City of Pacific Grove
Capital Asset Statistics By Function
Last Ten Fiscal Years
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Function:
General Government
Number of buildings 1 1 1 1 1 1 11 1 1
Public Safety
Police stations 1 1 1 1 1 1 1 1 1 1
Fire stations 1 1 1 1 1 1 1 1 1 1
Public Works
Miles of paved streets 55 55 55 55 55 55 55 55 55 55
Street lights 699 699 699 699 699 699 699 699 699 699
Fleet Vehicles (Citywide) 123 121 121 93 95 95 95 90 119 119 Recreation
Parks 19 19 19 19 19 19 19 19 19 19
Playgrounds 4 4 4 4 4 4 4 4 4 4
Community centers / facilities 4 4 4 4 4 4 4 4 4 4
Swimming pools 1 1 1 1 1 1 1 1 1 1
Tennis courts 5 5 5 5 5 5 5 5 5 5
Other City Facilities
Library facilities 1 1 1 1 1 1 1 1 1 1
Museum facilities 1 1 1 1 1 1 1 1 1 1
Cemetery facilities 1 1 1 1 1 1 1 1 1 1
Historic lighthouse 1 1 1 1 1 1 1 1 1 1
Golf courses 1 1 1 1 1 1 1 1 1 1
Sewer
Miles of sanitary sewers 58 58 58 58 58 58 58 58 58 58
Number of storm drains 332 332 332 332 332 332 332 332 332 332 Source:City of Pacific Grove Departments
#
For Fiscal Year Ended June 30
208 PGCC 1-21-26
6 Hutton Centre Drive, Suite 1200
Santa Ana, California 92707
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 Independent Auditor’s Report
To the Honorable Mayor and Members of the City Council
of the City of Pacific Grove
Pacific Grove, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Pacific Grove, California (the “City”), as of and for the year ended June 30, 2025, and the related notes to the basic financial statements, which collectively comprise the City's basic financial statements and have issued our report thereon dated December 18, 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 City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.
PGCC 1-21-26
To the Honorable Mayor and Members of the City Council
of the City of Pacific Grove
Pacific Grove, California
210
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 determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Santa Ana, California
December 18, 2025
PGCC 1-21-26
City of Pacific Grove
Transportation Safety and Investment Plan
Account Fund
Pacific Grove, California
Independent Auditors Reports
and Financial Statements
For the Year Ended June 30, 2025
PGCC 1-21-26
City of Pacific Grove
Transportation Safety and Investment Plan Account Fund
For the Year Ended June 30, 2025
Table of Contents
Page
Independent Auditors Report .................................................................................................................................... 1 Financial Statements:
Balance Sheet ........................................................................................................................................................... 7 Statement of Revenues, Expenditures, and Change in Fund Balance ...................................................................... 8 Notes to the Financial Statements ............................................................................................................................ 9 Supplementary Information:
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual .................................. 15 Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Governmental Auditing Standards .............................................................. 17 Independent Auditors Report on Compliance with TAMC Ordinance No. 2019-01 for Transportation Safety and Investment Plan Fund; and
Report on Internal Control Over Compliance .................................................................................................. 19 Schedule of Findings and Questioned Costs .......................................................................................................... 22 PGCC 1-21-26
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PGCC 1-21-26
INDEPENDENT AUDITORS REPORT
To the Honorable Mayor and the Members of City Council
of the City of Pacific Grove
Pacific Grove, California
Report on the Audit of the Financial Statements
Opinion
We have audited the accompanying financial statements of the Transportation Safety and Investment Plan Account Fund (the Fund) of the City of Pacific Grove, California (the City), which comprise the balance sheet as of June 30, 2025 and the related statement of revenues, expenditures, and changes in fund balance for the year then ended, and the related notes to the financial statements, as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Fund as of June 30, 2025, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standard applicable to financial audits contained in Governmental Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of Matter
As discussed in Note 1, the financial statements present only the Fund and do not purport to, and do not, present fairly the financial position of the City, as of June 30, 2025, the changes in its financial position, or where applicable, its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, 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.
PGCC 1-21-26
To the Honorable Mayor and the Members of City Council
of the City of Pacific Grove
Pacific Grove, California
2 Auditors Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion.
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 Citys internal control. Accordingly, no such opinion is expressed. evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
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
Management has omitted Managements Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.
PGCC 1-21-26
To the Honorable Mayor and the Members of City Council
of the City of Pacific Grove
Pacific Grove, California
3 Supplementary Information
Our audit was conducted for the purpose forming an opinion on the financial statements of the Fund. The Supplementary Information, 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 Funds 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 financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 18, 2025, on our consideration of the Funds internal control over financial reporting and on our tests of its compliance with the requirements described in the Transportation Agency for Monterey Countys (TMAC) Ordinance No. 2016-01 and in the agreement between TMAC and the City. 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 Funds internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Funds internal control over financial reporting and compliance.
Santa Ana, California
December 18, 2025
PGCC 1-21-26
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PGCC 1-21-26
FINANCIAL STATEMENTS
5 PGCC 1-21-26
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6 PGCC 1-21-26
ASSETS
Cash and investments $ 842,182
Intergovernmental receivable 404,350
Due from other funds 90,431
Total assets $ 1,336,963
LIABILITIES,
AND FUND BALANCE
Liabilities:
Accounts payable $ 43,623
Total liabilities 43,623
Fund Balance:
Restricted 1,293,340
Total fund balance 1,293,340
Total liabilities, and fund balance $ 1,336,963
City of Pacific Grove
Transportation Safety and Investment Plan Account Fund
June 30, 2025
Balance Sheet
See accompanying Notes to the Financial Statements.
7 PGCC 1-21-26
REVENUES:
Sales and use tax $ 820,135
Investment earnings 35,921
Total revenues 856,056
EXPENDITURES:
Capital outlay 599,605
Total expenditures 599,605
NET CHANGE IN FUND BALANCE 256,451
FUND BALANCE:
Beginning of year 1,036,890
End of year $ 1,293,341
City of Pacific Grove
Transportation Safety and Investment Plan Account Fund
Statement of Revenues, Expenditures, and Change in Fund Balance For the Year Ended June 30, 2025
See accompanying Notes to the Financial Statements.
8 PGCC 1-21-26
City of Pacific Grove
Transportation Safety and Investment Plan Account Fund
Notes to the Financial Statements
For the Year Ended June 30, 2025
9 Note 1 Summary of Significant Accounting Policies
Basis of Accounting
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. The Transportation Safety and Investment Plan Account Fund (the Fund) of the City of Pacific Grove (the City) is a governmental fund type. Governmental funds are accounted for using a current financial resources measurement focus. The application of this measurement focus provides that, in general, only current assets and current liabilities are present on the balance sheet. Operating statements of these funds present revenues and expenditures.
The modified accrual basis of accounting is used for the Fund. Under the modified accrual basis of accounting, revenues are recognized when they become susceptible to accrual (i.e., both measurable and available). Measurable means that the amount of the transaction can be determined. Available means the funds are collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period.
Expenditures of governmental funds are generally recognized when the related fund liability is incurred.
Reporting Entity
The Transportation Safety and Investment Plan Account Fund from the Transportation Agency for Monterey County (TMAC) was approved on November 8, 2016. The revenue from the Measure X sales tax measure will be used to fund transportation safety and mobility projects in Monterey County. Expenditures are restricted to road improvements, pothole repairs, street and road maintenance, traffic deduction and regional safety, mobility and walkability.
The Fund financial statements and related accounting policies of the City conform with accounting principles generally accepted in the United States of America (US GAAP) applicable to governments in the United States of America. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles.
The financial statements present only the Fund of the City and do not purport to, and do not present, the Citys financial position and changes in financial position. The Citys basic financial statements are available from the Finance Department at Citys address and website.
A. Fund Balances
The Fund reports fund balance as nonspendable, restricted, committed, assigned, or unassigned based primarily on the extent to which the City is bound to honor constraints on how specific amounts can be spent. Fund balances are categorized as follows:
Restricted - This amount indicates the portion of fund balances which has been restricted; a) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments; b) imposed by law through constitutional provisions or enabling legislation.
The County Council establishes, modifies, or rescinds fund balance commitments and assignments by passage of an ordinance or resolution. This is done through adoption of the budget and subsequent budget amendments that occur throughout the year.
PGCC 1-21-26
City of Pacific Grove
Transportation Safety and Investment Plan Account Fund
Notes to the Financial Statements (Continued)
For the Year Ended June 30, 2025
10 Note 1 Summary of Significant Accounting Policies (Continued) A. Fund Balances (Continued)
When expenditures are incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) fund balances are available, the Citys policy is to first apply restricted fund balance. When expenditures are incurred for purposes for which committed, assigned, or unassigned fund balances are available, the Citys policy is to first apply committed fund balance, then assigned fund balance, and finally unassigned fund balance.
B. Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions. These estimates and assumptions affect certain reported amounts and disclosures. Accordingly, actual results could differ from these estimates and assumptions.
Note 2 Cash
The City follows the practice of pooling cash and investments for all funds (including the Fund) under its direct daily control. Interest earned on pooled cash and investments is allocated periodically to the various funds based on average cash balances. Detailed disclosure regarding the Citys cash and investment is included in the notes to Citys basic financial statements.
Highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost.
All other investments are stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available.
Interest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the period-end cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund.
Certain disclosure requirements, if applicable, for deposits and investment risks in the following areas:
Interest rate risk
Credit risk - Overall - Custodial credit risk - Concentration of credit risk Foreign currency risk
In addition, other disclosures are specified including use of certain methods to present deposits and investments, highly sensitive investments, credit quality at year-end and other disclosures.
PGCC 1-21-26
City of Pacific Grove
Transportation Safety and Investment Plan Account Fund
Notes to the Financial Statements (Continued)
For the Year Ended June 30, 2025
11 Note 3 Amounts Due to City
At June 30, 2025, the Fund owed $90,431 to the City for payment of a project using grant funds received from TAMC after the end of the fiscal year.
Note 4 Maintenance of Effort
The Measure X Master Programs Funding Agreement between the City and the TAMC as amended, requires that the City must expend each fiscal year from its General Fund for street and highway purposes an amount not less than the annual average of its expenditures from its General Fund during the 2009-10, 2010-11, and 2011-12 fiscal years, but not less than what was expended in 2016-17 (when Measure X passed), as reported to the Controller pursuant to Streets and Highways Code section 2151 (Maintenance of Effort). This baseline amount is indexed annually to the Engineering News Record construction index.
The following expenditures were made:
Fiscal year ended June 30:
2010 $ 326,756
2011 396,862
2012 720,604
Total $ 1,444,222
Three-year average $ 481,407
Fiscal year ended June 30, 2017 $ 912,274
Maintenance of effort baseline $ 912,274
Engineering News Record construction index FY 2019/20 1.37% Engineering News Record construction index FY 2020/21 1.27% Engineering News Record construction index FY 2021/22 2.05% Engineering News Record construction index FY 2022/23 7.34% Engineering News Record construction index FY 2023/24 4.93% Engineering News Record construction index FY 2024/25 2.58% Index-adjusted maintenance of effort requirement $ 1,104,188 Current year eligible expenditures $ 1,638,166
Compliant (Yes or No) Yes
Total expenditures from the General Fund for street and highway purposes for the fiscal year ended June 30, 2025 were $1,638,166 and consisted of salaries and construction costs. The City was in compliance with the Maintenance of Effort requirement of the Measure X Master Programs Funding Agreement between the City and the TAMC.
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SUPPLEMENTARY INFORMATION
13 PGCC 1-21-26
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14 PGCC 1-21-26
Variance with
Original Final Final Budget
Budget Budget Actual Over/(Under)
REVENUES:
Sales and use tax $ 828,000 $ 828,000 $ 820,135 $ (7,865) Investment earnings 12,000 12,000 35,921 23,921
Total Revenues 840,000 840,000 856,056 16,056
EXPENDITURES:
Capital outlay 930,000 1,757,037 599,605 1,157,432
NET CHANGE IN FUND BALANCE $ (90,000) $ (917,037) 256,451 $ 1,173,488 FUND BALANCE:
Beginning of year 1,036,890
End of year $ 1,293,341
City of Pacific Grove
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the Year Ended June 30, 2025
Transportation Safety and Investment Plan Account Fund
15 PGCC 1-21-26
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16 PGCC 1-21-26
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
Independent Auditors Report
To the Honorable Mayor and the Members of City Council
of the City of Pacific Grove
Pacific Grove, California
We have audited, in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the Transportation Safety and Investment Plan Account Fund (the Fund) of the City of Pacific Grove, California (the City), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the Funds financial statements, and have issued our report thereon dated December 18, 2025.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Funds internal control over financial reporting (the 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 Funds internal control. Accordingly, we do not express an opinion on the effectiveness of the Funds internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entitys financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.
PGCC 1-21-26
To the Honorable Mayor and the Members of City Council
of the City of Pacific Grove
Pacific Grove, California
18 Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Fund'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. Purpose of this Report The purpose of that report is solely to report our opinion on compliance and to describe the scope of our testing of internal control over financial reporting and the results of that testing, and not to provide an opinion on the effectiveness of the Funds internal control over financial reporting. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entitys internal control and compliance. This report is intended solely for the information and use of City Council, management of the Transportation Agency for Monterey County and for filing with the appropriate regulatory agencies and is not intended to be and should not be used by anyone other than these specified parties.
Santa Ana, California
December 18, 2025
PGCC 1-21-26
REPORT ON COMPLIANCE WITH TAMC ORDINANCE NO. 2019-01 TRANSPORTATION SAFETY AND INVESTMENT PLAN FUND; AND
REPORT ON INTERNAL CONTROL OVER COMPLIANCE
Independent Auditors Report
To the Honorable Mayor and the Members of City Council
of the City of Pacific Grove
City of Pacific Grove, California
Report on Compliance with TAMC Ordinance No. 2019-01 for Transportation Safety and Investment Plan Fund
Opinion
We have audited the City of Pacific Grove, Californias (the City) compliance with the types of compliance requirements described in Transportation Agencys for Monterey Countys (the TAMC) Ordinance No. 2019-01 and Measure X Master Programs Funding Agreement between TAMC and the City (the Agreement), for the year ended June 30, 2025.
In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on the Agreement for the year ended June 30, 2025.
Basis for Opinion
We conducted our audit of compliance in accordance with auditing standards accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of City and TAMC 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 the TAMC. Our audit does not provide a legal determination of the TAMCs compliance with the compliance requirements referred to above.
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.
PGCC 1-21-26
To the Honorable Mayor and the Members of City Council
of the City of Pacific Grove
Pacific Grove, California
20 Auditors Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the Citys 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 auditing standards generally accepted in the United States of America, Government Auditing Standards 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 Citys compliance with the requirements as a whole.
In performing an audit in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards, 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 Funds 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 Funds 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 Government Auditing Standards, but not for the purpose of expressing an opinion on the effectiveness of the Funds 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.
Report on Internal Control Over Compliance
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 compliance requirement on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a compliance requirement will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a compliance requirement that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Accordingly, we do not express an opinion on the effectiveness of the Citys internal control over compliance.
PGCC 1-21-26
To the Honorable Mayor and the Members of City Council
of the City of Pacific Grove
Pacific Grove, California
21 Our consideration of internal control over compliance was for the limited purpose described in the Auditors Responsibilities for the Audit of Compliance section 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. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies may exist that were not identified.
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.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing on internal control over compliance and the results of that testing based on the requirements of TAMC Ordinance No. 2019-01.
Accordingly, this report is not suitable for any other purpose.
Santa Ana, California
December 18, 2025
PGCC 1-21-26
City of Pacific Grove
Transportation Safety and Investment Plan Account Fund
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2025
22 Audit Findings and Questioned Costs
A. Current Year Findings and Questioned Costs
No current year findings were noted.
B. Prior Year Findings and Questioned Costs
No prior year findings were noted.
PGCC 1-21-26
City of Pacific Grove
Pacific Grove, California
Independent Accountant’s Report on
Agreed-Upon Procedures Applied to
Appropriations Limit Schedule
For the Year Ending June 30, 2026
PGCC 1-21-26
200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707
INDEPENDENT ACCOUNTANT’S REPORT ON
APPLYING AGREED-UPON PROCEDURES
To the Honorable Mayor and Members of City Council
of the City of Pacific Grove
Pacific Grove, California
We have performed the procedures enumerated below to the accompanying Appropriations Limit Schedule of the City of Pacific Grove, California (the “City”) for the year ending June 30, 2026. The City’s management is responsible for the Appropriations Limit Schedule.
The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of meeting the requirements set forth in Section 1.5 of Article XIII-B of the California Constitution. These procedures, which were suggested by the League of California Cities and presented in the publication entitled Agreedupon Procedures Applied to the Appropriations Limitation Prescribed by Article XIII-B of the California Constitution, were performed solely to assist you in meeting the requirements. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.
The procedures and associated findings are as follows:
1. We obtained the completed worksheets used by the City to calculate its appropriations limit for the year ending June 30, 2026, and compared the limit and annual calculation factors that were adopted by resolution of the City Council. We also compared that the population and inflation options included in the aforementioned worksheets were selected by a recorded vote of the City Council.
Finding: No exceptions were noted as a result of our procedures.
2. For the accompanying Appropriations Limit Schedule, we added the prior year’s limit to the total adjustments, and compared the resulting amount to the current year’s limit.
Finding: No exceptions were noted as a result of our procedures.
3. We compared the current year information presented in the accompanying Appropriations Limit Schedule to corresponding information in worksheets used by the City.
Finding: No exceptions were noted as a result of our procedures.
4. We compared the prior year appropriations limit presented in the accompanying Appropriations Limit Schedule to the appropriations limit adopted by the City Council for the prior year.
Finding: No exceptions were noted as a result of our procedures.
PGCC 1-21-26
To the Honorable Mayor and Members of City Council
of the City of Pacific Grove
Pacific Grove, California
2 We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an audit or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the accompanying Appropriations Limit Schedule. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.
We are required to be independent of the City, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.
This report is intended solely for the information and use of the City Council and management of the City and is not intended to be and should not be used by anyone other than those specified parties. However, this report is a matter of public record and its distribution is not limited.
Santa Ana, California
July 30, 2025
PGCC 1-21-26
City of Pacific Grove
Appropriations Limit Schedule
For the Year Ending June 30, 2026
See accompanying Notes to the Appropriations Limit Schedule. 3 Amount Source
A. Appropriations Limit from FY 2024-2025 $ 49,842,649
B. Adjustment Factors:
1. Growth in City Population 1.0015 State Department of Finance
2. California per Capita Personal Income Growth 1.0644 State Department of Finance
3. Adjustment Factor B1*B2 1.0660
C. Annual Adjustment Increase 3,289,446 A * (B3 - 1)
D. Other Adjustments:
1) Loss reponsibility (-) – N/A
2) Transfer to private (-) – N/A
3) Transfer to fees (-) – N/A
4) Assumed responsibility (-) – N/A
E. Total Adjustments 3,289,446 (C+D)
F. Appropriations Limit FY 2025-2026 $ 53,132,095 (A+E) Prior Year appropriations
limit adopted by the City
PGCC 1-21-26
City of Pacific Grove
Notes to the Appropriations Limit Schedule
For the Year Ending June 30, 2026
4 Note 1 – Purpose of Limited Procedures Review
Under Article XIII-B of the California Constitution (the Gann Spending Limitation Initiative), California governmental agencies are restricted as to the amount of annual appropriations from proceeds of taxes. Effective for years beginning on or after July 1, 1990, under Section 1.5 of Article XIII-B, the annual calculation of the appropriations limit is subject to a limited procedures review in connection with the annual audit.
Note 2 – Method of Calculation
Under Section 10.5 of Article XIIIB, for fiscal years beginning on or after July 1, 1990, the appropriations limit is required to be calculated based on the limit for the fiscal year 1986-87, adjusted for the inflation and population factors discussed in Notes 3 and 4 below.
Note 3 – Population Factors
A California governmental agency may use as its population factor either the annual percentage change of the jurisdiction’s own population or the annual percentage change in population of the county where the jurisdiction is located. The factor adopted by the City for the year ending June 30, 2026, represents the annual percentage change in population for the county.
Note 4 – Inflation Factors
A California governmental agency may use as its inflation factor either the annual percentage change in the 4th quarter per capita personal income (which percentage is supplied by the State Department of Finance) or the percentage change in the local assessment roll from the preceding year due to the change of local nonresidential construction. The factor adopted by the City for the year ending June 30, 2026, represents the percentage change in California per capita personal income.
Note 5 – Other Adjustments
A California government agency may be required to adjust its appropriations limit when certain events occur, such as the transfer of responsibility for municipal services to, or from, another government agency or private entity. The City had no such adjustments for the year ending June 30, 2026.
PGCC 1-21-26