmental REVENUES:
Taxes $ 76,102,066 $ 253,569 $ - $ $ $ 2,346,783 78,702,418 Licenses and permits 100,255 45,515 - 199,064 344,834
Intergovernmental 130,800,725 32,123,832 5,282,977 38,374,446 206,581,980 Charges for services 19,630,203 5,697,380 1,322,781 5,630,065 32,280,429 Special assessments levied 368,587 84,427 - 5,034,452 5,487,466 Interest and rent 2,980,547 755,393 17,691 13,709,070 17,462,701 Net increase in fair value of investments 797,344 80,076 17,849 3,249,676 4,144,945 Fines and forfeits 1,395,769 - - 214,448 1,610,217
Miscellaneous 841,851 217,583 - 1,095,634 2,155,068
Total revenues 233,017,347 39,257,775 6,641,298 69,853,638 348,770,058 EXPENDITURES:
Current:
General government 17,464,350 485,617 - - 17,949,967
Community development 9,791,316 24,439,639 4,420,218 9,373,073 48,024,246 Highways and streets - - - 23,203,685 23,203,685
Public works 4,759,823 1,166,512 - 1,049,497 6,975,832
Parks and recreation 18,556,442 409,883 - 5,383,086 24,349,411 Public safety 162,667,321 10,222,300 - 824,749 173,714,370 Capital outlay:
General government 10,900 28,035 - - 38,935
Community development - - - 334,494 334,494
Highways and streets - - - 9,636,532 9,636,532
Public works - - - 876,217 876,217
Parks and recreation - 7,070 - 12,032,288 12,039,358
Public safety 133,704 - - 7,880 141,584
Debt service:
Principal retirement 1,716,610 235,650 345,000 3,207,207 5,504,467 Interest 246,651 5,194 4,916 1,045,283 1,302,044
Other 441,297 - - 48,191 489,488
Total expenditures 215,788,414 36,999,900 4,770,134 67,022,182 324,580,630
EXCESS OF REVENUES
OVER EXPENDITURES 17,228,933 2,257,875 1,871,164 2,831,456 24,189,428
OTHER FINANCING SOURCES
(USES):
Transfers in 2,132,113 2,447,319 - 23,388,810 27,968,242 Transfers out (14,622,900) (3,477,101) (703,168) (9,832,556) (28,635,725) Other financing proceeds - leases
and SBITAs 416,013 397,188 - - 813,201
Sale of assets 39,493 - - 18,002 57,495
Total other financial sources (uses) (12,035,281) (632,594) (703,168) 13,574,256 203,213 CHANGES IN FUND BALANCES 5,193,652 1,625,281 1,167,996 16,405,712 24,392,641 FUND BALANCES, JULY 1,
AS PREVIOUSLY REPORTED 83,058,620 859,092 27,778,843 55,290,002 88,140,746 255,127,303 Adjustments (Note 19) - - - (55,290,002) 55,290,002 -
FUND BALANCES, JULY 1, AS RESTATED 83,058,620 859,092 27,778,843 - 143,430,748 255,127,303 FUND BALANCES, JUNE 30 $ 88,252,272 $ 2,484,373 $ 28,946,839 $ $ 159,836,460 $ 279,519,944 #7..
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City of Modesto
Reconciliation of the Governmental Funds Statements of Revenues, Expenditures, and Changes in Fund Balances to the Governmental Activities Statement of Activities Fiscal Year Ended June 30, 2025
See Notes to Basic Financial Statements.
23 Net change in fund balances - governmental funds $ 24,392,641 Amounts reported for governmental activities in the statement of activities are different because:
Governmental funds report capital outlay as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.
Capital outlay $ 23,067,120
Adjustments to capital assets (7,583,977)
Depreciation and amortization expense (20,380,107) (4,896,964) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds.
Change in unavailable revenues $ (25,728,592)
Change in investments in joint ventures 589,514 (25,139,078) Recognition of Successor Agency annual payment for their Reimbursement Agreement receivable associated with long-term debt. (867,100) The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position.
Principal retirement 5,504,467
Adjustments to long-term debt 175,505
Proceeds of long-term debt (813,201) 4,866,771
Some expenses reported in the statement of activities require the use of current financial resources and therefore are not reported as expenditures in governmental funds.
Change in interest payable $ 4,097
OPEB expense associated with net OPEB liability 328,992 Pension expense associated with net pension liability (7,489,639) (7,156,550) Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue (expense) of internal service funds is allocated to governmental activities and business-type activities. 2,231,410 Change in net position - governmental activities $ (6,568,870) #7..
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City of Modesto
Statement of Net Position
Proprietary Funds
June 30, 2025
See Notes to Basic Financial Statements.
24 Other Total Internal
Water Sewer Enterprise Enterprise Service
ASSETS
Current assets:
Cash and investments $ 137,615,727 $ 90,327,175 $ 33,487,424 $ 261,430,326 $ 25,949,051 Receivables:
Accounts, net 104,114 51,028 3,832,030 3,987,172 726,249 Interest 816,612 474,380 169,102 1,460,094 167,189
Utilities, net 10,792,661 7,920,617 1,354,498 20,067,776 - Leases 19,285 411,238 515,152 945,675 5,488
Prepaid expenses 4,973,929 13,378 3,619 4,990,926 1,383,080 Due from governments 1,143,330 1,958,931 5,249,159 8,351,420 3,270,044 Due from other funds 2,837,583 - - 2,837,583 -
Inventories - - 49,674 49,674 7,498,689
Total current assets 158,303,241 101,156,747 44,660,658 304,120,646 38,999,790 Noncurrent assets:
Advances to other funds 1,860,000 615,600 - 2,475,600 - Restricted cash and investments 40,023,513 11,635,137 - 51,658,650 8,417,921 Restricted cash and investments with fiscal agent 2,549,306 196 121,033 2,670,535 580,927 Leases receivable 1,579,148 3,353,063 11,216,664 16,148,875 11,226 Land and construction in progress 37,765,947 116,489,985 11,998,391 166,254,323 9,980,735 Other capital assets, net of accumulated depreciation 376,181,040 351,473,940 24,370,229 752,025,209 39,218,667 Intangible assets, net of accumulated
amortization 2,336,737 48,026 240,926 2,625,689 1,256,271 Total noncurrent assets 462,295,691 483,615,947 47,947,243 993,858,881 59,465,747 Total assets 620,598,932 584,772,694 92,607,901 1,297,979,527 98,465,537
DEFERRED OUTFLOWS OF RESOURCES
Deferred OPEB 659,818 487,773 262,709 1,410,300 279,556 Deferred pensions 4,489,158 4,700,822 2,537,406 11,727,386 3,636,465 Loss on refunding 261,716 - - 261,716 -
Accumulated decrease in fair value of hedging
derivatives 9,546,743 - - 9,546,743 -
Total deferred outflows of resources 14,957,435 5,188,595 2,800,115 22,946,145 3,916,021 (Continued)
Enterprise
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City of Modesto
Statement of Net Position (Continued)
Proprietary Funds
June 30, 2025
See Notes to Basic Financial Statements.
25 Other Total Internal
Water Sewer Enterprise Enterprise Service
LIABILITIES
Current liabilities:
Accounts payable $ 2,906,649 $ 9,361,274 $ 813,874 $ 13,081,797 $ 5,622,033 Accrued salaries and benefits 454,443 485,401 327,213 1,267,057 386,260 Interest payable 1,932 464,752 19,138 485,822 26,751
Due to other funds - - - - 2,837,583
Current portion - compensated absences - - - - 6,642,839 Current portion - claims liability - - - - 7,886,993
Current portion - long-term debt 7,195,684 7,155,969 - 14,351,653 - Current portion - developer advances 79,793 - - 79,793 - Current portion - leases and SBITAS 203,644 18,230 81,930 303,804 143,336 Unearned revenue 40,972 1,403,494 338,329 1,782,795 35,627 Total current liabilities 10,883,117 18,889,120 1,580,484 31,352,721 23,581,422 Noncurrent liabilities:
Payable from restricted assets -
refundable deposits 1,510,851 1,135,537 - 2,646,388 -
Advances from other funds - - 3,800,304 3,800,304 -
Compensated absences - - - - 14,433,199
Claims liability - - - - 25,309,185
Derivative instrument - interest swap 9,546,743 - - 9,546,743 - Pollution remediation liability 40,000,476 10,511,114 3,170,994 53,682,584 - Long-term debt:
Reimbursement agreement related to MID debt 79,810,000 - - 79,810,000 - Revenue bonds payable - 83,485,262 - 83,485,262 -
Loans payable 201,020 22,703,266 - 22,904,286 -
Certificates of participation 35,104,528 - - 35,104,528 - Developer advances 330,888 - - 330,888 -
Leases and SBITAs payable 2,149,141 19,606 235,679 2,404,426 263,864 Net OPEB liability 2,044,136 1,751,708 1,354,262 5,150,106 1,154,746 Net pension liability 22,441,978 23,500,119 12,684,869 58,626,966 18,179,240 Total noncurrent liabilities 193,139,761 143,106,612 21,246,108 357,492,481 59,340,234 Total liabilities 204,022,878 161,995,732 22,826,592 388,845,202 82,921,656
DEFERRED INFLOWS OF RESOURCES
Deferred OPEB 501,643 262,255 233,469 997,367 333,322
Deferred pensions 16,990 17,791 9,604 44,385 13,764
Deferred leases 1,468,691 3,720,959 10,969,135 16,158,785 15,768 Total deferred inflows of resources 1,987,324 4,001,005 11,212,208 17,200,537 362,854
NET POSITION
Net investment in capital assets 291,470,742 354,629,618 36,291,937 682,392,297 50,048,473 Restricted for pollution remediation 23,037 1,124,023 - 1,147,060 - Restricted for support services - - - - 8,998,848
Restricted cash with fiscal agent 2,549,306 196 121,033 2,670,535 - Unrestricted 135,503,080 68,210,715 24,956,246 228,670,041 (39,950,273) Total net position $ 429,546,165 $ 423,964,552 $ 61,369,216 914,879,933 $ 19,097,048 Adjustment to reflect the consolidation of internal service fund activities (4,687,160) Net position of business-type activities $ 910,192,773
(Concluded)
Enterprise
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City of Modesto
Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds
Fiscal Year Ended June 30, 2025
See Notes to Basic Financial Statements.
26 Other Total Internal
Water Sewer Enterprise Enterprise Service
OPERATING REVENUES:
Charges for services $ 90,252,946 $ 68,762,132 $ 28,981,724 $ 187,996,802 $ 128,984,674 Miscellaneous 672,412 2,428,871 7,608,496 10,709,779 530,649 Total operating revenues 90,925,358 71,191,003 36,590,220 198,706,581 129,515,323 OPERATING EXPENSES:
Salaries and wages 11,454,377 11,222,706 6,971,461 29,648,544 11,851,671 Cost of goods sold - - - - 6,712,951
Contractual services 12,096,881 15,799,905 7,442,486 35,339,272 6,468,306 Utilities 3,185,190 3,454,073 671,750 7,311,013 598,769 Maintenance and supplies 11,751,382 6,052,104 5,871,898 23,675,384 15,994,871 Water purchases 18,731,636 - - 18,731,636 -
Insurance 654,866 2,018,388 985,958 3,659,212 29,833,194 Claims - - - - 14,508,351
Employee benefits 4,748,318 4,963,751 3,051,604 12,763,673 39,757,960 Administration services 1,501,588 2,989,791 4,642,905 9,134,284 1,467,724 Allocated indirect administrative costs 1,580,489 947,977 525,436 3,053,902 307,575 Depreciation 21,581,825 15,170,610 1,684,227 38,436,662 6,055,449 Total operating expenses 87,286,552 62,619,305 31,847,725 181,753,582 133,556,821 OPERATING INCOME (LOSS) 3,638,806 8,571,698 4,742,495 16,952,999 (4,041,498)
NONOPERATING REVENUES (EXPENSES)
Operating grants 203,049 1,819,221 538,809 2,561,079 -
Gain (loss) on disposition of capital assets 46,268 107,540 172,483 326,291 (174,014) Tax revenue - - 406,150 406,150 -
Tax expense (103,238) (63,505) (2,053) (168,796) -
Interest income 5,230,631 3,409,481 1,183,738 9,823,850 1,029,720 Net increase in fair value of investments 3,515,210 2,682,762 690,538 6,888,510 319,017 Connection fees - 533,918 - 533,918 -
Rental income 49,670 484,110 1,332,357 1,866,137 43,206 Settlements and recoveries - (295,000) - (295,000) -
Interest expense and amortization (5,172,561) (1,882,812) (27,954) (7,083,327) (39,892) Trustee and letter of credit fees (1,771) (6,668) - (8,439) - Total nonoperating revenues 3,767,258 6,789,047 4,294,068 14,850,373 1,178,037
INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS 7,406,064 15,360,745 9,036,563 31,803,372 (2,863,461) Capital contributions 1,232,226 5,990,417 - 7,222,643 1,843,063 Transfers in 1,331,100 24,150 2,231,895 3,587,145 4,328,657 Transfers out (2,789,505) (1,701,372) (1,320,199) (5,811,076) (1,437,243) Total contributions and transfers (226,179) 4,313,195 911,696 4,998,712 4,734,477 CHANGES IN NET POSITION 7,179,885 19,673,940 9,948,259 36,802,084 1,871,016 NET POSITION, JULY 1, AS PREVIOUSLY REPORTED 422,366,280 404,290,612 51,420,957 878,077,849 22,623,690 Restatements (Note 19) - - - - (5,397,658)
NET POSITION, JULY 1, AS RESTATED 422,366,280 404,290,612 51,420,957 878,077,849 17,226,032 NET POSITION, JUNE 30 $ 429,546,165 $ 423,964,552 $ 61,369,216 914,879,933 $ 19,097,048 Adjustment to reflect the consolidation of internal service funds (360,394) Change in net position of business-type activities $ 36,441,690 Enterprise
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City of Modesto
Statement of Cash Flows
Proprietary Funds
Fiscal Year Ended June 30, 2025
See Notes to Basic Financial Statements.
27 Other Total Internal
Water Sewer Enterprise Enterprise Service
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers and users $ 90,874,365 $ 67,454,361 $ 36,270,347 $ 194,599,073 $ 128,157,335 Payments to suppliers (13,920,332) (22,579,452) (23,867,960) (60,367,744) (73,404,405) Payments to employees (17,076,753) (16,984,695) (10,561,981) (44,623,429) (45,018,823) Net cash provided by operating activities 59,877,280 27,890,214 1,840,406 89,607,900 9,734,107
CASH FLOWS FROM NONCAPITAL FINANCING
ACTIVITIES:
Operating grants received 203,049 1,819,221 538,809 2,561,079 - Taxes received - - 406,150 406,150 -
Settlements and recoveries - (295,000) - (295,000) -
Transfers in 1,331,100 24,150 2,231,895 3,587,145 4,232,325 Transfers out (2,789,505) (1,701,372) (1,320,199) (5,811,076) (1,437,243) Advances from/to other funds 620,000 125,217 (601,318) 143,899 - Net cash provided by (used in) noncapital financing
activities (635,356) (27,784) 1,255,337 592,197 2,795,082
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Acquisition and construction of capital assets (20,905,613) (55,782,858) (418,912) (77,107,383) (7,847,189) Proceeds (loss) from sale of capital assets 46,268 107,540 160,432 314,240 185,888 Principal (repayments) collection (7,257,770) (4,945,579) 331,695 (11,871,654) - Interest paid (5,180,915) (1,915,602) (17,616) (7,114,133) (39,892) Refunding gain 23,791 22,216 - 46,007 -
Trustee and letter of credit fees (1,771) (6,668) - (8,439) - Capital contributions 1,232,226 5,990,417 - 7,222,643 474,629 Connection fees for capital purposes - 533,918 - 533,918 - Net cash provided by (used in) capital and related
financing activities (32,043,784) (55,996,616) 55,599 (87,984,801) (7,226,564) CASH FLOWS FROM INVESTING ACTIVITIES:
Interest received 4,923,575 3,388,391 1,115,830 9,427,796 968,324 Net increase in the fair value of investments 3,515,210 2,682,762 690,538 6,888,510 319,017 Rental income received 69,124 935,566 1,280,859 2,285,549 48,613 Net cash provided by investing activities 8,507,909 7,006,719 3,087,227 18,601,855 1,335,954 Net increase (decrease) in cash and investments 35,706,049 (21,127,467) 6,238,569 20,817,151 6,638,579 CASH AND INVESTMENTS, JULY 1 144,482,497 123,089,975 27,369,888 294,942,360 28,309,320 CASH AND INVESTMENTS, JUNE 30 $ 180,188,546 $ 101,962,508 $ 33,608,457 $ 315,759,511 $ 34,947,899 RECONCILIATION TO STATEMENT OF NET POSITION:
Cash and investments $ 137,615,727 $ 90,327,175 $ 33,487,424 $ 261,430,326 $ 25,949,051 Restricted cash and investments 40,023,513 11,635,137 - 51,658,650 8,417,921 Restricted cash and investments with fiscal agent 2,549,306 196 121,033 2,670,535 580,927 TOTAL CASH AND INVESTMENTS $ 180,188,546 $ 101,962,508 $ 33,608,457 $ 315,759,511 $ 34,947,899 (Continued)
Enterprise
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City of Modesto
Statement of Cash Flows (Continued)
Proprietary Funds
Fiscal Year Ended June 30, 2025
See Notes to Basic Financial Statements.
28 Other Total Internal
Water Sewer Enterprise Enterprise Service
RECONCILIATION OF OPERATING INCOME (LOSS)
TO NET CASH PROVIDED BY OPERATING
ACTIVITIES:
Operating income (loss) $ 3,638,806 $ 8,571,698 $ 4,742,495 $ 16,952,999 $ (4,041,498) Adjustments to reconcile operating income (loss) to
net cash provided by operating activities:
Depreciation 21,581,825 15,170,610 1,684,227 38,436,662 6,055,449 Taxes paid (103,238) (63,505) (2,053) (168,796) -
(Increase) decrease in:
Accounts receivable (42,265) 85,825 198,008 241,568 4,045,076 Taxes receivable - - 2,212 2,212 -
Utilities receivable (8,728) (91,448) 50,806 (49,370) - Due from governments (963,654) 3,780,289 (4,730,686) (1,914,051) (530,063) Prepaid expenses (329,738) 6,626 162,880 (160,232) 1,226,815 Inventories - - 3,762 3,762 (870,869)
Due from other funds (115,206) - - (115,206) -
Leases receivable - (3,731,019) (570,899) (4,301,918) - Deferred outflows of resources - OPEB (195,913) (151,516) (46,412) (393,841) (45,735) Deferred outflows of resources - pensions 2,412,194 2,489,548 1,384,840 6,286,582 1,994,486 Increase (decrease) in: -
Accounts payable (381,682) 1,113,188 258,071 989,577 (855,147) Accrued salaries and benefits 34,952 82,743 50,010 167,705 66,138 Interest payable - - - - (3,886)
Compensated absences - - - - 1,990,202
Deferred inflows of resources - OPEB (139,069) (86,467) (42,599) (268,135) (59,443) Deferred inflows of resources - pensions (47,047) (48,928) (26,790) (122,765) (38,485) Deferred inflows of resources - leases - - - - (5,406)
Net OPEB liability 287,310 206,010 75,472 568,792 87,784 Net pension liability (3,191,533) (3,206,885) (1,883,427) (8,281,845) (2,735,659) Claims liability - - - - 4,735,939
Pollution remediation liability 37,242,401 3,659,317 1,144,675 42,046,393 - Due to other funds - - - - (320,385)
Unearned revenue (25,999) (51,132) (614,186) (691,317) (5,932) Lease liability - - - - (955,274)
Refundable deposits 223,864 155,260 - 379,124 -
Total adjustments 56,238,474 19,318,516 (2,902,089) 72,654,901 13,775,605 Net cash provided by operating activities $ 59,877,280 $ 27,890,214 1,840,406 $ 89,607,900 $ 9,734,107
NONCASH INVESTING, CAPITAL AND FINANCING
ACTIVITIES:
Issuance of lease payable for right-to-use asset $ 2,440,688 $ - $ $ - - $ - Contributions of capital assets - - - - 1,464,766
TOTAL NONCASH INVESTING, CAPITAL AND
FINANCING ACTIVITIES $ 2,440,688 $ - $ $ - - $ 1,464,766 (Concluded)
Enterprise
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City of Modesto
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2025
See Notes to Basic Financial Statements.
29 Private-Purpose Investment
Trust Funds Trust Funds
ASSETS
Cash and investments $ $ 2,897,730 2,850,715
Cash and investments held with fiscal agent 3,346,988 - Interest receivable 12,527 5,978
Taxes receivable 1,600,980 110,846
Assessments receivable 24,555,000 -
Prepaids - 229
Leases receivable - 1,108,752
Due from governments 26,974 265,426
Land and construction in progress - 5,634,159
Other capital assets, net of accumulated depreciation - 5,137,575 Total assets 32,440,199 15,113,680
DEFERRED OUTFLOWS OF RESOURCES
Loss on refunding 766,250 -
Total deferred outflows of resources 766,250 -
LIABILITIES
Accounts payables and other liabilities 38,333 735,992
Unearned revenues 598,347 -
Due to local governments 1,192,004 -
Interest payable 362,600 -
Long-term liabilities:
Due within one year 2,736,259 -
Due in more than one year 33,406,651 -
Total liabilities 38,334,194 735,992
DEFERRED INFLOW OF RESOURCES
Leases - 1,025,284
Total deferred inflow of resources - 1,025,284
NET POSITION
Restricted for other governments 5,176,567 13,352,404
Unrestricted (10,304,312) -
Total net position (deficit) $ (5,127,745) $ 13,352,404 #7..
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City of Modesto
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
Fiscal Year Ended June 30, 2025
See Notes to Basic Financial Statements.
30 Private-Purpose Investment
Trust Funds Trust Funds
ADDITIONS:
Members investment pool $ - $ 849,312
Total contributions - 849,312
Collections on behalf of other governments:
Special assessments 2,204,199 254,158
Property taxes 1,801,473 464,280
Grants - 1,455,015
Other - 278,718
Total collections on behalf of other governments 4,005,672 2,452,171 Interest and investment earnings:
Interest earnings 305,578 173,368
Net increase in fair value of investments 50,463 90,845 Total interest and investment earnings 356,041 264,213
Other additions:
Gain on disposition of capital assets - 461,074
Total other additions - 461,074
Total additions 4,361,713 4,026,770
DEDUCTIONS:
Distribution of property taxes to other taxing entities 148,074 796,599 Obligation retirements:
Interest expense 1,100,892 -
Trustee fees 3,760 -
City administrative expenses 181,231 177,013
Other expenses 73,861 8,540
Depreciation expense - 434,128
Insurance expenses - 16,236
Operating expenses - 1,118,641
Total deductions 1,507,818 2,551,157
SPECIAL ITEMS:
Insurance recoveries - 453,744
Recovery of previously written-off capital asset - 180,011 Total special items - 633,755
Net increase in fiduciary net position 2,853,895 2,109,368 Net position (deficit), July 1 (7,981,640) 11,243,036
Net position (deficit), June 30 $ (5,127,745) $ 13,352,404 #7..
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
31 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Financial Reporting Entity
The City of Modesto (the City) was incorporated in 1884 and operates under a CouncilManager form of government as authorized by its charter adopted in 1951. The City Council consists of seven elected members. The following services are provided by the City to its citizens: public safety (fire and police), highways and streets, drinking water, wastewater collection and treatment, storm drainage, parks and recreation, public improvements, community development, planning and zoning, and general administrative services.
These financial statements present the financial status of the City and its component units.
The component units discussed in the following paragraphs are included in the City's reporting entity because the City is financially accountable for their operations.
1. The MPFA (Modesto Public Financing Authority) was established as a separate legal entity whose sole purpose is to provide financing for various City capital projects.
2. The City of Modesto has established several Community Facilities Districts (Districts) to provide funding and reimbursement mechanisms for public facilities and services required by each District Specific Plan. These Districts are the vehicles used to ensure that all landowners in the Districts contribute to the cost of public improvements. There are currently thirteen active Districts, which are combined for presentation in these financial statements. Individual component unit financial statements are prepared for each District.
Although these component units are legally separate from the City, they are reported on a blended basis as part of the primary government because their boards consist of all seven members of the City Council and operational responsibility. There is an operational responsibility for the City related to these component units and for the MPFA, it provides services solely for the City. Component unit financial statements may be obtained from the City's Finance Department.
The Redevelopment Successor Agency (Successor Agency) operates under the auspices of a legislatively formed Oversight Board comprised of representatives of the local agencies that serve the development project area. The Oversight Board, in its fiduciary capacity, has authority over the operations and the timely dissolution of the former Redevelopment Agency (RDA). It is tasked with fulfilling the obligations of the former RDA, and is also responsible for revenue collection, maintaining necessary loan reserves and disposing of excess property. This agency is reported as a private-purpose trust fund based on the generally accepted accounting standards requirement.
The joint ventures and jointly governed organizations described in Note 19 are not considered part of the reporting entity because the City is not financially accountable for their operations.
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
32 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 the statement of activities) report information on all of the non-fiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment, are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.
Basis of Presentation, Basis of Accounting, and Measurement Focus The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are proprietary fund statements and fiduciary funds financial statements. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Custodial funds have no measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.
Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days after the end of the current fiscal period. For grant revenues, the City considers this type of revenue to be available if collected within 180 days. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, principal and interest, compensated absences, claims and judgement expenditures are recorded as fund liabilities when due or when amounts have been accumulated in the debt service funds for payments to be made early in the following year. #7..
- 307 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
33 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of Presentation, Basis of Accounting, and Measurement Focus (Continued) Substantially all property taxes, taxpayer-assessed taxes (such as sales and use, utility users, business license, transient occupancy, franchise fees, and gas taxes), interest, special assessments levied, state and federal grants, and charges for current services are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Revenues from licenses, permits, and fines and forfeits are considered to be measurable and available only when cash is received by the City.
The City reports the following major governmental funds:
• The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.
• The Operating Grants Special Revenue Fund to account for a variety of governmental fund operating grants, including law enforcement grants. • The Housing and Community Development Special Revenue Fund to account for various grant funds received from federal Community Development Block Grants to be used for a variety of housing related programs primarily targeted at low-income housing.
Additionally, this fund accounts for the City’s revolving fund, which provides housing loans to low-income individuals and accounts for emergency shelter grant revenue received from the Housing and Urban Development Department.
The City reports the following major proprietary funds:
• The Water Fund accounts for all revenues collected by the City for the purpose of financing the construction, operation, and maintenance of the City water distribution system. Revenues are derived from water service charges and various installation fees. • The Sewer Fund accounts for revenues collected by the City for the purpose of financing the construction, operation, and maintenance of the City sewer system. Revenues include, but are not limited to, sewer service charges and sewer lateral charges. #7..
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
34 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of Presentation, Basis of Accounting, and Measurement Focus (Continued) Additionally, the City reports the following fund types:
• Private-Purpose Trust Funds account as the fiduciary fund type used by the City to report trust arrangements under which principal and income benefit other governments.
The fund reports the assets, liabilities, and net position of the Redevelopment Successor Agency. Additionally, the fund also reports the assets, primarily cash and investments, and related liabilities and net position of Special Districts, which are used to account for collection of special assessment from property owners which are collected and forwarded to trustees for payment to bondholders.
• Investment Trust Funds account for the assets and investments in the City’s investment pool, of legally separate entities held by the City as an agent of various assessment districts, governmental entities and non-profit organizations. • Internal Service Funds account for fleet management, central services, information and technology services, insurance, employee benefits management, and building services provided to other departments or agencies of the City on a cost-reimbursement basis.
As a general rule, the effect of interfund activity has been eliminated from the governmentwide financial statements. Exceptions to this general rule are exchange or exchange-like transactions between functions of the government. Eliminations of these charges would distort the direct costs and program revenues reported for the various functions concerned.
Proprietary funds distinguish operating revenues and expenses from nonoperating items.
Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations.
The principal operating revenues of the enterprise and internal service funds are charges to customers for sales and services. The Sewer Fund also recognize as nonoperating revenue the portion of tap fees intended to recover the cost of connecting new customers to the systems. Operating expenses for enterprise and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed. #7..
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
35 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net Position/Fund Balance
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, including the note disclosures. Actual results could differ from those estimates.
Cash and Investments
Cash and investments (including restricted assets) held in the City's investment pool are reported as cash and investments on the statement of net position and balance sheet because funds can spend cash at any time without prior notice or penalty. All investments with fiscal agents are also considered cash equivalents because they are highly liquid and have maturities of 3 months or less at the time of purchase. Investments are stated at fair value. Valuations are obtained based on various levels identified further under Note 2 – Fair Value Measurement and Application.
Restricted Assets - Cash and Cash Equivalents
Refundable deposits which reside in the Trust Deposits of the General Fund, are classified as restricted assets – cash and cash equivalents on the governmental funds balance sheet because their use is restricted for repayment of those refundable deposits. Legal or contractual obligations associated with the nonmajor governmental funds have been reported as restricted assets due to the restrictions identified on the revenue sources generated from these funds. Refundable deposits in the Water and Sewer funds are also reported as restricted assets on the proprietary funds statement of net position. In addition, certain proceeds of Water certificates of participation and Sewer revenue bonds are considered restricted assets because their use is limited by applicable debt covenants.
These proceeds are reported as part of “restricted assets – cash and cash equivalents” on the proprietary funds statement of net position. The Employee Benefits Management Fund collects funds which are restricted for future payouts for leave balances due to employees who terminate or retire from the City, as well as any severance payouts.
Receivables and Payables
All property taxes are collected and allocated by the County of Stanislaus to the various taxing entities. Property taxes are determined annually as of March 1 and attach as an enforceable lien on real property as of January 1. Taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively. The City participates in the County "Teeter Plan" method of property tax distribution. Under the Teeter Plan, the County remits property taxes to the City based on assessments, not on collections, according to the following schedule: 55 percent in December, 40 percent in April, and 5 percent at the end of the fiscal year. Property taxes are recognized in governmental funds when it is available and measurable. The City considers property tax as available if it is received within 60 days after year-end.
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- 310 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
36 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net Position/Fund Balance (Continued)
Receivables and Payables (Continued)
Revenue from taxpayer-assessed taxes (sales and use, business license, transient occupancy, utility users, gas, and franchise fees) are accrued in the governmental funds when they are both measurable and available. The City considers these revenues available if they are received during the period when settlement of prior fiscal year accounts payable occurs. Historically, the majority of these taxes are received within 60 days after the fiscal year end; therefore, revenue from taxpayer-assessed taxes is accrued if it is received by August 31.
Grant and entitlement revenues are recorded as receivables in the funds when they are susceptible to accrual (i.e., when all eligibility requirements have been met). The corresponding governmental fund revenues are recorded when they become available, with the differences recorded as deferred inflows of resources. The corresponding proprietary fund revenues are recorded as nonoperating revenues when the receivables are recorded.
Some grant and entitlement revenues are not susceptible to accrual, in which case the corresponding revenues are recorded when received. The total amount due from governments for grants, entitlements, and shared receivables and revenues at June 30, 2025 is $30,410,051.
Utility billings receivable is $21,990,773, net of an allowance for doubtful collections of $1,669,033, and includes unbilled receivables using actual amounts billed in July for June services for all City funds. City accounts receivable of $6,336,955 are reported net of an allowance for doubtful collections of $1,729,295 and are based on miscellaneous receivables from the City’s invoice system as well as other receivables accrued at year-end.
The City is a lessee for noncancelable leases of land, buildings, office space, and equipment and recognizes the liability and an intangible right-to-use lease asset at the inception of the lease agreement at the current present value of future payments, in the government-wide and proprietary fund financial statements.
The City is a lessor for noncancelable leases of buildings, hangars, office space and land use and parking spaces. The City recognizes a lease receivable and a deferred inflow of resources in the government-wide, proprietary fund, and governmental fund financial statements at the inception of the lease agreement at current present value of all future payments.
The City has Information Technology (IT) software contract agreements, also known as Subscription-Based Information Technology Arrangements (SBITAs) in which the contract conveys control of the right to use another party’s IT software, alone or in combination with a tangible capital asset for a defined period of time in an exchange or exchange like transaction. The City recognizes the liability and non-cancellable right to use of the IT software asset at the inception of the agreement in the government-wide and proprietary fund financial statements.
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
37 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net Position/Fund Balance (Continued)
Inventories and Prepaid Expenses/Expenditures
Inventories of material and supplies held by governmental and proprietary funds are stated at average cost. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid expenses/expenditures. The consumption method is used to record the prepaid expenses/expenditures.
Interfund Balances
Balances representing lending/borrowing transactions between funds outstanding at the end of the fiscal year are reported as either "due from/due to other funds" (amounts due within one year), or "advances to/from other funds" (non-current portions of interfund lending/borrowing transactions). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances”. Advances to other funds and prepaid items are offset by a nonspendable fund balance in applicable governmental funds to indicate they are not available for appropriation and are not expendable available financial resources to indicate that they are not in spendable form.
Capital Assets
Capital assets, which include property, plant and equipment, intangible assets and infrastructure assets (e.g., streets, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $10,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets received in a service concession agreement and all other types are recorded at acquisition value as of the date of donation.
The City will capitalize a single group purchase of similar assets that would be significant collectively, even if the individual items are below the capitalization thresholds above. For the purpose of this policy, a group purchase above $100,000 is considered significant.
In the case of the initial capitalization of infrastructure assets reported by governmental activities, the City chose to include them regardless of their acquisition date or amount.
Historical values were estimated.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed.
Interest incurred during the construction phase of capital assets of business-type activities and proprietary funds are not included as part of the capitalized value of the assets constructed. #7..
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
38 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net Position/Fund Balance (Continued)
Capital Assets (Continued)
Depreciation is recorded using the straight line method over the estimated useful lives of the assets, which are 75 years for pipelines, 30 years for buildings, 20 years for improvements, 3 to 10 years for buses, 3 to 10 years for furnishings and equipment, 3 to 10 years for vehicles, 3 to 5 years for intangible assets, 30 to 50 years for streets, 20 years for signalization, 30 years for water rights, 5 years for service animals, and 50 years for bridges. Operating expenses include depreciation on all depreciable capital assets.
Leases are recorded as an asset and an obligation at an amount equal to the present value at the beginning of the lease term of minimum lease payments during the lease term.
Non-cancellable lease agreements exceeding a 12-month term are recorded as an intangible right-to-use asset with an amortization calculated based on the term of the lease agreement.
Subscription Based Information Technology Arrangements (SBITAs) are recorded as an asset and an obligation at an amount equal to the present value at the beginning of the arrangement term of minimum arrangement payments during the arrangement term. Non-cancellable agreements exceeding a 12-month term are recorded as an intangible right-to-use asset with an amortization calculated based on the term of the agreement.
The City has established a materiality threshold of $10,000 in annual lease payments under Governmental Accounting Standards Board (GASB) 87 and SBITAs under GASB 96 for financial recording and reporting. All leases and SBITAs under $10,000 will be reported as operating activities.
Deferred Outflows and Inflows of Resources
GASB establishes criteria for recognizing deferred outflows and inflows of resources. A deferred outflow of resources is defined as a consumption of net assets by the government that is applicable to a future reporting period. A deferred inflow of resources is defined as an acquisition of net assets by the government that is applicable to a future reporting period. Refer to Note 18 for a detailed listing of the deferred outflows and inflows of resources the City has recognized.
Compensated Absences
The City recognizes liability for compensated absences for leave time that (1) has been earned for services previously rendered by employees, (2) accumulates and is allowed to be carried over to subsequent years, and (3) is more likely than not to be used as time off or settled during or upon separation from employment. Based on the criteria listed, vacation, holiday, management leave, bilingual leave, compensating time off and sick leave qualify for liability recognition for compensated absences. The liability for compensated absences is reported as incurred in the Employee Benefits Management Internal Service Fund. The liability for compensated absences includes salary–related benefits, where applicable. As of June 30, 2025, the total estimated liability for all compensated absences is $21,076,038. #7..
- 313 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
39 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net Position/Fund Balance (Continued)
Fund Balance
In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned or unassigned based primarily on the extent to which the City is bound to honor constraints on how specific amounts can be spent. • Nonspendable fund balance – amounts that cannot be spent because they are either (a) not spendable in form or (b) legally or contractually required to be maintained intact. • Restricted fund balance – amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation.
• Committed fund balance – amounts that can only be used for specific purposes determined by formal action of the City’s highest level of decision-making authority (City Council) and that remain binding unless removed in the same manner. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period.
• Assigned fund balance – amounts that are constrained by the City’s intent to be used for specific purposes. The intent can be established at either the highest level of decision making, which includes City Council or by an official designated, such as the City Manager, for such purposes.
• Unassigned fund balance – the residual classification for the City’s General Fund that includes amounts not contained in other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes.
The City establishes and modifies or rescinds fund balance commitments by passage of an ordinance. This is typically done through adoption and amendment of the budget. A fund balance commitment is further indicated in the budget as a commitment of the fund, such as approved construction contracts. Assigned fund balance is established by the City through adoption or amendment of the budget or future year budget plan, as intended for a specific purpose.
When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, followed by the unrestricted committed, assigned, and unassigned resources as they are needed.
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- 314 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
40 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net Position/Fund Balance (Continued)
Fund Balance Policy
The City believes that sound financial management principles require that sufficient funds be retained by the City to provide a stable financial base at all times. To retain this stable financial base, the City needs to maintain an unrestricted fund balance in its City funds sufficient to fund cash flows of the City and to provide financial reserves for unanticipated expenditures and/or revenue shortfalls of an emergency nature. Committed, assigned, and unassigned fund balances are considered unrestricted.
The purpose of the City’s fund balance policy is to maintain a prudent level of financial resources to protect against reducing service levels or raising taxes and fees because of temporary revenue shortfalls or unpredictable one-time expenditures.
The City has adopted a policy to achieve and maintain a General Fund reserve at a minimum level of no less than the average of two months of regular General Fund operating expenditures.
Net Position
The governmental and business-type activities in the government-wide financial statements and the proprietary funds in the fund financial statements utilize a net position presentation.
Net position is classified in the following categories:
• Net Investment in Capital Assets – This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt (including premiums) and any other capital related liabilities that are debt (including premiums) and any other capital related liabilities that are attributed to the acquisition, construction, or improvement of assets.
• Restricted Net Position – This amount is restricted by external creditors, grants, contributors, or laws or regulations of other governments. • Unrestricted Net Position – This amount is all net position that does not meet the definition of “net investment in capital assets” or “restricted net position”.
Other Significant Accounting Policies
Employee Benefits
The City established the Employee Benefits Management Internal Service Fund to account for all compensated absences and non-insurance benefits. Insurance benefits for current employees are paid from the Insurance Internal Service Fund. The Employee Benefits Management Fund is reimbursed based on actual benefits paid and leave taken, through payroll charges to the City's operating funds. Leave earned but not taken is being funded over a reasonable period of time.
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- 315 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
41 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Other Significant Accounting Policies (Continued)
Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the California Public Employees’ Retirement System (CalPERS) Safety (police and fire) and Miscellaneous (all other) Plans and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, the benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value. GASB 68 requires that the reported results must pertain to the liability and asset information within certain defined timeframes. For this report, the following:
Valuation Date: June 30, 2023
Measurement Date: June 30, 2024
Measurement Period: July 1, 2023, to June 30, 2024
Other Postemployment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the net position of the City’s plan (OPEB Plan) and additions to/deductions from the OPEB Plan’s net position have been determined on the same measurement basis. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.
GASB 75 requires that the reported results pertain to liability information within certain defined timeframes. For this report, the following timeframes are used:
Valuation Date: June 30, 2024
Measurement Date: June 30, 2024
Measurement Period: July 1, 2023, to June 30, 2024
Interfund Transactions
The City transfers resources among funds in the course of normal operations. Interfund services provided and used, such as equipment pool rental, are accounted for as revenues and expenditures or expenses. Transactions to reimburse a fund for expenditures/expenses initially made from it that are applicable to another fund are recorded as expenditures/ expenses in the correct fund and as reductions of expenditures/expenses in the original fund.
All other interfund transactions are reported as transfers. #7..
- 316 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
42 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) New Accounting Standards
During the year ended June 30, 2025, the City implemented the following GASB new standards. The financial statements included herein apply the requirements and provisions of the standards.
GASB Statement No. 101 – Compensated Absences. The requirements of this statement are effective for reporting periods beginning after December 15, 2023.
GASB Statement No. 102 – Certain Risk Disclosures. The requirements of this statement are effective for reporting periods beginning after June 15, 2024.
Released GASB Statements to be implemented in future financial statements are as follows:
GASB Statement No. 103 – Financial Reporting Model Improvements. The requirements of this statement are effective for reporting periods beginning after June 15, 2025.
GASB Statement No. 104 – Disclosure of Certain Capital Assets. The requirements of this statement are effective for reporting periods beginning after June 15, 2025.
NOTE 2 CASH AND INVESTMENTS
The City maintains a cash and investment pool (the Pool) that is used by all funds. Each fund’s portion of the City’s cash and investment pool is displayed on the balance sheet and proprietary and fiduciary fund statements of net position as “cash and cash equivalents.” Each fund is allocated interest on average monthly cash balances held by the funds throughout the year. Certain deposits held in trust are displayed on the governmental funds balance sheet and the proprietary funds statement of net position as “restricted assets – cash and cash equivalents.” The City also maintains “cash and cash equivalents with fiscal agent”, which represent monies held by fiscal agents for payment of various City debt and capital projects costs.
The City’s cash and investments are reported as follows:
Primary Government:
Cash and investments $ 369,041,170
Restricted cash and investments 201,752,060
Cash and investments held with fiscal agent 15,014,956
Private-Purpose Trust Funds:
Cash and investments 2,897,730
Cash and investments held with fiscal agent 3,346,988
Investment Trust Funds:
Cash and investments 2,850,715
Total cash and investments $ 594,903,619
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- 317 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
43 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Investments Authorized by the California Government Code and the City’s Investment Policy
The City’s investment policy and the California Government Code allow the City to invest in the following types of instruments, and the table also identifies certain provisions of the California Government Code, or the City’s investment policy where it is more restrictive:
Investment Instrument Summary
The City is a voluntary participant in the California Asset Management Program (CAMP).
CAMP is an investment pool offered by the California Asset Management Trust (the Trust).
The Trust is a joint powers authority and public agency created by the Declaration of Trust and established under the provisions of the California Joint Exercise of Powers Act (California Government Code Sections 6500 et seq., or the “Act”) for the purpose of exercising the common power of its participants to invest certain proceeds of debt issues and surplus funds.
The Pool’s investments are limited to investments permitted by subdivisions (a) to (n), inclusive, of Section 53601 of the California Government Code. Security types prohibited include but are not limited to: Investments in inverse floaters, range notes, or interest only strips that are derived from a pool of mortgages. At June 30, 2025, the fair value approximated the City’s cost. At June 30, 2025, these investments range from a maximum maturity of 5 years to some maturity limits of 270 days or less. The City reports its investments in CAMP at the fair value amounts provided by CAMP.
Security Type
Maximum
Maturity
Min Credit
Quality
Authorized
Investment
Limit
Per Issuer
Limit
City Issued Bonds 5 Years None None None
US Treasury Notes/ Bills 5 Years None None None
State of California Securities 5 Years “A” None None
California Municipal Securities 5 Years “A” None None
Other 49 State Municipal Securities 5 Years “A” None None Federal Agencies 5 Years None None None
Banker’s Acceptance (BA) 180 days “A-1” 40% 5%
Commercial Paper 270 days “A-1”/ “A” 40% 5%
Certificates of Deposit 1 Year FDIC Insured or
Collateralized
20% 5%
Negotiable Certificates of Deposit 5 Years “A” 30% 5%
Repurchase Agreements 90 Days None None 20%
Reverse Repurchase Agreements 92 Days None 20% 5%
Medium Term Notes (MTN) 5 Years “A” 30% 5%
Money Market Fund None “AAAm” 20% 10%
LAIF None None $75 million None
Mortgage and Asset-Backed Securities 5 Year “AA” 20% 5% CAMP None None None None
Supranationals 5 Years “AA” 30% 5%
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- 318 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
44 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Investments Authorized by Debt Agreements
The City must maintain required amounts of cash and investments with trustees or fiscal agents under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged as reserves to be used if the City fails to meet its obligations under these debt issues. The California Government Code requires these funds to be invested in accordance with City ordinance, bond indentures, or State statute.
Custodial Credit Risk – Deposits
The custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the City will not be able to recover deposits, or will not be able to recover collateral securities that are in the possession of an outside party. The City does not currently have a Custodial Credit Risk – Deposits Policy. Under California Government Code Section 53651, depending on specific types of eligible securities, a bank must deposit eligible securities posted as collateral with its Agent having a fair value of 110% to 150% of the City’s cash on deposit. All of the City’s deposits are either insured by the Federal Depository Insurance Corporation (FDIC), collateralized with pledged securities held by Wells Fargo Bank, or by Letters of Credit from the Federal Home Loan Bank of San Francisco.
The City has eleven (11) deposit accounts at Bank of Montreal (BMO) that are monitored for deposit collateral purposes. As per the CA Government Code, the bank must provide collateral for the collected deposit balances at 110% for securities and 105% for letters of credit coverage. As of June 30, 2025, the City had collected deposit balances of $10,466,458.
On this amount, the FDIC insurance coverage was $250,000.
Custodial Credit Risk – Investments
The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g. broker-dealer) to a transaction, the City will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. The City’s investment policy limits its exposure to custodial credit risk by requiring that all security transactions entered into by the City, including collateral for repurchase agreements, be conducted on a delivery-versus-payment basis. Securities are to be held by a third-party custodian.
The City’s investments consist of pooled investments, dedicated investments, and other funds held by trustees. The dedicated investment funds represent restricted funds and relate to bond proceeds of the Water and Sewer Enterprise Funds, assessment districts (reported under Private-Purpose Trust Funds) and the Successor Agency. The other funds held by trustees are made either in accordance with bond covenants and are pledged for payment of principal, interest, and specified capital improvements or in accordance with trust agreements. All investments held by a custodian are in the City’s name excluding the Successor Agency.
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- 319 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
45 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Interest Rate Risk
Interest rate risk is the risk that interest rates will rise and reduce the fair value of an investment. Long-term fixed-income securities have the greatest amount of interest rate risk, due to their duration, or sensitivity to interest rate changes, being greater.
As of June 30, 2025, the City owned twenty-six (26) callable bonds. Of the twenty-six (26), twenty-four (24) are corporate bonds, and two (2) are bank bonds. Information on those bonds has been provided as follows:
Maturity Date Call Date Call Terms
$ 5,217,696 5/10/2028 4/10/2028 Callable on and any time after 4/10/2028 3,393,080 1/28/2026 12/28/2025 Callable on and any time after 12/28/2025 2,200,345 11/13/2025 10/13/2025 Callable on and any time after 10/13/2025 3,516,584 9/14/2027 6/14/2027 Callable on and any time after 6/14/2027 2,948,772 8/8/2026 5/8/2026 Callable on and any time after 5/08/2026 2,969,181 2/6/2027 11/6/2026 Callable one-time on 11/06/2026 353,525 1/15/2027 12/15/2026 Callable on and any time after 12/15/2026 1,221,298 4/15/2028 3/15/2028 Callable on and any time after 3/15/2028 2,523,351 11/21/2026 8/21/2026 Callable one-time on 8/21/2026 2,947,758 4/4/2029 3/4/2029 Callable on and any time after 3/04/2029 372,690 3/14/2029 2/14/2029 Callable on and any time after 2/14/2029 5,906,866 9/29/2028 8/29/2028 Callable on and any time after 8/29/2028 4,404,827 12/8/2026 11/8/2026 Callable on and any time after 11/08/2026 4,083,076 5/26/2028 5/26/2027 Callable on 5/26/2027 and any time after if specifc conditions are met
1,499,764 2/24/2028 2/24/2027 Callable on and any time after 2/24/2027 5,706,390 8/7/2026 7/7/2026 Callable on and any time after 7/07/2026 3,024,612 5/21/2027 5/21/2026 Callable on and any time after 5/21/2026 2,088,537 1/24/2029 1/24/2028 Callable on and any time after 1/24/2028 2,355,090 3/22/2028 2/22/2028 Callable on and any time after 2/22/2028 1,914,849 2/20/2029 2/20/2028 Callable on and any time after 2/20/2028 4,691,374 4/28/2030 3/28/2030 Callable on and any time after 3/28/2030 2,737,652 4/20/2029 4/20/2028 Callable on and any time after 4/20/2028 2,960,605 8/14/2029 7/14/2029 Callable on and any time after 7/14/2029 1,964,814 7/17/2029 6/17/2029 Callable on and any time after 6/17/2029 743,330 2/7/2030 1/7/2030 Callable on and any time after 1/07/2030 3,803,108 8/18/2026 7/17/2026 Callable on and any time after 7/17/2026 Amount
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- 320 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
46 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Disclosures Related to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The City may from time to time be invested in a security whose rating is downgraded subsequent to the date of purchase. In the event a rating drops below the minimum allowed rating category for that given investment type, the investment advisor shall notify the Finance Director and recommend a plan of action. The City will limit investments in any one non-government issuers, except investment pools, to no more than 5% regardless of security type.
The following table summarizes the City’s various investments based on maturity dates and credit ratings:
Moody's
Standard & Investors 12 Months or 13 to 24 25 to 60
Poor's Service Total Less Months Months
Investments Held by City
Short-Term Fixed Deposits AAA Not Rated $ $ 746,316 $ - 746,316 $ - US Treasury Bonds and Securities Not Rated AA1 237,809,338 62,413,092 33,364,202 142,032,044 REMICS and Other Government
Paydowns
AA+ Not Rated 84,996,830 - 12,001,278 72,995,552
Corporate Bonds and Notes Not Rated See Below 85,772,642 5,593,678 29,283,797 50,895,167 Corporate Paydown Securities Not Rated See Below 37,908,674 - - 37,908,674 Municipal Bonds AA Aa2 1,800,000 1,800,000 - -
CAMP AAAm Not Rated 79,725,922 79,725,922 - -
Total Investments Held by City $ 528,759,722 $ 150,279,008 $ 74,649,277 $ 303,831,437 Investments Held by Fiscal Agent
Money Market Funds AAAm Aaa-mf $ $ 2,405,687 2,405,687 $ - $ - CAMP AAAm Not Rated 10,869,107 10,869,107 - -
PARS Not Rated Not Rated 5,087,150 5,087,150
Total Investments Held by Fiscal Agent $ 18,361,944 $ 18,361,944 $ - $ - City of Modesto Banking Accounts and
Cash on Hand A/A-1 A1/P1 47,781,953
Total Cash and Investments $ 594,903,619
Credit Rating Remaining Maturity (in Months)
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- 321 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
47 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Disclosures Related to Credit Risk (Continued)
The following is a table indicating the credit ratings for the City’s investment in Corporate Bonds and Notes:
The following is a table indicating the credit ratings for the City’s investment in Corporate Paydown Securities:
Amount
Standard &
Poors
Moody's
Investors Service
$ 5,918,220 AAA Aaa
5,218,356 AA+ Aaa
5,914,494 AA Aa2
7,143,222 AA- Aa2
372,723 AA- Aa3
9,510,021 A+ Aa2
15,475,969 A+ Aa3
12,728,147 A+ A1
5,308,092 A Aa3
6,472,902 A A1
6,072,470 A A2
2,089,376 A- A1
3,548,650 Not Rated Not Rated
$ 85,772,642
Amount
Standard &
Poors
Moody's
Investors Service
$ 6,109,986 AAA Aaa
23,483,113 AAA Not Rated
8,315,575 Not Rated Aaa
$ 37,908,674
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- 322 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
48 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Concentration of Credit Risk
The City’s investment policy contains no limitations on the amount that can be invested in any one government issuer beyond that stipulated by the California Government Code.
Investments in any one government issuer, other than U.S. Treasury securities, mutual funds, and external investment pools that represent 5% or more of total entity-wide investments are as follows at June 30, 2025:
Fair Value Measurement and Application
The Pool categorizes its fair value measurement within the fair value hierarchy established by U.S. GAAP. These principles recognize a three-tiered fair value hierarchy, of which levels 1 & 2 apply to the City as follows:
Level 1: Valuations are based on quoted prices in active markets for identical assets or liabilities. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgement. Examples would be securities with prices derived from the major exchanges.
Level 2: Valuations are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuations for which all significant assumptions are observable or can be corroborated by observable market data. Examples would be securities with prices derived from market corroborated sources such as indices and yield curves; and matrix pricing, such as for most debt securities.
Level 3: Valuations are based on unobservable inputs and include situations where there is little, if any, market activity for the investment. Examples are private equity valuations and complex derivatives with no active market.
Reported Percent of
Issuer Investment Type Amount Portfolio
FHLMC MULTICLASS MTG
PARTN
US Government Sponsored Enterprise
Structured Securities $ 81,653,253 18.18%
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- 323 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
49 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Fair Value Measurement and Application (Continued)
US Bank is the custodian of the City’s investments. Fair value is measured by using all assumptions utilized by marketplace participants, including risk assumptions considered by those participants. The measurement of fair value assumes an orderly, hypothetical transaction in the principal market for the asset or liability. However, if the volume and level of market activity for an asset or liability has significantly decreased, and transactions in a particular market are not orderly, other factors are considered in estimating fair value.
Moreover, if no principal market exists, and there are multiple markets, then the most advantageous market is used.
The Pool has the following recurring fair value measurements as of June 30, 2025:
Quoted Prices in Significant Other
Active Markets for Observable
Identical Assets Inputs
(Level 1) (Level 2)
Investments by Fair Value Level
US Treasury Bonds and Securities $ 237,809,338 $ 237,809,338 $ - REMICS and Other Government Paydowns 84,996,830 - 84,996,830 Corporate Bonds and Notes 85,772,642 - 85,772,642
Corporate Paydown Securities 37,908,674 - 37,908,674
Municipal Bonds 1,800,000 - 1,800,000
Total Investments by Fair Value Level $ 448,287,484 $ 237,809,338 $ 210,478,146 Investments Not Subject to Fair Value Hierarchy
CAMP $ 79,725,922
Short-Term Fixed Deposits 746,316
Total Investments Held by City $ 528,759,722
Investments Held by Fiscal Agents
Investments Not Subject to Fair Value Hierarchy
CAMP $ 10,869,107
Money Market Funds 2,405,687
PARS 5,087,150
Total Investments Held by Fiscal Agents 18,361,944
Grand Total of Investments $ 547,121,666
Fair Value Measurements Using
Investments Held by City
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- 324 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
50 NOTE 3 CAPITAL ASSETS
A summary of changes in the capital assets for the year ended June 30, 2025 is as follows:
Beginning Ending
Balance Additions Deletions Balance
Governmental activities:
Capital assets, not being depreciated
and amortized:
Land $ 42,653,318 $ $ - $ - 42,653,318
Construction in progress 34,968,291 27,494,575 (9,589,663) 52,873,203 Total capital assets, not being depreciated
and amortized: 77,621,609 27,494,575 (9,589,663) 95,526,521 Capital assets being depreciated:
Buildings 57,001,281 - - 57,001,281
Improvements other than buildings 144,564,872 197,354 - 144,762,226 Furnishings & equipment 16,272,927 663,675 (170,621) 16,765,981 Buses and fareboxes 278,852 - - 278,852
Service animals 56,327 - (11,200) 45,127
Equipment pool 59,052,795 5,952,035 (2,741,446) 62,263,384 Infrastructure
Streets 522,692,061 - - 522,692,061
Signals 26,808,179 - - 26,808,179
Bridges 37,078,565 - - 37,078,565
Pipeline 418,147 - - 418,147
Capital assets being amortized:
Intangible assets 7,974,303 - - 7,974,303
SBITAs 9,183,633 361,489 (300,119) 9,245,003
Right-to-use leases
Buildings 662,694 - - 662,694
Equipment 17,287 - - 17,287
Land 424,873 - - 424,873
Total capital assets, being depreciated
and amortized: 882,486,796 7,174,553 (3,223,386) 886,437,963 Less accumulated depreciation for:
Buildings (38,378,782) (1,602,160) - (39,980,942)
Improvements (90,488,839) (5,361,361) - (95,850,200)
Furnishings & equipment (14,062,539) (635,701) 155,080 (14,543,160) Buses and fareboxes (253,749) - - (253,749)
Service animals (36,716) (6,796) 11,200 (32,312)
Equipment pool (35,265,293) (4,346,197) 1,934,841 (37,676,649) Infrastructure
Streets (379,048,714) (10,453,840) - (389,502,554)
Signals (20,349,974) (511,054) - (20,861,028)
Bridges (12,656,587) (741,571) - (13,398,158)
Pipelines (23,453) (5,575) - (29,028)
Less accumulated amortization for:
Intangible assets (7,193,767) (394,952) - (7,588,719)
SBITAs (2,484,879) (2,146,512) 300,119 (4,331,272)
Right-to-use leases
Buildings (442,771) (189,481) 177,877 (454,375)
Equipment (17,286) - - (17,286)
Land (240,555) (40,356) - (280,911)
Total accumulated depreciation and amortization (600,943,904) (26,435,556) 2,579,117 (624,800,343) Total capital assets being depreciated
and amortized, net 281,542,892 (19,261,003) (644,269) 261,637,620 Governmental activities capital assets, net $ 359,164,501 $ 8,233,572 $ (10,233,932) $ 357,164,141
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
51 NOTE 3 CAPITAL ASSETS (CONTINUED)
Depreciation and amortization expenses were charged to functions/programs as follows:
Governmental activities:
General government $ 506,386
Community development 1,134,157
Highways and streets 12,559,456
Public works 223,126
Parks and recreation 1,006,780
Public safety 4,950,202
Capital assets held by the government’s internal service funds are charged to the various functions based on their usage of the assets 6,055,449 Total depreciation and amortization expense - Governmental activities $ 26,435,556 Beginning Ending
Balance Additions Deletions Balance
Business- type activities:
Capital assets not being depreciated
and amortized:
Land $ 30,647,169 $ $ - - $ 30,647,169
Construction in progress 112,476,491 73,138,621 (50,007,958) 135,607,154 Total capital assets, not being depreciated
and amortized: 143,123,660 73,138,621 (50,007,958) 166,254,323 Capital assets being depreciated:
Capitalized interest 19,496,181 - - 19,496,181
Buildings 95,773,532 - - 95,773,532
Improvements other than buildings 502,724,553 7,444,163 - 510,168,716 Furnishings and equipment 12,814,085 316,792 (46,166) 13,084,711 Water rights 358,226,691 - - 358,226,691
Pipelines 352,135,695 46,265,876 - 398,401,571
Capital assets being amortized:
Intangible assets 403,384 - - 403,384
SBITAs 204,627 - - 204,627
Right- to-use Leases
Land 631,838 2,409,080 - 3,040,918
Equipment 381,064 31,605 - 412,669
Total capital assets, being depreciated
and amortized: 1,342,791,650 56,467,516 (46,166) 1,399,213,000 Less accumulated depreciation for:
Capitalized interest (16,031,087) (504,786) - (16,535,873) Buildings (68,315,203) (1,653,644) - (69,968,847)
Improvements other than buildings (276,916,367) (18,645,943) - (295,562,310) Furnishings and equipment (10,664,558) (615,486) 39,716 (11,240,328) Water rights (167,172,459) (11,940,890) - (179,113,349) Pipelines (65,986,095) (4,719,391) - (70,705,486)
Less accumulated amortization for:
Intangible assets (403,381) - - (403,381)
SBITAs (50,702) (40,923) - (91,625)
Right- to-use Leases
Land (541,575) (210,763) - (752,338)
Equipment (83,729) (104,836) - (188,565)
Total accumulated depreciation and amortization (606,165,156) (38,436,662) 39,716 (644,562,102) Total capital assets being depreciated
and amortized, net 736,626,494 18,030,854 (6,450) 754,650,898 Business-type activities capital assets, net $ 879,750,154 $ 91,169,475 $ (50,014,408) $ 920,905,221 #7..
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
52 NOTE 3 CAPITAL ASSETS (CONTINUED)
Business-type activities:
NOTE 4 LEASES RECEIVABLE
The City is a lessor for leases of buildings, hangars, office space, land use, and parking spaces. The City uses the interest rate contained within the agreements as the discount rate except in cases when the interest rate charged is not provided; in those situations, the City uses the incremental borrowing rate as provided by the California State Controller’s Office or DebtBook.
Payment increases include flat percentage increases and the use of an index, such as the Consumer Price Index (CPI). For those leases that have payment increases utilizing an index; they were initially calculated using the index at the measurement period.
The length of the lease period includes any noncancellable period of the lease as well as any extension options that are reasonably certain to be taken.
The City's leases receivable of $27,562,158 was composed of the following:
Governmental Activities
Water $ 21,581,825
Sewer 15,170,610
Parking 385,571
Storm drain 442,184
Compost 49,443
Airport 643,728
Golf 119,930
Community Center 43,371
Total depreciation and amortization expense - Business-type activities $ 38,436,662 $ 168,563
10,299,045
Total Principal Balances - Governmental Activities $ 10,467,608 Building leases - annual payments range from $2,500 to $149,353 with interest at rates ranging from 1.5% to 2.6% and annual increases in base payments per CPI or flat increase. Final payment dates range from 2026 through 2028.
Land use leases (including land use for cell towers) - annual payments range from $650 to $80,111 with interest at rates ranging from 1.5% to
4.261% and annual increases in base payments per CPI or flat increase.
Final payment dates range from 2040 through 2064.
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
53 NOTE 4 LEASES RECEIVABLE (CONTINUED)
Payments for the lease receivables are expected to be received in the following subsequent years:
Business-Type Activities
Year Ending
June 30
2026 $ $ 346,242 175,870
2027 206,503 172,143
2028 219,221 168,854
2029 227,914 165,364
2030 244,028 161,669
2031 - 2035 1,437,842 743,453
2036 - 2040 1,782,499 607,758
2041 - 2045 1,957,655 452,525
2046 - 2050 1,603,733 297,407
2051 - 2055 1,361,533 151,788
2056 - 2060 845,928 49,458
2061 - 2064 234,510 2,924
Total $ 10,467,608 $ 3,149,213
Principal Interest
$ 5,566,386
6,498,446
5,029,718
Total Principal Balances - Business-Type Activities $ 17,094,550 Land use leases (including land use for cell towers) - annual payments range from $5,852 to $118,697 with interest at rates ranging from 1.5% to
4.261% and annual increases in base payments per CPI or flat increase.
Final payment dates range from 2043 through 2064.
Parking space leases - annual payments range from $112,000 to $347,120 with interest at rates ranging from 2.32% to 4.21% and annual increases in base payments per CPI or flat dollar increases. Final payment dates range from 2027 to 2054.
Buildings, hangars and office space leases - annual payments range from $1,486 to $475,700 with interest at rates ranging from 1.5% to 2.599% and annual increases in base payments per CPI or flat increase. Final payment dates range from 2026 through 2054.
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- 328 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
54 NOTE 4 LEASES RECEIVABLE (CONTINUED)
Payments for the leases receivable are expected to be received in the following subsequent years:
NOTE 5 NOTES AND LOANS RECEIVABLE
The notes receivable in the Housing and Community Development Fund and Other Governmental Funds of $64,514,410 consists of loans made for low-income housing rehabilitation, first-time homebuyers, property improvement and small business origination.
The loans are collateralized by deeds of trust on the improved properties or business assets and are generally bearing annual interest at 3 or 5 percent. Some direct loans may be subject to forgiveness, some are interest free and require no repayment of principal until the loans reach maturity, and some are subject to residual receipt payment agreements. Loan terms range from 5 to 55 years.
Year Ending
June 30 Principal Interest
2026 $ $ 945,675 436,817
2027 726,700 415,295
2028 635,261 399,210
2029 657,703 383,057
2030 678,177 366,351
2031 - 2035 2,543,970 1,596,328
2036 - 2040 2,052,749 1,330,736
2041 - 2045 2,446,444 1,011,505
2046 - 2050 2,608,500 636,624
2051 - 2055 2,249,533 243,982
2056 - 2060 1,061,869 78,636
2061 - 2064 487,969 10,459
Total $ 17,094,550 $ 6,909,000
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- 329 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
55 NOTE 6 LONG-TERM DEBT
Loans Payable
Governmental Activities:
No-interest loan payable to the Stanislaus County Economic Development Bank loan program, to pay costs incurred by the City for the Kiernan Business Park East Project; loan intended to be repaid when the financing mechanism is established. As of June 30, 2025, no payments have been made to the Stanislaus County Economic Development Bank. According to the agreement, the Project will be completed as of the date the City first issues building permits within the Kiernan Business Park East area. To date, no building permits have been issued. Kiernan Business Park East project revenues, mainly CFD special taxes, have been pledged as collateral. $ 500,000
Business-Type Activities:
Water Enterprise Fund:
Loan payable to State of California (State) Department of Public Health, also known as ARRA Water Grant. This Agreement constitutes funding in the form of a loan with forgiveness of principal made by the State under the provisions of California Safe Drinking Water State Revolving Fund Law of 1997, and the American Recovery and Reinvestment Act of 2009 (ARRA) Public Law 11 1-5. The purpose of the funding is to assist in financing construction of a project, which will enable the City to meet safe drinking water standards or to address other health concerns, herein referred to as the “Project”.
The total amount for the project was $1,136,656, of which 50% was to be repaid as a loan. This original loan amount of $568,328 has a payment term of 20 years at 2.5017% interest rate. Water Enterprise fund revenues have been pledged as collateral.
The following are significant terms that pertain to the ARRA Water Grant.
Acceleration Clause: In event of default, State may declare the Supplier's obligations immediately due and payable. Events of Default: default allows State to alter principal forgiveness, accelerate, terminate further disbursements, file lawsuit. Termination Events: Any funds already disbursed to Supplier under the terms of this Agreement shall be an obligation immediately due and payable to State. $ 231,704 #7..
- 330 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
56 NOTE 6 LONG-TERM DEBT (CONTINUED)
Loans Payable (Continued)
Business-Type Activities (Continued):
Sewer Enterprise Fund:
Loan payable to California State Water Resources Control Board, State Revolving Fund. The Project, commonly known as North Valley Regional Recycled Water Program generally consists of constructing improvements to the City’s existing pump station. The City will then distribute the recycled water to the Del Puerto Water District for agricultural use increasing recycled water supplies by 5.4 billion gallons per year within the first 5 years of operation and 9.9 billion gallons per year at build out. Completion of construction date was established as June 30, 2018. Project completion date was established as December 31, 2018.
The City agrees to repay all project funds at an interest rate of zero percent (0%) per annum and an administrative service charge of one percent (1%) per annum. The total final loan amount was $29,747,008, including $68,857 of approved Construction Period Interest. The loan repayment term is 30 years (final payment due on June 30, 2048) and after an initial payment of $1,104,284, in the fiscal year ending June 30, 2019, the annual principal and interest payment is $1,152,162 beginning in the fiscal year ending June 30, 2020. Sewer Enterprise fund net revenues have been pledged as collateral.
The following are significant terms that pertain to the California State Water Resources Control Board, State Revolving Fund loan payable related to the North Valley Regional Recycled Water Program. Acceleration and Termination Events Clauses: the City immediately repays to the State Water Board an amount equal to Project Funds disbursed under the Installment Sale Agreement and Grant, accrued interest, penalty assessments, and Additional Payments. In the event of termination, interest shall accrue on all amounts due at the highest legal rate of interest from the date that notice of termination is mailed to the City to the date all monies due have been received by the California State Water Resources Control Board. Events of Default: default allows California State Water Resources Control Board to terminate obligation, which results in acceleration. $ 23,619,235 Total Principal Balances - Business-Type Activities $ 23,850,939 #7..
- 331 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
57 NOTE 6 LONG-TERM DEBT (CONTINUED)
Loans Payable (Continued)
Annual debt service requirements to maturity for loans payable are as follows:
Certificates of Participation:
Year Ending June 30 Principal Interest Principal Interest 2026 $ $ 500,000 - $ $ 946,653 241,798
2027 - - 956,585 231,866
2028 - - 966,628 221,823
2029 - - 976,784 211,668
2030 - - 987,053 201,398
2030-2034 - - 4,981,066 852,321
2035-2039 - - 5,161,197 599,612
2040-2044 - - 5,424,469 336,339
2045-2048 - - 3,450,504 69,874
Total $ $ 500,000 $ - 23,850,939 $ 2,966,699
Governmental Activities Business-Type Activities
Business-Type Activities:
Water Enterprise Fund:
2008 Water Refunding Revenue Certificates of Participation (2008 COPs) issued to refund the 2006 issue, to provide funding for construction of new downstream water facilities and various water distribution system improvements in connection with Modesto Irrigation District’s expansion of the regional water treatment plant; variable rate securities maturing October 1, 2036, with interest initially calculated weekly, fluctuating according to market conditions. The Certificates may be converted to a daily, term, flexible, or fixed rate.
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- 332 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
58 NOTE 6 LONG-TERM DEBT (CONTINUED)
Certificates of Participation (Continued):
Business-Type Activities (Continued):
Water Enterprise Fund (Continued):
While the 2008 COPs are in the Weekly Mode, they are subject to optional tender and mandatory tender for purchase. Funds for the payment of the purchase price of 2008 COPs that are tendered for purchase and that are not remarketed by the Remarketing Agent will be available (subject to certain conditions) under a Standby Certificate Purchase Agreement with BMO Bank N.A., dated June 8, 2023 (the “Alternate Liquidity Facility”). The Alternate Liquidity Facility does not support, secure or guarantee the payments of the principal or interest with respect to the 2008 COPs.
Subject to the terms and conditions of the Alternate Liquidity Facility, the Alternate Liquidity Facility Provider is to provide funds for the payment of the purchase price on each purchase of 2008 COPS up to $40,090,000 in principal amount (the “Available Principal Commitment”) and $461,310 an amount equal to 35 days’ interest on the Available Principal Commitment at an assumed rate of 12% and accrued interest on 2008 COPs subject to the Weekly Rate tendered or deemed tendered for purchase in the event that remarketing proceeds are not sufficient to pay the purchase price of such 2008 COPs.
The Alternate Liquidity Facility will not provide for the payment of principal and interest on any 2008 COPs other than with respect to the purchase price of the 2008 COPs tendered or deemed tendered and not remarketed.
Barring an event of default, any such draws on the Alternate Liquidity Facility will be repaid under the terms of the Reimbursement Agreement.
However, the entire balance of the amount drawn shall become due immediately if the 2008 COPs are cancelled or prepaid, are remarketed, or converted to bear interest at a rate other than a daily rate or weekly rate; an alternate credit facility is secured; or an event of default occurs. The Alternate Liquidity Facility expires June 8, 2026 and contains a commitment fee of 0.3%. This replaced a prior agreement with JP Morgan that contained a commitment fee of 0.575%.
The City entered into a 30-year interest rate swap agreement as discussed below. The combination of the variable rate 2008 COPs and the floating rate swap creates a synthetic fixed-rate debt for the City. The average synthetic fixed-rate was 3.4747% for the fiscal year ended June 30, 2025. #7..
- 333 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
59 NOTE 6 LONG-TERM DEBT (CONTINUED)
Certificates of Participation (Continued):
The City has pledged all gross revenues of the Water Utility System to repay the 2008 COPs.
The total principal and estimated total interest remaining to be paid on the certificates is $42,004,767. The Water Fund’s principal, interest and other debt service cost paid on certificates for the current year, along with payments for the ARRA loan payable and payments to Modesto Irrigation District under the Treatment and Delivery Agreement, totaled $12,310,120, and net operating revenues of the Fund were $38,343,802, which represented coverage of 311%.
Water Enterprise Fund (Continued):
The following are significant terms that pertain to the 2008 COPs.
Acceleration Clauses: in the event of late payment, Modesto Public Financing Authority (Authority) shall accelerate bond payments; in the event of other default, Authority may choose to accelerate bond payments.
Events of Default: in the event of nonpayment, insolvency, or loss of bond insurance, the obligation of the Letter of Credit provider shall terminate; in the event of nonpayment of Letter of Credit fees or downgrade of Bonds to below investment grade, the Letter of Credit provider may terminate the Letter of Credit. Termination Events: The termination of the Letter of Credit triggers mandatory tender; termination of swap triggers on-time termination payment. $ 37,680,000
Total Principal Balances - Business-Type Activities 37,680,000 Less:Unamortized Discount - 2008 Water Refunding Certificates of Participation (60,472)
Total Business-Type Activities - Certificates of Participation $ 37,619,528 #7..
- 334 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
60 NOTE 6 LONG-TERM DEBT (CONTINUED)
Certificates of Participation (Continued):
Annual debt service requirements to maturity for Certificates of Participation for 2008 Water are as follows:
Lease Revenue Bonds:
Year Ending June 30 Principal Interest
2026 $ 2,515,000 $ 465,386
2027 2,595,000 431,913
2028 2,705,000 398,172
2029 2,810,000 360,923
2030 2,945,000 323,080
2031-2035 16,535,000 993,677
2036-2037 7,575,000 75,269
Total $ 37,680,000 $ 3,048,420
Governmental Activities:
Regularly scheduled payments of principal and interest are supported by an irrevocable, direct pay Letter of Credit (the “Credit Facility”) issued by BMO Bank N.A. (previously known as Bank of the West) on June 13, 2019, which replaced a Letter of Credit previously issued by Bank of America, N.A. The Trustee can draw funds under the Credit Facility to pay the purchase price of tendered bonds that are not remarketed. Barring an event of default, any such draws on the Letter of Credit will be paid under the terms of the Reimbursement Agreement. Under the terms of the Reimbursement Agreement, the City will repay the amount drawn in equal quarterly installments of principal plus monthly interest, at the Bank Rate, over a three-year amortization period. However, the entire balance of the amount drawn shall become due immediately if the tendered bonds are remarketed or defeased, or an alternate credit facility is secured, or an event of default occurs. The Credit Facility and Reimbursement Agreement with BMO Bank N.A was established with a commitment fee of 0.375%, this was extended on May 12, 2023 with a commitment fee of 0.34%.
The combination of the variable rate 2008 bonds and the floating rate swap creates a synthetic fixed-rate debt for the City. The average synthetic fixedrate was 3.6140% for the fiscal year ended June 30, 2025. #7..
- 335 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
61 NOTE 6 LONG-TERM DEBT (CONTINUED)
Lease Revenue Bonds (Continued):
Annual debt service requirements to maturity for Lease Revenue Bonds are as follows:
Governmental Activities (Continued):
The following are significant terms that pertain to the 2008 Lease Revenue Bonds. Acceleration Clauses: in the event of late payment, Trustee may accelerate bond payments; in the event of an Event of Default occurring under the Lease Agreement, the Trustee may take whatever action the Authority would be entitled to take, and shall take whatever action the Authority would be required to take, pursuant to the Lease Agreement in order to remedy the default. Events of Default: in Event of Default, Letter of Credit provider may declare all unpaid amounts drawn under the Letter of Credit and the corresponding Bank Bonds, together with all interest accrued and unpaid thereon, and all other amounts payable to the Letter of Credit provider under the Reimbursement Agreement to be immediately due and payable, without presentment, demand, protest or nay notice of any kind.
Termination Events: the termination of Letter of Credit triggers mandatory tender; termination of swap triggers on-time termination payment; in the event that the City files a bankruptcy petition or the City makes a general assignment for the benefit of creditors, all amounts drawn under the Letter of Credit and the corresponding Bank Bonds, together with all interest accrued thereon and all other amounts owed to the Bank under the Reimbursement Agreement shall be immediately due and payable, without notice to the City or the Authority and without presentment, demand, protest or further notice of any kind. $ 35,995,000
Year Ending June 30 Principal Interest
2026 $ 3,240,000 $ 249,790
2027 3,470,000 224,058
2028 3,730,000 196,940
2029 3,815,000 167,910
2030 3,970,000 138,333
2031-2034 17,770,000 230,091
Total $ 35,995,000 $ 1,207,122
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- 336 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
62 NOTE 6 LONG-TERM DEBT (CONTINUED)
Revenue Bonds:
Business-Type Activities:
Sewer Enterprise Fund:
Wastewater Revenue Refunding Bonds, Series 2020 A&B; interest payable on November 1 and May 1; principal is payable in annual installments on each November 1. Principal repayments for the 2020A federally taxable bonds commence November 1, 2021 and pause November 1, 2026, with interest rates from 0.38% to 1.2%. Principal repayments for the 2020B federally tax-exempt bonds commence November 1, 2027 and end November 1, 2030, with interest rates of 5%.
Principal repayments for the 2020A federally taxable bonds recommence November 1, 2031 and end November 1, 2036 with interest rates from
2.079% to 2.479%. Payment of principal and interest on the Series 2020 A&B Bonds is secured by a pledge of Net Revenues of the Sewer Enterprise Fund. The Series 2020 A&B Bonds constitute “Parity Debt” under the Indenture.
On October 27, 2020, the City issued the Series 2020 A&B Bonds as a Parity Debt to fully payoff the loan payable to California State Water Resources Control Board (State Water Board), State Revolving Fund. The proceeds were used to repay the loan and cost of issuance in connection with the financing. The loan payable has been fully paid off, the City will realize annual savings of around $510,000 in cash flow with an overall economic gain of 6.61% or $7,056,050 in present value savings.
The original loan was taken out in connection with the Tertiary Treatment Phase 1B Project, generally consisting of constructing a 12.6 million gallon per day tertiary treatment plant. Completion of construction date was established as June 1, 2016, and project completion date was established as December 1, 2016.
#7..
- 337 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
63 NOTE 6 LONG-TERM DEBT (CONTINUED)
Revenue Bonds (Continued):
Business-Type Activities (Continued):
Sewer Enterprise Fund (Continued):
The following are significant terms that pertain to the Wastewater Revenue Refunding Bonds, Series 2020 A&B. Acceleration Clause: upon violation by the City of any material provision of the Project Finance Agreement, the State Water Board may terminate agreement by written notice during construction of the Project, or thereafter at any time prior to complete repayment by the City, upon which the City agrees, upon demand, to immediately repay to the State Water Board an amount equal to Installment Payments due under the Project Finance Agreement, including accrued interest, and all penalty assessments due. In the event of termination, interest shall accrue on all amounts due at the highest legal rate of interest from the date that notice of termination is mailed to the Recipient to the date of full repayment by the Recipient. Events of Default: upon violation by the City of any material provision, State Water Board may terminate agreement which triggers acceleration. Termination Events: upon termination of the agreement by the State Water Board, the City agrees to immediately repay to the State Water Board including accrued interest, and all penalty assessments due. In the event of termination, interest shall accrue on all amounts due at the highest legal rate of interest from the date that notice of termination is mailed to the Recipient to the date of full repayment by the City. $ 72,585,000
Wastewater Revenue Refunding Bonds, Series 2018A; interest payable on November 1 and May 1; principal is payable in annual installments on each November 1, commencing November 1, 2025 and ending November 1, 2036, with interest rates from 4% to 5%. Payment of principal and interest on the Series 2018A Bond is secured by a pledge of Net Revenues of the Sewer Enterprise Fund. The Series 2018A Bond constitutes “Parity Debt” under the Indenture.
On April 19, 2018, the City issued the Series 2018A Bond as a Parity Debt to fully refund the 2006A Wastewater Revenue Bonds. The proceeds were used to refund the 2006A Wastewater Revenue Bonds and pay cost of issuance in connection with the financing. The Series 2006A has been fully redeemed, and the City will realize significant savings from the refunding of the 2006A bonds.
#7..
- 338 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
64 NOTE 6 LONG-TERM DEBT (CONTINUED)
Revenue Bonds (Continued):
Annual debt service requirements to maturity for total Revenue Bonds are as follows:
Sewer Enterprise Fund (Continued):
The following are significant terms that pertain to the Wastewater Revenue Refunding Bonds, Series 2018A. Acceleration Clause: in each and every such case during the continuance of an Event of Default (and subject to any rights granted to any insurer of the Bonds with respect to the enforcement of remedies upon an Event of Default pursuant to a Supplemental Indenture), the Owners of not less than a majority in aggregate amount of Bond Obligation of the Bonds at the time Outstanding shall be entitled, upon notice in writing to the City, to declare the principal of all of the bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in the Indenture or in the Bonds contained to the contrary notwithstanding. Events of Default: upon the occurrence and continuance of an Event of Default or other occasion giving rise to a right in the Trustee to represent the Bondholders, the Trustee in its discretion may, and upon written request of the Owners of not less than 25% in aggregate amount of Bond Obligation of the Bonds then Outstanding, initiate a lawsuit. $ 11,340,000
Total Principal Balances - Business-Type Activities 83,925,000 Add: Unamortized Bond Premium - 2018A Wastewater Bonds 1,304,408 Unamortized Bond Premium - 2020B Wastewater Bonds 4,495,854 Total Business-Type Activities Revenue Bonds $ 89,725,262 Year Ending June 30 Principal Interest
2026 $ 6,240,000 $ 2,743,524
2027 6,350,000 2,637,112
2028 6,570,000 2,411,436
2029 6,910,000 2,074,436
2030 7,260,000 1,720,186
2031-2035 40,580,000 4,327,492
2036-2037 10,015,000 209,023
Total $ 83,925,000 $ 16,123,209
#7..
- 339 -
City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
65 NOTE 6 LONG-TERM DEBT (CONTINUED)
Reimbursement Agreement:
Business-Type Activities:
Water Enterprise Fund:
In 1992, the City entered into a treatment and delivery agreement with the Modesto Irrigation District (MID) and the Del Este Water Company (Del Este). The City assumed Del Este’s interest and obligations under the agreement when it acquired Del Este in July 1995. Under the agreement, MID built and operates a surface water treatment plant on the Tuolumne River for the purpose of providing a long-term source of domestic treated water for the City.
MID is the sole owner of the project, and has all management and operations responsibility.
In exchange for the treated water, the City has agreed to pay: all debt service on bonds issued by MID for the construction of the project; a raw water charge as set forth in the agreement; project operation, administration, and maintenance costs; and insurance on the project. Gross revenues of the City's Water Fund are irrevocably pledged for the punctual payment of the MID debt service and all obligations of the City under any parity debt. Current parity debt of the City consists of the 2008 Water Revenue Certificates of Participation and the California Safe Drinking Water Act loan (as described previously). The treatment plant completed all tests and began commercial operations on May 15, 1995, at which time the City began paying for raw water and operations.
The City and MID have agreed upon an expansion of the initial Domestic Water Project facilities beyond the existing design capacity of 36 million gallons per day (“mgd”) to a design capacity of 72 mgd. In June 2007, MID issued $93,190,000 Domestic Water Project revenue bonds pursuant to the terms of the existing treatment and delivery agreement. On August 14, 2013, Modesto Irrigation District Financing Authority refunded the 1998 D Bonds, with 2013 G Bonds. As of June 30, 2025, $84,460,000 is outstanding for the 2007 F Bonds. For the 2007F Bonds, the annual principal payments begin on September 1, 2023 and mature on September 1, 2037 in amounts from $4,275,000 to $11,870,000, with variable interest rates fluctuating according to market conditions.
The following are significant terms that pertain to the 2007F Bonds. Acceleration Clause: in the event of late payment, Authority shall accelerate bond payments; in the event of other default, Authority may choose to accelerate bond payments. In event of default, Trustee may, with consent of Bond Insurer, and shall, at the direction of Bond Insurer or the owners of >50% of the bonds (with consent of Bond Insurer) accelerate bond payments. Events of Default: in event of default, Trustee may, with consent of Bond Insurer, and shall, at the direction of Bond Insurer or the owners of >50% of the bonds (with consent of Bond Insurer) initiate a lawsuit. Termination Events: the termination of swap triggers a one-time termination payment.
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
66 NOTE 6 LONG-TERM DEBT (CONTINUED)
Reimbursement Agreement (Continued):
Business-Type Activities (Continued):
Water Enterprise Fund (Continued):
The City has entered into interest-rate swap agreements for the 2007F bonds to synthetically fix the rates that the City pays at 4.378% and 4.44%. Refer to the Interest Rate Swap agreement section below with more information about the debt schedule.
Annual debt service payments to maturity for the Reimbursement Agreement are as follows:
Interest Rate Swap Agreements:
Objective of the swaps - The primary objective of the swaps is to mitigate the effect of fluctuations in variable interest rates by paying a fixed-rate and receiving a floating rate on the swap. Combining a pay-fixed receive-variable rate swap with variable debt results in what is termed “synthetic” fixed-rate debt. It is called synthetic because the economics are similar to fixed-rate debt, but another instrument is involved unlike regular fixed-rate debt. Each time the City created synthetic debt a comparison and determination were made that the fixedrate on regular debt would have been higher than the synthetic fixed rate on the swap.
During fiscal year 2007, the City entered into an interest swap agreement in connection with the 2006 Water Revenue Certificates of Participation. This transaction was updated due to the refunding of the 2006 Certificates by the 2008 Water Refunding fixed-rate Revenue Certificates of Participation (COPs). The swap agreement allows the City to create a synthetic on the COPs, protecting it against increases in short-term interest rates.
Year Ending June 30 Principal Interest
2026 $ 4,650,000 $ 2,980,187
2027 4,885,000 2,804,676
2028 5,105,000 2,624,553
2029 5,340,000 2,423,578
2030 5,570,000 2,223,745
2031-2035 32,040,000 7,721,771
2036-2038 26,870,000 1,407,786
Total $ 84,460,000 $ 22,186,296
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
67 NOTE 6 LONG-TERM DEBT (CONTINUED)
Interest Rate Swap Agreements (Continued):
During fiscal year 2008, the City entered into an interest swap agreement in connection with the 2008 Lease Revenue Bonds. The swap agreement allows the City to create a synthetic fixed rate on the Lease Revenue Bonds, protecting it against increases in short-term interest rates. The terms, fair value, and credit risk of these swap agreements are disclosed below.
Additionally, in May 2007, the City approved the issuance of revenue bonds by the Modesto Irrigation District Financing Authority related to the financing of Phase 2 of the Domestic Water Treatment and Delivery System of the Modesto Irrigation District. The MID Water Refunding Bonds were issued with an interest swap feature with Bear Sterns, which was subsequently acquired by JP Morgan. Under the agreement between MID and JP Morgan, the City must post collateral when the City’s negative position exceeds the Pledgor’s Threshold of $20 million. This negative position represents the present value of declining interest rates to date from issuance of bonds. In June 2010, the City Council authorized the City to post collateral up to $18 million, which would support a negative position of $38 million.
In July 2010, the City Council increased the City’s authorization to post collateral from $18 million to up to $20 million. Due to the negative position of the revenue bonds being less than the Pledgor’s Threshold of $20 million, at the end of fiscal year 2025, the City did not have any collateral posted.
Terms - The terms, including the counterparty credit rating of the outstanding swaps, as of June 30, 2025 are shown in the table below. The swap agreements contain scheduled reductions to the outstanding notional amounts that are expected to follow scheduled principal reductions in the associated debt issues.
2008 Water
Refunding
Revenue COPs
2008 Lease Revenue
Refunding and Capital
Improvement Bonds
2007 MID Domestic
Water Revenue Bonds
Series 2007F
2007 MID Domestic
Water Revenue Bonds
Series 2007F
Current Notional Amount $ 37,680,000 $ 35,995,000 $ 14,640,000 $ 69,820,000 Effective Date 5/30/2008 8/28/2008 6/26/2007 6/26/2007
Counterparty Bank of America Bank of America JP Morgan Chase Bank JP Morgan Chase Bank Credit Rating (S&P) AA AA+ AA AA
Fixed Rate Paid 3.47% 3.61% 4.38% 4.44%
Variable Rate Received
63.7% of USD-LIBOR
+ 0.154%
63.7% of USD-LIBOR
+ 0.154%
67% of 3-Month LIBOR
+ 0.58% till 9/1/23,
then 67% of 3-Month
CME Term SOFR +
0.683%
67% of 3-Month LIBOR
+ 0.63% till 9/1/23,
then 67% of 3-Month
CME Term SOFR +
0.7335%
Termination Date 10/1/2036 9/1/2033 9/1/2027 9/1/2037
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
68 NOTE 6 LONG-TERM DEBT (CONTINUED)
Interest Rate Swap Agreements (Continued):
Based on the swap agreements, the City owes interest calculated at a fixed-rate to the counterparty (Bank of America and JP Morgan). In return, the counterparty owes the City interest based on the variable rate that approximates the rate required by the associated COPs and lease revenue bonds. Debt principal is not exchanged; it is only the basis on which the swap receipts and payments are calculated.
GASB Statement 53 (GASB 53) addresses the recognition measurement and disclosure of information regarding derivative instruments entered into by state and local governments. All derivatives are to be reported on the statement of net position at fair value and all hedges must be tested for effectiveness to qualify for hedge accounting. The tests are outlined in GASB 53. Depending on the test results, the changes in fair value are either reported on the statement of net position as a deferral or in the statement of activities as investment revenue or loss.
Fair value - Fair value takes into consideration the prevailing interest rate environment, the specific terms and conditions of each transaction and any upfront payments that may have been received. Fair value was estimated using the zero-coupon discounting method, which calculates the future payments required by the swap, assuming that the current forward rates implied by the LIBOR swap yield curve are the market’s best estimate of future spot interest rates. These payments are then discounted using the spot rates implied by the current yield curve for a hypothetical zero-coupon rate bond due on the date of each future net settlement on the swaps.
As of June 30, 2025, the fair value of the swaps was in favor of the counterparty as shown in the following table:
Credit risk - As of June 30, 2025, the City was not exposed to credit risk on the swaps because the swaps had negative fair value. However, if interest rates increase and the fair value becomes positive, the City would be exposed to credit risk. The City will be exposed to interest rate risk only if the counterparty to the swap defaults or if the swap is terminated.
Basis risk - Basis risk is the risk that the interest rate paid by the City to the bondholders on the underlying variable rate bonds temporarily differs from the variable swap rates received from the counterparty. The swaps have basis risk since the City receives a percentage of the LIBOR Index to offset the actual variable bond rates the City pays on the underlying certificates of participation. The City is exposed to basis risk should the floating rate that it receives on the swap be less than the actual variable rate the City pays on the bonds.
Depending on the magnitude and duration of any basis risk shortfall, the expected cost of the basis risk may vary.
Bond Issue Fair Value
2008 Water Refunding Rev. Certificates of Participation $ (2,026,973) 2008 Lease Revenue Bonds $ (1,724,166)
2007 MID Domestic Water Revenue Bonds $ (7,519,770)
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
69 NOTE 6 LONG-TERM DEBT (CONTINUED)
Interest Rate Swap Agreements (Continued):
Basis risk (Continued) - A portion of this basis risk is tax risk. The City is exposed to tax risk when the relationship between the taxable LIBOR based swaps and tax-exempt variable rate bonds changes as a result of a reduction in federal and state income tax rates. Should the relationship between LIBOR and the underlying tax-exempt variable rate bonds converge the City is exposed to this basis risk.
Termination risk - The City may terminate the swap contracts if the other party fails to perform under the terms of the contracts. The City will be exposed to variable rates if the counterparty defaults or if the swap contract is terminated. A termination of the swap contract may also result in the City’s making or receiving a termination payment based on market interest rates at the time of the termination. If at the time of termination, the swap has a negative fair value, the City would be liable to the counterparty for a payment equal to the swap’s fair value.
Swap payments and associated debt - Using rates as of June 30, 2025, debt service requirements of the 2008 Water Refunding Revenue Certificates of Participation, the 2008 Lease Revenue Refunding Bonds, and the 2007 MID Domestic Water Revenue Bonds, including net swap payments and broker fees, are as shown in the following table assuming current interest rates remain the same for their term. The bond interest payments and net swap payments will vary as interest rates vary.
Net Swap
Payments,
Letter of Credit,
and
Year Ending Remarketing
June 30 Principal Interest Fees Total
2026 $ 10,405,000 $ 3,695,363 $ 1,358,603 $ 15,458,966
2027 10,950,000 3,460,647 1,265,276 15,675,923
2028 11,540,000 3,219,665 1,166,802 15,926,467
2029 11,965,000 2,952,411 1,069,707 15,987,118
2030 12,485,000 2,685,158 956,622 16,126,780
2031-2035 66,345,000 8,945,539 3,038,722 78,329,261
2036-2038 34,445,000 1,483,055 659,041 36,587,096
Total $ 158,135,000 $ 26,441,838 $ 9,514,773 $ 194,091,611 Variable-Rate Bonds
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
70 NOTE 6 LONG-TERM DEBT (CONTINUED)
Changes in Long-Term Obligations
Long-term obligations activity for the year ended June 30, 2025, was as follows:
Principal balances are reported on the government-wide and enterprise funds statements of net position, net of unamortized issuance discounts and premiums. Deferred losses on refunding are reported as deferred outflows of resources. Internal service funds predominantly serve governmental funds. Accordingly, any long-term liabilities for the internal service funds are included as part of the above totals for governmental activities.
The compensated absences and claims liability balances relate to the internal service funds, and as such, they are liquidated by the internal service funds. The predominant contributors for these internal service funds include the General Fund, Water Fund, and Sewer Fund.
Beginning Ending Due Within
Governmental Activities: Balance Additions Reductions Balance One Year Loans Payable $ 500,000 $ - $ - $ 500,000 $ 500,000
Lease Revenue Bonds 38,985,000 - (2,990,000) 35,995,000 3,240,000 Notes Payable 345,000 - (345,000) - -
Leases Payable 415,395 177,877 (232,224) 361,048 159,160 Finance Purchase Obligations 5,787,146 - (808,627) 4,978,519 822,582 SBITAs 5,136,687 635,324 (2,259,395) 3,512,616 1,336,454 Compensated Absences * 16,363,661 1,078,702 - 17,442,363 5,497,561 Claims Liability 28,460,239 19,241,185 (14,505,246) 33,196,178 7,886,993 Total Governmental Activities $ 95,993,128 $ 21,133,088 $ (21,140,492) $ 95,985,724 $ 19,442,750 Business-Type Activities:
Loans Payable $ 24,787,769 $ - $ (936,830) $ 23,850,939 $ 946,653 Certificates of Participation 40,090,000 - (2,410,000) 37,680,000 2,515,000 Unamortized Discount (65,969) - 5,497 (60,472) -
Leases Payable 428,527 2,440,688 (250,012) 2,619,203 260,910 SBITAs 128,857 - (39,830) 89,027 42,894
MID Bonds 88,915,000 - (4,455,000) 84,460,000 4,650,000 Sewer Bonds 89,405,000 - (5,480,000) 83,925,000 6,240,000 Unamortized Premium 6,751,935 - (951,673) 5,800,262 -
Sewer Bonds - Direct Placement 897,767 - (897,767) - -
Developer Advances 494,623 - (83,942) 410,681 79,793
Compensated Absences * 2,722,173 911,502 - 3,633,675 1,145,278 Total Business-Type Activities $ 254,555,682 $ 3,352,190 $ (15,499,557) $ 242,408,315 $ 15,880,528
* The change in compensated absences above is net change for the year. Beginning balances were restated due to GASB 101 implementation.
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
71 NOTE 7 FINANCE PURCHASE OBLIGATIONS
Governmental Activities
As of June 30, 2025, the City has two governmental activities finance purchase obligations with Pierce Manufacturing Inc. for the purchase of Velocity Pumpers and Velocity Tillers valued at $9,625,682, less accumulated depreciation of $5,438,362.
The following is a schedule of the future minimum lease payments, as of June 30, 2025:
NOTE 8 LEASES PAYABLE
The City is a lessee for leases of land, buildings and office space, and equipment. The City uses the interest rate charged by the lessor as the discount rate except in cases when the interest rate charged by the lessor is not provided; in those situations, the City uses the incremental borrowing rate as provided by the California State Controller’s Office or DebtBook.
Payment increases include flat percentage increases and the use of an index such as the CPI. For those leases that have payment increases utilizing an index; they were initially calculated using the index at the measurement period.
The length of the lease period includes any noncancellable period of the lease, as well as any extension options that are reasonably certain to be taken.
Year Ending June 30 Amount
2026 $ 945,377
2027 945,378
2028 1,301,047
2029 346,833
2030 346,833
2031-2032 1,518,060
Total minimum payments 5,403,528
Less: amount representing interest (425,009)
Present value of minimum payments $ 4,978,519
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
72 NOTE 8 LEASES PAYABLE (CONTINUED)
The City's lease payable of $2,980,251 was composed of the following:
Annual debt service requirements to maturity for leases payable are as follows:
Governmental Activities
$ 345,338
15,710
Total Principal Balances - Governmental Activities $ 361,048 Buildings and office space leases - annual payments range from $27,419 to $77,220 with interest at rates ranging from 0.9% to 2.86% and annual increases based on flat dollar amounts. Final payment dates range from 2026 to 2029.
Land leases - annual payments ranging from $1,783 to $2,193 with interest at 0.2% and annual increases based on flat amounts. Final payment date is 2033.
Year Ending June 30 Principal Interest
2026 $ 159,160 $ 6,447
2027 84,408 4,033
2028 80,039 1,857
2029 29,088 280
2030 1,990 17
2031-2033 6,363 26
Total $ 361,048 $ 12,660
Business-Type Activities
$ 2,314,847
19,421
284,935
Total Principal Balances - Business-Type Activities $ 2,619,203 Golf carts and pickers - annual payments range from $5,403 to $162,209 with interest at rates ranging from 8.18% to 8.71% and increases of flat dollar amounts. Final payment date is 2028.
Land leases - annual payments range from $31,315 to $123,434 with interest at a rate of 2.61% and increases based on CPI. Final payment date is 2035.
Building lease - annual payment of $19,674 with interest at a rate of 2.60%.
Final payment date is 2026.
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
73 NOTE 8 LEASES PAYABLE (CONTINUED)
Annual debt service requirements to maturity for leases payable are as follows:
NOTE 9 SUBSCRIPTION-BASED INFORMATION TECHNOLOGY ARRANGEMENTS (SBITAs) As of June 30, 2024, the financial statements include the adoption of GASB Statement No. 96, Subscription-Based Information Technology Arrangements. The primary objective of this statement is to enhance the relevance and consistency of information about governments' subscription activities. This statement establishes a single model for subscription accounting based on the principle that subscriptions are financings of the right to use an underlying asset. Under this Statement, an organization is required to recognize a subscription liability and an intangible right-to-use subscription asset.
The City uses the interest rate charged by the lessor as the discount rate except in cases when the interest rate charged by the lessor is not provided; in those situations, the City uses the incremental borrowing rate provided by DebtBook.
The City's SBITA liability of $3,601,643 was composed of the following:
Annual debt service requirements to maturity for SBITA liability are as follows:
Year Ending June 30 Principal Interest
2026 $ $ 260,910 81,020
2027 258,844 70,721
2028 378,121 50,525
2029 223,902 42,286
2030 237,897 36,277
2031-2035 1,259,529 78,497
Total $ 2,619,203 $ 359,326
Governmental Activities
$ 3,512,616
Annual payments range from $10,637 to $854,023 with interest at rates ranging from 2.02% - 3.71% and increases based on CPI or flat dollar increases. The value of the right-to-use assets is $4,913,731 ($9,245,003 net of accumulated amortization of $4,331,272). Final payment dates range from 2026 to 2028.
Year Ending June 30 Principal Interest
2026 $ $ 1,336,454 99,672
2027 1,215,789 60,970
2028 960,373 25,773
Total $ $ 3,512,616 186,415
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
74 NOTE 9 SUBSCRIPTION-BASED INFORMATION TECHNOLOGY ARRANGEMENTS (SBITAs) (CONTINUED)
Annual debt service requirements to maturity for SBITA liability are as follows:
NOTE 10 DEVELOPER ADVANCES
The Del Este Water Company (Del Este) entered into various agreements with developers under which infrastructure components were either constructed on behalf of Del Este or cash was advanced to the company to construct the infrastructure. Agreements in existence at the time of the City’s acquisition of Del Este were assumed by the City. The terms of repayment call for no interest, with principal paid over a 40-year period. As of June 30, 2025, the total outstanding balance due under the agreements is $410,681. The total annual payments fluctuate depending on the ending date of each agreement. At June 30, 2025, the amount of $79,793 due during fiscal year 2025 has been reported as “current portion developer advances” on the Water Enterprise Fund statement of net position. The remaining $330,888 of outstanding principal has been reported under noncurrent liabilities, as “developer advances.”
NOTE 11 INTERFUND BALANCES
Interfund balances as of June 30, 2025 consist of the following:
Business-Type Activities
$ 89,027
Annual payments range from $40,443 to $47,307 with interest at a rate of
2.31% and increases based on CPI or flat dollar increases. The value of the right to use assets is $113,002 ($204,627 net of accumulated amortization of $91,625). Final payment date is 2027.
Year Ending June 30 Principal Interest
2026 $ $ 42,894 2,057
2027 46,133 1,066
Total $ $ 89,027 3,123
Due to General Fund:
Other governmental funds $ 926,179
Due to Water Fund:
Internal Service funds 2,837,583
Total Due to/Due From: $ 3,763,762
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
75 NOTE 11 INTERFUND BALANCES (CONTINUED)
All balances reported as “due to/due from” are short-term loans to cover temporary fund cash shortages as of June 30, 2025 and were repaid in fiscal year 2025.
Balances reported as “advance to/from” were for capital projects expenditures and are either in the process of being repaid, or have scheduled repayments in future years.
NOTE 12 FUND BALANCE
Detailed classifications of the City’s Fund Balances, as of June 30, 2025, are provided below:
Advances from General Fund to:
Other governmental funds $ 843,041
Other enterprise funds 1,324,704
Advances from General Fund 2,167,745
Advances from Water Fund to other enterprise funds 1,860,000 Advances from Sewer Fund to other enterprise funds 615,600 Total Advances from/Advances to $ 4,643,345
Housing and
Operating Community Other Total
General Grants Development Governmental Governmental
Nonspendable
Advances to other funds $ 2,167,745 $ - $ - $ - $ 2,167,745 Prepaid Items 9,278,052 55,648 1,545 185,399 9,520,644
Total Nonspendable Fund Balance 11,445,797 55,648 1,545 185,399 11,688,389 Restricted
Cash with Fiscal Agent 1,621,755 833,381 - 5,842,963 8,298,099 Community Facilities District - - - 28,026,699 28,026,699 Community Facility Fees - - - 44,453,880 44,453,880
Grants and donations - 1,595,344 - 102,982 1,698,326
Notes receivable - - 28,945,294 - 28,945,294
Successor Redevelopment Housing Agency - - - 12,064,036 12,064,036 Strategic planning and development - - - 2,886,030 2,886,030 Traffic fines - - - 2,776,444 2,776,444
Transportation Tax Funding - - - 64,682,169 64,682,169
Total Restricted Fund Balance 1,621,755 2,428,725 28,945,294 160,835,203 193,830,977 Committed
General fund set-aside 18,397,817 - - - 18,397,817
Total Committed Fund Balance 18,397,817 - - - 18,397,817 Assigned
Encumbrances - vendor contracts 2,679,948 - - - 2,679,948 Capital projects - - - 4,087,997 4,087,997
Total Assigned Fund Balance 2,679,948 - - 4,087,997 6,767,945 Unassigned - General Fund 54,106,955 - - - 54,106,955
Unassigned - Special Revenue Funds - - - (49,508) (49,508) Unassigned - Capital Projects Funds - - - (5,089,227) (5,089,227) Unassigned - Debt Service Funds - - - (133,404) (133,404) Total Unassigned Fund Balance 54,106,955 - - (5,272,139) 48,834,816 Total Fund Balance $ 88,252,272 $ 2,484,373 $ 28,946,839 $ 159,836,460 $ 279,519,944 #7..
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
76 NOTE 13 DEFICIT FUND EQUITY
The Capital Grants Fund has a deficit fund balance of $3,313,999, which will be recovered through future grant revenues and local matches covered through the General Fund or other City funds.
The Central Services Fund has a deficit net position of $728,247, which will be recovered through future overhead charges.
The Insurance Fund has a deficit net position of $15,606,005 due mainly to the recognition of settlements that were reached both in the current and prior fiscal year which have been reported as liabilities of the Liability Insurance Fund. Both settlements involved matters that represented city-wide policies and practices and therefore are allocable to all of the funds that make annual contributions to the liability insurance program. The liability insurance program will recover the full amount of the settlement from charges to the funds that participate in the liability insurance program over a period of 5 years based on this methodology being factored into the Internal Service Fund allocation that is distributed to City departments.
The Employee Benefits Management Fund has a deficit net position of $12,870,988. It exists partially because the total compensated absences and other postemployment benefit balance for the employees which reside in this fund previously classified as debt of the governmental funds was included in this fund at its inception several years ago and has never been fully funded. The City is continuing to charge a higher benefit rate to help reduce this deficit. In addition, one-time revenues having to do with employee benefits are deposited to this fund.
NOTE 14 INTERFUND TRANSFERS
The following is a schedule of interfund transfers.
In general, the City uses interfund transfers to (1) move revenues from the funds that collect them to the funds that statute or budget requires to expend them, (2) use unrestricted revenues collected in the General Fund to help finance various programs and capital projects accounted for in other funds in accordance with budgetary authorization, and (3) move cash to debt service funds from the funds responsible for payment as debt service payments become due.
Housing Other Other
General Operating and Urban Govern- Enterprise Internal Transfers (in) to: Fund Grants Development mental Water Sewer Funds Service Total General Fund - $ $ $ - $ 585,911 $ 176,054 $ 65,000 $ 68,640 - $ $ 1,236,508 2,132,113 Operating Grants 1,549,920 - 703,168 - - - 50,183 144,048 2,447,319 Other Governmental 11,768,932 2,439,343 - 9,172,948 - - 7,587 - 23,388,810 Water 149,793 - - - - 1,068,361 112,946 - 1,331,100
Sewer - - - 2,967 - - 21,183 - 24,150
Other Enterprise 1,154,119 376,053 - 1,723 700,000 - - - 2,231,895 Internal Service 136 75,794 - 478,864 2,024,505 564,371 1,128,300 56,687 4,328,657 Grand Total $ 14,622,900 $ $ 3,477,101 $ 703,168 $ 9,832,556 $ 2,789,505 $ 1,701,372 $ 1,320,199 $ 1,437,243 35,884,044 Transfers from (out):
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
77 NOTE 15 SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY
On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 (Bill) that provides for the dissolution of all redevelopment agencies in the State of California. This action impacted the reporting entity of the City that previously had reported a redevelopment agency blended component unit. The Bill provides that upon dissolution of a redevelopment agency, either the City or another unit of local government will agree to serve as the “successor agency” to hold the assets until they are distributed to other units of state and local government. On January 24, 2012, the City Council elected to become the Successor Agency for the former Redevelopment Agency (RDA) in accordance with the Bill as part of County Resolution number 12-7.
After enactment of the law, which occurred on June 28, 2011, redevelopment agencies in the State of California cannot enter into new projects, obligations or commitments. Subject to the control of a newly established oversight board, remaining assets can only be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments).
In future fiscal years, successor agencies will only be allocated revenue in the amount that is necessary to pay the estimated annual installment payments on enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior redevelopment agency have been paid in full and all assets have been liquidated.
The Bill directs the State Controller to review the propriety of any transfers of assets between redevelopment agencies and other public bodies that occurred after January 1, 2011. If the public body that received such transfers is not contractually committed to a third party for the expenditure or encumbrance of those assets, the State Controller is required to order the available assets to be transferred to the public body designated as the successor agency by the Bill.
Management believes, in consultation with legal counsel, that the obligations of the former RDA due to the City are valid enforceable obligations payable by the Successor Agency trust under the requirements of the Bill.
In accordance with the timeline set forth in the Bill (as modified by the California Supreme Court on December 29, 2011), all redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as of February 1, 2012.
After the date of dissolution, as allowed under Section 34176(a) of the Bill, the City elected to retain the housing assets and functions previously performed by the former RDA. The assets and activities for the Successor Agency Housing fund continue to be reported in the City’s governmental fund financial statements. The remaining assets, liabilities, and activities of the dissolved RDA, are reported in the Successor Agency fiduciary fund (private-purpose trust fund) in the financial statements of the City.
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
78 NOTE 15 SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT
AGENCY (CONTINUED)
State Senate Bill (SB) 107 was then passed in 2015. This bill included many significant changes to the operation of the Successor Agencies. Among these changes were the Annual Recognized Obligation Payment Schedule (ROPS), the Last and Final ROPS, a single Countywide Oversight Board, and the requirement for the County Auditor-Controller to review the obligation payments made by the Successor Agency. Some of these changes like the County Oversight Board and the requirement for the County Auditor-Controller to review the obligation payments made by the Successor Agency become effective July 1, 2018. The Modesto RDA Successor Agency has complied with all aspects of the changes that are specified in SB 107 and all ROPS starting with the ROPS submitted for the Fiscal Year 2019-20 period will now be submitted for approval by the Stanislaus Countywide Successor Agency Oversight Board. As of June 30, 2025, one of the obligations under the Successor Agency trust is associated with the 10th Street Place Project:
Annual debt service requirements to maturity are as follows:
The reserves for the Reimbursement Agreement are recorded in the Public Financing Authority debt service fund for the City.
Reimbursement agreement with the City totaling $19,566,862. The original loan is from the City’s 1998 Lease Revenue Bonds and the 2007 Lease Revenue Bonds that pertain to the Successor Agency. On August 28, 2008, the City refinanced the entire outstanding balance of the City’s 1998 Lease Revenue Bonds and the 2007 Lease Revenue Bonds with variable rate 2008 Lease Revenue Bonds. The new balance has been provided as of June 30, 2025 that pertains to the Successor Agency. Additional information related to the 2008 Lease Revenue bonds is provided in Note 6 under the Lease Revenue Bonds - Governmental Activities section. $ 10,438,550
Year Ending
June 30 Principal Interest Total
2026 $ $ 939,600 $ 289,757 1,229,357
2027 1,006,300 259,907 1,266,207
2028 1,081,700 228,450 1,310,150
2029 1,106,350 194,776 1,301,126
2030 1,151,300 160,466 1,311,766
2031-2034 5,153,300 266,906 5,420,206
Total $ 10,438,550 $ 1,400,262 $ 11,838,812
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
79 NOTE 15 SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT
AGENCY (CONTINUED)
No-interest loan payable to the Stanislaus County Economic Development Bank loan program, for the purpose of funding the Kansas Avenue Business Park Project’s Master Plan costs. The Agency has no obligation to begin repayment until the Project is completed and revenues begin.
Future debt service requirements to maturity for loans payable, as of June 30, 2025, are as follows:
NOTE 16 APPROVED LOANS PAYABLE
The approved loans payable in the Housing and Community Development Special Revenue Fund in the amount of $5,914,221 consists of amounts being held for housing projects using funds provided by federal grants and state grants.
NOTE 17 POLLUTION REMEDIATION LIABILITY
The City reported a liability in the Water and Sewer Enterprise funds, which represents the recoveries the City has collected, less any remediation and legal costs incurred in pursuit of mitigating damages from the manufacturers of perchlorethylene, or PCE, a common chemical used in the dry-cleaning industry. This chemical has seeped into the groundwater through sewer lines when improperly disposed and threatens the City’s groundwater supplies. The City has been proactive in attempting to recover damages and future cleanup costs from the dry cleaners and their insurers and has also initiated litigation with the manufacturers. As of June 30, 2025, the City reported pollution remediation liability from the Water and Sewer Enterprise funds in the amounts of $3,079,869 and $10,511,114, respectively.
The City also reported a liability in the Water Enterprise fund, which represents the recovery the City has collected, less any remediation and legal costs incurred in pursuit of mitigating damages from the manufacturers of 1,2,3-trichloropropane, or TCP, a chemical solvent found in industrial and hazardous waste sites. TCP has been used in industrial solvents, various cleaning agents, and found as an impurity from the production of pesticide products. This chemical has seeped into the groundwater through soil fumigant applications and site sources where the chemical was manufactured and threatens the City’s groundwater supplies. The City has been proactive in attempting to recover damages and future cleanup costs from the manufacturers and their insurers and has also initiated litigation with the manufacturers. As of June 30, 2025, the City reported a pollution remediation liability from the Water Enterprise fund of $36,920,607.
Principal Total
$ 405,000 $ 405,000
$ 405,000 $ 405,000
Year Ending
June 30
2026
Total
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
80 NOTE 17 POLLUTION REMEDIATION LIABILITY (CONTINUED)
The City also records a liability in the Other Enterprise funds for two landfill pollution remediation efforts. For the Carpenter Road Landfill Fund, a liability was reported related to the Carpenter Road Landfill, which is a 39-acre City-owned landfill, located on both the east and west sides of Carpenter Road between Kenneth and Robertson Roads and the Tuolumne River, which was in operation from 1956 to 1968. This landfill precedes SubtitleD and had no liner or leachate collection or removal system. In 1993, six methane gas monitoring wells were installed. In December 2005, there was a spike in the methane gas level at the landfill’s Northern boundary. The State required the City to determine the cause and develop a mitigation and monitoring plan to ensure the landfill remained in compliance with the state statutes. In November of 2010, a Corrective Action Plan was proposed for the landfill involving a hydrogen-releasing compound injection. In October 2014, a revised corrective action plan and post-closure maintenance plan were submitted to the Central Valley Regional Water Quality Control Board (CVRWQCB).
In March 2015, a Cleanup and Abatement Order was issued to the City of Modesto for the Carpenter Road Landfill by the California Regional Water Quality Control Board to complete the clean closure correction action plan by January 15, 2017. Construction was to begin in the Spring of 2017; however, due to flooding during the Winter of 2016, the groundwater level increased to a level too high to begin construction. The City submitted a request to the CVRWQCB to delay the project until Spring of 2018. The waters receded; the project went out to bid and was awarded to Pacific States Environmental Contractors in August 2018. A permitting delay pushed the project to start, but as of September 2021, all waste has been moved from the eastern fill to the western fill, a stormwater retention basin is complete, and final, small or cosmetic work is being completed. The City will submit completion and permitting paperwork when the project is complete. Monitoring continued throughout the project on functional gas and groundwater wells. The City reported a pollution remediation liability from the Carpenter Road Landfill Fund in the amount of $218,735.
For the Geer Road Landfill Mitigation Costs Fund, a liability was reported related to the Geer Road Landfill, which is in Stanislaus County, 8 miles southeast of the City on the Tuolumne River. The site is jointly owned by Stanislaus County and the City but was formerly operated by the Stanislaus County Department of Environmental Resources. It consists of 168 acres and accepted an estimated 4.5 million tons of waste from 1970 until July 1990. This landfill precedes Subtitle-D and had no liner or leachate collection or removal system. The landfill closed in 1995, and a geomembrane liner was overlain by vegetative soil. Closure was approved in July 1996, and post-closure and correction action requirements, as well as requirements to maintain financial assurances and conduct monitoring, were prescribed in the Waste Discharge Requirements (WDRs). Pollution was first identified in 1985, and since that time, several investigations have been completed. In 1993, a groundwater extraction and treatment system of 12 extraction wells that pump water to a treatment plant, as well as 34 monitoring wells, was installed. The treated water was then released into a leach field, where it was recharged to the groundwater. The landfill methane gas was monitored by 83 gas probes in and around the landfill connected to a landfill gas flare facility. To cover the potential liability, the City established a fee within the Solid Waste rates to collect around $1,100,000 annually. The City reported a pollution remediation liability from the Geer Road Landfill Mitigation Costs Fund in the amount of $2,952,259.
As of June 30, 2025, the City reported pollution remediation liability of $3,170,994 from the Other Enterprise funds.
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
81 NOTE 18 DEFERRED INFLOWS/OUTFLOWS OF RESOURCES
Pursuant to GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, the City recognized deferred outflows and inflows of resources in the government-wide and governmental fund statements. These items are consumption and acquisition of net assets that are applicable to a future reporting period. The General Fund, Operating Grants, Housing and Community Development, and other governmental funds reported deferred inflows of resources in the amount of $8,697,820, $1,881,720, $24,611,481, and $10,008,042 for unavailable resources related to notes, grant receivables, and lease receivables not meeting the period of availability. Previous financial reporting standards do not include guidance for reporting these in the financial statements, which are distinct from assets and liabilities. The items relate to outflows and inflows for net pension liability (Note 19), OPEB liability (Note 19), swap hedging (Note 6) and loss on refunding.
NOTE 19 OTHER INFORMATION
Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to and illnesses of employees; and natural disasters. The City maintains the Insurance Internal Service Fund to account for and finance its risks of loss. Under this program, the City is self-insured for the following risks up to the maximum amount per claim/occurrence as follows: workers' compensation $750,000; liability $1,000,000. The City purchases commercial insurance for property loss, airport liability, miscellaneous coverage, and for claims in excess of the preceding self-insured limits.
For liability claims, the City is one of thirteen members of the Authority for California Cities Excess Liability (ACCEL) risk pool. This pool covers City claims between $1,000,000 and $10,000,000. The purpose of the pool is to spread the adverse effect of losses among the member agencies and leverages buying power in the commercial insurance market for excess coverage. The City contributes its pro rata share of anticipated losses to the pool.
Should actual losses among participants be greater than anticipated, the City will be assessed its pro rata share of that deficiency. Conversely, if the actual losses are less than anticipated, the City will be refunded its pro rata share of the excess subject to the board approval and current conditions. Commercial insurance, covers claims over $10,000,000 in several excess layers for a total coverage of $60,000,000 per claim. Settled claims have not exceeded this commercial coverage in any of the past five fiscal years. General liability claims are handled by the City’s third-party administrator George Hills Company of Rancho Cordova, CA, and risk management. Litigated claims are defended by the City Attorney. #7..
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
82 NOTE 19 OTHER INFORMATION (CONTINUED)
Risk Management (Continued)
All operating funds participate in the program and make payments to the Insurance Fund based on historical cost and/or actuarial estimates of the amounts needed to pay prior and current year claims, and to allow accrual of estimated incurred but not reported claims and allocated loss adjustment expenses. Insurance premiums to commercial insurers are also processed through the Insurance Fund. The total claims liability at June 30, 2025 is $33,196,178, consisting of $21,623,334 workers' compensation, $11,266,208 general liability, $266,344 dental, and $40,292 vision. Workers’ compensation and general liability claims liabilities are estimated on an actuarial basis and are reported at their net present value using an expected future investment yield assumption of 3% (general liability) and 3% (workers’ compensation). The undiscounted workers’ compensation and liability claims totaled $25,629,778 and $11,977,923, respectively. The actuarial liability for workers’ compensation and general liability was based on 2025 actuarial reports.
The current portion of the total liability claims is estimated to be $7,886,993 and the balance of $25,309,185 is reported as a long-term liability on the statement of net position. Changes in the Insurance Fund claims liability during the fiscal years ended June 30, 2024 through June 30, 2025 were:
Community Facilities Debt Without City Commitment
Special assessment and community facilities districts have been established in various areas of the City to provide improvements to properties located in those districts. Properties are assessed for the cost of the improvements; these assessments are payable solely by the property owners over the term of the debt issued to finance the improvements. The City is not legally obligated to pay these debts or be the purchaser of last resort of foreclosed properties in the special assessment districts, nor is it obligated to advance City funds to repay this debt in the event of default by any property owners. The City functions as an agent for the property owners by collecting assessments and forwarding collections to trustees for payment to bondholders.
At June 30, 2025, the balances of these districts’ outstanding debt were as follows:
Current-Year
Claims Liability
Claims and
Changes Current-Year Claims liability
July 1 in Estimates Claim Payments June 30
2023-24 $ 27,038,914 $ 12,928,634 $ (11,507,309) $ 28,460,239 2024-25 $ 28,460,239 $ 19,241,186 $ (14,505,247) $ 33,196,178 Debt Issued
Outstanding
Amount
Village One #2 Community Facilities District $ 21,505,000 Fairview Village Community Facilities District $ 3,050,000 #7..
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
83 NOTE 19 OTHER INFORMATION (CONTINUED)
Community Facilities Debt Without City Commitment (Continued) The accompanying financial statements include the Private-Purpose Trust Fund for both districts. The City serves solely in a fiduciary capacity; assets are held in trust for the benefit of the districts and are not available for City use. These districts issue stand-alone reports, which are available through the City.
The long-term debt activities for the year ended June 30, 2025 were as follows:
Annual debt service requirements for the bonds are as follows:
Conduit Debt Obligations
From time to time, the City has issued revenue bonds to provide financial assistance to private-sector entities for the acquisition and construction of industrial, commercial, health care, and multiple-family housing facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from developer payments on the underlying private-sector mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the entity served by the bond issuance. Neither the City, the State, nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are considered conduit debt obligations and are not reported as liabilities in the accompanying financial statements.
As of June 30, 2025, there was one series of conduit revenue bonds outstanding. The aggregate principal amount payable for these multiple-family housing bond issues, issued in 2002, was $2,300,000.
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Village One #2 District
Refunding Special Tax Bonds $ 22,540,000 $ $ - (1,035,000) $ 21,505,000 $ 1,130,000 Premium on Refunding Bonds 811,019 - (66,659) 744,360 66,659 23,351,019 - (1,101,659) 22,249,360 1,196,659
Fairview Village District
Refunding Special Tax Bonds 3,230,000 - (180,000) 3,050,000 195,000 Total $ 26,581,019 $ - $ (1,281,659) $ 25,299,360 $ 1,391,659 Year Ending
June 30 Principal Interest Principal Interest
2026 $ 1,130,000 $ 934,500 $ 195,000 $ 121,053
2027 1,230,000 875,500 205,000 112,853
2028 1,335,000 811,375 225,000 104,038
2029 1,455,000 741,625 240,000 94,505
2030 1,570,000 666,000 255,000 84,358
2031-2035 3,535,000 2,430,125 1,930,000 251,740
2036-2037 11,250,000 1,125,000 - -
$ 21,505,000 $ 7,584,125 $ 3,050,000 $ 768,547
Village One #2 District Fairview Village District
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
84 NOTE 19 OTHER INFORMATION (CONTINUED)
Commitments And Contingencies
The City is involved in litigation relating to tort claims, workers' compensation claims and other claims, such as contract actions and inverse condemnation actions, for which the City is self-insured. The City is a defendant in various matters of litigation.
The City receives funding from a number of federal, state and local grant programs, principally the Federal Highway Administration, Community Development Block Grants, and Federal Transit Administration grants. These programs are subject to financial and compliance review by the grantors. Accordingly, the City's compliance with applicable grant requirements will be determined at some future date. Expenditures, if any, which may be disallowed by the granting agencies, cannot be determined at this time. The City does not expect the undeterminable amounts of disallowed expenditures, if any, to materially affect the basic financial statements. Receipt of these federal, state and local grant revenues is not assured in the future.
The City has both operating and capital commitments of $33,646,692 for the City’s governmental funds as of June 30, 2025 for contracts awarded but not completed and other outstanding purchase requisitions and orders. This amount consists of $2,679,948 in the General Fund, $578,861 in the Operating Grants Fund, $761 in the Housing and Community Development, and $30,387,122 in other governmental funds. Commitments of the governmental funds are recorded in one of the classifications of fund balance based on the various funding restrictions on the balance sheet. As of June 30, 2025, there are major construction contracts Scenic Drive Pavement Rehabilitation Phase 2 and Orangeburg Avenue Pavement Rehabilitation Phase 2 with Bay Cities Paving and Grading in the amounts of $4,292,790 and $2,218,354 respectively, a construction contract with Harris Builders, Inc, for the renovation of Cesar E. Chavez park in the amount of $8,253,009 and an agreement with Winner Chevrolet in the amount of $347,311 for the purchase of five (5) Chevrolet Tahoes for the Police Department.
In the process of completing the work mandated by the Regional Water Control Board, additional waste was discovered in the southern wall of the bank of the Tuolumne River. The City provided this information to the Regional Water Control Board in May of 2021. They asked the City to submit a general plan and schedule to investigate and ultimately address the residual waste materials that were found in the area and appear to be on Army Corps lands. The State completed a review of the report on the additional waste during calendar year 2022 and asked the City to remove the waste. On September 12, 2023, with Resolution number 2023-412, Council approved the City to hire HDR Engineering to complete all the required work by the state. HDR started their work in November 2023.
The working draft report for waste removal was submitted to CalRecycle on July 9, 2024 and was conditionally approved on September 11, 2024. All required permits from the California Department of Fish and Wildlife (CDFW) were submitted on October 31, 2024. The final report will be submitted to the Water Board approximately in July 2025, with active trench excavation set for August 2025. The Public Works director will work with the City Council on selecting a Final Cover Repair Alternative once the work is completed, which will allow for final clean closure of the Carpenter Road Landfill.
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
85 NOTE 19 OTHER INFORMATION (CONTINUED)
Joint Ventures and Jointly Governed Organizations
Tuolumne River Regional Park
The City participates with Stanislaus County in the operation and development of the Tuolumne River Regional Park (TRRP). The governing body consists of 2 members from the County Board of Supervisors and 2 members from the City Council. The TRRP Board prepares the annual budget, which must be approved by the City Council and the Board of Supervisors. Each participant has an equity interest in the capital assets of TRRP based on the percentage of cumulative contributions paid. The City's contribution to TRRP was $352,874 for the fiscal year ended June 30, 2025. As of June 30, 2025, the City's investment in this joint venture was $3,062,040, and is included in governmental activities on the statement of net position. Financial statements for TRRP are prepared by the City Finance Department.
City-County Capital Improvements and Financing Agency
The City and Stanislaus County formed the City-County Capital Improvements and Financing Agency (CCCIFA) to provide for the design, construction, ownership, operation, management and financing of a City-County administration center located in Modesto’s downtown redevelopment area. The governing body is a commission consisting of two (2) members of the City Council, two (2) members of the County Board of Supervisors, the County Chief Executive Officer, and the City Manager.
City-County Capital Improvements and Financing Agency (Continued) The commission is responsible for developing an annual budget and determining the annual contribution rates, subject to approval by both the City and the County. The Stanislaus County Auditor Controller was the fiscal administrator during the construction phase, which was final at the end of June 2003. Starting on July 1, 2010 the County Auditor Controller became the fiscal administrator. For the fiscal year ended June 30, 2025, the City’s payments to the Agency were $1,457,796 for operations and capital reserve. The City’s equity interest in the Agency is $3,912,259, equal to its capital asset contributions to date, net of depreciation and is reported in governmental activities as investments in joint ventures in the statement of net position. Financial statements of the CCCIFA are prepared by the Stanislaus County Auditor Controller office.
Stanislaus Waste-to-Energy Financing Agency
The City participates with Stanislaus County in the Stanislaus Waste-to-Energy Financing Agency (SWEFA). SWEFA was created to provide financing for a facility that generates power from solid waste. The costs of operating the Agency, if any, are shared equally by the participants. The governing body consists of 2 members, each from the County Board of Supervisors and the Modesto City Council. As of June 30, 2025, the City has no equity interest. Stanislaus County Treasurer's office prepares the SWEFA financial statements. #7..
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
86 NOTE 19 OTHER INFORMATION (CONTINUED)
Joint Ventures and Jointly Governed Organization (Continued) Consolidated Emergency Dispatch Agency
The Modesto/Stanislaus Consolidated Emergency Dispatch Agency (the MSCEDA) was created on September 1, 1999, pursuant to a joint exercise of powers agreement between the City of Modesto and the County of Stanislaus. The MSCEDA is administered by a sevenmember commission consisting of one member of the City Council, one member of the County Board of Supervisors, the County Chief Executive Officer, the City Manager, two members from the Dispatch Advisory Board, and one member from the City of Ceres’ City Council or one member selected by the City Council of another participating City. The purpose of the MSCEDA is to consolidate the public safety communications system. The responsibilities of the agency include approval of the annual budget, claims, liabilities, and the use of MSCEDA property as collateral. Each participant will contribute sufficient funds to pay for all costs and expenses associated with providing Emergency Dispatch Services.
Upon termination of the agreement, assets will be distributed equally to the City and County, unless otherwise approved. The financial statements may be obtained by writing to the Modesto/Stanislaus Consolidated Emergency Dispatch, Office Manager, 3705 Oakdale Road, Modesto, California 95357.
On August 23, 2016, the City of Modesto City Council and County of Stanislaus Board of Supervisors approved to amend section 6.1 of the JPA agreement, allowing for any member of the JPA to terminate the agreement by providing a written notice of intent to terminate to the Commission and all members at least twenty-four (24) months in advance of the desired termination date.
On October 12, 2021, the Modesto City Council authorized the City Manager to provide the Consolidated Emergency Dispatch Agency Commission with a written notice of intent to terminate the Joint Exercise of Powers Agreement between the City of Modesto and the County of Stanislaus for Emergency Dispatch Services, effective January 1, 2024. The written notice of intent to terminate was provided to the MSCEDA and the County on October 27, 2021, in accordance with Section 6.1 of the agreement. The City and County are currently evaluating the best options for the dissolution of the Consolidated Emergency Dispatch Agency.
On December 6, 2022, Modesto and the County executed a third amendment to the agreement to update the governing body structure of the Commission, changing membership to one Modesto staff member appointed by the Modesto City Council and one County staff member appointed by the County Board of Supervisors, each with an appointed alternate from the respective partner agencies.
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
87 NOTE 19 OTHER INFORMATION (CONTINUED)
Joint Ventures and Jointly Governed Organization (Continued) Consolidated Emergency Dispatch Agency (Continued)
On December 8, 2023, Modesto and the County executed a fourth amendment to the agreement to extend the term to June 30, 2024. This extension was to provide the City and County time to continue to explore alternatives to service delivery and governance models and to avoid disruption of critical dispatch services. The fourth amendment also included a change to the governing body structure of the Commission, changing from seven members to four members. The Commission’s restructure consisted of two (2) members of the Modesto City Council, selected by the City Council and one alternate also a member of the Modesto City Council to serve in the absence of one of the two (2) Modesto selected members and two (2) members of the County’s Board of Supervisors, selected by the Board of Supervisors and they too shall have one (1) alternate to serve in the absence of one of the two (2) County selected members who will also be a member of the County’s Board of Supervisors. This changed the quorum of the governing body from four (4) commissioners to three (3).
On June 4, 2024, Modesto and the County entered into the Fifth Amendment to the Agreement, extending the agreement to December 31, 2024, changing the membership of the Commission and thereby editing the quorum requirement, amending the Agency Member Liaison requirements and appointing the Consolidated Emergency Dispatch Agency Commissioners and an Alternate Member.
On November 1, 2025, Modesto and the County entered into the Sixth Amendment to the Agreement, extending the agreement to December 31, 2025. This amendment was to provide sufficient time for Modesto and the County to reach a resolution on the future delivery of dispatch services and governance of the SR911 JPA.
North County Corridor Transportation Expressway Authority On April 1, 2008, the City Council approved the establishment of a Joint Powers Authority between the County and the cities of Modesto, Oakdale and Riverbank to create the North County Corridor Transportation Expressway Authority (NCCTEA). The purpose of the Authority is to prepare, identify, and adopt a precise alignment, and prepare and certify environmental documents for a route to improve east/west traffic circulation in the County.
The intent of the NCCTEA is to provide a high-capacity, high speed east-west roadway to accommodate anticipated traffic growth, alleviate traffic on parallel roads, and accommodate multi-modal travel. Under the terms of the agreement, the County will incur 40% of the costs of the project, while each of the participating cities will be contributing 20%. The preliminary project development costs will be funded by the State Transportation Program and Public Facility Fees. The NCCTEA Board of Directors will be comprised of two directors appointed by the County, and one director from each participating city. The board acts autonomously from the respective member agencies. The County of Stanislaus Public Works Director is designated as the NCCTEA’s manager. Upon completion of the agreement, all assets will be distributed to the respective parties of the agreement as determined by the Board of Directors of the Authority. At the end of the fiscal year June 30, 2025, the City has no equity interest.
Financial statements may be obtained by writing to the County of Stanislaus, Public Works Department, 1716 Morgan Road, Modesto, CA 95358.
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
88 NOTE 19 OTHER INFORMATION (CONTINUED)
Joint Ventures and Jointly Governed Organization (Continued) Stanislaus Animal Services Agency
The Stanislaus Animal Services Agency (SASA) was created on October 27, 2009, pursuant to a joint powers agreement among the cities of Ceres, Hughson, Modesto, Patterson, Waterford, and the County of Stanislaus. SASA is administered by a six-member board comprised of the City Manager of each partner agency, and the Chief Executive Officer of the County. The purpose of SASA is to operate a regional agency providing animal services to their respective communities. The SASA Executive Director is responsible for the annual budget which must be approved by the SASA Board of Directors. Each partner agency will contribute sufficient funds to pay for all costs approved in the budget to provide animal services. Upon termination of the agreement, assets will be distributed in accordance with the joint powers agreement. The City did not make contributions to the Agency for the fiscal year ended June 30, 2025. The financial statements may be obtained by writing to the Stanislaus Animal Services Agency, Executive Director, 3647 Cornucopia Way, Modesto, CA 95358.
Regional Fire Training Center
The City has entered into an agreement with the Yosemite Community College District (YCCD) and Stanislaus County for the use and management of the regional fire training center at Modesto Junior College. The executive board consists of the YCCD Chancellor, the President of Modesto Junior College, the City Manager of the City of Modesto, and the Chief Executive Officer of Stanislaus County. The YCCD is responsible for accounting and for monitoring the center's budget. All three entities share in the operating costs. Initial construction costs were paid by the YCCD from borrowed funds, with the City and County reimbursing a portion of these costs in exchange for future use of the center. The City has paid its share of the construction costs in full. Title to the constructed asset is held by the YCCD; therefore, the City has no equity interest.
North Valley Regional Recycled Water Program (NVRRWP)
The City participates in the NVRRWP, which was established by the City of Modesto and Del Puerto Water District in November 2014. The purpose of this agreement is to develop, construct, operate and maintain water supply facilities and service. Through this agreement, all partner agencies will cooperate and collaborate to use their best efforts regarding the submission of grants, loans and other funding resources to cover future costs related to the design and construction of future projects. At the end of the fiscal year June 30, 2025, the City has no equity interest.
Other Postemployment Benefits (OPEB)
I. Plan Description
In addition to the pension benefits described below under Pension Plans, the City’s singleemployer OPEB Plan provides health care benefits to employees who retire from the City based on certain criteria related to their hire and retirement dates, their employee bargaining unit, and their grandfathered sick leave at retirement. #7..
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
89 NOTE 19 OTHER INFORMATION (CONTINUED)
Other Postemployment Benefits (OPEB) (Continued)
I. Plan Description (Continued)
For employees who retire from the Modesto City Firefighters Association (MCFFA) bargaining unit, the City contributes toward the cost of retiree medical coverage for the retiree's lifetime or until coverage is discontinued. MCFFA is covered by a 1995 resolution with the California Public Employees' Retirement System defining the level of the City's contribution toward the cost of medical plan premiums for employees and retirees to be the minimum employer contribution (MEC). The MEC is $157 in 2024 and $158 in 2025.
All other full-time employees hired before January 1, 2011, are eligible to convert their accumulated grandfathered sick leave towards a contribution for future health care costs at retirement (sick leave conversion). The City has no obligation to pay health insurance allowance for retirees with no grandfathered sick leave. Any employee who retires after January 1, 2017, or retiree who elects the buy-out option, receives a contribution to a Retiree Health Savings Account. Those employees are then removed from the City’s medical plan and ineligible to re-enroll.
The OPEB Plan does not issue a separate report. All transactions are included within the financial statements of the City. During the fiscal year ending June 30, 2022, the City entered into an agreement with Public Agency Retirement Services (PARS) to prefund the City’s OPEB liability. PARS issues a publicly available financial report for the fiduciary net position of the OPEB Trust, which is available upon request.
II. Employees Covered
As of June 30, 2024 actuarial valuation, the following current and former City employees were covered by the OPEB plan membership:
III. Contributions
The OPEB plan and its contribution requirements are established by Memoranda of Understanding with the applicable employee bargaining units and may be amended by the agreements between the City and the bargaining units. The annual contribution is based on the actuarially determined contribution. For the fiscal year ended June 30, 2025, the City’s contributions were $2,595,885.The liability for all OPEB activities is primarily liquidated from the Employee Benefits Management Fund.
Active employees 377
Inactive employees 316
Total 693
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
90 NOTE 19 OTHER INFORMATION (CONTINUED)
Other Postemployment Benefits (OPEB) (Continued)
IV. Total OPEB Liability
The City’s total OPEB liability was measured as of June 30, 2024 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2024, based on the following actuarial methods and assumptions:
V. Long-term Expected Rate of Return
The long-term expected rate of return of 6.18% for the moderate portfolio, prior to offset for non-imbedded investment related fees of 0.58%, was determined using a building-block method and best-estimate ranges of expected future real-rates of returns for each major asset class (expected returns, net of OPEB plan investment expense and inflation).
The target allocation and best estimates of geometric real rates of return for each major class are summarized in the following table:
Actuarial Assumptions:
Discount Rate 3.93% at June 30, 2024; 5.45% at June 30, 2023 General Inflation 2.5% annually
Salary Increases 3%
Investment Rate of Return 5.6%, net of 0.58% assumed investment expense Medical Trend Average actual increase for 2026, decreasing to 3.9% by 2076 Mortality, Retirement,
Disability, Termination
Rates
CalPERS 2021 Experience Study
Mortality Improvement Scale MP-2021 is the most recent mortality improvement scale developed by the Retirement Plans Experience Committee of the Society of Actuaries (SOA).
Expected
Return Weight
Equity 50.00%
Large Cap Core 6.80% 26.50%
Mid Cap Core 7.10% 5.00%
Small Cap Core 7.90% 7.50%
Reat Estate 6.60% 1.75%
International 7.30% 6.00%
Emerging Markets 7.30% 3.25%
Fixed-Income 45.00%
Short Term Bond 3.30% 10.00%
Intermediate Term Bond 6.90% 33.50%
High Yield 6.10% 1.50%
Cash 2.40% 5.00%
Expected Return 6.18%
Expected Standard Deviation 8.70%
Asset Class
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
91 NOTE 19 OTHER INFORMATION (CONTINUED)
Other Postemployment Benefits (OPEB) (Continued)
VI. Discount Rate
The discount rate used to measure the total OPEB liability was 3.93 percent. The projection of the cash flows used to determine the discount rate assumed that the City contributions will be made at rates equal to the actuarially determined contribution rates. Based on these assumptions, the City’s OPEB fiduciary net position was projected to be not available to make all projected OPEB payments for current active and inactive employees and beneficiaries based on the ‘pay as you go’ annual contributions for the first year. As such, those payments and future benefit payments are treated as unfunded and are discounted using a municipal bond rate. The City has selected the Bond Buyer 20-Bond Go Index, which was 3.93% as of the measurement date, as the applicable rate.
VII. Changes in the Net OPEB Liability
The change in the Net OPEB Liability is as follows:
VIII. Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following presents the Net OPEB liability of the Plan as of the measurement date, calculated using the discount rate of 3.93 percent, as well as what the Net OPEB liability would be if it were calculated using a discount rate that is 1 lower (2.93 percent) or 1 percentage-point higher (4.93 percent) than the current rate:
Total OPEB Fiduciary Net OPEB
Liability Net Position Liability
Balance at June 30, 2024
(Measurement Date June 30, 2023) $ 20,492,396 $ 1,481,519 $ 19,010,877 Changes recognized for the measurement
period:
Service cost 679,094 - 679,094
Interest 1,090,081 - 1,090,081
Changes of Assumptions 3,396,023 - 3,396,023
Investment - 82,399 (82,399)
Change Due to Plan Experience 13,237 - 13,237
Investment Income - 82,965 (82,965)
Employer Contributions - 2,340,023 (2,340,023)
Benefit Payments (2,340,023) (2,340,023) -
Net Changes 2,838,412 165,364 2,673,048
Balance at June 30, 2025
(Measurement Date June 30, 2024) $ 23,330,808 $ 1,646,883 $ 21,683,925
2.93% 3.93% 4.93%
Net OPEB Liability $ 23,411,449 $ 21,683,925 $ 20,139,138 1% Decrease Discount Rate 1% Increase
Current
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
92 NOTE 19 OTHER INFORMATION (CONTINUED)
Other Postemployment Benefits (OPEB) (Continued)
IX. Sensitivity of the Net OPEB Liability to Changes in the Health Care Cost Trend Rates The following presents the Net OPEB liability of the Plan if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for the measurement period ended June 30, 2024:
X. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
For the measurement period ended June 30, 2024, the City recognized an OPEB expense of $2,156,315.
As of June 30, 2025, the City has deferred outflows and deferred inflows of resources related to the Net OPEB liability as follows:
The amounts above are net of outflows and inflows recognized as expense in the 2023-2024 measurement period. The amounts above reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the year ending June 30, 2026.
Net OPEB Liability $ 20,267,116 $ 21,683,925 $ 23,392,563 1% Decrease Current Trend 1% Increase
Components of OPEB Expense Total OPEB
Service cost $ 679,094
Interest 1,090,081
Expensed portion of current-period changes of assumptions or other inputs 387,140 OPEB Expense $ 2,156,315
Contributions subsequent to measurement period $ 2,595,885 $ - Changes of assumptions or other inputs 3,731,665 (4,062,912) Difference between actual and expected experience 130,787 (490,517) Net difference between projected and actual earnings
on investments 11,971 (75,827)
Total $ 6,470,308 $ (4,629,256)
Outflows of Inflows of
Deferred Deferred
Resources Resources
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
93 NOTE 19 OTHER INFORMATION (CONTINUED)
Other Postemployment Benefits (OPEB) (Continued)
X. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued)
Other amounts reported as deferred outflows of resources and developing of resources related to OPEB will be recognized in future OPEB expense as follows:
XI. Payable to the OPEB Plan
At June 30, 2025, the City had no outstanding amount of contributions to the OPEB plan required for the year ended June 30, 2025.
XII. OPEB Plan Fiduciary Net Position
Detailed information about the OPEB plan’s fiduciary net position is available in the separately issued reports of PARS, which may be obtained upon request.
Pension Plans
I. Plan Description
All City qualified employees are eligible to participate in the City’s separate Safety (police and fire) and Miscellaneous (all other) Plans (the Plans), agent multi-employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are established by the State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website. This report is available online at www.calpers.ca.gov.
The California Legislature passed and the Governor signed the “Public Employees’ Pension Reform Act of 2013” (PEPRA) on September 12, 2012. PEPRA contained a number of provisions intended to reduce future pension obligations. PEPRA primarily affects new pension plan members who are enrolled for the first time after December 2012. Benefit provisions and other requirements are established by State statute.
Fiscal Year Ending
June 30
2026 $ (204,717)
2027 (576,086)
2028 (591,022)
2029 (39,264)
2030 644,928
Thereafter 11,328
Deferred outflows/inflows
of resources related to
OPEB expense
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
94 NOTE 19 OTHER INFORMATION (CONTINUED)
Pension Plans (Continued)
II. Benefits Provided
The benefits for the Plans are based on members’ years of service, age, final compensation, and benefit formula. Benefits are provided for disability, death, and survivors of eligible members or beneficiaries. Members become fully vested in their retirement benefits earned to date after five years of credited service.
The Plans’ provisions and benefits in effect at June 30, 2025 are summarized as follows:
At the June 30, 2023 valuation date, the following employees were covered by the benefit terms for each Plan.
III. Contributions
Section 20814(c) of the California Public Employees Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through the CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.
Miscellaneous Plan:
Prior to January 17, 2012 to On or after
Hire date January 17, 2012 December 31, 2012 January 1, 2013 Benefit formula 2% @ 55 2% @ 60 2% @ 62
Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 to 67 50 to 67 52 to 67
Monthly benefits, as a %
of eligible compensation 1.426 to 2.418% 1.092 to 2.418% 1.0 to 2.5% Safety Plan:
Prior to September 11, 2012 On or after
Hire date September 11, 2012 to December 31, 2012 January 1, 2013 Benefit formula 3% @ 50 3% @ 55 2.7% @ 57
Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 to 55 50 to 55 50 to 57
Monthly benefits, as a %
of eligible compensation 3.0% 2.4 to 3.0% 2.0 to 2.7%
Miscellaneous Safety
Inactive employees or beneficiaries currently receiving benefits 1,087 610 Inactive employees entitles to, but not yet receiving benefits 1,006 261 Active employees 811 370
2,904 1,241
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
95 NOTE 19 OTHER INFORMATION (CONTINUED)
Pension Plans (Continued)
III. Contributions (Continued)
For the fiscal year June 30, 2025, the average active employee contribution rate was 7.42% of annual pay for Miscellaneous and 10.97% for Safety and the employer’s contribution rate is 9.11% of annual payroll for Miscellaneous and 22.49% for Safety. The employer contributions made for the fiscal year June 30, 2025 was $19.93 million for the Miscellaneous plan and $33.01 million for the Safety plan. Employer contribution rates may change if plan contracts are amended. The liability for all governmental activities is primarily liquidated from the general fund, while the liability for business-type activities is liquidated from the enterprise funds.
IV. Net Pension Liability
The City’s net pension liability for each Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of each of the Plan is measured as of June 30, 2024, using an annual actuarial valuation as of June 30, 2023 rolled forward to June 30, 2024 using standard update procedures.
A summary of principal assumptions and methods used to determine the total pension liability is shown below:
V. Long-term Expected Rate of Return
The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, CalPERS took into account both shortterm and long-term market return expectations. Using historical returns of all of the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach.
Miscellaneous and Safety Plans
Actuarial Cost Method Entry-Age Actuarial Cost Method
Actuarial Assumptions:
Discount Rate 6.90%
Inflation 2.30%
Salary Increases Varies by Entry Age and Service
Mortality (1) Derived using CalPERS’ membership data for all funds
The lesser of contract COLA or 2.30% until
Purchasing Power Protection
Post Retirement Benefit Increase Allowance floor on purchasing power applies,
2.30% thereafter
(1) The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the 2021 experience study report from November 2021 that can be found on the CalPERS website. #7..
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
96 NOTE 19 OTHER INFORMATION (CONTINUED)
Pension Plans (Continued)
V. Long-term Expected Rate of Return (Continued)
The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points. The expected real rates of return by asset class are as follows:
VI. Discount Rate
The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Assumed
Asset
Asset Class(1) Allocation Real Return (1), (2)
Global Equity - Cap-weighted 30.00 % 4.54 %
Global Equity - Non-Cap-weighted 12.00 3.84
Private Equity 13.00 7.28
Treasury 5.00 0.27
Mortgage-backed Securities 5.00 0.50
Investment Grade Corporates 10.00 1.56
High Yield 5.00 2.27
Emerging Market Debt 5.00 2.48
Private Debt 5.00 3.57
Real Assets 15.00 3.21
Leverage (5.00) (0.59)
(1) An expected inflation of 2.30% used for this period. (2) Figures are based on the 2021 Asset Liability Management study. #7..
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
97 NOTE 19 OTHER INFORMATION (CONTINUED)
Pension Plans (Continued)
VII. Changes in the Net Pension Liability
The changes in the Net Pension Liability for each Plan follows:
Miscellaneous Plan
Balance at June 30, 2023 Measurement Date (1) $ 563,916,637 $ 396,679,689 $ 167,236,948 Changes Recognized for the Measurement Period:
Service Cost 9,179,081 - 9,179,081
Interest on the Total Pension Liability 38,258,073 - 38,258,073 Changes of Assumptions - - -
Differences between Expected and Actual Experience 2,630,876 - 2,630,876 Contributions - Employer - 17,400,016 (17,400,016)
Contributions - Employees - 4,695,774 (4,695,774)
Net Investment Income - 37,856,926 (37,856,926)
Benefit Payments, including Refunds of Employee
Contributions (33,344,425) (33,344,425) -
Administrative Expense - (322,779) 322,779
Net Change during 2023-24 16,723,605 26,285,512 (9,561,907) Balance at June 30, 2024 Measurement Date (1) $ 580,640,242 $ 422,965,201 $ 157,675,041
Increase (Decrease)
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability/(Asset)
(a) (b) (c) = (a) - (b)
Safety Plan
Balance at June 30, 2023 Measurement Date (1) $ 754,703,829 $ 493,727,149 $ 260,976,680 Changes Recognized for the Measurement Period:
Service Cost 13,868,810 - 13,868,810
Interest on the Total Pension Liability 51,475,368 - 51,475,368 Differences between Expected and Actual Experience 4,407,902 - 4,407,902 Contributions - Employer - 30,299,553 (30,299,553)
Contributions - Employees - 5,293,230 (5,293,230)
Net Investment Income - 47,897,856 (47,897,856)
Benefit Payments, including Refunds of Employee
Contributions (40,052,614) (40,052,614) -
Administrative Expense - (401,747) 401,747
Net Change during 2023-24 29,699,466 43,036,278 (13,336,812) Balance at June 30, 2024 Measurement Date (1) $ 784,403,295 $ 536,763,427 $ 247,639,868 (1) The fiduciary net position includes receivables for employee service buybacks, deficiency reserves, fiduciary self-insurance and OPEB expense. This may differ from the plan assets reported in the funding actuarial valuation report.
Increase (Decrease)
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability/(Asset)
(a) (b) (c) = (a) - (b)
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
98 NOTE 19 OTHER INFORMATION (CONTINUED)
Pension Plans (Continued)
VIII. Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the Plan as of the measurement date, calculated using the discount rate of 6.90 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (5.90 percent) or 1 percentage-point higher (7.90 percent) than the current rate:
IX. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions For the measurement period ended June 30, 2024, the City incurred an aggregate pension expense of $60,361,969.
As of June 30, 2024 measurement date, the City has deferred outflows and deferred inflows of resources related to pensions as follows:
The amounts above are net of outflows and inflows recognized as expense in the 2023-2024 measurement period. The amounts above reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2026.
Miscellaneous Plan
Plan’s Net Pension Liability/(Asset) $ 230,858,873 $ 157,675,041 $ 97,087,289 Discount Rate - Current Discount Discount Rate
1% (5.90%) Rate (6.90%) +1% (7.90%)
Safety Plan
Plan’s Net Pension Liability/(Asset) $ 354,656,392 $ 247,639,868 $ 160,262,487 Discount Rate - Current Discount Discount Rate
1% (5.90%) Rate (6.90%) +1% (7.90%)
Miscellaneous Plan
Changes of Assumptions $ 1,907,519 $ -
3,574,767 (119,369)
6,128,604 -
Contributions subsequent to the measurement date 19,929,475 - Total $ 31,540,365 $ (119,369)
on Pension Plan Investments
Net Difference Between Projected and Actual Earnings
Deferred Outflows Deferred Inflows
of Resources of Resources
Differences between Expected and Actual Experiences
Safety Plan
Change of Assumptions $ 5,388,810 $ -
5,256,049 (678,953)
on Pension Plan Investments 7,065,489 -
Contributions subsequent to the measurement date 33,006,659 - Total $ 50,717,007 $ (678,953)
Differences between Expected and Actual Experiences
Net Difference Between Projected and Actual Earnings
of Resources of Resources
Deferred Outflows Deferred Inflows
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
99 NOTE 19 OTHER INFORMATION (CONTINUED)
Pension Plans (Continued)
IX. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
Other amounts reported as deferred inflows and outflows of resources related to pensions will be recognized in future pension expense (not including contributions subsequent to the measurement date) as follows:
X. Payable to the Pension Plan
At June 30, 2025, the City had no outstanding amount of contributions to the pension plan required for the year ended June 30, 2025.
XI. Subsequent Events
There were no subsequent events that would naturally affect the results presented in this disclosure.
Deferred Compensation
The City has established a deferred compensation plan for all employees. Participation in the plan is voluntary and the Memorandums of Understanding approved by the City Council are the authority for establishing or amending the plan's provisions. Generally, the amount of compensation subject to deferral until retirement, disability, or other termination by a participant may not exceed the legal limits set by the Internal Revenue Code (IRC). Amounts withheld by the City under this plan are deposited into a trust account on a pay period basis.
Mission Square Retirement (Formerly ICMA-RC), in accordance with IRC Section 457(b) administers the Deferred Compensation Defined Contribution plans for the City.
The City is obligated to match a percentage of employee contributions based on their years of service as set out in the applicable Memorandum of Association. Matching amounts total
2.5% of the annual salary per participant, per year. As of June 30, 2025, the deferred compensation plan assets were held in a trust account for the sole benefit of the employees and their beneficiaries and, accordingly, have been excluded from the City's reported assets.
The value of the plan as of June 30, 2025 was $188,577,798. $ 3,382,355 $ 6,149,817
11,703,641 14,812,473
(1,414,044) (1,126,958)
(2,180,431) (2,803,937)
- -
$ 11,491,521 $ 17,031,395
Total
Safety Plan
2025
2026
2027
2028
Thereafter
Fiscal Year Miscellaneous
Ending June 30 Plan
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
100
NOTE 19 OTHER INFORMATION (CONTINUED)
Adjustments and Restatement of Beginning Balances
Changes to or within the Financial Reporting Entity
The Transportation Special Tax Special Revenue Fund was previously reported as a major fund in the 2024 ACFR. However, the size criteria for the current year changed the presentation for the fund. The effect of the change within the financial reporting entity is summarized below in the “Change to or Within the Financial Reporting Entity” column in the following table.
Changes in Accounting Principles
During the fiscal year 2025, the City implemented GASB Statement No. 101, Compensated Absences. The effect of the change in accounting principle is summarized below in the “Restatement-GASB 101 Implementation” column in the table below.
Net position/fund Change to or
balance June 30, 2024 Within the Restatement - Net position/fund As Previously Financial GASB 101 balance June 30, 2024
Government-Wide Reported Reporting Entity Implementation As Restated Government Activities $ 353,579,350 $ - $ (5,265,341) $ 348,314,009 Business-Type Activities 873,883,400 - (132,317) 873,751,083 Total Primary Government $ 1,227,462,750 $ $ - (5,397,658) $ 1,222,065,092 Governmental Funds
Major Funds:
General $ 83,058,620 $ $ - - $ 83,058,620
Operating Grants 859,092 - - 859,092
Housing and Community
Development 27,778,843 - - 27,778,843
Transportation Special Tax 55,290,002 (55,290,002) - -
Nonmajor Funds:
Other nonmajor funds 88,140,746 55,290,002 - 143,430,748 $ 255,127,303 $ $ - - $ 255,127,303
Proprietary Funds
Internal Service $ 22,623,690 $ - $ (5,397,658) $ 17,226,032 #7..
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City of Modesto
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2025
101
NOTE 20 SUBSEQUENT EVENTS
The United Soccer League (USL) was founded in 1986 and is the largest and fastest growing pre-professional and professional soccer organization in the country. Since 2012, the USL has significantly grown from 11 clubs to 44 professional clubs and over 150 pre-professional clubs spanning 42 states, in over 200 U.S. markets and over 20,000 players. The City would be next in line to be part of one of the most widely accessible soccer leagues in the United States.
On September 10, 2024, the City Council approved a letter of intent (LOI) between the City and the USL, committing to exclusively negotiate the potential of bringing professional men’s and women’s teams to the City and the surrounding region. During fiscal year 2025, the City evaluated the viability of supporting professional soccer teams and explored opportunities to enhance entertainment options for the community, including funding and the location of the stadium with an entertainment district. On August 5, 2025, City Council agreed that a proposed stadium should be located in downtown Modesto and the practice soccer fields would be located at the Muni Golf Course location near John Thurman field. City staff is currently in the process of evaluating all options to fund this new stadium.
After nearly 8 decades of professional, minor league, baseball, the Modesto Nuts played their last game at John Thurman Field in Modesto and relocated to Southern California. On September 9, 2025, City Council approved an agreement with Main Street Modesto, LLC, for a new Pioneer Baseball League team to play at John Thurman Field. The Pioneer Baseball league is one of four MLB Partner Leagues and is uniquely focused on developing young future Major Leaguers. The new team, The Modesto Roadsters, is expected to start to play in May 2026. This change comes after the Modesto Nuts ended nearly 8 decades of professional minor league baseball in Modesto.
On September 23, 2025 under Resolutions 2025-347 to 2025-351, City Council approved plans and specifications for the River Trunk Realignment – Pump Station Project for a total estimated construction cost of $144 million, awarded a construction contract to Shimmick Construction Company, Inc, of Irvine CA, and approved the issuance of Wastewater Revenue Bonds, Series 2025 in a not to exceed aggregate principal amount of $60 million, to finance the construction of the River Trunk Realignment – Pump Station Construction project with the remaining funding for this project coming from wastewater reserves.
On October 15, 2025, S&P published and ratified a ‘AA’ rating with a stable outlook for Modesto’s 2025A Wastewater Bonds and outstanding wastewater revenue debt. #7..
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REQUIRED SUPPLEMENTARY
INFORMATION TAB
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REQUIRED SUPPLEMENTARY INFORMATION
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City of Modesto
Schedule of Changes in the Net Pension Liability and Related Ratios Last Ten Fiscal Years
102
Miscellaneous Plan
Measurement Period 2023-2024 2022-2023 2021-2022 2020-2021 (4) 2019-2020 (4) 2018-2019 2017-2018 2016-2017 2015-2016 2014-2015
TOTAL PENSION LIABILITY
Service Cost $ $ 9,179,081 $ 8,762,511 $ 8,879,438 $ 7,916,536 $ 7,723,070 $ 7,583,252 $ 7,365,767 $ 6,992,542 $ 6,092,179 5,768,082 Interest on Total Pension Liability 38,258,073 37,132,493 35,812,577 34,981,202 33,802,792 32,749,831 31,433,420 30,399,913 29,752,178 28,873,755 Changes of Benefit Terms - 771,514 - - - - - - - -
Changes of Assumptions - - 16,213,922 - - - (2,477,241) 24,124,929 - (6,709,358) Difference Between Expected and Actual Experience 2,630,876 4,360,258 (1,014,629) 1,935,811 (39,916) 3,777,379 2,514,973 (1,956,450) (2,005,545) (3,177,191) Benefit Payments, Including Refunds of Employee Contributions (33,344,425) (31,498,367) (29,773,825) (27,832,629) (26,321,649) (24,951,032) (23,596,900) (22,727,426) (21,686,131) (20,945,229) Net Change in Total Pension Liability 16,723,605 19,528,409 30,117,483 17,000,920 15,164,297 19,159,430 15,240,019 36,833,508 12,152,681 3,810,059 Total Pension Liability - Beginning 563,916,637 544,388,228 514,270,745 497,269,825 482,105,528 462,946,098 447,706,079 410,872,571 398,719,890 394,909,831 Total Pension Liability - Ending (a) $ 580,640,242 $ 563,916,637 $ 544,388,228 $ 514,270,745 $ 497,269,825 $ 482,105,528 $ 462,946,098 $ 447,706,079 $ 410,872,571 $ 398,719,890
PLAN FIDUCIARY NET POSITION
Contributions - Employer $ 17,400,016 $ 16,140,415 $ 14,557,323 $ 13,607,488 $ 11,857,136 $ 10,158,019 $ $ 8,553,955 $ 8,382,192 $ 6,920,358 5,632,179 Contributions - Employee 4,695,774 3,918,555 3,811,839 3,732,886 3,522,762 3,479,149 3,393,722 3,396,338 3,349,400 3,061,157 Net Investment Income 37,856,926 23,825,399 (32,153,027) 80,411,612 17,470,077 22,333,423 27,586,156 33,859,910 1,667,540 7,093,159 Benefit Payments, Including Refunds of Employee Contributions (33,344,425) (31,498,367) (29,773,825) (27,832,629) (26,321,649) (24,951,032) (23,596,900) (22,727,426) (21,686,131) (20,945,229) Plan to Plan Resource Movement - - - - - - (181) 505 (1,118) (188) Administrative Expense (322,779) (282,799) (266,868) (358,459) (497,374) (244,082) (510,454) (450,482) (192,011) (355,544) Other Miscellaneous Income/(Expense) (1) - - - - - 796 (969,360) - - - Net Change in Fiduciary Net Position 26,285,512 12,103,203 (43,824,558) 69,560,898 6,030,952 10,776,273 14,456,938 22,461,037 (9,941,962) (5,514,466) Plan Fiduciary Net Position - Beginning (2) 396,679,689 384,576,486 428,401,044 358,840,146 352,809,194 342,032,921 327,575,983 305,114,946 315,056,908 320,571,374 Plan Fiduciary Net Position - Ending (b) 422,965,201 396,679,689 384,576,486 428,401,044 358,840,146 352,809,194 342,032,921 327,575,983 305,114,946 315,056,908 Plan Net Pension Liability - Ending (a) - (b) $ 157,675,041 $ 167,236,948 $ 159,811,742 $ 85,869,701 $ 138,429,679 $ 129,296,334 $ 120,913,177 $ 120,130,096 $ 105,757,625 $ 83,662,982 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 72.84% 70.34% 70.64% 83.30% 72.16% 73.18% 73.88% 73.17% 74.26% 79.02% Covered Payroll (3) $ 57,369,255 $ 54,290,652 $ 53,912,800 $ 54,111,658 $ 52,112,485 $ 50,907,972 $ 49,812,447 $ 46,735,345 $ 45,207,621 $ 41,562,776 Plan Net Pension Liability as a Percentage of Covered Payroll (3) 274.84% 308.04% 296.43% 158.69% 265.64% 253.98% 242.74% 257.04% 233.94% 201.29% NOTES:
(1) During fiscal year 2017-2018, as a result of Governmental Accounting Standards Board Statement (GASB) No. 75, Accounting and Financial Reporting for Postemployment Benefit Plans Other than Pensions (GASB 75), CalPERS reported its proportionate share of activity related to postemployment benefits for participation in the State of California’s agent OPEB plan. Accordingly, CalPERS recorded a one-time expense as a result of the adoption of GASB 75. Additionally, CalPERS employees participate in various State of California agent pension plans and during fiscal year 2017-18, CalPERS recorded a correction to previously reported financial statements to properly reflect its proportionate share of activity related to pensions in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68). (2) Includes any beginning of year adjustment.
(3) Includes one year’s payroll growth using 2.80% payroll growth assumption for fiscal years ended in 2022 and 2024; 2.75% payroll growth assumption for fiscal years ended in 2018 through 2021; 3% payroll growth assumption for fiscal years ended in 2014 through 2017.
(4) Covered Payroll and Plan Net Pension Liability as a Percentage of Covered Payroll were incorrectly reported for 2019-2020 and 2020-2021. In fiscal year 2023 the error was noticed and the amounts were updated accordingly. #7..
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City of Modesto
Schedule of Changes in the Net Pension Liability and Related Ratios (Continued) Last Ten Fiscal Years
103
Safety Plan
Measurement Period 2023-2024 2022-2023 2021-2022 2020-2021 (4) 2019-2020 (4) 2018-2019 2017-2018 2016-2017 2015-2016 2014-2015
TOTAL PENSION LIABILITY
Service Cost $ 13,868,810 $ 12,967,240 $ 11,971,941 $ 11,100,896 $ 10,961,188 $ $ 9,984,949 $ 9,648,518 $ 9,298,519 $ 8,193,455 8,633,865 Interest on Total Pension Liability 51,475,368 49,519,367 47,646,679 46,176,343 44,407,891 42,759,837 40,490,329 39,048,366 38,004,835 36,721,112 Changes of Benefit Terms - 295,867 - - - - - - - -
Changes of Assumptions - - 25,596,849 - - - (2,434,317) 33,217,275 - (9,188,394) Difference Between Expected and Actual Experience 4,407,902 3,900,247 (3,225,026) 3,056,480 2,147,305 12,017,379 2,992,729 (3,102,753) (2,184,871) (849,707) Benefit Payments, Including Refunds of Employee Contributions (40,052,614) (37,942,281) (36,401,697) (34,350,284) (33,173,358) (31,487,589) (29,678,588) (28,147,381) (26,911,771) (25,426,619) Net Change in Total Pension Liability 29,699,466 28,740,440 45,588,746 25,983,435 24,343,026 33,274,576 21,018,671 50,314,026 17,101,648 9,890,257 Total Pension Liability - Beginning 754,703,829 725,963,389 680,374,643 654,391,208 630,048,182 596,773,606 575,754,935 525,440,909 508,339,261 498,449,004 Total Pension Liability - Ending (a) $ 784,403,295 $ 754,703,829 $ 725,963,389 $ 680,374,643 $ 654,391,208 $ 630,048,182 $ 596,773,606 $ 575,754,935 $ 525,440,909 $ 508,339,261
PLAN FIDUCIARY NET POSITION
Contributions - Employer $ 30,299,553 $ 28,423,970 $ 25,211,361 $ 21,650,057 $ 20,241,960 $ 16,758,148 $ 14,809,730 $ 12,812,060 $ 11,137,899 $ 10,210,101 Contributions - Employee 5,293,230 4,545,810 4,262,417 3,864,069 3,770,808 3,402,676 3,400,369 3,165,011 2,962,566 2,800,626 Net Investment Income 47,897,856 29,323,916 (39,469,852) 97,134,657 20,809,917 26,427,421 32,428,941 39,443,735 1,898,536 8,215,387 Benefit Payments, Including Refunds of Employee Contributions (40,052,614) (37,942,281) (36,401,697) (34,350,284) (33,173,358) (31,487,589) (29,678,588) (28,147,381) (26,911,771) (25,426,619) Plan to Plan Resource Movement - - - - - - (1,551) (505) 1,118 211 Administrative Expense (401,747) (345,411) (321,712) (428,116) (588,586) (287,372) (597,550) (526,677) (224,190) (414,089) Other Miscellaneous Income/(Expense) (1) - - - - - 936 (1,134,757) - - - Net Change in Fiduciary Net Position 43,036,278 24,006,004 (46,719,483) 87,870,383 11,060,741 14,814,220 19,226,594 26,746,243 (11,135,842) (4,614,383) Plan Fiduciary Net Position - Beginning (2) 493,727,149 469,721,145 516,440,628 428,570,245 417,509,504 402,695,284 383,468,690 356,722,447 367,858,289 372,472,672 Plan Fiduciary Net Position - Ending (b) 536,763,427 493,727,149 469,721,145 516,440,628 428,570,245 417,509,504 402,695,284 383,468,690 356,722,447 367,858,289 Plan Net Pension Liability - Ending (a) - (b) $ 247,639,868 $ 260,976,680 $ 256,242,244 $ 163,934,015 $ 225,820,963 $ 212,538,678 $ 194,078,322 $ 192,286,245 $ 168,718,462 $ 140,480,972 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 68.43% 65.42% 64.70% 75.91% 65.49% 66.27% 67.48% 66.60% 67.89% 72.36% Covered Payroll (3) $ 43,057,467 $ 39,679,438 $ 36,422,089 $ 37,591,927 $ 36,906,356 $ 33,819,770 $ 32,259,582 $ 30,608,378 $ 30,022,552 $ 31,202,983 Plan Net Pension Liability as a Percentage of Covered Payroll (3) 575.14% 657.71% 703.54% 436.09% 611.88% 628.45% 601.61% 628.21% 561.97% 450.22% NOTES:
(1) During fiscal year 2017-2018, as a result of Governmental Accounting Standards Board Statement (GASB) No. 75, Accounting and Financial Reporting for Postemployment Benefit Plans Other than Pensions (GASB 75), CalPERS reported its proportionate share of activity related to postemployment benefits for participation in the State of California’s agent OPEB plan. Accordingly, CalPERS recorded a one-time expense as a result of the adoption of GASB 75. Additionally, CalPERS employees participate in various State of California agent pension plans and during fiscal year 2017-18, CalPERS recorded a correction to previously reported financial statements to properly reflect its proportionate share of activity related to pensions in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68). (2) Includes any beginning of year adjustment.
(3) Includes one year’s payroll growth using 2.80% payroll growth assumption for fiscal years ended in 2022 and 2024; 2.75% payroll growth assumption for fiscal years ended in 2018 through 2021; 3% payroll growth assumption for fiscal years ended in 2014 through 2017.
(4) Covered Payroll and Plan Net Pension Liability as a Percentage of Covered Payroll were incorrectly reported for 2019-2020 and 2020-2021. In fiscal year 2023 the error was noticed and the amounts were updated accordingly.
#7..
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City of Modesto
Schedule of Pension Plan Contributions
Last Ten Fiscal Years *
104
Miscellaneous Plan
Fiscal Year 2024-2025 2023-2024 2022-2023 2021-2022 2020-2021 (4) 2019-2020 (4) 2018-2019 2017-2018 2016-2017 2015-2016 Actuarially Determined Contribution (2) $ 19,929,475 $ 17,088,675 $ 15,933,439 $ 14,288,254 $ 13,302,558 $ 11,857,136 $ 10,158,019 $ 8,553,955 $ 8,382,192 $ 6,920,358 Contributions in Relation to the Actuarially Determined Contribution (2) (19,929,475) (17,400,016) (16,140,415) (14,557,323) (13,607,488) (11,857,136) (10,158,019) (8,553,955) (8,382,192) (6,920,358) Contribution Deficiency (Excess) $ - $ (311,341) $ (206,976) $ (269,069) $ (304,930) $ - $ - $ - $ - $ - Covered Payroll (3) $ 71,934,501 $ 57,369,255 $ 54,290,652 $ 53,912,800 $ 54,111,658 $ 52,112,485 $ 50,907,972 $ 49,812,447 $ 46,735,345 $ 45,207,621 Contributions as a Percentage of Covered Payroll (3) 27.71% 30.33% 29.73% 27.00% 25.15% 22.75% 19.95% 17.17% 17.94% 15.31% Safety Plan
Fiscal Year 2024-2025 2023-2024 2022-2023 2021-2022 2020-2021 (4) 2019-2020 (4) 2018-2019 2017-2018 2016-2017 2015-2016 Actuarially Determined Contribution (2) $ 33,006,659 $ 28,548,727 $ 26,631,905 $ 24,116,232 $ 21,472,516 $ 19,749,458 $ 16,758,148 $ 14,809,730 $ 12,812,060 $ 11,137,889 Contributions in Relation to the Actuarially Determined Contribution (2) (33,006,659) (30,299,553) (28,423,970) (25,211,361) (21,650,057) (20,241,960) (16,758,148) (14,809,730) (12,812,060) (11,137,889) Contribution Deficiency (Excess) $ - $ (1,750,826) $ (1,792,065) $ (1,095,129) $ (177,541) $ (492,502) $ - $ - $ - $ - Covered Payroll (3) $ 52,776,533 $ 43,057,467 $ 39,679,438 $ 36,422,089 $ 37,591,927 $ 36,906,356 $ 33,819,770 $ 32,259,582 $ 30,608,378 $ 30,022,552 Contributions as a Percentage of Covered Payroll (3) 62.54% 70.37% 71.63% 69.22% 57.59% 54.85% 49.55% 45.91% 41.86% 37.10% (1)As prescribed in GASB 68, paragraph 46, the information presented in the Schedule of Plan Contributions should also be determined as of the employer’s most recent fiscal year-end. The employer is responsible for determining this information as prescribed by the standard as this data is not available to CalPERS. (2)Employers are assumed to make contributions equal to the actuarially determined contributions. However, some employers may choose to make additional contributions towards their unfunded liability. Employer contributions for such plans exceed the actuarially determined contributions.
(3)Includes one year’s payroll growth using 2.80% payroll growth assumption for fiscal years ended in 2022 and 2023; 2.75% payroll growth assumption for fiscal years ended in 2018 through 2021; 3% payroll growth assumption for fiscal years ended in 2014 through 2017.
(4)Covered Payroll and Contributions as a Percentage of Covered Payroll were incorrectly reported for 2019-2020 and 2020-2021. In fiscal year 2023 the error was noticed and the amounts undated accordingly.
NOTE: There are no assets accumulated in a trust to pay related benefits for the pension plan. #7..
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City of Modesto
Other Postemployment Benefits (OPEB)
Schedule of Changes in the Net OPEB Liability and Related Ratios Last Ten Fiscal Years *
105
Reporting Period FY 2024-2025 FY 2023-2024 FY 2022-2023 FY 2021-2022 FY 2020-2021 FY 2019-2020 FY 2018-2019 FY 2017-2018 Measurement Date June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 Total OPEB liability:
Service cost $ $ 679,094 $ 672,081 $ 1,244,957 $ 1,196,410 $ 836,292 $ 811,934 $ 963,490 935,427 Interest 1,090,081 1,076,573 635,756 667,183 903,896 1,013,863 1,038,035 892,669 Differences between expected and actual experience 13,237 - (902,717) - 1,737,964 - (468,009) - Changes of assumptions 3,396,023 906,060 (7,477,125) 129,927 3,430,611 754,247 (1,306,633) (1,600,635) Benefit payments (2,340,023) (2,487,735) (2,727,324) (2,869,050) (2,941,351) (3,012,214) (2,733,246) (2,430,468) Net change in total OPEB liability 2,838,412 166,979 (9,226,453) (875,530) 3,967,412 (432,170) (2,506,363) (2,203,007) Total OPEB liability - beginning 20,492,396 20,325,417 29,551,870 30,427,400 26,459,988 26,892,158 29,398,521 31,601,528 Total OPEB liability - ending 23,330,808 20,492,396 20,325,417 29,551,870 30,427,400 26,459,988 26,892,158 29,398,521 OPEB Fiduciary Net Position:
Investment income 165,364 94,204 35 - - - - -
Employer contributions 2,340,023 2,487,735 4,114,604 - - - - - Benefit payments (2,340,023) (2,487,735) (2,727,324) - - - - - Net change in plan fiduciary net position 165,364 94,204 1,387,315 - - - - - Fiduciary net position - beginning 1,481,519 1,387,315 - - - - - - Fiduciary net position - ending 1,646,883 1,481,519 1,387,315 - - - - - Net OPEB liability - ending (a) $ 21,683,925 $ 19,010,877 $ 18,938,102 $ 29,551,870 $ 30,427,400 $ 26,459,988 $ 26,892,158 $ 29,398,521 Covered Payroll $ 53,447,711 $ 54,018,721 $ 52,727,185 $ 52,545,565 $ 54,106,179 $ 50,879,818 $ 49,647,245 $ 55,637,076 Total OPEB liablity as a Percentage of Covered Payroll 40.57% 35.19% 35.92% 56.24% 56.24% 52.00% 54.17% 52.84% Notes to Schedule:
*Historical information is required only for measurement periods for which GASB 75 is applicable. Future years’ information will be displayed up to 10 years as information becomes available. *Amounts presented above were determined as of June 30th. Additional years will be presented as they become available. #7..
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City of Modesto
Schedule of OPEB Plan Contributions
Last Ten Fiscal Years *
106
Fiscal Year 2024-2025 2023-2024 2022-2023 2021-2022 2020-2021 2019-2020 2018-2019 2017-2018 2016-2017 Actuarially Determined Contribution (ADC) $ 2,509,426 $ 2,210,205 $ 2,208,621 $ 2,686,307 $ 2,869,050 $ 3,569,890 $ 3,012,214 $ 2,733,246 $ 2,430,468 Contributions in Relation to the ADC (2,595,885) (2,340,023) (2,487,735) (4,114,604) (2,869,050) (3,569,890) (3,012,214) (2,733,246) (2,430,468) Contribution Deficiency (Excess) $ (86,459) $ (129,818) $ (279,114) $ (1,428,297) $ - $ - $ - $ - $ - Covered Payroll $ 56,237,965 $ 53,447,711 $ 54,018,720 $ 52,727,185 $ 52,545,565 $ 54,106,179 $ 50,879,818 $ 49,647,245 $ 55,637,076 Contributions as a Percentage of Covered Payroll 4.82% 4.38% 4.61% 7.83% 5.46% 6.60% 5.92% 5.51% 4.37% Notes to schedule:
The actuarial methods and assumptions used to set the actuarially determined contributions for fiscal year 2023-24 were as follows for June 30, 2024 measurement date actuarial valuations.
Actuarial Cost Method Entry Age Normal
Discount Rate 3.93% at June 30, 2024 (Bond Buyer 20-Bond Index).
3.93% at June 30, 2023 (Bond Buyer 20-Bond Index).
Asset Valuation Method Market Value
General Inflation 2.5% annually
Salary Increases 3%
Trend Average actual increase for 2025, 8.1% for 2025, decreasing to 3.9% in 2075 Retirement Age 50 to 75
Mortality CalPERS 2021 Experience Study
Mortality Improvement MP-2021
*Historical information is required only for measurement periods for which GASB 75 is applicable. Future years’ information will be displayed up to 10 years as information becomes available. #7..
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City of Modesto
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget (GAAP Basis) and Actual - General Fund
Fiscal Year Ended June 30, 2025
See Notes to Required Supplementary Information
107
Variance with
Original Final Actual Final Budget
TAXES
Utility users tax $ 22,105,000 $ 22,707,614 $ 23,446,327 $ 738,713 Property tax 23,026,264 23,756,000 24,284,092 528,092
Transient occupancy tax 3,514,400 3,443,286 3,488,165 44,879 Franchise tax 6,161,300 6,161,300 5,269,278 (892,022)
Cannabis tax 3,859,148 3,306,506 3,279,809 (26,697)
Business license tax 17,055,056 17,853,824 16,334,395 (1,519,429) Total taxes 75,721,168 77,228,530 76,102,066 (1,126,464) LICENSES AND PERMITS 192,746 192,746 100,255 (92,491)
INTERGOVERNMENTAL
Sales tax 41,004,883 36,549,000 36,595,971 46,971
Sales tax Measure H 42,809,800 42,809,800 47,211,026 4,401,226 Motor vehicle license fees 23,249,188 23,574,795 23,850,552 275,757 State 1,200,000 1,200,000 1,329,400 129,400
County 41,821 41,821 38,042 (3,779)
Other intergovernmental 21,534,664 21,534,664 21,775,734 241,070 Total intergovernmental 129,840,356 125,710,080 130,800,725 5,090,645
CHARGES FOR SERVICES
General government 3,706,878 3,754,075 3,689,672 (64,403) Community development 3,264,686 3,522,339 3,444,053 (78,286) Parks and recreation 3,513,568 3,176,906 2,227,107 (949,799) Public safety 3,444,418 3,523,427 6,458,006 2,934,579
Indirect cost recovery 3,811,522 3,811,522 3,811,365 (157) Total charges for services 17,741,072 17,788,269 19,630,203 1,841,934 SPECIAL ASSESSMENT 367,350 368,065 368,587 522
INTEREST AND RENT 566,979 566,979 2,980,547 2,413,568
NET INCREASE (DECREASE) IN FAIR VALUE
OF INVESTMENTS (150,000) (150,000) 797,344 947,344
FINES AND FORFEITS 235,905 1,055,386 1,395,769 340,383
MISCELLANEOUS
Mandated cost recovery 102,500 102,500 164,796 62,296
Other 453,080 453,080 677,055 223,975
Total miscellaneous 555,580 555,580 841,851 286,271
Total revenues $ 225,071,156 $ 223,315,635 $ 233,017,347 $ 9,701,712 (Continued)
Budget
#7..
- 386 -
City of Modesto
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget (GAAP Basis) and Actual - General Fund (Continued) Fiscal Year Ended June 30, 2025
NOTE: The expenditures by function amounts listed above include the capital outlay expenditures within each department.
The notes to required supplementary information are an integral part of this schedule. 108
Variance with
Original Final Actual Final Budget
General government:
City council $ $ 764,810 $ 764,830 $ 650,666 114,164
Human resources 2,248,430 2,248,562 2,198,028 50,534
City manager 3,405,477 3,427,748 2,855,945 571,803
City attorney 2,382,415 2,382,503 2,218,518 163,985
City clerk/auditor 1,996,241 1,996,325 1,396,262 600,063 Finance 7,229,693 7,530,342 6,954,586 575,756
OPMB 1,415,950 1,412,189 995,771 416,418
Other 308,770 308,781 205,474 103,307
Total general government 19,751,786 20,071,280 17,475,250 2,596,030 Community development: 9,378,158 10,184,534 9,791,316 393,218 Public works:
Operations and maintenance dept: 7,279,723 6,185,444 4,759,823 1,425,621 Total public works 7,279,723 6,185,444 4,759,823 1,425,621 Parks and recreation:
Administration 950,916 950,958 855,075 95,883
Planning and development 1,828,576 886,848 886,629 219
Convention visitors bureau 808,269 836,535 833,036 3,499 Operations service and maintenance 11,024,717 11,048,500 9,542,708 1,505,792 Facilities 2,044,497 2,064,124 1,996,251 67,873
Recreation division 5,076,367 4,991,331 4,442,743 548,588 Total parks and recreation 21,733,342 20,778,296 18,556,442 2,221,854 Public safety:
Fire protection 69,035,908 81,826,778 69,733,660 12,093,118 Police protection 103,979,747 103,705,187 93,067,365 10,637,822 Total public safety 173,015,655 185,531,965 162,801,025 22,730,940 Debt service:
Principal retirement 808,633 1,716,610 1,716,610 -
Interest expenditures 143,766 246,651 246,651 -
Other 436,873 441,373 441,297 76
Total debt service 1,389,272 2,404,634 2,404,558 76
Total expenditures 232,547,936 245,156,153 215,788,414 29,367,739 (7,476,780) (21,840,518) 17,228,933 39,069,451
OTHER FINANCING SOURCES (USES):
Transfers in 628,640 2,451,061 2,132,113 (318,948)
Transfers out (16,322,749) (21,161,590) (14,622,900) 6,538,690 Other financing proceeds - leases and SBITAs - 238,136 416,013 177,877 Sale of assets 5,000 5,000 39,493 34,493
Total other financing sources (uses) (15,689,109) (18,467,393) (12,035,281) 6,432,112 CHANGES IN FUND BALANCE (23,165,889) (40,307,911) 5,193,652 45,501,563 FUND BALANCE, JULY 1 83,058,620 83,058,620 83,058,620 - FUND BALANCE, JUNE 30 $ 59,892,731 $ 42,750,709 $ 88,252,272 $ 45,501,563 (Concluded)
Budget
EXCESS (DEFICIT) OF REVENUES OVER
(UNDER) EXPENDITURES
#7..
- 387 -
City of Modesto
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget (GAAP Basis) and Actual – Operating Grants Special Revenue Fund Fiscal Year Ended June 30, 2025
NOTE: The expenditures by function amounts listed above include the capital outlay expenditures within each department.
The notes to required supplementary information are an integral part of this schedule. 109
Variance with
Original Final Actual Final Budget
REVENUES:
Taxes $ 496,628 $ 496,628 $ 253,569 $ (243,059)
Licenses and permits 50,000 50,000 45,515 (4,485)
Intergovernmental 36,526,237 34,882,793 32,123,832 (2,758,961) Charges for services 7,072,641 7,072,641 5,697,380 (1,375,261) Special assessments 82,097 82,097 84,427 2,330
Interest and rent 8,064 278,471 755,393 476,922
Net increase in fair value of investments - - 80,076 80,076 Miscellaneous 144,048 203,893 217,583 13,690
Total revenues 44,379,715 43,066,523 39,257,775 (3,808,748) EXPENDITURES:
Current:
General government 9,163,249 2,654,014 513,652 2,140,362 Community development 24,303,684 30,261,245 24,439,639 5,821,606 Public works 1,793,163 1,169,431 1,166,512 2,919
Parks and recreation 5,807,866 3,894,496 416,953 3,477,543 Public safety 4,124,517 14,198,041 10,222,300 3,975,741 Debt service:
Principal retirement - 235,650 235,650 -
Interest - 5,194 5,194 -
Total expenditures 45,192,479 52,418,071 36,999,900 15,418,171
EXCESS (DEFICIT) OF REVENUES OVER (UNDER)
EXPENDITURES (812,764) (9,351,548) 2,257,875 11,609,423 OTHER FINANCING SOURCES (USES):
Transfers in 3,863,903 7,196,403 2,447,319 (4,749,084)
Transfers out (112) (6,166,138) (3,477,101) 2,689,037
Other financing proceeds - - 397,188 397,188
Total other financing sources (uses) 3,863,791 1,030,265 (632,594) (1,662,859) CHANGES IN FUND BALANCE 3,051,027 (8,321,283) 1,625,281 9,946,564 FUND BALANCE, JULY 1 859,092 859,092 859,092 -
FUND BALANCE, JUNE 30 $ 3,910,119 $ (7,462,191) $ 2,484,373 $ 9,946,564 Budget
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City of Modesto
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget (GAAP Basis) and Actual – Housing and Community Development Special Revenue Fund
Fiscal Year Ended June 30, 2025
NOTE: The expenditures by function amounts listed above include the capital outlay expenditures within each department.
The notes to required supplementary information are an integral part of this schedule. 110
Variance with
Original Final Actual Final Budget
REVENUES:
Intergovernmental $ 12,038,285 $ 173,227 $ 5,282,977 $ 5,109,750 Charges for services 2,495,570 2,344,558 1,322,781 (1,021,777) Interest and rent - - 17,691 17,691
Net increase in fair value of investments - - 17,849 17,849 Miscellaneous 51,829 51,829 - (51,829)
Total revenues 14,585,684 2,569,614 6,641,298 4,071,684 EXPENDITURES:
Current:
Community development 24,412,988 8,628,368 4,420,218 4,208,150 Debt service:
Principal retirement 345,000 345,000 345,000 -
Interest 4,916 4,916 4,916 -
Total expenditures 24,762,904 8,978,284 4,770,134 4,208,150
EXCESS (DEFICIT) OF REVENUES OVER (UNDER)
EXPENDITURES (10,177,220) (6,408,670) 1,871,164 8,279,834 OTHER FINANCING SOURCES (USES):
Transfers in 2,791,033 3,616,184 - (3,616,184)
Transfers out (400,000) (1,175,404) (703,168) 472,236
Total other financing sources (uses) 2,391,033 2,440,780 (703,168) (3,143,948) CHANGES IN FUND BALANCE (7,786,187) (3,967,890) 1,167,996 5,135,886 FUND BALANCE, JULY 1 27,778,843 27,778,843 27,778,843 - FUND BALANCE, JUNE 30 $ 19,992,656 $ 23,810,953 $ 28,946,839 $ 5,135,886 Budget
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City of Modesto
Note to Required Supplementary Information
Fiscal Year Ended June 30, 2025
111
NOTE 1 BUDGETARY INFORMATION
The City follows these procedures annually in establishing the budgetary data reflected in the budgetary comparison schedules for operating, non-capital multi-year, and capital budgets:
1. The City Manager submits to the City Council a proposed budget for the fiscal year commencing the following July 1. The budget includes proposed expenditures and the means of financing them for operating, non-capital multi-year, and capital projects.
2. The City Council reviews the proposed budget at specially scheduled sessions, which are open to the public. The Council also conducts a public hearing on all proposed budgets to obtain comments from interested persons.
3. Prior to July 1, the budget is legally adopted through adoption of a resolution. This budget is reported as the Original Budget in the budgetary comparison schedules.
4. During the fiscal year, changes to the Adopted Budget may be authorized, as follows:
a. Authority to approve any adjustment in the amount of $25,000 or less is delegated to the Office of Performance Management and Budget Director. b. Authority to approve any adjustment in an amount between $25,000 and $50,000 is delegated to the City Manager.
c. Authority for any budget adjustment more than $50,000 is delegated to the parties described below:
a. Items requiring City Council Action - appropriation of undesignated reserves; appropriation of new revenues; transfers of appropriations between funds (interfund transfers); creation of inter-fund loans; creation of, or increase in, any multiyear appropriation. b. Items delegated to the City Manager - transfer appropriations between departments within a fund; changing any capital equipment appropriation; appropriation of reserves for litigation on a case-by-case basis; appropriation of developer payments not previously budgeted.
c. Items delegated to the Office of Performance Management and Budget Director - appropriation of grant interest; revise the allocation of Internal Service Fund charges between departments provided that the total allocated amount does not increase; changing any capital improvement budget line item appropriation; make technical budget corrections to implement the intent of Council approved actions and resolutions.
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City of Modesto
Note to Required Supplementary Information
Fiscal Year Ended June 30, 2025
112
NOTE 1 BUDGETARY INFORMATION (CONTINUED)
d. Items delegated to Department Directors - transfer appropriations within a department, within a single fund. Department Directors under this context is only permitted to move existing budget from one appropriation to another within a single department and fund. Department Directors cannot move funds from one department to another or from one fund to another.
5. Formal budgetary accounting is employed as a management tool for all funds. Annual budgets are legally adopted and amended as required for the general, special revenue, enterprise and internal service funds. Project length budgets are adopted for the capital projects funds. All budgets are prepared on a basis consistent with generally accepted accounting principles (GAAP), and budgetary comparisons for the general and major special revenue funds are presented on this basis in the required supplementary information. A debt service payment schedule for the debt service funds is also approved as part of the budget process.
6. Budget amounts are reflected after all authorized amendments and revisions. This budget is reported as the Final Budget in the budgetary comparison schedules.
7. For each legally adopted operating budget, expenditures may not exceed budgeted appropriations at the appropriation unit level. The legal appropriation basis is at the level called "department". A "department" for legal appropriation purposes may be a single organization (e.g., City Attorney), or an entire department having multiple organizations within the same fund (e.g., Operations and Maintenance), or an entire fund (e.g., Downtown Improvement District). All departments and funds completed the year within their legally authorized expenditures. Encumbrance accounting, under which purchase orders, contracts and other commitments are recorded to reserve the applicable appropriations, is employed in the governmental funds.
The City does, however, honor the contracts represented by year-end encumbrances and the subsequent year's appropriations provide authority to complete these transactions.
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COMBINING AND INDIVIDUAL FUND
STATEMENTS AND SCHEDULES TAB
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City of Modesto
Description of Nonmajor Governmental Funds
Fiscal Year Ended June 30, 2025
113
NONMAJOR SPECIAL REVENUE FUNDS
Special Revenue Funds include funds which are restricted as to use by the Federal or State governments, and special purpose funds established by authority of the City Council. Nonmajor Special Revenue Funds include:
Local Transportation Fund - To account for revenues and expenditures of Local Transportation Fund allocations for streets, urban trails, and non-motorized facilities.
Traffic Safety Fund - To account for receipts and expenditures of traffic safety fines.
Downtown Improvement District Fund - To account for the fiscal activities of Business Improvement Area A and Downtown Modesto Community Benefit District of the City of Modesto.
Strategic Planning and Development Fund - Established to provide a funding source for future village planning, general plan update and other large expenses related to planning and development. This fund was originally financed with an apportionment of the PERS rebate related to AB702. Subsequent funding has been provided by transfers from the General Fund. Future funding will be provided by fees imposed on private development.
Transportation Special Tax Fund - To account for state–controlled, locally-shared gas tax, 25 year, ½ cent sales tax Measure L, SB-I (Road Repair and Accountability Act of 2017) monies.
Cannabis Fund - To account for the collection of annual commercial cannabis permits, cannabis application fees, cannabis grants and any cannabis-related expenses.
Opioid Fund -To account for the City’s share of various lawsuit settlements against the manufacturers of certain prescription opioid medications.
NONMAJOR CAPITAL PROJECTS FUNDS
Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities other than those financed by proprietary funds. Nonmajor Capital Projects Funds include:
Capital Grants Fund - To account for receipts and disbursements of a variety of Governmental Fund capital grants.
Special Fund for Capital Outlays - To account for capital outlay authorized by the City Council. No monies placed in this fund are to be disbursed except for this purpose unless authorized by a vote of the people.
Parks Fund - To account for a discretionary transfer of General Fund property tax revenue to provide for the development of parks within the City, as directed by the City Council.
Securities For Future Improvements Fund - To account for the collection of impact fees for approved development projects to construct facilities needed for future development.
Community Facilities Districts Fund - To account for the construction of public improvements deemed to benefit properties against which special taxes are levied.
Successor Redevelopment Housing Agency Fund - To account for the housing redevelopment capital projects financed by the Successor Redevelopment Housing Agency of the City of Modesto. #7..
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City of Modesto
Description of Nonmajor Governmental Funds (Continued)
Fiscal Year Ended June 30, 2025
114
Capital Facility Fees Fund - To account for special fees collected on new building permits to be used for construction of certain growth-related projects. The fees and related capital projects include police department expansion, fire department expansion, expressway loop, streetlights, street improvements, parks, new traffic signals, City downtown, wastewater treatment, public transportation, and air quality improvements. Special revenue funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specific purposes.
Transportation Special Tax Capital Fund - To account for receipts and disbursements of Governmental Fund capital projects funded through locally shared gas tax, 25 year, ½ cent sales tax Measure L, and SB-1 (Road Repair and Accountability Act of 2017) monies.
NONMAJOR DEBT SERVICE FUND
Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general long-term debt principal and interest. Nonmajor Debt Service Fund includes:
Public Financing Authority Fund - To account for payment of debt issued to finance projects authorized by the Modesto Public Financing Authority.
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City of Modesto
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2025
115
Downtown Strategic
Local Traffic Improvement Planning and Transportation
Transportation Safety District Development Special Tax
ASSETS
Cash and investments $ 2,385,582 $ - $ - $ - $ -
Receivables:
Accounts, net - - - - -
Interest - - - - -
Taxes - - 70,109 - -
Leases - - - - -
Due from governments - - - - -
Prepaid expenditures - 108,597 52,125 - 15,689
Restricted assets:
Cash and investments 1,775 2,727,886 - 3,077,530 59,024,131 Cash and investments with fiscal agent - - - - -
Accounts receivable, net - - - - 837,284
Interest receivable - - - 12,919 284,150
Due from governments - 55,736 - - 5,457,494
Due from Successor Agency - - - - -
Notes receivable, net - - - 44,609 -
Total assets $ 2,387,357 $ 2,892,219 $ 122,234 $ 3,135,058 $ 65,618,748
LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND FUND BALANCES
Liabilities:
Accounts payable $ - $ 102 $ 34,225 $ 249,028 $ 553,170 Accrued salaries and benefits - 7,076 - - 238,740
Interest payable - - - - 4,187
Due to other funds - - 85,392 - -
Due to fiduciary funds - - - - -
Unearned revenue 2,385,582 - - - 124,793
Refundable deposits - - - - -
Advances from other funds - - - - -
Total liabilities 2,385,582 7,178 119,617 249,028 920,890 Deferred inflows of resources:
Unavailable revenue - - - - -
Leases - - - - -
Total deferred inflows of resources - - - - -
Fund balances:
Nonspendable - 108,597 52,125 - 15,689
Restricted 1,775 2,776,444 - 2,886,030 64,682,169
Assigned - - - - -
Unassigned - - (49,508) - -
Total fund balances (deficit) 1,775 2,885,041 2,617 2,886,030 64,697,858 Total liabilities, deferred inflows of
resources, and fund balances $ 2,387,357 $ 2,892,219 $ 122,234 $ 3,135,058 $ 65,618,748 (Continued)
Special Revenue
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City of Modesto
Combining Balance Sheet
Nonmajor Governmental Funds (Continued)
June 30, 2025
116
Special Fund
Capital for Capital
Cannabis Opioid Grants Outlays Parks
ASSETS
Cash and investments $ - $ 1,882,821 $ - $ 4,266,662 $ 538,911 Receivables:
Accounts, net - 129,531 10,068 54,551 36
Interest - - - 14,291 2,017
Taxes - - - - -
Leases - - - - 371,607
Due from governments - - 7,572,302 - 173,190
Prepaid expenditures - - 8,269 - -
Restricted assets:
Cash and investments 176,659 - - - -
Cash and investments with fiscal agent - - - - -
Accounts receivable, net - - - - -
Interest receivable - - - - -
Due from governments - - - - -
Due from Successor Agency - - - - -
Notes receivable, net - - - - -
Total assets $ 176,659 $ 2,012,352 $ 7,590,639 $ 4,335,504 $ 1,085,761
LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND FUND BALANCES
Liabilities:
Accounts payable $ 18,398 $ - $ 1,227,185 $ 451,103 $ 326,600 Accrued salaries and benefits - - - - -
Interest payable - - - - -
Due to other funds - - 840,787 - -
Due to fiduciary funds - - - - -
Unearned revenue 141,678 2,012,352 1,264,364 - -
Refundable deposits - - - - -
Advances from other funds - - - - -
Total liabilities 160,076 2,012,352 3,332,336 451,103 326,600 Deferred inflows of resources:
Unavailable revenue - - 7,572,302 38,501 173,190
Leases - - - - 343,874
Total deferred inflows of resources - - 7,572,302 38,501 517,064 Fund balances:
Nonspendable - - 8,269 - -
Restricted 16,583 - - - -
Assigned - - - 3,845,900 242,097
Unassigned - - (3,322,268) - -
Total fund balances (deficit) 16,583 - (3,313,999) 3,845,900 242,097 Total liabilities, deferred inflows of
resources, and fund balances $ 176,659 $ 2,012,352 $ 7,590,639 $ 4,335,504 $ 1,085,761 (Continued)
Special Revenue Capital Projects
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City of Modesto
Combining Balance Sheet
Nonmajor Governmental Funds (Continued)
June 30, 2025
117
Securities Community Successor Capital Transportation
for Future Facilities Redevelopment Facility Special Tax Improvements Districts Housing Agency Fees Capital
ASSETS
Cash and investments $ - $ - $ - $ - $ 928,733
Receivables:
Accounts, net - - - 128,037 -
Interest - 126,983 - 212,055 -
Taxes - 95,363 - - -
Leases - 1,013,950 - - -
Due from governments - - - - -
Prepaid expenditures - 378 - - -
Restricted assets:
Cash and investments 84,624 28,118,021 135,737 44,453,880 - Cash and investments with fiscal agent - - - - -
Accounts receivable, net - - 604 - -
Interest receivable - - - - -
Due from governments - - - 833,604 -
Due from Successor Agency - - 1,192,004 - -
Notes receivable, net - - 10,881,418 - -
Total assets $ 84,624 $ 29,354,695 $ 12,209,763 $ 45,627,576 $ 928,733
LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND FUND BALANCES
Liabilities:
Accounts payable $ - $ 261,823 $ - $ 1,282,702 $ 928,733 Accrued salaries and benefits - 27,963 - - -
Interest payable - - - - -
Due to other funds - - - - -
Due to fiduciary funds - 26,974 - - -
Unearned revenue - - - - -
Refundable deposits - 91,322 - - -
Advances from other funds - 424,840 145,727 272,474 -
Total liabilities - 832,922 145,727 1,555,176 928,733
Deferred inflows of resources:
Unavailable revenue - 48,616 - 890,636 -
Leases - 940,923 - - -
Total deferred inflows of resources - 989,539 - 890,636 - Fund balances:
Nonspendable - 378 - - -
Restricted 84,624 28,026,699 12,064,036 44,453,880 -
Assigned - - - - -
Unassigned - (494,843) - (1,272,116) -
Total fund balances (deficit) 84,624 27,532,234 12,064,036 43,181,764 - Total liabilities, deferred inflows of
resources, and fund balances $ 84,624 $ 29,354,695 $ 12,209,763 $ 45,627,576 $ 928,733 (Continued)
Capital Projects
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City of Modesto
Combining Balance Sheet
Nonmajor Governmental Funds (Continued)
June 30, 2025
118
Debt Service
Public
Financing
Authority Total
ASSETS
Cash and investments $ 1,624 $ 10,004,333
Receivables:
Accounts, net - 322,223
Interest - 355,346
Taxes - 165,472
Leases - 1,385,557
Due from governments - 7,745,492
Prepaid expenditures 341 185,399
Restricted assets:
Cash and investments - 137,800,243
Cash and investments with fiscal agent 5,842,963 5,842,963 Accounts receivable, net - 837,888
Interest receivable - 297,069
Due from governments - 6,346,834
Due from Successor Agency - 1,192,004
Notes receivable, net - 10,926,027
Total assets $ 5,844,928 $ 183,406,850
LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND FUND BALANCES
Liabilities:
Accounts payable $ 135,028 $ 5,468,097
Accrued salaries and benefits - 273,779
Interest payable - 4,187
Due to other funds - 926,179
Due to fiduciary funds - 26,974
Unearned revenue - 5,928,769
Refundable deposits - 91,322
Advances from other funds - 843,041
Total liabilities 135,028 13,562,348
Deferred inflows of resources:
Unavailable revenue - 8,723,245
Leases - 1,284,797
Total deferred inflows of resources - 10,008,042
Fund balances:
Nonspendable 341 185,399
Restricted 5,842,963 160,835,203
Assigned - 4,087,997
Unassigned (133,404) (5,272,139)
Total fund balances (deficit) 5,709,900 159,836,460
Total liabilities, deferred inflows of
resources, and fund balances $ 5,844,928 $ 183,406,850
(Concluded)
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City of Modesto
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds
Fiscal Year Ended June 30, 2025
119
Downtown Strategic
Local Traffic Improvement Planning and Transportation
Transportation Safety District Development Special Tax
REVENUES:
Taxes $ - $ - $ 208,399 $ - $ 2,138,384
Licenses and permits - - - - 1,260
Intergovernmental 50,553 - - 219,654 26,022,667
Charges for services - 368,915 - 414,021 1,867,112
Special assessments levied - - 840,342 - -
Interest and rent 68,997 - - 91,658 1,890,546
Net increase in fair value
of investments - - - 60,504 1,346,670
Fines and forfeits - 214,448 - - -
Miscellaneous - - - - 171,711
Total revenues 119,550 583,363 1,048,741 785,837 33,438,350 EXPENDITURES:
Current:
Community development - - 1,045,801 847,878 1,569,824
Highways and streets - - - - 16,911,287
Public works - - - - -
Parks and recreation - - - - -
Public safety - 709,621 - - -
Capital outlay:
Community development - - - - -
Highways and streets - - - - 88,233
Public works - - - - -
Parks and recreation - - - - -
Public safety - 7,880 - - -
Debt service:
Principal retirement - 211,437 - - 4,074
Interest - 19,700 - - 304
Other - - - - -
Total expenditures - 948,638 1,045,801 847,878 18,573,722
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 119,550 (365,275) 2,940 (62,041) 14,864,628 OTHER FINANCING SOURCES (USES):
Transfers in - - - 345,090 1,540,205
Transfers out (119,550) - - (1,723) (7,014,979)
Sale of assets - - - - 18,002
Total other financing sources (uses) (119,550) - - 343,367 (5,456,772) CHANGES IN FUND BALANCES - (365,275) 2,940 281,326 9,407,856 FUND BALANCES, JULY 1,
AS PREVIOUSLY REPORTED 1,775 3,250,316 (323) 2,604,704 - Adjustments (Note 19) - - - - 55,290,002
FUND BALANCES, JULY 1,
AS RESTATED 1,775 3,250,316 (323) 2,604,704 55,290,002
FUND BALANCES (DEFICIT), JUNE 30 $ 1,775 $ 2,885,041 $ 2,617 $ 2,886,030 $ 64,697,858 (Continued)
Special Revenue
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City of Modesto
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds (Continued)
Fiscal Year Ended June 30, 2025
120
Special Fund
Capital for Capital
Cannabis Opioid Grants Outlays Parks
REVENUES:
Taxes $ - $ - $ - $ - $ -
Licenses and permits 197,804 - - - -
Intergovernmental - - 11,011,231 - -
Charges for services 44,660 - - 43,663 975
Special assessments levied - - - - -
Interest and rent - - - 100,923 63,139
Net increase in fair value
of investments - - - 72,173 11,957
Fines and forfeits - - - - -
Miscellaneous - - 130,000 761,985 12,500
Total revenues 242,464 - 11,141,231 978,744 88,571
EXPENDITURES:
Current:
Community development 211,059 - 115,693 1,096,380 -
Highways and streets - - 6,190,161 - -
Public works - - 623,343 426,154 -
Parks and recreation - - - 5,126,645 25,452
Public safety - - - 115,128 -
Capital outlay:
Community development - - 76,095 - -
Highways and streets - - 6,269,819 - -
Public works - - 777,067 99,150 -
Parks and recreation - - 6,075,878 - 754,056
Public safety - - - - -
Debt service:
Principal retirement - - - - -
Interest - - - - -
Other - - - - -
Total expenditures 211,059 - 20,128,056 6,863,457 779,508
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 31,405 - (8,986,825) (5,884,713) (690,937) OTHER FINANCING SOURCES (USES):
Transfers in - - 8,292,182 6,884,561 411,375
Transfers out - - - (2,967) -
Sale of assets - - - - -
Total other financing sources (uses) - - 8,292,182 6,881,594 411,375 CHANGES IN FUND BALANCES 31,405 - (694,643) 996,881 (279,562) FUND BALANCES, JULY 1,
AS PREVIOUSLY REPORTED (14,822) - (2,619,356) 2,849,019 521,659 Adjustments (Note 19) - - - - -
FUND BALANCES, JULY 1,
AS RESTATED (14,822) - (2,619,356) 2,849,019 521,659
FUND BALANCES (DEFICIT), JUNE 30 $ 16,583 $ - $ (3,313,999) $ 3,845,900 $ 242,097 (Continued)
Special Revenue Capital Projects
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City of Modesto
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds (Continued)
Fiscal Year Ended June 30, 2025
121
Securities Community Successor Capital Transportation
for Future Facilities Redevelopment Facility Special Tax Improvements Districts Housing Agency Fees Capital
REVENUES:
Taxes $ - $ - $ - $ - $ -
Licenses and permits - - - - -
Intergovernmental - - - 55,167 -
Charges for services - 821,108 - 2,069,611 -
Special assessments levied - 4,194,110 - - -
Interest and rent 3,578 925,446 8,684,999 1,577,296 -
Net increase in fair value
of investments - 629,372 2,907 1,126,093 -
Fines and forfeits - - - - -
Miscellaneous - 4,192 - 15,246 -
Total revenues 3,578 6,574,228 8,687,906 4,843,413 -
EXPENDITURES:
Current:
Community development - 4,466,702 - 19,679 57
Highways and streets - - - 55,275 46,962
Public works - - - - -
Parks and recreation - - - 230,748 241
Public safety - - - - -
Capital outlay:
Community development - - - - 258,399
Highways and streets - - - 1,658,492 1,619,988
Public Works - - - - -
Parks and recreation - - - 4,196,427 1,005,927
Public safety - - - - -
Debt service:
Principal retirement - 1,696 - - -
Interest - 35 - - -
Other - - - - -
Total expenditures - 4,468,433 - 6,160,621 2,931,574
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 3,578 2,105,795 8,687,906 (1,317,208) (2,931,574) OTHER FINANCING SOURCES (USES):
Transfers in - - - - 2,931,574
Transfers out - - - (2,693,337) -
Sale of assets - - - - -
Total other financing sources (uses) - - - (2,693,337) 2,931,574 CHANGES IN FUND BALANCES 3,578 2,105,795 8,687,906 (4,010,545) - FUND BALANCES, JULY 1,
AS PREVIOUSLY REPORTED 81,046 25,426,439 3,376,130 47,192,309 - Adjustments (Note 19) - - - - -
FUND BALANCES, JULY 1,
AS RESTATED 81,046 25,426,439 3,376,130 47,192,309 -
FUND BALANCES (DEFICIT), JUNE 30 $ 84,624 $ 27,532,234 $ 12,064,036 $ 43,181,764 $ - (Continued)
Capital Projects
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City of Modesto
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds (Continued)
Fiscal Year Ended June 30, 2025
122
Debt Service
Public
Financing
Authority Total
REVENUES:
Taxes $ - $ 2,346,783
Licenses and permits - 199,064
Intergovernmental 1,015,174 38,374,446
Charges for services - 5,630,065
Special assessments levied - 5,034,452
Interest and rent 302,488 13,709,070
Net increase in fair value
of investments - 3,249,676
Fines and forfeits - 214,448
Miscellaneous - 1,095,634
Total revenues 1,317,662 69,853,638
EXPENDITURES:
Current:
Community development - 9,373,073
Highways and streets - 23,203,685
Public works - 1,049,497
Parks and recreation - 5,383,086
Public safety - 824,749
Capital outlay:
Community development - 334,494
Highways and streets - 9,636,532
Public works - 876,217
Parks and recreation - 12,032,288
Public safety - 7,880
Debt service:
Principal retirement 2,990,000 3,207,207
Interest 1,025,244 1,045,283
Other 48,191 48,191
Total expenditures 4,063,435 67,022,182
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (2,745,773) 2,831,456
OTHER FINANCING SOURCES (USES):
Transfers in 2,983,823 23,388,810
Transfers out - (9,832,556)
Sale of assets - 18,002
Total other financing sources (uses) 2,983,823 13,574,256 CHANGES IN FUND BALANCES 238,050 16,405,712
FUND BALANCES, JULY 1,
AS PREVIOUSLY REPORTED 5,471,850 88,140,746
Adjustments (Note 19) - 55,290,002
FUND BALANCES, JULY 1,
AS RESTATED 5,471,850 143,430,748
FUND BALANCES (DEFICIT), JUNE 30 $ 5,709,900 $ 159,836,460 (Concluded)
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City of Modesto
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget (GAAP Basis) and Actual
Local Transportation Special Revenue Fund
Fiscal Year Ended June 30, 2025
NOTE: The Expenditures by function amounts listed above include the capital outlay expenditures within each department.
123
Variance with
Original Final Actual Final Budget
REVENUES:
Intergovernmental $ - $ - $ 50,553 $ 50,553
Interest and rent - - 68,997 68,997
Total revenues - - 119,550 119,550
OTHER FINANCING USES:
Transfers out - (764,659) (119,550) 645,109
CHANGES IN FUND BALANCES - (764,659) - 764,659
FUND BALANCES, JULY 1 1,775 1,775 1,775 -
FUND BALANCES (DEFICITS), JUNE 30 $ 1,775 $ (762,884) $ 1,775 $ 764,659 Budget
#7..
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City of Modesto
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget (GAAP Basis) and Actual
Traffic Safety Special Revenue Fund
Fiscal Year Ended June 30, 2025
NOTE: The Expenditures by function amounts listed above include the capital outlay expenditures within each department.
124
Variance with
Original Final Actual Final Budget
REVENUES:
Charges for services $ 305,000 $ 305,000 $ 368,915 $ 63,915 Fines and forfeits 200,000 200,000 214,448 14,448
Total revenues 505,000 505,000 583,363 78,363
EXPENDITURES:
Current:
Public safety 1,110,930 1,029,793 717,501 312,292
Debt service:
Principal retirement - 211,437 211,437 -
Interest - 19,700 19,700 -
Total expenditures 1,110,930 1,260,930 948,638 312,292
DEFICIENCY OF REVENUES
UNDER EXPENDITURES (605,930) (755,930) (365,275) 390,655 CHANGES IN FUND BALANCES (605,930) (755,930) (365,275) 390,655 FUND BALANCES, JULY 1 3,250,316 3,250,316 3,250,316 -
FUND BALANCES, JUNE 30 $ 2,644,386 $ 2,494,386 $ 2,885,041 $ 390,655 Budget
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- 407 -
City of Modesto
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget (GAAP Basis) and Actual
Downtown Improvement District Special Revenue Fund
Fiscal Year Ended June 30, 2025
NOTE: The Expenditures by function amounts listed above include the capital outlay expenditures within each department.
125
Variance with
Original Final Actual Final Budget
REVENUES:
Taxes $ 207,000 $ 208,400 $ 208,399 $ (1)
Special assessments levied - 850,000 840,342 (9,658)
Total revenues 207,000 1,058,400 1,048,741 (9,659)
EXPENDITURES:
Current:
Community development 207,409 1,058,400 1,045,801 12,599 Total expenditures 207,409 1,058,400 1,045,801 12,599
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (409) - 2,940 2,940
CHANGES IN FUND BALANCES (409) - 2,940 2,940
FUND DEFICITS, JULY 1 (323) (323) (323) -
FUND BALANCES (DEFICITS), JUNE 30 $ (732) $ (323) $ 2,617 $ 2,940 Budget
#7..
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City of Modesto
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget (GAAP Basis) and Actual
Strategic Planning and Development Special Revenue Fund Fiscal Year Ended June 30, 2025
NOTE: The Expenditures by function amounts listed above include the capital outlay expenditures within each department.
126
Variance with
Original Final Actual Final Budget
REVENUES:
Intergovernmental $ 35,104 $ - $ 219,654 $ 219,654
Charges for services 40,000 715,000 414,021 (300,979)
Interest and rent 12,330 - 91,658 91,658
Net increase in fair
value of investments - - 60,504 60,504
Miscellaneous - 1,728,302 - (1,728,302)
Total revenues 87,434 2,443,302 785,837 (1,657,465)
EXPENDITURES:
Current:
Community development 3,032,626 4,027,095 847,878 3,179,217 Total expenditures 3,032,626 4,027,095 847,878 3,179,217
DEFICIENCY OF REVENUES
UNDER EXPENDITURES (2,945,192) (1,583,793) (62,041) 1,521,752 OTHER FINANCING SOURCES (USES):
Transfers in - 391,606 345,090 (46,516)
Transfers out - - (1,723) (1,723)
Total other financing sources - 391,606 343,367 (48,239) CHANGES IN FUND BALANCES (2,945,192) (1,192,187) 281,326 1,473,513 FUND BALANCES, JULY 1 2,604,704 2,604,704 2,604,704 -
FUND BALANCES, JUNE 30 $ (340,488) $ 1,412,517 $ 2,886,030 $ 1,473,513 Budget
#7..
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City of Modesto
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget (GAAP Basis) and Actual
Transportation Special Tax Special Revenue Fund
Fiscal Year Ended June 30, 2025
NOTE: The Expenditures by function amounts listed above include the capital outlay expenditures within each department.
127
Variance with
Original Final Actual Final Budget
REVENUES:
Taxes $ 1,500,000 $ 1,500,000 $ 2,138,384 $ 638,384
Licenses and permits - - 1,260 1,260
Intergovernmental 15,522,123 15,651,453 26,022,667 10,371,214 Charges for services 1,391,459 1,391,459 1,867,112 475,653 Interest and rent - 1,700,000 1,890,546 190,546
Net increase in fair value of investments - 1,165,717 1,346,670 180,953 Miscellaneous 10,000 50,000 171,711 121,711
Total revenues 18,423,582 21,458,629 33,438,350 11,979,721 EXPENDITURES:
Current:
Community development 2,197,832 2,874,500 1,569,824 1,304,676 Highways and streets 17,776,735 18,030,845 16,999,520 1,031,325 Debt service:
Principal retirement - 4,074 4,074 -
Interest - 304 304 -
Total expenditures 19,974,567 20,909,723 18,573,722 2,336,001
EXCESS (DEFICIT) OF REVENUES OVER
(UNDER) EXPENDITURES (1,550,985) 548,906 14,864,628 14,315,722 OTHER FINANCING SOURCES (USES):
Transfers in 1,485,453 1,688,922 1,540,205 (148,717)
Transfers out - (6,665,966) (7,014,979) (349,013)
Sale of assets - - 18,002 18,002
Total other financing sources (uses) 1,485,453 (4,977,044) (5,456,772) (479,728) CHANGES IN FUND BALANCE (65,532) (4,428,138) 9,407,856 13,835,994 FUND BALANCE, JULY 1 55,290,002 55,290,002 55,290,002 - FUND BALANCE, JUNE 30 $ 55,224,470 $ 50,861,864 $ 64,697,858 $ 13,835,994 Budget
#7..
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City of Modesto
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget (GAAP Basis) and Actual
Cannabis Special Revenue Fund
Fiscal Year Ended June 30, 2025
NOTE: The Expenditures by function amounts listed above include the capital outlay expenditures within each department.
128
Variance with
Original Final Actual Final Budget
REVENUES:
Licenses and permits $ 274,642 $ 274,642 $ 197,804 $ (76,838) Charges for services 12,760 12,760 44,660 31,900
Total revenues 287,402 287,402 242,464 (44,938)
EXPENDITURES:
Current:
Community development 272,609 272,609 211,059 61,550
Total expenditures 272,609 272,609 211,059 61,550
EXCESS OF REVENUES
OVER EXPENDITURES 14,793 14,793 31,405 16,612
CHANGES IN FUND BALANCES 14,793 14,793 31,405 16,612
FUND DEFICITS, JULY 1 (14,822) (14,822) (14,822) -
FUND BALANCES (DEFICITS), JUNE 30 $ (29) $ (29) $ 16,583 $ 16,612 Budget
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City of Modesto
Description of Nonmajor Enterprise Funds
Fiscal Year Ended June 30, 2025
129
Enterprise Funds are established to account for activities that render services on a user-charge basis to the general public. Nonmajor Enterprise Funds include:
Parking Fund - Revenues in this fund consist of charges for off-street parking, downtown parking garage, as well as in-lieu parking fees, parking citations, adjudication and enforcement programs. The revenue is used to develop and maintain parking facilities.
Storm Drain Fund - To account for storm drain improvements, operations and maintenance. The activities of the fund include street cleaning, rock well maintenance, and compliance with Federal and State water quality standards on storm water discharge.
Compost Fund - To account for tip fees charged at the City’s composting facility for processing various compostable materials and the sale of compost product. Excess revenues over expenses are set aside to protect the enterprise against market fluctuations, and to provide for capital improvements to the facility infrastructure.
Airport Fund - To account for all airport operations as stipulated in the City-Stanislaus County agreement of January 1968. Amounts received from the Federal government, State of California, and Stanislaus County, requiring matching amounts by the City, are recorded in this fund and are appropriated to finance approved capital projects.
Golf Fund - Revenues in this fund consist of fees charged for using the City’s golf courses. The revenue is used to improve, operate, and maintain golf courses.
Community Center Fund - Accounted for in this fund are all amounts collected for the purpose of operating and maintaining the Modesto Centre Plaza Community Center. Revenues include room rental, catering fees, ticket sales, and other charges for using the center.
Abatement and Public Nuisance Fund - To account the activity for expenses and recovery for the cost for both dangerous and unsafe building and property abatements. #7..
- 413 -
City of Modesto
Combining Statement of Net Position
Nonmajor Enterprise Fund
June 30, 2025
130
Storm
Parking Drain Compost Airport
ASSETS
Current assets:
Cash and investments $ $ 527,810 10,367,748 $ 12,201,290 $ 4,887,151 Receivables:
Accounts, net 37,049 10,454 2,190,923 51,729
Interest 2,139 46,233 78,675 21,823
Utilities, net - 600,675 753,823 -
Leases 54,566 - - 409,574
Prepaid expenses 172 13 1,342 1,969
Due from governments 5,378 4,538 4,836,950 402,293
Inventories - - - -
Total current assets 627,114 11,029,661 20,063,003 5,774,539 Noncurrent assets:
Restricted cash and investments with fiscal agent - - - - Leases receivable 4,540,019 - - 2,335,911
Land and construction in progress 3,131,804 928,317 1,140,000 1,352,142 Other capital assets, net of accumulated depreciation 1,850,241 12,148,632 716,490 6,412,551 Intangible assets, net of accumulated amortization - 12,970 3,852 - Total noncurrent assets 9,522,064 13,089,919 1,860,342 10,100,604 Total assets 10,149,178 24,119,580 21,923,345 15,875,143
DEFERRED OUTFLOWS OF RESOURCES
Deferred OPEB 46,648 23,972 161,757 -
Deferred pensions 191,758 183,342 1,797,948 191,453
Total deferred outflows of resources 238,406 207,314 1,959,705 191,453
LIABILITIES
Current liabilities:
Accounts payable 32,124 97,819 461,188 30,059
Accrued salaries and benefits 26,813 15,095 191,524 21,097 Interest payable - - 19,138 -
Current portion - leases and SBITA - 4,923 1,462 -
Unearned revenue 12,480 - - -
Total current liabilities 71,417 117,837 673,312 51,156 Noncurrent liabilities:
Advances from other funds - 1,324,704 2,475,600 -
Pollution remediation liability - - 3,170,994 -
Long-term debt:
Leases and SBITA payable - 5,295 1,573 -
Net OPEB liability 142,850 129,360 953,996 -
Net pension liability 958,625 916,556 8,988,208 957,102 Total noncurrent liabilities 1,101,475 2,375,915 15,590,371 957,102 Total liabilities 1,172,892 2,493,752 16,263,683 1,008,258
DEFERRED INFLOWS OF RESOURCES
Deferred OPEB 31,957 29,808 152,366 -
Deferred pensions 726 694 6,805 725
Deferred leases 4,260,354 - - 2,665,521
Total deferred inflows of resources 4,293,037 30,502 159,171 2,666,246
NET POSITION
Net investment in capital assets 4,982,045 13,079,701 1,857,307 7,764,693 Restricted - - - -
Unrestricted (60,390) 8,722,939 5,602,889 4,627,399
Total net position $ $ 4,921,655 21,802,640 $ $ 7,460,196 12,392,092 (Continued)
#7..
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City of Modesto
Combining Statement of Net Position
Nonmajor Enterprise Fund (Continued)
June 30, 2025
131
Community Abatement and
Golf Center Public Nuisance Total
ASSETS
Current assets:
Cash and investments $ $ 4,043,762 $ 534,618 $ 925,045 33,487,424 Receivables:
Accounts, net 12,684 58,698 1,470,493 3,832,030
Interest 16,187 - 4,045 169,102
Utilities, net - - - 1,354,498
Leases 42,633 8,379 - 515,152
Prepaid expenses - 123 - 3,619
Due from governments - - - 5,249,159
Inventories 49,674 - - 49,674
Total current assets 4,164,940 601,818 2,399,583 44,660,658 Noncurrent assets:
Restricted cash and investments with fiscal agent 121,033 - - 121,033 Leases receivable 4,340,734 - - 11,216,664
Land and construction in progress 1,779,108 3,667,020 - 11,998,391 Other capital assets, net of accumulated depreciation 846,861 2,395,454 - 24,370,229 Intangible assets, net of accumulated amortization 224,104 - - 240,926 Total noncurrent assets 7,311,840 6,062,474 - 47,947,243 Total assets 11,476,780 6,664,292 2,399,583 92,607,901
DEFERRED OUTFLOWS OF RESOURCES
Deferred OPEB - 30,332 - 262,709
Deferred pensions - 172,905 - 2,537,406
Total deferred outflows of resources - 203,237 - 2,800,115
LIABILITIES
Current liabilities:
Accounts payable 149,300 43,384 - 813,874
Accrued salaries and benefits 36,649 36,035 - 327,213
Interest payable - - - 19,138
Current portion - leases and SBITA 75,545 - - 81,930
Unearned revenue 325,849 - - 338,329
Total current liabilities 587,343 79,419 - 1,580,484
Noncurrent liabilities:
Advances from other funds - - - 3,800,304
Pollution remediation liability - - - 3,170,994
Long-term debt:
Leases and SBITA payable 228,811 - - 235,679
Net OPEB liability - 128,056 - 1,354,262
Net pension liability - 864,378 - 12,684,869
Total noncurrent liabilities 228,811 992,434 - 21,246,108 Total liabilities 816,154 1,071,853 - 22,826,592
DEFERRED INFLOWS OF RESOURCES
Deferred OPEB - 19,338 - 233,469
Deferred pensions - 654 - 9,604
Deferred leases 4,040,984 2,276 - 10,969,135
Total deferred inflows of resources 4,040,984 22,268 - 11,212,208
NET POSITION
Net investment in capital assets 2,545,717 6,062,474 - 36,291,937 Restricted 121,033 - - 121,033
Unrestricted 3,952,892 (289,066) 2,399,583 24,956,246
Total net position $ $ 6,619,642 $ 5,773,408 $ 2,399,583 61,369,216 (Concluded)
#7..
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City of Modesto
Combining Statement of Revenues, Expenses, and Changes in Net Position Nonmajor Enterprise Funds
Fiscal Year Ended June 30, 2025
132
Parking Storm Drain Compost Airport
OPERATING REVENUES:
Charges for services $ $ 1,166,651 $ 6,184,232 16,426,800 $ 782,979 Miscellaneous 298,867 4,196 7,278,969 17,441
Total operating revenues 1,465,518 6,188,428 23,705,769 800,420 OPERATING EXPENSES:
Salaries and wages 631,874 390,536 4,690,663 482,958
Contractual services 312,582 621,268 3,404,914 135,761
Utilities 154,893 37,425 32,028 111,217
Maintenance and supplies 136,809 2,714,170 2,445,008 159,491 Insurance 172,209 16,467 543,839 122,609
Employee benefits 234,964 275,340 2,061,327 251,569
Administration services 492,418 3,004,536 634,564 57,299 Allocated indirect administrative costs 46,511 130,212 264,072 37,514 Depreciation 385,571 442,184 49,443 643,728
Total operating expenses 2,567,831 7,632,138 14,125,858 2,002,146 OPERATING INCOME (LOSS) (1,102,313) (1,443,710) 9,579,911 (1,201,726) NONOPERATING REVENUES (EXPENSES):
Operating grants - - 107,166 431,643
Gain on disposition of capital assets - 30,685 141,798 - Tax revenue - - - 406,150
Tax expense - - - (2,053)
Interest income 199,723 275,036 372,858 176,462
Net increase in fair value of investments 15,971 247,456 212,882 98,176 Rental income 152,034 - - 470,815
Interest expense and amortization - (341) (101) -
Total nonoperating revenues 367,728 552,836 834,603 1,581,193 INCOME (LOSS) BEFORE TRANSFERS (734,585) (890,874) 10,414,514 379,467
TRANSFERS
Transfers in - 700,000 - -
Transfers out - (32,098) (1,280,514) (7,587)
Total transfers - 667,902 (1,280,514) (7,587)
CHANGES IN NET POSITION (734,585) (222,972) 9,134,000 371,880 NET POSITION (DEFICIT), JULY 1 5,656,240 22,025,612 (1,673,804) 12,020,212 NET POSITION, JUNE 30 $ $ 4,921,655 21,802,640 $ $ 7,460,196 12,392,092 (Continued)
#7..
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City of Modesto
Combining Statement of Revenues, Expenses, and Changes in Net Position Nonmajor Enterprise Funds (Continued)
Fiscal Year Ended June 30, 2025
133
Community Abatement and
Golf Center Public Nuisance Total
OPERATING REVENUES:
Charges for services $ $ 3,516,586 $ 248,246 $ 656,230 28,981,724 Miscellaneous 5,679 3,344 - 7,608,496
Total operating revenues 3,522,265 251,590 656,230 36,590,220 OPERATING EXPENSES:
Salaries and wages - 775,430 - 6,971,461
Contractual services 2,706,775 261,086 100 7,442,486
Utilities 63,385 272,802 - 671,750
Maintenance and supplies 276,060 140,360 - 5,871,898
Insurance 47,528 83,306 - 985,958
Employee benefits - 228,404 - 3,051,604
Administration services 302,954 64,831 86,303 4,642,905 Allocated indirect administrative costs 47,127 - - 525,436 Depreciation 119,930 43,371 - 1,684,227
Total operating expenses 3,563,759 1,869,590 86,403 31,847,725 OPERATING INCOME (LOSS) (41,494) (1,618,000) 569,827 4,742,495 NONOPERATING REVENUES (EXPENSES):
Operating grants - - - 538,809
Gain on disposition of capital assets - - - 172,483
Tax revenue - - - 406,150
Tax expense - - - (2,053)
Interest income 127,870 3,946 27,843 1,183,738
Net increase in fair value of investments 97,657 - 18,396 690,538 Rental income 131,916 577,592 - 1,332,357
Interest expense and amortization (27,512) - - (27,954) Total nonoperating revenues 329,931 581,538 46,239 4,294,068 INCOME (LOSS) BEFORE TRANSFERS 288,437 (1,036,462) 616,066 9,036,563
TRANSFERS
Transfers in 504,547 1,025,625 1,723 2,231,895
Transfers out - - - (1,320,199)
Total transfers 504,547 1,025,625 1,723 911,696
CHANGES IN NET POSITION 792,984 (10,837) 617,789 9,948,259 NET POSITION (DEFICIT), JULY 1 5,826,658 5,784,245 1,781,794 51,420,957 NET POSITION, JUNE 30 $ $ 6,619,642 $ 5,773,408 $ 2,399,583 61,369,216 (Concluded)
#7..
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City of Modesto
Combining Statement of Cash Flows
Nonmajor Enterprise Funds
Fiscal Year Ended June 30, 2025
134
Storm
Parking Drain Compost Airport
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers and users $ 1,533,120 $ 6,212,109 $ 23,891,511 $ 770,805 Payments to suppliers (1,298,831) (6,507,764) (10,577,277) (704,444) Payments to employees (904,200) (718,727) (7,192,546) (728,690) Net cash provided by (used in) operating activities (669,911) (1,014,382) 6,121,688 (662,329)
CASH FLOWS FROM NONCAPITAL FINANCING
ACTIVITIES:
Operating grants received - - 107,166 431,643
Taxes received - - - 406,150
Transfers in - 700,000 - -
Transfers out - (32,098) (1,280,514) (7,587)
Advances from/(to) other funds - - (654,200) -
Net cash provided by (used in) noncapital financing
activities - 667,902 (1,827,548) 830,206
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Acquisition and construction of capital assets - - - -
Proceeds from sale of capital assets - 18,627 141,802 3 Principal (repayments) collection (319,193) (4,573) (1,360) 239,178 Interest (paid) received - (341) 10,237 -
Net cash provided by (used in) capital and related
financing activities (319,193) 13,713 150,679 239,181
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest received 198,418 266,506 329,982 167,939
Net increase in the fair value of investments 15,971 247,456 212,882 98,176 Rental income received 349,257 - - 222,094
Net cash provided by investing activities 563,646 513,962 542,864 488,209 Net increase (decrease) in cash and investments (425,458) 181,195 4,987,683 895,267 CASH AND INVESTMENTS, JULY 1 953,268 10,186,553 7,213,607 3,991,884 CASH AND INVESTMENTS, JUNE 30 $ 527,810 $ 10,367,748 $ 12,201,290 $ 4,887,151 RECONCILIATION TO STATEMENT OF NET POSITION:
Cash and investments $ 527,810 $ 10,367,748 $ 12,201,290 $ 4,887,151 Restricted cash and investments with fiscal agent - - - - TOTAL CASH AND INVESTMENTS $ 527,810 $ 10,367,748 $ 12,201,290 $ 4,887,151 (Continued)
#7..
- 418 -
City of Modesto
Combining Statement of Cash Flows
Nonmajor Enterprise Funds (Continued)
Fiscal Year Ended June 30, 2025
135
Community Abatement and
Golf Center Public Nuisance Total
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers and users $ 3,275,594 $ 315,319 $ 271,889 $ 36,270,347 Payments to suppliers (3,815,990) (803,492) (160,162) (23,867,960) Payments to employees - (1,017,818) - (10,561,981)
Net cash provided by (used in) operating activities (540,396) (1,505,991) 111,727 1,840,406
CASH FLOWS FROM NONCAPITAL FINANCING
ACTIVITIES:
Operating grants received - - - 538,809
Taxes received - - - 406,150
Transfers in 504,547 1,025,625 1,723 2,231,895
Transfers out - - - (1,320,199)
Advances from/(to) other funds - - 52,882 (601,318)
Net cash provided by (used in) noncapital financing
activities 504,547 1,025,625 54,605 1,255,337
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Acquisition and construction of capital assets (418,912) - - (418,912) Proceeds from sale of capital assets - - - 160,432
Principal (repayments) collection 416,985 658 - 331,695 Interest (paid) received (27,512) - - (17,616)
Net cash provided by (used in) capital and related
financing activities (29,439) 658 - 55,599
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest received 123,422 3,946 25,617 1,115,830
Net increase in the fair value of investments 97,657 - 18,396 690,538 Rental income received 131,916 577,592 - 1,280,859
Net cash provided by investing activities 352,995 581,538 44,013 3,087,227 Net increase (decrease) in cash and investments 287,707 101,830 210,345 6,238,569 CASH AND INVESTMENTS, JULY 1 3,877,088 432,788 714,700 27,369,888 CASH AND INVESTMENTS, JUNE 30 $ 4,164,795 $ 534,618 $ 925,045 $ 33,608,457 RECONCILIATION TO STATEMENT OF NET POSITION:
Cash and investments $ 4,043,762 $ 534,618 $ 925,045 $ 33,487,424 Restricted cash and investments with fiscal agent 121,033 - - 121,033 TOTAL CASH AND INVESTMENTS $ 4,164,795 $ 534,618 $ 925,045 $ 33,608,457 (Concluded)
#7..
- 419 -
City of Modesto
Combining Statement of Cash Flows
Nonmajor Enterprise Funds (Continued)
Fiscal Year Ended June 30, 2025
136
Storm
Parking Drain Compost Airport
RECONCILIATION OF OPERATING INCOME (LOSS)
TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Operating income (loss) $ (1,102,313) $ (1,443,710) $ 9,579,911 $ (1,201,726) Adjustments to reconcile operating income (loss) to
net cash provided (used in) by operating activities:
Depreciation 385,571 442,184 49,443 643,728
Taxes paid - - - (2,053)
Change in assets, liabilities, and deferred resources:
(Increase) decrease:
Accounts receivable 67,602 (4,915) 163,532 (31,827)
Taxes receivable - - - 2,212
Utilities receivable - 28,596 22,210 -
Leases receivable
Due from other governments 2,846 13,614 (4,684,078) (63,068) Inventories - - - -
Prepaid expenses (57) 130 (271) 29
Deferred outflows of resources - OPEB (15,299) (105) (22,347) - Deferred outflows of resources - pensions 102,518 105,208 1,003,673 87,791 Increase (decrease):
Accounts payable (750) 5,260 298,742 16,863
Accrued salaries and benefits 2,072 (2,690) 30,972 7,676 Unearned revenue 12,480 - (42,892) (40,000)
Net OPEB liability 21,627 2,970 38,784 -
Net pension liability (134,396) (155,199) (1,417,778) (80,088) Deferred inflows of resources - OPEB (9,807) (3,742) (23,697) - Deferred inflows of resources - pensions (2,005) (1,983) (19,191) (1,866) Pollution remediation - - 1,144,675 -
Total adjustments 432,402 429,328 (3,458,223) 539,397
Net cash provided (used in) by operating activities $ (669,911) $ (1,014,382) $ 6,121,688 $ (662,329) (Continued)
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City of Modesto
Combining Statement of Cash Flows
Nonmajor Enterprise Funds (Continued)
Fiscal Year Ended June 30, 2025
137
Community Abatement and
Golf Center Public Nuisance Total
RECONCILIATION OF OPERATING INCOME (LOSS)
TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Operating income (loss) $ (41,494) $ (1,618,000) $ 569,827 $ 4,742,495 Adjustments to reconcile operating income (loss) to
net cash provided (used in) by operating activities:
Depreciation 119,930 43,371 - 1,684,227
Taxes paid - - - (2,053)
Change in assets, liabilities, and deferred resources:
(Increase) decrease:
Accounts receivable 324,228 63,729 (384,341) 198,008
Taxes receivable - - - 2,212
Utilities receivable - - - 50,806
Leases receivable (570,899) - - (570,899)
Due from other governments - - - (4,730,686)
Inventories 3,762 - - 3,762
Prepaid expenses 162,788 261 - 162,880
Deferred outflows of resources - OPEB - (8,661) - (46,412) Deferred outflows of resources - pensions - 85,650 - 1,384,840 Increase (decrease):
Accounts payable 1,001 10,614 (73,659) 258,071
Accrued salaries and benefits 3,962 8,018 - 50,010
Unearned revenue (543,674) - (100) (614,186)
Net OPEB liability - 12,091 - 75,472
Net pension liability - (95,966) - (1,883,427)
Deferred inflows of resources - OPEB - (5,353) - (42,599) Deferred inflows of resources - pensions - (1,745) - (26,790) Pollution remediation - - - 1,144,675
Total adjustments (498,902) 112,009 (458,100) (2,902,089) Net cash provided (used in) by operating activities $ (540,396) $ (1,505,991) $ 111,727 $ 1,840,406 (Concluded)
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City of Modesto
Description of Internal Service Funds
Fiscal Year Ended June 30, 2025
138
Internal Service Funds are established to finance and account for services and commodities furnished by a designated agency of a governmental unit to other departments of the same governmental unit. Since the services and commodities are supplied exclusively to other departments of a governmental jurisdiction, they are distinguishable from those public services which are rendered to the public in general and which are accounted for in General, Special Revenue, or Enterprise Funds. Internal Service Funds include:
Fleet Management Fund - To provide the maintenance necessary for the City’s equipment pool, which serves the needs of all City departments.
Central Services Fund - To provide office supplies, various maintenance and construction materials, records storage, and mail services to all City departments.
Information and Technology Services Fund - To finance and account for the replacement, upgrade and maintenance of the City’s network and technology infrastructure, and to develop and implement a coordinated city-wide information technology plan.
Insurance Fund - To finance and account for the City’s insurance and risk management programs.
Employee Benefits Management Fund - To account for all compensated absences and other employee benefits. Insurance benefits for current employees are accounted for in the Insurance Fund.
Building Services Fund - To account for the true cost of occupying and maintaining office space, to better reflect the value of that space, and to accumulate amounts for future building repair costs. #7..
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City of Modesto
Combining Statement of Net Position
Internal Service Fund
June 30, 2025
139
Information
Fleet Central and Technology
Management Services Services Insurance
ASSETS
Current assets:
Cash and investments $ $ 675,876 - $ $ 4,617,001 18,196,471 Receivables:
Accounts 12,270 - - 678,581
Interest 9,041 112 21,153 86,509
Leases - - - -
Prepaid expenses 1,898 317,269 1,050,633 7,186
Due from governments 3,250,038 - - -
Inventories 3,833,779 3,664,910 - -
Total current assets 7,782,902 3,982,291 5,688,787 18,968,747 Noncurrent assets:
Restricted assets - cash and investments - - - -
Restricted assets - cash from fiscal agent - - - 580,927 Leases receivable - - - -
Land and construction in progress 7,865,520 - - -
Other capital assets, net of accumulated depreciation 35,082,111 - 2,325,991 - Intangible assets, net of accumulated amortization - - 1,249,292 6,979 Total noncurrent assets 42,947,631 - 3,575,283 587,906
Total assets 50,730,533 3,982,291 9,264,070 19,556,653
DEFERRED OUTFLOWS OF RESOURCES
Deferred OPEB 97,987 - 181,569 -
Deferred pensions 1,455,551 228,339 1,450,794 187,038
Total deferred outflows of resources 1,553,538 228,339 1,632,363 187,038
LIABILITIES
Current liabilities:
Accounts payable 3,129,948 937,372 246,653 1,157,556
Accrued salaries and benefits 163,759 21,419 143,885 21,182 Interest payable 23,201 138 - 3,412
Due to other funds - 2,837,583 - -
Unearned revenue - - - 35,627
Current portion - compensated absences - - - -
Current portion - claims liability - - - 7,886,993
Current portion - leases and SBITA - - 143,336 -
Total current liabilities 3,316,908 3,796,512 533,874 9,104,770 Noncurrent liabilities:
Compensated absences - - - -
Claims liability - - - 25,309,185
Leases and SBITA - - 263,864 -
Net OPEB liability 509,265 - 645,481 -
Net pension liability 7,276,521 1,141,500 7,252,738 935,033 Total noncurrent liabilities 7,785,786 1,141,500 8,162,083 26,244,218 Total liabilities 11,102,694 4,938,012 8,695,957 35,348,988
DEFERRED INFLOWS OF RESOURCES
Deferred OPEB 109,250 - 224,072 -
Deferred pensions 5,509 865 5,491 708
Deferred leases - - - -
Total deferred inflows of resources 114,759 865 229,563 708
NET POSITION
Net investment in capital assets 42,947,631 - 3,168,083 6,979 Restricted - - - 580,927
Unrestricted (1,881,013) (728,247) (1,197,170) (16,193,911) Total net position $ 41,066,618 $ $ (728,247) $ 1,970,913 (15,606,005) (Continued)
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City of Modesto
Combining Statement of Net Position
Internal Service Fund (Continued)
June 30, 2025
140
Employee
Benefits Building
Management Services Total
ASSETS
Current assets:
Cash and investments $ $ 4,744 $ 2,454,959 25,949,051
Receivables:
Accounts 35,398 - 726,249
Interest 39,148 11,226 167,189
Leases - 5,488 5,488
Prepaid expenses 5,979 115 1,383,080
Due from governments - 20,006 3,270,044
Inventories - - 7,498,689
Total current assets 85,269 2,491,794 38,999,790
Noncurrent assets:
Restricted assets - cash and investments 8,417,921 - 8,417,921 Restricted assets - cash from fiscal agent - - 580,927
Leases receivable - 11,226 11,226
Land and construction in progress - 2,115,215 9,980,735 Other capital assets, net of accumulated depreciation - 1,810,565 39,218,667 Intangible assets, net of accumulated amortization - - 1,256,271 Total noncurrent assets 8,417,921 3,937,006 59,465,747
Total assets 8,503,190 6,428,800 98,465,537
DEFERRED OUTFLOWS OF RESOURCES
Deferred OPEB - - 279,556
Deferred pensions 62,484 252,259 3,636,465
Total deferred outflows of resources 62,484 252,259 3,916,021
LIABILITIES
Current liabilities:
Accounts payable 41,376 109,128 5,622,033
Accrued salaries and benefits 6,647 29,368 386,260
Interest payable - - 26,751
Due to other funds - - 2,837,583
Unearned revenue - - 35,627
Current portion - compensated absences 6,642,839 - 6,642,839 Current portion - claims liability - - 7,886,993
Current portion - leases and SBITA - - 143,336
Total current liabilities 6,690,862 138,496 23,581,422
Noncurrent liabilities:
Compensated absences 14,433,199 - 14,433,199
Claims liability - - 25,309,185
Leases and SBITA - - 263,864
Net OPEB liability - - 1,154,746
Net pension liability 312,365 1,261,083 18,179,240
Total noncurrent liabilities 14,745,564 1,261,083 59,340,234 Total liabilities 21,436,426 1,399,579 82,921,656
DEFERRED INFLOWS OF RESOURCES
Deferred OPEB - - 333,322
Deferred pensions 236 955 13,764
Deferred leases - 15,768 15,768
Total deferred inflows of resources 236 16,723 362,854
NET POSITION
Net investment in capital assets - 3,925,780 50,048,473 Restricted 8,417,921 - 8,998,848
Unrestricted (21,288,909) 1,338,977 (39,950,273)
Total net position $ (12,870,988) $ $ 5,264,757 19,097,048 (Concluded)
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City of Modesto
Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds
Fiscal Year Ended June 30, 2025
141
Information
Fleet Central and Technology
Management Services Services Insurance
OPERATING REVENUES:
Charges for services $ 22,598,656 $ 7,927,284 $ 10,984,397 $ 42,931,414 Miscellaneous 37,908 2,367 - 294,771
Total operating revenues 22,636,564 7,929,651 10,984,397 43,226,185 OPERATING EXPENSES:
Salaries and wages 3,685,910 403,488 3,446,100 480,232
Cost of goods sold - 6,712,951 - -
Contractual services 901,704 204,759 1,446,129 1,943,553 Utilities 190,716 - 140,520 1,391
Maintenance and supplies 11,442,011 190,907 3,063,059 276,973 Insurance 466,199 17,251 111,497 29,202,429
Claims - - - 14,505,247
Employee benefits 1,476,344 338,084 1,215,036 281,710
Administration services 617,676 266,429 15,539 147,781
Allocated indirect administrative costs 307,575 - - -
Depreciation 4,015,919 - 1,768,887 21,113
Total operating expenses 23,104,054 8,133,869 11,206,767 46,860,429 OPERATING INCOME (LOSS) (467,490) (204,218) (222,370) (3,634,244) NONOPERATING REVENUES (EXPENSES):
Loss on disposition of capital assets (174,014) - - -
Interest income 66,369 313 160,499 452,231
Net increase (decrease) in fair value of investments (266,580) 505 108,664 238,512 Rental income 37,800 - - -
Interest expense and amortization - - (39,173) (719)
Total nonoperating revenues (expenses) (336,425) 818 229,990 690,024
INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS
AND TRANSFERS (803,915) (203,400) 7,620 (2,944,220)
CAPITAL CONTRIBUTIONS AND TRANSFERS
Capital contributions 1,843,063 - - -
Transfers in 4,328,657 - - -
Transfers out - (24,000) (144,048) -
Total capital contributions and transfers 6,171,720 (24,000) (144,048) - CHANGES IN NET POSITION 5,367,805 (227,400) (136,428) (2,944,220) NET POSITION (DEFICIT), JULY 1 35,698,813 (500,847) 2,107,341 (12,661,785) Restatements (Note 19) - - - -
NET POSITION (DEFICIT), JUNE 30 $ 41,066,618 $ $ (728,247) 1,970,913 $ (15,606,005) (Continued)
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City of Modesto
Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds (Continued)
Fiscal Year Ended June 30, 2025
142
Employee
Benefits Building
Management Services Total
OPERATING REVENUES:
Charges for services $ 40,135,613 $ 4,407,310 $ 128,984,674 Miscellaneous 177,081 18,522 530,649
Total operating revenues 40,312,694 4,425,832 129,515,323 OPERATING EXPENSES:
Salaries and wages 3,213,728 622,213 11,851,671
Cost of goods sold - - 6,712,951
Contractual services 259,797 1,712,364 6,468,306
Utilities 1,241 264,901 598,769
Maintenance and supplies 22,528 999,393 15,994,871
Insurance 3,780 32,038 29,833,194
Claims 3,104 - 14,508,351
Employee benefits 36,174,613 272,173 39,757,960
Administration services 312,674 107,625 1,467,724
Allocated indirect administrative costs - - 307,575
Depreciation - 249,530 6,055,449
Total operating expenses 39,991,465 4,260,237 133,556,821 OPERATING INCOME (LOSS) 321,229 165,595 (4,041,498)
NONOPERATING REVENUES (EXPENSES):
Loss on disposition of capital assets - - (174,014)
Interest income 273,922 76,386 1,029,720
Net increase (decrease) in fair value of investments 187,317 50,599 319,017 Rental income - 5,406 43,206
Interest expense and amortization - - (39,892)
Total nonoperating revenues (expenses) 461,239 132,391 1,178,037
INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS
AND TRANSFERS 782,468 297,986 (2,863,461)
CAPITAL CONTRIBUTIONS AND TRANSFERS
Capital contributions - - 1,843,063
Transfers in - - 4,328,657
Transfers out (1,212,508) (56,687) (1,437,243)
Total capital contributions and transfers (1,212,508) (56,687) 4,734,477 CHANGES IN NET POSITION (430,040) 241,299 1,871,016
NET POSITION (DEFICIT), JULY 1 (7,043,290) 5,023,458 22,623,690 Restatements (Note 19) (5,397,658) - (5,397,658)
NET POSITION (DEFICIT), JUNE 30 $ (12,870,988) $ 5,264,757 $ 19,097,048 (Concluded)
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City of Modesto
Combining Statement of Cash Flows
Internal Service Funds
Fiscal Year Ended June 30, 2025
143
Information
Fleet Central and Technology
Management Services Services Insurance
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers and users $ 22,624,757 $ 7,929,651 $ 10,984,397 $ 47,316,191 Payments to suppliers (13,421,973) (7,208,227) (5,717,414) (43,464,565) Payments to employees (5,531,290) (698,316) (5,070,868) (729,936) Net cash provided by operating activities 3,671,494 23,108 196,115 3,121,690 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers in 4,232,325 - - -
Transfers out - (24,000) (144,048) -
Net cash provided by (used in) noncapital financing activities 4,232,325 (24,000) (144,048) -
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Acquisition and construction of capital assets (7,717,008) - (102,089) (28,092) Proceeds from the sale of capital assets 185,888 - - -
Capital contributions received 474,629 - - -
Interest paid - - (39,173) (719)
Net cash used in capital and related financing activities (7,056,491) - (141,262) (28,811) CASH FLOWS FROM INVESTING ACTIVITIES:
Interest received 57,328 387 155,351 421,141
Net increase (decrease) in the fair value of investments (266,580) 505 108,664 238,512 Rental income received 37,800 - - -
Net cash provided by (used in) investing activities (171,452) 892 264,015 659,653 Net increase in cash and investments 675,876 - 174,820 3,752,532 CASH AND INVESTMENTS, JULY 1 - - 4,442,181 15,024,866
CASH AND INVESTMENTS, JUNE 30 $ 675,876 $ - $ 4,617,001 $ 18,777,398 RECONCILIATION TO STATEMENT OF NET POSITION:
Cash and investments $ 675,876 $ - $ 4,617,001 $ 18,196,471 Restricted cash and investments - - - -
Restricted cash and investments with fiscal agent - - - 580,927 TOTAL CASH AND INVESTMENTS $ 675,876 $ - $ 4,617,001 $ 18,777,398 (Continued)
#7..
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City of Modesto
Combining Statement of Cash Flows
Internal Service Funds (Continued)
Fiscal Year Ended June 30, 2025
144
Employee
Benefits Building
Management Services Total
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers and users $ 34,879,638 $ 4,422,701 $ 128,157,335 Payments to suppliers (586,915) (3,005,311) (73,404,405) Payments to employees (32,011,979) (976,434) (45,018,823) Net cash provided by operating activities 2,280,744 440,956 9,734,107 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers in - - 4,232,325
Transfers out (1,212,508) (56,687) (1,437,243)
Net cash provided by (used in) noncapital financing activities (1,212,508) (56,687) 2,795,082
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Acquisition and construction of capital assets - - (7,847,189) Proceeds from the sale of capital assets - - 185,888
Capital contributions received - - 474,629
Interest paid - - (39,892)
Net cash used in capital and related financing activities - - (7,226,564) CASH FLOWS FROM INVESTING ACTIVITIES:
Interest received 262,059 72,058 968,324
Net increase (decrease) in the fair value of investments 187,317 50,599 319,017 Rental income received - 10,813 48,613
Net cash provided by (used in) investing activities 449,376 133,470 1,335,954 Net increase in cash and investments 1,517,612 517,739 6,638,579 CASH AND INVESTMENTS, JULY 1 6,905,053 1,937,220 28,309,320 CASH AND INVESTMENTS, JUNE 30 $ 8,422,665 $ 2,454,959 $ 34,947,899 RECONCILIATION TO STATEMENT OF NET POSITION:
Cash and investments $ 4,744 $ 2,454,959 $ 25,949,051
Restricted cash and investments 8,417,921 - 8,417,921
Restricted cash and investments with fiscal agent - - 580,927 TOTAL CASH AND INVESTMENTS $ 8,422,665 $ 2,454,959 $ 34,947,899 (Concluded)
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City of Modesto
Combining Statement of Cash Flows
Internal Service Funds (Continued)
Fiscal Year Ended June 30, 2025
145
Information
Fleet Central and Technology
Management Services Services Insurance
RECONCILIATION OF OPERATING INCOME (LOSS) TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Operating income (loss) $ (467,490) $ (204,218) $ (222,370) $ (3,634,244) Adjustments to reconcile operating income (loss) to
net cash provided by operating activities:
Depreciation 4,015,919 - 1,768,887 21,113
(Increase) decrease in:
Accounts receivable (11,807) - - 4,090,006
Due from governments (581,904) - - -
Prepaid expenses 1,915 (315,199) (89,392) 1,635,585
Inventories (567,615) (303,254) - -
Deferred outflows of resources - OPEB (27,080) - (18,655) - Deferred outflows of resources - pensions 816,483 91,380 828,318 76,109 Increase (decrease) in:
Accounts payable 2,033,989 689,016 90,156 (3,746,779)
Accrued salaries and benefits 49,744 (1,836) 13,840 1,389 Interest payable 3,369 138 - (7,393)
Due to other funds (435,590) 115,205 - -
Compensated absences - - - -
OPEB liability 42,757 - 45,027 -
Net pension liability (1,162,435) (46,023) (1,212,510) (42,369) Deferred inflows of resources - OPEB (23,188) - (36,255) - Deferred inflows of resources - pensions (15,573) (2,101) (15,657) (1,734) Deferred inflows of resources - leases
Unearned revenue - - - (5,932)
Lease liability - - (955,274) -
Claims liability - - - 4,735,939
Total adjustments 4,138,984 227,326 418,485 6,755,934
Net cash provided (used) by operating activities $ 3,671,494 $ 23,108 $ 196,115 $ 3,121,690 NONCASH FINANCING ACTIVITIES:
Contributions of capital assets $ 1,464,766 $ - $ - $ - TOTAL NONCASH FINANCING ACTIVITIES $ 1,464,766 $ - $ - $ - (Continued)
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City of Modesto
Combining Statement of Cash Flows
Internal Service Funds (Continued)
Fiscal Year Ended June 30, 2025
146
Employee
Benefits Building
Management Services Total
RECONCILIATION OF OPERATING INCOME (LOSS) TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Operating income (loss) $ $ 321,229 $ 165,595 (4,041,498) Adjustments to reconcile operating income (loss) to
net cash provided by operating activities:
Depreciation - 249,530 6,055,449
(Increase) decrease in:
Accounts receivable (35,398) 2,275 4,045,076
Due from governments - 51,841 (530,063)
Prepaid expenses (5,979) (115) 1,226,815
Inventories - - (870,869)
Deferred outflows of resources - OPEB - - (45,735)
Deferred outflows of resources - pensions 33,572 148,624 1,994,486 Increase (decrease) in:
Accounts payable 24,810 53,661 (855,147)
Accrued salaries and benefits (2,622) 5,623 66,138
Interest payable - - (3,886)
Due to other funds - - (320,385)
Compensated absences 1,990,202 - 1,990,202
OPEB liability - - 87,784
Net pension liability (44,415) (227,907) (2,735,659)
Deferred inflows of resources - OPEB - - (59,443)
Deferred inflows of resources - pensions (655) (2,765) (38,485) Deferred inflows of resources - leases (5,406) (5,406)
Unearned revenue - - (5,932)
Lease liability - - (955,274)
Claims liability - - 4,735,939
Total adjustments 1,959,515 275,361 13,775,605
Net cash provided (used) by operating activities $ 2,280,744 $ 440,956 $ 9,734,107 NONCASH FINANCING ACTIVITIES:
Contributions of capital assets $ $ - $ - 1,464,766
TOTAL NONCASH FINANCING ACTIVITIES $ $ - $ - 1,464,766
(Concluded)
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City of Modesto
Description of Private-Purpose Trust Funds and Investment Trust Funds Fiscal Year Ended June 30, 2025
147
Private Purpose Trust Funds account as the fiduciary fund type used by the City to report trust arrangements under which principal and income benefit other governments. Investment Trust Funds account for assets held by the City as an agent for individuals, governmental entities, and non-public organizations.
PRIVATE-PURPOSE TRUST FUNDS
Redevelopment Successor Agency - To account for allocated revenues in amounts necessary to pay the estimated annual installment payments on all enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior redevelopment agency have been paid in full and all assets have been liquidated.
Special Districts - To account for collection of special assessment from property owners which are collected and forwarded to trustees for payment to bondholders. The cash and investment of the Special Districts are invested as part of the City’s investment pool.
INVESTMENT TRUST FUNDS
Tuolumne River Regional Park - To account for cash and investments of the Tuolumne River Regional Park, a joint powers agency between the City of Modesto and Stanislaus County. The agency provides financing, development, and maintenance of the Tuolumne River Regional Park facilities. The cash and investments of the Park are invested as part of the City’s investment pool.
Modesto-Ceres Fire Protection Agency - To record and distribute the special assessments for fire protection that were established under the Industrial Fire District. This is a joint powers agency between the Modesto Regional Fire Authority, the City of Ceres, and the Industrial Fire District. Cash and investments of the Agency are invested in the City’s investment pool.
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City of Modesto
Combining Statement of Fiduciary Net Position
Fiduciary Funds – Private–Purpose Trust Funds
June 30, 2025
148
Total
Redevelopment Special Private-Purpose
Successor Agency Districts Trust Funds
ASSETS
Cash and investments $ 236,750 $ 2,660,980 $ 2,897,730
Cash and investments held with fiscal agent - 3,346,988 3,346,988 Interest receivable 2,704 9,823 12,527
Taxes receivable 1,528,103 72,877 1,600,980
Assessments receivable - 24,555,000 24,555,000
Due from primary governments - 26,974 26,974
Total assets 1,767,557 30,672,642 32,440,199
DEFERRED OUTFLOWS OF RESOURCES
Loss on refunding - 766,250 766,250
Total deferred outflows of resources - 766,250 766,250
LIABILITIES
Accounts payables and other liabilities 36,315 2,018 38,333 Unearned revenues - 598,347 598,347
Due to local governments 1,192,004 - 1,192,004
Interest payable - 362,600 362,600
Long-term liabilities:
Due within one year 1,344,600 1,391,659 2,736,259
Due in more than one year 9,498,950 23,907,701 33,406,651 Total liabilities 12,071,869 26,262,325 38,334,194
NET POSITION
Restricted for other governments - 5,176,567 5,176,567
Unrestricted (10,304,312) - (10,304,312)
Total net position (deficit) $ (10,304,312) $ 5,176,567 $ (5,127,745)
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City of Modesto
Combining Statement of Changes in Fiduciary Net Position Fiduciary Funds – Private-Purpose Trust Funds
Fiscal Year Ended June 30, 2025
149
Total
Redevelopment Special Private-Purpose
Successor Agency Districts Trust Funds
ADDITIONS:
Contributions:
Collections on behalf of other governments:
Special assessments $ $ - 2,204,199 $ 2,204,199
Property taxes 1,801,473 - 1,801,473
Total collections on behalf of other governments 1,801,473 2,204,199 4,005,672 Interest and investment earnings:
Interest earnings 25,174 280,404 305,578
Net increase in fair value of investments 22,212 28,251 50,463 Total interest and investment earnings 47,386 308,655 356,041 Total additions 1,848,859 2,512,854 4,361,713
DEDUCTIONS:
Distribution of property taxes to other taxing entities 148,074 - 148,074 Obligation retirements:
Interest expense - 1,100,892 1,100,892
Trustee fees - 3,760 3,760
City administrative expenses 130,060 51,171 181,231
Other expenses - 73,861 73,861
Total deductions 278,134 1,229,684 1,507,818
Net increase in fiduciary net position 1,570,725 1,283,170 2,853,895 Net position (deficit), July 1 (11,875,037) 3,893,397 (7,981,640) Net position (deficit), June 30 $ (10,304,312) $ 5,176,567 $ (5,127,745) #7..
- 434 -
City of Modesto
Combining Statement of Fiduciary Net Position
Fiduciary Funds – Investment Trust Funds
June 30, 2025
150
Modesto-Ceres Total
Tuolumne River Fire Protection Investment
Regional Park Agency Trust Funds
ASSETS
Cash and investments $ 2,610,828 $ $ 239,887 2,850,715
Interest receivable 3,138 2,840 5,978
Taxes receivable - 110,846 110,846
Prepaid expenses 229 - 229
Leases receivable 1,108,752 - 1,108,752
Due from governments 265,426 - 265,426
Land and construction in progress 5,634,159 - 5,634,159 Other capital assets, net of accumulated depreciation 5,137,575 - 5,137,575 Total assets 14,760,107 353,573 15,113,680
LIABILITIES
Accounts payables and other liabilities 382,419 353,573 735,992 Total liabilities 382,419 353,573 735,992
DEFERRED INFLOW OF RESOURCES
Leases 1,025,284 - 1,025,284
Total deferred inflow of resources 1,025,284 - 1,025,284
NET POSITION
Restricted for other governments 13,352,404 - 13,352,404 Total net position $ 13,352,404 $ $ - 13,352,404
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City of Modesto
Combining Statement of Changes in Fiduciary Net Position Fiduciary Funds – Investment Trust Funds
Fiscal Year Ended June 30, 2025
151
Modesto-Ceres Total
Tuolumne River Fire Protection Investment
Regional Park Agency Trust Funds
ADDITIONS:
Contributions:
Members investment pool $ 849,312 $ - $ 849,312
Total contributions 849,312 - 849,312
Collections on behalf of other governments:
Special assessments - 254,158 254,158
Property taxes - 464,280 464,280
Grants 1,455,015 - 1,455,015
Other 235,243 43,475 278,718
Total collections on behalf of other governments 1,690,258 761,913 2,452,171 Interest and investment earnings:
Interest and rent earnings 161,521 11,847 173,368
Net increase in fair value of investments 80,398 10,447 90,845 Total interest and investment earnings 241,919 22,294 264,213 Other additions:
Gain on disposition of capital assets 461,074 - 461,074 Total other additions 461,074 - 461,074
Total additions 3,242,563 784,207 4,026,770
DEDUCTIONS:
Distribution of property taxes to other taxing entities - 796,599 796,599 City administrative expenses 170,602 6,411 177,013
Other expenses - 8,540 8,540
Depreciation expense 434,128 - 434,128
Insurance expenses 14,216 2,020 16,236
Operating expenses 1,118,641 - 1,118,641
Total deductions 1,737,587 813,570 2,551,157
SPECIAL ITEMS:
Insurance recoveries 453,744 - 453,744
Recovery of previously written-off capital asset 180,011 - 180,011 Total special items 633,755 - 633,755
Net increase (decrease) in fiduciary net position 2,138,731 (29,363) 2,109,368 Net position, July 1 11,213,673 29,363 11,243,036
Net position, June 30 $ 13,352,404 $ - $ 13,352,404
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STATISTICAL SECTION TAB
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STATISTICAL SECTION
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City of Modesto
Fiscal Year Ended June 30, 2025
152
STATISTICAL SECTION
This part of the Annual Comprehensive Financial Report presents detailed information to aid in understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial health. In contrast to the financial section, the statistical section information is not subject to independent audit. Financial Trends These schedules contain trend information to help the reader understand how the City’s financial performance has changed over time:
1. Net Position by Component
2. Changes in Net Position
3. Fund Balances of Governmental Funds
4. Changes in Fund Balances of Governmental Funds
Revenue Capacity
This schedule gives information on the City’s most significant local revenue source, the water usage charges:
1. Water Utility System - Ten Largest Customers
2. Water revenues by customer class
3. Water rates
Debt Capacity
These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future:
1. Ratio of Outstanding Debt by Type
2. Computation of Direct and Overlapping Debt
3. Computation of Legal Debt Margin
4. Revenue Bond Coverage, Wastewater Revenue Bonds
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place:
1. Demographic and Economic Statistics
2. Principal Employers
3. Principal Property Taxpayers
Operating Information
These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs:
1. Full-Time City Government Employees by Function
2. Operating Indicators by Function
3. Capital Asset Statistics by Function/Program
Sources: Unless otherwise noted, the information in these schedules is derived from the Annual Comprehensive Financial Reports for the relevant year.
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City of Modesto
Net Position by Component(1)
Last Ten Fiscal Years
(Accrual Basis of Accounting)
153
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Governmental activities
Net investment in capital assets $ 381,887,289 $ 376,743,556 $ 377,529,238 $ 401,515,805 $ 374,618,780 $ 407,347,307 $ 457,620,157 $ 468,002,326 $ 347,825,273 $ 348,311,958 Restricted (2) 115,619,807 123,851,082 130,192,278 127,885,787 135,818,614 183,357,207 195,793,646 208,472,568 83,916,553 230,262,278 Unrestricted (173,275,294) (191,483,628) (182,197,396) (191,345,565) (206,772,243) (217,114,643) (189,907,446) (187,041,193) (83,427,817) (236,829,097) Total governmental activities net position $ 324,231,802 $ 309,111,010 $ 325,524,120 $ 338,056,027 $ 303,665,151 $ 373,589,871 $ 463,506,357 $ 489,433,701 $ 348,314,009 $ 341,745,139 Business-type activities
Net investment in capital assets $ 539,821,175 $ 555,163,217 $ 571,811,118 $ 607,813,261 $ 647,695,354 $ 648,609,186 $ 687,640,266 $ 589,299,184 $ 628,224,368 $ 682,392,297 Restricted (2) 22,052,595 21,525,961 21,071,542 15,569,107 15,857,655 17,004,338 15,918,799 16,788,942 15,883,497 3,817,595 Unrestricted 92,324,550 113,595,981 130,146,975 148,005,231 138,508,360 178,262,877 115,746,227 241,640,663 229,643,218 223,982,881 Total business-type activities net position $ 654,198,320 $ 690,285,159 $ 723,029,635 $ 771,387,599 $ 802,061,369 $ 843,876,401 $ 819,305,292 $ 847,728,789 $ 873,751,083 $ 910,192,773 Primary government
Net investment in capital assets $ 921,708,464 $ 931,906,773 $ 949,340,356 $ 1,009,329,066 $ 1,022,314,134 $ 1,055,956,493 $ 1,145,260,423 $ 1,057,301,510 $ 976,049,641 $ 1,030,704,255 Restricted (2) 137,672,402 145,377,043 151,263,820 143,454,894 151,676,269 200,361,545 211,712,445 225,261,510 99,800,050 234,079,873 Unrestricted (80,950,744) (77,887,647) (52,050,421) (43,340,334) (68,263,883) (38,851,766) (74,161,219) 54,599,470 146,215,401 (12,846,216) Total primary government net position $ 978,430,122 $ 999,396,169 $ 1,048,553,755 $ 1,109,443,626 $ 1,105,726,520 $ 1,217,466,272 $ 1,282,811,649 $ 1,337,162,490 $ 1,222,065,092 $ 1,251,937,912 Restricted
(1) Accounting standards require that net position be reported in three components in the financial statements: net investment in capital assets; restricted; and unrestricted. Net position is considered restricted when (a) externally imposed by creditors (such as debt covenants), grantors, contributors, or laws or regulations of other governments or (b) imposed by law through constitutional provisions or enabling legislation. (2) During fiscal year 2024, a correction to construction work in progress in the amount of $138,748,624 was process to correct previously overstated capital assets, when the City determined that a previously recognized asset would be turned over to the California Department of Transportation once the asset was completed, based on a cooperative agreement. ($100)
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
$1,100
$1,200
$1,300
$1,400
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Net investment in capital assets Restricted Unrestricted #7..
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City of Modesto
Changes in Net Position
Last Ten Fiscal Years
(Accrual Basis of Accounting)
154
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Expenses
Governmental activities:
General government $ 12,838,583 $ 13,945,824 $ 15,432,617 $ 13,973,768 $ 14,808,371 $ 14,727,031 $ 20,268,611 $ 16,573,945 $ 17,124,132 $ 19,507,887 Community development 12,552,115 15,419,529 17,268,926 15,720,280 25,698,343 30,782,573 20,615,432 28,589,701 49,357,807 50,662,150 Highways and streets 20,149,011 22,481,002 22,997,140 23,937,423 25,858,611 25,863,042 27,463,523 27,337,181 40,587,533 36,489,700 Public works 10,749,465 13,169,149 8,674,538 3,472,405 3,736,696 3,126,390 3,086,419 7,795,895 13,898,622 15,001,365 Parks and recreation 3,493,743 3,947,898 4,456,508 15,680,980 14,725,590 13,750,865 12,439,250 16,227,064 21,298,671 26,118,626 Public safety 86,907,876 104,348,464 120,629,673 111,059,794 140,709,104 129,785,835 121,675,443 147,700,874 169,102,289 184,103,949 Interest on long-term debt 2,691,894 2,500,849 2,510,224 2,402,299 2,302,626 2,039,849 1,954,306 1,719,479 1,276,737 1,122,442 Total governmental activities expenses $ 149,382,687 $ 175,812,715 $ 191,969,626 $ 186,246,949 $ 227,839,341 $ 220,075,585 $ 207,502,984 $ 245,944,139 $ 312,645,791 $ 333,006,119 Business-type activities:
Water $ 59,127,625 $ 63,008,231 $ 56,526,729 $ 62,745,688 $ 69,187,391 $ 68,792,875 $ 73,421,868 $ 77,533,248 $ 89,689,694 $ 92,737,199 Sewer 33,093,921 36,248,877 41,444,220 41,216,914 45,832,671 46,500,454 44,263,767 48,558,199 54,056,910 64,696,457 Other Enterprise Funds(1) 45,630,005 45,977,066 43,273,109 48,115,965 51,408,949 54,972,944 26,000,573 28,102,128 31,958,844 31,940,883 Total business-type activities expenses 137,851,551 145,234,174 141,244,058 152,078,567 166,429,011 170,266,273 143,686,208 154,193,575 175,705,448 189,374,539 Total primary government expenses $ 287,234,238 $ 321,046,889 $ 333,213,684 $ 338,325,516 $ 394,268,352 $ 390,341,858 $ 351,189,192 $ 400,137,714 $ 488,351,239 $ 522,380,658 Program revenues
Governmental activities:
Charges for services:
General government $ 6,539,908 $ 5,082,405 $ 6,544,581 $ 6,387,743 $ 5,973,621 $ 6,237,530 $ 6,572,771 $ 5,945,470 $ 7,216,392 $ 9,458,727 Community development 6,885,850 10,378,999 16,049,727 12,106,237 17,327,298 16,611,118 19,488,129 16,094,070 10,896,436 8,011,784 Highway and streets 1,154,290 1,101,813 758,952 748,319 909,580 651,061 651,082 1,077,458 1,293,908 1,889,103 Public works 5,469,419 5,908,332 1,637,024 2,779,546 2,921,053 2,869,808 2,711,433 3,780,309 4,556,686 5,049,886 Parks and recreation 771,733 1,614,443 2,346,211 2,450,965 3,358,983 2,145,685 2,205,344 2,507,683 2,133,067 2,253,950 Public safety 3,868,346 4,847,914 5,127,433 4,502,546 11,354,045 5,849,193 8,960,454 6,993,295 8,727,941 7,572,030 Operating grants and contributions 3,630,185 5,050,771 5,802,634 6,591,435 16,838,122 12,010,918 15,352,734 19,539,354 15,527,564 16,658,746 Capital grants and contributions 1,708,602 2,117,867 3,062,292 8,831,664 5,894,717 57,825,011 12,835,899 4,174,014 6,838,419 8,827,153 Total government activities program revenues 30,028,333 36,102,544 41,328,854 44,398,455 64,577,419 104,200,324 68,777,846 60,111,653 57,190,413 59,721,379 Business-type activities:
Charges for services:
Water $ 55,992,533 $ 69,075,873 $ 74,842,451 $ 76,806,740 $ 82,796,199 $ 87,713,122 $ 86,231,116 $ 81,863,397 $ 86,165,645 $ 90,925,358 Sewer 47,859,680 49,905,078 52,799,102 57,562,619 58,168,552 63,614,677 65,367,417 64,518,164 68,673,479 71,724,921 Other enterprise funds (1) 21,130,529 22,607,585 23,223,082 24,594,413 22,951,211 23,391,632 22,982,937 28,871,874 29,425,822 36,590,220 Operating grants and contributions 14,153,568 15,975,703 17,858,762 25,668,280 21,780,920 29,310,591 1,644,338 1,263,264 844,097 2,561,079 Capital grants and contributions 4,753,223 19,617,513 7,196,698 5,198,721 546,375 8,672,597 2,452,983 3,310,141 8,018,762 7,222,643 Total business-type activities program revenues 143,889,533 177,181,752 175,920,095 189,830,773 186,243,257 212,702,619 178,678,791 179,826,840 193,127,805 209,024,221 Total primary government program revenues $ 173,917,866 $ 213,284,296 $ 217,248,949 $ 234,229,228 $ 250,820,676 $ 316,902,943 $ 247,456,637 $ 239,938,493 $ 250,318,218 $ 268,745,600 Net (Expense)/Revenue
Governmental activities $ (119,354,354) $ (139,710,171) $ (150,640,772) $ (141,848,494) $ (163,261,922) $ (115,875,261) $ (138,725,138) $ (185,832,486) $ (255,455,378) $ (273,284,740) Business-type activities 6,037,982 31,947,578 34,676,037 37,752,206 19,814,246 42,436,346 34,992,583 25,633,265 18,188,757 19,649,682 Total primary government net expense $ (113,316,372) $ (107,762,593) $ (115,964,735) $ (104,096,288) $ (143,447,676) $ (73,438,915) $ (103,732,555) $ (160,199,221) $ (237,266,621) $ (253,635,058) (continued)
(1) Effective July 1, 2021 bus fund operations seized at the City of Modesto, due to the formation of the regionalized transit agency, Stanislaus Regional Transit Authority (StanRTA). #7..
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City of Modesto
Changes in Net Position (Continued)
Last Ten Fiscal Years
(Accrual Basis of Accounting)
155
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
General Revenues and Other Changes in Net Position
Governmental activities:
Taxes:
Utility users tax $ 19,564,921 $ 20,113,023 $ 20,609,874 $ 19,803,859 $ 19,803,218 $ 20,764,694 $ 20,918,653 $ 22,363,013 $ 21,173,728 $ 23,446,327 Property taxes, levied for general purposes (1) 14,552,304 15,384,518 16,356,095 17,316,735 18,113,180 19,106,595 19,757,550 21,893,830 23,046,388 24,284,092 Transient occupancy tax 2,523,087 2,669,484 2,826,160 2,961,406 2,727,061 2,850,229 3,621,190 3,513,477 3,351,194 3,488,165 Franchise tax 6,194,733 6,431,223 6,433,869 6,762,101 6,996,152 7,117,014 7,402,770 8,569,338 7,975,509 7,661,231 Cannabis tax (2) - - - 352,208 3,201,364 5,379,402 4,022,799 3,185,203 3,408,455 3,279,809 Business license tax, levied for general purposes 11,944,291 12,255,062 13,053,199 13,715,997 13,269,468 13,899,554 15,263,225 15,306,957 16,147,087 16,334,395 Business license tax, levied for downtown improvement district 186,123 192,540 189,070 202,014 190,543 225,051 205,995 211,645 209,236 208,399 Special assessments, levied 3,168,260 3,014,768 5,715,030 4,260,281 4,622,697 4,851,750 5,578,262 4,900,860 5,436,061 5,487,466 Grants and contributions not restricted to specific programs:
Sales tax (state appropriation) 29,878,815 30,204,125 31,302,950 31,665,700 30,534,694 35,670,236 40,389,650 39,611,849 38,038,757 36,595,971 Sales tax Measure H(4) - - - - - - - 11,116,219 47,954,202 47,211,026 Motor vehicle license fee 14,548,427 15,385,069 16,206,760 17,057,003 17,977,807 18,855,971 19,881,139 21,194,886 22,537,514 23,850,552 Transportation tax funding 4,533,572 3,968,029 5,672,563 19,002,236 19,438,347 22,501,876 23,404,322 23,171,728 26,795,778 26,022,667 Community facilities district fees 3,829 1,830 274,494 8,432 16,567 14,628 - - - - Other 13,101,149 15,842,047 17,469,209 13,832,686 27,469,638 39,528,038 54,289,046 35,769,198 29,551,761 20,820,173 Unrestricted investment earnings 582,565 362,856 726,199 5,753,083 6,044,156 (287,088) (3,911,830) 3,403,539 10,274,601 23,589,103 Miscellaneous 2,440,696 515,206 818,542 3,421,783 3,660,429 2,184,677 1,643,071 923,411 1,156,335 2,212,563 Transfers (567,177) (1,750,401) (354,287) (1,675,373) 479,917 824,609 21,077,584 66,244 1,975,368 2,223,931 Total government activities 122,655,595 124,589,379 137,299,727 154,440,151 174,545,238 193,487,236 233,543,426 215,201,397 259,031,974 266,715,870 Business-type activities:
Taxes:
Property taxes, generated by and allocated to the airport 206,854 199,124 207,849 201,931 190,995 266,272 212,978 291,711 359,122 406,150 Unrestricted investment earnings 2,247,061 872,935 1,047,604 7,290,802 8,082,331 (192,489) (8,124,559) 2,562,708 13,009,651 16,712,360 Miscellaneous 1,368,761 1,316,801 1,472,809 1,528,727 1,390,820 1,686,667 1,301,658 1,707,204 1,479,611 1,897,429 Settlements - - - - - - - - 3,620,125 -
Transfers, net 567,177 1,750,401 354,287 1,675,373 (479,917) (824,609) (21,077,584) (66,244) (1,975,368) (2,223,931) Special item (3) - - - - - - (19,461,712) - - -
Total business-type activities 4,389,853 4,139,261 3,082,549 10,696,833 9,184,229 935,841 (47,149,219) 4,495,379 16,493,141 16,792,008 Total primary government $ 127,045,448 $ 128,728,640 $ 140,382,276 $ 165,136,984 $ 183,729,467 $ 194,423,077 $ 186,394,207 $ 219,696,776 $ 275,525,115 $ 283,507,878 Change in Net Position
Governmental activities $ 3,301,241 $ (15,120,792) $ (13,341,045) $ 12,591,657 $ 11,283,316 $ 77,611,975 $ 94,818,288 $ 29,368,911 $ 3,576,596 $ (6,568,870) Business-type activities 10,427,835 36,086,839 37,758,586 48,449,039 28,998,475 43,372,187 (12,156,636) 30,128,644 34,681,898 36,441,690 Total primary government $ 13,729,076 $ 20,966,047 $ 24,417,541 $ 61,040,696 $ 40,281,791 $ 120,984,162 $ 82,661,652 $ 59,497,555 $ 38,258,494 $ 29,872,820 (concluded)
(1) Due to the dissolution of the Redevelopment agencies, no tax increments will be reported on the entity-wide statements. (2) During fiscal years 2019 and 2020, Cannabis tax was previously reported as Business license tax levied for general purposes. In fiscal year 2021 financials have been updated to report Cannabis tax as such. (3) Effective July 1, 2021 bus fund operations seized at the City of Modesto, due to the formation of the regionalized transit agency, Stanislaus Regional Transit Authority (StanRTA), resulting in a loss in transfer of operations for the City. (4) Effective April 1, 2023 the City of Modesto sales tax rate increased by 1% to 8.875% approved by City residents as part of Measure H. #7..
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City of Modesto
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
156
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
General Fund
Nonspendable $ 2,647,692 $ 2,515,146 $ 2,881,523 $ 2,723,032 $ 2,503,547 $ 2,388,852 $ 2,341,984 $ 2,092,091 $ 1,976,718 $ 11,445,797 Restricted 2,092,126 1,970,622 2,674,200 2,209,485 2,137,896 3,367,488 8,157,536 8,486,061 10,088,574 1,621,755 Committed 3,000,000 15,800,000 18,397,817 18,397,817 18,397,817 18,397,817 18,397,817 18,397,817 18,397,817 18,397,817 Assigned 6,503,769 4,854,307 1,096,566 509,751 309,114 349,022 579,390 1,149,259 4,535,259 2,679,948 Unassigned(1) 12,822,134 4,509,693 1,695,476 1,742,785 2,407,575 6,395,913 9,942,398 23,445,340 48,060,252 54,106,955 Total General Fund $ 27,065,721 $ 29,649,768 $ 26,745,582 $ 25,582,870 $ 25,755,949 $ 30,899,092 $ 39,419,125 $ 53,570,568 $ 83,058,620 $ 88,252,272 All Other Governmental Funds
Nonspendable $ 86,242 $ 81,007 $ 23,816 $ 13,290 $ 101,173 $ 543,554 $ 32,734 $ 27,828 $ 274,550 $ 242,592 Restricted 80,563,574 85,531,411 91,786,367 89,210,020 104,838,269 111,141,528 114,815,329 124,953,657 170,915,534 192,209,222 Assigned 10,063,058 7,975,865 17,126,893 19,304,837 26,193,552 34,308,329 46,078,354 52,426,693 3,611,105 4,087,997 Unassigned (724,841) (3,156,679) (1,723,380) (2,809,303) (7,112,005) (4,375,860) (5,343,454) (7,072,854) (2,732,506) (5,272,139) Total all other governmental funds $ 89,988,033 $ 90,431,604 $ 107,213,696 $ 105,718,844 $ 124,020,989 $ 141,617,551 $ 155,582,963 $ 170,335,324 $ 172,068,683 $ 191,267,672 The change in total fund balance for the General Fund and other governmental funds is explained in Management's Discussion and Analysis.
Note: The City has elected to show ten years of data for this schedule.
General Fund.
(2) During fiscal year 2024-2025, Non-spendable fund balance increased as compared to prior years due to the prepayment of five (5) firetrucks and two (2) drawn aerials totaling $9.2 million.
Firetrucks and aerials are currently being built and the City expects delivery in the upcoming years. (1) Effective April 1, 2023 the City of Modesto sales tax rate increased by 1% to 8.875% approved by City residents as part of Measure H, this increase to the sales tax increased the unassigned fund balance in #7..
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City of Modesto
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
157
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Revenues
Taxes $ 54,965,459 $ 57,045,850 $ 59,468,267 $ 61,114,320 $ 64,300,986 $ 69,342,539 $ 71,192,182 $ 75,043,463 $ 75,311,597 $ 78,702,418 Licenses and permits 186,624 201,445 153,226 344,855 408,645 473,693 434,118 409,082 399,698 344,834 Intergovernmental 76,317,229 72,069,739 85,629,758 96,174,839 125,072,949 154,356,852 166,804,885 168,444,765 196,139,064 206,581,980 Charges for services 20,429,860 24,454,286 25,467,795 23,226,714 36,147,116 28,378,842 33,744,323 30,208,091 33,848,559 32,280,429 Special assessments levied 3,168,260 3,014,768 5,715,030 4,260,281 4,622,697 4,851,750 5,578,262 4,900,860 5,436,061 5,487,466 Interest and rent 1,297,734 1,402,387 1,574,347 2,219,282 2,018,446 1,320,686 2,191,466 4,113,653 5,468,374 17,462,701 Net increase (decrease) in fair value of investments 102,422 (572,616) (645,593) 1,294,543 1,728,158 (985,713) (4,317,623) (487,727) 3,807,834 4,144,945 Fines and forfeits 904,802 1,263,407 1,127,877 1,143,506 666,120 660,110 832,510 880,252 576,173 1,610,217 Donations and Contribution - - - - - 370,958 44,338 - - - Miscellaneous 2,286,597 516,844 818,542 722,662 989,858 1,392,784 1,461,307 927,525 1,102,519 2,155,068 Total Revenues 159,658,987 159,396,110 179,309,249 190,501,002 235,954,975 260,162,501 277,965,768 284,439,964 322,089,879 348,770,058 Expenditures
Current:
General government 12,414,982 11,542,131 11,837,635 12,262,797 12,028,015 12,483,217 21,110,258 15,483,071 15,228,776 17,949,967 Community development 12,453,678 13,264,050 13,234,820 13,796,154 20,945,194 26,215,559 21,429,140 26,878,953 45,142,072 48,024,246 Highways and streets 8,498,783 9,240,654 8,936,163 10,102,646 11,039,619 12,152,803 16,510,434 14,694,631 26,421,078 23,203,685 Public works 10,393,169 10,919,102 6,509,418 3,017,247 3,035,851 2,635,907 3,215,409 7,359,391 12,711,516 6,975,832 Parks and recreation 3,385,484 3,269,360 3,420,453 13,843,885 11,944,940 11,634,840 12,943,340 15,247,166 19,479,513 24,349,411 Public safety 84,022,670 86,475,891 92,341,706 97,411,634 114,540,829 110,275,920 126,649,307 139,450,451 154,658,970 173,714,370 Capital outlay 19,817,025 21,431,186 19,037,250 38,522,334 38,425,318 51,533,054 50,042,664 30,540,807 10,646,681 23,067,120 Debt service:
Principal retirement 2,345,362 2,535,093 2,849,343 2,562,498 2,734,132 2,931,077 3,362,904 4,210,255 5,598,966 5,504,467 Interest 2,043,278 2,075,202 2,114,488 1,897,384 1,996,806 1,985,927 1,913,046 1,609,215 1,280,380 1,302,044 Other 697,405 430,779 396,686 506,333 307,928 51,814 48,610 113,633 473,170 489,488 Total Expenditures 156,071,836 161,183,448 160,677,962 193,922,912 216,998,632 231,900,118 257,225,112 255,587,573 291,641,122 324,580,630 Excess of revenues over
(under) expenditures 3,587,151 (1,787,338) 18,631,287 (3,421,910) 18,956,343 28,262,383 20,740,656 28,852,391 30,448,757 24,189,428 Other Financing Sources (Uses)
Transfers in 6,960,425 5,559,720 10,707,217 21,496,638 15,292,128 14,249,431 15,993,594 17,408,119 26,873,392 27,968,242 Transfers out (10,572,346) (6,659,759) (13,568,675) (20,760,150) (17,397,619) (15,500,194) (17,677,119) (19,129,521) (29,514,905) (28,635,725) Capital leases and SBITAs 330,947 5,883,756 - - 39,204 - 3,741,926 1,772,045 4,042,674 813,201 Sale of assets 106,582 31,239 154,458 87,608 132,485 1,934 32,551 10,540 53,816 57,495 Total other financing sources (uses) (3,174,392) 4,814,956 (2,707,000) 824,096 (1,933,802) (1,248,829) 2,090,952 61,183 1,454,977 203,213 Change in fund balances 412,759 3,027,618 15,924,287 (2,597,814) 17,022,541 27,013,554 22,831,608 28,913,574 31,903,734 24,392,641 FUND BALANCES, July 1 115,647,600 117,053,754 120,081,372 133,959,278 131,301,714 149,776,938 172,516,643 195,002,088 223,905,892 255,127,303 Restatements 993,395 - (2,046,381) (59,750) 1,452,683 (4,273,849) (346,163) (9,770) (682,323) - FUND BALANCES, June 30 $117,053,754 $120,081,372 $133,959,278 $131,301,714 $149,776,938 $172,516,643 $195,002,088 $223,905,892 $255,127,303 $279,519,944 Debt service as a percentage of
noncapital expenditures (1) 3.22% 3.30% 3.50% 2.87% 2.65% 2.73% 2.55% 2.59% 2.45% 2.26% (1) This calculation includes only principal retirement and interest as debt service #7..
- 446 -
City of Modesto
Revenue Capacity – Most Significant Local Revenue Source Water Utility System
(Fiscal Year Ended June 30, 2025)
158
Ten Largest Customers of Water Utility System, Year Ended June 30,2025 % of Total % of Total Water Water Sales
Customer Usage (ccf) (1) Usage Sales Revenue Revenue ($) 1) City of Modesto 405,660 1.94% 1.64% $ 1,351,889
2) Modesto City Schools 370,224 1.77% 1.44% 1,184,361
3) Stanislaus Food Products 467,344 2.23% 1.32% 1,091,072 4) Foster Farms 468,665 2.24% 1.25% 1,031,431
5) Sunopta 281,695 1.35% 0.77% 633,982
6) E & J Gallo 186,846 0.89% 0.68% 560,709
7) Stanislaus Housing Authority 142,031 0.68% 0.61% 503,748 8) Yosemite Community College 123,898 0.59% 0.47% 385,716 9) STANCO 84,543 0.40% 0.42% 347,998
10) Modesto Irrigation District 112,562 0.54% 0.41% 333,896 Total Top Ten 2,643,468 12.63% 9.00% $ 7,424,802
Residential - Flat Rates $ 1,542
Commercial, Industrial and Municipal - Metered Rates 82,364,776 Total Flat/Metered Revenues (Water Sales) (2) $ 82,366,318 The average monthly flat rate service charge for residential customers is: $ 69.44 Commercial Accounts: Meter Size
3/4" $ 26.43
1" 38.55
1 1/2" 68.85
2" 105.21
3" 220.35
4" 390.03
6" 796.05
8" 1,462.65
10" 2,311.05
12" 3,038.25
In addition to these minimum charges, commercial accounts are charged $2.11 per 100 cubic feet of water used. (1) "ccf" means "hundred cubic feet"
(2) Water sales only reflect the revenues in the Water Operating Fund and do not include revenue generated from developer fees and fleet replacement revenues.
Source: City of Modesto-Utilities Division
Water Rates and Charges as of July 1, 2024
Water Sales Revenue, Year Ended June 30,2025
#7..
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City of Modesto
Ratio of Outstanding Debt by Type
Last Ten Fiscal Years
159
Lease Finance Purchase
Fiscal Loans Revenue Notes Obligations
Year Payable Bonds Payable and Leases Total
2016 $ 500,000 $ 56,305,000 $ 2,568,000 $ 942,057 $ - $ 60,315,057 2017 500,000 54,470,000 2,335,000 6,358,720 - 63,663,720 2018 500,000 52,775,000 2,090,000 5,449,379 - 60,814,379 2019 500,000 50,915,000 1,834,000 5,002,881 - 58,251,881 2020 500,000 48,915,000 1,565,000 4,576,954 - 55,556,954 2021 500,000 46,745,000 1,282,000 4,098,878 - 52,625,878 2022 500,000 44,355,000 985,000 8,021,476 - 53,861,476
2023 500,000 41,770,000 673,000 7,018,112 1,695,502 51,656,614 2024 500,000 38,985,000 345,000 6,210,878 5,136,686 51,177,564 2025 500,000 35,995,000 - 5,339,567 3,512,616 45,347,183 Certificates Reimbursement Finance Purchase Total Percentage Fiscal Loans of Agreement Revenue Obligations Primary of Personal Per Year Payable Participation (2) related to MID (3) Bonds (1)(2)(3) and Leases(4) Total Government Income (1) Capita 2016 125,787,342 $ $ 48,330,053 $ 132,375,084 $ 33,945,516 $ - $ - $ 340,437,995 $ 400,753,052 8.21% 1,891 2017 124,280,500 47,630,552 127,484,358 31,605,936 - - 331,001,346 394,665,066 8.13% 1,859 2018 147,366,700 46,916,049 122,378,632 28,090,694 73,589 - 344,825,664 405,640,043 7.31% 1,894 2019 141,471,062 46,146,545 117,047,906 25,522,898 19,510 - 330,207,921 388,459,802 7.20% 1,807 2020 135,251,891 45,357,043 111,472,183 22,892,869 7,825 - 314,981,811 370,538,765 6.41% 1,696 2021 27,540,402 44,557,540 105,641,454 122,384,268 5,625 - 300,129,289 352,755,167 5.89% 1,613 2022 26,632,391 43,703,037 99,555,726 113,398,481 460,435 - 283,750,070 337,611,546 5.52% 1,550 2023 25,714,883 42,798,534 93,190,000 104,323,170 276,292 165,802 266,468,681 318,125,295 5.02% 1,466 2024 24,787,769 40,024,030 88,915,000 97,054,701 92,317 128,861 251,002,678 302,180,242 4.31% 1,380 2025 23,850,939 37,619,528 84,460,000 89,725,262 2,619,203 89,027 238,363,959 283,711,142 3.95% 1,291 (1) See Demographic and Economic Statistics for personal income and population data. (2) Starting in fiscal year 2016, the amounts presented include net of unamortized premiums or discounts. (3) In fiscal year 2021 the decrease in Loans Payable and increase in Revenue Bonds is due to the issuance of Revenue Bonds to pay off the State Revolving Fund loan for the tertiary treatment plant. (4) In fiscal year 2022 the City adopted GASB Statement No. 87, Leases (5) In fiscal year 2023 the City adopted GASB Statement No. 96, Subscription-Based Information Technology Arrangements (SBITAs).
SubscriptionBased IT
Arrangements (5)
Governmental Activities
Business-Type Activities
SubscriptionBased IT
Arrangements
0 50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
400,000,000
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Total Governmental "Total Business"
#7..
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City of Modesto
Computation of Direct and Overlapping Debt
June 30, 2025
160
Percentage Amount
Net Debt Applicable to Applicable to
Jurisdiction Outstanding (1) City of Modesto (2) City of Modesto Direct debt:
City of Modesto $45,347,183 100% $45,347,183
Overlapping General Obligation debt - school districts:
Ceres Unified School District 120,689,256 6.76% 8,157,331 Hart-Ransom Union School District 3,017,135 31.56% 952,070 Modesto Elementary School District (3) 146,253,911 77.23% 112,945,861 Modesto High School District 200,079,139 67.02% 134,102,084 Paradise Elementary School District 120,000 0.00% -
Salida Union Elementary District 12,950,000 29.31% 3,795,117 Stanislaus Union School District 45,365,000 76.20% 34,569,476 Sylvan School District 25,881,178 78.20% 20,239,772
Yosemite Community College District 229,290,110 33.12% 75,934,060 Total overlapping debt 783,645,729 390,695,771
Total direct and overlapping debt $828,992,912 $436,042,954 (1) Gross debt (Principal) outstanding less applicable amounts in debt service funds. (2) Determined by ratio of assessed valuation of property subject to taxation in overlapping portion to valuation of all property subject to taxation in the jurisdiction.
(3) Increase from Modesto Elementary 2018, Measure D & E, General Obligation Bond Series C Note: Source of data for School Districts: Stanislaus County Auditor. #7..
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City of Modesto
Computation of Legal Debt Margin
June 30, 2025
161
Net assessed value (1)(3) $ 22,874,163,771
Plus homeowners' exemption (1)(3) $ 192,554,941
Gross assessed value (1)(3) $ 23,066,718,712
Debt limit - 15% of gross assessed value (2) $ 3,460,007,807 Legal debt margin $ 3,460,007,807
Total Net Debt
Total Net Debt Applicable to the
Applicable Legal Limit as a Percentage
Fiscal Year Debt Limit to Limit Debt Margin of Debt Limit 2016 $ 2,120,160,392 $ $ - 2,120,160,392 0%
2017 2,232,042,092 - 2,232,042,092 0%
2018(4) 2,354,367,851 - 2,354,367,851 0%
2019 2,476,468,235 - 2,476,468,235 0%
2020 2,606,133,716 - 2,606,133,716 0%
2021 2,734,540,136 - 2,734,540,136 0%
2022 2,874,165,127 - 2,874,165,127 0%
2023 3,081,811,386 - 3,081,811,386 0%
2024 3,271,123,737 - 3,271,123,737 0%
2025 3,460,007,807 - 3,460,007,807 0%
(1) Source: Stanislaus County Auditor.
(2) Section 43605 California Government Code.
(3) Figures are based on Stanislaus County.
(4) Fiscal year 2018 was updated after a discussion with Stanislaus County made apparent that the wrong Tax Year was originally pulled from their records.
Note: The City has elected to show ten years worth of data for this schedule. #7..
- 450 -
City of Modesto
Revenue Bond Coverage
Wastewater Revenue Bonds
Last Ten Fiscal Years
162
Net Revenue Debt
Fiscal Gross Operating Available for Service
Year Revenue (1) Expenses (2) Debt Service Requirements Coverage 2016 50,207,559 25,418,140 24,789,419 4,570,286 5.42
2017 50,907,228 25,212,214 25,695,014 11,311,098 2.27
2018 53,770,230 27,227,948 26,542,282 13,536,703 1.96
2019 62,618,527 27,144,632 35,473,895 11,958,407 2.97
2020 64,094,389 29,019,732 35,074,657 12,706,004 2.76
2021 67,012,041 29,187,910 37,824,131 12,560,711 3.01
2022 65,071,038 32,152,205 32,918,833 12,232,431 2.69
2023 68,423,045 27,468,119 40,954,926 12,246,146 3.34
2024 78,858,367 37,243,977 41,614,390 10,412,754 4.00
2025 80,224,049 45,182,314 35,041,735 10,364,998 3.38
(1) Consists of all receipts of the Sewer fund not dedicated to capital spending purposes and including charges for services, conection fees, interest and rental income.
(2) Reflects total sewer fund operating expenses less depreciation; also includes certain transfers out that are made for operational costs incurred in other funds.
0.00 1.00
2.00 3.00
4.00 5.00
6.00 2016 2017 2018 2019 2020 2021 2022 2023 2024
Coverage
#7..
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City of Modesto
Demographic and Economic Statistics
Last Ten Fiscal Years
163
Total Per Capita Stanislaus City
Fiscal City Personal Personal Unemployment County Population Year (1)(2)(3)(4) Population Income ($) Income ($) Rate (%) Population % of County 2016 211,903 $ 4,880,973,702 $ 23,034 9.10% 540,214 39.23% 2017 212,287 4,856,701,986 22,878 7.80% 541,466 39.21%
2018 214,181 5,549,643,891 25,911 7.20% 549,976 38.94%
2019 215,030 5,396,177,850 25,095 6.50% 554,108 38.81%
2020 218,440 5,779,485,520 26,458 13.30% 550,660 39.67% 2021 218,745 5,984,425,710 27,358 7.60% 552,878 39.56%
2022 217,880 6,111,969,760 28,052 5.20% 552,999 39.40%
2023 216,995 6,335,169,025 29,195 6.50% 551,275 39.36%
2024 218,989 7,017,283,516 32,044 5.20% 551,430 39.71%
2025 219,765 7,187,414,325 32,705 5.40% 551,838 39.82%
(1) The population for 2020 was previously overreported as 222,335 (2) In 2020, unemployment rates increased due to the effects of the novel coronavirus, COVID-19. (3) The population for 2021 was previoulsy overreported as 219,294 based on demographic data reported by California Department of Finance Demographic Research Unit.
(4) The fiscal year 2023-2024 unemployment rate was misstated as 7.10% ; the correct rate is 5.20%
Source: State of California, Department of Finance (population) State of California, Employment Development Department (unemployment rate) U.S. Department of Commerce, Census Bureau (income)
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2016201720182019202020212022202320242025
Unemployment Rate (%)
$-
$1,000,000,000
$2,000,000,000
$3,000,000,000
$4,000,000,000
$5,000,000,000
$6,000,000,000
$7,000,000,000
$8,000,000,000
20162017
2018201920202021202220232024
2025
Total Personal Income ($)
$20,000
$22,000
$24,000
$26,000
$28,000
$30,000
$32,000
$34,000
2016
2017201820192020202120222023
20242025
Per Capita Personal Income ($)
38.00%
38.25%
38.50%
38.75%
39.00%
39.25%
39.50%
39.75%
40.00%
40.25%
40.50%
2016201720182019
202020212022202320242025
Population % of County
#7..
- 452 -
City of Modesto
Principal Employers
164
2024/25 2016/17
Percentage Percentage
Number of (1) of Total City Number of (1) of Total City Employer Employees Rank Employment Employees Rank Employment Kaiser Permanente Modesto Medical Center 3,800 1 1.52%
E&J Gallo (2) 3,700 2 1.48% 2,000 4 0.87%
Modesto City School 3,200 3 1.28%
Memorial Medical Center 3,018 4 1.21% 2,056 3 0.90%
Doctors Medical 2,600 5 1.04% 2,260 2 0.99%
Modesto Junior College 1,500 6 0.60% 1,007 7 0.44%
City of Modesto 1,456 7 0.58% 1,219 6 0.53%
Stanislaus County Office of Education 1,224 8 0.49%
Save Mart Supermarkets 1,000 9 0.40%
Sylvan Union School District 900 10 0.36%
Gallo Vineyards, Inc 3,000 1 1.31%
Del Monte Foods, Inc 1,500 5 0.65%
Copperidge Winery 1,001 8 0.44%
Community Services Agency 1,000 9 0.44%
Modesto Bee 651 10 0.28%
Subtotal 22,398 8.96% 15,694 6.85%
Total Labor Force 249,500
Total City Population 219,765
Source: Stanislaus Economic Development & Workforce Alliance (1) The number of employees include both part-time and full time. (2) E. & J. Gallo Winery’s employment figures for FY 2023-2024 reflect active full-time and part-time employees within Modesto city limits only.
Prior year data included broader operations, accounting for the variance. #7..
- 453 -
City of Modesto
Principal Property Taxpayers
165
2024/25 2016/17
Employer
Taxable Assessed
Value Rank
Percentage of
Total City
Taxable
Assessed Value
Taxable Assessed
Value (2) Rank
Percentage of
Total City
Taxable
Assessed Value
Pacific Gas & Electric Company $ 626,897,192 1 2.72% 327,477,112 $ 2 2.20% Frito Lay Inc $ 603,756,840 2 2.62%
E & J Gallo Winery $ 579,256,968 3 2.51% 440,613,920 $ 1 2.96% Gallo Glass Company $ 485,126,397 4 2.10% 291,025,616 $ 4 1.96% G3 Enterprises Inc $ 285,072,479 5 1.24% 124,503,970 $ 9 0.84% Hunt Wesson Foods Inc $ 235,019,499 6 1.02%
California Dairies Inc $ 200,644,877 7 0.87%
Doctors Medical Center $ 193,712,133 8 0.84% 228,032,370 $ 5 1.53% Qr Amz Turlock Propco LLC $ 161,851,232 9 0.70%
Bronco Wine Company $ 161,170,576 10 0.70%
World International (1) $ 22,040,608 3 0.15%
Excel Monte Vista LP $ 138,921,002 6 0.93%
WR Griffin Patterson LLC $ 100,198,114 8 0.67%
Beard Land IMP CO $ 100,970,754 7 0.68%
Fresno Farming LLC $ 102,771,626 10 0.69%
Subtotal $ 3,532,508,193 15.32% 1,876,555,092 $ 12.61%
Total assessed value of $ $ 23,066,718,712 $ 14,880,280,611 Source: Stanislaus Country Treasurer-Tax Collector
Note: Information based on entire Stanislaus County
(1) Formerly World International LLC; should utilize AV in combination with "taxes" paid, if so taxpayer is not in the top 10. Not top 10 in relation to ad valorem taxes.
(2) In fiscal year 2017-2018, the methodology for taxable assessed value was updated. The prior year comparison amounts are also presented using the new methodology.
#7..
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City of Modesto
Full-Time City Government Employees by Function
Last Ten Fiscal Years
166
2016 2017 2018 2019 2020 2021 2022 2023 2024 (2) 2025
Function
General Government 79.00 80.00 90.00 84.00 84.00 85.00 86.00 88.00 91.75 91.75 Community Development 67.00 70.00 81.00 72.00 76.00 69.00 73.00 74.00 91.00 95.00 Public Works and Utilities 107.00 78.00 157.00 56.00 56.00 53.00 63.00 65.00 70.00 70.00 Parks and Recreation 18.50 17.50 17.50 54.75 56.75 51.75 51.75 62.75 66.75 71.75 Public Safety 462.50 490.50 490.50 480.50 510.50 482.00 528.00 557.00 614.50 627.50 Parking 6.00 6.00 6.00 6.00 6.00 7.00 7.00 7.00 7.00 7.00 Water 128.00 134.00 101.00 135.00 136.00 127.00 126.00 127.00 135.00 135.00 Sewer 139.00 157.00 146.80 158.00 158.00 157.00 155.00 156.00 139.00 148.00 Storm Drain 8.00 8.00 2.00 8.00 8.00 8.00 6.00 6.00 6.00 6.00 Compost 61.80 58.80 48.00 57.80 57.80 58.00 63.00 68.00 72.00 75.00 Airport 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 Bus(1) 24.00 24.00 16.00 24.00 24.00 24.00 - - - -
Community Center 5.00 11.00 3.00 2.00 2.00 1.00 1.00 1.00 1.00 1.00 Internal Services 82.00 79.00 56.00 81.00 81.00 79.00 108.00 108.00 110.00 122.00 Total 1,193.80 1,219.80 1,220.80 1,225.05 1,262.05 1,207.75 1,273.75 1,325.75 1,410.00 1,456.00 (1) Effective July 1, 2021, bus services at the City of Modesto seized due to the formation of the Stanislaus Regional Transit Authority (StanRTA). (2) As a result of the positive impact of Measure H funding, position allocations were approved for functions throughout the City.
Source: City of Modesto
0 100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
2016 2017 2018 2019 2020 2021 2022 2023 2024 (2) 2025
POSITION ALLOCATIONS
Internal Services
Community Center
Bus
Airport
Compost
Storm Drain
Sewer
Water
Parking
Public Safety
Parks and Recreation
Public Works and Utilities
Community Development
General Government
#7..
- 455 -
City of Modesto
Operating Indicators by Function
167
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Function/Program
Public safety:
Fire:
Fire calls for service 21,135 26,288 28,444 30,341 31,415 30,741 32,618 33,305 33,825 34,375 Primary fire inspections conducted 764 1,060 1,509 2,011 2,687 1,993 2,167 1,818 1,945 2,192 Police:
Communication Center calls answered
Police calls for service 129,439 129,802 194,931 181,430 178,649 165,126 148,710 134,513 138,514 166,007 Law violations: (4)
Part I and Part II crimes 53,609 53,142 53,543 47,141 36,898 33,067 28,204 18,494 20,104 19,646 Physical arrests (adult and juvenile) 12,303 11,760 13,247 12,388 13,302 12,360 10,962 5,611 5,952 8,106 Traffic violations 11,451 15,428 16,930 17,098 16,263 13,767 7,978 6,914 7,538 13,108 Parking violations (12) 6,139 10,841 9,414 7,443 3,781 477 429 1,020 1,010 1,813 Public works
Streets:
Street resurfacing (Slurry Seal lane miles) 4 12 4 8 1 123 118 160 195 177 Potholes repaired (Total # of repairs) (13) 24,059 8,745 25,004 36,709 2,831 21,863 9,230 16,672 11,944 16,990 Crack sealing (lane miles) 37 29 48 29 23 43 32 34 36 49 Airport:
Number of tenant aircraft 173 162 153 167 160 164 156 165 159 157 Number of hangars 119 119 119 119 119 119 119 119 119 119 Number of runways 2 2 2 2 2 2 2 2 2 2
Annual fuel consumption in gallons 443,272 582,602 580,383 631,891 511,928 540,226 647,631 683,330 761,410 689,325 Bus service:(3)
Number of buses 60 59 57 61 61 69 - - - -
Number of routes 21 21 17 17 17 19 - - - -
Total route miles 362 362 245 245 245 338 - - - -
Average weekday number of passengers 12,441 10,523 9,354 8,869 7,475 6,686 - - - - Total number of passengers carried 3,664,689 3,108,307 2,762,922 2,589,049 2,182,079 1,987,698 - - - - Solid waste:
Recyclables processed (tons per year)(6)(7) 56,493 71,155 62,701 60,947 62,617 60,332 17,008 3,409 9,384 9,564 Organic Waste (8) - - - - - - 29,111 20,116 35,400 31,710 Green Waste(2) 58,730 62,859 64,873 66,017 82,866 46,373 14,691 18,932 14,153 16,698 Commercial food waste(5) 845 914 1,550 1,145 1,192 2,783 3,368 - - - Waste tires 4,497 4,931 4,285 4,320 5,089 4,501 4,883 6,236 3,597 4,511 Community development
Building safety & NPU:
Permits issued 4,939 4,973 5,033 4,335 4,146 4,808 4,690 4,790 4,809 4,585 Estimated cost of construction (10) $ 92,768,634 $ 118,527,812 $ 172,595,385 $ 112,433,029 $ 170,765,326 $ 201,953,969 $ 216,000,327 $ 173,801,514 $ 260,927,659 $ 241,208,491 Building Inspections made (11) 23,187 36,158 42,891 39,086 34,218 34,730 21,064 17,720 25,038 34,390 Traffic electrical:
Street lights 13,764 13,764 13,764 13,764 13,764 13,764 13,764 13,764 13,923 13,923 Traffic signals 151 153 155 155 156 156 156 160 159 159 Lighted ped walks 28 28 24 26 26 26 26 34 40 42
Beacons 11 11 3 4 4 4 4 15 16 16
Four way flashers 10 10 5 3 3 3 3 6 8 9
School flashers 23 24 16 13 14 14 14 44 62 81
CCTV 41 41 30 24 24 24 24 24 10 10
Hubs 6 6 2 6 6 6 6 8 8 17
Culture and recreation:
Recreation class participants(1) (9) g y ( g ) 150,091 150,500 154,000 160,656 116,131 28,240 58,426 88,103 132,313 134,735 (1) Fiscal year 2020-2021 Recreation class participants had decreased due the COVID-19 outbreak and classes were suspended. (2) Fiscal year 2021-2022 Yard waste is to be changed to Green Waste and was split into Organic Waste and Green Waste. This was the first year for recording Organic Waste. Fiscal year 2022-2023 Green waste increased due to rain fall. (3) Effective July 1, 2021, the operations of the Bus services seized as the newly regional transit agency, Stanislaus Regional Transit Agency (StanRTA) formed and took over the public transit services within some areas of Stanislaus County. (5) This was a temporary program to resturants and food producers separate from organics collection. Recent State Legislation has removed distinction between food waste and other organic waste. (6) Fiscal year 2022-2023 recycling numbers decreased due to the inaccurate reporting from the haulers and adding a blue recycling container to residents. (7) Beginning 23/24 - data includes hauler and City staff collected recycling (8) Organic waste data includes yard, food, and paper waste and is collected by haulers from residential and commercial customers. (9) Recreational swimming, outreach tabling events, department events and parade, and senior center programming attendance are the main contributing factors. The parade attendance was in correctly reported in FY23 and should have been 12,000 higher. (10) Increase for fiscal year 2023-2024 is mainly due to an increase in labor and materials costs. (11) The increase in inspections is due to larger projects like multifamily developments, proactive follow-up on inactive permits, and the continued expansion of the Rental Housing Safety Program, which now includes daily inspections by two dedicated staff. (12) The increase in parking violations is attributed to a higher number of Community Service Officer's (CSOs), which has expanded enforcement capacity and coverage. (13) The year-over-year increase in pothole repairs is attributed to fluctuations in available manpower, equipment, and volume of service requests from both internal departments and the public.
Additionally, pothole patching is often conducted as part of slurry seal preparation, contributing to the overall repair count.
Source: City of Modesto - Various Departments
(4) Effective January 1, 2021, every law enforcement is now required to use the National Incident Based Reporting System (NIBRS), which has a focus on whether the crime was attempted or completed. Under prior reporting requirements, attempted crimes and completed crimes were reported as crimes. #7..
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City of Modesto
Capital Asset Statistics by Function/Program
168
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Function/Program
Public safety:
Fire stations 11 11 11 11 11 11 11 11 11 11
Police stations 1 1 1 1 1 1 1 1 1 1
Police patrol units 105 104 104 100 105 100 105 105 103 106 Public works
Streets:
Miles of streets (1) 692 692 692 693 693 694 700 700 700 701 Water:
Miles of water mains 887 887 908 908 914 916 914 914 914 918 Fire hydrants 7,845 7,859 7,921 7,974 8,026 8,043 8,077 8,262 8,435 8,506 Storage capacity (gallons) 18,300,000 18,300,000 18,300,000 22,300,000 22,300,000 22,550,000 22,545,000 22,545,000 22,545,000 22,545,000 Wastewater:
Miles of sanitary sewers 639 655 656 656 656 657 650 650 650 649 Miles of storm sewers 183 170 170 170 170 170 165 165 165 164 Number of treatment plants (2) 2 2 2 2 2 2 2 2 2 2
Treatment capacity (millions of gallons) (3) 70 19 19 19 19 19 19 19 19 19 Community services:
City parks 76 76 76 76 76 76 76 76 75 75
City parks acreage 1,240 1,240 1,240 1,240 1,240 1,246 1,246 1,249 1,245 1,245 Playgrounds (4) 58 58 58 58 54 55 55 55 54 54
City trails 6 6 6 6 6 9 9 9 9 9
City trails miles 15 15 16 16 17 17 17 17 17 17
Regional park acreage 375 375 375 375 375 653 653 634 641 641 Regional park facilities:
Golf courses (18 holes) 2 2 2 2 2 2 2 2 2 2
Golf courses (9 holes)(5) 1 1 1 1 1 1 1 - - -
Clubhouse and banquet facility(6)(6) 8 8 8 8 8 8 8 4 4 4 Historic house (3) 3 3 3 3 3 3 3 3 3 3
Museums(7) - - - - - - - 1 1 1
Community gardens 2 1 1 1 1 1 1 1 1 1
Community centers(8) 7 7 7 7 7 7 7 4 4 4
Senior centers 1 1 1 1 1 1 1 1 1 1
Sports centers 1 1 1 1 1 1 1 1 1 1
Performing arts centers 1 1 1 1 1 1 1 1 1 1
Swimming pools 4 1 1 1 1 1 1 1 1 1
Tennis courts 37 37 37 37 37 37 37 33 33 33
Pickleball courts - - - - - - - 12 12 12
Baseball/softball diamonds 24 24 24 24 24 29 29 29 28 28 Soccer/football fields 29 29 29 29 29 31 31 31 31 31
Splash play in Existing parks 10 10 10 9 9 9 9 9 9 9
(1) Information reported from the City's GIS system.
(2) The City has both a Primary and a Secondary treatment facility. (3) In fiscal year 2016-2017 the City implemented a new process and permit. Previous permit was 70 million gallons daily seasonal Oct. through May. Current permit is 19 million gallons daily year round.
(4) In fiscal year 2019-2020 the number of playgrounds was reduced as playgrounds were removed to rebuild. (5) The City closed Muni golf course in fiscal year 2022-2023. (6) The American Legion Hall and Little Legion Hall were damaged due to a fire in fiscal year 2022-2023. There are no plans to repair or use. (7) In fiscal year 2022-2023 the McHenry Museum was recategorized from banquet facility to museum. (8) In fiscal year 2022-2023 the methodology was changed leading to fewer facilities recoginzed as community centers.
Source: City of Modesto - Various Departments
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CONTINUING DISCLOSURE TAB
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CONTINUING DISCLOSURE SECTION
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City of Modesto
Continuing Disclosure Section
169
This part of the Annual Comprehensive Financial Report provides information in order to comply with the City’s contractual commitment established by certain continuing disclosure undertaking of the City, entered into in accordance with Securities and Exchange Commission Rule 15c2-12 (the “Rule”) for the City’s bond obligations listed below. In contrast to the financial section, the continuing disclosure section information is not subject to independent audit.
1. Wastewater Revenue Refunding Bonds, Series 2018A
2. Wastewater Revenue Refunding Bonds, Series 2020A
3. Wastewater Revenue Refunding Bonds, Series 2020B
4. Water Revenue Refinancing Certificates of Participation, 2008 Series A
5. Modesto Irrigation District Financing Authority Domestic Water Project Revenue Bonds, Series 2007F #7..
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City of Modesto
Continuing Disclosure Requirements Information
Fiscal Year Ended June 30, 2025
170
Connection charge information: The Sewer Enterprise imposes connection fees on an on-time basis to new users of the sewer system and to users who significantly expand their usage. The fees have three components:
Capacity charge: $2,643 per Equivalent Dwelling Unit for residential units. Commercial and industrial property charged based on type of business.
Sub-trunk sewer charge: $645 per acre
Connection (lateral) charge: $33 per linear foot of lot frontage adjacent to the sewer line.
Customer Base by Type of Account
Number of % of Total % of Sewer Fee
Category Accounts Accounts Operating Revenue
Residential 59,499 94.9% 59.48%
Commercial 3,104 5.0% 17.18%
Industrial 50 0.1% 23.34%
Total 62,653 100.00% 100.00%
Ten Largest Users of Sewer Facilities, Year Ended June 30,2025 Sewer Fee % of Sewer Fee
User Revenue Operating Revenue
1) Foster Farms $ 2,944,610 4.47%
2) E & J Gallo $ 2,869,240 4.36%
3) Stanislaus Food Products $ 2,786,816 4.23%
4) City of Ceres $ 1,706,494 2.59%
5) Frito Lay, Inc $ 1,302,704 1.98%
6) Sunopta $ 1,264,318 1.92%
7) Del Monte Foods $ 860,563 1.31%
8) Nestle Food Company $ 845,221 1.28%
9) Modesto City Schools $ 394,863 0.60%
10) Memorial Hospital $ 356,618 0.54%
Total (Top Ten Customers) $ 15,331,447 23.28%
Total (All Customers) $ 65,862,904
The average single-family residence monthly sewer charge is: $46.26 Charge
Commercial Group Per 1,000 Gallons Fixed Charge
Group 1 (no food, just toilets or working facilities) $4.12 Group 2 (commercial laundromats, service stations, hotels without food) $5.41 Group 3 (industrial laundromats, hotels with food) $6.74 Group 4 (restaurants, bakeries, auto steam, markets) $8.34 Industrial users pay a minimum account charge of $5.22 with additional charges of: $4006.12 per million gallons of flow, $298.65 per 1,000 pounds of biochemical oxygen demand (BOD), and $556.83 per 1,000 pounds of Total Suspended Solids (TSS).
Industrial users on the Cannery Segregation line pay a minimum account charge of $5.22 with additional charges of: $2,996.74 per million gallons of flow, $19.98 per 1,000 pounds of biochemical oxygen demand (BOD), and $39.36 per 1,000 pounds of Tota Suspended Solids (TSS) while in production during the months of July, August and September.
The Annual Budget of the City of Modesto is available from the City of Modesto Finance Department.
Updates of other required disclosures may be found elsewhere in this report, as follows:
Statement of Revenues, Expenses and Changes in Fund Net Position Page 25 Principal Amount of Bonds and Other Parity Debt Page 50-53 (Note III-C) Historical Debt Service Coverage Page 147
(continued)
Wastewater Revenue Refunding Bonds, Series 2018 A, and
Wastewater Revenue Refunding Bonds, Series 2020 A & B
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City of Modesto
Continuing Disclosure Requirements Information (Continued) Fiscal Year Ended June 30, 2025
171
Residential, commercial and industrial rates have increased according to the following approved schedule.
Fiscal Year Percent Increase
2015-16 3.0%
2016-17 6.0%
2017-18 6.0%
2018-19 6.0%
2019-20 6.0%
2020-21 4.0%
2021-22 4.0%
2022-23 3.5%
2023-24 3.5%
2024-25 3.5%
Comparative Monthly Wastewater Service Charges.
The City's residential charges as of July 1, 2024 are set forth below with a comparison to other Central Valley and Northern California cities.
City
Monthly
Residential
Charge
Fresno $ 25.75
Lodi 50.18
Modesto 46.26
Stockton (1) 57.36
Tracy 58.14
Turlock 47.25
WASTEWATER COMPARISON INFORMATION
Ten Year History of Rate Increases
WASTEWATER SYSTEM
CITY OF MODESTO
CITY OF MODESTO
WASTEWATER SYSTEM
Monthly Sewer Charge Comparison
Residential Service
As of July 1, 2024
(1) The monthly sewer charge for residential services was innacuratelty represented on fiscal year 2023-2024 ACFR for the city of Stockton. The correct number should have been $55.00. (2) The monthly sewer charge for residential services was innacuartely represented on fiscal year 2023-2024 ACFR for the city of Turlock. The correct number should have been $45.47. #7..
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City of Modesto
Continuing Disclosure Requirements Information (Continued) Fiscal Year Ended June 30, 2025
172
Comparative Monthly Wastewater Service Charges.
(1) Connection fees are based on the size of the lot & location. (2) Connection fees are based on the size of the water meter.
As of July 1, 2024
Monthly Sewer Charge
Comparison
Residential Service
Wastewater Connection
Fees Comparison
$25.75
2,332.34
2,269.00
2,461.00
City
Fresno (1)
Lodi (2)
Modesto
Stockton
Tracy
Turlock
57.36 58.14
47.25 The City's residential charges as of July 1, 2024 are set forth below with a comparison to other Central Valley and Northern California cities.
WASTEWATER SYSTEM
Sewer Charge Comparisons
CITY OF MODESTO
2,119.00
3,655.00
2,643.00
50.18 46.26
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Continuing Disclosure Requirements Information (Continued) Fiscal Year Ended June 30, 2025
173
Water Revenue Refinancing Certificates of Participation, 2008 Series A Reserve Account Requirement as of June 30, 2025 $ 4,011,410 Surety Policy Value: 2,082,513
Balance in Parity Reserve Account as of June 30, 2025 2,496,142 Shortfall/(Excess) Reserve Coverage: $ (567,245)
Ten Largest Customers of Water Utility System, Year Ended June 30, 2025 % of Total Water Sales % of Total Water
Customer Business Type Usage (ccf ) (1) Usage Revenue ($) Sales Revenue 1) City of Modesto Local Government 405,660 1.94% 1,351,889 $ 1.64% 2) Modesto City Schools Education 370,224 1.77% 1,184,361 1.44% 3) Stanislaus Foods Products Cannery 467,344 2.23% 1,091,072 1.32% 4) Foster Farms Dairy Processor 468,665 2.24% 1,031,431 1.25% 5) Sunopta Cannery 281,695 1.35% 633,982 0.77%
6) E & J Gallo Processor 186,846 0.89% 560,709 0.68%
7) Stanislaus Housing Authority Housing Authority 142,031 0.68% 503,748 0.61% 8) Yosemite Community College Education 123,898 0.59% 385,716 0.47% 9) STANCO Local Government 84,543 0.40% 347,998 0.42%
10) Modesto Irrigation District Power Company 112,562 0.54% 333,896 0.41% Total Top Ten 2,643,468 12.63% 7,424,802 $ 9.01%
Total Flat/Metered Revenues (Water Sales) $ 82,366,318
(1) Grover Landscaping maintains City parks
(2) "ccf" means "hundred cubic feet"
Water Sales Revenue, Year Ended June 30, 2025
Residential - flat rates $ 1,542
Commercial, industrial and municipal - metered rates $ 82,364,776 Total Water Sales $ 82,366,318
The average monthly flat rate service charge for residential customers is:
$ 69.44
Meter Size
3/4" $ 26.43
1" 38.55
1 1/2" 68.85
2" 105.21
3" 220.35
4" 390.03
6" 796.05
8" 1,462.65
10" 2,311.05
12" 3,038.25
In addition to these minimum charges, commercial accounts are charged $2.11 per 100 cubic feet of water used.
The Annual Budget of the City of Modesto is available from the City of Modesto Finance Department. (1)
Current Water Rates as of July 1, 2024 - Commercial Accounts Water sales only reflect the revenues in the Water Operating Fund and do not include revenue generated from developer fees and fleet replacement revenues.
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Continuing Disclosure Requirements Information (Continued) City Water – Historical Debt Service Coverage
Last Ten Fiscal Years
174
2016 (6) 2017 2018 (10) 2019 (11) 2020(13) 2021 2022 (14)(15) 2023 2024 2025 Charges for services $ 51,489,077 $ 63,253,114 $ 68,928,504 $ 71,952,653 $ 76,996,091 $ 80,908,193 $ 79,318,075 $ 76,795,929 $ 80,556,147 $ 85,032,612 Connection charges 935,987 1,435,654 1,661,151 1,081,913 1,904,330 1,559,621 1,194,261 1,337,878 1,731,616 1,599,147 Refunds, damages & recoveries 511,063 57,533 (121,929) 95,591 92,786 (801,155) (4,141,774) 53,974 80,714 87,251 Interest and rental income 535,823 574,899 689,500 999,269 1,086,126 864,989 971,868 890,334 5,469,458 6,678,745 Service credits 3,026,911 3,304,911 3,408,238 3,309,703 3,576,012 3,654,881 3,405,150 2,797,201 3,528,249 4,127,355 Miscellaneous (9) 2,979,500 231,134 1,117,571 1,120,960 1,243,999 1,738,084 1,995,136 1,182,927 1,211,317 1,922,860 Total gross operating revenues $ 59,478,361 $ 68,857,245 $ 75,683,035 $ 78,560,089 $ 84,899,344 $ 87,924,613 $ 82,742,716 $ 83,058,243 $ 92,577,501 $ 99,447,970 Operating expenses (1) (4) $ 38,722,320 $ 35,508,887 $ 35,685,576 $ 38,806,127 $ 39,167,326 $ 42,088,154 $ 47,165,967 $ 47,741,404 $ 53,146,114 $ 60,293,176 Operating transfers (2)(12) 765,954 765,000 1,239,943 3,129,583 2,241,135 3,283,246 689,875 799,091 1,197,857 810,992 Total operating expenses (2) $ 39,488,274 $ 36,273,887 $ 36,925,519 $ 41,935,710 $ 41,408,461 $ 45,371,400 $ 47,855,842 $ 48,540,495 $ 54,343,971 $ 61,104,168 Net operating revenues $ 19,990,087 $ 32,583,358 $ 38,757,516 $ 36,624,379 $ 43,490,883 $ 42,553,213 $ 34,886,874 $ 34,517,748 $ 38,233,530 $ 38,343,802 2008 Revenue Certificates of Participation $ 2,313,857 $ 2,468,593 $ 2,268,298 $ 2,121,410 $ 2,309,687 $ 2,130,448 $ 2,138,850 $ 2,124,040 $ 3,632,022 $ 3,698,625 MID Treatment & Delivery Agreement (3) 10,203,352 10,202,108 10,208,384 10,214,947 10,213,274 10,709,280 9,921,714 9,115,777 8,525,231 8,572,575 CDWR Loan 131,322 - - - - - - - - -
ARRA Grant 36,089 36,084 36,080 37,123 39,350 37,540 37,343 37,756 37,443 38,920 Total debt service $ 12,684,620 $ 12,706,785 $ 12,512,762 $ 12,373,480 $ 12,562,311 $ 12,877,268 $ 12,097,907 $ 11,277,573 $ 12,194,696 $ 12,310,120 Debt service coverage (7) (8) 1.58 2.56 3.10 2.96 3.46 3.30 2.88 3.06 3.14 3.11 (1) Reduced fiscal year 2015- 2016 Operating Expenses as the $131,322 CDWR Loan payment (along with 2 dollars attributed to rounding error) were counted both in Operating Expense and in the debt service section.
(2) Total operating expenses excludes depreciation and amortization, as well as the debt service component under the Treatment and Delivery Agreement. fiscal year 2015-2016 Total operating expense reduced from $39,619,604 to $39,488,274 since the Operating expenses was adjusted (see note 2) (3) Increased fiscal year 2014-2015 2008 Revenue Certificates of Participation from $2,501,891 to $2,531,179 to account for actual expenditure instead of the internal transfer. (5) The sale of the Waterford-Hickman Water System for $2.6 million had a significant impact to the Water Fund debt service calculation. Without the sale of this system Water Fund debt service coverage would have been 1.35. Reduced fiscal year 2015-2016 Operating Expenses as the $131,322 Del Estate Water Company loan payment (along with $2 dollars attributed to rounding error) were counted both in Operating Expense and in the Debt service section.
(6) Del Estate Water Company (CDWR) loan payment for fiscal year 2014-2015 was reduced from $264,719 to $262,692 and fiscal year 2015-2016 reduced from $264,719 to $131,322. Loan repayment was completed in fiscal year 2015-2016.
(7) Fiscal year 2015-2016 Debt service coverage increased from 1.55 to 1.57 and fiscal year 2014-2015 Debt service coverage increased from 1.45 to 1.96 after above stated changes were made. (8) The financial figures reported only reflect net operating revenues in the Water Operating Fund. (9) Fiscal year 2017-2018 Miscellaneous revenues include $1,048,863 of one-time transfer as result of the dissolution of the Central Stores Fund. (10) Fiscal year 2018-2019 Operating Transfers of $3,129,583 includes $2,300,000 in one-time loan to fund 4893 (Carpenter Road Landfill) to be repaid over 6 years. (11) Fiscal year 2019-2020 Miscellaneous revenues include the first, interest-only payment of the fiscal year 2018-2019 Loan from the Water fund to the Carpenter Road Landfill Fund. year 2018-2019.
(13) Fiscal year 2020-2021, Negative refunds, damages, and recoveries is due to large negative change in Fair Market Value. Operating Transfers include a new $1,540,000 loan to the Carpenter Road Landfill. (14) Fiscal year 2021-2022 Negative refunds, damages, and recoveries is due to large negative change in Fair Market Value. Miscellaneous Revenues includes repayment of the Carpenter Road Landfill loan. (15) Fiscal year 2021-2022 MID Treatment & Delivery Agreement was previously reported incorrectly as $10,400,158. This was updated in Fiscal year 2022-2023.
Source: City of Modesto
(4) Reduced fiscal year 2014-2015 Operating expenses from $40,349,338 to $33,773,198. (12) Fiscal year 2019-2020 Operating Transfers of $2,241,135 include $900,000 in one-time loan to fund 4893 (Carpenter Road Landfill). This $900,000 is in addition to the $2,300,000 that was borrowed in fiscal
CITY WATER UTILITY SYSTEM
Historical Debt Service Coverage
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Continuing Disclosure Requirements Information (Continued) City Water Utility System
Projected Operating Results
175
Fiscal Year
Projected 2026
Fiscal Year
Projected 2027
Fiscal Year
Projected 2028
Fiscal Year
Projected 2029
Fiscal Year
Projected 2030
Charges for services $ 86,075,250 $ 89,948,636 $ 93,996,325 $ 96,064,703 $ 96,064,703 Connection charges 1,303,560 1,329,631 1,356,224 1,383,348 1,411,015 Refunds, damages & recoveries 11,730 11,965 12,204 12,448 12,697 Interest and rental income 1,545,000 1,591,350 1,639,091 1,688,263 1,738,911 Service credits 4,741,378 4,836,206 4,932,930 5,031,588 5,132,220 Miscellaneous 59,078 60,259 61,464 62,694 63,947
6-year Loan Repayment from fund 4893
(Carpenter Road Landfill) 663,710 649,140 634,570 634,570 634,570 Total gross operating revenues $ 94,399,706 $ 98,427,187 $ 102,632,808 $ 104,877,614 $ 105,058,063 Operating expenses $ 66,131,723 $ 69,438,309 $ 72,910,224 $ 76,555,736 $ 80,383,522 Operating transfers 765,000 765,000 765,000 765,000 765,000 Total operating expenses $ 66,896,723 $ 70,203,309 $ 73,675,224 $ 77,320,736 $ 81,148,522 Net operating revenues $ 27,502,983 $ 28,223,878 $ 28,957,584 $ 27,556,878 $ 23,909,541 2008 Revenue Certificates of Participation $ 3,828,547 $ 3,375,765 $ 3,424,772 $ 3,424,772 $ 3,424,772 MID Treatment & Delivery Agreement 8,405,500 8,409,206 8,409,207 8,409,208 8,409,209 ARRA Grant 39,117 39,117 39,117 36,600 36,600
Total debt service $ 12,273,164 $ 11,824,088 $ 11,873,096 $ 11,870,580 $ 11,870,581 Debt service coverage 2.24 2.39 2.44 2.32 2.01
Source: City of Modesto.
The City has prepared the following table of projections of operating results of the Water Utility System for the five fiscal years 2026-30. The projected amounts set forth below are based on certain assumptions made by the City. To the extent that actual future conditions vary from those assumed in preparing the projections, the actual results will vary. #7..
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City of Modesto
Continuing Disclosure Requirements Information (Continued) Fiscal Year Ended June 30, 2025
176
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Number of Service Accounts 72,825.00 73,135.00 73,423.00 73,591.00 73,897.00 74,094.00 74,356.00 74,527.00 74,776.00 74,795.00 Total Water Production (MG) 15,155.00 15,319.48 16,782.00 16,059.00 17,141.56 17,569.00 17,017.93 15,655.52 15,610.17 16,679.55 Capacity (MGD) (1) 175.20 175.20 168.00 168.20 170.30 135.00 130.00 135.00 135.00 135.00 Peak Daily Distribution (MGD) 74.70 84.25 77.50 83.50 75.14 75.90 73.63 69.99 64.78 72.61 Average Daily Distribution (MGD) 41.52 41.97 45.98 44.00 46.96 48.13 46.62 42.89 42.77 45.70 "MG" means million gallons.
"MGD" means million gallons daily.
(1) Capacity for fiscal year 2020- 2021 was reported using source (wells) and surface water capacity; will be reported this way moving forward. 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Well Water (BG) 9.22 8.63 9.82 5.45 7.71 7.12 8.81 7.68 7.56 7.82
5.02 5.86 6.23 9.86 8.76 9.56 8.21 7.98 8.05 8.86
Total (BG) 14.24 14.49 16.05 15.31 16.47 16.68 17.02 15.66 15.61 16.68 "BG" means billion gallons.
City
Fresno (1)
Lodi (2)
Modesto
Stockton (1)
Tracy (2)
Turlock (1)
(1) Water is metered. Charge varies per meter size.
(2) Water is both metered and flat rate. Charge varies per meter and dwelling size.
CITY WATER UTILITY SYSTEM
Average Monthly Water Rates Comparison
Flat Rate (1" Service)
36.54 CITY WATER UTILITY SYSTEM STATISTICS
(Calendar Years 2016 through 2025)
Surface Water (BG)
CITY WATER UTILITY SYSTEM
Service Area Total Production
(Fiscal Years 2016 through 2025)
43.87 As of July 1, 2024
Flat Rate Typical Home
$17.90
37.03 30.90
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Continuing Disclosure Requirements Information (Continued) Fiscal Year Ended June 30, 2025
177
The following table sets forth connection fees for all users except multi-family units by meter size for fiscal year 5/8" meter** $ 2,202
1" meter 3,671
1-1/2" meter 7,341
2" meter 11,746
3" meter 25,695
4" meter 46,250
6" meter 95,437
8" meter 176,191
10" meter 278,970
12" meter 367,065
**NOTE- Single-family residences qualify for the 5/8" connection fee only under the following conditions:
Single story, single-family residences on a lot of 4,000 square feet or less.
Two-story single family residence on a lot of 4,000 square feet or less, provided the request for such a service accompanied by a report from a licensed professional engineer that certifies that the 5/8" service is adequate to meet the needs of the proposed dwelling.
A 5/8" "service" shall not be allowed for a single-family dwellings of greater than 2 stories on lots less than 4,000 square feet.
Meter Size Connection Fees
2024-2025:
CITY WATER UTILITY SYSTEM
Connection Fees Comparison
Except Multiple Family Units
(Fiscal Year 2024-2025)
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City of Modesto
Continuing Disclosure Requirements Information (Continued) Fiscal Year Ended June 30, 2025
178
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 (2)
Revenues
Residential (Flat Rates) $7,320,096 $6,767,446 $5,506,216 $4,385,017 $3,450,868 $2,533,090 $1,414,328 $299,865 $131,904 $1,542 Commercial, Industrial and
Municipal (Metered) 40,242,493 51,960,729 60,113,019 62,933,627 70,175,513 76,169,202 75,068,664 74,488,920 76,370,026 82,364,776 Total Water Sales $47,562,589 $58,728,175 $65,619,235 $67,318,644 $73,626,381 $78,702,292 $76,482,992 $74,788,785 $76,501,930 $82,366,318 Lot Size 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0-5,000 sq. ft. lot $40.81 $47.38 $48.77 $52.97 $56.11 $59.48 $60.66 $60.66 $60.66 $60.66 5,001-7,000 sq. ft. lot 46.38 54.72 56.23 60.89 64.23 68.08 69.44 69.44 69.44 69.44 7,001-11,000 sq. ft. lot 55.04 69.22 70.98 76.52 80.26 85.08 86.78 86.78 86.78 86.78 11,001-17,000 sq. ft. lot 58.43 90.88 93.00 99.87 104.22 110.47 112.68 112.68 112.68 112.68 over 17,000 sq. ft. lot 68.69 101.80 104.10 111.65 116.3 123.28 125.75 125.75 125.75 125.75 (1) Single family residential properties with water meters that are read for billing purposes, are charged the meter water rate. (2) In FY 2025, the City of Modesto completed the conversion to metered billing for the whole City. All residential accounts are now metered.
NOTE: Additional financial information available at www.modestogov.com (Year Ended June 30, 2025)
Sale of Water
The table below sets forth the adopted single family residential flat rates effective each fiscal year
CITY WATER UTILITY SYSTEM
Monthly Single Family Residential Flat Water Rates (1)
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City of Modesto
Continuing Disclosure Requirements Information (Continued) Fiscal Year Ended June 30, 2025
179
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Volume-based Rate ($/hcf) $ 1.40 $ 1.79 $ 1.82 $ 1.93 $ 1.98 $ 1.98 $ 2.02 $ 2.02 $ 2.11 $ 2.20 Fixed Monthly Meter Charge
(in addition to volume-based charges)
5/8"-3/4" meter $ 15.03 $ 20.79 $ 21.47 $ 23.34 $ 24.94 $ 24.94 $ 25.44 $ 25.44 $ 26.43 $ 27.62 1" meter 21.33 29.30 30.39 33.48 36.11 36.11 36.83 36.83 38.55 40.28 1-1/2" meter 36.90 50.58 52.71 58.83 64.04 64.04 65.32 65.32 68.85 71.95 2" meter 55.68 76.11 79.49 89.25 97.55 97.55 99.50 99.50 105.21 109.94 3" meter 105.80 156.98 164.30 185.59 203.66 203.66 207.73 207.73 220.35 230.27 4" meter 162.13 276.14 289.28 327.55 360.04 360.04 367.24 367.24 390.03 407.58 6" meter 318.47 561.28 588.33 667.24 734.22 734.22 748.90 748.90 796.05 831.87 8" meter 506.20 1,029.42 1,079.32 1,224.95 1,348.56 1,348.56 1,375.53 1,375.53 1,462.65 1,528.47 10" meter 725.26 1,625.23 1,704.21 1,934.76 2,130.44 2,130.44 2,173.05 2,173.05 2,311.05 2,415.05 12" meter 1,350.92 2,135.93 2,239.84 2,543.16 2,800.62 2,800.62 2,856.63 2,856.63 3,038.25 3,174.97 Note: Additional financial information is available at www.modestogov.com Commercial Accounts
CITY WATER UTILITY SYSTEM
Water Rates and Charges
The following table sets forth the adopted monthly service charge and volume charge for commercial accounts through fiscal year 2024-25. #7..
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City of Modesto
Continuing Disclosure Requirements Information (Continued) Fiscal Year Ended June 30, 2025
180
Bonds Moody's Rating Standard & Poor's Rating Fitch Rating 2008 Lease Revenue Bonds Aa3 A+/A-1 AA+
2008 Water Certificates of Participation Aa2 AA/A-1
Wastewater Revenue Bonds, Series 2018A AA
Wastewater Revenue Bonds, Series 2020A AA
Wastewater Revenue Bonds, Series 2020B AA
Sources: www.moodys.com
www.standardandpoors.com
www.Fitchratings.com
BOND RATINGS
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- 474 -
City of Modesto
Independent Accountant’s Report on Agreed-Upon Procedures Applied to Annual Appropriations Limit
For the Year Ended June 30, 2025
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- 475 -
City of Modesto
Annual Appropriations Limit
Table of Contents
PAGE
Independent Accountant’s Report on Agreed-Upon Procedures Applied to Annual Appropriations Limit 1
Annual Appropriations Limit 4
Notes to Annual Appropriations Limit 5
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1 Independent Accountant’s Report on Agreed-Upon Procedures Applied to Annual Appropriations Limit
Honorable Members of the City Council
City of Modesto, California
We have performed the procedures enumerated below to the accompanying Annual Appropriations Limit of the City of Modesto, California (the City) for the year ended June 30, 2025. The City’s management is responsible for the calculation of the Annual Appropriations Limit.
The City’s management has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of meeting the requirements of Section 1.5 of Article XIII-B of the California Constitution. These procedures, which were suggested by the League of California Cities and presented in the publication entitled Agreed-Upon Procedures Applied to the Appropriations Limitation Prescribed by Article XIII-B of the California Constitution, were performed solely to assist you in meeting the requirements. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.
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2 The procedures performed and the associated findings were as follows:
1. We obtained the City’s calculation of the Annual Appropriations Limit for the year ended June 30, 2025 and compared the limit and annual adjustment factors included in that calculation to the limit and annual adjustment factors that were adopted by the resolution of the City Council. We also compared the population and inflation options included in the aforementioned calculation to those that were selected by a recorded vote of the City Council.
Finding: No exceptions were noted as a result of this procedure.
2. For the accompanying Annual Appropriations Limit, we added last year's limit to the total adjustments and compared the resulting amount to this year's limit. We also recalculated the adjustment factor and the adjustment for inflation and population and compared the results with the City’s calculation.
Finding: No exceptions were noted as a result of this procedure.
3. We compared the prior year appropriations limit presented in the accompanying Annual Appropriations Limit to the prior year appropriations limit adopted by the City Council for the prior year.
Finding: No exceptions were noted as a result of this procedure. #7..
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3 We were engaged by the City’s management to perform this agreed-upon procedures engagement and conducted our engagement in accordance with the attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to, and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the accompanying Annual Appropriations Limit. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements related to our agreed-upon procedures engagement.
This report is intended solely for the use of the City Council and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties.
However, this report is a matter of public record, and its distribution is not limited.
Glendale, California
November 12, 2025
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Unaudited; see Independent Accountant’s Report on Agreed-Upon Procedures Applied to Annual Appropriations Limit and Accompanying Notes to Annual Appropriations Limit. 4 City of Modesto
Annual Appropriations Limit
For the Year Ended June 30, 2025
Appropriations limit, fiscal year 2024 $581,968,829
Adjustment factors:
Inflation factor, as adopted 1.0362
Population factor, as adopted 1.0052
Combined factor for fiscal year 2025 1.0416
Annual adjustment in dollars 24,209,904
Appropriations limit, fiscal year 2025, as adopted $606,178,733 #7..
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5 City of Modesto
Notes to Annual Appropriations Limit
Year Ended June 30, 2025
NOTE 1 PURPOSE OF LIMITED PROCEDURES REVIEW
Under Article XIII-B of the California Constitution (the Gann Spending Limitation Initiative), California governmental agencies are restricted as to the amount of annual appropriations from proceeds of taxes. Effective for years beginning on or after July 1, 1990, under Section 1.5 of Article XIII-B, the annual calculation of the appropriations limit is subject to an agreed-upon procedures review in connection with the annual audit.
NOTE 2 METHOD OF CALCULATION
Under Section 10.5 of Article XIII-B, for fiscal years beginning on or after July 1, 1990, the appropriations limit is required to be calculated based on the limit for the fiscal year 1986-87, adjusted for the inflation and population factors discussed in Notes 3 and 4 below.
NOTE 3 INFLATION FACTOR
A California governmental agency may adjust its appropriations limit by either the annual percentage change in the 4th quarter per capita personal income (which percentages are supplied by the State Department of Finance), or the percentage change in the local assessment roll from the preceding year due to the change in local nonresidential construction.
The factor adopted by the City for the fiscal year 2025 represents the annual percentage change in the State’s per capita personal income.
NOTE 4 POPULATION FACTOR
A California governmental agency may adjust its appropriations limit by either the annual percentage change of the jurisdiction's own population or the annual percentage change in population in the County where the jurisdiction is located. The factor adopted by the City for the fiscal year 2025 represents the annual percentage change in population of its own jurisdiction.
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- 481 -
City of Modesto
Notes to Annual Appropriations Limit
Year Ended June 30, 2025
6 NOTE 5 OTHER ADJUSTMENTS
A California governmental agency may be required to adjust its appropriations limit when certain events occur, such as the transfer of responsibility for municipal services to, or from, another government agency or private entity. The City had no such adjustments for the year ended June 30, 2025.
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- 482 -
www.vasquez.cpa
655 N Central Avenue, Suite 1550 • Glendale, California 91203-1437 • +1.213.873.1700 #7..
- 483 -
Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2025
with Independent Auditor’s Report
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Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
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 19
Statement of Activities – Governmental Activities 20
Balance Sheet – Governmental Funds 22
Reconciliation of the Governmental Funds Balance Sheet to the Governmental Activities Statement of Net Position 23
Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 24
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Governmental Activities Statement of Activities 25 Statement of Revenues, Expenditures, and Changes in Fund Balance – Special Revenue Fund Budget and Actual 26
Notes to Basic Financial Statements 27
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 38
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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 1998-2 Carver-Bangs/PelandaleSnyder (the District), a component unit of the City of Modesto, California, (the City) as of and for the year ended June 30, 2025, the budgetary comparison statement for the special revenue fund for the year ended June 30, 2025, and the related notes to the basic 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, 2025, 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. #7..
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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.
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 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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- 488 -
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.
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 6-17 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 12, 2025, 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 12, 2025
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- 490 -
6 Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2025
The City of Modesto Community Facilities District Number 1998-2 Carver-Bangs/PelandaleSnyder (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.
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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- 491 -
Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2025
7 BACKGROUND AND MANAGEMENT’S DISCUSSION
The Carver-Bangs Specific Plan (Resolution No. 97-161) was adopted by the City Council on April 1, 1997, and was subsequently amended through Resolution No. 97-633 on November 4, 1997, and Resolution No. 99-442 on September 1, 1999 to allow multifamily development at Pelandale/Prescott and to shift the location of the storm drain. The CarverBangs Specific Plan has been developed under the City’s Village Residential guidelines and should yield approximately 800 single-family residential units. On January 16, 1996, the City Council approved the Pelandale-Snyder Specific Plan (Resolution No. 96-19) and was subsequently amended, with the most recent amendment enacted on August 8, 2000 through Resolution No. 2000-428. The Specific Plan area contains approximately 227 acres designated as single-family residential and approximately 57 acres are designated multi-family residential.
On December 8 1998, the City Council adopted Resolution 98-653 to form the District to provide a funding and reimbursement mechanism for public facilities and services required to serve the Carver-Bangs and Pelandale-Snyder Specific Plan areas in the City and to fund ongoing maintenance costs. Portions of both Specific Plan areas were included within the initial boundaries of the District and the remainder of the property within both Specific Plan areas, excluding a remainder parcel, have been annexed to the District.
As a condition of development, developers are required to install various public improvements that will serve the increased population generated from the projects. Many of these improvements must be provided in the early stages of development and, therefore, the first developers to build within the Specific Plan areas must install the improvements. The District was established as a funding and reimbursement mechanism for many of the improvements.
Up until a few years ago, developers installed most of the improvements. The developers received a cash reimbursement or tax credit equal to the cost of that improvement(s) as set forth in the Public Report adopted in connection with the formation of the District. #7..
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Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2025
8 Over the past several years, the City has designed and overseen the installation of the improvements. Construction of the storm drain pump stations located at the East and West Basins on Prescott Road between Pelandale and Snyder was completed in the summer of 2007 while the Snyder Avenue widening project between Prescott Road and Carver Road commenced in the spring of 2008. The design of the bike trail commenced in 2009.
FISCAL YEAR 2025 FINANCIAL HIGHLIGHTS
Financial highlights of the year include the following
Government-Wide:
• At June 30, 2025, the District’s total net position increased to $2,138,111. • Total District revenues were $221,927 and expenses were $135,198.
Fund Basis:
• Capital Projects Fund revenues increased from $71,439 in the prior year to $96,613 for fiscal year 2025 and expenditures of $0 had no change from the prior year. The increase in revenues is attributed to the increase in the fair value of investments and interest income. The Capital Projects Fund increased by $96,613 to an ending fund balance of $1,754,265.
• Special Revenue Fund revenues of $125,144 were $11,450 more than the prior year due to increases in taxes and investment earnings. Expenditures of $135,198 were $27,018 more than the prior year due to an increase in service expenditures. The Special Revenue Fund balance decreased by $10,054 to an ending fund balance of $382,256. #7..
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Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2025
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 are comprised of the Statement of Net Position and the Statement of Activities.
The Statement of Net Position provides information about the financial position of the District as a whole, including all its capital assets and long-term liabilities. The Statement of Activities provides information about the District’s revenues and all its expenses. The Statement of Activities explains in detail the change in net position for the year. The Statement of Net Position and the Statement of Activities present information about the following:
Governmental activities - All of the District’s basic services are considered to be governmental activities, including formation, financing, construction, and maintenance activities. These services are supported by formation deposits, special facilities taxes, and annual maintenance assessments. Government-wide financial statements are prepared on the accrual basis of accounting, which means they measure the flow of all economic resources of the District as a whole, similar to that used by the private sector. #7..
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Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2025
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, 2025, total assets of $2,147,131 were offset by liabilities of $9,020. The District’s net position from governmental activities increased to $2,138,111 in 2025 from $2,051,382 in 2024. The District’s net position has restrictions as follows: $1,754,265 for acquisition or construction and $383,846 for District maintenance.
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Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2025
11 FINANCIAL ACTIVITIES OF THE DISTRICT AS A WHOLE (CONTINUED) The following summarizes the Statements of Net Position as of June 30, 2025 and 2024 and the related changes:
Statements of Net Position – Governmental Activities
Description 2025 2024 Change
Assets
Cash and investments $2,135,115 $2,051,050 $84,065
Assessments receivable 2,260 2,501 (241)
Interest receivable 9,756 7,100 2,656
Total assets 2,147,131 2,060,651 86,480
Liabilities
Accounts payable 9,020 9,269 (249)
Total liabilities 9,020 9,269 (249)
Net position
Restricted for:
Capital projects 1,754,265 1,657,652 96,613
District maintenance 383,846 393,730 (9,884)
Total net position $2,138,111 $2,051,382 $86,729
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Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2025
12 FISCAL YEAR 2025 GOVERNMENTAL ACTIVITIES
The District’s fiscal year 2025 revenue came primarily from maintenance special taxes of $103,366 and investment earnings of $118,561. Facilities special taxes were not collected in fiscal years 2025 and 2024, as these revenues are collected at the time of building permit issuance, and no such development occurred in the District in fiscal years 2025 and 2024.
District expenses of $135,198 were primarily for community development.
The following summarizes the Statements of Activities for the years ended June 30, 2025 and 2024, and the respective changes:
Statements of Activities – Governmental Activities
Description 2025 2024 Change
Revenues
General revenues
Maintenance special taxes $103,366 $97,786 $5,580
Investment earnings 118,561 87,741 30,820
Total revenues 221,927 185,527 36,400
Expenses
Community development 135,198 108,180 27,018
Total expenses 135,198 108,180 27,018
Change in net position 86,729 77,347 $9,382
Net position, beginning of year 2,051,382 1,974,035
Net position, end of year $2,138,111 $2,051,382
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Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2025
13 THE DISTRICT’S 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 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.
Presented on the succeeding pages is the summarized Balance Sheets and the 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, 2025 and 2024, and the respective changes:
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Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2025
14 THE DISTRICT’S FUND FINANCIAL STATEMENTS (CONTINUED) Balance Sheets – Capital Projects Fund
Description 2025 2024 Change
Assets
Cash and investments $1,746,288 $1,651,908 $94,380
Interest receivable 7,977 5,744 2,233
Total assets $1,754,265 $1,657,652 $96,613
Fund balances
Restricted for:
Capital projects $1,754,265 $1,657,652 $96,613
Total fund balances $1,754,265 $1,657,652 $96,613
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Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2025
15 THE DISTRICT’S FUND FINANCIAL STATEMENTS (CONTINUED) Balance Sheets – Special Revenue Fund
Description 2025 2024 Change
Assets
Cash and investments $388,827 $399,142 $(10,315)
Assessments receivable 2,260 2,501 (241)
Interest receivable 1,779 1,356 423
Total assets $392,866 $402,999 $(10,133)
Liabilities
Accounts payable $9,020 $9,269 $(249)
Total liabilities 9,020 9,269 (249)
Deferred inflow of resources
Unavailable revenues 1,590 1,420 170
Total deferred inflows of resources 1,590 1,420 170
Fund balances
Restricted for:
District maintenance 382,256 392,310 (10,054)
Total fund balances 382,256 392,310 (10,054)
Total liabilities, deferred inflow of
resources and fund balances $392,866 $402,999 $(10,133) #7..
- 500 -
Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2025
16 THE DISTRICT’S FUND FINANCIAL STATEMENTS (CONTINUED) Statements of Revenues, Expenditures, and Changes in Fund Balance – Capital Projects Fund
Description 2025 2024 Change
Revenues $96,613 $71,439 $25,174
Expenditures - - -
Net change in fund balance 96,613 71,439 $25,174
Fund balance, beginning of year 1,657,652 1,586,213
Fund balance, end of year $1,754,265 $1,657,652
Statements of Revenues, Expenditures, and Changes in Fund Balance – Special Revenue Fund
Description 2025 2024 Change
Revenues $125,144 $113,694 $11,450
Expenditures 135,198 108,180 27,018
Net change in fund balance (10,054) 5,514 $(15,568)
Fund balance, beginning of year 392,310 386,796
Fund balance, end of year $382,256 $392,310
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- 501 -
Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Management’s Discussion and Analysis (Unaudited)
Year Ended June 30, 2025
17 THE DISTRICT’S FUND FINANCIAL STATEMENTS (CONTINUED) At June 30, 2025, the District’s governmental funds reported a combined fund balance of $2,136,521, an increase of $86,559 compared to fiscal year 2024. The Capital Projects Fund realized a $96,613 increase, primarily due to increases in interest income and the fair value of investments. The Special Revenue Fund realized a $10,054 decrease due to total expenditures exceeding total revenues reported during the year.
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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- 502 -
Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
18 STATEMENT OF NET POSITION AND STATEMENT OF ACTIVITIES The Statement of Net Position and the Statement of Activities summarize the entire District’s financial activities and financial position. They are prepared on the same basis of accounting as that used by most businesses, which means they include all the District’s assets and all its liabilities, as well as all its revenues and expenses. This is known as the full accrual basis of accounting – the effect of all the District’s transactions is taken into account, regardless of whether or when cash changes hands, but all material internal transactions between District funds have been eliminated.
The Statement of Net Position reports the difference between the District’s total assets and deferred outflows of resources and the District’s total liabilities and deferred inflows of resources, including all the District’s capital assets and all its long-term debt. The Statement of Net Position 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 are generated directly by these programs are deducted from program expenses to arrive at the net program revenue (expense). General revenues that 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. #7..
- 503 -
See notes to basic financial statements.
19 Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Statement of Net Position – Governmental Activities
June 30, 2025
ASSETS
Cash and investments $2,135,115
Assessments receivable 2,260
Interest receivable 9,756
Total Assets 2,147,131
LIABILITIES
Accounts payable 9,020
Total Liabilities 9,020
NET POSITION
Restricted for:
Capital projects 1,754,265
District maintenance 383,846
Total Net Position $2,138,111
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- 504 -
See notes to basic financial statements.
20 Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Statement of Activities – Governmental Activities
Year Ended June 30, 2025
Program
Revenues
Net (Expense)
Revenue and
Changes in
Net Position
Functions/Programs Expenses
Operating
Grants and
Contributions
Governmental
Activities
Community development $135,198 $- $(135,198)
$135,198 $- (135,198)
General Revenues
Maintenance special taxes 103,366
Investment earnings 118,561
Total General Revenues 221,927
Change in Net Position 86,729
Net Position, Beginning of Year 2,051,382
Net Position, End of Year $2,138,111
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- 505 -
Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
21 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. #7..
- 506 -
See notes to basic financial statements.
22 Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Balance Sheet – Governmental Funds
June 30, 2025
Capital
Projects
Fund
Special
Revenue
Fund Total
ASSETS
Cash and investments $1,746,288 $388,827 $2,135,115
Assessments receivable - 2,260 2,260
Interest receivable 7,977 1,779 9,756
Total Assets $1,754,265 $392,866 $2,147,131
LIABILITIES
Accounts payable $- $9,020 $9,020
Total Liabilities - 9,020 9,020
DEFERRED INFLOW OF RESOURCES
Unavailable revenues - 1,590 1,590
Total Deferred Inflow of Resources - 1,590 1,590
FUND BALANCES
Restricted for:
Capital projects 1,754,265 - 1,754,265
District maintenance - 382,256 382,256
Total Fund Balances 1,754,265 382,256 2,136,521
Total Liabilities, Deferred Inflow of
Resources and Fund Balances $1,754,265 $392,866 $2,147,131 #7..
- 507 -
See notes to basic financial statements.
23 Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Reconciliation of the Governmental Funds Balance Sheet to the Governmental Activities Statement of Net Position
June 30, 2025
Total Fund Balances - Governmental Funds $2,136,521
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. 1,590
Total Net Position - Governmental Activities $2,138,111 #7..
- 508 -
See notes to basic financial statements.
24 Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Statement of Revenues, Expenditures, and
Changes in Fund Balances – Governmental Funds
Year Ended June 30, 2025
Capital
Projects
Fund
Special
Revenue
Fund Total
REVENUES
Maintenance special taxes $- $103,196 $103,196
Interest income 56,330 12,496 68,826
Change in fair value of investments 40,283 9,452 49,735 Total Revenues 96,613 125,144 221,757
EXPENDITURES
Community development
Services – professional and other - 117,168 117,168
Utilities - 18,030 18,030
Total Expenditures - 135,198 135,198
Net Change in Fund Balances 96,613 (10,054) 86,559
Fund Balances, Beginning of Year 1,657,652 392,310 2,049,962 Fund Balances, End of Year $1,754,265 $382,256 $2,136,521 #7..
- 509 -
See notes to basic financial statements.
25 Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
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, 2025
Net Change in Fund Balances - Governmental Funds $86,559 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. 170 Change in Net Position - Governmental Activities $86,729 #7..
- 510 -
See notes to basic financial statements.
26 Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Statement of Revenues, Expenditures, and Changes in Fund Balance – Special Revenue Fund
Budget and Actual
Year Ended June 30, 2025
Original
Budgeted
Amounts
Final
Budgeted
Amounts
Actual
Amounts
Variance
with Final
Budget
REVENUES
Maintenance special taxes $98,800 $103,300 $103,196 $(104) Interest income - - 12,496 12,496
Change in fair value of investments - - 9,452 9,452
Total Revenues 98,800 103,300 125,144 21,844
EXPENDITURES
Community development
Services - professional and other 111,986 116,486 117,168 (682) Utilities 19,000 19,000 18,030 970
Total Expenditures 130,986 135,486 135,198 288
Net Change in Fund Balance $(32,186) $(32,186) (10,054) $22,132 Fund Balance, Beginning of Year 392,310
Fund Balance, End of Year $382,256
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27 Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2025
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description and Reporting Entity
The Community Facilities District Number 1998-2 Carver-Bangs/Pelandale-Snyder (the District) was formed on December 8, 1998 via Resolution 98-653 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 480-acre project bounded on the East by Carver Road, on the North by Bangs Avenue, on the West by Dale Road, and the Modesto Irrigation District canal and Snyder Avenue on the South. The District is expected to yield 3,413 residential dwelling units at buildout. To date, 1,669 residential units have been constructed, alongside 19.7 acres developed for commercial and industrial use. In addition, 36 acres within the District have been designated for community-serving facilities, including Mary Lou Dietrich Elementary School, McKinney Colony Park, and Big Valley Grace Community Church.
The District is an integral part of the City of Modesto, California (the City) and the accompanying financial statements are included as a blended component unit of the basic financial statements prepared by the City. A component unit is a separate governmental unit, agency, or nonprofit corporation which, when combined with all other component units, constitutes the reporting entity as defined in the City’s basic financial statements. #7..
- 512 -
Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2025
28 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 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 that 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. #7..
- 513 -
Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2025
29 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 60 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 the maintenance of parkways and open space within the District.
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.
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- 514 -
Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2025
30 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Management’s Use of Estimates (Continued)
These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Maintenance Special Taxes
The maintenance special taxes are collected by the County of Stanislaus on the property tax bill. The special taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively. The County of Stanislaus bills and collects the special taxes and remits them to the District. The Rate and Method of Apportionment of Special Tax (RMA), set forth in the District’s Public Report, describes how the tax will be allocated among properties in the District. The Public Report was established during the formation of the District.
A cost of living adjustment is applied to the special taxes annually.
Fund Balance
In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned, or unassigned based primarily on the extent to which the District is bound to honor constraints on how specific amounts can be spent. • Nonspendable – Amounts that are not in spendable form (such as inventory) or are required either legally or contractually to be maintained intact. The District did not have nonspendable resources as of June 30, 2025.
• 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. The District reported $2,136,521 of restricted resources as of June 30, 2025. #7..
- 515 -
Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2025
31 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. The District did not have committed resources as of June 30, 2025. • 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. The District did not have assigned resources as of June 30, 2025.
• 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 did not have unassigned resources as of June 30, 2025.
The District establishes and modifies or rescinds fund balance commitments by passage of an ordinance or policy. This is typically done through the 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 the adoption or amendment of the budget or future year budget plan as intended for a specific purpose.
#7..
- 516 -
Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2025
32 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.
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 applies to a future reporting period.
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 applies to a future reporting period. Deferred inflow of resources reported by the District consists of unearned deferred assessments that have been billed as of year-end, but not yet collected. #7..
- 517 -
Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2025
33 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net Position
Net position represents the residual interest in the District’s assets and deferred outflow of resources after liabilities and deferred inflow of resources are deducted. In accordance with GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, the 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 those assets' acquisition, construction, or improvement. • 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 do 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.
#7..
- 518 -
Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2025
34 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Governmental Accounting Standards Update
During the year ended June 30, 2025, the District implemented the following Governmental Accounting Standards Board (GASB) standards with no impact on the financial statements:
GASB Statement No. 101 - Compensated Absences. The requirements of this statement are effective for reporting periods beginning after December 15, 2023.
GASB Statement No. 102 – Certain Risk Disclosures. The requirements of this statement are effective for reporting periods beginning after June 15, 2024.
Released GASB Statements to be implemented in future financial statements are as follows:
GASB Statement No. 103 – Financial Reporting Model Improvements. The requirements of this statement are effective for reporting periods beginning after June 15, 2025.
GASB Statement No. 104 – Disclosure of Certain Capital Assets. The requirements of this statement are effective for reporting periods beginning after June 15, 2025.
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.
#7..
- 519 -
Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2025
35 NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Cash and investment in the pool are 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, 2025.
Cash and investments as of June 30, 2025 are classified in the accompanying financial statements as follows:
Statement of Net Position – Governmental Activities
Cash and investments $2,135,115
Total cash and investments $2,135,115
Deposits with the City
Cash and investment pool $2,135,115
Total cash and investments $2,135,115
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, 2025, the fair value of the District’s position in the pool is the same as the value of its pool shares.
NOTE 3 RESTRICTED FUND BALANCES
Restrictions of Fund Balances
Fund balances are all presented in the restricted category (see Note 1 for a description of fund balance categories). As of June 30, 2025, restrictions included:
#7..
- 520 -
Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2025
36 NOTE 3 RESTRICTED FUND BALANCES
Restrictions of Fund Balances (Continued)
Restricted for Capital Projects - the portion of the fund balance legally restricted for the acquisition, construction, and formation/annexation activities.
Restricted for District Maintenance - the portion of the fund balance legally restricted for the maintenance of parkways and open space within the District.
NOTE 4 DELINQUENCIES AND FORECLOSURES
The District has made a covenant under the Trust Indenture of the Special Tax Bonds that will initiate foreclosure proceedings against delinquent parcels as follows:
(a) Any parcel that is delinquent for three consecutive payments. Foreclosure against these parcels is to be initiated within 120 days after the third delinquency. (b) All parcels delinquent at June 30 when the District received Special Taxes totaling less than 95% of the total Special Tax levied for that fiscal year. Foreclosure against these parcels is to be initiated by September 1 following the end of the fiscal year.
At June 30, 2025, the District had 23 delinquent parcels for a total of $1,590, four of which are delinquent for more than two consecutive payments. The District received 99.04% of the Special Revenue Fund maintenance special taxes levied during the year ended June 30, 2025.
The delinquencies total of $1,590 at June 30, 2025 is included in assessments receivable on the Statement of Net Position and Balance Sheet.
#7..
- 521 -
Community Facilities District
Number 1998-2 Carver-Bangs/Pelandale-Snyder
City of Modesto, California
Notes to Basic Financial Statements
Year Ended June 30, 2025
37 NOTE 5 EXCESS OF EXPENDITURES OVER APPROPRIATIONS
Excess of expenditures over appropriations for the year ended June 30, 2025 was as follows:
Expenditures Amount
Special Revenue Fund
Community development
Services - professional and other $(682)
NOTE 6 SUBSEQUENT EVENTS
The District has evaluated events or transactions subsequent to June 30, 2025, to assess the need for potential recognition or disclosure in the financial statements. Such events were evaluated through November 12, 2025, the date the financial statements were available to be issued, and determined that no subsequent events required recognition or disclosure in the accompanying financial statements.
#7..
- 522 -
38 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 1998-2 CarverBangs/Pelandale-Snyder (the District), as of and for the year ended June 30, 2025, the budgetary comparison statement for the special revenue fund for the year ended June 30, 2025, and the related notes to the basic financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated November 12, 2025.
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.
#7..
- 523 -
39 A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit, we did not identify any deficiencies in internal control that we consider to be material weaknesses.
However, material weaknesses or significant deficiencies may exist that were not identified.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the 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. #7..
- 524 -
40 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 12, 2025
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- 525 -
www.vasquez.cpa
655 N Central Avenue, Suite 1550 • Glendale, California 91203-1437 • +1.213.873.1700 #7..
- 526 -
Community Facilities District
Number 2000-2 Coffee-Claratina
City of Modesto, California
Annual Financial Report
As of and for the Year Ended June 30, 2025
with Independent Auditor’s Report
#7..
- 527 -
Community Facilities District
Number 2000-2 Coffee-Claratina
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 Fund 19
Reconciliation of Governmental Fund Balance Sheet to Governmental Activities Statement of Net Position 20
Statement of Revenues, Expenditures, and Changes in Fund Balance – Governmental Fund 21
Reconciliation of Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balance to 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 #7..
- 528 -
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 2000-2 Coffee-Claratina (the District), a component unit of the City of Modesto, California, (the City) as of and for the year ended June 30, 2025, the budgetary comparison statement for the special revenue fund for the year ended June 30, 2025, and the related notes to the basic 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 major fund of the District as of June 30, 2025, 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. #7..
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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.
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.