Needles City Council
August 12, 2025

(ACT) ACTION NEEDED
(INF) INFORMATION ONLY
(DIS) DISCRETIONARY
AGENDA

REGULAR MEETING OF THE CITY COUNCIL

NEEDLES PUBLIC UTILITY AUTHORITY

HOUSING AUTHORITY CITY OF NEEDLES

CITY OF NEEDLES, CALIFORNIA
COUNCIL CHAMBERS, 1111 BAILEY AVENUE.

TUESDAY, AUGUST 12, 2025
COUNCIL EXECUTIVE SESSION – 5:00 PM
CITY COUNCIL MEETING – 6:00 PM

THE PUBLIC MAY ATTEND VIA TEAMS AND MAY SUBMIT ANY COMMENTS IN WRITING PRIOR TO NOON ON THE DAY OF THE MEETING BY EMAILING [email protected] TO JOIN THE LIVE TEAMS MEETING: log into the City of Needles website at www.cityofneedles.com to access the agenda and Click here to join the meeting If asked, enter the following: Meeting ID: 696 537 308# OR listen in and participate by calling Teams: 1-323-488-2227 - Meeting ID: 696 537 308# The meetings are being recorded.

CALL TO ORDER

ROLL CALL

PUBLIC COMMENTS PERTAINING TO THE EXECUTIVE SESSION ITEMS A three-minute time limit per person has been established.

RECESS TO EXECUTIVE SESSION

EXECUTIVE SESSION
a. Significant exposure to litigation pursuant to Government Code section 54956.9(d)(2): (1 potential case)
b. Conference with Real Property Negotiators Pursuant to California Government Code §54956.8 Real Property: 144 Marina Drive, River’s Edge Snack Bar (Concession/Lease Agreement) Agency Negotiator: City Manager Patrick Martinez or his designee Negotiating Parties: City of Needles (potential lessor) and Kristin and Scott Baran (potential lessees) Under Negotiation:

Price and terms of Lease.
c. Conference with Legal Counsel – Existing Litigation (Government Code § 54956.9) Name of Case: Ruben Junior Lopez v. California Department of Transportation, City of Needles, County of San Bernardino San Bernardino County of Superior Court CIVSB2518392 d. Conference with Labor Negotiator pursuant to California Government Code §54957.6 - Personnel - Agency Representatives City Manager Patrick Martinez and Pamela Osteen - Employee Organization: Teamsters Local 1932-Unclassified e. Conference with Labor Negotiator pursuant to California Government Code §54957.6 - Personnel - Agency Representatives City Manager Patrick Martinez and Pamela Osteen - Employee Organization: Teamsters Local 1932-Classified
f. Conference with Legal Counsel Regarding Potential Initiation of Litigation Pursuant to Government Code Section 54956.9(d)(4). Re: Medical Investor Holdings, LLC (MIH) and MIH Related Entities

CALL TO ORDER

ROLL CALL
EXECUTIVE SESSION REPORT - by City Attorney

PLEDGE OF ALLEGIANCE

INVOCATION

APPROVAL OF AGENDA

CONFLICT OF INTEREST

CORRESPONDENCE

INTRODUCTIONS
CITY ATTORNEY – Parliamentary Procedures
As a courtesy to those in attendance, we would ask that cell phones be turned off or set in their silent mode. Thank you
PUBLIC APPEARANCE - Persons wishing to address the NPUA / City Council on subjects other than those scheduled are requested to do so at this time. When called by the Mayor, please announce your name and address for the record. In order to conduct a timely meeting, a three-minute time limit per person has been established by Municipal Code Section 2-18. Amendments to the California Government Code Section 54950 prohibits the City Council from taking action on a specific item until it appears on the agenda.

PRESENTATION

1. Accept and file the City Annual Financial Report and Single Audit Report for the Fiscal Year Ended June 30, 2023. (ACT)

PUBLIC HEARINGS

2. Adopt Resolution 2025-32 Amending Resolution 2024-37 and increasing Green Fee Rates at the Rivers Edge Golf Course
 Staff Report
 Council questions of staff
 Mayor to open the public hearing
 Public Comment
 Mayor to close the public hearing
 Council Discussion / Deliberation
 Adopt Resolution 2025-32 Amending Resolution 2024-37 and increasing Green Fee Rates at the Rivers Edge Golf Course. (ACT)

3. Adopt Resolution 2025-35 Approving Tentative Parcel Map (TPM) 20989 To Subdivide 2.54 Gross Acres Into Three (3) Parcels, Located At 193 Morgan Drive, Within The Two-Family (R-2) Land Use Zoning District; APN 0650-318-08
 Staff Report
 Council questions of staff
 Mayor to open the public hearing
 Public Comment
 Mayor to close the public hearing
 Council Discussion / Deliberation
 Adopt Resolution 2025-35 Approving Tentative Parcel Map (TPM) 20989 To Subdivide 2.54 Gross Acres Into Three (3) Parcels, Located At 193 Morgan Drive, Within The Two-Family (R-2) Land Use Zoning District; APN 0650-318-08 (ACT)

NPUA / COUNCIL CONSENT CALENDAR
All matters listed on the Consent Calendar are considered to be routine and will be enacted by one motion in the form listed. The Mayor or any member of the NPUA / City Council may pull an item from the Consent Calendar for discussion. Prior to NPUA / Council action, a member of the public may address the NPUA / City Council on matters scheduled on the Consent Calendar. A three-minute time limit per person applies. RECOMMENDED ACTION: Approve Items 4 through 8 on the Consent Calendar by affirmative roll call vote (ACT)

4. Approve the First Amendment to the Non-Exclusive License Agreement for Joint Use of Poles between the City of Needles and Fort Mojave Telecommunications, Inc., authorizing additional attachments along Erin Drive, Washington Street, and Highland Avenue.

5. Authorize Brooks Consulting, LLC FY26 Electrical Engineering Fees not to exceed $15,000

6. Accept the AB32 Greenhouse Gas (GHG) Emissions Verification Report 2024 Emissions prepared by WZI Inc.

7. Approve Change Order #1 with Raftelis Financial Consultants, Inc. to include a Joint Pole Cost of Service Analysis in the utility ratemaking study, at a cost not to exceed $5,000, to be funded from the adopted FY26 electric budget.

8. Accept the California Public Utilities Commission (CPUC) Electric Distribution Audit covering the period of March 10–14, 2025, as documented in the final report dated June 25, 2025.

END OF NPUA CONSENT CALENDAR

REGULAR NPUA / COUNCIL ITEMS

9. Adopt Ordinance 676-AC of the City of Needles, California Establishing a Procedure for Property Owner Objections to Proposed Water/Sewer Fees or Special Assessment. (ACT)

HACN/COUNCIL CONSENT CALENDAR
All matters listed on the Consent Calendar are considered to be routine and will be enacted by one motion in the form listed. The Mayor or any member of the HACN / City Council may pull an item from the Consent Calendar for discussion. Prior to HACN / City Council action, a member of the public may address the HACN / City Council on matters scheduled on the Consent Calendar. A three-minute time limit per person applies. RECOMMENDED ACTION: Approve Items 10 through 11 on the Consent Calendar by affirmative roll call vote. (ACT)

10. Approve Change Order No. 1 for the NHA Primary Fencing Project increasing the contract with Golden West Fence by $32,573.22 for total contract amount of $233,099.77; and authorize staff to execute said Change Order.

11. Adopt Resolution No. 2025-11-HACN authorizing the establishment of a new account with LAIF and identifying HACN officials and staff authorized to transfer monies between HACN’s bank account and LAIF.

END OF HACN / COUNCIL CONSENT CALENDAR
COUNCIL CONSENT CALENDAR All matters listed on the Consent Calendar are considered to be routine and will be enacted by one motion in the form listed. The Mayor or any member of the City Council may pull an item from the Consent Calendar for discussion. Prior to Council action, a member of the public may address the City Council on matters scheduled on the Consent Calendar. A threeminute time limit per person applies. RECOMMENDED ACTION: Approve Items 12 through 21 on the Consent Calendar by affirmative roll call vote. (ACT)

12. Approve the Warrants Register through August 12, 2025

13. Approve the Minutes of July 8, 2025

14. Accept and file the June 2025 Treasurer’s Report.

15. Accept and File the July 2025 Treasurer’s Report.

16. Accept the FY24 Emergency Management Performance Grant (EMPG) in the amount of $13,227.

17. Adopt Resolution 2025-34 Authorizing Submittal of Individual Grant Applications and Related Authorization for all Grant Programs Related to CalRecycle

18. Approve filing of a claim for Local Transportation Fund (LTF) and State Transit Assistance (STA) Funds for the fiscal year 2025-2026.

19. Waive the formal bid requirement for independent financial audit services and accept the threeyear proposal from LSL CPAs and Advisors in the amount of $416,713, including a 10% contingency, with an option to extend the contract in years 4 and 5; and Increase the Purchase Order with Vaquez and Company LLC for Fiscal Year 2023 audit services by $30,000 for audit cost overruns.

20. Approve the Seventh Amendment to the Professional Services Agreement for Building Support Services with Willdan extending the contract term for one (1) year.

21. Accept Amendment No. 3 to the Professional Services Agreement with TKE Engineering Inc. to Provide On-Call Supplemental Engineering Services.

END OF COUNCIL CONSENT CALENDAR

REGULAR COUNCIL ITEMS

22. Approve the First Amendment to the Professional Services Agreement with Tripepi Smith for continued Marketing and Public Affairs Services in FY 2025–2026, for an amount not to exceed $40,000; Authorize the City Manager to execute the First Amendment and any related documents and Authorize the carryover of the Fiscal Year 2024-2025 Tripepi Smith purchase order and encumbrance of $9,226.25 from the original contract, allowing Tripepi to continue foundational work for the video marketing campaign. (ACT)

23. Waive full reading and Adopt Ordinance 675-AC adding Chapter 11A, Camping, to the Needles Municipal Code, establishing regulations prohibiting camping on public property. (2nd Read - Adopt) (ACT)

24. Authorize those interested to attend the San Bernardino County 2025 State of the County event on September 17, 2025. (ACT)

25. Adopt Ordinance 677-AC of the City Council of the City Of Needles, California, Amending Chapter 18, Article 18-V, Entitled “Conduct On Public Property” in the Needles Municipal Code. (ACT)

26. Provide Staff Direction on School Zone Analysis (DIS)

27. Provide Staff Direction - Multi-Way Stop Warrant and Crosswalk Evaluation – Broadway St. & B Street (DIS)

CITY ATTORNEY REPORT

CITY CLERK REPORT

CITY MANAGER REPORT
City Manager's Reports for the weeks of July 25 and August 1, 2025

COUNCIL REQUESTS
Council Member Ford
Council Member McCorkle
Vice Mayor Campbell
Council Member Pogue
Council Member Belt
Council Member Longbrake
Mayor Jernigan

ADJOURNMENT

INTERNET ACCESS TO CITY COUNCIL AGENDAS AND STAFF REPORT MATERIAL IS AVAILABLE PRIOR TO CITY COUNCIL MEETINGS AT: http://www.cityofneedles.com Posted: August 8, 2025
SB 343-DOCUMENTS RELATED TO OPEN SESSION AGENDAS -- Any public record, relating to an open session agenda item, that is distributed within 72 hours prior to the meeting is available for public inspection at the City Clerk’s Office, 817 Third Street, Needles, CA 92363.

In compliance with the American with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk’s Office at (760) 326-2113 ext 133. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting (28 CFR 35.102-104 ADA Title II).

I hereby certify, under penalty of perjury under the laws of the State of California that the foregoing Agenda was posted at the front entrance of City Hall not less than 72 hours prior to the meeting.

Dated this 8th day of August, 2025
/s/        Candace Clark, CPMC, CMC, City Clerk
City of Needles, California
Request for City Council Action
CITY COUNCIL NPUA Regular Special
Meeting Date: August 12, 2025
Title: City Annual Financial Report and Single Audit Report for the Fiscal Year Ended June 30, 2023
Background: Vasquez & Company LLP completed the audits of the City of Needles Annual Financial Report and the Single Audit Report for the fiscal year ended June 30, 2023. The audits were conducted in accordance with Generally Accepted Auditing Standards (GAAS) and Government Auditing Standards (GAS). Roger Martinez, Audit Relationship Manager, will present the audit results via Zoom at the Council Meeting.

Summary of Audit Results:

City Audit Opinion: Unmodified (“clean”) opinion. The financial statements fairly present the financial position and results of operations for the City, including its two component units, NPUA and HACN.

City Internal Controls: Material Weaknesses and significant deficiencies on internal control over financial reporting were noted. These occurred primarily due to the Finance Director vacancy. The findings will be discussed by the Audit Relationship Manager in his presentation.

City Audit Compliance: No instances of noncompliance were reported.

Single Audit Findings: The Single Audit also identified other material weaknesses and significant deficiencies that occurred primarily due to errors in grant reporting. The findings will be also discussed by the Audit Relationship Manager in his presentation.

Fiscal Impact: None.

Environmental Impact: None.

Recommended Action: Receive a presentation from the City’s Audit Engagement Partner; and, Accept and file the City Annual Financial Report and Single Audit Report for the Fiscal Year Ended June 30, 2023.

Submitted By: Jill Taura, Interim Finance Director
City Manager Approval: Date:

Other Department Approval (when required): Date:

Approved: Not Approved: Tabled: Other:
8/8/2025
Agenda Item 1.

REPORT TO THE

CITY COUNCIL
August 12, 2025
Agenda Item 1.
1 / Introduction
To the Honorable Members of the City Council
We are pleased to present this report related to our audit of the financial statements of the City of Needles (the City) as of and for the year ended June 30, 2023. This report summarizes certain matters required by professional standards to be communicated to you in your oversight responsibility for the City’s financial reporting process, as well as other matters that we believe may be of interest to you. Our audit of the financial statements does not relieve management or those charged with governance of their responsibilities.

This report is intended solely for the information and use of the City Council and Management, and is not intended to be, and should not be, used by anyone other than these specified parties. It will be our pleasure to respond to any questions you have regarding this report. We appreciate the opportunity to be of service to the City.

Agenda Item 1.
2 Engagement Team 3
Independence 4
Scope of Services 5
Summary of Audit Results 6
Auditor’s Required Communications to Those Charged
with Governance 11
New Accounting Pronouncements – GASB Implementation 15
Questions 16
Contact Information 17
/ Table of Contents
Agenda Item 1.
3 / The Engagement Team
Linda Narciso
Quality Control Partner
The City of Needles
Engagement Team
Cristy Canieda
Engagement Partner
Rhoda Dollaga
Senior Audit Manager
Auditors
Roger Martinez
Relationship Partner
Jason Tagasa
IT Audit Manager
Agenda Item 1.
4 / Independence
There are no relationships between any of our representatives and the City that in our professional judgment may reasonably be thought to bear on independence.

Vasquez & Company LLP meets the independence requirements of the AICPA and the Government Auditing Standards as it relates to the City.

Agenda Item 1.
5 The Financial Statements Audit
/ Scope of Services
• City’s basic financial statements
• City’s Public Financing Authority (PFA)
Consultation
• Audit of Major Federal
Grant Programs in
accordance with the
Uniform Guidance
The Single Audit
• Year-Round
Consultation on
Financial and
Accounting Matters
Agenda Item 1.
6 / SUMMARY OF

AUDIT RESULTS
Agenda Item 1.
7 / Financial Statements Audit
Unmodified (Clean) Opinions on Financial Statements
 The financial statements present fairly, in all material respects, the City’s and the PFA’s financial position and changes in net position.
 The supplemental combining financial statements and supplemental schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Internal Control over Financial Reporting
 Material weaknesses and significant deficiencies on internal control over financial reporting were noted.

Agenda Item 1.
8 1. Significant Delay in the Year-end Closing Process and Completing the Audit

2. Material audit adjustments noted during the audit

3. Improper application of applicable basis of accounting

1. Improper implementation of new accounting standards

2. Non-compliance with the CA Government Code Section
53646 – Annual Adoption of Investments policy and quarterly submission of Treasurer’s report
Significant Deficiencies
Material Weaknesses
/ Material Weaknesses and Significant Deficiencies on
Internal Control Over Financial Reporting
Agenda Item 1.
9 1 Major Programs 2 Classification 3 Results
• Three (3) federal awards
findings.
• The City is classified as a
“High-Risk Auditee” based
on the Federallyprescribed criteria.
•ALN 20.205 – Highway
Planning and Construction
($1.1 million)
•ALN 21.027 - Coronavirus
State and Local Fiscal
Recovery Funds
($1.04 million)
The major programs covered
88% of total federal
expenditures of $2.5 million.
/ Single Audit
Agenda Item 1.
10 1. Delay in the completion and submission of single audit report

1. Inaccurate reporting of federal expenditures

2. Reporting of federal expenditures outside of period of performance
Significant Deficiencies
Material Weaknesses
/ Material Weakness and Significant Deficiencies on
Internal Control Over Major Programs (Compliance)
Agenda Item 1.
11 / AUDITOR’S REQUIRED

COMMUNICATION TO

THOSE CHARGED WITH

GOVERNANCE
(AU-C 260)
Agenda Item 1.
12 Management’s
Responsibility
Management has primary responsibility for the accounting principles used, including their consistency, application, clarity and completeness.

Significant
Accounting
Policies
The City’s significant accounting policies are appropriate, and management has applied its policies consistently with prior periods in all material respects. The City implemented GASB Statement No. 96 – Subscription-Based Information Technology Arrangements (SBITAs), GASB Statement No. 94, - Public-Private and Public-Public Partnerships (PPPs) and Availability Payment Arrangements (APAs), and GASB 100, Accounting Changes and Error Corrections, during the fiscal year ended June 30, 2023.

Controversial
issues
No accounting policies in controversial or emerging areas for which there is lack of authoritative guidance or consensus were identified.

Significant Unusual
Transactions We did not identify any significant or unusual transactions. / Required Communication to Those Charged
with Governance
Agenda Item 1.
13 Audit Adjustments Audit adjustments, other than those that are clearly trivial, proposed by us and recorded by the City are shown on the Summary of Recorded Audit Adjustments included in the Required Communication Letter.

Disagreements
with Management
We encountered no disagreements with management on financial accounting and reporting matters as it relates to the current year financial statements.

Consultations with
Other Accountants
We are not aware of any consultations management had with other accountants about accounting and auditing matters.

Conditions of
Retention
No significant issues were discussed, or subject to correspondence, with management prior to retention.
/ Required Communication to Those Charged
with Governance, continued
Agenda Item 1.
14 Difficulties with
Management
We did not encounter any difficulties with management while performing our audit procedures that require the attention of the City Council.

Material
Weaknesses and
Significant
Deficiencies
Material Weaknesses and Significant Deficiencies on internal controls over financial reporting and compliance were identified.

Irregularities,
Fraud or Illegal
Acts
No irregularities, fraud or illegal acts or that would cause a material misstatement of the financial statements, came to our attention as a result of our audit procedures.

Management
Representations
The City provided us with a signed copy of the management representation letter at the end of the audit and prior to our issuance of the report on financial statements. / Required Communication to Those Charged
with Governance, continued
Agenda Item 1.
15 / New Accounting Pronouncements – Effective in
Future Years
The Governmental Accounting Standards Board (GASB) has issued several pronouncements that have effective dates that may impact future financial presentations.

To be
implemented in
FY 2025
• GASB 101 – Compensated Absences
• GASB 102 – Certain Risk Disclosures
To be
implemented in
FY 2026
• GASB 103 – Financial Reporting Model
• GASB 104 – Disclosure of Certain Capital Assets
Agenda Item 1.
16 QUESTIONS
Agenda Item 1.

Vasquez + Company LLP has over 55 years of
experience in performing audit, accounting, and
consulting services for all types of private
companies, nonprofit organizations, and
governmental entities.

We are clients of the Aprio Professional Services+
Practice. As a client, we have access to the
Professional Services+ Collaborative, a globally
connected community that provides access to an
ecosystem of capabilities, collaboration and
camaraderie to help professional services firms
grow and thrive in a rapidly changing business
environment. As a participant in the PS+
Collaborative, we have the opportunity to interact
and share best practices with other professional
services firms across the U.S. and Canada.
/ Contact Information
17 Roger A. Martinez, CPA
O: +1.213.873.1703
[email protected]
Cristy Canieda, CPA, CGMA
O: +1.213.873.1720
[email protected]
Rhoda Dollaga, CPA
O: +1.213.873.1746
[email protected]
www.vasquez.cpa
Agenda Item 1.
18 Thank you for your
time and attention!
Agenda Item 1.

CITY OF NEEDLES, CALIFORNIA
Annual Financial Report and
Required Supplemental Information
Fiscal Year Ended June 30, 2023
with Independent Auditor’s Report
Agenda Item 1.

CITY OF NEEDLES, CALIFORNIA
Annual Financial Report and
Required Supplemental Information
Fiscal Year Ended June 30, 2023
with Independent Auditor’s Report
Agenda Item 1.

City of Needles, California
Table of Contents
PAGE
Independent Auditor’s Report 1
Management’s Discussion and Analysis (Unaudited) 5
Basic Financial Statements
Government-Wide Financial Statements
Statement of Net Position 17
Statement of Activities 18
Fund Financial Statements
Balance Sheet – Governmental Funds 19
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 20
Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 21
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the
Statement of Activities 22
Statement of Net Position – Proprietary Funds 23
Statement of Revenues, Expenses and Changes in Net Position – Proprietary Funds 24
Statement of Cash Flows – Proprietary Funds 25
Notes to Basic Financial Statements 26
Required Supplementary Information
Budgetary Comparison Schedule – General Fund 61
Budgetary Comparison Schedule – State Recreation Grant Special Revenue Fund 62 Schedule of the City’s Proportionate Share of the Net Pension Liability and Schedule of Plan Contribution – Miscellaneous Plan

63 Schedule of the City’s Proportionate Share of the Net Pension Liability and Schedule of Plan Contribution – Safety Plan 64
Schedule of Changes in the Net OPEB Liability and Related Ratios and Schedule of OPEB Plan Contribution 65
Supplementary Information
Combining and Individual Fund Statements and Schedules
Combining Balance Sheet – Other Governmental Funds 66
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Other Governmental Funds 71
Combining Statement of Net Position – Other Enterprise Funds 76 Combining Statement of Revenues, Expenses, and Change in Net Position – Other Enterprise Funds 77
Combining Statement of Cash Flows – Other Enterprise Funds 78 Combining Statement of Net Position – Internal Service Funds 79 Combining Statement of Revenues, Expenses and Changes in Net Position – Internal Service Funds 81
Combining Statement of Cash Flows – Internal Service Funds 83 Agenda Item 1.

FINANCIAL SECTION
Agenda Item 1.
1 Independent Auditor’s Report
The Honorable Mayor and the Members of the City Council City of Needles, 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 Needles, California (the City), as of and for the year ended June 30, 2023, and the related notes to 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 of Needles, California, as of June 30, 2023, 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 Matters
Implementation of a New Accounting Standard
As discussed in Note 1, the City implemented the provisions of Governmental Accounting Standards Board Statement No. 100, Accounting Changes and Error Corrections—an amendment of GASB Statement No. 62, during the fiscal year ended June 30, 2023. Our opinion is not modified with respect to this matter.

Agenda Item 1.
2 Prior Year Adjustments
As discussed in Note 13 to the financial statements, the 2022 financial statements have been restated to correct misstatements. Our opinion is not modified with respect to this matter.

Other Matter
The financial statements of the City as of and for the year ended June 30, 2022, were audited by other auditors, whose report, dated November 30, 2023, expressed an unmodified opinion on those statements.

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.

Agenda Item 1.
3 • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.

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

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 5 through 16 and the required supplementary information on pages 61 through 65 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 as 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.

Agenda Item 1.
4 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated July 28, 2025, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance.

That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City’s internal control over financial reporting and compliance.

Glendale, California
July 28, 2025
Agenda Item 1.

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
Agenda Item 1.

City of Needles, California
Management’s Discussion & Analysis (Unaudited)
June 30, 2023
5 Within this section of the annual financial report, the City of Needles, California’s management presents this discussion and analysis of the City’s financial performance for the fiscal year ended June 30, 2023. The financial statements and footnotes follow this section and should be read in conjunction with this discussion and analysis.

The discussion below includes the City’s governmental funds (the general fund, the state recreation grants special revenue fund, and other nonmajor governmental funds), as well as the City’s proprietary funds (the Public Utility, Sanitation, other enterprise funds, and internal service funds).

Financial Highlights
• The City’s net position (excess of assets and deferred outflows of resources over liabilities and deferred inflows of resources) increased from $50.7 million, as restated, to $58.6 million for the fiscal year ended June 30, 2023. Governmental activities experienced an increase of $4.2 million, including transfers to business-type activities of $142 thousand. The change in net position resulting from business-type activities for the fiscal year was an increase of $3.6 million. • Total net position comprises the following:

1. Capital assets, net of related debt of $37.9 million include capital assets, net of accumulated depreciation and amortization, reduced by outstanding debt related to the acquisition or construction of such capital assets.

2. Net position of $5.4 million that is restricted as to its use by outside factors such as debt covenants, grantors, laws, or regulations.

3. Net position of $15.3 million is not restricted as to its use and is available to fund the City’s operations.
• The City’s governmental funds reflect total fund balances of $17.5 million at June 30, 2023. This represents a decrease of $557 thousand from the prior fiscal year. • The City’s total liabilities increased from $19.5 million, as restated, to $24.5 million. This increase is due primarily to increases of $3.3 million in net pension liability and $1.2 million in accounts payable.

Overview of the Financial Statements
Management’s Discussion and Analysis serves as an introduction to the City’s basic financial statements. The basic financial statements include government-wide financial statements, fund financial statements, and notes to financial statements. In addition, there is certain supplemental information included with the financial statements and notes thereto.

Agenda Item 1.

City of Needles, California
Management’s Discussion & Analysis (Unaudited)
June 30, 2023
6 Government-wide Financial Statements
The City’s government-wide financial statements include: (1) a Statement of Net Position, and (2) a Statement of Activities.

These financial statements present the City’s current and long-term financial information. At the government-wide level, the financial statements are similar to normal operating financial statements, using the full accrual basis of accounting and eliminating or reclassifying internal activities.

The Statement of Net Position presents all of the City’s assets, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference presented as net position. The evaluation of whether the City’s financial status is improving or not can be measured by changes in net position over time. Increases in net position generally represent an improvement in financial position.

The Statement of Activities reflects the change in the City’s net position during the current fiscal year.

This statement includes all revenues and expenses for the year, regardless of when the cash is received or paid. The statement shows the costs of the City’s functions and activities, then shows how much of those costs are funded by program revenues or grants, with the remaining amount dependent on the City’s general revenues.

Both of the above statements report on governmental activities of the City that are funded by taxes and intergovernmental grants, and business-type activities that are funded primarily by charges to users. Governmental activities include general government, public safety, public works, parks and recreation, and community development. Business-type activities include power and water, wastewater, refuse collection, public transportation, and a municipal golf course. Financial statements for fiduciary activities (such as a pension plan) are not included in the government-wide financial statements, as the assets of those activities are not available to fund the City’s programs and activities.

The financial reporting entity includes the City’s funds and organizations for which the City is accountable. The City itself is considered the primary government, and the organizations for which the City is accountable are considered component units. The component units are legally separate from the City but are governed by the same individuals who govern the City. There are three such component units: (1) the Needles Public Utility Authority, and (2) the Needles Public Financing Authority. Both of these component units are blended into the City’s financial statements. More comprehensive information about the City’s component units can be found in the notes to the financial statements following this discussion and analysis.

Agenda Item 1.

City of Needles, California
Management’s Discussion & Analysis (Unaudited)
June 30, 2023
7 Fund Financial Statements
Fund-level financial statements are intended to present the financial position and activities of individual funds within the City. A fund is a self-balancing set of accounts used to ensure that resources intended to fund specific activities or objectives are, in fact, properly utilized. Fund-level financial statements focus on significant funds, with major funds reported separately, and non-major funds aggregated into a single presentation.

There are three primary types of funds, as follows:

Governmental funds are reported in fund-level financial statements and include the governmental types of activities previously mentioned.

The City’s major governmental funds are the General Fund and the State Recreation Grants Special Revenue Fund.

The fund level statements differ significantly from the government-wide financial statements, as the fund level statements focus on current resources, uses of those resources, and resources remaining at the end of the fiscal year.

The government-wide financial statements include the current resources and use of those resources, as well as the long-term financial information for the City. A reconciliation of the fund level balance sheet and statement of revenues, expenditures, and changes in fund balance to the government-wide statements follows the fund level financial statements.

Proprietary funds are also reported in fund-level financial statements and include those activities for which the costs incurred are intended to be recovered through charges to the users of the services provided. Proprietary funds include enterprise funds and internal service funds. The functions of enterprise funds are the same as the business-type activities reported in the government-wide financial statements. Enterprise funds recover costs primarily through charges to external customers. The City’s enterprise funds include the electric, water and wastewater utility, sanitation, public transportation, and the golf course.

Internal service funds provide services to other departments within the City and charge these departments for such services. Internal service funds include water, wastewater, electricity, utility office, admin facility, fleet maintenance, information systems and vehicle replacement. Because the public utility dominates the City’s financial position, the internal service funds are included within the business-type activities in the government-wide financial statements.

Proprietary funds present their financial position and their activities similar to private companies.

Accordingly, the fund-level financial statements utilize the same focus as that used for the governmentwide financial statements. The major difference is that individual proprietary funds are only presented at the fund level. The City’s major proprietary funds include the Public Utility Fund and the Sanitation Fund. The remaining non-major proprietary funds are aggregated into a single presentation at the fund level.

Agenda Item 1.

City of Needles, California
Management’s Discussion & Analysis (Unaudited)
June 30, 2023
8 Fund Financial Statements, continued
Fiduciary funds, such as custodial funds, are reported in fiduciary fund financial statements. Such statements are excluded from the government-wide financial statements. Fiduciary fund financial statements report on resources that are unavailable to finance City programs. The focus of fiduciary fund financial statements is similar to that for proprietary funds. As of June 30, 2023, the City did not have any fiduciary funds.

Notes to the Financial Statements
Following the government-wide and fund-level financial statements are various notes to such statements. These notes are critical to a reader’s understanding of the City and its financial position and performance.

Financial Analysis for the City as a Whole
The accumulation of consistently presented financial information allows a reader to understand the City’s financial position and determine whether there is improvement or deterioration.

One measure of continued improvement is the change in net position. The City’s net position increased by about $7.9 million, primarily because of continued positive results from utility revenues and cannabis tax revenues.

The following table shows summarized information regarding the City’s assets, deferred outflows of resources, liabilities, deferred inflows of resources, net position, and the changes therein for the fiscal year ended June 30, 2023:
2022 2022 2022 Amount Percent
2023 (As restated) 2023 (As restated) 2023 (As restated) Change Change Assets
Current and other assets $ 20,605,937 $ 19,922,171 $ 12,288,393 $ 11,578,669 $ 32,894,330 $ 31,500,840 $ 1,393,490 4.4% Capital assets, net 20,332,899 16,842,911 27,815,475 23,325,280 48,148,374 40,168,191 7,980,183 19.9% Total assets 40,938,836 36,765,082 40,103,868 34,903,949 81,042,704 71,669,031 9,373,673 13.1% Deferred outflows of resources 1,763,784 678,185 1,118,561 549,743 2,882,345 1,227,928 1,654,417 134.7% Liabilities
Current and other liabilities 1,571,410 1,541,593 5,073,152 3,689,727 6,644,562 5,231,320 1,413,242 27.0% Long-term liabilities 4,528,439 2,566,802 13,384,118 11,702,595 17,912,557 14,269,397 3,643,160 25.5% Total liabilities 6,099,849 4,108,395 18,457,270 15,392,322 24,557,119 19,500,717 5,056,402 25.9% Deferred inflows of resources 657,748 1,611,436 117,264 1,036,638 775,012 2,648,074 (1,873,062) -70.7% Net Position
Net investment in capital assets 20,277,271 16,770,481 17,608,751 12,106,236 37,886,022 28,876,717 9,009,305 31.2% Restricted 5,396,163 1,882,248 - - 5,396,163 1,882,248 3,513,915 186.7% Unrestricted 10,271,589 13,070,707 5,039,144 6,918,496 15,310,733 19,989,203 (4,678,470) -23.4% Total net position $ 35,945,023 $ 31,723,436 $ 22,647,895 $ 19,024,732 $ 58,592,918 $ 50,748,168 $ 7,844,750 15.5% Governmental Activities Business-Type Activities Totals Agenda Item 1.

City of Needles, California
Management’s Discussion & Analysis (Unaudited)
June 30, 2023
9 Financial Analysis for the City as a Whole, continued Net position was positive for both governmental activities and business-type activities in 2023 and 2022. Overall, the net position increased by about $7.9 million due to the current year change in operations. The increase in net position from business-type activity operations was about $3.6 million, primarily due to increases in grants and contributions received to support the City’s capital improvement plans.

Governmental activities' revenues increased by about $3.1 million. Property taxes and transient occupancy taxes continued to play a significant role in the City’s results, totaling about $3.0 million in revenues for fiscal year 2023. This represents an increase of $358 thousand from the previous fiscal year. However, the most significant governmental activity revenue was cannabis taxes, which reported a total of $4.1 million in 2023. Governmental activities' expenses increased by about $1.8 million due to an increase in pension and OPEB expenses allocated to general government and public safety functions.

To assist in analyzing the City’s operating results, comparative data is accumulated and presented.

The following table summarizes the City’s changes in net position for the year ended June 30, 2023:
2022 2022 2022 Amount Percent
2023 (As restated) 2023 (As restated) 2023 (As restated) Change Change Revenues
Program revenues
Charges for services $ 1,175,821 $ 2,064,820 $ 19,349,552 $ 19,492,224 $ 20,525,373 $ 21,557,044 $ (1,031,671) -4.8% Operating grants and contribution 5,050,834 869,064 3,926,969 496,274 8,977,803 1,365,338 7,612,465 557.6% Capital grants and contributions - - 5,811,156 1,368,659 5,811,156 1,368,659 4,442,497 324.6% General revenues
Property taxes 1,921,322 1,668,459 - - 1,921,322 1,668,459 252,863 15.2% Transient occupancy taxes 1,088,807 983,675 - - 1,088,807 983,675 105,132 10.7% Fuel taxes 238,700 237,833 - - 238,700 237,833 867 0.4% State sales tax 881,494 975,304 - - 881,494 975,304 (93,810) -9.6% Franchise taxes 157,148 157,725 - - 157,148 157,725 (577) -0.4% Cannabis tax 4,115,018 4,821,894 - - 4,115,018 4,821,894 (706,876) -14.7% Utility users tax 343,007 319,322 - - 343,007 319,322 23,685 7.4% Gain (loss) on sale of asset - (3,000) - 3,950 - 950 (950) -100.0% Use of money and property 10,790 100,574 68,123 31,519 78,913 132,093 (53,180) -40.3% Miscellaneous 314,419 29,968 - - 314,419 29,968 284,451 949.2% Total revenues 15,297,360 12,225,638 29,155,800 21,392,626 44,453,160 33,618,264 10,834,896 1695.3% Expenses
General government 1,756,949 853,946 - - 1,756,949 853,946 903,003 105.7% Public safety 5,003,930 4,475,791 - - 5,003,930 4,475,791 528,139 11.8% Public works 2,093,518 2,093,095 - - 2,093,518 2,093,095 423 0.0% Parks and recreation 1,600,328 1,361,679 - - 1,600,328 1,361,679 238,649 17.5% Community development 755,023 624,417 - - 755,023 624,417 130,606 20.9% Interest on long-term debt 8,360 16,500 - - 8,360 16,500 (8,140) -49.3% Public Utility Authority - - 22,527,383 15,881,492 22,527,383 15,881,492 6,645,891 41.8% Sanitation - - 1,366,404 1,272,614 1,366,404 1,272,614 93,790 7.4% Golf Course - - 883,792 853,683 883,792 853,683 30,109 3.5% Transit - - 612,723 574,443 612,723 574,443 38,280 6.7% Total expenses 11,218,108 9,425,428 25,390,302 18,582,232 36,608,410 28,007,660 8,600,750 166.1% Increase in net position
before transfers 4,079,252 2,800,210 3,765,498 2,810,394 7,844,750 5,610,604 2,234,146 39.8% Transfers 142,335 (2,117,206) (142,335) 2,117,206 - - - 100.0% Change in net position 4,221,587 683,004 3,623,163 4,927,600 7,844,750 5,610,604 2,234,146 39.8% Net position - beginning 31,723,436 31,040,432 19,024,732 14,097,132 50,748,168 45,137,564 5,610,604 12.4% Ending net position $ 35,945,023 $ 31,723,436 $ 22,647,895 $ 19,024,732 $ 58,592,918 $ 50,748,168 $ 7,844,750 15.5% Governmental Activities Business-Type Activities Totals Agenda Item 1.

City of Needles, California
Management’s Discussion & Analysis (Unaudited)
June 30, 2023
10 The following charts show graphic representations of the City’s revenues for the fiscal years ended June 30, 2023 and 2022:

As displayed in the charts above, the revenues from charges for services comprise 46% and 64% of the City’s revenues for 2023 and 2022, respectively. Most of the charges for services are attributed to the Public Utility Fund, which makes up approximately 35% of all revenues in 2023 and 49% of all revenues in 2022.

Agenda Item 1.

City of Needles, California
Management’s Discussion & Analysis (Unaudited)
June 30, 2023
11 The following charts show graphic representations of the City’s governmental functional expenses for the fiscal years ended June 30, 2023 and 2022:

Agenda Item 1.

City of Needles, California
Management’s Discussion & Analysis (Unaudited)
June 30, 2023
12 The City contracts with the County of San Bernardino for public safety services. These expenses are funded primarily through general revenues. Parks and recreation expenses are significant for the City, as it is the City’s responsibility to maintain the marinas, public swimming pool, skate park, and cemetery.

The following chart depicts the revenues and expenses of the City’s business-type activities for the year ended June 30, 2023:

The Public Utility Fund contributed most of the City’s revenues and produced an operating loss of about $5.4 million. Interest expense of $400 thousand on the revenue refinancing bonds, operating grants of $3.4 million, and net capital contributions and transfers of about $5.9 million contributed to the Public Utility Fund’s increase in net position of about $3.5 million for the fiscal year.

The City’s business-type activities also include refuse collection, a golf course, and public transportation. All business-type activities are designed to be self-supporting, and costs are expected to be fully recovered by user fees and other revenues. Refuse collection activities are contracted out to a private company. The sanitation fund increased its net position by $141 thousand. The golf course fund, which normally reflects an operating deficit, also reflected an increase in total net position of $44 thousand. The transit fund reflected a decrease in net position of $9 thousand for the fiscal year ended June 30, 2023.

Agenda Item 1.

City of Needles, California
Management’s Discussion & Analysis (Unaudited)
June 30, 2023
13 Financial Analysis of the City’s Funds
Governmental funds
Governmental funds focus on the availability of resources on a short-term basis, showing inflows and outflows and resulting in an ending balance of spendable resources.

City officials compare these available resources to the upcoming financial obligations. The ending fund balance for governmental funds at June 30, 2023, was $17.5 million. Of this total, $4.6 million was unassigned and is available to fund any City requirements. Nonspendable fund balances of $8.1 million represents assets that cannot be converted to cash, such as inventory, prepaid items, advances to other funds, and land held for resale.

There are restricted fund balances totaling $4.2 million, committed fund balances of $350 thousand, and assigned fund balances of $221 thousand.

Governmental fund balances decreased by $557 thousand from the previous year. Expenditures exceeded revenues by about $699 thousand, but there was a net transfer in of approximately $142 thousand.

Major Governmental Funds
The City’s General Fund is the primary governmental fund in use, and accounts for about 77% of governmental revenues and about 72% of governmental expenditures. The General Fund’s fund balance increased by $307 thousand from the previous year. General Fund revenues increased by $722 thousand and expenditures increased by about $1.7 million.

The State Recreation Grants Special Revenue Fund is used to manage grant funds received for park and recreation improvements. Its fund balance decreased by $973 thousand during the fiscal year, ending at $1.04 million, due to an increase in capitalizable expenditures incurred to improve facilities.

Other Governmental Funds
All other governmental funds are considered non-major. Such funds include special revenue funds, debt service fund, and capital projects funds. Together, these funds experienced an increase in fund balances of about $109 thousand. The total ending fund balance for these funds was $3.3 million.

Proprietary funds
Proprietary fund financial statements are similar to those prepared for private companies, with both short-term and long-term information included in the statements. Also, proprietary funds have the same focus as the government-wide financial statements.

Agenda Item 1.

City of Needles, California
Management’s Discussion & Analysis (Unaudited)
June 30, 2023
14 Major Proprietary Funds
The Public Utility Fund is by far the most significant fund for the City, comprising 53% of total assets and about 58% of total revenues. Public Utility Fund provides power, water, and wastewater to the City’s businesses and residents. All fixed assets of the utility are carried on the Public Utility Fund’s books, as well as the revenue bonds issued to finance the acquisition of the utility.

The Sanitation Fund supports the City’s solid waste and sanitation services. It comprises 3% of the City’s assets and 4% of the City’s revenues.

General Fund Budgetary Highlights
The original budget adopted for the General Fund totaled $11,613,002 in revenues and $12,640,438 in expenditures. The budget was amended once during the fiscal year, primarily to reflect increases in revenues of $2,224,152 and increases in expenditures as follows: general government expenditures of $172,946, public safety expenditures of $184,024, public works of $117,410, and parks and recreation expenditures of $2,548,497. The General Fund ended the fiscal year 2023 with $2,137,430 budget surplus.

Capital Assets and Debt Administration
Capital Assets
At June 30, 2023, the City had approximately $48.1 million invested in capital assets, $20.3 million of which was in governmental activities and $27.8 million of which was in business-type activities.

The notes to the financial statements include more details about changes in capital assets, accumulated depreciation, ongoing construction, and commitments outstanding at the end of the fiscal year.

Capital Assets, net of accumulated depreciation and amortization, are as follows:

Amount Percent
2023 2022 2023 2022 2023 2022 Change Change
Non-Depreciable Assets
Land $ 340,403 $ 346,403 $ 3,209,553 $ 3,209,553 $ 3,549,956 $ 3,555,956 $ (6,000) -0.2% Construction in progress 1,896,821 212,317 5,442,013 755,887 7,338,834 968,204 6,370,630 658.0% Total non-depreciable assets 2,237,224 558,720 8,651,566 3,965,440 10,888,790 4,524,160 6,364,630 657.8% Depreciable and Amortizable Assets
Structures and improvements 17,477,423 15,884,390 15,279,144 15,181,319 32,756,567 31,065,709 1,690,858 5.4% Equipment and vehicles 564,195 327,371 1,111,228 1,372,956 1,675,423 1,700,327 (24,904) -1.5% Right-of-use lease asset 54,057 72,430 352,556 366,375 406,613 438,805 (32,192) -7.3% Intangible asset - - 2,420,981 2,439,190 2,420,981 2,439,190 (18,209) -0.7% Total depreciable and amortizable asse 18,095,675 16,284,191 19,163,909 19,359,840 37,259,584 35,644,031 1,615,553 (0) Total $ 20,332,899 $ 16,842,911 $ 27,815,475 $ 23,325,280 $ 48,148,374 $ 40,168,191 $ 7,980,183 653.7% Governmental Activities Business-Type Activities Totals Agenda Item 1.

City of Needles, California
Management’s Discussion & Analysis (Unaudited)
June 30, 2023
15 Long-term debt
At the end of the fiscal year, the City’s total long-term debt obligations were $17.9 million. Of this total, $4.5 million is in governmental activities, and the remaining balance is in business-type activities.

The business-type activities debt consists of revenue bonds issued by the Needles Public Utility Authority. These bonds are being repaid from the utility’s operating revenues. There is also a note payable in the sanitation fund resulting from an agreement with San Bernardino County related to a municipal landfill.

The following table depicts the City’s outstanding long-term debt obligations at June 30, 2023 and 2022:

Economic Activity Update – Fiscal Year 2023
City of Needles, California
The City of Needles experienced continued economic momentum in FY 2023, marked by business growth, infrastructure investment, public service expansions, and strategic planning initiatives aimed at sustainable development.

Business & Industry Growth
Cannabis-related industrial development remains a primary economic driver. Since 2021, approximately 224,204 square feet of industrial space has been constructed, supporting cultivation, processing, and lab extraction operations. As of FY 2023, this sector supports over 523 direct jobs, contributing significantly to job creation and local revenue generation.

The City also attracted retail and service-based businesses with the assistance of GO-Biz, the Governor’s Office of Business and Economic Development, which actively promoted Needles to prospective grocery and retail operators.

Property Valuation
The City’s assessed property valuation continued its upward trajectory. From FY 2022 to FY 2023, the assessed roll grew from $511 million to $536 million, representing a $25 million increase and reinforcing the city’s rising property values and market confidence. 2022 2022 Amount Percent
2023 2022 2023 (As restated) 2023 (As restated) Change Change Compensated absences $ 236,068 $ 184,177 $ 250,153 $ 274,039 $ 486,221 $ 458,216 28,005 6.1% Estimated claims liability 100,000 100,000 - - 100,000 100,000 - 0.0% Lease liability 55,628 73,044 360,064 368,843 415,692 441,887 (26,195) -5.9% Net pension liability 3,418,332 1,288,346 2,196,678 1,044,347 5,615,010 2,332,693 3,282,317 140.7% NPUA 2016 bonds - - 9,846,660 10,878,983 9,846,660 10,878,983 (1,032,323) -9.5% Notes payable - - 227,787 249,571 227,787 249,571 (21,784) -8.7% Other postemployment benefits liability 736,504 771,235 502,776 625,171 1,239,280 1,396,406 (157,126) -11.3% Tax allocation bonds - 150,000 - - - 150,000 (150,000) -100.0% Total $ 4,546,532 $ 2,566,802 $ 13,384,118 $ 13,440,954 $ 17,930,650 $ 16,007,756 $ 1,922,894 12.0%

Governmental Activities Business-Type Activities Totals Agenda Item 1.

City of Needles, California
Management’s Discussion & Analysis (Unaudited)
June 30, 2023
16 Tourism & Hospitality
In FY 2023, the Hampton Inn & Suites officially opened at the former El Rancho Motel site, offering 80 rooms across a 46,000 sq. ft., 3-story structure. The project introduced 35–50 new hospitality jobs and expanded the city’s lodging capacity to serve both tourists and business travelers.

Infrastructure & Planning
The City completed Phase IV-A of its multiyear street improvement project in FY 2023, which included paving, utility upgrades, and safety improvements near North K Street and Front Street. To date, three phases have been completed under the city’s 15-year Street Pavement Management Plan, significantly improving infrastructure quality and safety.

Additionally, San Bernardino County completed improvements along Needles Highway within city limits, enhancing regional connectivity.

Public Services & Facilities
In January 2023, the Needles Courthouse reopened five days a week, a major win for local access to justice after more than a decade of limited service.

The City formally took over the Needles Housing Authority, integrating it into local operations.

Through this transition, the City ensured better responsiveness to public housing needs and collaborated with regional agencies on housing, social services, and emergency assistance.

Programs & Grants
In FY 2023, the City launched the Trap-Neuter-Release/Rehome Program with a $112,000 grant from the California for All Animals initiative. The program enhances animal control services and reduces euthanasia rates by funding equipment, staffing, and public education.

Community Planning
In March 2023, the City adopted an updated Land Use and Transportation Element, ensuring compliance with State housing mandates and establishing a long-range vision for growth, connectivity, and sustainable development. This adoption aligns with the Prohousing Designation the City earned in 2022, which has positioned Needles to access funding incentives and expand housing opportunities.

Closing Statement for the Audit Report
This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City’s finances, to comply with finance-related laws and regulations, and to demonstrate the City’s commitment to public accountability.

For questions or additional information, please contact the City of Needles Finance Department at 817 Third Street, Needles, California 92363. You may also request the separately issued financial statements of the Needles Public Utility Authority, the Needles Public Financing Authority, and the Needles Transit System.

Agenda Item 1.

BASIC FINANCIAL STATEMENTS
Agenda Item 1.

GOVERNMENT-WIDE FINANCIAL STATEMENTS
Agenda Item 1.

City of Needles, California
Statement of Net Position
June 30, 2023
See accompanying Notes to Basic Financial Statements.
17 Governmental Business-Type
Activities Activities Totals
ASSETS
Cash and investments $ 5,462,157 $ 13,719,608 $ 19,181,765 Restricted cash 1,739,448 - 1,739,448
Accounts receivable, net 474,112 2,491,866 2,965,978
Due from other governments 1,572,830 1,984,063 3,556,893 Internal balances 10,578,928 (10,578,928) -
Inventory - 839,077 839,077
Prepaid items 187,675 3,324,091 3,511,766
Land held for resale 182,153 - 182,153
Notes receivable - 508,616 508,616
Operating lease receivables 408,634 - 408,634
Capital assets, net 20,332,899 27,815,475 48,148,374
TOTAL ASSETS 40,938,836 40,103,868 81,042,704

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows of resources related to pensions 1,717,896 1,087,236 2,805,132 Deferred outflows of resources related to OPEB 45,888 31,325 77,213 TOTAL DEFERRED OUTFLOWS OF RESOURCES 1,763,784 1,118,561 2,882,345

LIABILITIES
Accounts payable 628,502 2,011,109 2,639,611
Accrued payroll 297,020 40,070 337,090
Deposits payable 589,495 2,747,858 3,337,353
Accrued interest - 158,367 158,367
Unearned revenues 38,300 - 38,300
Other liabilities - 115,748 115,748
Long-term liabilities
Due within one year 18,093 1,206,928 1,225,021
Due in more than one year 37,535 9,227,583 9,265,118
Compensated absences 236,068 250,153 486,221
Estimated claims liability 100,000 - 100,000
Net pension liability 3,418,332 2,196,678 5,615,010
Other postemployment benefits liability 736,504 502,776 1,239,280 TOTAL LIABILITIES 6,099,849 18,457,270 24,557,119

DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources related to pensions 258,952 117,264 376,216 Deferred inflows of resources related to leases 398,796 - 398,796 TOTAL DEFERRED INFLOWS OF RESOURCES 657,748 117,264 775,012

NET POSITION
Net investment in capital assets 20,277,271 17,608,751 37,886,022 Restricted for
Community development projects 5,396,163 - 5,396,163
Unrestricted 10,271,589 5,039,144 15,310,733
TOTAL NET POSITION $ 35,945,023 $ 22,647,895 $ 58,592,918 Agenda Item 1.

City of Needles, California
Statement of Activities
Year ended June 30, 2023
See accompanying Notes to Basic Financial Statements.
18 Operating Capital BusinessCharges for Grants and Grants and Governmental Type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total

PRIMARY GOVERNMENT
Governmental activities
General government $ 1,756,949 $ 1,043,311 $ 424,727 $ - $ (288,911) $ - $ (288,911) Public safety 5,003,930 - 269,223 - (4,734,707) - (4,734,707) Public works 2,093,518 2,640 3,029,479 - 938,601 - 938,601 Parks and recreation 1,600,328 40,587 - - (1,559,741) - (1,559,741) Community development 755,023 89,283 1,327,405 - 661,665 - 661,665 Interest on long-term debt 8,360 - - - (8,360) - (8,360) Total governmental
activities 11,218,108 1,175,821 5,050,834 - (4,991,453) - (4,991,453) Business-type activities
Public utility authority 22,527,383 17,087,933 3,358,172 5,787,061 - 3,705,783 3,705,783 Sanitation 1,366,404 1,627,012 - - - 260,608 260,608
Golf course 883,792 601,429 - - - (282,363) (282,363)
Transit 612,723 33,178 568,797 24,095 - 13,347 13,347
Total business-type
activities 25,390,302 19,349,552 3,926,969 5,811,156 - 3,697,375 3,697,375 Total primary government $ 36,608,410 $ 20,525,373 $ 8,977,803 $ 5,811,156 (4,991,453) 3,697,375 (1,294,078) General revenues:

Taxes:

Property taxes 1,921,322 - 1,921,322
Transient occupancy taxes 1,088,807 - 1,088,807
Fuel taxes 238,700 - 238,700
State sales tax 881,494 - 881,494
Franchise taxes 157,148 - 157,148
Cannabis tax 4,115,018 - 4,115,018
Utility users tax 343,007 - 343,007
Use of money and property 10,790 68,123 78,913
Miscellaneous 314,419 - 314,419
Transfers 142,335 (142,335) -
Total general revenues 9,213,040 (74,212) 9,138,828
Change in net position 4,221,587 3,623,163 7,844,750
Net position - beginning, as previously reported 33,133,819 18,157,483 51,291,302 Restatements (1,410,383) 867,249 (543,134)
Net position - beginning, as restated 31,723,436 19,024,732 50,748,168 Net position - ending $ 35,945,023 $ 22,647,895 $ 58,592,918 Program Revenues
Net (Expense) Revenue and
Changes in Net Position
Agenda Item 1.

FUND FINANCIAL STATEMENTS
Agenda Item 1.

City of Needles, California
Balance Sheet
Governmental Funds
June 30, 2023
See accompanying Notes to Basic Financial Statements.
19 State Recreation Other Total
General Grants Special Governmental Governmental
Fund Revenue Fund Funds Funds
ASSETS
Cash and investments $ 2,459,994 $ - $ 3,002,163 $ 5,462,157 Restricted cash 1,420,839 - 318,609 1,739,448
Accounts receivable, net 474,112 - - 474,112
Due from other funds 4,286,781 - 725 4,287,506
Due from other governments 248,744 1,038,231 285,855 1,572,830 Prepaid items 33,913 - 153,762 187,675
Lease receivables 408,634 - - 408,634
Land held for resale - - 182,153 182,153
Advances to other funds 7,724,761 - - 7,724,761
TOTAL ASSETS $ 17,057,778 $ 1,038,231 $ 3,943,267 $ 22,039,276

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities
Accounts payable $ 481,339 $ 76,472 $ 70,691 $ 628,502
Accrued liabilities 236,126 - 60,894 297,020
Deposits 589,495 - - 589,495
Due to other funds - 962,391 470,948 1,433,339
Unearned revenues - - 38,300 38,300
Total liabilities 1,306,960 1,038,863 640,833 2,986,656 Deferred inflows of resources
Unavailable revenues 95,249 1,038,231 28,925 1,162,405
Leases 398,796 - - 398,796
Total deferred inflows of resources 494,045 1,038,231 28,925 1,561,201 Fund balances
Nonspendable 7,758,674 - 335,915 8,094,589
Restricted 1,420,839 - 2,812,919 4,233,758
Committed 350,000 - - 350,000
Assigned - - 220,911 220,911
Unassigned 5,727,260 (1,038,863) (96,236) 4,592,161
Total fund balances 15,256,773 (1,038,863) 3,273,509 17,491,419

TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES $ 17,057,778 $ 1,038,231 $ 3,943,267 $ 22,039,276 Agenda Item 1.

City of Needles, California
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Position
June 30, 2023
See accompanying Notes to Basic Financial Statements.
20 Fund balances - total governmental funds $ 17,491,419 Amounts reported for governmental activities in the Statement of Net Position are different because:

Revenues reported as unavailable revenue in the governmental funds and recognized in the Statement of Activities. These are included in the intergovernmental revenues in the governmental fund activity. 1,162,405 Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds Balance Sheet.

Governmental capital assets $ 35,572,818
Less: Accumulated depreciation (15,293,976)
Governmental right-of-use lease assets 84,754
Less: Accumulated amortization (30,697) 20,332,899
Long-term liabilities applicable to the City governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities. All liabilities, both current and long-term, are reported in the Statement of Net Position. Balances as of June 30,2023 are:

Compensated absences (236,068)
Estimated claims liability (100,000)
Lease liability (55,628) (391,696)
Pension and OPEB related debt applicable to the City governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities. Deferred outflows of resources and deferred inflows of resources related to pensions and OPEB are only reported in the Statement of Net Position as the changes in these amounts effects only the government-wide statements for governmental activities:

Deferred outflows of resources related to OPEB 45,888
Net OPEB Liability (736,504)
Deferred outflows of resources related to pension 1,717,896 Deferred inflows of resources related to pension (258,952) Net pension liability (3,418,332) (2,650,004)
Net position of governmental activities $ 35,945,023
Agenda Item 1.

City of Needles, California
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
Year ended June 30, 2023
See accompanying Notes to Basic Financial Statements.
21 State Recreation Other Total
General Grants Special Governmental Governmental
Fund Revenue Fund Funds Funds

REVENUES
Taxes $ 8,349,648 $ - $ 221,959 $ 8,571,607
Licenses, permits, and fees 582,718 - - 582,718
Intergovernmental 477,712 - 1,942,966 2,420,678
Charges for services 944,916 - 1,072,702 2,017,618
Fines and forfeitures 217,125 - - 217,125
Use of money and property 156,389 - 647 157,036
Other revenues 90,302 77,121 750 168,173
Total revenues 10,818,810 77,121 3,239,024 14,134,955

EXPENDITURES
Current
General government 1,709,792 - - 1,709,792
Public safety 4,786,280 - 202,479 4,988,759
Public works 584,376 - 1,054,976 1,639,352
Parks and recreation 1,159,418 - 163,815 1,323,233
Community development 90,180 - 296,022 386,202
Capital outlay 2,269,981 1,050,135 1,290,620 4,610,736
Debt service
Principal retirement 17,416 - 150,000 167,416
Interest and fiscal charges 2,735 - 5,625 8,360
Total expenditures 10,620,178 1,050,135 3,163,537 14,833,850

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 198,632 (973,014) 75,487 (698,895)

OTHER FINANCING SOURCES (USES)
Transfers in 1,092,498 - 212,911 1,305,409
Transfers out (983,861) - (179,213) (1,163,074)
Total other financing sources 108,637 - 33,698 142,335
CHANGES IN FUND BALANCES 307,269 (973,014) 109,185 (556,560)

FUND BALANCES
Fund balances - beginning, as previously reported 16,687,863 (65,849) 2,836,348 19,458,362 Restatements (1,738,359) - 327,976 (1,410,383)
Fund balances - beginning, as restated 14,949,504 (65,849) 3,164,324 18,047,979 Fund balances - ending $ 15,256,773 $ (1,038,863) $ 3,273,509 $ 17,491,419 Agenda Item 1.

City of Needles, California
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Funds to the Statement of Activities Year ended June 30, 2023
See accompanying Notes to Basic Financial Statements.
22 Net change in fund balances - total governmental funds $ (556,560) Amounts reported for governmental activities in the Statement of Activities are different because:

Revenues reported as unavailable revenues in the governmental funds and recognized in the Statement of Activities. These are included in the intergovernmental revenues in the governmental fund activities. 1,162,405 Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over the estimated useful lives as depreciation and amortization expense.

Capital outlay $ 4,595,902
Depreciation and amortization expenses (1,105,914) 3,489,988 Long-term debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Position. Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position.

Principal bond repayments 150,000
Lease liability repayments 17,416
Net change in compensated absences (51,891)
OPEB expense reported in the governmental funds includes the insurance premiums paid. In the Statement of Activities, OPEB expense includes the changes in the net OPEB liability, and related changes in OPEB amounts for deferred outflows of resources and deferred inflows of resources. 30,002 Pension expense reported in the governmental funds includes the annual required contributions. In the Statement of Activities, pension expense includes the changes in the net pension liability, and related changes in pension amounts for deferred outflows of resources and deferred inflows of resources. (19,773)
Change in net position of governmental activities $ 4,221,587 Agenda Item 1.

City of Needles, California
Statement of Net Position
Proprietary Funds
June 30, 2023
See accompanying Notes to Basic Financial Statements.
23 Other Total Internal
Public Utility Enterprise Enterprise Service
Fund Sanitation Funds Funds Funds
ASSETS
Current assets
Cash and investments $ 6,955,046 $ 2,178,577 $ 436,731 $ 9,570,354 $ 4,149,254 Accounts receivable, net 2,270,237 221,629 - 2,491,866 - Notes receivable 340,175 - - 340,175 -
Due from other funds 4,116,757 - - 4,116,757 19,457
Due from other governments 1,899,381 - 84,682 1,984,063 - Inventory 829,550 - 9,527 839,077 -
Prepaid items - 7,550 923 8,473 3,315,618
Total current assets 16,411,146 2,407,756 531,863 19,350,765 7,484,329 Non-current assets
Notes receivable 168,441 - - 168,441 -
Capital assets, net 26,049,682 - 1,143,061 27,192,743 622,732 Total non-current assets 26,218,123 - 1,143,061 27,361,184 622,732 TOTAL ASSETS 42,629,269 2,407,756 1,674,924 46,711,949 8,107,061

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows of resources related to pensions 1,058,293 - 28,943 1,087,236 - Deferred outflows of resources related to OPEB 30,491 - 834 31,325 -

TOTAL DEFERRED OUTFLOWS
OF RESOURCES 1,088,784 - 29,777 1,118,561 -

LIABILITIES
Current liabilities
Accounts payable 1,431,855 204,373 85,407 1,721,635 289,474 Accrued payroll - - - - 40,070
Deposits 2,747,858 - - 2,747,858 -
Due to other funds 19,457 3,093,930 - 3,113,387 3,876,995 Deferred revenue - - 106,028 106,028 -
Accrued interest 158,367 - - 158,367 -
Advance payable, current position 147,796 - - 147,796 - Lease liability 48,925 - 44,946 93,871 7,983
Bonds/note payable, current position 1,072,556 32,518 - 1,105,074 - Other liabilities - - 4,855 4,855 4,865
Total current liabilities 5,626,814 3,330,821 241,236 9,198,871 4,219,387 Non-current liabilities
Net pension liability 2,138,201 - 58,477 2,196,678 -
Other postemployment benefits liability 489,392 - 13,384 502,776 - Compensated absences 238,617 - - 238,617 11,536
Advance payable, non-current position 7,576,964 - - 7,576,964 - Lease liability 120,067 - 126,072 246,139 12,071
Bonds/note payable, noncurrent portion 8,774,104 195,269 - 8,969,373 - Total non-current liabilities 19,337,345 195,269 197,933 19,730,547 23,607 TOTAL LIABILITIES 24,964,159 3,526,090 439,169 28,929,418 4,242,994

DEFERRED INFLOW OF RESOURCES
Deferred inflows of resources related to pensions 114,142 - 3,122 117,264 -

TOTAL DEFERRED INFLOW
OF RESOURCES 114,142 - 3,122 117,264 -

NET POSITION
Net investment in capital assets 16,034,030 - 972,043 17,006,073 602,678 Unrestricted (deficit) 2,605,722 (1,118,334) 290,367 1,777,755 3,261,389 TOTAL NET POSITION $ 18,639,752 $ (1,118,334) $ 1,262,410 18,783,828 $ 3,864,067 Internal service fund allocated to enterprise funds 3,864,067 Net Position, Business-Type Activities $ 22,647,895
Agenda Item 1.

City of Needles, California
Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds
Year ended June 30, 2023
See accompanying Notes to Basic Financial Statements.
24 Other Total Internal
Public Utility Enterprise Enterprise Service
Fund Sanitation Funds Funds Funds

OPERATING REVENUES
Charges for services $ 15,697,153 $ 1,627,012 $ 592,765 $ 17,916,930 $ 13,709,203 Other fees and sales - - 41,842 41,842 -
Other revenues 1,031,416 - - 1,031,416 -
Total operating revenues 16,728,569 1,627,012 634,607 18,990,188 13,709,203

OPERATING EXPENSES
Personnel costs - - (103,833) (103,833) 2,857,170
Contractual services - 1,194,670 479,029 1,673,699 539,574 Power and utilities - - 177,564 177,564 7,897,946
Maintenance and operations 20,706,803 120,000 677,936 21,504,739 1,299,609 Administrative and management - 31,980 72,237 104,217 485,979 Insurance - 12 9,932 9,944 129,820
Depreciation and amortization 1,372,183 - 177,909 1,550,092 136,518 Total operating expenses 22,078,986 1,346,662 1,490,774 24,916,422 13,346,616 Operating income (loss) (5,350,417) 280,350 (856,167) (5,926,234) 362,587

NON-OPERATING REVENUES (EXPENSES)
Interest revenue 66,832 - - 66,832 1,291
Government grants 3,358,172 - 568,797 3,926,969 -
Interest expense and fiscal charges (448,397) (19,742) (5,741) (473,880) (3,223) Total non-operating revenues (expenses) 2,976,607 (19,742) 563,056 3,519,921 (1,932) Income (loss) before capital contributions
and transfers (2,373,810) 260,608 (293,111) (2,406,313) 360,655 Capital contributions - AB 2766 - - 15,000 15,000 -
Capital contributions - State of good repair - - 9,095 9,095 - Capital contributions 5,781,366 - - 5,781,366 5,695
Transfers in 75,000 - 326,792 401,792 394,543
Transfers out - (120,000) (22,296) (142,296) (796,374)
Net capital contributions and transfers 5,856,366 (120,000) 328,591 6,064,957 (396,136) Changes in net position 3,482,556 140,608 35,480 3,658,644 (35,481) Net position - beginning, as previously reported 14,289,947 (1,258,942) 1,226,930 14,257,935 3,899,548 Restatements 867,249 - - 867,249 -
Net position - beginning, as restated 15,157,196 (1,258,942) 1,226,930 15,125,184 3,899,548 Net position - ending $ 18,639,752 $ (1,118,334) $ 1,262,410 18,783,828 $ 3,864,067 Change in net position of internal service fund
allocated to enterprise funds $ (35,481)
Change in net position of enteprise funds 3,658,644
Change in net position of business-type activities $ 3,623,163 Agenda Item 1.

City of Needles, California
Statement of Cash Flows
Proprietary Funds
Year ended June 30, 2023
See accompanying Notes to Basic Financial Statements.
25 Other
Public Utility Enterprise Total Enterprise Internal Service Fund Sanitation Funds Funds Funds
Cash Flows from Operating Activities
Cash collected from customers $ 17,494,451 $ 1,652,910 $ 661,953 $ 19,809,314 $ 13,757,723 Cash payments to suppliers for goods and services (19,309,977) (1,334,821) (1,391,011) (22,035,809) (10,397,648) Cash payments to employees for services (379,426) - (5,093) (384,519) (2,857,170) Net cash provided by (used in) operating activities (2,194,952) 318,089 (734,151) (2,611,014) 502,905 Cash Flows From Noncapital Financing Activities
Operating grants received 3,358,172 - 568,797 3,926,969 - Increase in due from other funds (3,324,102) - - (3,324,102) (9,580) Decrease in due to other funds/advances (1,867,277) 240,000 - (1,627,277) 3,234,416 Operating transfers in 75,000 - 326,792 401,792 1,287,264 Operating transfers out - (120,000) (22,296) (142,296) (1,689,095) Net cash provided by (used in) noncapital
financing activities (1,758,207) 120,000 873,293 (764,914) 2,823,005 Cash Flows from Capital and Financing Activities
Acquisition and construction of capital assets (5,816,631) - (153,091) (5,969,722) (207,082) Principal paid on bonds/note payable (1,032,323) (21,784) - (1,054,107) - Capital grants received 5,781,366 - 24,095 5,805,461 5,695 Payments of leases 42,718 - (43,729) (1,011) (7,768)
Interest paid (448,397) (19,742) (5,741) (473,880) (3,223) Net cash used in capital and related
financing activities (1,473,267) (41,526) (178,466) (1,693,259) (212,378) Cash Flows from Investing Activities
Issuance of notes receivable (508,616) - - (508,616) -
Interest on investments 66,832 - 66,832 1,291
Net cash used in investing activities (441,784) - - (441,784) 1,291 Net increase (decrease) in cash and investments (5,868,210) 396,563 (39,324) (5,510,971) 3,114,823 Cash and investments, beginning of year 12,823,256 1,782,014 476,055 15,081,325 1,034,431 Cash and cash investments, end of year $ 6,955,046 $ 2,178,577 $ 436,731 $ 9,570,354 $ 4,149,254 Reconciliation of operating income (loss) to net cash
provided by (used in) operating activities
Operating income (loss) $ (5,350,417) $ 280,350 $ (856,167) $ (5,926,234) $ 362,587 Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities
Depreciation and amortization 1,372,183 - 177,909 1,550,092 136,518 Adjustment of beginning balances 867,249 - - 867,249 -
Changes in assets and liabilities
Decrease (increase) in:

Accounts receivable 945,061 33,448 - 978,509 2,102
Due from other governments (1,851,711) - 30,784 (1,820,927) - Inventory (65,827) - (4,200) (70,027) -
Prepaid expenses 871,110 (7,550) 762 864,322 46,418
Deferred outflows (578,335) - 9,517 (568,818) -
Increase (decrease) in:

Accounts payable 1,112,999 12,341 (19,404) 1,105,936 (370) Accrued liabilities (16,603) - - (16,603) (50,560)
Deposits payable 300,430 (500) - 299,930 -
Deferred revenue - - 45,091 45,091 -
Net pension liability 1,168,500 - (16,169) 1,152,331 -
OPEB liability (91,094) - (31,301) (122,395) -
Deferred inflows (848,401) - (70,973) (919,374) -
Compensated absences payable (30,096) - - (30,096) 6,210 Net cash provided by (used in) operating activities $ (2,194,952) $ 318,089 $ (734,151) $ (2,611,014) $ 502,905 Agenda Item 1.

NOTES TO BASIC FINANCIAL STATEMENTS
Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
26 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. INTRODUCTION
The accounting and reporting framework and the more significant accounting principles and practices of the City of Needles, California (City) are discussed in subsequent sections of this Note. The remaining Notes are organized to provide explanations, including required disclosures, of the City’s financial activities for the fiscal year ended June 30, 2023.

B. FINANCIAL REPORTING ENTITY – BASIS OF PRESENTATION
Description of the Reporting Entity
The City was incorporated on October 30, 1913, as a General Law City. The City became a Charter City on January 28, 1959, and operates under a Council-Manager form of government. The City Council consists of seven members elected by the citizens of the City. The City provides the following services to its citizens: public safety (police and fire), highways and streets, electricity, water, wastewater, sanitation, public transportation, health and social services, cemetery, culture-recreation, public improvements, community development (planning, building, zoning), and general administrative services.

The accompanying financial statements present the City’s primary government and component units over which the City exercises significant influence. Significant influence or accountability is based primarily on operational or financial relationships with the City, as distinct from legal relationships. Blended component units, although legally separate entities, are in substance part of the City’s operations and so data from these units are combined with data of the primary government.

Each blended component unit has a June 30, 2023 fiscal year-end and issues separate audited financial statements. The City has no discretely presented component units.

Management has determined that the following component units should be blended:

Needles Public Financing Authority and Needles Public Utility Authority. Additional detailed financial information for each of these entities can be obtained from the City of Needles Finance Department at 817 Third Street, Needles, California, 92363.

Needles Public Financing Authority
The Needles Public Financing Authority (NPFA) was formed on March 7, 1992, for the sole purpose of providing financing for various City capital projects. The Financing Authority is governed by a seven-member board, which consists of members of the City Council.

Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
27 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. FINANCIAL REPORTING ENTITY – BASIS OF PRESENTATION (CONTINUED) Needles Public Utility Authority
The Needles Public Utility Authority (NPUA) was formed on January 6, 1997, for the purpose of owning, operating, and maintaining the Utility Enterprise. The Utility Enterprise consists of the Water, Sewer, and Electric Enterprise Funds serving the City and the surrounding area. A seven-member Board that consists of members of the City Council governs the Utility Authority.

Other Governmental Agencies
Other governmental agencies providing various levels of service to the City include the State of California, the County of San Bernardino (County), as well as various special districts and school districts.

Each of the above agencies has an independent elected governing board or is dependent on an independently elected governing board other than the City Council.

Accordingly, financial data and transactions of these agencies are not included within the scope of this financial report.

Government-Wide and Fund Financial Statements
Government-Wide Financial Statements
The government-wide financial statements include the statement of net position and the statement of activities. These statements report on financial information for the City as a whole, excluding fiduciary activities such as employee pension plans.

Individual funds are not displayed, but the statements distinguish governmental activities, which are generally supported by taxes and City general revenues, from business-type activities, generally financed as a whole or in part by fees charged to external customers.

The statement of activities reports the expenses of a given function, offset by program revenues directly connected with the functional program. A function is an assembly of similar activities and may include portions of a fund or summarize more than one fund to capture the expenses and program revenues associated with a distinct functional activity.

Program revenues include: (1) charges for services which report fees, fines and forfeitures, and other charges to users of the City’s services; (2) operating grants and contributions which finance annual operating activities including restricted investment income; and (3) capital grants and contributions which fund the acquisition, construction, or rehabilitation of capital assets and include fees to developers. These revenues are subject to externally imposed restrictions on the specified program purposes. Taxes and other revenue sources not properly included with program revenues are reported as general revenues.

Fund Financial Statements
Fund financial statements are provided for governmental and proprietary funds. Major individual governmental and enterprise funds are reported in separate columns, with composite columns for non-major funds.

Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
28 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL

STATEMENT PRESENTATION
The government-wide statements report using the economic resources measurement focus and the accrual basis of accounting, generally including the reclassification or elimination of internal activity (between or within funds). However, internal eliminations do not include utility services provided to City departments. Proprietary and fiduciary fund financial statements and financial statements of City component units also report using this same focus and 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. Property tax revenues are recognized in the year for which they are levied, while grants are recognized when grantor eligibility requirements are met.

Governmental fund financial statements report using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Available means collectible within the current period or soon enough thereafter to pay current liabilities. The City considers revenues to be available if they are collected within 60 days after the end of the fiscal year.

Expenditures are recorded when the related fund liability is incurred, except for general obligation bond principal and interest, which are reported as expenditures in the year due.

Major revenue sources subject to accrual include cannabis taxes, property taxes, sales taxes, transient occupancy taxes, franchise taxes, intergovernmental revenues, and use of money and property.

Operating income reported in proprietary fund financial statements includes revenues and expenses related to the primary continuing operations of the fund. Principal operating revenues for proprietary funds are charges to customers for sales or services. Principal operating expenses are the costs of providing goods or services and include administrative expenses and depreciation of capital assets. Other revenues and expenses are classified as non-operating in the financial statements.

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

Restricted assets and liabilities payable from restricted assets that are considered current are reported as current assets and liabilities in the financial statements.

Assets that are restricted for the acquisition or construction of non-current assets, or are restricted for the liquidation of long-term debt, are considered non-current.

Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
29 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. FUND TYPES AND MAJOR FUNDS
Governmental Funds
The City reports the following major governmental funds:

General Fund – The General Fund is the general operating fund of the City. It is used to account for all financial resources not reported in other funds.

State Recreation Grants Special Revenue Fund – This fund is being used to manage grant funding received for the improvement of parks and recreation facilities.

Proprietary Funds
The City reports the following major enterprise funds:

Public Utility Fund – This fund accounts for the operating activities of the City’s public utility operations. NPUA transactions roll up to this fund.

Sanitation Fund – This fund accounts for the operating activities of the City’s refuse collection service, which is contracted to a third-party service provider.

Other Fund Types
The City also reports the following fund types:

Internal Service Funds – These funds are used to account for the financing of goods or services provided by one department to other departments within the City on a cost-reimbursement basis. These include fleet maintenance, business office, and information technology. These are proprietary funds reported with business-type activities in the government-wide statements, as the majority of the activities are charged to other proprietary funds.

E. ASSETS, LIABILITIES, AND FUND BALANCES/NET POSITION
Cash and Investments
The City maintains and controls one major cash and investment pool. Each fund’s portion of the pool is displayed on its respective balance sheet as “cash and investments”.

In addition, non-pooled cash and investments are separately held and reflected in respective funds or component units as “cash with fiscal agents” or “restricted cash”.

For purposes of the accompanying statement of cash flows, the City considers highly liquid investments (including restricted assets) with an original maturity of three months or less when purchased to be cash equivalents.

Investments are reported at fair value. The State Treasurer’s Investment Pool operates in accordance with appropriate state laws and regulations. The fair value of the State Treasurer’s Investment Pool is based on the stated fair value represented by the Pool.

Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
30 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. ASSETS, LIABILITIES, AND FUND BALANCES/NET POSITION (CONTINUED) Cash and Investments (Continued)
Cash deposits are reported at the carrying amount, which reasonably approximates fair value.

Inventory of Supplies
Inventories in governmental funds consist of expendable supplies held for consumption stated on an average cost basis. They are reported at cost, which is recorded as an expenditure at the time the inventory items are used. Proprietary fund inventories and similar component unit inventories are recorded at the lower of cost or market value on an average cost basis. Inventories are reported similarly in the fund financial statements and the government-wide financial statements.

Prepaid Expenses
Prepaid items represent payments made to vendors that benefit future reporting periods and are reported on a consumption basis. Prepaid items are reported similarly in the fund financial statements and the government-wide financial statements.

Land Held for Resale
Land held for resale is valued at the lower of cost or market.

Capital Assets, Depreciation, and Amortization
The City’s property, plant, equipment, and infrastructure with useful lives of more than one year are stated at historical cost and reported in the government-wide financial statements.

Proprietary and component unit capital assets are also reported in their respective funds and component unit financial statements. Donated assets are stated at fair value on the date donated. The City generally capitalizes assets with a cost of $5,000 or more. The cost of normal maintenance and repairs that do not add to the asset value or materially extend useful lives are not capitalized. Capital assets, including those of component units, are depreciated using the straight-line method.

When capital assets are disposed, the cost and applicable accumulated depreciation are removed from the respective accounts, and the resulting gain or loss is recorded in operations.

Estimated useful lives for depreciable assets are as follows:

Buildings 20 – 30 years
Improvements, other than buildings 5 – 15 years
Mobile equipment 5 – 7 years
Furniture, machinery, and equipment 5 – 7 years
Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
31 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. ASSETS, LIABILITIES, AND FUND BALANCES/NET POSITION (CONTINUED) Long-term Debt and Bond Discounts/Premiums
In the government-wide financial statements, outstanding debt is reported as a liability.

Bond issuance costs, bond discounts and premiums, and the difference between the reacquisition price and the net carrying value of refunded debt are capitalized and amortized over the terms of the respective bonds using a method that approximates the effective interest method.

Governmental fund financial statements recognize debt proceeds and premiums as other financing sources of the current fiscal period. Issuance costs are reported as expenditures of the current fiscal period.

Unavailable Revenues
Under the modified accrual basis of accounting, it is not enough that revenue has been earned if it is to be recognized in the current period. Revenue must also be available to finance expenditures of the current period. Governmental funds report revenues in connection with receivables for revenues not considered available to liquidate as deferred inflows of resources in the current period. Unavailable revenues in the current year represent revenues not collected within the availability period of 60 days.

Compensated Absences
Full-time, permanent employees are granted vacation benefits in varying amounts to specified maximums depending on tenure with the City. Sick leave accrues to fulltime, permanent employees up to specified maximums. The estimated liabilities include required salary-related payments. Compensated absences are reported as accrued in the government-wide, proprietary, and component unit financial statements.

Governmental funds report only matured compensated absences payable to currently terminating employees.

Fund Balances
In accordance with Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, governmental fund types report fund equity in one of five categories, as follows:

Nonspendable – Fund balances that cannot be spent because they are either:
• Not in Spendable Form – generally, amounts that are not expected to be converted to cash, such as inventories or prepaid amounts. This classification also includes some long-term amounts, such as property acquired for resale or the long-term portion of loans receivable.
• Legally or Contractually Required to be Maintained Intact – amounts that are required to be maintained intact, such as the principal of a permanent fund.

Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
32 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. ASSETS, LIABILITIES, AND FUND BALANCES/NET POSITION (CONTINUED) Fund Balances (Continued)
Restricted – This classification includes amounts for which constraints have been placed on the use of the resources either (a) externally imposed by creditors (such as through a debt covenant), grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation.

Committed – This classification includes amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the City Council. These amounts cannot be used for any other purpose unless the City Council removes or changes the specified use by taking the same type of action (ordinance or resolution) that was employed when the funds were initially committed. This classification also includes contractual obligations to the extent that existing resources have been specifically committed for use in satisfying those contractual requirements.

Assigned – This classification includes amounts that are constrained by the City’s intent to be used for a specific purpose but are neither restricted nor committed. This intent can be expressed by the City Council or through the City Council delegating this responsibility to the City manager through the budgetary process. This classification also includes the remaining positive fund balance for all governmental funds except for the General Fund.

Unassigned – This is the residual classification for the general fund (i.e., everything that is not in another classification or another fund).

When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the City considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed, unless the City Council has provided otherwise in its commitment or assignment actions.

Net Position
The net position represents the residual interest in the City’s assets and deferred outflows of resources after liabilities and deferred inflows of resources are deducted.

In accordance with GASB Statement No. 63, the fund equity section on the Statement of Net Position was combined to report the total net position and present it in three broad components:

Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
33 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. ASSETS, LIABILITIES, AND FUND BALANCES/NET POSITION (CONTINUED) Net Position (Continued)
Net investment in capital assets – The amount consists of capital assets, including infrastructure, net of accumulated depreciation and amortization and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets.

Restricted – Amount consists of net position restricted by external creditors, grantors, contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabled legislature.

Unrestricted – Amount consists of all net position that do not meet the definition of “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.

F. REVENUES, EXPENDITURES, AND EXPENSES
Utility Billings
The Public Utility Fund bills individuals and businesses for electric, water, and sewer services monthly. The billings are considered delinquent when they are not paid by the due date indicated on the billing, which is generally 20 days after the billing date. The City reserves an amount as uncollectible based on historical collection rates. The amount of the estimated uncollectible billings as of June 30, 2023 was $341,527.

Use of Estimates
The financial statements and related disclosures are prepared in conformity with accounting principles generally accepted in the United States. Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and revenue and expenses during the period reported. These estimates include assessing the collectability of accounts receivable, the use and recoverability of inventory, and the useful lives and impairment of tangible and intangible assets, among others. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary. Actual results could differ from the estimates.

Property Tax Revenues
All property taxes are collected and allocated by the County 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 July 1. Taxes are due November 30 and February 1 and are delinquent if not paid by December 10 and April 10, respectively.

The County bills and collects the property taxes and remits them to the City in installments during the year. City property tax revenues are recognized when available and measurable. The City considers property tax as available if it is received within 60 days after the year-end.

Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
34 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) F. REVENUES, EXPENDITURES, AND EXPENSES (CONTINUED)
Pension
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pension and pension expense, information about the fiduciary net position of the California Public Employees’ Retirement System (CalPERS) plans (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, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

G. IMPLEMENTATION OF NEW ACCOUNTING PRONOUNCEMENTS
During the year ended June 30, 2023, the City implemented the following Governmental Accounting Standards Board (GASB) standards:

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

The implementation of this standard did not have an impact on the City’s financial statements as of June 30, 2023.

GASB Statement No. 96 – Subscription-Based Information Technology Arrangements (SBITAs). The requirements of this statement are effective for reporting periods beginning after June 15, 2022. The implementation of this standard did not have an impact on the City’s financial statements as of June 30, 2023.

GASB Statement No. 100 – Accounting Changes and Error Corrections. The requirements of this statement are effective for reporting periods beginning after June 15, 2023, but the City has early implemented the requirements of this statement. The financial statements included herein apply the requirements and provisions of the standard.

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

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.

GASB Statement No. 103 – Financial Reporting Model Improvements. The requirements of this statement are effective for reporting periods beginning after June 15, 2025.

Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
35 NOTE 2 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
The County is permitted by State Law (Proposition 13) to levy taxes at 1% of full market value (at time of purchase) and can increase the market value no more than 2% per year. The City receives a share of this basic levy proportionate to what it received in the 1976 and 1978 periods. Property tax rates for bond debt service are determined by the City, with collections and allocations made by the County.

Deficit Fund Balance/Net Position – Primary Government
Deficit fund balances/net position as of June 30, 2023 are as follows:

Budgets and Budgetary Accounting
The City prepared and adopted annual operating budgets for the General Fund, all Special Revenue funds, and all Capital Projects funds. The City follows these procedures in establishing the budgetary data reflected in the financial statements:

1. The City Manager submits to the City Council a proposed budget for the fiscal year commencing on the following July 1. The budget includes proposed expenditures and the means of financing them.

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

3. The budget is legally adopted through passage of a resolution.

4. The City Manager is authorized to transfer funds within departmental budgets between major object classifications and between capital projects in the same fund. The City Council must authorize transfers between funds, between departments, and from the fund balances reserved for specific purposes.

5. Annual budgets presented are legally adopted and amended as required for the General, Special Revenue, and Capital Projects funds. All budgets presented are prepared on a basis consistent with GAAP.

6. Budgeted amounts are reflected after all applicable amendments and revisions.

7. For each legally adopted operating budget, expenditures may not exceed budgeted appropriations at the department level. The legal level of budgetary control is at the level called “department”. A “department” for legal appropriation purposes may be a single organization (i.e., City Attorney), or an entire department having multiple organizations (i.e., Parks and Recreation), or an entire fund (i.e., Special Fund for Capital Outlay). All departments and funds should complete the year within legally authorized expenditures.

State Recreation Grants Special Revenue Fund $ (1,038,863) Safe Routes to School Special Revenue Fund (2,479)
Sanitation Enterprise Fund (1,118,334)
Sewer Internal Service Fund (91,188)
Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
36 NOTE 3 CASH AND INVESTMENTS
Cash and Investments
As of June 30, 2023, cash and investments were reported in the accompanying financial statements as follows:

Cash and investments held by the City at June 30, 2024 consisted of the following:

The City maintains a cash and investment pool that is available for use for all funds.

Each fund type’s position in the pool is reported on the financial statements as cash and investments. The City has adopted an investment policy, which authorizes it to invest in various investments.

Disclosures Relating to Custodial Risk
Custodial credit risk for deposits with financial institutions is the risk that, in the event of a failure of the financial institution, the City’s deposits will not be returned or the City will not be able to obtain collateral securities pledged by the financial institutions.

Custodial credit risk is not covered by bond indentures, although the indentures usually require the issuer to maintain reserve accounts with the trustee bank named in the indenture.

The City’s policy, in accordance with the State of California Government Code, is to require financial institutions to collateralize the City’s deposits at 110% of the deposit amount with U.S. government securities in the City’s name.

California law allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total deposit. The City, at management’s discretion, may waive the 110% collateral requirements for deposits that are federally insured up to $100,000. Federal insurance provides up to $250,000 of coverage for each depositor.

At June 30, 2023, the book balance of the City’s deposits was $19.4 million, and the bank balance was $21.4 million, which is insured and collaterized under California law.

The difference of $2 million represents outstanding checks and other reconciling items.

The City’s deposits were covered by FDIC insurance or collaterized as required by California law.

Unrestricted Restricted Total
Governmental Activities $ 5,462,157 $ 1,739,448 $ 7,201,605 Business-Type Activities 13,719,608 - 13,719,608
Total Cash and Investments $ 19,181,765 $ 1,739,448 $ 20,921,213 California LAIF $ 1,469,252
Petty cash and cash drawers 4,846
Cash in banks 19,447,115
Total Cash and Investments $ 20,921,213
Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
37 NOTE 3 CASH AND INVESTMENTS (CONTINUED)
Disclosures Relating to Credit Risk
Credit risk is the risk that an issuer of a security or a counterparty to the investment will not be able to fulfill its obligations with respect to the investment. The City does not have a formal policy with respect to credit risk.

Instead, the City follows State of California law, which authorizes the City to invest in obligations of U.S. Government agencies and U.S. Government securities, certificates of deposit, municipal securities, and the Local Agency Investment Fund (LAIF) of the State of California.

Disclosures Relating to Interest and Concentration of Credit Risk Interest rate risk is the risk that a change in interest rates will have an adverse effect on the fair value of an investment. Concentration of credit risk is the risk of loss attributable to a concentration of funds in a single issue or issuer. The City’s investments include only certificates of deposit or investments in LAIF. Accordingly, the City does not have a formal policy with respect to interest rate risk, the matching of investment maturities with anticipated future cash flows or concentration of credit risk.

Investments in State Investment Pool
The City is a voluntary participant in the LAIF, which is regulated by the California Government Code Section 16429 under the oversight of the Treasurer of the State of California. LAIF is overseen by the Local Agency Investment Board, which consists of five members, in accordance with state statute. The State of California’s Treasurer’s Office audits the fund annually. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis multiplied by the fair market value factor provided by the State.

Fair Value Measurements
The City categorizes its fair value measurement within the fair value hierarchy established by U.S. GAAP. The hierarchy is based on the relative inputs used to measure the fair value of the investments. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets (Level 1 measurements), inputs are quoted prices of similar assets in active markets (Level 2 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The City’s investments in LAIF are not subject to the fair value hierarchy.

Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
38 NOTE 4 CAPITAL ASSETS
A summary of the changes in capital assets follows:

Balance
July 1, 2022 Additions Deletions
Balance
June 30, 2023
Governmental Activities
Capital assets, not being depreciated
Land $ 346,403 $ - $ (6,000) $ 340,403
Construction in progress 212,317 1,716,634 (32,130) 1,896,821 Total capital assets, not being depreciated 558,720 1,716,634 (38,130) 2,237,224 Capital assets being depreciated and amortized
Structures and improvements 29,398,855 2,554,952 - 31,953,807 Equipment 1,019,341 383,641 (21,195) 1,381,787
Right-of-use lease assets 84,754 - - 84,754
Total capital assets being depreciated and amortized 30,502,950 2,938,593 (21,195) 33,420,348 Less accumulated depreciation and amortization for
Structures and improvements (13,514,465) (961,919) - (14,476,384) Equipment (691,970) (125,622) - (817,592)
Right-of-use lease assets (12,324) (18,373) - (30,697)
Total accumulated depreciation and amortization (14,218,759) (1,105,914) - (15,324,673) Total capital assets being depreciated and amortized, net 16,284,191 1,832,679 (21,195) 18,095,675 Capital assets, net $ 16,842,911 $ 3,549,313 $ (59,325) $ 20,332,899 Business-Type Activities
Capital assets not being depreciated
Land $ 3,209,553 $ - $ - $ 3,209,553
Construction in progress 755,887 4,699,606 (13,480) 5,442,013 Total capital assets, not being depreciated 3,965,440 4,699,606 (13,480) 8,651,566 Capital assets being depreciated and amortized
Structures and improvements 43,185,327 149,600 - 43,334,927 Equipment 1,979,419 1,258,165 (39,913) 3,197,671
Right-of-use lease assets 414,520 85,467 - 499,987
Water rights 2,662,807 - - 2,662,807
Canal constuction cost sharing 728,366 - - 728,366
Total capital assets being depreciated and amortized 48,970,439 1,493,232 (39,913) 50,423,758 Less accumulated depreciation and amortization for
Structures and improvements (28,004,008) (51,775) - (28,055,783) Equipment (606,463) (1,517,340) 37,360 (2,086,443)
Right-of-use lease assets (48,145) (99,286) - (147,431) Water rights (490,687) - - (490,687)
Canal constuction cost sharing (461,296) (18,209) - (479,505) Total accumulated depreciation and amortization (29,610,599) (1,686,610) 37,360 (31,259,849) Total capital assets being depreciated and amortized, net 19,359,840 (193,378) (2,553) 19,163,909 Capital assets, net $ 23,325,280 $ 4,506,228 $ (16,033) $ 27,815,475 Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
39 NOTE 4 CAPITAL ASSETS (CONTINUED)
Depreciation Expense
Depreciation expense was charged to functions of the primary government as follows:

NOTE 5 OPERATING LEASE RECEIVABLES
The City leases its property to other agencies in the course of making services available to the community. The material leases that fall under the scope of GASB 87 include the City subleasing Bureau of Land Management land to the County to operate the Marina, RV park, and other recreational services. It also leases the Needles Chamber of Commerce building to the Needles Area Chamber of Commerce nonprofit corporation for operating the Chamber of Commerce and Visitor’s Center. The lease with the County first commenced in 1960 and has since been amended to extend through June 2048, while the lease with the Needles Area Chamber of Commerce expires in April 2026.

Commencing on October 25, 2022, the City entered into a 3-year lease agreement with the County to use a certain portion of the City-owned building known as Building C for monthly rent payments of $4,052.

At June 30, 2023, the total operating lease receivables and deferred inflows of resources for the above leases were $408,634 and $398,796, respectively. Discount rates ranging from 0.712% to 3.378% were used to calculate the net present values of the leases. There were no significant variable payments received during the fiscal year ended June 30, 2023. The future minimum operating lease receivable payments as of June 30, 2023, were as follows:

Governmental Activities Business-Type Activities
Public safety $ 17,737 Public Utility Fund $ 1,372,183
Public works 455,267 Golf course 100,416
Parks and recreation 277,046 Transit 77,493
Community development 355,864 Internal service funds 136,518 $ 1,105,914 $ 1,686,610
Year Ending June 30 Amount
2024 $ 56,671
2025 58,393
2026 27,434
2027 9,363
2028 7,367
2029-2033 52,949
2034-2038 59,625
2039-2043 65,305
2044-2047 71,527
Total $ 408,634
Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
40 NOTE 6 BALANCES AND TRANSFERS/PAYMENTS WITHIN THE REPORTING ENTITY In general, outstanding balances between funds are presented in the financial statements as either “Due to/from other funds” (i.e., the current portion of interfund loans) or “Advances to/from other funds” (i.e., the non-current portion of interfund loans).

These balances include outstanding charges by one fund to another fund for goods or services or for other miscellaneous receivables/payables between funds. Balances between governmental funds and business-type funds are reflected in the government-wide financial statements as “internal balances”.

Due To/From Other Funds
The composition of due to/from other funds as of June 30, 2023 is as follows:

Advances To/From Other Funds
The City entered into a Purchase Obligation with the NPUA in which the NPUA agreed to pay the City $685,300 each February 1st, including interest imputed at 6.714% through February 2012. Starting February 2013, the annual payment was reduced to $673,036 as a result of the $400,000 prepayments made in 2012. The annual payment was further reduced to $666,983 in fiscal year 2016 as a result of the additional prepayment made in 2013, amounting to $350,000. The balance of the obligation as of June 30, 2023 was $7,724,760.

Receivable Fund Payable Fund Amount Purpose
Major Funds
General Fund Sanitation $ 3,093,930 Temporary cash borrowing State Recreation Grants 962,391 Temporary cash borrowing Other Governmental Funds
Department of Housing and
Community Development
Grant 136,565 Temporary cash borrowing
Redevelopment Agency 80,421 Temporary cash borrowing
Boating and Waterways Grant 10,995 Temporary cash borrowing Safe Routes to School Grant 2,479 Temporary cash borrowing Public Utility Fund Internal Service Funds 3,876,994 Reimbursement of expenses Other Governmental Fund
All American Canal 239,763 Reimbursement of expenses
Nonmajor Funds
Other Governmental Fund Other Governmental Fund
Active Transportation Program SANBAG Bus Stop Grant 725 Temporary cash borrowing Internal Service Funds Public Utility Fund 19,457 Reimbursement of expenses $ 8,423,720
Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
41 NOTE 6 BALANCES AND TRANSFERS/PAYMENTS WITHIN THE REPORTING ENTITY (CONTINUED)
Advances To/From Other Funds (Continued)
Annual maturities of the Purchase Obligation are presented below:

Transfers
Transfers and payments within the reporting entity are primarily to provide cash to meet operating and debt service needs or to fund the construction or purchase of capital assets. The government-wide statement of activities eliminates transfers reported within the segregated governmental and business-type activities columns.

Only transfers between the two columns appear in this statement.

The following schedule reports transfers and payments within the reporting entity:

Year Ending June 30: Principal Interest Total
2024 $ 147,796 $ 518,640 $ 666,436
2025 157,719 508,717 666,436
2026 37,293 498,128 535,421
2027 39,797 495,624 535,421
2028 42,469 492,952 535,421
2029 - 2033 259,139 2,417,966 2,677,105
2034 - 2038 358,625 2,318,480 2,677,105
2039 - 2043 496,304 2,180,801 2,677,105
2044 - 2048 686,838 1,990,267 2,677,105
2049 - 2053 950,520 1,726,585 2,677,105
2054 - 2058 1,315,432 1,361,673 2,677,105
2059 - 2063 1,820,436 856,669 2,677,105
2064 - 2066 1,412,392 193,756 1,606,148
$ 7,724,760 $ 15,560,258 $ 23,285,018
Transfer To Transfer From Amount Purpose
Major Funds
General Fund
Other Governmental Fund
Gas Tax $ 153,828 Gas tax
Sanitation Enterprise Fund 120,000 Fund operations
Other Enterprise Fund
Transit 22,296 Fund operations
Internal Service Funds 796,374 Fair share allocation
Public Utility Fund General Fund 75,000 General fund reserves Nonmajor Funds
Other Governmental Funds
Cemetery General Fund 180,216 Cemetery Fund from General Fund Boating and Waterways Grant General Fund 25,486 Fund operations Redevelopment Agency Other Governmental Fund
Public Financing Fund 6,484 Transfer of RDA debt payment Active Transportation Program Other Governmental Fund
SANBAG Bus Stop Grant 725 Donation
Other Enterprise Funds
Golf General Fund 326,784 Fund operations
Transit Other Governmental Fund
Measure I Transit 8 Fund operations
Internal Service Funds General Fund 376,375 Transfer of capital assets Other Governmental Fund
All American Canal 18,168 Fund operations
$ 2,101,744
Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
42 NOTE 7 LONG-TERM LIABILITIES
The following is a summary of long-term liabilities transactions of the City for the year ended June 30, 2023:

Bonds and Direct Borrowings
2016 Revenue Refunding Bonds (NPUA 2016 Bonds)
In December 2016, the Utility Authority issued $15,488,000 in revenue bonds bearing interest at 3.86%. Principal payments in various amounts are due annually through February 2031. $ 9,846,660 Debt service requirements for NPUA 2016 Bonds are as follows:

Description and Purpose
Balance
July 1, 2022
(As restated) Additions Deletions
Balance
June 30, 2023
Due Within One
Year
Governmental Activities:

Bonds and Direct Borrowings:

Tax allocation 1992 bonds $ 150,000 $ - $ (150,000) $ - $ - Lease liability 73,044 - (17,416) 55,628 18,093
Subtotal 223,044 - (167,416) 55,628 18,093
Other Long-term Liabilities
Compensated absences, net 184,177 51,891 - 236,068 -
Estimated claims liability 100,000 - - 100,000 -
Total Governmental Activities 507,221 51,891 (167,416) 391,696 18,093 Business-Type Activities:

Bonds and Direct Borrowings:

NPUA 2016 bonds 10,878,983 - (1,032,323) 9,846,660 1,072,556 Notes Payable 249,571 8,845 (30,629) 227,787 32,518
Lease liability 368,843 85,468 (94,247) 360,064 101,854 Subtotal 11,497,397 94,313 (1,157,199) 10,434,511 1,206,928 Other Long-term Liabilities
Compensated absences, net 274,039 (23,886) 250,153 -
Total Business-Type Activities 11,771,436 94,313 (1,181,085) 10,684,664 1,206,928 Total Primary Government $ 12,278,657 $ 146,204 $ (1,348,501) $ 11,076,360 $ 1,225,021 Year Ending June 30: Principal Interest Total
2024 $ 1,072,556 $ 369,830 $ 1,442,386
2025 1,114,355 328,030 1,442,385
2026 1,157,784 284,600 1,442,384
2027 1,202,907 239,479 1,442,386
2028 1,249,787 192,598 1,442,385
2029-2031 4,049,271 277,885 4,327,156
$ 9,846,660 $ 1,692,422 $ 11,539,082
Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
43 NOTE 7 LONG TERM LIABILITIES (CONTINUED)
Obligation under agreement with the County of San Bernardino (Notes Payable) The note payable in the Sanitation Enterprise Fund resulted from an agreement the City made with the County on January 30, 1996. The County agreed to accept the landfill into the County landfill system and to serve as the lead agency for the cleanup, closure, and post-closure activities for the landfill.

The City agreed to reimburse the County $665,195 for its share of the cleanup, closure, and post-closure costs, to provide in-kind services for post-closure activities, to assist the County in obtaining approval from regulatory agencies for a “monolithic soil cover”, and in seeking recovery from other parties who may be responsible for the costs of cleanup, closure, and post-closure.

Per the agreement, interest shall accrue on the unpaid balance at 6% per annum compounded annually commencing on January 1 of the year following the year in which the landfill is deemed closed.

The landfill ceased accepting waste in 1994 and was closed in 2002. The Closure Agreement calls for annual principal payments of $50,000 over 15 years.

The City settled this obligation with the County by agreeing to pay a principal amount of $447,361 beginning on July 1, 2014. Payments are $3,775 per month for 180 months ending on June 1, 2029. This debt bears interest at 6% per annum.

Future payments under this debt are as follows:

Lease Liability
The City maintains several equipment operating leases that commenced during or before the fiscal year ended June 30, 2023. The City leases 7 vehicles serving the Code Enforcement, Public Works, Utility Office, Water, Wastewater, and Electric departments, which commenced in 2021 and will expire in fiscal year ending June 30, 2028. Upon expiration, there is a $400 processing fee for each vehicle, which has been included in the total lease obligation being amortized. There is also an ongoing lease for 60 golf carts utilized by the Golf Course, which began in August 2021 and will expire in August 2026. The City leased a copy machine in July 2021 for the administrative offices, which expires in July 2026. None of the lease agreements carries any residual value guarantees or includes any variable payments. The discount rates used to calculate the lease liability range from 2.62% to 7.50%.

Year Ending June 30: Principal Interest Total
2024 $ 32,518 $ 12,783 $ 45,301
2025 34,524 10,777 45,301
2026 36,654 8,647 45,301
2027 38,914 6,387 45,301
2028 41,314 3,987 45,301
2029 43,863 1,438 45,301
$ 227,787 $ 44,019 $ 271,806
Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
44 NOTE 7 LONG-TERM LIABILITIES (CONTINUED)
Lease Liability (Continued)
The following is a schedule of the intangible right-to-use assets for governmental activities and business-type activities, along with their related accumulated amortization as of June 30, 2023:

The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2023, were as follows:

Other Long-term Liabilities
Compensated Absences
The City’s policies relating to compensated absences are described in Note 1 of the notes to financial statements. The outstanding balance at June 30, 2024, was $486,221.

Estimated Claims Payable
See Note 10 regarding the City’s risk management. The claims payable is normally liquidated by the General Fund. The outstanding balance at June 30, 2023, was $100,000.

NOTE 8 UTILITY ENTERPRISE
As disclosed in Note 1, the Needles Public Utility Authority (NPUA) was formed on January 6, 1997, to own, operate, and maintain the Utility Enterprise. On March 6, 1997, NPUA purchased the Utility Enterprise (consisting of the Water, Sewer, and Electric Funds) from the City for $65,000,000.

Governmental Activities
Year Ending June 30:

Liability
Reduction Interest
Total
Payments
2024 $ 18,093 $ 2,058 $ 20,151
2025 18,801 1,350 20,151
2026 11,932 671 12,603
2027 6,802 204 7,006
Total $ 55,628 $ 4,283 $ 59,911
Business-Type Activities
Year Ending June 30:

Liability
Reduction Interest
Total
Payments
2024 $ 101,854 $ 12,006 $ 113,860
2025 105,505 8,339 113,844
2026 85,888 4,747 90,635
2027 60,847 1,693 62,540
2028 5,970 150 6,120
Total $ 360,064 $ 26,935 $ 386,999
Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
45 NOTE 8 UTILITY ENTERPRISE (CONTINUED)
To fund the acquisition, NPUA issued 1997 revenue bonds totaling $21,145,000, of which $17,941,092 was used as an initial down payment for the acquisition. These bonds were fully paid during the year ended June 30, 2017, with the proceeds of 2016 revenue refunding bonds issued by the NPUA. The 2016 Revenue Refunding bonds were issued in the face amount of $15,488,000 and are more fully described in Note7 above.

The balance of $47,058,908 was financed by the City and evidenced by an advance from the City to the NPUA. This is being repaid with an annual purchase payment of $685,300 through the year 2065. As a component unit, the NPUA is included as part of the City’s reporting entity (see Note 1). Accordingly, the Utility Enterprise assets and liabilities acquired by NPUA are included in the financial statements at net book value rather than fair market value (acquisition price) and the note, which approximates the step-up to the fair market value, is shown as an interfund advance from the general fund to the NPUA (see Note 6).

The City and NPUA entered into a separate agreement wherein the City has agreed to continue to manage and administer the utility operations. As a result, the City performs the customer billing and collection function and pays the expenses related to the utility operations. NPUA reimburses the City monthly for expenses incurred.

Section 1202 of the Needles Municipal Code states, “Each utility shall be operated as a separate unit and all accounting respecting such utility shall be on that basis. All personal services of officers or employees and all costs incurred for the joint benefit of any such utility and any other office, department or agency of the city shall be prorated between them. Charges shall be made by the utility for all service, property or other things of value supplied or rendered by it to any other office, department or agency of the City.”
The City acts as the manager and operator of NPUA’s Enterprises under a Management Agreement. The City receives a management fee equal to its actual costs and direct overhead incurred in connection with the management and operation of the Enterprises. Such costs include, but are not limited to, salaries, insurance, and retirement benefits of City employees providing services to Enterprises. Each July 1, the Management Agreement is extended for one year, unless either party notifies the other that it does not intend to extend the term of the Agreement. Total payments made to the City for operating the Enterprises for the year ended June 30, 2023 amounted to $16,069,965. This amount includes payment of Fair Share Allocation (FSA) and purchase of electric power and capital assets.

Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
46 NOTE 8 UTILITY ENTERPRISE (CONTINUED)
In exchange for the City providing rights of way and rights of access to all real property owned by the City and necessary for NPUA to operate the Enterprises, the City collected an annual franchise fee from NPUA. The amount of the franchise fee was determined by the City, the payment of which is subordinate to NPUA’s annual debt service. In August 2010, NPUA’s Board approved the increase in franchise fee from 5% of gross revenues to 7.5% of gross revenues for two years, and then 5% thereafter.

In November 2012, the voters of the City of Needles approved Measure T, eliminating

2.5% of the franchise fee that the City of Needles charges NPUA and establishing a utility user tax of up to 2.5% to be applied to electric, water, and sewer charges. In fiscal year 2017, the City underwent a study to determine the utilities’ actual usage of rights of way and rights of access to all real property owned by the City. After the study, the City eliminated the franchise fee and created the Fair Share Allocation (FSA). The FSA and utility user tax amounted to $1,139,686 for the year ended June 30, 2023.

NOTE 9 RESTRICTED FUND BALANCES AND NET POSITION
The fund balances of the governmental funds have been classified into the five categories of fund balance specified in GASB Statement No. 54. The City’s fund balances at June 30, 2023 are as follows:

General Fund
State
Recreation
Grants Special
Revenue Fund
Other
Governmental
Funds Total
Nonspendable
Prepaid items $ 33,913 $ - $ 153,762 $ 187,675
Land held for resale - - 182,153 182,153
Advances to other funds 7,724,761 - - 7,724,761
Subtotal 7,758,674 - 335,915 8,094,589
Restricted
Debt service 1,420,839 - - 1,420,839
Public safety - - 181,929 181,929
Public works - - 991,084 991,084
Parks and recreation - - 320,485 320,485
Community development - - 1,319,421 1,319,421
Subtotal 1,420,839 - 2,812,919 4,233,758
Committed
General government 350,000 - - 350,000
Subtotal 350,000 - - 350,000
Assigned
Capital projects - - 220,911 220,911
Subtotal - - 220,911 220,911
Unassigned 5,727,260 (1,038,863) (96,236) 4,592,161
Total $ 15,256,773 $ (1,038,863) $ 3,273,509 $ 17,491,419 Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
47 NOTE 10 LIABILITY, WORKERS’ COMPENSATION, AND PURCHASED INSURANCE A. Description of Self-Insurance Pool Pursuant to Joint Powers Agreement The City is a member of the California Joint Powers Insurance Authority (Authority). The Authority is composed of 124 California public entities and is organized under a joint powers agreement pursuant to California Government Code §6500 et seq. The purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. The California JPIA began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The Board operates through a nine-member Executive Committee.

B. Primary Self-Insurance Programs of the Authority
Each member pays an annual contribution at the beginning of the coverage period.

A retrospective adjustment is then conducted annually thereafter, for coverage years 2012-13 and prior. Coverage years 2013-14 and forward are not subject to routine annual retrospective adjustment. The total funding requirement for self-insurance programs is based on an actuarial analysis. Costs are allocated to individual agencies based on payroll and claims history, relative to other members of the risk-sharing pool.

Primary Liability Program
Claims are pooled separately between police and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $100,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $100,000 to $500,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs from $500,000 to $50 million, are distributed based on the outcome of cost allocation within the first and second loss layers.

The overall coverage limit for each member, including all layers of coverage, is $50 million per occurrence. Subsidence losses also have a $50 million per occurrence limit. The coverage structure is composed of a combination of pooled self-insurance, reinsurance, and excess insurance. Additional information concerning the coverage structure is available on the Authority’s website:
https://cjpia.org/coverage/ risk-sharing-pools/.

Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
48 NOTE 10 LIABILITY, WORKERS’ COMPENSATION, AND PURCHASED INSURANCE (CONTINUED)
B. Primary Self-Insurance Programs of the Authority (Continued) Workers’ Compensation Program
Claims are pooled separately between public safety (police and fire) and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $75,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $75,000 to $200,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs from $200,000 to statutory limits are distributed based on the outcome of cost allocation within the first and second loss layers.

For Fiscal Year 2022-23, the Authority’s pooled retention is $1 million per occurrence, with reinsurance to statutory limits under California Workers’ Compensation Law. Employer’s Liability losses are pooled among members to $1 million. Coverage from $1 million to $5 million is purchased through reinsurance policies, and Employer’s Liability losses from $5 million to $10 million are pooled among members.

C. Purchased Insurance
Pollution Legal Liability Insurance
The City participates in the pollution legal liability insurance program which is available through the Authority. The policy covers sudden and gradual pollution of scheduled property, streets, and storm drains owned by the City. Coverage is on a claims-made basis. There is a $250,000 deductible. The Authority has an aggregate limit of $20 million.

Property Insurance
The City participates in the all-risk property protection program of the Authority.

This insurance protection is underwritten by several insurance companies. The City property is currently insured according to a schedule of covered property submitted by the City to the Authority. The City property currently has all-risk property insurance protection in the amount of $55,718,509. There is a $10,000 deductible per occurrence except for non-emergency vehicle insurance which has a $2,500 deductible.

Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
49 NOTE 10 LIABILITY, WORKERS’ COMPENSATION, AND PURCHASED INSURANCE (CONTINUED)
C. Purchased Insurance (Continued)
Earthquake and Flood Insurance
The City purchases earthquake and flood insurance on a portion of its property.

The earthquake insurance is part of the property protection insurance program of the Authority. City property currently has earthquake protection in the amount of $34,875,734. There is a deductible of 5% per unit of value with a minimum deductible of $100,000.

Crime Insurance
The City purchases crime insurance coverage in the amount of $1,000,000 with a $2,500 deductible. The fidelity coverage is provided through the Authority.

D. Adequacy of Protection
During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage.

There were also no significant reductions in pooled or insured liability coverage in 2022-23.

NOTE 11 DEFINED BENEFIT PENSION PLAN
Plan Description – All qualified permanent and probationary employees are eligible to participate in the City’s Employee Pension Plan, a cost-sharing multiple-employer defined benefit pension plan administered by the California Public Employees’ Retirement System (CalPERS). Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions, and membership information that can be found on the CalPERS website.

The plans in existence for employees hired before January 1, 2013, (“Classic” plans) are closed to new entrants.

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

Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
50 NOTE 11 DEFINED BENEFIT PENSION PLAN (CONTINUED)
The Plans’ provisions and benefits in effect at June 30, 2023, are summarized as follows:

Contributions - Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.

The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the year ended June 30, 2023, the contributions recognized as part of pension expense for each Plan were $790,333.

Net Pension Liability
As of June 30, 2023, the City reported a net pension liability of $5,414,540 for its proportionate share of the net pension liability of the Miscellaneous Plan and $200,470 for its proportionate share of the net pension liability of the Safety Plan.

Hire date
Prior to
January 1, 2013
On or After
January 1, 2013
Benefit formula 2% @ 55 2% @ 62
Benefit vesting schedule 5 years of service 5 years of service Benefit payments monthly for life monthly for life
Retirement age 55 62
Benefits as a % of annual salary 2.000% 2.000%
Required employee contribution rates 8.000% 6.750%
Required employer contribution rates 10.340% 7.732%
Safety Plan
Hire date
Prior to
January 1, 2013
Benefit formula 3% @ 50
Benefit vesting schedule 5 years of service
Benefit payments monthly for life
Retirement age 50
Benefits as a % of annual salary 3.000%
Required employee contribution rates 0.000%
Required employer contribution rates 0.000%
Miscellaneous Plan
Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
51 NOTE 11 DEFINED BENEFIT PENSION PLAN (CONTINUED)
Net Pension Liability (Continued)
The City’s net pension liability for the Miscellaneous Plan and the Safety Plan (the Plans) is measured as the proportionate share of the net pension liability. The net pension liability of the Plans is measured as of June 30, 2022, and the total pension liability for the Plans used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2021, rolled forward to June 30, 2022, using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. The City’s proportionate share of the net pension liability for the Plans as of June 30, 2023 and 2022 was as follows:

Actuarial Assumptions - The total pension liabilities on June 30, 2021 actuarial valuations was determined using the following actuarial assumptions:

Miscellaneous
Plan Safety Plan Total
Proportion June 30, 2023 0.11571% 0.00292% 0.11863%
Proportion June 30, 2022 0.12172% 0.00061% 0.12233%
Change -0.00600% 0.00230% -0.00370%
Miscellaneous
Plan Safety Plan
Valuation date June 30, 2021 June 30, 2021
Measurement date June 30, 2022 June 30, 2022
Actuarial cost method
Actuarial Assumptions:

Discount rate 6.90% 6.90%
Inflation 2.30% 2.30%
Payroll growth 2.80% 2.80%
Projected salary increase
Mortality1
Post retirement benefit increase
1 The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study for the period from 2001 to 2019. Pre-retirement and Post-retirement mortality rates include 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 CalPERS Experience Study and Review of Actuarial Assumptions report from November 2021 that can be found on the CalPERS website.
data for all funds
The lesser of contract COLA or 2.30%
unitl Purchasing Power Protection
Allowance floor on purchasing power
applies, 2.30% thereafter
Entry-Age Normal Cost Method
Derived using CalPERS' membership
Varies by entry age and service
Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
52 NOTE 11 DEFINED BENEFIT PENSION PLAN (CONTINUED)
Net Pension Liability (Continued)
Long-term expected rate of return - The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense, and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term return expectations. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach. 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:

Discount Rate – The discount rate used to measure the total pension liability was 6.9% for each plan. 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 Class1 Allocation Real Return1,2
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 0.5
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.

Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
53 NOTE 11 DEFINED BENEFIT PENSION PLAN (CONTINUED)
Changes in the Net Pension Liability
The changes in the Net Pension Liability for each Plan measured as of June 30, 2022 is as follows:

Total Pension
Liability
Fiduciary Net
Position
Pension
Liability/ (Asset)
Miscellaneous Plan
Balance at June 30, 2022 $ 20,767,171 $ 18,456,013 $ 2,311,158 Changes in the Year:

Service cost 503,138 - 503,138
Interest on the total pension liability 1,432,658 - 1,432,658 Changes in benefit terms 3,796 - 3,796
Changes in assumptions 672,250 - 672,250
Difference between expected and
actual experience (88,237) - (88,237)
Change in proportion (341,394) (648,561) 307,167
Net plan to plan resource movement - (8,247) 8,247
Contributions - employer - 857,468 (857,468)
Contributions - employee - 206,149 (206,149)
Net investment income - (1,353,461) 1,353,461
Benefits payments, including refunds
of employee contributions (1,003,990) (967,289) (36,701) Administrative expense - (11,220) 11,220
Other miscellaneous income - - -
Net Changes 1,178,221 (1,925,161) 3,103,382
Balance at June 30, 2023 $ 21,945,392 $ 16,530,852 $ 5,414,540 Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
54 NOTE 11 DEFINED BENEFIT PENSION PLAN (CONTINUED)
Changes in the Net Pension Liability (Continued)
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate – The following presents the City’s proportionate share of the net pension liability for the Miscellaneous and Safety Plans, calculated using the discount rate for the Plans, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

Total Pension
Liability
Fiduciary Net
Position
Pension
Liability/ (Asset)
Safety Plan
Balance at June 30, 2022 $ 1,161,118 $ 1,139,583 $ 21,535 Changes in the Year:

Service cost 22,401 - 22,401
Interest on the total pension liability 75,203 - 75,203 Changes in benefit terms 32 - 32
Changes in assumptions 38,834 - 38,834
Difference between expected and
actual experience (4,182) - (4,182)
Change in proportion (89,115) (124,854) 35,739
Net plan to plan resource movement - - -
Contributions - employer - 63,236 (63,236)
Contributions - employee - 9,297 (9,297)
Net investment income - (77,601) 77,601
Benefits payments, including refunds
of employee contributions (55,978) (61,179) 5,201
Administrative expense - (639) 639
Other miscellaneous income - - -
Net Changes (12,805) (191,740) 178,935
Balance at June 30, 2023 $ 1,148,313 $ 947,843 $ 200,470 Discount Rate
Minus 1%
Current
Discount Rate
Discount Rate
Plus 1%
Employer's Net Pension Liability/(Asset)
Miscellaneous Plan $ 8,406,093 $ 5,414,540 $ 2,953,235
Safety Plan 359,050 200,470 70,867
Total $ 8,765,143 $ 5,615,010 $ 3,024,102
Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
55 NOTE 11 DEFINED BENEFIT PENSION PLAN (CONTINUED)
Changes in the Net Pension Liability (Continued)
Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

Pension Expense and Deferred Outflows/Inflows of Resources Related to Pensions
Annual Pension Cost – For 2023, the City recognized net pension expense of $464,538. At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

The $790,332 deferred outflow of resources related to pension contributions made subsequent to the measurement date will be recognized as a reduction of net pension liability in the year ending June 30, 2024. Other amounts reported as deferred outflows and deferred inflows will be recognized as pension expense as follows:

Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Changes in assumptions $ 575,046 $ -
Differences between expected and
actual experience 117,032 75,003
Differences between projected and
actual earnings on plan investments 1,023,457 -
Differences between the employer's contributions
and the employer's proportionate share of
contributions - 301,213
Change in employer's proportion 299,265 -
Pension contributions subsequent to the
measurement date 790,332 -
Total $ 2,805,132 $ 376,216
Fiscal Year Ending June 30 Miscellaneous Safety Total
2024 $ 410,516 $ 966 $ 411,482
2025 371,662 9,272 380,934
2026 211,731 8,507 220,238
2027 606,619 19,311 625,930
2028 - - -
Thereafter - - -
$ 1,600,528 $ 38,056 $ 1,638,584
Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
56 NOTE 12 OTHER POSTEMPLOYMENT BENEFITS (OPEB) LIABILITY General Information about the OPEB Plan
Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. The City has elected to use the GASB 75 “lookback” method, where assets and liabilities are measured as of the prior fiscal year-end, but applied to the current fiscal year. For this report, the following timeframes are used:

Valuation Date June 30, 2021
Measurement Date June 30, 2022
Plan Description – In addition to providing pension benefits, the City provides certain health care benefits for retired employees. Classified employees retiring after 20 or more years of service and after having reached age 58 or older are provided medical insurance coverage until the retiree becomes eligible for Medicare. Unclassified employees retiring at age 55 or later with 20 or more years of service are paid $300 per month for medical insurance coverage until the retiree becomes eligible for Medicare.

Contributions – The contribution requirements of the City are established and may be amended by the City Council. While GASB Statement 75 requires that the liability for all post-employment benefits be measured, it does not require that an agency “pre-fund” the accrued liability. The City will pay for the post-employment healthcare cost on a “pay-as-you-go” basis. The provisions of GASB Statement 75 determine the amount that must be presented as an annual expense and accrued liability on the City’s financial statements. The contributions made on behalf of the plan members for the year ended June 30, 2023 were $77,213.

Employees Covered – Participants eligible for OPEB were as follows:

Valuation Date
6/30/2021
Active employees electing coverage 45
Active employees waiving coverage 4
Retirees electing coverage 4
Total 53
Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
57 NOTE 12 OTHER POSTEMPLOYMENT BENEFITS (OPEB) LIABILITY (CONTINUED) Total OPEB Liability
Actuarial Assumptions – Significant assumptions are as follows:

Discount rate 3.69%
Expected return on plan assets N/A
Inflation rate 2.25%
Mortality Pub-2010 General above median income
Employee and Retiree and General disabled
mortality tables projected with generational
mortality improvement using 80% of scale MPHealth care cost trend rate 6.7% for fiscal year 2022, gradually decreasing over several decades to an ultimate rate of 3.7%
in fiscal year 2075 and later years.

Discount – The discount rate used to measure the total OPEB liability is the municipal bond rate of 3.69%. This discount rate approach is necessary as the City funds the OPEB benefit on a pay-as-you-go basis. The municipal bond rate is the assumed rate of return on general funds, and the assumption is that the City will use general funds to pay benefits.

Changes in the Total OPEB Liability
The table below shows the changes in the total OPEB liability, the Plan Fiduciary Net Position, and the net OPEB liability during the measurement period ending on June 30, 2022, for the City’s reporting date of June 30, 2023:

Total OPEB
Liability
(a)
Plan Fiduciary
Net Position
(b)
Net OPEB
Liability (Asset)
(c) = (a) - (b)
Balance at June 30, 2022 $ 1,396,406 $ - $ 1,396,406
Changes recognized for the measurement
period:

Service cost 92,786 - 92,786
Interest 27,713 - 27,713
Differences between expected and
actual experience 2,121 - 2,121
Change of assumptions (188,098) - (188,098)
Employer contributions - 91,648 (91,648)
Benefit payments (91,648) (91,648) -
Net changes (157,126) - (157,126)
Balance at June 30, 2023 $ 1,239,280 $ - $ 1,239,280
Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
58 NOTE 12 OTHER POSTEMPLOYMENT BENEFITS (OPEB) LIABILITY (CONTINUED) Sensitivity of the City’s Net OPEB Liability to Changes in the Discount Rate The following presents the net OPEB liability, as well as what the net OPEB liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current discount rate:

Sensitivity of the City’s Net OPEB Liability to Changes in the Healthcare Cost Trend Rates
The following presents the net OPEB liability, as well as what the net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage point lower or 1-percentage point higher than the current healthcare cost trend rates:

Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
At June 30, 2023, the City’s deferred outflows of resources and deferred inflows of resources related to OPEB were from the following sources:

Deferred outflows from contributions between measurement date and reporting date will be recognized as OPEB expense in the year ended June 30, 2023. 1% Decrease

2.69%
Discount Rate

3.69%
1% Increase

4.69%
Net OPEB liability $ 1,342,783 $ 1,239,280 $ 1,143,241
1% Decrease
Current Trend
Rate 1% Increase
Net OPEB liability $ 1,098,834 $ 1,239,280 $ 1,406,743
Deferred
Outflows of
Resources(1)
Deferred
Inflows of
Resources
$ 77,213 $ -
(1) Includes estimated implicit rate subsidy of $33,918.

Contributions between measurement date
and reporting date
Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
59 NOTE 12 OTHER POSTEMPLOYMENT BENEFITS (OPEB) LIABILITY (CONTINUED) Net OPEB Expense (Income)
For the year ended June 30, 2023, the City’s OPEB expense/(income) was $(65,478).

Detail of the expense is shown below:

NOTE 13 RESTATEMENTS
Changes to or within the Financial Reporting Entity
Public Financing Authority and State Recreation Grant Special Revenue Fund were previously reported as major and nonmajor fund, respectively, in the 2022 Annual Financial Report. However, the size criteria for the current year changed the presentation for the funds. The effect of the change to or within the financial reporting entity is shown in column A below.

Correction of Errors in Previously Issued Financial Statements During the fiscal year 2023, the City determined:
a. that the prepayment made by the Public Utility Fund to the General Fund for purchase obligation intercompany advances was not applied to reduce its liability.

Consequently, the General Fund did not recognize such prepayment and continued to record receivables from the Public Utility Fund. This resulted in an understatement of $867,249 under Public Utility Fund and Business-Type Activities, while simultaneously causing an overstatement of $1,738,359 under General Fund and Government Activities.
b. that the City has incorrectly recognize a $239,247 property tax payable to San Bernardino County in the prior year. This resulted in an understatement of both the Redevelopment Agency fund balance and Governmental Activities’ net position by $239,247.
c. that the City failed to recognize available revenues for the Cemetery payments collected in the prior year. This resulted in an understatement of both the Cemetery fund balance and Governmental Activities net position by $88,729.

Service cost $ 92,786
Interest cost 27,713
Differences between expected and
actual experience 2,121
Changes of assumptions (188,098)
Net OPEB Expense (Income) $ (65,478)
Agenda Item 1.

City of Needles, California
Notes to Basic Financial Statements
Year ended June 30, 2023
60 NOTE 13 RESTATEMENTS (CONTINUED)
Correction of Errors in Previously Issued Financial Statements (Continued) The effects of correcting the above errors are shown in column B below.

NOTE 14 SUBSEQUENT EVENTS
In preparing these financial statements, the City has evaluated events and transactions for potential recognition or disclosure through June 28, 2025, the date the financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or additional disclosure in the financial statements.

Changes to
or within
June 30, 2022 the Financial
As Previously Reporting Error June 30, 2022
Reported Entity (A) Corrections (B) As Restated
Government-Wide
Government Activities $ 33,133,819 $ - $ (1,410,383) $ 31,723,436 Business-Type Activities 18,157,483 - 867,249 19,024,732 Total Primary Government $ 51,291,302 $ - $ (543,134) $ 50,748,168 Governmental Funds
Major Funds
General Fund $ 16,687,863 $ - $ (1,738,359) $ 14,949,504 State Recreation Grant - (65,849) (65,849)
Public Financing Authority 161,777 (161,777) - -
Total Major Funds $ 16,849,640 $ (227,626) $ (1,738,359) $ 14,883,655 Nonmajor Funds
Cemetery $ 184,881 $ - $ 88,729 $ 273,610
Public Financing Authority $ - $ 161,777 $ - $ 161,777
Redevelopment Agency $ (72,493) $ - $ 239,247 $ 166,754 State Recreation Grant $ (65,849) $ 65,849 $ - $ -
Proprietary Funds
Major Fund
Public Utility Fund $ 14,289,947 $ - $ 867,249 $ 15,157,196 Agenda Item 1.

REQUIRED SUPPLEMENTARY INFORMATION
Agenda Item 1.

City of Needles, California
Budgetary Comparison Schedule
General Fund
Year ended June 30, 2023
61 Variance with
Original Final Actual Final Budget
Budgetary fund balance July 1, 2022, as restated $ 14,949,504 $ 14,949,504 $ 14,949,504 $ - Resources (inflows):

Taxes 8,568,257 8,568,257 8,349,648 (218,609)
Licenses, permits, and fees 441,300 477,950 582,718 104,768 Intergovernmental 11,900 2,191,602 477,712 (1,713,890)
Charges for services 1,074,550 1,074,550 944,916 (129,634) Fines and forfeitures 246,500 253,500 217,125 (36,375)
Use of money and property 125,138 125,938 156,389 30,451 Transfers from other funds 1,092,810 1,092,810 1,092,498 (312) Other revenues 52,547 52,547 90,302 37,755
Amounts available for appropriation 11,613,002 13,837,154 11,911,308 (1,925,846) Charges to appropriations (outflows):

General government:

City attorney 80,000 75,000 70,033 4,967
City manager 191,087 191,087 182,682 8,405
Finance and administration 637,216 786,097 661,249 124,848 City clerk 263,920 273,920 243,598 30,322
Planning and zoning 339,780 341,080 231,693 109,387
Engineer 326,423 326,423 271,437 54,986
Community development 38,900 60,665 90,655 (29,990)
Senior center 59,457 59,457 48,625 10,832
Public safety:

Police 3,483,367 3,594,791 3,532,172 62,619
Animal control 229,746 229,746 216,322 13,424
Building and safety 604,377 605,677 337,455 268,222
Code enforcement 685,014 756,314 700,331 55,983
Public works:

Streets 3,405,345 3,522,755 2,402,967 1,119,788
Sanitation 66,337 66,337 66,881 (544)
Parks and recreation:

Aquatics 845,683 3,077,416 914,946 2,162,470
Jack Smith Park Marina 107,923 109,323 99,123 10,200
Recreation 371,884 687,248 550,009 137,239
Nondepartmental:

Transfers to other funds 903,979 903,979 983,861 (79,882) Total charges to appropriations 12,640,438 15,667,315 11,604,039 4,063,276 Budgetary fund balance June 30, 2023 $ 13,922,068 $ 13,119,343 $ 15,256,773 $ 2,137,430 Note: The expenditures by function amounts listed above include the capital outlay expenditures within each department.

Budgeted Amounts
Agenda Item 1.

City of Needles, California
Budgetary Comparison Schedule
State Recreation Grant Special Revenue Fund
Year ended June 30, 2023
62 Variance with
Original Final Actual Final Budget
Budgetary fund balance July 1, 2022, as restated $ (65,849) $ (65,849) $ (65,849) $ - Resources (inflows):

Intergovernmental - 3,899,640 - (3,899,640)
Other revenues - - 77,121 77,121
Amounts available for appropriation - 3,899,640 77,121 (3,822,519) Charges to appropriations (outflows):

Parks and recreation:

Aquatics - 306,342 198,938 107,404
Parks - 3,593,298 851,197 2,742,101
Total charges to appropriations - 3,899,640 1,050,135 2,849,505 Budgetary fund balance June 30, 2023 $ (65,849) $ (65,849) $ (1,038,863) $ (973,014) Note: The expenditures by function amounts listed above include the capital outlay expenditures within each department.

Budgeted Amounts
Agenda Item 1.

City of Needles, California
Schedule of the City’s Proportionate Share of the Net Pension Liability and Schedule of Plan Contribution
Miscellaneous Plan
Last Ten Fiscal Years*
63 Measurement Date 2014 2015 2016 2017 2018
City’s proportion of the net pension liability 0.03% 0.08% 0.10% 0.10% 0.10% City’s proportionate share of the net pension
liability $ 2,054,707 $ 2,283,923 $ 3,417,806 $ 3,947,484 $ 3,782,261 City’s covered payroll $ 2,347,411 $ 2,129,947 $ 2,150,169 $ 2,183,340 $ 2,366,448 City’s proportionate share of the net pension
liability as a percentage of its covered payroll 87.53% 107.23% 158.96% 180.80% 159.83% City’s proportionate share of the fiduciary net
position as a percentage of the total pension
liability 87.06% 85.73% 79.32% 78.17% 79.63%
Measurement Date 2019 2020 2021 2022
City’s proportion of the net pension liability 0.10% 0.11% 0.10% 0.10% City’s proportionate share of the net pension
liability $ 4,139,617 $ 4,520,208 $ 2,311,158 $ 5,414,540 City’s covered payroll $ 2,366,583 $ 2,566,584 $ 2,921,443 $ 3,726,896 City’s proportionate share of the net pension
liability as a percentage of its covered payroll y p p y 174.92% 176.12% 79.11% 145.28% position as a percentage of the total pension
liability 78.47% 77.34% 77.34% 75.33%
CalPERS - Schedule of City's contributions:

Fiscal Year End 2015 2016 2017 2018 2019
Actuarially determined contribution $ 174,760 $ 357,824 $ 363,108 $ 386,723 $ 448,179 Contributions in relation to the actuarially
determined contribution 174,760 357,824 363,108 386,723 448,179 Contribution deficiency (excess) $ - $ - $ - $ - $ -
City’s covered payroll $ 2,347,411 $ 2,129,947 $ 2,150,169 $ 2,183,340 $ 2,366,448 Contributions as a percentage of covered
payroll 7.44% 16.80% 16.89% 17.71% 18.94%
Fiscal Year End 2020 2021 2022 2023
Actuarially determined contribution $ 500,300 $ 583,707 $ 690,883 $ 790,332 Contributions in relation to the actuarially
determined contribution 500,300 583,707 690,883 790,332 Contribution deficiency (excess) $ - $ - $ - $ -
City’s covered payroll $ 2,366,583 $ 2,566,584 $ 2,921,443 $ 3,726,896 Contributions as a percentage of covered
payroll 21.14% 22.74% 22.78% 21.21%
*Fiscal year ended June 30, 2015 was the first year of implementation.

June 30
June 30
June 30
June 30
Agenda Item 1.

City of Needles, California
Schedule of the City’s Proportionate Share of the Net Pension Liability and Schedule of Plan Contribution
Safety Plan
Last Ten Fiscal Years*
64 Schedule of the City’s proportionate share of the Net Pension Liability:

Measurement Date 2014 2015 2016 2017 2018
City’s proportion of the net pension liability 0.00% 0.00% 0.00% 0.00% 0.00% City’s proportionate share of the net pension
liability $ - $ 10,757 $ 99,001 $ 130,042 $ 131,962
City’s covered payroll $ - $ - $ - $ - $ -
City’s proportionate share of the net pension
liability as a percentage of its covered payroll N/A N/A N/A N/A N/A Plan Fiduciary net position as a percentage of
the total pension liability N/A 99.23% 92.89% 91.21% 90.91% Measurement Date 2019 2020 2021 2022
City’s proportion of the net pension liability 0.00% 0.00% 0.00% 0.00% City’s proportionate share of the net pension
liability $ 153,418 $ 173,792 $ 21,535 $ 200,470
City’s covered payroll $ - $ - $ - $ -
City’s proportionate share of the net pension
liability as a percentage of its covered payroll N/A N/A N/A N/A Plan Fiduciary net position as a percentage of
the total pension liability 86.96% 85.17% 98.15% 82.54% CalPERS - Schedule of City's contributions:

Fiscal Year End 2015 2016 2017 2018 2019
Actuarially determined contribution $ - $ - $ - $ - $ - Contributions in relation to the actuarially
determined contribution - - - - -
Contribution deficiency (excess) $ - $ - $ - $ - $ -
City’s covered payroll $ - $ - $ - $ - $ -
Contributions as a percentage of covered
payroll N/A N/A N/A N/A N/A
Fiscal Year End 2020 2021 2022 2023
Actuarially determined contribution $ - $ - $ - $ -
Contributions in relation to the actuarially
determined contribution - - - -
Contribution deficiency (excess) $ - $ - $ - $ -
City’s covered payroll $ - $ - $ - $ -
Contributions as a percentage of covered payroll N/A N/A N/A N/A *Fiscal year ended June 30, 2015 was the first year of implementation.

June 30
June 30
June 30
June 30
Agenda Item 1.

City of Needles, California
Schedule of Changes in the Net OPEB Liability and Related Ratios and Schedule of OPEB Plan Contribution
Last Ten Fiscal Years*
65 Fiscal Year End 2018 2019 2020 2021 2022
Net OPEB liability
Service cost $ 45,161 $ 42,518 $ 44,458 $ 50,497 $ 60,909 Interest 37,348 44,070 45,273 35,320 29,150
Differences between expected and actual
experience - - 127,243 - 196,696
Change in assumptions (59,030) (5,315) (266,725) 54,488 21,133 Benefit payments (53,510) (70,393) (70,629) (92,163) (80,726) Net change in Net OPEB liability (30,031) 10,880 (120,380) 48,142 227,162 Net OPEB liability - beginning 1,260,633 1,230,602 1,241,482 1,121,102 1,169,244 Net OPEB liability - ending $ 1,230,602 $ 1,241,482 $ 1,121,102 $ 1,169,244 $ 1,396,406 Covered payroll $ 2,433,924 $ 2,767,083 $ 2,713,144 $ 2,767,083 $ 2,921,443 Net OPEB liability (asset) as a percentage of
covered payroll 50.60% 44.90% 41.30% 42.30% 47.80%
Plan fiduciary net position as a % of the total
OPEB liability 0.00% 0.00% 0.00% 0.00% 0.00%
June 30,
Fiscal Year End 2023
Net OPEB liability
Service cost $ 92,786
Interest 27,713
Differences between expected and actual
experience 2,121
Change in assumptions (188,098)
Benefit payments (91,648)
Net change in Net OPEB liability (157,126)
Net OPEB liability - beginning 1,396,406
Net OPEB liability - ending $ 1,239,280
Covered payroll $ 3,737,513
Net OPEB liability (asset) as a percentage of
covered payroll 33.20%
Plan fiduciary net position as a % of the total
OPEB liability 0.00%
*Fiscal year ended June 30, 2018 was the first year of implementation.

June 30
Agenda Item 1.

SUPPLEMENTARY INFORMATION
Agenda Item 1.

City of Needles, California
Combining Balance Sheet
Other Governmental Funds
June 30, 2023
66 Housing &
Caltrans grant Special CD
CDBG Cemetery (bridge project) Gas Tax Grant
ASSETS
Cash and investments $ 4,942 $ 159,336 $ 944,720 $ 176,906 $ - Restricted cash - 252,956 - - -
Due from other funds - - - - -
Due from other governments - - 41,422 21,185 160,000
Prepaid items - 1,834 151,012 - -
Land held for resale - - - - -
TOTAL ASSETS $ 4,942 $ 414,126 $ 1,137,154 $ 198,091 $ 160,000

LIABILITIES, DEFERRED INFLOW OF

RESOURCES, AND FUND BALANCES
Liabilities
Accounts payable $ - $ 7,024 $ - $ - $ 6,200
Accrued liabilities - 46,483 - - -
Due to other funds - - - - 136,565
Unearned revenues - 38,300 - - -
Total liabilities - 91,807 - - 142,765

DEFERRED INFLOW OF RESOURCES
Unavailable revenues - - - - -
Total deferred inflow of resources - - - - -

FUND BALANCES
Nonspendable - 1,834 151,012 - -
Restricted 4,942 320,485 986,142 198,091 17,235
Assigned - - - - -
Unassigned - - - - -
Total fund balances 4,942 322,319 1,137,154 198,091 17,235

TOTAL LIABILITIES, DEFERRED INFLOW
OF RESOURCES, AND FUND BALANCES $ 4,942 $ 414,126 $ 1,137,154 $ 198,091 $ 160,000 Special Revenue
Agenda Item 1.

City of Needles, California
Combining Balance Sheet
Other Governmental Funds (Continued)
June 30, 2023
67 New SANBAG COPS - I/S Commerce
Sanbag Measure I Bus Stop AB 3229 I40/J Street
Meas. I Transit Grant Supplemental Project
ASSETS
Cash and investments $ 509,488 $ 10,718 $ 725 $ 208,237 $ 2,049 Restricted cash - - - - -
Due from other funds - - - - -
Due from other governments 52,253 - - - -
Prepaid items - - - - -
Land held for resale - - - - -
TOTAL ASSETS $ 561,741 $ 10,718 $ 725 $ 208,237 $ 2,049

LIABILITIES, DEFERRED INFLOW OF

RESOURCES, AND FUND BALANCES
Liabilities
Accounts payable $ 13,125 $ - $ - $ 26,308 $ -
Accrued liabilities - - - - -
Due to other funds - - 725 - -
Unearned revenues - - - - -
Total liabilities 13,125 - 725 26,308 -

DEFERRED INFLOW OF RESOURCES
Unavailable revenues 17,930 - - - -
Total deferred inflow of resources 17,930 - - - -

FUND BALANCES
Nonspendable - - - - -
Restricted 530,686 10,718 - 181,929 2,049
Assigned - - - - -
Unassigned - - - - -
Total fund balances 530,686 10,718 - 181,929 2,049

TOTAL LIABILITIES, DEFERRED INFLOW
OF RESOURCES, AND FUND BALANCES $ 561,741 $ 10,718 $ 725 $ 208,237 $ 2,049 Special Revenue
Agenda Item 1.

City of Needles, California
Combining Balance Sheet
Other Governmental Funds (Continued)
June 30, 2023
68 Ca. Conserv. Safe Routes All
Recycle to Redevelopment American
Grant School Agency Canal
ASSETS
Cash and investments $ 35,279 $ - $ 152,063 $ 623,966
Restricted cash - - - -
Due from other funds - - - -
Due from other governments - - - -
Prepaid items - - - 350
Land held for resale - - - -
TOTAL ASSETS $ 35,279 $ - $ 152,063 $ 624,316

LIABILITIES, DEFERRED INFLOW OF

RESOURCES, AND FUND BALANCES
Liabilities
Accounts payable $ 2,247 $ - $ 6,771 $ 1,356
Accrued liabilities - - - 1,254
Due to other funds - 2,479 - 239,763
Unearned revenues - - - -
Total liabilities 2,247 2,479 6,771 242,373

DEFERRED INFLOW OF RESOURCES
Unavailable revenues - - - -
Total deferred inflow of resources - - - -

FUND BALANCES
Nonspendable - - - 350
Restricted 33,032 - 145,292 381,593
Assigned - - - -
Unassigned - (2,479) - -
Total fund balances 33,032 (2,479) 145,292 381,943

TOTAL LIABILITIES, DEFERRED INFLOW
OF RESOURCES, AND FUND BALANCES $ 35,279 $ - $ 152,063 $ 624,316 Special Revenue
Agenda Item 1.

City of Needles, California
Combining Balance Sheet
Other Governmental Funds (Continued)
June 30, 2023
69 Special Revenue
Active
Transportation Redevelopment North South
Program Agency Needles Needles
ASSETS
Cash and investments $ - $ - $ 76,349 $ 97,385
Restricted cash - - - -
Due from other funds 725 - - -
Due from other governments - - - -
Prepaid items - 566 - -
Land held for resale - 182,153 - -
TOTAL ASSETS $ 725 $ 182,719 $ 76,349 $ 97,385

LIABILITIES, DEFERRED INFLOW OF

RESOURCES, AND FUND BALANCES
Liabilities
Accounts payable $ - $ 179 $ 4,570 $ 2,911
Accrued liabilities - 13,157 - -
Due to other funds - 80,421 - -
Unearned revenues - - - -
Total liabilities - 93,757 4,570 2,911

DEFERRED INFLOW OF RESOURCES
Unavailable revenues - - - -
Total deferred inflow of resources - - - -

FUND BALANCES
Nonspendable - 182,719 - -
Restricted 725 - - -
Assigned - - 71,779 94,474
Unassigned - (93,757) - -
Total fund balances 725 88,962 71,779 94,474

TOTAL LIABILITIES, DEFERRED INFLOW
OF RESOURCES, AND FUND BALANCES $ 725 $ 182,719 $ 76,349 $ 97,385 Capital Projects
Agenda Item 1.

City of Needles, California
Combining Balance Sheet
Other Governmental Funds (Continued)
June 30, 2023
70 Capital Projects Debt Service
Boating and Public Total
Waterways Financing Nonmajor
Grant Authority Funds
ASSETS
Cash and investments $ - $ - $ 3,002,163
Restricted cash 65,653 - 318,609
Due from other funds - - 725
Due from other governments 10,995 - 285,855
Prepaid items - - 153,762
Land held for resale - - 182,153
TOTAL ASSETS $ 76,648 $ - $ 3,943,267

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities
Accounts payable $ - $ - $ 70,691
Accrued liabilities - - 60,894
Due to other funds 10,995 - 470,948
Unearned revenues - - 38,300
Total liabilities 10,995 - 640,833

DEFERRED INFLOWS OF RESOURCES
Unavailable revenues 10,995 - 28,925
Total deferred inflow of resources 10,995 - 28,925

FUND BALANCES
Nonspendable - - 335,915
Restricted - - 2,812,919
Assigned 54,658 - 220,911
Unassigned - - (96,236)
Total fund balances 54,658 - 3,273,509

TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES $ 76,648 $ - $ 3,943,267 Agenda Item 1.

City of Needles, California
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Other Governmental Funds
Year ended June 30, 2023
71 Housing &
Caltrans grant Special CD
CDBG Cemetery (bridge project) Gas Tax Grant

REVENUES
Taxes $ - $ - $ - $ - $ -
Intergovernmental 15,800 - 1,309,619 238,700 160,000
Charges for services - 31,306 - - -
Use of money and property - 252 - - -
Other revenues - 750 - - -
Total revenues 15,800 32,308 1,309,619 238,700 160,000

EXPENDITURES
Current
Public safety - - - - -
Public works 7,896 - 113,135 - -
Parks and recreation - 163,815 - - -
Community development - - - - 38,046
Capital outlay - - 1,284,812 - -
Debt service
Principal retirement - - - - -
Interest and fiscal charges - - - - -
Total expenditures 7,896 163,815 1,397,947 - 38,046

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 7,904 (131,507) (88,328) 238,700 121,954

OTHER FINANCING SOURCES (USES)
Transfers in - 180,216 - - -
Transfers out - - - (153,828) -
Total other financing sources (uses) - 180,216 - (153,828) - CHANGES IN FUND BALANCES 7,904 48,709 (88,328) 84,872 121,954

FUND BALANCES
Fund balances - beginning,
as previously reported (2,962) 184,881 1,225,482 113,219 (104,719) Restatements - 88,729 - - -
Fund balances - beginning,
as restated (2,962) 273,610 1,225,482 113,219 (104,719) Fund balances - ending $ 4,942 $ 322,319 $ 1,137,154 $ 198,091 $ 17,235 Special Revenue
Agenda Item 1.

City of Needles, California
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Other Governmental Funds (Continued)
Year ended June 30, 2023
72 New SANBAG COPS - I/S Commerce
Sanbag Measure I Bus Stop AB 3229 I40/J Street
Meas. I Transit Grant Supplemental Project

REVENUES
Taxes $ 221,959 $ - $ - $ - $ -
Intergovernmental - - - 211,798 2,049
Charges for services - - - - -
Use of money and property - - - 63 -
Other revenues - - - - -
Total revenues 221,959 - - 211,861 2,049

EXPENDITURES
Current
Public safety - - - 202,479 -
Public works - - - - -
Parks and recreation - - - - -
Community development - - - - -
Capital outlay - - - - -
Debt service
Principal retirement - - - - -
Interest and fiscal charges - - - - -
Total expenditures - - - 202,479 -

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 221,959 - - 9,382 2,049

OTHER FINANCING SOURCES (USES)
Transfers in - - - - -
Transfers out - (8) (725) - -
Total other financing sources (uses) - (8) (725) - -
CHANGES IN FUND BALANCES 221,959 (8) (725) 9,382 2,049

FUND BALANCES
Fund balances - beginning,
as previously reported 308,727 10,726 725 172,547 -
Restatements - - - - -
Fund balances - beginning,
as restated 308,727 10,726 725 172,547 -
Fund balances - ending $ 530,686 $ 10,718 $ - $ 181,929 $ 2,049 Special Revenue
Agenda Item 1.

City of Needles, California
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Other Governmental Funds (Continued)
Year ended June 30, 2023
73 Ca. Conserv. Safe Routes All
Recycle to Redevelopment American
Grant School Agency Canal

REVENUES
Taxes $ - $ - $ - $ -
Intergovernmental 5,000 - - -
Charges for services - - - 952,113
Use of money and property - - - -
Other revenues - - - -
Total revenues 5,000 - - 952,113

EXPENDITURES
Current
Public safety - - - -
Public works - - - 933,945
Parks and recreation - - - -
Community development 4,831 - 161,388 -
Capital outlay - - - -
Debt service
Principal retirement - - - -
Interest and fiscal charges - - - -
Total expenditures 4,831 - 161,388 933,945

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 169 - (161,388) 18,168

OTHER FINANCING SOURCES (USES)
Transfers in - - - -
Transfers out - - - (18,168)
Total other financing sources (uses) - - - (18,168)
CHANGES IN FUND BALANCES 169 - (161,388) -

FUND BALANCES
s - beginning,
y reported 32,863 (2,479) 306,680 381,943
Restatements - - - -
s - beginning,
32,863 (2,479) 306,680 381,943
Fund balances - ending $ 33,032 $ (2,479) $ 145,292 $ 381,943 Special Revenue
Agenda Item 1.

City of Needles, California
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Other Governmental Funds (Continued)
Year ended June 30, 2023
74 Special Revenue
Active
Transportation Redevelopment North South
Program Agency Needles Needles

REVENUES
Taxes $ - $ - $ - $ -
Intergovernmental - - - -
Charges for services - - 57,987 31,296
Use of money and property - - - -
Other revenues - - - -
Total revenues - - 57,987 31,296

EXPENDITURES
Current
Public safety - - - -
Public works - - - -
Parks and recreation - - - -
Community development - 84,276 4,570 2,911
Capital outlay - - - -
Debt service
Principal retirement - - - -
Interest and fiscal charges - - - -
Total expenditures - 84,276 4,570 2,911

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES - (84,276) 53,417 28,385

OTHER FINANCING SOURCES (USES)
Transfers in 725 6,484 - -
Transfers out - - - -
Total other financing sources (uses) 725 6,484 - -
CHANGES IN FUND BALANCES 725 (77,792) 53,417 28,385

FUND BALANCES
Fund balances - beginning,
as previously reported - (72,493) 18,362 66,089
Restatements - 239,247 - -
Fund balances - beginning,
as restated - 166,754 18,362 66,089
Fund balances - ending $ 725 $ 88,962 $ 71,779 $ 94,474 Capital Projects
Agenda Item 1.

City of Needles, California
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Other Governmental Funds (Continued)
Year ended June 30, 2023
75 Capital Projects Debt Service
Boating and Public Total
Waterways Financing Nonmajor
Grant Authority Funds

REVENUES
Taxes $ - $ - $ 221,959
Intergovernmental - - 1,942,966
Charges for services - - 1,072,702
Use of money and property - 332 647
Other revenues - - 750
Total revenues - 332 3,239,024

EXPENDITURES
Current
Public safety - - 202,479
Public works - - 1,054,976
Parks and recreation - - 163,815
Community development - - 296,022
Capital outlay 5,808 - 1,290,620
Debt service
Principal retirement - 150,000 150,000
Interest and fiscal charges - 5,625 5,625
Total expenditures 5,808 155,625 3,163,537

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (5,808) (155,293) 75,487

OTHER FINANCING SOURCES (USES)
Transfers in 25,486 - 212,911
Transfers out - (6,484) (179,213)
Total other financing sources (uses) 25,486 (6,484) 33,698 CHANGES IN FUND BALANCES 19,678 (161,777) 109,185

FUND BALANCES
lances - beginning,
viously reported 34,980 161,777 2,836,348
Restatements - - 327,976
lances - beginning,
tated 34,980 161,777 3,164,324
Fund balances - ending $ 54,658 $ - $ 3,273,509
Agenda Item 1.

City of Needles, California
Combining Statement of Net Position
Other Enterprise Funds
June 30, 2023
76 Total
Other
Golf Enterprise
Course Transit Funds
ASSETS
Current assets
Cash and investments $ 206,028 $ 230,703 $ 436,731
Due from other governments 15,726 68,956 84,682
Inventory 9,527 - 9,527
Prepaid items 923 - 923
Total current assets 232,204 299,659 531,863
Non-current assets
Capital assets, net 705,365 437,696 1,143,061
Total non-current assets 705,365 437,696 1,143,061
TOTAL ASSETS 937,569 737,355 1,674,924

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows of resources related to pensions 28,943 - 28,943 Deferred outflows of resources related to OPEB 834 - 834

TOTAL DEFERRED OUTFLOWS
OF RESOURCES 29,777 - 29,777

LIABILITIES
Current liabilities
Accounts payable 41,502 43,905 85,407
Deferred revenue - 106,028 106,028
Lease liability 44,946 - 44,946
Other liabilities 4,855 - 4,855
Total current liabilities 91,303 149,933 241,236
Non-current liabilities
Net pension liability 58,477 - 58,477
Other postemployment benefits liability 13,384 - 13,384 Lease liability 126,072 - 126,072
Total non-current liabilities 197,933 - 197,933
TOTAL LIABILITIES 289,236 149,933 439,169

DEFERRED INFLOW OF RESOURCES
Deferred inflows of resources related to pensions 3,122 - 3,122

TOTAL DEFERRED INFLOW
OF RESOURCES 3,122 - 3,122

NET POSITION
Net investment in capital assets 534,347 437,696 972,043 Unrestricted 140,641 149,726 290,367
TOTAL NET POSITION $ 674,988 $ 587,422 $ 1,262,410
Agenda Item 1.

City of Needles, California
Combining Statement of Revenues, Expenses and Changes in Net Position Other Enterprise Funds
Year ended June 30, 2023
77 Total
Other
Golf Enterprise
Course Transit Funds

OPERATING REVENUES
Charges for services $ 559,587 $ 33,178 $ 592,765
Other fees and sales 41,842 - 41,842
Total operating revenues 601,429 33,178 634,607

OPERATING EXPENSES
Personnel costs (103,833) - (103,833)
Contractual services 479,029 - 479,029
Power and utilities 177,564 - 177,564
Maintenance and operations 160,186 517,750 677,936
Administrative and management 56,100 16,137 72,237
Insurance 8,973 959 9,932
Depreciation and amortization 100,416 77,493 177,909
Total operating expenses 878,435 612,339 1,490,774
Operating loss (277,006) (579,161) (856,167)

NON-OPERATING REVENUES (EXPENSES)
Government grants - 568,797 568,797
Interest expense and fiscal charges (5,357) (384) (5,741) Total non-operating revenues (expenses) (5,357) 568,413 563,056 Loss before capital contributions
and transfers (282,363) (10,748) (293,111)
Capital contributions - AB 2766 - 15,000 15,000
Capital contributions - State of good repair - 9,095 9,095 Transfers in 326,784 8 326,792
Transfers out - (22,296) (22,296)
Net capital contributions and transfers 326,784 1,807 328,591 Changes in net position 44,421 (8,941) 35,480
Net position - beginning 630,567 596,363 1,226,930
Net position - ending $ 674,988 $ 587,422 $ 1,262,410
Agenda Item 1.

City of Needles, California
Combining Statement of Cash Flows
Other Enterprise Funds
Year ended June 30, 2023
78 Total
Other
Golf Enterprise
Course Transit Funds
Cash Flows from Operating Activities
Cash collected from customers $ 582,265 $ 79,688 $ 661,953 Cash payments to suppliers for goods and services (896,974) (494,037) (1,391,011) Cash payments to employees for services (5,093) - (5,093) Net cash used in operating activities (319,802) (414,349) (734,151) Cash Flows From Noncapital Financing Activities
Operating grants received - 568,797 568,797
Operating transfers in 326,784 8 326,792
Operating transfers out - (22,296) (22,296)
Net cash provided by noncapital
financing activities 326,784 546,509 873,293
Cash Flows from Capital and Financing Activities
Acquisition and construction of capital assets (48,595) (104,496) (153,091) Capital grants received - 24,095 24,095
Payments of leases (43,729) - (43,729)
Interest paid (5,357) (384) (5,741)
Net cash used in capital and
related financing activities (97,681) (80,785) (178,466) Net increase (decrease) in cash and investments (90,699) 51,375 (39,324) Cash and investments, beginning of year 296,727 179,328 476,055 Cash and cash investments, end of year $ 206,028 $ 230,703 $ 436,731 Reconciliation of operating loss to net cash
used in operating activities
Operating loss $ (277,006) $ (579,161) $ (856,167)
Adjustments to reconcile operating loss to
net cash used in operating activities
Depreciation and amortization 100,416 77,493 177,909
Changes in assets and liabilities
Decrease (increase) in:

Due from other governments (15,726) 46,510 30,784
Inventory (4,200) - (4,200)
Prepaid expenses 762 - 762
Deferred outflows 9,517 - 9,517
Increase (decrease) in:

Accounts payable (15,122) (4,282) (19,404)
Deferred revenue - 45,091 45,091
Net pension liability (16,169) - (16,169)
OPEB liability (31,301) - (31,301)
Deferred inflows (70,973) - (70,973)
Net cash used in operating activities $ (319,802) $ (414,349) $ (734,151) Agenda Item 1.

City of Needles, California
Combining Statement of Net Position
Internal Service Funds
June 30, 2023
79 Utility Admin
Water Sewer Electric Office Facility
ASSETS
Current assets
Cash and investments $ 292,830 $ 196,632 $ 1,795,216 $ 258,703 $ 177,996 Due from other funds - - 19,457 - -
Prepaid expenses 4,469 2,991 3,303,170 3,734 -
Total current assets 297,299 199,623 5,117,843 262,437 177,996 Noncurrent assets
Capital assets, net - - - 111,149 219,238
Total noncurrent assets - - - 111,149 219,238
TOTAL ASSETS 297,299 199,623 5,117,843 373,586 397,234

LIABILITIES
Accounts payable 25,889 26,197 154,509 2,069 66,484
Accrued payroll 11,462 3,840 18,062 4,783 -
Compensated absences - - - 7,653 -
Other accrued liabilities - 678 4,187 - -
Due to other funds 235,804 260,096 3,381,095 - -
Lease liability, current portion - - - 5,435 2,548
Lease liability,noncurrent portion - - - 6,531 5,540
TOTAL LIABILITIES 273,155 290,811 3,557,853 26,471 74,572

NET POSITION
Net investment in capital assets - - - 99,183 211,150
Unrestricted (Deficit) 24,144 (91,188) 1,559,990 247,932 111,512 TOTAL NET POSITION $ 24,144 $ (91,188) $ 1,559,990 $ 347,115 $ 322,662 Agenda Item 1.

City of Needles, California
Combining Statement of Net Position
Internal Service Funds (Continued)
June 30, 2023
80 Total
Fleet Information Vehicle Internal Service
Maintenance Systems Replacement Fund
ASSETS
Current assets
Cash and investments $ 587,437 $ 133,454 $ 706,986 $ 4,149,254 Due from other funds - - - 19,457
Prepaid expenses 1,254 - - 3,315,618
Total current assets 588,691 133,454 706,986 7,484,329
Noncurrent assets
Capital assets, net 6,026 48,222 238,097 622,732
Total noncurrent assets 6,026 48,222 238,097 622,732
TOTAL ASSETS 594,717 181,676 945,083 8,107,061

LIABILITIES
Accounts payable 3,967 10,359 - 289,474
Accrued payroll 1,923 - - 40,070
Compensated absences 3,883 - - 11,536
Other accrued liabilities - - - 4,865
Due to other funds - - - 3,876,995
Lease liability, current portion - - - 7,983
Lease liability,noncurrent portion - - - 12,071
TOTAL LIABILITIES 9,773 10,359 - 4,242,994

NET POSITION
Net investment in capital assets 6,026 48,222 238,097 602,678 Unrestricted (Deficit) 578,918 123,095 706,986 3,261,389 TOTAL NET POSITION $ 584,944 $ 171,317 $ 945,083 3,864,067 Agenda Item 1.

City of Needles, California
Combining Statement of Revenues, Expenses and Change in Net Position Internal Service Funds
Year ended June 30, 2023
81 502 503 580 508 510
Utility Admin
Water Sewer Electric Office Facility

OPERATING REVENUES
Charges for services $ 1,743,095 $ 1,207,733 $ 10,758,375 $ - $ - Total operating revenues 1,743,095 1,207,733 10,758,375 - -

OPERATING EXPENSES
Personnel 811,440 268,359 1,307,884 321,150 -
Contractual services - 348,060 42,399 1,350 -
Power and utilities 182,405 110,217 7,560,420 - 44,904
Maintenance and operations 134,727 54,391 844,980 6,855 44,358 Administrative and management 146,292 148,194 31,046 21,874 85,390 Insurance 30,735 38,191 56,397 4,497 -
Depreciation and amortization - - - 14,287 8,912
Total operating expenses 1,305,599 967,412 9,843,126 370,013 183,564 Operating income (loss) 437,496 240,321 915,249 (370,013) (183,564)

NONOPERATING REVENUES (EXPENSES)
Capital contributions - - - 5,695 -
Interest revenue 217 427 305 - -
Interest expense and fiscal charges - - - (407) (2,816) Total non-operating revenues (expenses) 217 427 305 5,288 (2,816) Income (loss) before transfers 437,713 240,748 915,554 (364,725) (186,380) Transfers in - - 692 455,980 215,544
Transfers out (447,019) (240,321) (984,259) (17,496) -
Net transfers (447,019) (240,321) (983,567) 438,484 215,544 Changes in net position (9,306) 427 (68,013) 73,759 29,164 Net position - beginning 33,450 (91,615) 1,628,003 273,356 293,498 Net position - ending $ 24,144 $ (91,188) $ 1,559,990 $ 347,115 $ 322,662 Agenda Item 1.

City of Needles, California
Combining Statement of Revenues, Expenses and Change in Net Position Internal Service Funds (Continued)
Year ended June 30, 2023
82 511 509 512 Total
Fleet Information Vehicle Internal Service
Maintenance Systems Replacement Fund

OPERATING REVENUES
Charges for services $ - $ - $ - $ 13,709,203
Total operating revenues - - - 13,709,203

OPERATING EXPENSES
Personnel 148,337 - - 2,857,170
Contractual services - 128,531 19,234 539,574
Power and utilities - - - 7,897,946
Maintenance and operations 84,441 73,961 55,896 1,299,609 Administrative and management 53,183 - 485,979
Insurance - - - 129,820
Depreciation and amortization 670 14,624 98,025 136,518 Total operating expenses 233,448 270,299 173,155 13,346,616 Operating income (loss) (233,448) (270,299) (173,155) 362,587

NONOPERATING REVENUES (EXPENSES)
Capital contributions - - - 5,695
Interest revenue - - 342 1,291
Interest expense and fiscal charges - - - (3,223)
Total non-operating revenues (expenses) - - 342 3,763
Income (loss) before transfers (233,448) (270,299) (172,813) 366,350 Transfers in 281,076 257,364 76,608 394,543
Transfers out - - - (796,374)
Net transfers 281,076 257,364 76,608 (401,831)
Changes in net position 47,628 (12,935) (96,205) (35,481) Net position - beginning 537,316 184,252 1,041,288 3,899,548 Net position - ending $ 584,944 $ 171,317 $ 945,083 $ 3,864,067 Agenda Item 1.

City of Needles, California
Combining Statement of Cash Flows
Internal Service Funds
Year ended June 30, 2023
83 502 503 580 508 510
Utility Admin
Water Sewer Electric Office Facility
Cash Flows from Operating Activities
Cash collected from customers $ 1,742,869 $ 1,207,592 $ 10,810,949 $ (3,616) $ - Cash payments to suppliers for goods and services (545,927) (710,132) (8,570,584) (36,421) (122,471) Cash payments to employees for services (811,440) (268,359) (1,307,884) (321,150) - Net cash provided by (used in) operating activities 385,502 229,101 932,481 (361,187) (122,471) Cash Flow From Noncapital Financing Activities
Operating transfers in - - 692 455,980 215,544
Operating transfers out (447,019) (240,321) (984,259) (17,496) - Increase in due from other funds - - (9,580) - -
Increase in due to other funds/advances 36,365 103,133 3,094,918 - - Net cash provided by (used in) noncapital
financing activities (410,654) (137,188) 2,101,771 438,484 215,544 Cash Flow From Capital and Related Financing Activities Acquisition and construction of capital assets - - - - (206,462) Capital contribution 5,695
Payments of leases - - - (5,288) (2,480)
Interest paid - - - (407) (2,816)
Net cash used in capital and
related financing activities - - - - (211,758)
Cash Flow From Investing Activities
Interest on investments 217 427 305 - -
Net cash provided by investing activities 217 427 305 - - Net increase (decrease) in cash and investments (24,935) 92,340 3,034,557 77,297 (118,685) Cash and investments, beginning of year 317,765 104,292 (1,239,341) 181,406 296,681 Cash and cash investments, end of year $ 292,830 $ 196,632 $ 1,795,216 $ 258,703 $ 177,996 Reconciliation of operating income (loss) to net cash
provided by (used in) operating activities
Operating income (loss) $ 437,496 $ 240,321 $ 915,249 $ (370,013) $ (183,564) Adjustments to reconcile operating income (loss) to
net cash provided (used) by operating activities
Depreciation and amortization - - - 14,287 8,912
Adjustment of beginning balances
Changes in assets and liabilities
Decrease (increase) in:

Accounts receivable - - 2,102 - -
Prepaid expenses (226) (141) 50,472 (3,616) -
Increase (decrease) in:

Accounts payable (37,138) (7,410) (11,433) 556 52,181
Accrued liabilities (14,630) (3,669) (23,909) (5,478) - Compensated absences - - - 3,077 -
Net cash provided by (used in) operating activities $ 385,502 $ 229,101 $ 932,481 $ (361,187) $ (122,471) Agenda Item 1.

City of Needles, California
Combining Statement of Cash Flows
Internal Service Funds (Continued)
Year ended June 30, 2023
84 511 509 512 Total
Fleet Information Vehicle Internal Service
Maintenance Systems Replacement Fund
Cash Flows from Operating Activities
Cash collected from customers $ (71) $ - $ - $ 13,757,723 Cash payments to suppliers for goods and services (82,117) (254,866) (75,130) (10,397,648) Cash payments to employees for services (148,337) - - (2,857,170) Net cash provided by (used in) operating activities (230,525) (254,866) (75,130) 502,905 Cash Flow From Noncapital Financing Activities
Operating transfers in 281,076 257,364 76,608 1,287,264 Operating transfers out - - - (1,689,095)
Increase in due from other funds - - - (9,580)
Increase in due to other funds/advances - - - 3,234,416 Net cash provided by (used in) noncapital
financing activities 281,076 257,364 76,608 2,823,005
Cash Flow From Capital and Related Financing Activities Acquisition and construction of capital assets - (620) - (207,082) Capital contribution
Payments of leases - - - (7,768)
Interest paid - - - (3,223)
Net cash used in capital and
related financing activities - (620) - (212,378)
Cash Flow From Investing Activities
Interest on investments - - 342 1,291
Net cash provided by investing activities - - 342 1,291 Net increase (decrease) in cash and investments 50,551 1,878 1,820 3,114,823 Cash and investments, beginning of year 536,886 131,576 705,166 1,034,431 Cash and cash investments, end of year $ 587,437 $ 133,454 $ 706,986 $ 4,149,254 Reconciliation of operating income (loss) to net cash
provided by (used in) operating activities
Operating income (loss) $ (233,448) $ (270,299) $ (173,155) $ 362,587 Adjustments to reconcile operating income (loss) to
net cash provided (used) by operating activities
Depreciation and amortization 670 14,624 98,025 136,518 Adjustment of beginning balances
Changes in assets and liabilities
Decrease (increase) in:

Accounts receivable - - - 2,102
Prepaid expenses (71) - - 46,418
Increase (decrease) in:

Accounts payable 2,065 809 - (370)
Accrued liabilities (2,874) - - (50,560)
Compensated absences 3,133 - - 6,210
Net cash provided by (used in) operating activities $ (230,525) $ (254,866) $ (75,130) $ 502,905 Agenda Item 1.
www.vasquez.cpa
655 N Central Avenue, Suite 1550 • Glendale, California 91203-1437 • +1.213.873.1700 Agenda Item 1.

City of Needles
Single Audit Report
Year Ended June 30, 2023
with Independent Auditor’s Report
Agenda Item 1.

City of Needles
Single Audit Report
Year Ended June 30, 2023
with Independent Auditor’s Report
Agenda Item 1.

City of Needles
Table of Contents
PAGE
INDEPENDENT AUDITOR’S REPORT

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 1
Report on Compliance for Each Major Federal Program; on Internal Control Over Compliance; and on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance 3
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 7
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 8
SCHEDULE OF FINDINGS AND QUESTIONED COSTS 9
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS 23
Agenda Item 1.
1 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 Mayor and the Members of the City Council City of Needles, 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, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Needles, California (the City), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated July 28, 2025.

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

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies.

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. We consider the deficiencies described in the accompanying schedule of findings and questioned costs as items FS 2023-001, FS 2023-002, and FS 2023-003 to be material weaknesses.

Agenda Item 1.
2 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. We consider the deficiencies described in the accompanying schedule of findings and questioned costs as items FS 2023-004 and FS 2023-005 to be significant deficiencies.

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

City’s Response to Findings
Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the findings identified in our audit and described in the accompanying schedule of findings and questioned costs. The City’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.

Purpose of This Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Glendale, California
July 28, 2025
Agenda Item 1.
3 Independent Auditor’s Report on Compliance for Each Major Federal Program; on Internal Control Over Compliance; and on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance
The Honorable Mayor and the Members of the City Council City of Needles, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City of Needles, California’s (the City) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended June 30, 2023. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

In our opinion, the City complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2023.

Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above.

Agenda Item 1.
4 Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the City’s federal programs.

Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of each major federal program as a whole.

In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we:
 Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.  Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance.

Accordingly, no such opinion is expressed.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.

Other Matters
The results of our auditing procedures disclosed instances of noncompliance which are required to be reported in accordance with the Uniform Guidance and which are described in the accompanying schedule of findings and questioned costs as items SA 2023-001, SA 2023-002 and SA 2023-003.

Our opinion on each major federal program is not modified with respect to these matters.

Agenda Item 1.
5 Government Auditing Standards requires the auditor to perform limited procedures on the City’s responses to the noncompliance findings identified in our compliance audit described in the accompanying schedule of findings and questioned costs. The City’s responses were not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the responses.

Report on Internal Control Over Compliance
Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance and therefore, material weaknesses or significant deficiencies in internal control may exist that were not identified. However, as discussed below, we did identify certain deficiencies in internal control over compliance that we consider to be a material weakness and significant deficiencies.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis.

We consider the deficiency in internal control over compliance described in the accompanying schedule of findings and questioned costs as item SA 2023-001 to be a material weakness.

A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as items SA 2023-002 and SA 2023-003 to be significant deficiencies.

Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.

Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the internal control over compliance findings identified in our compliance audit described in the accompanying schedule of findings and questioned costs. The City’s response was not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Agenda Item 1.
6 Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon, dated July 28, 2025, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements.

The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.

Glendale, California
July 28, 2025
Agenda Item 1.

City of Needles
Schedule of Expenditures of Federal Awards
Year ended June 30, 2023
See Notes to Schedule of Expenditures of Federal Awards. 7 Assistance Grant Federal
Listing Identifying Passed-through Award
Federal Grantor/Pass-through Grantor/Cluster/Program Number Number to Subrecipients Expenditures U.S. Department of Housing and Urban Development
Senior Transportation Program 14.218 NEED-23-1-05E/1539 $ - $ 7,896 Total U.S. Department of Housing and Urban Development 7,896 - U.S. Department of Transportation Highway Planning and Construction 20.205 BPML-5220(007) - 1,137,444 * Formula Grants for Rural Areas 20.509 64BA22-02065 - 62,366 Total U.S. Department of Transportation 1,199,810 - U.S. Department of Interior WaterSMART (Sustain and Manager America's Resources for Tomorrow) 15.507 R20AP00081-02 - 212,826 Total U.S. Department of Interior 212,826 - U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds 21.027 N/A - 1,040,044 Total U.S. Department of the Treasury 1,040,044 - * Total Expenditures of Federal Awards $ - $ 2,460,576 * Denotes major program Passed-through the San Bernardino County Community Development and Housing Community Development Block Grants (CDBG)
- Entitlement Grants Cluster
Passed-through the State of California Department of Transportation Agenda Item 1.

City of Needles
Notes to Schedule of Expenditures of Federal Awards
Year ended June 30, 2023
8 NOTE 1 BASIS OF PRESENTATION

The accompanying Schedule of Expenditures of Federal Awards (SEFA) includes the federal award activity of the City of Needles (the City) under programs of the federal government for the year ended June 30, 2023. For purposes of this schedule, financial awards include federal awards received directly from a federal agency, as well as federal funds received indirectly by the City from a non-federal agency or other organization. Only the portions of program expenditures reimbursable with federal funds are reported in the accompanying schedule. Program expenditures in excess of the maximum reimbursement authorized, if any, or the portion of the program expenditures that were funded with other state, local or other non-federal funds are excluded from the accompanying schedule.

The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because SEFA presents only a selected portion of the operations of the City, it is not intended to and does not present the financial statements of the City. The City’s reporting entity is defined in Note 1 of the notes to the City’s Annual Financial Report (AFR).

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying SEFA is presented using the modified accrual basis of accounting, which is described in Note 1 of the notes to the City’s basic financial statements. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement.

The City has elected not to use the 10-percent de minimis indirect cost rate allowed in the Uniform Guidance.

NOTE 3 RELATIONSHIP TO FEDERAL FINANCIAL REPORTS
Grant expenditure reports for the year ended June 30, 2023, which have been submitted to grantor agencies, will, in some cases, differ from the amounts disclosed herein. The reports prepared for grantor agencies are typically prepared at a later date and often reflect refined estimates of the year-end accruals.

NOTE 4 RELATIONSHIP TO ANNUAL FINANCIAL REPORT
Amounts reported in the accompanying SEFA agree, in all material respects, with amounts reported within the City’s AFR.

Agenda Item 1.

City of Needles
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
9 Section I – Summary of Auditor's Results
Financial Statements
Type of auditor’s report issued on whether the
financial statements audited were prepared
in accordance with GAAP Unmodified
Internal control over financial reporting:
 Material weakness(es) identified? Yes
 Significant deficiency(ies) identified? Yes
Noncompliance material to financial
statements noted No
Federal Awards
Internal control over major programs:
 Material weakness(es) identified? Yes
 Significant deficiency(ies) identified? Yes
Type of auditors’ report issued on compliance
with respect to major federal programs: Unmodified
Any audit findings disclosed that are required to be reported in accordance with Section 2 CFR 200.516(a)? Yes
Identification of Major Program:

Assistance Listing Number Name of Federal Program or Cluster

21.027

20.205
Coronavirus State and Local Fiscal
Recovery Funds
Highway Planning and Construction
Dollar threshold used to distinguish between
Type A and Type B programs $750,000
Auditee qualified as a low-risk auditee? No
Agenda Item 1.

City of Needles, California
Schedule of Findings and Questioned Costs (Continued)
Year ended June 30, 2023
10 Section II – Financial Statement Findings
Finding No. FS 2023-001: Internal Control Over Financial Reporting – Significant Delay in Completing the Audit (Material Weakness)
Criteria:

California Government Code Section 6505 requires that municipalities conduct an annual audit of their accounts and records, either internally or through an independent certified public accountant. The audit must adhere to generally accepted auditing standards and be filed as a public record within 12 months of the fiscal year's end.

Additionally, municipalities that expend $750,000 or more in federal awards in a single fiscal year are subject to the Single Audit Act, which mandates an annual audit to ensure accountability for federal funds. Under 2 CFR 200.512, single audit reporting packages must be submitted within nine months after the entity’s fiscal year-end.

Condition:

The City failed to complete its required annual audit for Fiscal Year 2023 within the mandated 12-month deadline. As of July 1, 2024, no audit report has been issued or filed, resulting in noncompliance with California Government Code Section 6505.

The City also failed to complete its Single Audit for Fiscal Year 2023 within the required ninemonth deadline under 2 CFR 200.512. As of March 31, 2024, no single audit report has been issued or filed, resulting in noncompliance with federal audit requirements.

Cause and Effect:

The City's audit delays stem from significant management turnover in key financial leadership positions. The transition among multiple interim finance officials and auditors disrupted record collection, transaction verification, and report finalization.

Noncompliance may trigger funding restrictions, stricter oversight, and increased regulatory scrutiny, potentially leading to corrective actions or financial penalties. Additionally, the delayed audit has increased costs, requiring extended engagements, additional staff hours, and expedited review fees to meet compliance requirements.

Recommendation:

To ensure future compliance, the City should:

1. Establish a continuity plan for management to mitigate the impact of turnover, including written, detailed transition procedures and backup financial officers.

2. Hire or designate a permanent financial officer responsible for overseeing the audit process and maintaining compliance with Government Code Section 6505 and federal requirements.

3. Implement an audit tracking system to monitor progress and deadlines, ensuring timely completion regardless of personnel changes.

4. Engage an external audit firm earlier in the fiscal year to allow sufficient time for data collection and report preparation.

Agenda Item 1.

City of Needles, California
Schedule of Findings and Questioned Costs (Continued)
Year ended June 30, 2023
11 Finding No. FS 2023-001: Internal Control Over Financial Reporting – Significant Delay in Completing the Audit (Material Weakness) (Continued)
Views of Responsible Personnel and Corrective Action Plan:

In January 2023, the City’s Finance Director was placed on paid leave for a period of one year, pending an investigation. The City was unable to begin recruiting for a new Finance Director during the investigation period. The Director was eventually terminated on December 29, 2023.

Of note here, the City has no reason to believe at this time that there was any fraud, abuse or malfeasance connected with the former Finance Director; the employee was terminated for other reasons.

After the termination, the City conducted three traditional recruitments without finding a qualified candidate. Over the three rounds, the City received 26 applications. Of the 26, none of the applicants had municipal finance administration or governmental accounting experience, and less than half were identified as potential interview candidates. After three rounds of interviews, none were found to be suitable for the position.

In November 2024, the City then contracted with Tripepi Smith Talent Solutions for a 4th recruitment. However, Tripepi was only to find four possible candidates and only one with municipal accounting experience. After the interviews of all four, the candidate with municipal experience was offered a position. She accepted the position but withdrew prior to her start date. Two more Tripepi candidates were reinterviewed, and neither was found to be suitable.

The City has hired a second Interim Finance Director through August 2025 and a 5th recruitment to find a permanent Finance Director is underway.

The Interim Finance Director is overseeing the correction of deficiencies and weaknesses identified by the auditors so they will be resolved going forward. However, because of the delay in finalizing the fiscal year 2023 audit and, considering that as of the date of this letter fiscal year 2026 has already begun, the Interim Finance Director has implemented corrective measures, such as staff training, appropriate reviews, and best practices, but findings may be evident for the audits for fiscal years 2024 and 2025. The Finance Director is also preparing procedures lists and manuals and scheduling important finance tasks for staff to follow until a permanent Director is hired, including training on such tasks.

Specific training has been identified for Finance staff (the Senior Accountant and Account Clerk, both of whom perform general accounting duties). As the training courses are held over the next 6 months, staff will attend. The courses will be completed in the first half of fiscal year 2025-2026 to ensure that during the Finance Director vacancy or any other Finance staff vacancy, staff is cross-trained on duties and better able to manage transition periods to meet required deadlines. As of the date of this letter, both staff have completed at least one training in fiscal year 2026. Management will also continue to hire high-level consultants (Interim Finance Directors) when the Finance Director position is vacant to assist with audit preparation so future audits will be completed in a timely manner.

Responsible Personnel Name and Position: Jill Taura, Interim Finance Director Expected Implementation Date of Corrective Action Plan: Fiscal year 2026 Agenda Item 1.

City of Needles, California
Schedule of Findings and Questioned Costs (Continued)
Year ended June 30, 2023
12 Finding No. FS 2023-002: Internal Control Over Financial Reporting – Corrections of Financial Reporting Errors (Material Weakness)
Criteria:

Local governments must establish and maintain effective internal controls to ensure accurate financial reporting, compliance with applicable laws and regulations, and protection of public funds. These internal controls must align with the Standards for Internal Control in the Federal Government (Green Book) issued by the Comptroller General of the United States or the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Per the Governmental Accounting Standards Board (GASB) Statement No. 34, interfund activities must be properly recorded to ensure financial transparency and compliance with governmental accounting standards. GASB defines interfund activities as financial interactions between funds within a government entity, requiring that each transaction be offset by an equal and opposite entry in the corresponding fund to maintain balance. Additionally, accounting principles generally accepted in the United States (U.S. GAAP) mandates that interfund activities be classified as reciprocal or nonreciprocal and properly reconciled so that total debits equal total credits, preventing discrepancies in financial statements.

Additionally, GASB standards and U.S. GAAP require proper classification, recognition, measurement, and disclosure of financial transactions to ensure transparency, consistency, and accountability in financial reporting.

Condition:

During our audit of the City accounts, we noted the following:

1. The City failed to record pension and other postemployment benefits (OPEB) allocations in the Golf Course Fund and General Long-term Debt Account Group upon receiving the final trial balance. As a result, adjustments were necessary to accurately reflect the liabilities, requiring a reduction of $2,211 in the Golf Course Fund and an increase of $4,154,836 in the General Long-term Debt Account Group.

2. The City pools its cash and investments across all funds but did not reclassify negative cash balances as a liability, leading to inaccurate financial reporting. We proposed an adjustment to reclassify $1,192,851 as a liability to ensure proper financial statement presentation.

3. The City received $105,496 from third parties but inadvertently reduced its capital outlay expenditures instead of recognizing the amount as income. This resulted in an audit adjustment to properly recognize the funds as revenue and align capital outlay expenditures with the capital asset roll forward.

4. The City does not assess the fair value of its investments as of the end of the year. To properly report the fair value of the investments, we proposed an adjustment to reduce investment balances by $22,634.

5. The City authorized the transfer of $158,238 in American Rescue Plan Act (ARPA) funds to offset revenue losses across various funds. While the disbursing fund correctly recorded the transaction as a transfers out, the corresponding receiving funds did not recognize the transfers in.

Agenda Item 1.

City of Needles, California
Schedule of Findings and Questioned Costs (Continued)
Year ended June 30, 2023
13 Finding No. FS 2023-002: Internal Control Over Financial Reporting – Corrections of Financial Reporting Errors (Material Weakness) (Continued)
Condition (Continued):

6. The City approved the transfer of $75,000 from General Fund reserves to the Public Utility Fund to cover customer credits. While the General Fund properly recorded the transaction as a transfers out, the Public Utility Fund incorrectly classified it as charges for services rather than a transfers in.

Audit adjustments were proposed to correct these errors and ensure proper alignment of fund balances.

Cause and Effect:

The City's financial reporting challenges primarily result from management turnover. Frequent transitions in financial leadership have disrupted established accounting procedures, while limited training on GASB standards and U.S. GAAP has contributed to reporting errors.

Additionally, the lack of comprehensive documentation has led to inconsistencies in pension and OPEB allocation, revenue recognition, investment valuation, and cash reclassification. As a result, financial statements require significant audit adjustments to ensure accuracy and compliance with the local government's financial reporting standards.

The reporting discrepancies in interfund transfers were primarily due to a lack of proper review and oversight. These errors indicate deficiencies in financial review processes, where transactions were not properly verified before recording. The absence of thorough oversight increases the risk of misstatements, which can potentially impact fund balances, budgeting decisions, and compliance with accounting standards.

Recommendation:

Establishing clear documentation for accounting procedures, including pension and OPEB allocations, revenue recognition, investment valuation, interfund transactions, and cash management, will improve accuracy and consistency in financial reporting. Providing specialized training on GASB standards and U.S. GAAP will equip staff with the necessary expertise to review financial statements effectively. Additionally, appointing dedicated financial leadership will promote oversight and stability and minimize disruptions caused by management turnover.

Strengthening these measures will improve financial transparency, reduce errors, and mitigate the need for extensive audit adjustments in the future.

Views of Responsible Personnel and Corrective Action Plan:

As a result of the Finance Director vacancy, Finance staff made errors in recording financial transactions due to a lack of basic knowledge of municipal accounting. No managerial-level review of journal entries was possible when the fiscal year 2023 year-end closing was performed due to the Finance Director vacancy. Both the Senior Accountant and the Account Clerk are scheduled to complete multiple courses in governmental accounting by December 31, 2025. In the interim, journal entries will be reviewed by the Interim Finance Director to ensure accuracy.

Additionally, management is in the process of hiring a consulting accounting manager to help Finance with audit readiness and assistance for the audits for fiscal years 2024 and 2025.

Responsible Personnel Name and Position: Jill Taura, Interim Finance Director Expected Implementation Date of Corrective Action Plan: Fiscal year 2026 Agenda Item 1.

City of Needles, California
Schedule of Findings and Questioned Costs (Continued)
Year ended June 30, 2023
14 Finding No. FS 2023-003: Internal Control Over Financial Reporting – Proper Application of Basis of Accounting (Material Weakness)
Criteria:

Per GASB Statement No. 33 and GASB Statement No. 65, unavailable revenue is recognized only under the modified accrual basis of accounting for governmental funds. GASB 33 establishes that revenue should be recognized when it is measurable and available, meaning it is collectible within the government's defined availability period. GASB 65 further refines this treatment by requiring unavailable revenue to be reported as deferred inflows of resources until it becomes available. Under the full accrual basis of accounting, revenues are recognized when they are earned, regardless of availability, making the concept of unavailable revenue inapplicable in that context.

Condition:

During our audit, we found that the City incorrectly recognized $1,242,143 in unavailable revenue within the Public Utility Fund, despite the fund being reported under the full accrual basis of accounting.

Cause and Effect:

A lack of proper financial review and misapplication of accounting principles can result in inaccurate reporting, leading to misstatements in fund balances.

Recommendation:

The City should implement stronger review processes to ensure accurate classification of transactions. Providing targeted training for finance personnel on accounting principles, including revenue recognition and fund classification, will help minimize errors and improve compliance with accounting standards.

Views of Responsible Personnel and Corrective Action Plan:

In meeting with the City’s auditors, management understands that the material weakness was a result of a single improper journal entry, albeit a significant one, that was booked according to the modified basis of accounting into an Enterprise Fund. The Senior Accountant has been educated, understands the error and will maintain compliance with accounting standards in the future. The Senior Accountant will also attend governmental accounting training as previously described. Lastly, the Finance Director is responsible for reviewing journal entries, particularly year-end closing entries. But due to the extended vacancy, having a reviewer in fiscal year 2023 was not possible. This will be fixed going forward.

Responsible Personnel Name and Position: Jill Taura, Interim Finance Director Expected Implementation Date of Corrective Action Plan: Fiscal year 2026

Agenda Item 1.

City of Needles, California
Schedule of Findings and Questioned Costs (Continued)
Year ended June 30, 2023
15 Finding No. FS 2023-004: Internal Control Over Financial Reporting – Proper Implementation of GASB 87, Leases (Significant Deficiency)
Criteria:

GASB Statement No. 87 standardizes lease accounting by requiring lessees to recognize lease liabilities and right-to-use assets while lessors record lease receivables and deferred inflows of resources, eliminating the distinction between operating and capital leases. Under the current financial resources measurement focus, lessors recognize lease receivables and deferred inflows, while lessees report an expenditure and other financing source upon initial recognition. Subsequent lease payments in governmental funds follow debt service principles for long-term obligations. In government-wide statements, all leases adhere to full accrual accounting, ensuring comprehensive financial reporting across all activities.

Condition:

During our audit of the City’s lease contracts, we identified several instances of noncompliance with GASB Statement No. 87:

1. The City failed to recognize an existing lease receivable and deferred inflow of resources in the General Fund’s Balance Sheet, totaling $310,554 and $306,180, respectively.

2. A new lease contract entered during the year was not accounted for in accordance with GASB Statement No. 87, resulting in the omission of a lease receivable and deferred inflow of $138,539 in the General Fund’s Balance Sheet.

3. The City did not properly record inflows of resources and corresponding reductions in lease receivables for all leases in the current year, amounting to $45,923 and $40,459, respectively.

4. Subsequent lease payments, totaling $20,151, were improperly classified as functional expenditures rather than debt service payments in the General Fund’s Statement of Revenues, Expenditures, and Changes in Fund Balance.

To ensure compliance with GASB Statement No. 87, adjustments were proposed to correct these errors and align financial reporting with the prescribed standards.

Cause and Effect:

The City’s lack of familiarity with GASB Statement No. 87 led to misstatements in financial reporting, including unrecognized lease receivables, deferred inflows, and misclassified expenditures.

Recommendation:

To improve compliance with GASB 87, the City should:

1. Enhance staff training. Provide targeted training on GASB Statement No. 87 to ensure personnel understand lease recognition, measurement, and reporting requirements.

2. Implement a lease tracking system. Establish a centralized system to monitor lease agreements, ensuring timely recognition and proper classification.

Agenda Item 1.

City of Needles, California
Schedule of Findings and Questioned Costs (Continued)
Year ended June 30, 2023
16 Finding No. FS 2023-004: Internal Control Over Financial Reporting – Proper Implementation of GASB 87, Leases (Significant Deficiency) (Continued)
Recommendation (Continued):

3. Conduct periodic reviews. Regularly assess lease accounting practices to identify and correct misstatements before financial reporting deadlines.

4. Strengthen internal controls. Develop clear policies and procedures for lease accounting to prevent errors and ensure consistency.

5. Engage external expertise. Consult with GASB specialists or auditors to validate compliance and address complex lease arrangements.

Views of Responsible Personnel and Corrective Action Plan:

As a result of the Finance Director vacancy, staf was not knowledgeable or properly trained on the implementation of new GASB standards. The Senior Accountant will work with the City auditors for information on new GASB standards that must be implemented each year and request assistance as needed in preparing accurate journal entries required to conform to new GASB standards. Additionally, the Senior Accountant and Account Clerk will complete multiple trainings on all aspects of governmental accounting practices and procedures by December 31, 2025.

Responsible Personnel Name and Position: Jill Taura, Interim Finance Director Expected Implementation Date of Corrective Action Plan: Fiscal year 2026 Finding No. FS 2023-005: Internal Control Over Financial Reporting – Submission of Investment Reports (Significant Deficiency)
Criteria:

Under California Government Code section 53646, local agency treasurers must submit quarterly investment reports within 45 days of the end of each quarter. These reports must include details on investment types, issuers, maturity dates, amounts, compliance with the agency’s investment policy, and an assessment of the agency’s ability to meet financial obligations for the next six months. Additionally, the City’s investment policy requires the annual submission of the Statement of Investment Policy and mandates monthly reporting of all investments held in the City’s portfolio to the City Council within 60 days after the end of the monthly reporting period.

Condition:

The City failed to submit the Statement of Investment Policy to the City Council annually as required, with the most recent policy dated January 2000. Additionally, monthly investment reports were not provided for Fiscal Year 2023, resulting in noncompliance with the reporting requirements of the California Government Code and the City.

Cause and Effect:

The failure to submit the Statement of Investment Policy and monthly investment reports for the fiscal year 2023 appears to be primarily due to management turnover, which disrupted established reporting processes.

Agenda Item 1.

City of Needles, California
Schedule of Findings and Questioned Costs (Continued)
Year ended June 30, 2023
17 Finding No. FS 2023-005: Internal Control Over Financial Reporting – Submission of Investment Reports (Significant Deficiency) (Continued)
Recommendation:

To ensure compliance with California Government Code section 53646 and the City's investment policy, the following actions are recommended:

1. Reinforce Reporting Protocols. Clearly define and document investment reporting procedures to maintain consistency despite management turnover.

2. Enhance Transition Planning. Implement structured handover processes to ensure new personnel understand reporting requirements and deadlines.

3. Strengthen Oversight. Designate a compliance officer or team to track reporting deadlines and verify adherence to regulations.

4. Automate Reporting Systems. Utilize digital tools to monitor submission schedules and send timely reminders.

5. Conduct Regular Training. Provide ongoing training for financial staff to ensure awareness of reporting obligations.

6. Improve Communication with the City Council. Establish routine updates and transparent reporting practices to maintain accountability.

Implementing these recommendations will help prevent future reporting lapses, safeguard financial transparency, and ensure continued regulatory compliance.

Views of Responsible Personnel and Corrective Action Plan:

As background, California Government Code Section 53646 states “In the case of any other local agency, the treasurer or chief fiscal officer of the local agency may annually render to the legislative body of that local agency and any oversight committee of that local agency a statement of investment policy, which the legislative body of the local agency shall consider at a public meeting.”
Furthermore, California Government Code Section 53607 states that if the legislative body delegates investment authority to the City Treasurer, the City Treasurer “… shall make a monthly report of those transactions to the legislative body.”
While past practice followed minimum statutory compliance, the City acknowledges the lack of clarity and outdated policy, and has since modernized its reporting to meet current standards.

Management disagrees with the auditor's finding that a quarterly investment report is required under Section 53646 because the quarterly report was not a requirement of the City Council, nor required under state law. Under the previous Investment Policy, only monthly reporting was required (under Section 53607), and this was done. The City’s report is called the Treasurer’s Report, not an “investment report”, as has been the City’s nomenclature according to past practice. The City Treasurer submitted monthly Treasurer’s Reports to City Council by memorandum every month in fiscal year 2023; however, the prior Treasurer’s Reports did not report the investments at “Cost” or the “Yield at 365” as required by Section 53607. All reports are on file in the Finance Department and were submitted in a timely manner.

Agenda Item 1.

City of Needles, California
Schedule of Findings and Questioned Costs (Continued)
Year ended June 30, 2023
18 Finding No. FS 2023-005: Internal Control Over Financial Reporting – Submission of Investment Reports (Significant Deficiency) (Continued)
Views of Responsible Personnel and Corrective Action Plan (Continued):

There is no requirement that the report be made at a public meeting, unlike the requirement in Government Code Section 53646 when, if a quarterly report is elected, it shall be considered at a public meeting.

With that said, the monthly Treasurer’s Report was revised in June 2025 to be in full compliance with the Investment Policy and state law. It was first presented at a public meeting for Council’s acceptance on July 8, 2025, rather than by memo, clearly demonstrating the City’s ongoing commitment to financial transparency and timeliness of reporting. It will continue to be presented monthly at public meetings in the future.

Management agrees that the updated Investment Policy was not taken to Council each year as required. This was due to management turnover. This finding was immediately corrected by the Interim Finance Director. The updated Annual Statement of Investment Policy, which conforms in all respects with state law, was adopted by Council on July 8, 2025, and will continue to be adopted by Council annually in the future.

The process and reporting requirements are now clearly understood by Finance staff and well documented. The Senior Accountant and Account Clerk have been educated about complying with all investment reporting requirements until the permanent Finance Director is hired, who will take over responsibility for Finance’s Treasury Management duties.

Responsible Personnel Name and Position: Jill Taura, Interim Finance Director Expected Implementation Date of Corrective Action Plan: Fiscal year 2026

Agenda Item 1.

City of Needles, California
Schedule of Findings and Questioned Costs (Continued)
Year ended June 30, 2023
19 Section III – Federal Award Findings
Finding No. SA 2023-001: Internal Control and Compliance – Untimely Completion and Submission of Single Audit Report (Material Weakness)
Criteria:

According to 2 CFR 200.512(a), recipients and subrecipients expending $750,000 or more in federal awards must submit their audit report to the Federal Audit Clearinghouse within nine months of the fiscal year-end.

Condition:

The City did not complete and submit the Single Audit report within the required timeframe as outlined in 2 CFR 200.512(a), which mandates submission within nine months after the fiscal year end, June 30, 2023.

Questioned Cost:

None.

Cause and Effect:

The City experienced significant management turnover, which contributed to delays in completing and submitting the Single Audit report within the required timeframe outlined in 2 CFR 200.512(a). Frequent leadership changes disrupted oversight and continuity, leading to gaps in communication, delayed decision-making, and difficulties in coordinating audit activities.

As a result, critical deadlines were missed, increasing the risk of noncompliance with federal regulations. The failure to submit the audit timely manner may lead to heightened scrutiny from oversight agencies, potential funding repercussions, and diminished confidence among stakeholders.

Recommendation:

To prevent future delays in Single Audit submissions, the City should establish strong internal controls and ensure leadership stability during transitions. Implementing a clear audit timeline with designated accountability, providing adequate training for staff handling federal compliance requirements, and maintaining continuity in key financial roles will help mitigate disruptions caused by management turnover. Additionally, enhancing communication between departments and external auditors can facilitate a more efficient audit process.

Views of Responsible Personnel and Corrective Action Plan:

As indicated in Finding No. FS 2023-001, in January 2023, the City’s Finance Director was placed on paid leave for a period of one year pending an investigation. The City was unable to recruit for a new Finance Director during the leave period. The Director was eventually terminated on December 29, 2023, and the City has conducted four unsuccessful recruitments and hired three different Interim Finance Directors since that time. Ongoing recruitment efforts continue. Again, resolution of identified deficiencies and corrective actions actively continues under the guidance of the Interim Finance Director, as well as the implementation of best practices in Finance’s operations. The Senior Accountant and the Account Clerk are actively attending training on governmental accounting and municipal finance administration which will be completed by December 31, 2025.

Responsible Personnel Name and Position: Jill Taura, Interim Finance Director Expected Implementation Date of Corrective Action Plan: Fiscal year 2026 Agenda Item 1.

City of Needles, California
Schedule of Findings and Questioned Costs (Continued)
Year ended June 30, 2023
20 Finding No. SA 2023-002: Internal Control and Compliance over Reporting – Inaccurate Reporting of Federal Expenditures (Significant Deficiency)
Federal Program Information:

Federal Assistance Listing Number: 21.027
Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF)
Federal Agency: U.S. Department of Treasury
Federal Award Number: None
Federal Award Year: March 3, 2021 to December 31, 2024
Criteria:
2 CFR 200.328, Financial Reporting, emphasizes the importance of submitting performance and financial reports that are complete, accurate, and consistent with the accounting records.

Specifically:
 Financial data must be derived from and consistent with the recipient's accounting records.
 Reports must include all financial information in accordance with federal requirements.

Additionally, 2 CFR 200.303, Internal Controls, mandates the implementation of effective internal controls, including proper segregation of duties, to maintain financial integrity and ensure compliance with federal regulations.

Condition:

The City's Annual Project and Expenditure Report (P&E) did not properly report federal expenditures for fiscal year 2023, as it does not align with the City's accounting records.

Specifically, $98,428 in eligible fiscal year 2024 expenditures were incorrectly reported as fiscal year 2023 expenditures. While this amount is considered an eligible cost under the program, it was not reported properly in the correct accounting and reporting period. Additionally, the lack of segregation of duties, where the same personnel handled both preparation and review, raises concerns about internal control deficiencies and the risk of reporting errors.

Questioned Cost:

None.

Cause and Effect:

The City Council authorized federal expenditures for the CSLFRF project as a lump sum, resulting in the reporting of all eligible expenditures in a single reporting period, rather than aligning them with the appropriate fiscal year. Additionally, since CSLFRF was newly established in response to COVID-19 in 2021, the City had limited experience with managing and reporting such grants. The lack of prior exposure, coupled with an insufficient number of qualified staff, contributed to inaccuracies in financial reporting and deficiencies in internal controls.

Recommendation:

To ensure compliance with federal reporting requirements and strengthen internal controls, the City should:

1. Establish a reconciliation procedure to ensure all reported expenditures in the Annual Project and Expenditure Report (P&E) align with the City's accounting records.

Agenda Item 1.

City of Needles, California
Schedule of Findings and Questioned Costs (Continued)
Year ended June 30, 2023
21 Finding No. SA 2023-002: Internal Control and Compliance over Reporting – Inaccurate Reporting of Federal Expenditures (Significant Deficiency) (Continued) Recommendation (Continued):

2. Implement a structured review process that requires independent verification of financial reports. Assign separate personnel for the preparation and review of reports to address concerns regarding segregation of duties.

3. Conduct regular training sessions for finance and grant management staff to improve understanding of federal grant reporting requirements and best practices, ensuring the accuracy of future submissions.

Views of Responsible Personnel and Corrective Action Plan:

Management has instructed the department managers involved with grants to work with the Finance Director and Senior Accountant for all future grant accounting and reporting to ensure that grant expenditures are properly recorded and reported in the correct period. The Senior Accountant will complete GFOA’s Generally Accepted Accounting Principles for Grants in August 2026. As of the date of this letter, Management is working to identify other grants-related training appropriate for the Senior Accountant, the Utility Manager, and the Director of Development Services and Capital Projects, all of whom are involved in grant proposals, management, expenditures, accounting and required reporting. Meetings with all three department managers will be scheduled to coordinate administration and deadlines for the City’s new and existing grants as grant reporting deadlines occur.

Responsible Personnel Name and Position: Jill Taura, Interim Finance Director Expected Implementation Date of Corrective Action Plan: Fiscal year 2026 Finding No. SA 2023-003: Internal Control and Compliance over Period of Performance – Misclassification of Expenditures Outside the Period of Performance (Significant Deficiency) Federal Program Information:

Federal Assistance Listing Number: 21.027
Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF)
Federal Agency: U.S. Department of Treasury
Federal Award Number: None
Federal Award Year: March 3, 2021 to December 31, 2024
Criteria:

The American Rescue Plan Act (ARPA) specifies that eligible expenditures must align with the period of performance requirements established by the U.S. Department of the Treasury (Treasury). According to Treasury guidelines, the period of performance for CLSFRF begins on March 3, 2021, meaning recipients may only use funds to cover costs incurred during the period beginning on March 3, 2021, pursuant to the Final Rule at 31 CFR section 35.5(a).

Agenda Item 1.

City of Needles, California
Schedule of Findings and Questioned Costs (Continued)
Year ended June 30, 2023
22 Finding No. SA 2023-003: Internal Control and Compliance over Period of Performance – Misclassification of Expenditures Outside the Period of Performance (Significant Deficiency) (Continued)
Condition:

During the audit of CSLFRF expenditures, we identified $13,834 in costs that were incurred before March 3, 2021, which is outside the allowable period of performance established under the Treasury guidelines.

Cause and Effect:

The CSLFRF program, introduced under ARPA in 2021, presented new grant management and reporting challenges for the City, which had no prior experience navigating these requirements. As a result, $13,834 in expenditures incurred before March 3, 2021, were misclassified, falling outside the allowable performance period defined by Treasury guidelines.

However, the City has since identified and allocated other eligible expenditures to appropriately replace the $13,834. The City attempted to update the expenditures report filed with the Treasury Department but was unsuccessful.

Questioned Cost:

None.

Recommendation:

To ensure compliance with Treasury guidelines, the City should strengthen its grant management procedures by verifying that expenditures align with the approved period of performance before reporting. Staff training on CSLFRF requirements will help improve accuracy, while enhanced internal controls, including independent expenditure reviews, will reduce the risk of misclassification. Lastly, establishing a process for consulting federal grant administrators when needed will ensure clarity and compliance in expenditure reporting.

Views of Responsible Officials and Planned Corrective Action:

Consistent with Management’s Response to Audit Finding SA 2023-002, the City’s grant processes have been updated to ensure that grants administration and reporting are compliant with individual grant requirements and that there is interdepartmental coordination to ensure appropriate monitoring, reviews, and reporting. Training will also be provided to all departmental managers and Finance staff involved in grants administration, accounting, and reporting.

Responsible Personnel Name and Position: Jill Taura, Interim Finance Director Expected Implementation Date of Corrective Action Plan: Fiscal year 2026 Agenda Item 1.

City of Needles
Summary Schedule of Prior Audit Findings
Year ended June 30, 2023
23 Identifying
No. Audit Finding
Planned Corrective
Action
Current
Status
Explanation
if not fully
implemented
2022-01 –
Significant
Audit
Adjustment
over
Construction
Expenditures
Type of
Finding:

Significant
deficiency in
internal
control
There were significant
amounts of missing
documentation relating
to the Arizona Bridge
Project at the
commencement of the
engagement. Through
extended procedures
during the course of
audit fieldwork, we were
able to determine that
the City’s payments to
the Arizona Department
of Transportation during
fiscal year 2021-22 fell
outside the scope of the
agreement with the
California Department
of Transportation, only
serving as prepayment
for an upcoming project
that had not yet
commenced. No
approved expenditure
of federal awards had
been issued, and no
actual work had been
completed until the
fiscal year ended June
30, 2023, and beyond.

An audit adjustment
was necessary to
reclassify the $1.2
million of expenditures
to prepaid expense in
order to account for the
disbursement in
accordance with
Generally Accepted
Accounting Principles
(GAAP).

The City of Needles
found itself in a unique
position beginning in
FY 22. They were
awarded grants for
multiple large projects. At
the time, they did not
have sufficient staff for
all the additional
planning and paperwork
involved. They realized
quickly that they needed
a Project Manager and
hired one early FY 23.

They also added a
position in Finance that
can help track project
expenses and
reimbursements
received.

The Project Manager
has been able to plan
and organize all of their
grant and other large
projects. She sends
reimbursement requests
timely and has been
successful at receiving
the grant funds they are
due.

The Project Manager,
with the help of
Department heads, will
maintain a
comprehensive list of
open and ongoing grants
that include the primary
contacts, and any
performance obligations
required.

Fully
implemented.

Not
applicable.

Agenda Item 1.
www.vasquez.cpa
655 N Central Avenue, Suite 1550 • Glendale, California 91203-1437 • +1.213.873.1700 Agenda Item 1.

City of Needles, California
Request for City Council Action
CITY COUNCIL PARKS & RECREATION COMMISSION Regular Special Meeting Date: August 12, 2025
Title: City Council Resolution 2025-32 of the City Council of the City of Needles, California Amending Resolution 2024-37 and increasing Green Fee Rates at the Rivers Edge Golf Course
Background: On September 10, 2024, the City Council adopted an increase to $42 for the 18- hole green fee. A recent Competitive Market Analysis by Touchstone Golf/KemperSports (Attachment B) confirms that Rivers Edge remains priced well below regional competitors, which range from $55 to $109 for daily green fees.

The nearest competitor is $10 above our current rate.

To address inflationary increases in operating costs, maintain competitive service quality, and continue improvements to turf conditions, staff proposes a modest $3 increase to the 18-hole green fee—from $42 to $45—effective for the 2025–26 season. This is roughly a 7% increase and still keeps Rivers Edge well below market rates.

Fiscal Impact: Based on historic rounds played, the $3 increase is projected to generate approximately $35,000 in additional annual revenue, which will be reinvested into course maintenance and operations.

Recommended Approve City Council Resolution 2025-32 amending Resolution 2024-37 to Action: increase the 18-hole green fee rate from $42 to $45 and Adopt the updated Golf Course Fee Structure for 2025–26 as outlined in Attachment A.

Submitted By: JJ Deleon, Rivers Edge Golf Course Golf Pro City Manager Approval: Date:

Other Department Approval (when required): Date:

Approved: Not Approved: Tabled: Other:
8/7/2025
8/8/2025
Agenda Item 2.

RESOLUTION 2025-32

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
NEEDLES, CALIFORNIA, AMENDING RESOLUTION 2024-37

ADOPTING A NEW GREEN FEE RATE STRUCTURE

AT THE RIVERS EDGE GOLF COURSE
WHEREAS, the City Council adopted Resolution No. 2024-37 on September 10, 2024, adopting a new membership rate structure at the Rivers Edge Golf Course and; WHEREAS, a Notice of Public Hearing was published in the Needles Desert Star on July 23, 2025,and said public hearing was held on August 12, 2025, at which time all persons were provided an opportunity to speak for or against the proposed increase in fees (refer to Exhibit A); and WHEREAS, the City of Needles has made significant strides in improving the quality of the golf course; and
WHEREAS, Phase 1 of the Irrigation Efficiency Project was completed in August 2024. This is the first step in making the golf course have an automated system, and involved putting in pop up heads around all greens and tee boxes controlled with valves, which provides better coverage; and WHEREAS, these improvements, along with the proposed fee adjustments, will enable the City of Needles to continue elevating the golf course experience for all players while ensuring we have the resources to maintain the course at a high standard.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Needles, California, hereby approves the new fee structure as show in Exhibit A.

PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council on the 12th day of August, 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Janet Jernigan, Mayor
ATTEST:

Candace Clark, City Clerk
APPROVED AS TO FORM:

Lena Wade, Deputy City Attorney
Agenda Item 2.

Annual Passes Walk/ride Walk/ride
Annual Pass /walk $1,100 $1,100
Annual Pass/cart $1,430 $1,430
Annual Pass/premium w range $1,650 $1,650
Daily Green Fees Walk/ride Walk/Ride
Daily--18 Holes $29/$45* $29/$42*
Daily--9 Holes $26/$29* $26/$29*
Daily Twilight (12 pm)--18 Holes $25/$38* $25/$35*
Daily Super Twilight (3 pm)--18 Holes $21/$25 $21/$25
Daily -- May 16 - Oct 31 -- 18 Holes Adjustable Adjustable Daily -- May 16 - Oct 31 -- 9 Holes Adjustable Adjustable Green Fee Kids Rate (10-18 yrs old)
Needles Students with ID walk only Free Free
Jr./Student 18 Holes $11.00 $8.00
Jr./Student 9 Holes $5 $5
Cart Rental
Golf Car Rental -- Per Person -- 18 Holes $13 $13
Golf Car Rental -- Per Person -- 9 Holes $7 $7
Range Fees
Pull Carts $5 $5
Driving Range -- Small $5 $5
Driving Range -- Large $9 $9
Annual Range Pass $300 $300
Club Rental $35 $25
Monthly Passes
Monthly with Cart, Range $330 $330
Montly Golf, Range $242 $242
Monthly Golf $220 $220
Trail Fee (use of private carts)
Trail Fee -- Monthly $80.00 $80.00
City Resident Discount Card
Needle Resident Rate 9 Holes $18/$24 w/cart $18/$24 w/cart Needle Resident Rate 18 Holes $25/$35 w/cart $25/$35 w/cart Corporate Rate (50 Plus Employees)

EXHIBIT A
Golf Course Fee Structure 2025-26
Fee Type 2024/25
Fee Increase from 2025 Adopted Golf Course Fee Structure in Yellow Proposed
Agenda Item 2.

Market Comparison
Golf Course Daily Green Fees
These Rates indicate “Local Rate” for Tri-State Residents  Laughlin Ranch Golf Club - $109
 Mojave Resort Golf Club - $69
 Huukan Golf Club - $59
 El Rio Golf Course - $55
 Los Lagos Golf Club - $59
 Rivers Edge Golf Course *$42
(Currently)
*Proposing to increase to $45 in 2025-26
Season
Agenda Item 2.

City of Needles, California
Request for Commission Action
CITY COUNCIL PLANNING COMMISSION Regular Special
MEETING DATE: August 6, 2025
TITLE: Planning Commission Resolution No. 08-06-2025-PC Recommending City Council Approval Tentative Parcel Map (TPM) 20989 to Subdivide 2.54 Gross Acres into three (3) Parcels, in Needles at 193 Morgan Drive, within the TwoFamily Residential (R-2) Land Use Zoning Designation; APN 0650-318-08-0000 APPLICANT: Wade Phillips, 301 Schulz Road, Needles, CA 92363 LOCATION: The project site is located at 193 Morgan Drive, Needles Ca 92363 (APN 0650- 318-08-0000).

BACKGROUND: The applicant, Wade Phillips, is requesting approval of Tentative Parcel Map (TPM) 20989 to subdivide an existing 2.54-gross-acre vacant property into three (3) individual parcels. The subject property is located at 193 Morgan Drive and is within the Two-Family Residential (R-2) land use zoning designation.

The proposed subdivision has been reviewed and found to be consistent with the goals, objectives, and policies of the City of Needles General Plan. The proposed lot layout, configuration, and access comply with the applicable development standards of the R-2 zoning district. Specifically, the subdivision meets or exceeds the minimum requirements for parcel area (3,000 square feet), parcel width, and parcel depth for each of the three proposed parcels.

The subdivision design represents a logical and orderly progression of development and will allow for future residential uses consistent with the zoning designation. The subject property is currently vacant, and no physical development is proposed as part of this tentative map. The design and configuration of the lots are not likely to cause substantial environmental damage, and no variances or exceptions are requested.

The proposed subdivision has been reviewed by all applicable City departments, including Engineering, Utilities, Fire, and Building & Safety. No concerns were raised regarding potential impacts to public health, safety, or welfare. The proposed parcel map is not expected to result in serious public health or safety problems and meets all applicable requirements for infrastructure access and service availability.

Staff recommends approval of Tentative Parcel Map (TPM) 20989 based on the project's consistency with the General Plan, compliance with zoning and subdivision regulations, and exemption from CEQA under Section 15061(b)(3). The project represents an orderly and appropriate division of land within an existing residential area and does not raise concerns regarding environmental or public health impacts.

TENTATIVE PARCEL MAP (TPM) APPROVAL: In accordance with Section 19-8, the Planning Commission must make the following findings to recommend approval of a tentative map:

1. The tentative map may be approved or conditionally approved by the approving body if it finds that the proposed subdivision, together with the provisions for its design and improvement, is consistent with the general plan, any applicable specific plan, and all applicable provisions of this code.

PUBLIC NOTIFICATION: A public hearing notice was published in the Needles Desert Star on Wednesday, July 23, 2025, and posted in two conspicuous locations. Notices were sent to property owners within 300' of the proposed project site.

ENVIRONMENTAL: The project qualifies for exemption under CEQA Guidelines Section 15061(b)(3), known as the “common sense” exemption, as it can be seen with certainty that the activity will not have a significant effect on the environment. The subject property is vacant, the subdivision complies with applicable development standards, and no physical development or grading is proposed at this time.

Agenda Item 3.
2 RECOMMENDATION: Approval of Planning Commission Resolution No. 08-06-2025-PC recommending City Council approval of a Tentative Parcel Map (TPM) 20989 to subdivide 2.54 gross acres into three (3) parcels, in Needles at 193 Morgan Drive, within the Two-Family Residential (R-2) land use zoning designation; APN 0650-318-08-0000
SUBMITTED BY: Irene Romero, City Planner
ATTACHMENTS:

1. Project Vicinity Map

2. Planning Commission Resolution, Findings, and Conditions of Approval

3. Approved Tentative Parcel Map

4. Tentative Parcel Map Application

City Manager Approval: Date:

Other Department Approval (when required): Date:

Approved: Not Approved: Tabled: Other:
8/1/2025
Agenda Item 3.

ATTACHMENT NO. 1

VICINITY MAP
DATE: August 12, 2025
PROJECT: TENTATIVE PARCEL MAP (TPM) 20989 TO
SUBDIVIDE 2.54 GROSS ACRES INTO
THREE (3) PARCELS, IN NEEDLES AT 193

MORGAN DRIVE, WITHIN THE TWO-FAMILY
RESIDENTIAL (R-2) LAND USE ZONING
DESIGNATION; APN 0650-318-08-0000
NORTH

CITY OF NEEDLES PLANNING DEPARTMENT

PROJECT SITE
Agenda Item 3.

ATTACHMENT NO. 2

RESOLUTION NO 2025-35

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEEDLES, APPROVING TENTATIVE PARCEL MAP (TPM) 20989 TO SUBDIVIDE 2.54 GROSS ACRES INTO THREE (3) PARCELS LOCATED AT 193 MORGAN DRIVE, WITHIN THE TWO-FAMILY RESIDENTIAL (R-2) ZONING DISTRICT, ALSO IDENTIFIED AS ASSESSOR’S PARCEL NUMBER (APN) 0650-318-08-0000
WHEREAS, the City Council wishes to assist property owners in their efforts to build in the City in a reasonable manner that does not create a hazard to health, safety, and welfare or degrade property values or create incompatibility with surrounding uses; and WHEREAS, the applicant, Wade Phillips, has submitted an application for Tentative Parcel Map (TPM) 20989 to subdivide 2.54 gross acres of vacant land into three (3) parcels located at 193 Morgan Drive, APN 0650-318-08-0000, within the Two-Family Residential (R-2) zoning district; and WHEREAS, the proposed subdivision is consistent with the General Plan and the development standards of the R-2 zoning designation, including minimum parcel size, parcel width, and depth; and
WHEREAS, the project was reviewed by all applicable City departments, and no concerns were raised regarding infrastructure availability or public health and safety impacts; and WHEREAS, a public hearing notice for the August 12, 2025 City Council meeting was published in the Needles Desert Star on July 23, 2025, at least 10 days prior to said meeting, and notices were sent to property owners within a 300-foot radius of the subject property specifying the date, time and location of the public hearing; and
WHEREAS, on August 6, 2025, the Needles Planning Commission held a duly noticed and advertised public hearing to receive oral and written testimony relative to RESOLUTION NO. 08-06- 2025-PC and was commended for approval unanimously; and WHEREAS, the Needles City Council has sufficiently considered all testimony and any documentary evidence presented to them in order to make the following determination.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Needles as follows:

SECTION 1. The City Council HEREBY FINDS AND DETERMINES that Tentative Parcel Map 20989 is exempt from environmental review pursuant to CEQA Guidelines Section 15061(b)(3), as the subdivision of the vacant land will not result in physical development at this time and does not have the potential to result in significant environmental impacts. Therefore, the proposed project qualifies for this exemption and no further environmental review is required.

SECTION 2. The City Council HEREBY FINDS AND DETERMINES, with reports and findings, that facts do exist to approve RESOLUTION 2025-35, subject to conditions, according to the criteria specified in Chapter 19 of the Needles Municipal Code:

A. The proposed subdivision is consistent with the Needles General Plan.

FINDING: The proposed subdivision has been reviewed and found to be consistent with the goals, objectives, and policies of the City of Needles General Plan. The proposed lot layout, configuration, and access comply with the applicable development standards of the R-2 zoning district.

Specifically, the subdivision meets or exceeds the minimum requirements for parcel area (3,000 square feet), parcel width, and parcel depth for each of the three proposed parcels.

B. The site is physically suitable for the development contemplated.

FINDING: The subdivision design represents a logical and orderly progression of development and will allow for future residential uses consistent with the zoning designation. The subject Agenda Item 3.

ATTACHMENT NO. 2

property is currently vacant, and no physical development is proposed as part of this tentative map.

The design and configuration of the lots are not likely to cause substantial environmental damage, and no variances or exceptions are requested.

C. The design of the subdivision or the proposed improvements will not cause substantial environmental damages.

FINDING: The subdivision design represents a logical and orderly progression of development and will allow for future residential uses consistent with the zoning designation. The subject property is currently vacant, and no physical development is proposed as part of this tentative map.

The design and configuration of the lots are not likely to cause substantial environmental damage, and no variances or exceptions are requested.

Pursuant to the California Environmental Quality Act (CEQA), the project qualifies for an exemption under Section 15061(b)(3), also known as the “common sense” exemption, as it can be seen with certainty that the project will not have a significant effect on the environment. The proposed action involves only the subdivision of land and does not authorize development or grading at this time.

D. The design of the subdivision or type of improvements will not cause serious public health problems.

FINDING: The proposed subdivision has been reviewed by all applicable City departments, including Public Works, Fire, and Building & Safety. No concerns were raised regarding potential impacts to public health, safety, or welfare. The proposed parcel map is not expected to result in serious public health or safety problems and meets all applicable requirements for infrastructure access and service availability.

SECTION 3. The City Council HEREBY FINDS AND DETERMINES that facts do exist to approve RESOLUTION 2025-35.

SECTION 4. The City Council HEREBY APPROVES RESOLUTION 2025-35, approving of a Tentative Parcel Map (TPM) 20989 to subdivide 2.54 gross acres of vacant land into three (3) parcels, within the Two-Family Residential (R-2) zoning district also known as APN 0650-318-08-0000, subject to conditions stated herein below:

General Conditions:

1. This approval shall expire 36 months from the date of approval unless the final parcel map is recorded or an extension is granted.

2. The applicant shall defend, indemnify, and hold harmless the City of Needles, its agents, officers, and employees from any claim or legal action related to this approval.

3. The final parcel map shall conform to the approved tentative map and comply with all provisions of the Subdivision Map Act and Needles Municipal Code.

Engineering and Public Works:

4. All required public utility easements shall be dedicated as determined by the City Engineer.

5. Any future development shall require submittal and approval of a grading and drainage plan.

6. Legal and physical access to each parcel must be provided via public right-of-way; driveway improvements shall be constructed to City standards.

7. A soils or geotechnical report may be required prior to development or grading permit issuance.

8. Compliance with stormwater and Low Impact Development (LID) standards shall be required for future development.

Agenda Item 3.

ATTACHMENT NO. 2

9. Each parcel created by Tentative Parcel Map (TPM) 20989 shall be served by an individual, permitted, and functioning onsite wastewater treatment system (septic system), subject to review and approval by the City of Needles.

Planning Department:

10. Future development on the parcels must comply with the Two-Family (R-2) zoning district development standards.

11. Any new construction shall be subject to the City’s standard development review and permitting processes.

12. Any proposed change to the approved Tentative Parcel Map and/or the conditions of approval shall require an additional application and submitted to Planning for review and approval.

13. Where circumstances cause delays, which do not permit compliance with the required recordation time limit, the developer may submit for review and approval application requesting an extension of time. Planning may grant such requests for extension of time in compliance with the State Map Act Section 66452.6. An extension of time may be granted upon a successful review of an Extension of Time application, which includes a justification of the delay in recordation, a plan of action for completion and submittal of the appropriate fee, not less than 30 days prior to the expiration date. The granting of an extension request is a discretionary action that may be subject to additional or revised conditions of approval.

San Bernardino County Fire Department:

14. Fire department access and adequate water supply (including hydrants) shall be provided in accordance with San Bernardino County Fire Department requirements.

15. Parcel known as APN 0650-318-08-0000 is under the jurisdiction of the San Bernardino County Fire Department herein “Fire Department”. Prior to any construction occurring on any parcel, the applicant shall contact the Fire Department for verification of current fire protection requirements.

All new construction shall comply with the current California Fire Code requirements and all applicable statutes, codes, ordinances, and standards of the Fire Department.

16. The required fire fees shall be paid to the San Bernardino County Fire Department/Community Safety Division.

17. Fire Condition Letters shall expire on the date determined by the Planning Division or Building and Safety.

18. The project applicant shall submit for review and approval a "Composite Development Plan" (CDP). The following statements shall be placed verbatim on the CDP. a) Fire Jurisdiction. This project is protected by the San Bernardino County Fire Department.

Prior to building permits being issued on any parcel, the applicant shall comply with the adopted California Fire Code requirements and all other applicable codes, ordinances, and standards of San Bernardino County and local Fire Department standards. b) Fire Requirements. Individual lot owners shall be required to provide their own fire protection measures as determined and approved by the Fire Department prior to any building permit issuance. Fire protection measures may include Fire Department approval of Individual fire protection water systems (e.g. fire flow) for each lot, Automatic fire sprinklers for all structures, Surfacing of access roads and driveways.

19. Any changes to this proposal shall require new Fire Department condition letter.

Miscellaneous:

20. The final parcel map shall be reviewed and approved by the City Engineer and recorded with the San Bernardino County Recorder.

Agenda Item 3.

ATTACHMENT NO. 2

21. New addresses and street names (if applicable) shall be coordinated with the City and County departments.

22. This approval does not authorize construction. All development must obtain the appropriate permits and entitlements.

SECTION 5. This action shall become final and effective fifteen (15) days after the decision by the CITY COUNCIL, unless within such period, a written appeal is filed with the City Clerk for consideration by the City Council as provided by the Needles City Code.

PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council of the City of Needles, California, held on the 12th day of August 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Janet Jernigan, Mayor

ATTEST:

Candace Clark, City Clerk
APPROVED AS TO FORM:

City Attorney
Agenda Item 3.

HOLIDAY
WAY

MUSTANG
LANE
PARCEL 1

0.67 ACRE
A DIVISION OF THE LOT 45 OF TRACT MAP NO. 7620 RECORDED IN BOOK 98, PAGES 70 - 76

OF THE OFFICIAL RECORDS OF THE COUNTY OF SAN BERNARDINO WITHIN THE NORTHWEST QUARTER OF SECTION 5,
TOWNSHIP 8 NORTH, RANGE 23 EAST, SAN BERNARDINO BASE AND MERIDIAN,

IN THE CITY OF NEEDLES, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA JULY, 2024
SURVEYOR'S NOTES:

INDICATES SET 1/2" REBAR CAP LS 6119

INDICATES FOUND MONUMENT AS NOTED

INDICATES CALCULATED POINT
(R) INDICATES RECORD DATA FROM TM 7620
(M) INDICATES MEASURED DATA
(C) INDICATES CALCULATED DATA

ELECTRIC BOX

WATER BOX
PROPERTY IS ZONED R-2
BASIS OF BEARING:

THE CENTER LINE OF HOLIDAY WAY AS SHOWN ON TRACT
MAP 7620 (MAP BOOK 98/70) BEING N00°00'00"E.

SHEET 1 OF 1 SHEETS
MORGAN
DRIVE
0650-318-17
ZONED R-2
0650-312-06
ZONED R-2
0650-312-07
ZONED R-2
0650-311-21
ZONED R-2
0650-318-07
ZONED R-2
0650-318-12
ZONED R-2
0650-311-19
ZONED R-2
TENTATIVE PARCEL MAP 20989
C1
C2
C3
C4
25' B.S.L. 25' B.S.L.
5' P.U.E.
5' P.U.E.
30' S.B.C.D.E. N57°11' 45" (M)
N89°56' 51"E (M&R)

81.00' (R) 81.31' (M) 70.00'

15.00'
PARCEL 2

0.68 ACRE
PARCEL 3

1.19 ACRE
10' P.U.E. 5' P.U.E.

IP
IP
IP
IP
HUB
IP
IP IP
IP
IP
NAIL
FLOW S. HWY 95 C( A) SCHULZ RD
E. ROAD
SPIKES W. SPIKES RD 1503
208
213 209 205 201
201
441
305 301 217

V ALUE INN
BEST
1102
1101 S. HWY 95 (CA) SAFARI DRIVE
1212
1204
1200
1205
1201 133 140 130 120
1100
1104
1101
1105 DRIVE
224
1201
233
215 1201
1205
213 211
1213
1209
1208
1212 163 153 190 180 170 160 150
1204
1200
1213
1209 5
1303
1243
1233
1223 TRAILERS
Y-95
1208 1225
1221
1217
1213 FARM
BEE
1213
1203 DISTRIB UTOR'S COLORADO HOILDAY WAY MORGAN DRIVE

VICTORY DRIVE MUSTANG LN
E. SPIKES ROAD

EASY STREET
1423
1413
1313
1301
220
211
230
233
153
111
1240
210
110 12 1
0 3
1 0
40 1245
1249
1253
1241
1237
1233
1229
1225
1221
1252
1244
1240
1236
1232
1228
1224
1220
1241
1237
1233
1229
1225
1221
1244
1240
1236
1232
1265
1261
1257
1253
1245
212 208 204 200
233
230 220
223 203 OFFICE
BLM
101
263
293 333
1212
1216
1226
1224
1213
1209
1207
1412 1413
308 304
1408
1404
1409
1405
251
254
246
243 RIVERVIEW LN

VICTORY DRIVE
1228
1224
1220
1241
1237
1233 DESERT STRE T CHER Y STREET SAFARI 1217
1216
1217
1216
1209
1208 1205 1200
"EAST BROADWA Y" FREE WAY ENTRANCE
S. HWY 95 (CA) S TREE T R.O.W. 223
231 SAFARI DRIVE
260
264
1400
210 OLD

PROJECT

VICINITY MAP
30' 30' 30' 30'
TENTATIVE PARCEL MAP 20989
LOT 45 OF TRACT MAP 7620 - APN 0650-318-08
OWNER/APPLICANT: WADE DUSTIN PHILLIPS AND
BROOKE NICOLE PHILLIPS - 760-221-8683
301 SCHULZ RD NEEDLES, CA 92363
PREPARED BY: JAMES MCCANN, PE, PLS - 956-433-1937
4 THORNHILL TR BROWNSVILLE, TX 78521
PREPARED JULY 2024, REVISED JUNE 2025

PARCEL MAP PROJECT WITH THREE NEW PARCELS

PROJECT IS FOR LOT SALES ONLY - NO STRUCTURES
UTILITIES:

ELECTRIC AND WATER - CITY OF NEEDLES
817 THIRD ST NEEDLES, CA 760-326-5700

SEWER - ON SITE SEPTIC BY OWNER

TELEPHONE/INTERNET - FRONTIER
911 BROADWAY NEEDLES, CA 855-392-5390
GAS - SOUTHWEST GAS 705 Langford DRIVE
BULLHEAD CITY, AZ 877- 860-6020
CABLE TV - GOLDEN VALLEY CABLE 760-326-4190
1058 EAST BROADWAY NEEDLES, CA
E E
E
E
W W
W W
E
W

W E E W
E
W
W
W
INSTALL SCH 40 PVC FOR ELEC PRIMARY
TAP EX WATER LINE WITH 1" POLY SERVICES
MINIMUM 1 FOOT BETWEEN UTILITIES
E
W E
______________________
JAMES MCCANN PLS 6119
EXP. DATE: 3/31/2026
JUNE 5, 2025
ATTACHMENT NO. 3 Agenda Item 3.
and Brooke Phillips
Agenda Item 3.

Agenda Item 3.

City of Needles, California
Request for City Council Action

CITY COUNCIL NPUA Regular Special
Meeting Date: August 12, 2025
Title: Approve the First Amendment to Non-Exclusive License Agreement for Joint Use of Poles between the City of Needles and Fort Mojave Telecommunications, Inc., authorizing additional attachments along Erin Drive, Washington Street, and Highland Avenue Background: In December 2024, the Board of Public Utilities and the City Council authorized a new joint pole agreement with the Fort Mojave Telecommunications Inc.

The Joint Pole Agreements allow the communications companies access to install communication services above ground rather than directly buried. The Joint Pole agreement is an agreement whereby each party has the right to attach to and occupy space on a power pole.

The original agreement allowed two connections. The first location is Eagle Pass Road, where the NPUA has two poles that cross BNSF tracks, and the second is on Needles Highway to cross a San Bernardino County flood control area.

Fort Mojave Telecommunications has requested additional attachments along Erin, Washington and Highland due to the trenching ordinance requirements on newly paved asphalt. Staff have reviewed the locations and have no objections to the additional attachments.

Fiscal Impact: Additional revenues for the Electric Department Environmental Impact: N/A
Recommended Action: Approve the First Amendment to the Non-Exclusive License Agreement for Joint Use of Poles between the City of Needles and Fort Mojave Telecommunications, Inc., authorizing additional attachments along Erin Drive, Washington Street, and Highland Avenue.

Submitted By: Rainie Torrance, Utility Manager
City Manager Approval: Date:

Other Department Approval (when required): Date:

Approved: Not Approved: Tabled: Other:
8/7/2025
Agenda Item 4.

FIRST AMENDMENT
TO

NON-EXCLUSIVE LICENSE AGREEMENT

FOR THE JOINT USE OF POLES

FIRST AMENDMENT TO NON-EXCLUSIVE LICENSE AGREEMENT FOR THE JOINT USE OF POLES (“Amendment”) is made and entered into as of July 23, 2025 (“Effective Date”), by and between Citizens Utilities Rural Company, a California corporation, doing business as Fort Mojave Telecommunications, Inc. hereinafter referred to as “Licensee”, and the City of Needles, a California charter city and the Needles Public Utility Authority, collectively hereinafter referred to as “City.” Licensee and City may be referred to individually as a “Party” and collectively as the “Parties.”

RECITALS
WHEREAS, the Parties entered into that certain Non-Exclusive License Agreement for Joint Use of Poles dated December 10, 2024 (“Agreement”); and
WHEREAS, pursuant to the Agreement, Licensee was granted a non-exclusive license to utilize certain Joint Use Poles owned by City, as photos of and identifier described in Exhibit "A" to the Agreement; and
WHEREAS, the Parties desire to amend the Agreement to add nine (9) additional Joint Use Poles to the scope of the Agreement; and
WHEREAS, Section 14.2 of the Agreement provides that any modification to the Agreement will be effective only if in writing and signed by both Parties.

NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, City and Licensee agree as follows:

1. Incorporation of Recitals. The Parties hereby agree that the recitals set forth in this Amendment are deemed incorporated into this Amendment and the Agreement by this reference.

2. Definitions. All capitalized terms used but not defined in this First Amendment shall have the meanings ascribed to them in the Agreement.

3. Amendment to Recital A. The Parties hereby agree that Recital A of the Agreement is hereby deleted in its entirety and replaced with the following:

Agenda Item 4.

A. The Licensee has requested approval from Needles Public Utility Authority ("NPUA") to utilize certain power poles across eleven (11) specific locations to expand the Licensee's service area within California jurisdiction, as follows: (i) Location One: Eagle Pass Road, where the NPUA has two (2) power poles; (ii) Location Two: Needles Highway, crossing a San Bernardino County flood control area; (iii) Location Three: NPUA identification number 4883N Highland; (iv) Location Four: NPUA identification number 4878N Dead end on Highland; (v) Location Five: NPUA identification number 4864N Highland; (vi) Location Six: NPUA identification number 4608N Erin Drive; (vii) Location Seven: NPUA identification number 4595N Erin Drive; (viii) Location Eight: Situated on Fremont & Highland (no NPUA identification number); (ix) Location Nine: NPUA identification number 2713N L-Street at Fremont & Highland; (x) Location Ten: NPUA identification number 4689N Washington & Bailey; and (xi) Location Eleven: NPUA identification number 4584N Washington & Bailey. Photographic documentation of each Joint Use Pole is attached hereto as Exhibit “A” (hereinafter "Joint Use Pole" or "Joint Use Poles") and incorporated herein by this reference.

4. Amendment to Recital B. The Parties hereby agree that Recital B of the Agreement is hereby deleted in its entirety and replaced with the following:

B. The Parties agree that this nonexclusive license Agreement only pertains to the Joint Use Poles depicted in Exhibit “A” as amended by the first Amendment to this Agreement executed on July 23, 2025; and

5. Amendment to Section 7.1. The Parties hereby agree that Section 7.1 of the Agreement is hereby deleted in its entirety and replaced with the following:

7.1 Pole Attachment Fee. The annual fee for calendar year 2025 shall be $7.78 per pole (“Annual Attachment Fee”). The Annual Attachment Fee shall be adjusted effective January 1 of each year. The amount of adjustment will be calculated by utilizing the National Consumer Price Index as follows: (i) the most recent published index number for the current year will be used as the fee adjuster to the next year’s Annual Attachment Fee, (ii) the percentage of change in the average index numbers will be applied to the current year’s Annual Attachment Fee, which will be effective January 1 of the next year, and (iii) the Annual Attachment Fee billing for the next year will be forwarded to Licensee by December 15 of each year.

Notwithstanding the foregoing, the Annual Attachment Fee will be adjusted in its entirety upon the successful completion of a rate study conducted by the City, in which case the findings of the study shall supersede the National Consumer Price Index. City has unilateral authority to determine the success of the rate study and the results will apply upon City’s sole determination.

Agenda Item 4.

6. Pole Attachment Fee. The Parties acknowledge and agree that the Annual Attachment Fee set forth in the Amended Section 7.1 above shall apply to each of the additional Joint Use Poles listed in Section 3 of this Amendment.

7. The Parties hereby agree that Exhibit “A” of the Agreement is hereby deleted in its entirety and replaced with Amended Exhibit “A” attached hereto this Amendment as Exhibit “A.”

8. All other terms of the Agreement not expressly amended by this Amendment shall remain in full force and effect.

9. This Amendment shall be governed by the laws of the State of California. Any legal action arising from or related to this Amendment shall be brought in the state or federal courts of the State of California in and for the County of San Bernardino.

IN WITNESS WHEREOF, the Parties hereby have made and executed this Amendment to be effective as of the day and year first above written.

CITY OF NEEDLES, CALIFORNIA FORT MOJAVE TELECOMMUNCIATIONS, INC.

By: _____________________ By: _____________________
Title: ____________________ Title: ____________________ Date: ____________________ Date: ____________________
ATTEST:
________________________
City Clerk
Approved As To Form:
_________________________
City Attorney
General Manager
July 25, 2025
Agenda Item 4.

EXHIBIT “A”
AMENDED EXHIBIT “A”
(JOINT USE POLES)
Agenda Item 4.

Location Three Location Four
Location Five Location Six
Agenda Item 4.

Location Seven Location Eight:

Location Nine Location Ten
Agenda Item 4.

Location Eleven:

Location Twelve:

Agenda Item 4.

Location Thirteen:

Location Fourteen:

Agenda Item 4.

Location Fifteen:

Agenda Item 4.


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City of Needles, California
Request for City Council Action