Agenda packet, regular meeting — Patterson City Council, May 16, 2023 (part 4 of 4)

2 Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s basic 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.

The 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.

Walnut Creek, California
May 3, 2023

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Packet Pg. 767 Attachment: 2022_Patterson_Single Audit_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) 2121 North California Blvd., Suite 290
Walnut Creek, California 94596

REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM,

ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE

UNIFORM GUIDANCE, AND ON SCHEDULE OF EXPENDITURS OF FEDERAL AWARDS Independent Auditors’ Report
To the Honorable Mayor and Members of City Council
of the City of Patterson
Patterson, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited City of Patterson, 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, 2022. 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 types of 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, 2022.

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; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; 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 Auditors’ 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.

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.

7.1.b
Packet Pg. 768 Attachment: 2022_Patterson_Single Audit_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) To the Honorable Mayor and Members of City Council
of the City of Patterson
Patterson, California

Page 2 ends

4 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 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 generally accepted auditing standards, 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 auditing standards generally accepted in the United States of America, 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.

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 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. 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.

Our consideration of internal control over compliance was for the limited purpose described in the Auditors' 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. 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 in internal control over compliance may exist that were not identified.

7.1.b
Packet Pg. 769 Attachment: 2022_Patterson_Single Audit_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) To the Honorable Mayor and Members of City Council
of the City of Patterson
Patterson, California

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5 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 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.

Report on Schedule of Expenditures of Federal Awards
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, 2022, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon dated May 3, 2023, which contained unmodified opinions on those financial statements. Our audit was performed 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 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.

Walnut Creek, California
May 3, 2023

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Packet Pg. 771 Attachment: 2022_Patterson_Single Audit_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) City of Patterson
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2022
See accompanying Notes to the Schedule of Expenditures of Federal Awards. 7 Assistance Grant
Federal Grantor/Passed through Grantor Listing Identification Federal Program Title Number Number Expenditures
U.S. Department of Transportation:

Highway Planning and Construction Cluster:

Passed Through State of California Department of Transportation:

Las Palmas Overlay 20.205 STPL-5244 (039) 192,715 $
Rogers Road DMC Bridge 20.205 BRLS-5244 (032) 24,503
Total Highway Planning and Construction Cluster 217,218 Total U.S. Department of Transportation 217,218
U.S. Department of Treasury:

Direct Program:

Coronavirus State and Local Fiscal Recovery Funds 21.027 NEU - CA0198 614,352 Passed through the State of California:

California Water and Wastewater Arrearage Payment Program 21.027 CA5010017 83,927 Total Coronavirus State and Local Fiscal Recovery Funds 698,279 Total U.S. Department of Treasury 698,279
Total Expenditures of Federal Awards $ 915,497

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Packet Pg. 772 Attachment: 2022_Patterson_Single Audit_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) 8 This page intentionally left blank.

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Packet Pg. 773 Attachment: 2022_Patterson_Single Audit_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) City of Patterson
Notes to the Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2022
9 Note 1 – Reporting Entity
The financial reporting entity consists of the primary government, City of Patterson (the “City”), organizations for which the primary government is financially accountable, and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete.

Note 2 – Basis of Accounting
The various grant programs have been recorded within the general fund and special revenue funds of the City. The City utilizes the modified accrual method of accounting for the general fund and special revenue funds. The accompanying Schedule of Expenditures of Federal Awards (“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). Therefore, some amounts presented in the schedule may differ from amounts presented in, or used in, the preparation of the City’s basic financial statements.

Note 3 – Schedule of Expenditures of Federal Awards
The accompanying Schedule presents the activity of all federal financial assistance programs of the City Federal financial assistance received directly from federal agencies as well as federal financial assistance passed through the State of California is included in the Schedule. The Schedule was prepared from only the accounts of various grant programs and, therefore, does not present the financial position, change in fund balance, or results of operations of the City.

Note 4 – Subrecipients
During the fiscal year ended June 30, 2022, there were no amounts provided to subrecipients.

Note 5 – Indirect Cost Rate
The City has not elected to use the 10-percent de minimis indirect rate as allowed under the Uniform Guidance.

7.1.b
Packet Pg. 774 Attachment: 2022_Patterson_Single Audit_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) City of Patterson
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2022
10 Section I – Summary of Auditors’ Results
Financial Statements
Type of report the auditors issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified Internal control over financial reporting:
 Material weakness(es) identified? No
 Significant deficiency(ies) identified? 2022-001
Noncompliance material to financial statements noted? No Federal Awards
Internal control over major programs:
 Material weakness(es) identified? No
 Significant deficiency(ies) identified? None Reported Type of auditors’ report issued on compliance for major programs Unmodified Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? No
Identification of major programs:

Assistance Listing Federal
Number Name of Federal Program or Cluster Expenditures

21.027 Coronavirus State and Local Fiscal Recovery Funds 698,279 $ Total major program expenditures $ 698,279
Total expenditures of federal awards $ 915,497
Percent of total federal award expenditures 76.27%
Dollar threshold used to distinguish between type A and type B programs $750,000 Auditee qualified as low-risk auditee in accordance with 2 CFR 200.520? Yes

7.1.b
Packet Pg. 775 Attachment: 2022_Patterson_Single Audit_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) City of Patterson
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
11 Section II – Financial Statements Findings
A. Current Year Findings and Questioned Costs – Financial Statement Audit Finding 2022-001 Delay in Financial Reporting
Criteria:

Management is responsible for providing timely and accurate financial information. Since the City has expended over $750,000 of expenditures of federal awards, Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award (Uniform Guidance), states the City is required to submit the Data Collection Form and the reporting package to the Federal Audit Clearinghouse and the State Controller’s Office, which includes the Single Audit Report of the City, within the earlier of 30 days after receipt of auditors' report, or nine month after the end of the audit period.

Condition:

The City has experienced delays in the issuance of the 2022 Single Audit required under Uniform Guidance.

Cause:

Due to changes in accounting staff and significant unforeseen workload impacts the Finance Department had difficulty handling the day-to-day operations and perform year-end closing procedures and the required external reporting functions simultaneously in order to provide timely financial statements (including the Single Audit Report).

Effect:

Delays in processing year-end closing procedures caused the financial statements release to be delayed. In addition, the City is neither in compliance with Uniform Guidance nor is it meeting its current demands for external financial reporting.

Repeat Finding:

No.

Recommendation:

Finance Department should look at increasing the amount of experienced finance staff to help facilitate year-end closing processes and the preparation of its basic financial statements (including the Single Audit Report). Because the basic financial statements (including the Single Audit Report) are the responsibility of the City, it is in its own best interest to closely monitor the accounting process to ensure that financial position and operating results are accurately and timely reported. The following steps could be used to avoid future delays:
 Assign additional qualified accounting personnel to help process complex transactions;  Identify critical due dates and develop a listing of assignment, including department coordinated items, based on available resources to meet those due dates;
 Hold periodic meetings to monitor the progress of assignments and responsibilities; and  Conduct management review of financial statements and audit schedules prior to presenting them to the auditors.

7.1.b
Packet Pg. 776 Attachment: 2022_Patterson_Single Audit_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) City of Patterson
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
12 Section II – Financial Statements Findings (Continued) A. Current Year Findings and Questioned Costs – Financial Statement Audit (Continued) Management’s View and Corrective Action Plan:

City management concurs with the auditor’s comments and recommendations. The primary cause of delay in financial reporting was due to accounting staff vacancies during the FY 2022 audit period. The Lead Accountant left in January of 2022 and only other two Accountants on staff left the City in May and September 2022. In addition to those vacancies, the Finance Director left in September of 2022. The City hired an Accounting Manager and Finance Director in February 2023, and the two vacant Accountant positions were filled in March 2023. Now that these key positions are filled, the Finance Director will implement scheduled reconciliations, review, and analysis of financial activity to prevent future delays in the year end closing processes and financial reporting.

B. Prior Year Findings and Questioned Costs – Financial Statement Audit No findings or questioned costs were noted on the City’s major federal programs for the year ended June 30, 2021.

Section III – Federal Award Findings
A. Current Year Findings and Questioned Costs – Major Federal Award Program Audit No findings or questioned costs were noted on the City’s major federal programs for the year ended June 30, 2022.

B. Prior Year Findings and Questioned Costs – Major Federal Award Program Audit No findings or questioned costs were noted on the City’s major federal programs for the year ended June 30, 2021.

7.1.b
Packet Pg. 777 Attachment: 2022_Patterson_Single Audit_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) City of Patterson
Transportation Development Act Fund
Patterson, California
Independent Auditors’ Reports
and Financial Statements
For the Year Ended June 30, 2022

7.1.c
Packet Pg. 778 Attachment: 2022_Patterson_TDA_FINAL Report (Accept the City of Patterson's Financial Reports for FY 2021-22) City of Patterson
Transportation Development Act Fund
For the Year Ended June 30, 2022
Table of Contents
Page
Independent Auditors’ Report on Financial Statements .......................................................................................... 1 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards, and With the Statutes, Rules and Regulations of the California Transportation Development Act ..................................................... 5 Financial Statements:

Balance Sheet ........................................................................................................................................................... 9 Statement of Revenues, Expenditures, and Change in Fund Balance .................................................................... 10 Notes to the Financial Statements............................................................................................................................. 15

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Packet Pg. 780 Attachment: 2022_Patterson_TDA_FINAL Report (Accept the City of Patterson's Financial Reports for FY 2021-22) 2121 North California Blvd., Suite 290
Walnut Creek, California 94596
INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members of the City Council
of the City of Patterson
Patterson, California
Report on the Audit of the Financial Statements
Opinion
We have audited the accompanying balance sheet of the Transportation Development Act Fund (the “TDA Fund”) of the City of Patterson, California (the “City”) as of June 30, 2022 and the related statement of revenues, expenditures, and change in fund balance for the year then ended, and the related notes to the financial statements.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of TDA Fund as of June 30, 2022, 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, and 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 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 audits. 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 TDA Fund of the City and do not purport to, and do not present fairly the financial position of the City as of June 30, 2022, and change in its financial position 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 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 TDA Fund’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.

7.1.c
Packet Pg. 781 Attachment: 2022_Patterson_TDA_FINAL Report (Accept the City of Patterson's Financial Reports for FY 2021-22) 2 To the Honorable Mayor and Members of the City Council of the City of Patterson
Patterson, California

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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 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 auditing standards generally accepted in the United States of America 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 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 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 TDA Fund’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the TDA Fund’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
Management has omitted the Management’s Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the financial statements. Such missing information, although not a part of the financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the financial statements in an appropriate operational, economic, or historical context. Our opinion on the financial statements is not affected by this missing information.

7.1.c
Packet Pg. 782 Attachment: 2022_Patterson_TDA_FINAL Report (Accept the City of Patterson's Financial Reports for FY 2021-22) To the Honorable Mayor and Members of the City Council
of the City of Patterson
Patterson, California

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3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards and the Transportation Development Act, we have also issued our report dated May 3, 2023, on our consideration of the TDA Fund’s internal control over financial reporting and on our tests of its compliance with the statutes, rules, and regulations of the California Transportation Development Act.

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

Walnut Creek, California
May 3, 2023

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Packet Pg. 784 Attachment: 2022_Patterson_TDA_FINAL Report (Accept the City of Patterson's Financial Reports for FY 2021-22) 2121 North California Blvd., Suite 290
Walnut Creek, California 94596

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, AND WITH THE STATUTES, RULES

AND REGULATIONS OF THE CALIFORNIA TRANSPORTATION DEVELOPMENT ACT Independent Auditors’ Report
To the Honorable Mayor and Members of the City Council
of the City of Patterson
Patterson, 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 Transportation Development Act Fund (the “TDA Fund”) of the City of Patterson, California (the “City”), as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the TDA Fund’s basic financial statements and have issued our report thereon dated May 3, 2023.

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 TDA Fund 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.

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 and therefore, material weaknesses or significant deficiencies may exist that have not been identified.

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 have not been identified.

7.1.c
Packet Pg. 785 Attachment: 2022_Patterson_TDA_FINAL Report (Accept the City of Patterson's Financial Reports for FY 2021-22) To the Honorable Mayor and Members of the City Council
of the City of Patterson
Patterson, California

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6 Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s Transportation Development Act Fund financial statements are free from material misstatement, we performed tests of its compliance with the applicable statutes, rules and regulations of the Transportation Development Act and the allocation instructions and resolutions of the Stanislaus Council of Governments as required by Sections 6666 of Title 21, Division 3, Chapter 2, Article 5.5 of the California Code of Regulations, noncompliance with which could have a direct and material effect on the determination of 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 or the Transportation Development Act.

As part of obtaining reasonable assurance about whether the TDA 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 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 one instance of noncompliance or other matters that are required to be reported under Government Auditing Standards.

In connection with our audit referred to above, we also performed an audit for compliance with the Transportation Development Act, the California Code of Regulations, and the rules and regulations and allocation instructions of the Stanislaus Council of Governments, for the year ended June 30, 2022. In connection with our audit, we performed to the extent applicable, the compliance audit tasks set forth in Section 6666 of the Rules and Regulations of the California Administrative Code in the Transportation Development Act Statutes and Administrative Code for 1987 (the “Act”) and the allocation instructions and resolutions of the Stanislaus Council of Governments applicable to the City’s Transportation Development Act Fund (the “TDA Fund”). The results of performing the tasks specified above disclosed one instance of noncompliance with the applicable statutes, rules, and regulations of the Act, and the allocation instructions and resolutions of the Stanislaus Council of Governments. In our opinion, the funds allocated to and received by the TDA Fund for the year ended June 30, 2022, pursuant to the Transportation Development Act, were accounted for and expended in conformance with the Transportation Development Act, the California Code of Regulations, and the rules and regulations and allocation instructions of the Stanislaus Council of Governments.

Finding 2022-001 - Late Submission of Certified Fiscal Audit Criteria:

Pursuant to the Stanislaus Council of Governments TDA Guidebook for the Transportation Development Act:
“Certified Fiscal Audit -The TDA statute requires that all claimants submit a certified fiscal audit annually to their regional transportation planning agency and to the State Controller within 180 days after the end of the fiscal year. The fiscal report must include the audited amounts for the prior fiscal year.” Condition:

The City has experienced significant delays in the preparation and issuance of 2022 financial statements and completion of their annual fiscal audit required under the Transportation Development Act.

Effect:

The City is not in compliance with the requirements of the Transportation Development Act.

Recommendation:

The City’s Finance Department should develop standard operating procedures to facilitate monthly and year-end closing processes and the preparation of its financial statements.

7.1.c
Packet Pg. 786 Attachment: 2022_Patterson_TDA_FINAL Report (Accept the City of Patterson's Financial Reports for FY 2021-22) To the Honorable Mayor and Members of the City Council
of the City of Patterson
Patterson, California

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7 Finding 2022-001 - Late Submission of Certified Fiscal Audit (Continued) Management’s Response:

The City concurs with this finding. The Finance staff continues to improve its annual work plan and to focus on staff training in order to accelerate the publication of its annual financial statements.

City’s Response to the Findings
City’s response to the findings identified in our audit is described previously. City’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

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 to express an opinion on the compliance of the TDA Fund with the Transportation Development Act, the California Code of Regulations, and the rules and regulations and allocation instructions of the Stanislaus Council of Governments, and not to provide an opinion on the effectiveness of the TDA Fund’s internal control or on other compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the TDA Fund’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Walnut Creek, California
May 3, 2023

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Packet Pg. 788 Attachment: 2022_Patterson_TDA_FINAL Report (Accept the City of Patterson's Financial Reports for FY 2021-22) LTF
Transportation
ASSETS
Cash and investments $ 309,750
Intergovernmental receivable 585
Interest receivable 134
Total assets $ 310,469

LIABILITIES AND FUND BALANCE
LIABILITIES:

Accounts payable $ 114
Unearned revenue 309,470
Total liabilities 309,584
FUND BALANCE:

Unrestricted 885
Total fund balance 885
Total liabilities and fund balance $ 310,469
City of Patterson
Transportation Development Act Fund
Balance Sheet
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 9 7.1.c
Packet Pg. 789 Attachment: 2022_Patterson_TDA_FINAL Report (Accept the City of Patterson's Financial Reports for FY 2021-22) LTF
Transportation
REVENUES:

Streets - SB325 $ 40,365
Interest 541
Miscellaneous 585
Total revenues 41,491
EXPENDITURES:

Public works 114
Total expenditures 114
Net change in fund balance 41,377
FUND BALANCE (DEFICIT):

Beginning of year (40,492)
End of year $ 885
City of Patterson
Transportation Development Act Fund
Statement of Revenues, Expenditures, and Change in Fund Balance For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 10 7.1.c
Packet Pg. 790 Attachment: 2022_Patterson_TDA_FINAL Report (Accept the City of Patterson's Financial Reports for FY 2021-22) 11 NOTES TO THE FINANCIAL STATEMENTS

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Packet Pg. 792 Attachment: 2022_Patterson_TDA_FINAL Report (Accept the City of Patterson's Financial Reports for FY 2021-22) City of Patterson
Transportation Development Act Fund
Index to the Notes to the Financial Statements
For the Year Ended June 30, 2022
13 Note 1 – Summary of Significant Accounting Policies ............................................................................................. 15 A. The Reporting Entity .................................................................................................................................. 15 B. Fund Accounting......................................................................................................................................... 15 C. Basis of Accounting and Measurement Focus ............................................................................................ 15 D. Cash and Investments ................................................................................................................................. 15 E. Fund Balance .............................................................................................................................................. 15 F. Use of Estimates ......................................................................................................................................... 16 Note 2 – Cash and Investments ................................................................................................................................... 16 Note 3 – Unearned Revenue ........................................................................................................................................ 16 Note 4 – Transportation Development Act Compliance Requirements .................................................................. 16 Note 5 – Restrictions ..................................................................................................................................................... 16

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Packet Pg. 794 Attachment: 2022_Patterson_TDA_FINAL Report (Accept the City of Patterson's Financial Reports for FY 2021-22) City of Patterson
Transportation Development Act Fund
Notes to the Financial Statements
For the Year Ended June 30, 2022
15 Note 1 – Summary of Significant Accounting Policies
The accompanying financial statements are prepared from the accounts and financial transactions of the Transportation Development Act Fund (“TDA Fund”) of the City of Patterson, California (the “City”) and have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Governmental Accounting Standards Board (“GASB”) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies applicable to the TDA Fund are described below.

A. The Reporting Entity
The City operates under a Council-Manager form of government and provides the following services as authorized: public safety (police, fire and civil defense), highway and streets, sanitation, health and social services, culture-recreation, education, public improvements, planning and zoning, and general administrative services. The City also provides water, garbage, and sewer service. It is governed by an elected five member council.

The financial statements of the TDA Fund are intended to present the financial position and changes in financial position of only those transactions attributable to the TDA Fund administered and disbursed by the City.

B. Fund Accounting
In accordance with Section 99400 (a) and (c) of the Transportation Development Act, monies are reported in the TDA Fund. The monies of the TDA Fund are the City’s share of the Transportation Development Act allocations that are legally restricted for specific purposes. The operation of this fund is accounted for as a “Special Revenue Fund” in a separate set of self-balancing accounts that comprise its assets, liabilities, fund balance, revenues, and expenditures.

C. Basis of Accounting and Measurement Focus
The TDA Fund’s financial statements include a balance sheet and a statement of revenues, expenditures and changes in fund balances. This fund is accounted for on a spending or “current financial resources” measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the balance sheet. The statement of revenues, expenditures and change in fund balance presents increases (revenue and other financing sources) and decreases (expenditures and other financing uses) in fund balance. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. The City defines available to be within 60 days.

D. Cash and Investments
The Transportation Development Act Fund’s cash is pooled with the City’s internal investment pool. Cash equivalents are reported as cash and are considered to be cash on hand, demand deposits, and short-term investments with original maturity of three months or less from the date of acquisition.

E. Fund Balance
The City reports fund balance for governmental funds in specific classifications (nonspendable, restricted, committed, assigned, and unassigned), which creates a hierarchy primarily based on the extent to which the City is bound to the constraints on the specific purpose for which funds can be spent. The TDA fund only receives restricted revenues, therefore any remaining fund balance is restricted by nature of the revenue received.

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Packet Pg. 795 Attachment: 2022_Patterson_TDA_FINAL Report (Accept the City of Patterson's Financial Reports for FY 2021-22) City of Patterson
Transportation Development Act Fund
Notes to the Financial Statements (Continued)
For the Year Ended June 30, 2022
16 Note 1 – Summary of Significant Accounting Policies (Continued) F. Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosure. Accordingly, actual results could differ from those estimates.

Note 2 – Cash and Investments
The TDA Fund’s share of the City’s cash and investments at June 30, 2022 was $309,750.

Cash is deposited in the City’s internal investment pool, which is reported at fair value. The TDA Fund do not own specifically identifiable securities in the City’s pool. Interest income is allocated based on average cash balances.

Investment policies and associates risk factors applicable to the TDA Fund are those of the City and are included in the City’s basic financial statements.

Note 3 – Unearned Revenue
As of June 30, 2022, the balance of $309,470 is unearned revenue and consists of unspent funds of $297,142 of FY2016 Congestion Mitigation and Air Quality (CMAQ) Improvement funding and $12,328 of FY2015 NonMotorized Sidewalks funding.

Note 4 – Transportation Development Act Compliance Requirements Allocations and disbursements of the State Transit Assistance Fund and the Local Transportation Fund are made by the Stanislaus Council of Governments. Such allocations and disbursements are in accordance with written allocation instructions conveyed by the Stanislaus Council of Governments, the Transportation Development Act, and Section 6753 of the California Administrative Code.

Pursuant to Section 6750 (e) of the California Administrative Code, the Local Transportation Fund shall not be commingled with the State Transit Assistance Fund, or with any other revenues or funds of the regional entity, county, or operator. The Local Transportation Fund is maintained as a separate fund of the City.

Note 5 – Restrictions
Funds received pursuant to TDA Article 3 may only be used for pedestrian and bicycle projects.

Funds received pursuant to TDA Article 8e may only be used to pay for capital expenses incurred while contracting for transit services with profit making or non-profit companies for public transportation services as described in TDA Article 8e.

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Packet Pg. 796 Attachment: 2022_Patterson_TDA_FINAL Report (Accept the City of Patterson's Financial Reports for FY 2021-22) City of Patterson
Abandoned Vehicle Abatement Program
Patterson, California
Independent Auditors’ Reports
and Financial Statements
For the Year Ended June 30, 2022

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Packet Pg. 797 Attachment: 2022_Patterson_AVA_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) City of Patterson
Abandoned Vehicle Abatement Program
For the Year Ended June 30, 2022
Table of Contents
Page
Independent Auditors’ Report on Financial Statements .......................................................................................... 1 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards and the Abandoned Vehicle Abatement Program Handbook ........................................................................... 3 Financial Statements:

Statement of Revenues, Expenditures, and Changes in Fund Balances ................................................................... 7 Notes to the Financial Statements ............................................................................................................................. 11

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Packet Pg. 799 Attachment: 2022_Patterson_AVA_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) 2121 North California Blvd., Suite 290
Walnut Creek, California 94596
INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members of the City Council
of the City of Patterson
Patterson, California
Report on the Audit of the Financial Statements
Opinion
We have audited the accompanying Statement of Revenues, Expenditures and Changes in Fund Balance (the “Statement”) of the Abandoned Vehicle Abatement Program (the “Program”) of the City of Patterson, California (the “City”) as of and for the year ended June 30, 2022, and the related notes to the financial statement, as listed in the table of contents.

In our opinion, the Statement referred to above presents fairly, in all material respects, the revenues, expenditures and changes in fund balance of the program for the year ended June 30, 2022 in conformity 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, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and certain provisions of the Abandoned Vehicle Abatement Program Handbook (AVA Program Handbook), issued by the California Highway Patrol. 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 Program, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. 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 described in Note 1, the Statement is intended to present only the results of operations of the Program of the City.

It does not purport to, and does not, present fairly the financial position of the City as of June 30, 2022, and change in fund balance 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.

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 Program’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

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Packet Pg. 800 Attachment: 2022_Patterson_AVA_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) 2 To the Honorable Mayor and Members of the City Council of the City of Patterson
Patterson, California

Page 2 ends

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 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 Program’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Program’s ability to continue as a going concern for a reasonable period of time.

Other Reporting Required by Government Auditing Standards and the AVA Program Handbook In accordance with Government Auditing Standards and the AVA Program Handbook, we have also issued our report dated May 3, 2023, on our consideration of the Program’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and the AVA Program Handbook in considering the Program’s internal control over financial reporting and compliance.

Walnut Creek, California
May 3, 2023

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Packet Pg. 801 Attachment: 2022_Patterson_AVA_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) 2121 North California Blvd., Suite 290
Walnut Creek, California 94596

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 AND

THE ABANDONED VEHICLE ABATEMENT PROGRAM HANDBOOK
Independent Auditors’ Report
To the Honorable Mayor and Members of the City Council
of the City of Patterson
Patterson, California
We have audited, in accordance with the 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, and certain provisions of the Abandoned Vehicle Abatement Program Handbook (AVA Program Handbook), the financial statement of the Abandoned Vehicle Abatement Program (the “Program”) of the City of Patterson, California (the “City”), for the year ended June 30 2022, and the related notes to the financial statement, and have issued our report thereon dated May 3, 2023.

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

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Packet Pg. 802 Attachment: 2022_Patterson_AVA_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) To the Honorable Mayor and Members of the City Council
of the City of Patterson
Patterson, California

Page 2 ends

4 Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Program’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 or the AVA Program Handbook.

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

Walnut Creek, California
May 3, 2023

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Packet Pg. 803 Attachment: 2022_Patterson_AVA_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) FINANCIAL STATEMENTS 5

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Packet Pg. 805 Attachment: 2022_Patterson_AVA_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) REVENUES:

Registration fees $ 21,095
Total revenues 21,095
EXPENDITURES:

Personnel 17,184
Services and supplies 3,889
Total expenditures 21,073
Net change in fund balance 22
FUND BALANCE:

Beginning of year 33,721
End of year $ 33,743
City of Patterson
Abandoned Vehicle Abatement Program
Statement of Revenues, Expenditures, and Changes in Fund Balances For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statement. 7 7.1.d
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Packet Pg. 807 Attachment: 2022_Patterson_AVA_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) 9 NOTES TO THE FINANCIAL STATEMENT

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Packet Pg. 809 Attachment: 2022_Patterson_AVA_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) City of Patterson
Abandoned Vehicle Abatement Program
Notes to the Financial Statement
For the Year Ended June 30, 2022
11 Note 1 – Summary of Significant Accounting Policies
The Statement of Revenues, Expenditures and Change in Fund Balance (the “Statement”) of the Abandoned Vehicle Abatement Program (the “Program”) of the City of Patterson, California (the “City), have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as applied to governmental agencies. The Governmental Accounting Standards Board (“GASB”) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the Program’s accounting policies are described below.

A. The Reporting Entity
The Abandoned Vehicle Abatement Program is a statewide program administered by the California Highway Patrol (CHP). The City administers and operates the local vehicle abatement program pursuant to Section 22710 of the Vehicle Code, Patterson Municipal City Code Section 10.24.010 et seq., and the Stanislaus Council of Governments (StanCOG) Abandoned Vehicle Program and Plan. Section 9250.7 of the Vehicle code establishes the funding source for the abatement of abandoned vehicles by a county-based Service Authority (the “Authority”), pursuant to the provisions of Section 22710 of the Vehicle Code. The Vehicle Code imposes a service fee of one dollar ($1) on vehicles registered to an owner with an address in the county that establishes the Authority. This fee is paid to the Department of Motor Vehicles (DMV) at the time of registration or renewal of registration. The DMV, after deducting its administrative costs, at least quarterly transmits the net amount collected to the State Controller’s Office (SCO) for deposit in the Abandoned Vehicle Trust Fund. All money in the fund is continuously appropriated to the SCO for allocation to an Authority that has an approved Program, and for payment of the administrative costs of the SCO. StanCOG, the Authority, distributes Program funds to participating entities based on the allocation determined in the Vehicle Abatement Services Agreement.

The Statement is intended to present the results of operations, and those program revenues and expenditures of the Program that are accounted for within the General Fund of the City. They are not intended to present the financial position or results of operations of the City as a whole.

B. Basis of Accounting and Measurement Focus
Basis of accounting refers to when revenues and expenditures/expenses are recognized in the accounts and reported in the financial statements.

Governmental funds are accounted for using the modified accrual basis of accounting and "current financial resources" measurement focus. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Revenues are recognized in the accounting period in which they become measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The Program’s accrual period is generally 60 days after fiscal year end. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred.

C. Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates.

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Packet Pg. 811 Attachment: 2022_Patterson_AVA_FINAL Report_ (Accept the City of Patterson's Financial Reports for FY 2021-22) 2121 North California Blvd., Suite 290
Walnut Creek, California 94596
May 3, 2023
To the Honorable Mayor and Members of the City Council
of the City of Patterson
Patterson, California
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 Patterson, California (the “City”) for the year ended June 30, 2022. Professional standards require that we provide you with information about our responsibilities under auditing standards generally accepted in the United States of America, and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated May 1, 2022. Professional standards also require that we communicate the following information related to our audit.

Qualitative Aspects of Accounting Practices
Accounting Policies
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the basic financial statements. Other than those standards described below that were implement in the fiscal year ended June 30, 2022, no new accounting policies were adopted nor was the application of existing policies changed:

GASB Statement No. 87
In June 2017, GASB issued Statement No. 87, Leases (GASB Statement No. 87), to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It also establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Implementation of this Statement had a significant effect on the City’s financial statements for the year ended June 30, 2022.

GASB Statement No. 92
In January 2020, GASB issued Statement No. 92, Omnibus 2020. The primary objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve consistency of authoritative literature by addressing practice issues that have been identified during implementation and application of certain GASB Statements. Application of this statement did not have a material effect on the City’s financial statements for the fiscal year ending June 30, 2022.

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Packet Pg. 812 Attachment: 2022_Patterson_AC-U Communication at Conclusion Letter_FINAL (Accept the City of Patterson's Financial Reports for FY 2021- To the Honorable Mayor and Members of the City Council
of the City of Patterson
Patterson, California

Page 2 ends

GASB Statement No. 93
In March 2020, GASB issued Statement No. 93, Replacement of Interbank Offered Rates. Some governments have entered into agreements in which variable payments made or received depend on an interbank offered rate (IBOR)— most notably, the London Interbank Offered Rate (LIBOR). As a result of global reference rate reform, LIBOR is expected to cease to exist in its current form at the end of 2021, prompting governments to amend or replace financial instruments for the purpose of replacing LIBOR with other reference rates, by either changing the reference rate or adding or changing fallback provisions related to the reference rate. The objective of this Statement is to address those and other accounting and financial reporting implications that result from the replacement of an IBOR.

Application of this statement did not have a material effect on the City’s financial statements for the fiscal year ending June 30, 2022.

GASB Statement No. 97
In June 2020, GASB issued Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans – An Amendment of GASB Statements No. 14 and No. 84, and a Supersession of GASB Statement No. 32. The primary objectives of this Statement are to (1) increase consistency and comparability related to the reporting of fiduciary component units in circumstances in which a potential component unit does not have a governing board and the primary government performs the duties that a governing board typically would perform; (2) mitigate costs associated with the reporting of certain defined contribution pension plans, defined contribution other postemployment benefit (OPEB) plans, and employee benefit plans other than pension plans or OPEB plans (other employee benefit plans) as fiduciary component units in fiduciary fund financial statements; and (3) enhance the relevance, consistency, and comparability of the accounting and financial reporting for Internal Revenue Code (IRC) Section 457 deferred compensation plans (Section 457 plans) that meet the definition of a pension plan and for benefits provided through those plans. Application of this statement did not have a material effect on the City’s financial statements for the fiscal year ending June 30, 2022.

We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.

Accounting Estimates
Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements were:
 Management’s estimate of the fair value of investments is based on information provided by the State of California, U.S. Treasury, and financial institutions. We agreed the fair value factor used in determining that it is reasonable in relation to the financial statements as a whole.  Management’s estimate of the depreciation on capital assets is based on the industry standard and past experience on actual useful life of the asset groups. We evaluated the key factors and assumptions used to develop the depreciation on capital assets in determining that it is reasonable in relation to the financial statements taken as a whole.

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Packet Pg. 813 Attachment: 2022_Patterson_AC-U Communication at Conclusion Letter_FINAL (Accept the City of Patterson's Financial Reports for FY 2021- To the Honorable Mayor and Members of the City Council
of the City of Patterson
Patterson, California

Page 3 ends

 Management’s estimate of the net Pension and Other Post Employment Benefit (OPEB) liabilities is based on the most recent actuarial valuations performed by the CalPERS actuary and independent actuaries, and the total pension/OPEB liability and fiduciary net position for the CalPERS plans based on audited financial statements. 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.

As part of our audit, we evaluated the key factors and assumptions used to develop the accounting estimates described above and in determining that it is reasonable in relation to the financial statements taken as a whole.

Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users.

The most sensitive disclosures affecting the financial statements were:

Note 1 – Summary of Significant Accounting Policies
Note 3 – Lease Receivable
Note 13 – Pension Plans
Note 14 – Other Postemployment Benefits
Note 16 – Other Required Disclosures
Note 19 – Commitments and Contingencies
The financial statement disclosures are neutral, consistent, and clear.

Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.

Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. There were no misstatements identified during our audit that management had to correct and none of the misstatements detected as a result of audit procedures were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole.

Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report.

We are pleased to report that no such disagreements arose during the course of our audit.

Management Representations
We have requested certain representations from management that are communicated to us in the management representation letter dated May 3, 2023.

Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the governmental unit’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts.

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Packet Pg. 814 Attachment: 2022_Patterson_AC-U Communication at Conclusion Letter_FINAL (Accept the City of Patterson's Financial Reports for FY 2021- To the Honorable Mayor and Members of the City Council
of the City of Patterson
Patterson, California

Page 4 ends

Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the governmental unit’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

Other Information in Documents Containing Audited Financial Statements We applied certain limited procedures to the Management’s Discussion and Analysis, Budgetary Comparison Schedules, Schedules of the Proportionate Share of the Net Pension Liability and Related Ratios, and the Schedules of Contributions for Pension, Schedule of Changes in Total OPEB Liability and Related Ratios, which are Required Supplementary Information (“RSI”) that supplement the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI.

We were engaged to report on the Combining and Individual Non-major Fund Financial Statements and the Budgetary Comparison Schedules, as listed in the table of contents, which accompany the financial statements but are not RSI.

With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.

We were not engaged to report on the Introductory and the Statistical Sections, which accompany the financial statements but are not RSI. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

Restriction on Use
This information is intended solely for the use of the City Council and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties.

Very truly yours,
Walnut Creek, California

7.1.e
Packet Pg. 815 Attachment: 2022_Patterson_AC-U Communication at Conclusion Letter_FINAL (Accept the City of Patterson's Financial Reports for FY 2021- TO:

FROM:

BY:

PATTERSON PUBLIC FINANCING AUTHORITY

AGENDA REPORT
Chair Clauzel and Members of the Patterson Public Financing Authority Ken Irwin, Executive Director
Jennifer Riedeman, Finance Director
MEETING DATE: May 16, 2023
ITEM NO: 7.2
SUBJECT: Accept the Patterson Public Financing Authority’s 2021-22 Financial Audit Report.

RECOMMENDATION
Motion to Accept the Patterson Public Financing Authority’s 2021-22 Financial Audit Report.

BACKGROUND
The Patterson Public Financing Authority publishes financial statements presented in conformance with Generally Accepted Accounting Principles (GAAP). The financial statement was audited by the independent public accounting firm of The Pun Group, LLP, whose unmodified opinion is included within the financial section of the report. The unmodified opinion indicates that the financial statements present fairly the financial position of the Patterson Public Financing Authority as of June 30, 2022, and the results of operations, in accordance with generally accepted accounting principles.

As part of the audit, The Pun Group, LLP also reviewed and performed tests of the Authority’s internal accounting control procedures to determine if there are any material weaknesses or instances of non-compliance. Based on the audit, there is no instance of non-compliance.

The Patterson Public Financing Authority’s 2021-22 financial report is available on the City of Patterson’s website and is attached to this staff report.

Representative of The Pun Group, LLP will be present to discuss the audit and answer questions.

ANALYSIS
The Government-wide Net position in the Authority’s totaled a deficit of $2.4 million as of June

7.2 Packet Pg. 816
30, 2022, which changed $2,741 from the ending balance in the prior fiscal year.

The governmental fund balance in the Authority’s totaled approximately $60.6 million as of June 30, 2022, which was $2.3 million less than the ending balance in the prior fiscal year.

The difference between Government-wide Net position and governmental fund balance is the long-term liabilities are not due and payable in the current period and the interest payable on long-term debt does not require current financial resources and therefore are not reported in the governmental funds.

FISCAL IMPACT
Acceptance of this report does not affect the Authority’s budget or its financial condition. The report merely reflects an audit of the Authority’s financial records at June 30, 2022.

7.2 Packet Pg. 817
Patterson Public
Financing Authority
(A Component Unit of the City of Patterson)
Patterson, California
Basic Financial Statements
and Independent Auditors' Report
For the Year Ended June 30, 2022

7.2.a
Packet Pg. 818 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) Patterson Public Financing Authority
(A Component Unit of the City of Patterson)
Basic Financial Statements
For the Year Ended June 30, 2022
Table of Contents
Page

FINANCIAL SECTION
Independent Auditors’ Report on Financial Statements ......................................................................................... 1 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ........................................................................ 5 Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position ............................................................................................................................... 11 Statement of Activities ................................................................................................................................... 12 Fund Financial Statements:

Governmental Fund Financial Statements:

Balance Sheet ................................................................................................................................................. 17 Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position ............................................................................... 18 Statement of Revenues, Expenditures and Changes in Fund Balances .......................................................... 19 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Position .............................................................................. 20 Notes to the Basic Financial Statements .................................................................................................................. 25 Required Supplementary Information (Unaudited):

Budgetary Information ................................................................................................................................... 37 Budgetary Comparison Schedule:

PPFA 2013 Heartland Ranch Revenue Bonds ......................................................................................... 38 PPFA 2013 Authority Bonds ................................................................................................................... 39

7.2.a
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7.2.a
Packet Pg. 820 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) 2121 North California Blvd., Suite 290
Walnut Creek, California 94596
Independent Auditors’ Report
To the Board of Directors
of the Patterson Public Financing Authority
Patterson, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities and each major fund of the Patterson Public Financing Authority (the “Authority”) , a component unit of the City of Patterson, California (the “City”), as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the Authority’s basic 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 respective financial position of the governmental activities, and each major fund of the Authority, as of June 30, 2022, 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 Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. 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 audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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 Authority’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.

7.2.a
Packet Pg. 821 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) To the Board of Directors
of the Patterson Public Financing Authority
Patterson, California

Page 2 ends

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 opinions.

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 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 Authority’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Authority’s ability to continue as a going concern for a reasonable period of time.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Budgetary Comparison Schedules, as listed in the accompanying table of contents, be presented to supplement the basic financial statements.

Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

7.2.a
Packet Pg. 822 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) To the Board of Directors
of the Patterson Public Financing Authority
Patterson, California

Page 3 ends

3 Management has omitted the management’s 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.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 3, 2023, on our consideration of the Authority’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 Authority’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority’s internal control over financial reporting and compliance.

Walnut Creek, California
May 3, 2023

7.2.a
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7.2.a
Packet Pg. 824 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) 2121 North California Blvd., Suite 290
Walnut Creek, California 94596

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 Board of Directors
of the Patterson Public Financing Authority
Patterson, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund of the Patterson Public Financing Authority (the “Authority”), a component unit of the City of Patterson, California (the “City”), as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise Authority’s basic financial statements, as listed in the table of contents, and have issued our report thereon dated May 3, 2023.

Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Authority’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 statement, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Authority’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 Authority’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.

7.2.a
Packet Pg. 825 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) To the Board of Directors
of the Patterson Public Financing Authority
Patterson, California

Page 2 ends

6 Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Authority’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.

This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Walnut Creek, California
May 3, 2023

7.2.a
Packet Pg. 826 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) BASIC FINANCIAL STATEMENTS 7

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7.2.a
Packet Pg. 828 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report)

GOVERNMENT-WIDE FINANCIAL STATEMENTS
9 7.2.a
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10 7.2.a
Packet Pg. 830 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) Governmental
Activities
ASSETS
Current assets:

Cash and investments $ 317,283
Interest receivable 220
Total current assets 317,503
Noncurrent assets:

Restricted cash and investments 1,112,191
Investments held in trust 60,552,790
Total noncurrent assets 61,664,981
Total assets 61,982,484

LIABILITIES
Current liabilities:

Accrued interest payable 1,230,995
Due to City of Patterson 1,320,163
Due within one year:

Long-term debt 2,392,628
Total current liabilities 4,943,786
Noncurrent liabilities:

Due in more than one year:

Long-term debt 59,463,452
Total noncurrent liabilities 59,463,452
Total liabilities 64,407,238

NET POSITION (DEFICIT)
Unrestricted (deficit) (2,424,754)
Total net position (deficit) $ (2,424,754)
(A Component Unit of the City of Patterson)
Patterson Public Financing Authority
Statement of Net Position
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 11 7.2.a
Packet Pg. 831 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) Net (Expense)
Revenue and
Changes in
Net Position
Governmental
Functions/Programs Expenses Activities
Governmental activities:

Interest and fiscal charges $ (4,100,402) 4,100,402 $
Total governmental activities (4,100,402) 4,100,402
Total primary government $ (4,100,402) 4,100,402
General revenues and contributions:

Intergovernmental revenue 518,052
Investment earnings 3,771,959
Capital contributions to the City's Custodial Fund (192,350) Total general revenues and contributions 4,097,661
Changes in net position (2,741)
Net Position (Deficit):

Beginning of year (2,422,013)
End of year $ (2,424,754)
For the Year Ended June 30, 2022
Patterson Public Financing Authority
Statement of Activities
(A Component Unit of the City of Patterson)
See accompanying Notes to the Basic Financial Statements. 12 7.2.a
Packet Pg. 832 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report)

FUND FINANCIAL STATEMENTS
13 7.2.a
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14 7.2.a
Packet Pg. 834 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report)

GOVERNMENTAL FUND FINANCIAL STATEMENTS
15 7.2.a
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16 7.2.a
Packet Pg. 836 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) PPFA 2013 PPFA Total
Heartland Ranch 2013 Authority Governmental
Revenue Bonds Bonds Funds
ASSETS
Cash and investments 317,283 $ - $ 317,283 $
Cash and investments with fiscal agents - 1,112,191 1,112,191 Investments held in trust 1,745,011 58,807,779 60,552,790 Interest receivable - 220 220
Total assets $ 59,919,970 2,062,514 $ 61,982,484 $

LIABILITIES AND FUND BALANCES
LIABILITIES:

Due to City of Patterson - $ 1,320,163 $ 1,320,163 $
Total liabilities 1,320,163 - 1,320,163

FUND BALANCES
Restricted for debt service 2,062,514 58,599,807 60,662,321 Total Fund Balances 58,599,807 2,062,514 60,662,321
Total Liabilities and Fund Balances $ 59,919,970 2,062,514 $ 61,982,484 $ Patterson Public Financing Authority
Balance Sheet
Governmental Funds
June 30, 2022
(A Component Unit of the City of Patterson)
See accompanying Notes to the Basic Financial Statements. 17 7.2.a
Packet Pg. 837 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) Total fund balances of governmental funds $ 60,662,321
Amounts reported for governmental activities in the Statement of Net Position are different because:

Interest payable on long-term debt does not require current financial resources. Therefore, interest payable is not reported as a liability in the Governmental Funds Balance Sheet. (1,230,995) Long-term liabilities are not due and payable in the current period and therefore are not reported in the Governmental Funds Balance Sheet.

Long-term debt (61,856,080)
Net position (deficit) of governmental activities $ (2,424,754) Patterson Public Financing Authority
Reconciliation of the Governmental Funds
Balance Sheet to the Government-Wide Statement of Net Position June 30, 2022
(A Component Unit of the City of Patterson)
See accompanying Notes to the Basic Financial Statements. 18 7.2.a
Packet Pg. 838 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) PPFA 2013 PPFA Total
Heartland Ranch 2013 Authority Governmental
Revenue Bonds Bonds Funds
REVENUES:

Intergovernmental revenue 518,052 $ - $ 518,052 $
Interest 3,651,692 120,267 3,771,959
Total revenues 3,651,692 638,319 4,290,011
EXPENDITURES:

Contribution to City's Custodial Fund - 192,350 192,350 Debt service:

Principal 2,015,000 443,630 2,458,630
Interest and fiscal charges 595,271 3,430,713 4,025,984 Total expenditures 5,638,063 1,038,901 6,676,964

REVENUES OVER (UNDER)
EXPENDITURES (1,986,371) (400,582) (2,386,953)
Net change in fund balances (1,986,371) (400,582) (2,386,953) FUND BALANCES:

Beginning of year 2,463,096 60,586,178 63,049,274
End of year $ 58,599,807 2,062,514 $ 60,662,321 $
Patterson Public Financing Authority
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
For the Year Ended June 30, 2022
(A Component Unit of the City of Patterson)
See accompanying Notes to the Basic Financial Statements. 19 7.2.a
Packet Pg. 839 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) Net change in fund balances - total governmental funds: $ (2,386,953) Amounts reported for governmental activities in the Statement of Activities are different because:

Repayment of long-term liabilities was an expenditures in governmental funds, but the repayment reduced long-term liabilities in the Government-Wide Statement of Net Position Principal payment of long-term debt 2,458,630
Amortization of bond discount (28,446)
Interest expenses on long-term debt was reported in the Government-Wide Statement of Activities, but it did not require the use of current financial resources. This amount represented the changes in accrued interest from prior year (45,972) Change in net position of governmental activities $ (2,741) Patterson Public Financing Authority
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Position For the Year Ended June 30, 2022
(A Component Unit of the City of Patterson)
See accompanying Notes to the Basic Financial Statements. 20 7.2.a
Packet Pg. 840 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) 21 NOTES TO THE BASIC FINANCIAL STATEMENTS

7.2.a
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7.2.a
Packet Pg. 842 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) Patterson Public Financing Authority
(A Component Unit of the City of Patterson)
Index to the Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
23 Note 1 – Summary of Significant Accounting Policies ............................................................................................. 25 A. Financial Reporting Entity .......................................................................................................................... 25 B. Basis of Accounting and Measurement Focus ............................................................................................ 25 C. Cash and Investments ................................................................................................................................. 26 D. Restricted Cash and Investments ................................................................................................................ 27 E. Long-Term Debt ......................................................................................................................................... 27 F. Net Position ................................................................................................................................................ 27 G. Fund Balances ............................................................................................................................................. 28 H. Use of Estimates ......................................................................................................................................... 28 Note 2 – Cash and Investments .................................................................................................................................. 28 A. Cash Deposits ............................................................................................................................................. 29 B. Investments ................................................................................................................................................. 30 C. Risk Disclosures ......................................................................................................................................... 31 Note 3 – Due to City of Patterson ............................................................................................................................... 32 Note 4 – Long-Term Obligations................................................................................................................................. 32 A. Governmental Activities ............................................................................................................................. 32 Note 5 – Other Required Disclosures .......................................................................................................................... 34 A. Unrestricted Net Position (Deficit) ............................................................................................................. 34 Note 6 – Contributions to City’s Custodial Fund ...................................................................................................... 34

7.2.a
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7.2.a
Packet Pg. 844 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) Patterson Public Financing Authority
(A Component Unit of the City of Patterson)
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
25 Note 1 – Summary of Significant Accounting Policies
The basic financial statements of the Patterson Public Financing Authority (the “Authority” or “PPFA”), a component unit of the City of Patterson, California (the “City”), have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as applied to governmental agencies. The Governmental Accounting Standards Board (“GASB”) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the Authority’s accounting policies are described below.

A. Financial Reporting Entity
The Authority was formed in 2001 pursuant to a joint exercise of powers agreement between the City and the former Redevelopment Agency of the City. The Authority is authorized to borrow money for the purpose of financing the acquisition of bonds, notes, and other obligations of, or for the purpose of making loans to, public entities, including the Authority and to provide financing for public capital improvements for lease to public entities, including the Authority. The members of the City Council also sit as the Board of Directors of the Authority.

B. Basis of Accounting and Measurement Focus
Fund Accounting
The accounts of the Authority are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses as appropriate. Government resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled.

Government–Wide Financial Statements
The Authority’s government-wide financial statements include a statement of net position and a statement of activities. These statements present summaries of governmental activities for the Authority.

These financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the Authority’s assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying statement of net position. The statement of activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred.

Certain eliminations have been made in regards to interfund activities, payables and receivables. All internal balances in the statement of net position have been eliminated.

7.2.a
Packet Pg. 845 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) Patterson Public Financing Authority
(A Component Unit of the City of Patterson)
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
26 Note 1 – Summary of Significant Accounting Policies (Continued) B. Basis of Accounting and Measurement Focus (Continued) Governmental Fund Financial Statements
Governmental fund financial statements include a balance sheet and a statement of revenues, expenditures and changes in fund balances for all major governmental funds. An accompanying schedule is presented to reconcile and explain the differences in net position as presented in these statements to the net position presented in the government-wide financial statements. The Authority has presented all major funds that met the applicable criteria.

All governmental funds are accounted for on a spending or “current financial resources” measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the balance sheet. The statement of revenues, expenditures and changes in fund balances present increases (revenue and other financing sources) and decreases (expenditures and other financing uses) in fund balances.

Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period.

The primary revenue sources, which have been treated as susceptible to accrual by the Authority is interest income. Certain indirect costs are included in program expenses reported for individual functions and activities.

Expenditures are recorded in the accounting period in which the related fund liability is incurred.

The reconciliation of the fund financial statements to the government-wide financial statements is provided to explain the differences.

Governmental funds of the Authority are outlined below:

PPFA 2013 Heartland Ranch Revenue Bonds – This debt service fund is used to account for the debt service payments, investment income, and projects related to the 2013 Heartland Ranch Revenue Bonds (“HR”).

PPFA 2013 Authority Bonds – This debt service fund is used to account for the debt service payments, investment income, and projects related to the 2013 Authority Bonds.

C. Cash and Investments
The Authority’s cash and investments considered to be cash equivalents, consist of cash on hand, demand deposits, and short-term investments with original maturity of three months or less from the date of acquisition. Cash and cash equivalents are combined with investments and reported as cash and investments. The Authority's cash and investments are held by the City in its pooled cash and investments, except for funds required to be held by fiscal agents under the provisions of bond indentures.

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.

7.2.a
Packet Pg. 846 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) Patterson Public Financing Authority
(A Component Unit of the City of Patterson)
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
27 Note 1 – Summary of Significant Accounting Policies (Continued) C. Cash and Investments (Continued)
U.S. GAAP defines fair value, establishes a framework for measuring fair value and establishes disclosures about fair value measurement. Investments, unless otherwise specified, recorded at fair value in the Statements of Net Position, are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Levels of inputs are as follows:

Level 1 – Inputs are unadjusted, quoted prices for identical assets and liabilities in active markets at the measurement date.

Level 2 – Inputs other than quoted prices included in Level 1, that are observable for the assets or liabilities through corroboration with market data at the measurement date.

Level 3 – Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the assets or liabilities at the measurement date.

D. Restricted Cash and Investments
Certain restricted cash and investments are held by a fiscal agent for the redemption of bonded debt and for acquisition and construction of capital projects.

E. Long-Term Debt
In the government-wide financial statements, long-term liabilities and other long-term obligations are reported as liabilities in the applicable governmental activities Statement of Net Position. Initial issue bond premiums and discounts, are deferred and amortized over the life of the bonds using the straight-line method. The difference between the reacquisition price of refunding bonds and the net carrying amount of refunded debt (deferred amount on refunding) is amortized over the shorter of the lives of the refunding debt or remaining life of the refunded debt.

Bond issuance costs except for insurance, are expenses in the period incurred. Amortization of bond premiums or discounts, issuance costs, and deferred amounts on refunding is included in interest expense.

In the fund financial statements, governmental fund types recognize bond premiums, discounts, and issuance costs during the period issued. The face amount of debt issued is reported as other financing sources. Premiums received are reported as other financing sources, while discounts are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

F. Net Position
For government-wide financial statements, net position is categorized as follows:

Net Investment in Capital Assets – This component of net position consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of debt that are attributable to the acquisition, construction, or improvement of those assets. There is no net investment in capital assets as of June 30, 2022.

Restricted – This component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. There is no restricted net position as of June 30, 2022.

7.2.a
Packet Pg. 847 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) Patterson Public Financing Authority
(A Component Unit of the City of Patterson)
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
28 Note 1 – Summary of Significant Accounting Policies (Continued) F. Net Position (Continued)
Unrestricted – This component of net position is the amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position.

When expenses are incurred for purposes for which both restricted and unrestricted net position is available, the Authority’s policy is to apply restricted net position first.

G. Fund Balances
The City reports the fund balances for governmental funds in specific classifications (nonspendable, restricted, committed, assigned, and unassigned), which creates a hierarchy primarily based on the extent to which the City is bound to the constraints on the specific purpose for which funds can be spent. The Authority only receives restricted revenues, therefore any remaining fund balances are restricted by nature of the revenue received.

H. Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosure. Accordingly, actual results could differ from those estimates.

Note 2 – Cash and Investments
The following is a summary of pooled cash and investments and restricted cash and investments at June 30, 2022:

Governmental
Activities
Cash and investments 317,283 $
Restricted cash and investments 1,112,191
Investments held in trust 60,552,790
Total cash and investments $ 61,982,264
Cash, cash equivalents, and investments, consisted of the following at June 30, 2022:

Cash and cash equivalents:

Pooled cash with City of Patterson 317,283 $
Total cash and cash equivalents 317,283
Investments:

Local obligation bonds 60,552,790
Money market mutual funds 1,112,191
Total investments 61,664,981
Total cash and investments $ 61,982,264

7.2.a
Packet Pg. 848 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) Patterson Public Financing Authority
(A Component Unit of the City of Patterson)
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
29 Note 2 – Cash and Investments (Continued)
At June 30, 2022, investments, are reported at fair value based on quoted market prices. The following table represents the fair value measurements of investments recognized in the accompanying Statement of Net Position measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2022:

Measurement
Fair Value Input
Investments:

Local obligation bonds 60,552,790 $ Level 2
Money market mutual funds 1,112,191 Uncategorized
Total investments $ 61,664,981
Valuation
Technique
Present Value of Expected
Future Cash Flows
Not applicable
A. Cash Deposits
The carrying amounts of the Authority’s pooled cash and investment with the City was $317,283 at June 30, 2022.

The Authority pools its cash and investments of all funds with the City of Patterson, California to facilitate the management of cash and achieve the goal of obtaining the highest yield with the greatest safety and least risk. The pool is managed by the City Treasurer for investing, except for certain restricted funds and investments held in trust, which are held and invested by outside custodians through contractual agreements. These restricted funds include cash with fiscal agents. The total amount of which was collateralized or insured with securities held by the pledging financial institutions in the City’s name is discussed below.

Investments held in the City of Patterson's cash and investments pool are available on demand. Information regarding the City's cash and investment pools is described in the City's Comprehensive Annual Financial Report.

The California Government Code requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City's name.

The market value of pledged securities must equal at least 110% of the City's cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash deposits; however, the City has not waived the collateralization requirements.

7.2.a
Packet Pg. 849 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) Patterson Public Financing Authority
(A Component Unit of the City of Patterson)
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
30 Note 2 – Cash and Investments (Continued)
B. Investments
Investments Authorized by the California Code and the Authority’s Investments Policy The table below identifies the investment types that are authorized by the Authority's investment policy. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the Authority, rather than the general provisions of the California Government Code or the Authority's investment policy.

Maximum Maximum
Maximum Percentage of Investment in
Maturity Portfolio one Issuer
U.S. Treasury Obligation 5 years None None
U.S. Agency Securities 5 years None None
Certificates of Deposit 2 years None None
Local Agency Investment Fund (LAIF) N/A None None
Money Market Funds N/A None None
Annuities N/A None None
Mutual Funds N/A 5% None
Corporate Notes (Minimum rating of "AAA") 5 years 5% None Local Agency Bonds (Local obligation bonds) 5 years None None Authorized Investment Type
* The table is based on state law requirements or investment policy requirements, whichever is more restrictive.

Investments Authorized by Debt Agreements
Investment of debt issuances held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the Authority's investment policy. The table below identifies the investment types that are authorized by bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.

Maximum Maximum
Maximum Percentage of Investment in
Maturity Portfolio one Issuer
U.S. Treasury Obligation 5 years None None
U.S. Agency Securities 5 years None None
Certificates of Deposit 2 years None None
Local Agency Investment Fund (LAIF) None None None
Money Market Funds None None None
Annuities None None None
Mutual Funds None 5% None
Corporate Notes (Minimum rating of "AAA") 5 years 5% None Local Agency Bonds (Local obligation bonds) 5 years None None Authorized Investment Type

7.2.a
Packet Pg. 850 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) Patterson Public Financing Authority
(A Component Unit of the City of Patterson)
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
31 Note 2 – Cash and Investments (Continued)
C. Risk Disclosures
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the Authority's interest rate risk is mitigated is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

Information about the sensitivity of the fair values of the Authority's investments to market rate fluctuations is provided by the following table that shows the distribution of the Authority's investments by maturity as of June 30, 2022:
12 Months
Fair Value or Less 1-5 Years 6-10 Years Thereafter
Investments:

Local obligation bonds $ 423,164 60,552,790 $ 1,321,847 $ - $ 58,807,779 $ Money market mutual funds 1,112,191 1,112,191 - - -
Total investments $ 1,535,355 61,664,981 $ 1,321,847 $ - $ 58,807,779 $ Maturity
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code or debt agreements, and the actual rating as of the fiscal year for each investment type.

Minimum
Legal
Fair Value Rating S&P Moody's
Investments:

Local obligation bonds $ N/A Not rated Not rated 60,552,790 Money market mutual funds 1,112,191 N/A AAAm Aaa-mf
Total investments $ 61,664,981
Credit Rating
Disclosures Relating to Concentration of Credit Risk
The Authority held the following investments in a single issuer (other than U.S. Treasury securities, external investment pools and mutual funds) that represented 5% or more of total Authority investment as of June 30, 2022:

Issuer Amount
West Patterson Financing Authority 60,552,790 $
Investment Type
Local obligation bonds

7.2.a
Packet Pg. 851 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) Patterson Public Financing Authority
(A Component Unit of the City of Patterson)
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
32 Note 2 – Cash and Investments (Continued)
C. Risk Disclosures (Continued)
Disclosures Relating to Custodial Credit Risk
The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g. brokerdealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. None of the Authority’s investments was subject to custodial credit risk.

Note 3 – Due to City of Patterson
At June 30, 2022, the Authority owes the City in the amount of $1,320,163 to cover the cash overdrawn.

Note 4 – Long-Term Obligations
A. Governmental Activities
Summary of changes in long-term liabilities for the governmental activities for the year ended June 30, 2022 is as follows:

Original Balance Balance Due Within Due In More
Issuance July 1, 2021 Additions Deletions June 30, 2022 One Year Than One Year Private Placement:

PPFA 2013 Heartland Ranch Revenue Bonds 4,963,568 $ 2,292,005 $ - $ (443,630) $ 1,848,375 $ 462,628 $ 1,385,747 $ PPFA 2013 Series A Revenue Bonds 67,190,000 57,045,000 - (1,850,000) 55,195,000 1,765,000 53,430,000 Less: Bond Discount (853,389) (625,741) - 28,446 (597,295) - (597,295) PPFA 2013 Series B Revenue Bonds 6,465,000 5,575,000 - (165,000) 5,410,000 165,000 5,245,000 Total long-term debt $ 64,286,264 77,765,179 $ - $ (2,430,184) $ 61,856,080 $ 2,392,628 $ 59,463,452 $ 2013 Heartland Ranch Revenue Bonds
On July 30, 2013, the Authority issued $4,963,568 of revenue refunding bonds (Series 2013 Heartland Ranch Revenue Bonds) to repay, in part, the principal of the Authority's 2002 Heartland Ranch Revenue Bonds. Interest on the bonds is payable semi-annually on March 2 and September 2 of each year through September 2, 2027, beginning on March 2, 2014. The interest rate on the bonds is 3.73 percent. Principal payments are due annually beginning on September 2, 2014. At June 30, 2022, the outstanding balance of the 2013 Heartland Ranch Revenue bonds was $1,848,375.

The annual debt service requirements are as follows:

Year Ending
June 30, Principal Interest Total
2023 462,628 $ 60,316 $ 522,944 $
2024 470,959 42,905 513,864
2025 273,775 29,016 302,791
2026 284,557 18,603 303,160
2027 174,771 10,036 184,807
2028 181,685 3,388 185,073
Total 1,848,375 $ 164,264 $ 2,012,639 $

7.2.a
Packet Pg. 852 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) Patterson Public Financing Authority
(A Component Unit of the City of Patterson)
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
33 Note 4 – Long-Term Obligations (Continued)
A. Governmental Activities (Continued)
2013 PPFA Series A Bonds
On August 14, 2013, the PPFA issued $67,190,000 of special tax refunding bonds (Senior Series 2013A) to purchase, in part, the 2013-A1, 2013-A2, and 2013-B special tax bonds issued by the WPFA. The bonds were issued with an original issue discount of $853,389. Interest on the bonds is payable semi-annually on March 1 and September 1 of each year through September 1, 2039, beginning on March 1, 2014. The interest rates on the bonds is 3.00 percent. Principal payments are due annually beginning on September 1, 2014. The bonds are secured by a first pledge of the investment revenues and funds on deposit in the Bond Fund, Reserve Fund, and Special Tax Fund. At June 30, 2022, the outstanding balance of the 2013 PPFA Series A bonds was $55,195,000.

The annual debt service requirements are as follows:

Year Ending
June 30, Principal Interest Total
2023 1,765,000 $ 3,020,750 $ $ 4,785,750
2024 1,860,000 2,927,800 4,787,800
2025 2,025,000 2,825,819 4,850,819
2026 2,195,000 2,715,044 4,910,044
2027 2,345,000 2,595,869 4,940,869
2028-2032 13,750,000 10,935,100 24,685,100
2033-2037 17,310,000 6,603,013 23,913,013
2038-2040 13,945,000 1,245,019 15,190,019
Total 55,195,000 $ 32,868,414 $ 88,063,414 $
2013 PPFA Series B Bonds
On August 14, 2013, the PPFA issued $6,465,000 of special tax refunding bonds (Subordinate Series 2013B) to purchase, in part, the 2013-A1, 2013-A2, and 2013-B special tax bonds issued by the West Patterson Financing Authority. Interest on the bonds is payable semi-annually on March 1 and September 1 of each year through September 1, 2039, beginning on March 1, 2014. The interest rate on the bonds is 5.875%.

Principal payments are due annually beginning on September 1, 2014. The bonds are secured by a first pledge of the investment revenues and funds on deposit in the Bond Fund, Reserve Fund, and Special Tax Fund. At June 30, 2022, the outstanding balance of the 2013 PPFA Series B bonds was $5,410,000.

The annual debt service requirements are as follows:

Year Ending
June 30, Principal Interest Total
2023 165,000 $ 312,991 $ $ 477,991
2024 175,000 303,003 478,003
2025 190,000 292,281 482,281
2026 210,000 280,531 490,531
2027 225,000 267,753 492,753
2028-2032 1,340,000 1,117,425 2,457,425
2033-2037 1,720,000 670,338 2,390,338
2038-2040 1,385,000 125,872 1,510,872
Total 5,410,000 $ 3,370,194 $ 8,780,194 $

7.2.a
Packet Pg. 853 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) Patterson Public Financing Authority
(A Component Unit of the City of Patterson)
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
34 Note 5 – Other Required Disclosures
A. Unrestricted Net Position (Deficit)
At June 30, 2022, the Governmental Activities of the Authority had an unrestricted net deficit of $(2,424,754).

The deficit will be eliminated through future secured revenues which will be used to pay outstanding debt.

Note 6 –Contributions to City’s Custodial Fund
For the year ended June 30, 2022, the Authority transferred bond proceeds in the amount of $192,350 to the City’s Custodial Fund for funding projects as required by the Bond Indenture.

7.2.a
Packet Pg. 854 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) 35 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

7.2.a
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7.2.a
Packet Pg. 856 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) Patterson Public Financing Authority
(A Component Unit of the City of Patterson)
Required Supplementary Information (Unaudited)
For the Year Ended June 30, 2022
37 Budgetary Information
The Authority maintains budgetary controls in order to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. The Authority maintains an encumbrance accounting system to provide management with information regarding obligations against appropriations. Budgetary compliance is based on expenditures during the period (U.S.GAAP), rather than expenditures and encumbrances (non-GAAP).

Because appropriations lapse at June 30, encumbrances outstanding at June 30, 2022 are disclosed in the notes to the financial statements. Appropriations for fiscal year 2022 will provide authority to complete those transactions.

The Authority is required by its municipal code to adopt an annual budget on or before June 30 for the ensuing fiscal year. From the effective date of the budget, the amounts become the "annual appropriated budget".

The following procedures are performed by the Authority in establishing the budgetary data reflected in the financial statements:

1. The Finance Director submits a preliminary budget by June 30 of each year to Board of Directors. This allows the Authority to continue normal operations until the final budget is adopted in July. The operating budget includes proposed expenditures and the means of financing them.

2. Public hearings are conducted to obtain taxpayers' comments.

3. The appropriated budget is prepared by fund, department, and division. The government department heads may make transfers of appropriation within a department. Transfers of appropriations between departments requires approval of the City Manager. The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations) is the fund level.

4. The budget is legally adopted through the passage of a council resolution.

5. The Board of Directors may amend the budget by resolution during the fiscal year. The City Manager may transfer appropriations from one program, activity, or object to another within the same fund. All appropriations lapse at the end of the fiscal year to the extent they have not been expended. Capital project funds are based on a project time frame, rather than a fiscal year "operating" time frame reappropriating unused appropriations from year to year until project completion.

6. A budget review is presented to the City Council by the City Manager mid-year and approved additions or changes are legally adopted through Council resolution.

7. Formal budgetary integration is employed as a management control device during the year for the funds.

8. Budgets for the funds are adopted on a basis consistent with United States generally accepted accounting principles.

7.2.a
Packet Pg. 857 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) Patterson Public Financing Authority
(A Component Unit of the City of Patterson)
Required Supplementary Information (Unaudited) (Continued) For the Year Ended June 30, 2022
38 Budgetary Comparison Schedule – PPFA 2013 HR Revenue Bonds Variance with
Final Budget
Favorable
Original Final Actual (Unfavorable)
REVENUES:

Intergovernmental revenue 520,848 $ 518,052 $ 518,052 $ - $ Interest 3,373 69,237 120,267 51,030
Total revenues 587,289 524,221 638,319 51,030
EXPENDITURES:

Debt service:

Principal 443,630 443,630 443,630 -
Interest and fiscal charges 595,271 595,271 595,271 -
Total expenditures 1,038,901 1,038,901 1,038,901 -

REVENUES OVER (UNDER)
EXPENDITURES (451,612) (514,680) (400,582) 51,030
Net change in fund balance $ (451,612) (514,680) $ (400,582) 51,030 $ FUND BALANCE:

Beginning of year 2,463,096
End of year $ 2,062,514
Budgeted Amounts

7.2.a
Packet Pg. 858 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) Patterson Public Financing Authority
(A Component Unit of the City of Patterson)
Required Supplementary Information (Unaudited) (Continued) For the Year Ended June 30, 2022
39 Budgetary Comparison Schedule – PPFA 2013 Authority Bonds Variance with
Final Budget
Favorable
Original Final Actual (Unfavorable)
REVENUES:

Interest 3,659,302 $ 3,659,302 $ 3,651,692 $ (7,610) $
Total revenues 3,659,302 3,659,302 3,651,692 (7,610)
EXPENDITURES:

Contribution to City's Custodial Fund - - 192,350 (192,350) Debt service:

Principal 1,800,000 1,850,000 2,015,000 (165,000)
Interest and fiscal charges 3,932,112 3,932,112 3,430,713 501,399 Total expenditures 5,782,112 5,732,112 5,638,063 144,049 Net change in fund balance $ (2,122,810) (2,072,810) $ (1,986,371) 136,439 $ FUND BALANCE:

Beginning of year 60,586,178
End of year $ 58,599,807
Budgeted Amounts

7.2.a
Packet Pg. 859 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) 40 This page intentionally left blank.

7.2.a
Packet Pg. 860 Attachment: 2022_Patterson_PPFA_FINAL Report_ (Patterson Public Financing Authority’s 2021-22 Financial Audit Report) TO:

FROM:

BY:

WEST PATTERSON FINANCING AUTHORITY

AGENDA REPORT
Chair Clauzel and Members of the West Patterson Financing Authority Ken Irwin, Executive Director
Jennifer Riedeman, Finance Director
MEETING DATE: May 16, 2023
ITEM NO: 7.3
SUBJECT: Accept the West Patterson Financing Authority’s 2021-22 Financial Audit Report.

RECOMMENDATION
Motion to Accept the West Patterson Financing Authority’s 2021-22 Financial Audit Report.

BACKGROUND
The West Patterson Financing Authority publishes financial statements presented in conformance with Generally Accepted Accounting Principles (GAAP). The financial statements were audited by the independent public accounting firm of The Pun Group, LLP, whose unmodified opinion is included within the financial section of the report. The unmodified opinion indicates that the financial statements present fairly the financial position of the West Patterson Financing Authority as of June 30, 2021, and the results of operations, in accordance with generally accepted accounting principles.

The West Patterson Financing Authority’s 2021-22 financial report is available on the City of Patterson’s website and is attached to this staff report.

Representative of The Pun Group, LLP will be present to discuss the audit and answer questions.

ANALYSIS
The Government-wide Net position in the Authority’s totaled a deficit of $58.7 million as of

7.3 Packet Pg. 861
June 30, 2022, which changed $2.4 million from the ending balance in the prior fiscal year.

The governmental fund balance in the Authority’s totaled $27.6 million as of June 30, 2022, which was $13 million more than the ending balance in the prior fiscal year.

7.3 Packet Pg. 862
West Patterson
Financing Authority
Patterson, California
Basic Financial Statements
and Independent Auditors' Report
For the Year Ended June 30, 2022

7.3.a
Packet Pg. 863 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) West Patterson Financing Authority
Basic Financial Statements
For the Year Ended June 30, 2022
Table of Contents
Page

Government-Wide Financial Statements:

Governmental Fund Financial Statements:

Balance Sheet ................................................................................................................................................. 17 Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position ............................................................................... 18 Statement of Revenues, Expenditures, and Changes in Fund Balance .......................................................... 19 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities ............................................................................................................................. 20 Notes to the Basic Financial Statements .................................................................................................................. 25 Required Supplementary Information (Unaudited):

Budgetary Information ................................................................................................................................... 39 Budgetary Comparison Schedule:

CFD 2001-1 Special Tax Bonds .............................................................................................................. 40 CFD 2005-1 Special Tax Bonds .............................................................................................................. 41 CFD 2015-1 Special Tax Bonds .............................................................................................................. 42 CFD 2018-1 Special Tax Bonds .............................................................................................................. 43

7.3.a
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7.3.a
Packet Pg. 865 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) 2121 North California Blvd., Suite 290
Walnut Creek, California 94596
INDEPENDENT AUDITORS’ REPORT
To the Board of Directors
of the West Patterson Financing Authority
Patterson, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities and each major fund of the West Patterson Financing Authority (the “Authority”) as of and for the year ended June 30, 2022, and the related notes to the basic financial statements, which collectively comprise the Authority’s basic financial statements as listed in the table of contents.

Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. 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 Authority, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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 Authority’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.

7.3.a
Packet Pg. 866 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) To the Board of Directors
of the West Patterson Financing Authority
Patterson, California

Page 2 ends

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 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 Authority’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Authority’s ability to continue as a going concern for a reasonable period of time.

7.3.a
Packet Pg. 867 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) To the Board of Directors
of the West Patterson Financing Authority
Patterson, California

Page 3 ends

Walnut Creek, California
May 3, 2023

7.3.a
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7.3.a
Packet Pg. 869 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) 2121 North California Blvd., Suite 290
Walnut Creek, California 94596

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 Board of Directors
of the West Patterson Financing Authority
Patterson, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund of the West Patterson Financing Authority (the “Authority”) as of and for the year ended June 30, 2022, and the related notes to the basic financial statements, which collectively comprise Authority’s basic financial statements and have issued our report thereon dated May 3, 2023.

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 Authority’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.

7.3.a
Packet Pg. 870 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) To the Board of Directors
of the West Patterson Financing Authority
Patterson, California

Page 2 ends

Walnut Creek, California
May 3, 2023

7.3.a
Packet Pg. 871 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) BASIC FINANCIAL STATEMENTS 7

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Packet Pg. 873 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report)

GOVERNMENT-WIDE FINANCIAL STATEMENTS
9 7.3.a
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10 7.3.a
Packet Pg. 875 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) Governmental
Activities
ASSETS
Current assets:

Cash $ 10,030,394
Accounts receivable 70,038
Intergovernmental receivable 183,351
Interest receivable 4,408
Total current assets 10,288,191
Noncurrent assets:

Notes receivable - noncurrent 993,418
Restricted cash and investments 16,437,314
Total noncurrent assets 17,430,732
Total assets 27,718,923

LIABILITIES
Current liabilities:

Accrued interest payable 1,520,319
Due to City of Patterson 68,656
Due within one year:

Long-term debt 1,960,548
Total current liabilities 3,549,523
Noncurrent liabilities:

Due in more than one year:

Long-term debt 82,875,643
Total noncurrent liabilities 82,875,643
Total liabilities 86,425,166

NET POSITION (DEFICIT)
Restricted for debt service 16,437,314
Unrestricted (deficit) (75,143,557)
Total net position (deficit) $ (58,706,243)
West Patterson Financing Authority
Statement of Net Position
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 11 7.3.a
Packet Pg. 876 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) Revenue and
Changes in
Net Position
Governmental
Functions/Programs Expenses Activities
Governmental activities:

General government $ (325,517) 325,517 $
Interest and fiscal charges (5,030,429) 5,030,429
Total governmental activities (5,355,946) 5,355,946
Total primary government $ (5,355,946) 5,355,946
General revenues:

Assessment fee 7,753,871
Investment earnings 78,763
Total general revenues 7,832,634
Changes in net position 2,476,688
Net Position (Deficit):

Beginning of year (61,182,931)
End of year $ (58,706,243)
For the Year Ended June 30, 2022
Net (Expense)
West Patterson Financing Authority
Statement of Activities
See accompanying Notes to the Basic Financial Statements. 12 7.3.a
Packet Pg. 877 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report)

FUND FINANCIAL STATEMENTS
13 7.3.a
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Packet Pg. 879 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report)

GOVERNMENTAL FUND FINANCIAL STATEMENTS
15 7.3.a
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16 7.3.a
Packet Pg. 881 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) CFD 2001-1 CFD 2005-1 CFD 2015-1 CFD 2018-1 Total
Special Tax Special Tax Special Tax Special Tax Governmental Bonds Bonds Bonds Bonds Funds
ASSETS
Cash 5,614,968 $ 3,310,498 $ - $ 1,104,928 $ 10,030,394 $ Restricted cash and investments 3,160,342 8,197,201 429,771 4,650,000 16,437,314 Accounts receivable - - - 70,038 70,038
Intergovernmental receivable 51,962 107,452 - 23,937 183,351 Interest receivable 2,429 1,495 - 484 4,408
Notes receivable 993,418 - - - 993,418
Total assets $ 11,616,646 9,823,119 $ 429,771 $ 5,849,387 $ 27,718,923 $

LIABILITIES AND FUND BALANCES
LIABILITIES:

Due to City of Patterson - $ - $ 68,656 $ - $ 68,656 $
Total liabilities - - 68,656 - 68,656

FUND BALANCES
Restricted for debt service 9,823,119 11,616,646 361,115 5,849,387 27,650,267 Total fund balances 11,616,646 9,823,119 361,115 5,849,387 27,650,267 Total liabilities and fund balances $ 11,616,646 9,823,119 $ 429,771 $ 5,849,387 $ 27,718,923 $ West Patterson Financing Authority
Balance Sheet
Governmental Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 17 7.3.a
Packet Pg. 882 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) Total fund balances of governmental funds $ 27,650,267
Amounts reported for governmental activities in the Statement of Net Position are different because:

Interest payable on long-term debt does not require current financial resources. Therefore, interest payable is not reported as a liability in the Governmental Funds Balance Sheet. (1,520,319) Long-term liabilities are not due and payable in the current period and therefore are not reported in the Governmental Funds Balance Sheet.

Long-term debt (84,836,191)
Net position (deficit) of governmental activities $ (58,706,243) West Patterson Financing Authority
Reconciliation of the Governmental Funds
Balance Sheet to the Government-Wide Statement of Net Position June 30, 2022
See accompanying Notes to the Basic Financial Statements. 18 7.3.a
Packet Pg. 883 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) CFD 2001-1 CFD 2005-1 CFD 2015-1 CFD 2018-1 Total
Special Tax Special Tax Special Tax Special Tax Governmental Bonds Bonds Bonds Bonds Funds
REVENUES:

Assessment fee 5,623,105 $ 788,166 $ 283,659 $ 1,058,941 $ 7,753,871 $ Interest 63,853 10,260 385 4,265 78,763
Total revenues 798,426 5,686,958 284,044 1,063,206 7,832,634 EXPENDITURES:

General administration 569 70,953 6,126 57,869 135,517
Project payments - - - 190,000 190,000
Debt service:

Principal 1,784,879 100,000 35,000 - 1,919,879
Interest and fiscal charges 3,650,750 726,964 244,463 324,022 4,946,199 Total expenditures 897,917 5,436,198 285,589 571,891 7,191,595

REVENUES OVER (UNDER)
EXPENDITURES (99,491) 250,760 (1,545) 491,315 641,039
OTHER FINANCING SOURCES (USES):

Proceeds from issuance of debt - 6,799,999 - 4,465,000 11,264,999 Premium on debt issuance - 680,313 - 486,498 1,166,811
Total other financing sources (uses) 7,480,312 - - 4,951,498 12,431,810 Net change in fund balances 7,380,821 250,760 (1,545) 5,442,813 13,072,849 FUND BALANCES:

Beginning of year 9,572,359 4,235,825 362,660 406,574 14,577,418 End of year $ 11,616,646 9,823,119 $ 361,115 $ 5,849,387 $ 27,650,267 $ West Patterson Financing Authority
Statement of Revenues, Expenditures, and Changes in Fund Balance Governmental Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 19 7.3.a
Packet Pg. 884 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) Net change in fund balances - total governmental funds: $ 13,072,849 Amounts reported for governmental activities in the Statement of Activities are different because:

Issuance of long-term liabilities provides current financial resources to governmental funds, but the issuance increased long-term liabilities in the Government-Wide Statement of Net Position.

Bonds payable (11,264,999)
Premium on bonds payable (1,166,811)
Repayment of long-term liabilities was an expenditures in governmental funds, but the repayment reduced long-term liabilities in the Government-Wide Statement of Net Position Principal payment of long-term debt 1,919,879
Amortization of bond premium and discount (12,256)
Interest expenses on long-term debt was reported in the Government-Wide Statement of Activities, but it did not require the use of current financial resources. This amount represented the changes in accrued interest from prior year (71,974) Change in net position of governmental activities $ 2,476,688 West Patterson Financing Authority
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 20 7.3.a
Packet Pg. 885 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) 21 NOTES TO THE BASIC FINANCIAL STATEMENTS

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Packet Pg. 887 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) West Patterson Financing Authority
Index to the Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
23 Note 1 – Summary of Significant Accounting Policies .............................................................................................. 25 A. Financial Reporting Entity .......................................................................................................................... 25 B. Basis of Accounting and Measurement Focus ............................................................................................ 25 C. Cash and Investments ................................................................................................................................. 26 D. Restricted Cash and Investments ................................................................................................................ 27 E. Receivables ................................................................................................................................................. 27 F. Long-Term Debt ......................................................................................................................................... 27 G. Special Tax ................................................................................................................................................. 27 H. Net Position ................................................................................................................................................ 28 I. Fund Balances ............................................................................................................................................. 28 J. Use of Estimates ......................................................................................................................................... 28 Note 2 – Cash and Investments ................................................................................................................................... 28 A. Cash Deposits ............................................................................................................................................. 29 B. Investments ................................................................................................................................................. 30 C. Risk Disclosures ......................................................................................................................................... 31 Note 3 – Notes Receivable ............................................................................................................................................ 32 Note 4 – Due to City of Patterson ................................................................................................................................ 32 Note 5 – Long-Term Debt ............................................................................................................................................ 32 Note 6 – Other Required Disclosures .......................................................................................................................... 36 A. Unrestricted Net Position (Deficit) ............................................................................................................. 36 B. Expenditures in Excess of Appropriations .................................................................................................. 36

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Packet Pg. 889 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) West Patterson Financing Authority
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
25 Note 1 – Summary of Significant Accounting Policies
The basic financial statements of the West Patterson Financing Authority (the “Authority” or “WPFA”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as applied to governmental agencies. The Governmental Accounting Standards Board (“GASB”) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the Authority’s accounting policies are described below.

A. Financial Reporting Entity
The Authority was formed in 2001 pursuant to a joint exercise of powers agreement between the City of Patterson, California (the “City”) and the former Redevelopment Agency of the City. The primary activity of the Authority is issuing special tax bonds on behalf of the West Patterson Financing Authority Community Facilities District No. 2001-1 (Public Improvements). The proceeds of the special tax bonds are used to finance the costs of certain engineering, design, construction and other expenses related to public infrastructure improvements.

On October 18, 2005, pursuant to Resolution No. 2005-04 of the Board of Directors of the Authority founded its Community Facilities District No. 2005-1 (West Patterson Business Park) and authorized special tax levies therein.

On June 2, 2015 pursuant to Resolution No.2015-03 of the Board of Directors of the Authority founded its Community Facilities District No. 2015-1 (Arambel-KND) and authorized special tax levies therein.

On October 16, 2018 pursuant to Resolution No. 2018-04 of the Board of Directors of the Authority founded its Community Facilities District No. 2018-1 (Villages of Patterson) and authorized special tax levies therein.

The financial activities of the Authority are included in the City’s custodial funds.

Certain eliminations have been made in regards to interfund activities, payables and receivables. All internal balances in the statement of net position have been eliminated.

7.3.a
Packet Pg. 890 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) West Patterson Financing Authority
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
26 Note 1 – Summary of Significant Accounting Policies (Continued) B. Basis of Accounting and Measurement Focus (Continued) Governmental Fund Financial Statements
Governmental fund financial statements include a balance sheet and a statement of revenues, expenditures and changes in fund balances for all major governmental funds. An accompanying schedule is presented to reconcile and explain the differences in net position as presented in these statements to the net position presented in the government-wide financial statements. The Authority has presented all of its funds as major funds.

Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period.

The primary revenue sources, which have been treated as susceptible to accrual by the Authority is assessments and interest income. Certain indirect costs are included in program expenses reported for individual functions and activities. Expenditures are recorded in the accounting period in which the related fund liability is incurred.

The reconciliation of the fund financial statements to the government-wide financial statements is provided to explain the differences.

Governmental funds of the Authority are outlined below:

CFD 2001-1 Special Tax Bonds – This debt service fund is used to account for the debt service payments, investment income, and projects related to the 2013 Special Tax Bonds.

CFD 2005-1 Special Tax Bonds - This debt service fund is used to account for the debt service payments, investment income, and projects related to the Community Facilities District 2005-1 (West Patterson Business Park) Special Tax Bonds.

CFD 2015-1 Special Tax Bonds - This debt service fund is used to account for the debt service payments, investment income, and projects related to the Community Facilities District 2015-1 (Arambel-KND) Special Tax Bonds.

CFD 2018-1 Special Tax Bonds - This debt service fund is used to account for the debt service payments, investment income, and projects related to the Community Facilities District 2018-1 (Villages of Patterson) Special Tax Bonds.

C. Cash and Investments
The Authority’s cash and investments considered to be cash equivalents, consist of cash on hand, demand deposits, and short-term investments with original maturity of three months or less from the date of acquisition. Cash and cash equivalents are combined with investments and reported as Cash and Investments. The Authority's cash and investments are held by the City in its pooled cash and investments, except for funds required to be held by fiscal agents under the provisions of bond indentures.

7.3.a
Packet Pg. 891 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) West Patterson Financing Authority
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
27 Note 1 – Summary of Significant Accounting Policies (Continued) C. Cash and Investments (Continued)
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.

D. Restricted Cash and Investments
Certain restricted cash and investments are held by a fiscal agent for the redemption of bonded debt and for acquisition and construction of capital projects.

E. Receivables
Receivables include such items as assessments, interest, notes, and miscellaneous accounts receivable. No allowance for doubtful accounts has been established, as the Authority believes all amounts are considered collectible in the normal course of business.

F. Long-Term Debt
In the government-wide financial statements long-term liabilities and other long-term obligations are reported as liabilities in the applicable governmental activities Statement of Net Position. Initial issue bond premiums and discounts, are deferred and amortized over the life of the bonds using the straight-line method. The difference between the reacquisition price of refunding bonds and the net carrying amount of refunded debt (deferred amount on refunding) is amortized over the shorter of the lives of the refunding debt or remaining life of the refunded debt.

G. Special Tax
The Community Facilities Districts established by the Authority are authorized to levy special taxes annually on real property located within the Community Facilities Districts. The County of Stanislaus levies, bills, and collects the special property taxes for the Authority. The County of Stanislaus remits Community Facilities District special taxes collected on the County tax roll to the Authority in three installments during the months of December, April, and July.

Tax collections of special taxes on the County tax roll are the responsibility of the County Tax Collector. Taxes and assessments on secured and utility rolls which constitute a lien against the property, are levied and payable in two installments; the first is due November 1 of the fiscal year and is delinquent if not paid by December 10; and the second is due on March 1 of the fiscal year and is delinquent if not paid by April 10. Significant penalties are imposed under State law for late payment.

Tax levy dates are attached annually on January 1 preceding the fiscal year for which the taxes are levied. The fiscal year begins July 1 and ends June 30 of the following year. Taxes are levied on real property, as it exists at that time. Liens against real estate are not relieved by subsequent renewal or change in ownership.

7.3.a
Packet Pg. 892 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) West Patterson Financing Authority
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
28 Note 1 – Summary of Significant Accounting Policies (Continued) G. Special Tax (Continued)
In order to collect delinquent special tax levies, the Authority may conduct foreclosure actions against the property on which the special taxes are levied. In some cases, the Authority will "strip" the delinquent special tax amount from the County ad valorem tax roll, and proceed to enforce the payment of the special taxes itself through collection efforts including possible judicial foreclosure.

H. Net Position
For government-wide financial statements, net position is categorized as follows:

Restricted – This component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets.

Unrestricted – This component of net position is the amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position.

When expenses are incurred for purposes for which both restricted and unrestricted net position is available, the Authority’s policy is to apply restricted net position first.

I. Fund Balances
The Authority reports the fund balances for governmental funds in specific classifications (nonspendable, restricted, committed, assigned, and unassigned), which creates a hierarchy primarily based on the extent to which the Authority is bound to the constraints on the specific purpose for which funds can be spent. The Authority only receive restricted revenues; therefore, any remaining fund balances are restricted by nature of the revenue received.

J. Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosure. Accordingly, actual results could differ from those estimates.

Note 2 – Cash and Investments
The following is a summary of pooled cash and investments and restricted cash and investments at June 30, 2022:

Governmental
Activities
Cash and investments 10,030,394 $
Restricted cash and investments with fiscal agents 16,437,314 Total cash and investments $ 26,467,708

7.3.a
Packet Pg. 893 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) West Patterson Financing Authority
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
29 Note 2 – Cash and Investments (Continued)
Cash, cash equivalents, and investments, consisted of the following at June 30, 2022:

Cash and cash equivalents:

Pooled cash with the City of Patterson 10,030,394 $
Total cash and cash equivalents 10,030,394
Investments:

Money market mutual funds 16,437,314
Total investments 16,437,314
Total cash and investments $ 26,467,708
At June 30, 2022, investments, are reported at fair value based on quoted market prices. The following table represents the fair value measurements of investments recognized in the accompanying Statement of Net Position measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2022:

Measurement Valuation
Fair Value Input Technique
Investments:

Money market mutual funds 16,437,314 $ Uncategorized N/A Total investments $ 16,437,314
A. Cash Deposits
The carrying amounts of the Authority’s pooled cash and investment with the City was $10,030,394 at June 30, 2022. The Authority pools its cash and investments of all funds with the City to facilitate the management of cash and achieve the goal of obtaining the highest yield with the greatest safety and least risk. The pool is managed by the City Treasurer for investing, except for certain restricted funds and investments held in trust, which are held and invested by outside custodians through contractual agreements. These restricted funds include cash with fiscal agents. The total amount of which was collateralized or insured with securities held by the pledging financial institutions in the City’s name is discussed below.

7.3.a
Packet Pg. 894 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) West Patterson Financing Authority
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
30 Note 2 – Cash and Investments (Continued)
B. Investments
Investments Authorized by the California Code and the Authority’s Investments Policy The table below identifies the investment types that are authorized by the Authority's investment policy. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the Authority, rather than the general provisions of the California Government Code or the Authority's investment policy.

Maximum Maximum
Maximum Percentage of Investment in
Maturity Portfolio one Issuer
U.S. Treasury Obligation 5 years None None
U.S. Agency Securities 5 years None None
Certificates of Deposit 2 years None None
Local Agency Investment Fund (LAIF) None None None
Money Market Funds None None None
Annuities None None None
Mutual Funds None 5% None
Corporate Notes (Minimum rating of "AAA") 5 years 5% None Local Agency Bonds (Local obligation bonds) 5 years None None Authorized Investment Type

7.3.a
Packet Pg. 895 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) West Patterson Financing Authority
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
31 Note 2 – Cash and Investments (Continued)
C. Risk Disclosures
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the Authority's interest rate risk is mitigated is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

Maturity
12 Months
Fair Value or Less
Investments:

Money market mutual funds 16,437,314 $ 16,437,314 $
Total investments $ 16,437,314 16,437,314 $
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code or debt agreements, and the actual rating as of the fiscal year for each investment type.

Minimum
Legal
Fair Value Rating S&P Moody's
Investments:

Money market mutual funds 16,437,314 $ N/A AAAm Aaa-mf
Total investments $ 16,437,314
Credit Rating
Disclosures Relating to Concentration of Credit Risk
The Authority complies with the limitations on the amount that can be invested in any one issuer as stipulated by the California Government Code. The Authority held no investments in a single issuer (other than external investment pools and mutual funds) that represented 5% or more of total Authority investment as of June 30, 2022.

Disclosures Relating to Custodial Credit Risk
The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g. brokerdealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. None of the Authority’s investments was subject to custodial credit risk.

7.3.a
Packet Pg. 896 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) West Patterson Financing Authority
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
32 Note 3 – Notes Receivable
On November 7, 2017, the Patterson City Council adopted Ordinance No. 806 to establish a Cannabis Business Pilot Program, which allows for the regulation of cannabis businesses with the City. On December 5, 2017, the Authority entered into a development agreement with a developer to improve, develop, and use real property to operate a cannabis dispensary in the City. As part of the development agreement, the developer issued a promissory note to the Authority for $1,045,000 with an annual interest rate of 5% commencing with the developer’s start of business. The developer agreed to pay the Authority a monthly payment of $5,610 (including principal and interest) through July 2024 with a balloon payment of $898,124 due on August 1, 2024. At June 30, 2022, the outstanding balance of the note receivable was $993,418.

Note 4 – Due to City of Patterson
At June 30, 2022, the Authority owes the City in the amount of $68,656 to cover the cash overdrawn in CFD 2015-1.

Note 5 – Long-Term Debt
The Authority issued each of the respective bonds and notes on behalf of CFD 2001-1, CFD 2005-1, CFD 2015-1, and 2018-1. Summary of changes in long-term liabilities for the governmental activities for the year ended June 30, 2022 is as follows:

Original Balance Balance Due Within Due In More
Issuance July 1, 2021 Additions Deletions June 30, 2022 One Year Than One Year Public Offering:

CFD 2001-1 Series:

Series 2013 A-1 Special Tax Bonds 35,714,049 $ 31,273,171 $ - $ (838,273) $ 30,434,898 $ 803,448 $ 29,631,450 $ Series 2013 A-2 Special Tax Bonds 29,486,669 25,606,716 - (830,506) 24,776,210 817,289 23,958,921 Series 2013 B Special Tax Bonds 4,353,803 3,712,772 - (116,100) 3,596,672 109,811 3,486,861 CFD 2005-1 West Patterson Business Park Series:

Series 2015 Special Tax Bonds 9,630,000 9,265,000 - (100,000) 9,165,000 115,000 9,050,000 Less: bond discount (302,797) (239,707) - 12,618 (227,089) - (227,089) Series 2021 Special Tax Bonds 6,800,000 - 6,800,000 - 6,800,000 25,000 6,775,000 Add: bond premium 680,313 - 680,313 - 680,313 - 680,313 CFD 2015-1 Arambel-KND Special Tax Bonds 4,775,000 4,685,000 - (35,000) 4,650,000 40,000 4,610,000 Add: bond premium 10,861 9,051 - (362) 8,689 - 8,689
CFD 2018-1 Villages of Patterson Special Tax Bonds 4,465,000 - 4,465,000 - 4,465,000 50,000 4,415,000 Add: bond premium 486,498 - 486,498 - 486,498 - 486,498 Total long-term debt $ 74,312,003 96,099,396 $ 12,431,811 $ (1,907,623) $ 84,836,191 $ 1,960,548 $ 82,875,643 $ Special Tax Refunding Bonds, Series 2013-A-1
On August 14, 2013, the Authority issued $35,714,049 of special tax refunding bonds (Series 2013-A-1) to repay, in part, the principal of the Authority's Special Tax Bond Series 2002-A, 2003-A, 2003-B, 2004-A, 2004-B, 2009-A, and 2009-B. Interest on the bonds is payable semi-annually on March 1 and September 1 of each year through September 1, 2039, beginning on March 1, 2014. The interest rate on the bonds is 5.62%. Principal payments are due annually beginning on September 1, 2014. The bonds are secured by a first pledge of the special tax revenues and funds on deposit in the Bond Fund, Reserve Fund, and Special Tax Fund. The outstanding balance of the Series 2013- A-1 bonds at June 30, 2022 was $30,434,898.

7.3.a
Packet Pg. 897 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) West Patterson Financing Authority
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
33 Note 5 – Long-Term Debt (Continued)
Special Tax Refunding Bonds, Series 2013-A-1 (Continued) The annual debt service requirements are as follows:

Year Ending
June 30, Principal Interest Total
2023 803,448 $ 1,687,864 $ 2,491,312 $
2024 829,601 1,641,976 2,471,577
2025 908,055 1,593,148 2,501,203
2026 994,772 1,539,678 2,534,450
2027 1,065,967 1,481,771 2,547,738
2028-2032 5,802,717 6,463,290 12,266,007
2033-2037 9,302,633 4,499,953 13,802,586
2038-2040 10,727,705 1,014,066 11,741,771
Total 30,434,898 $ 19,921,746 $ 50,356,644 $
Special Tax Refunding Bonds, Series 2013-A-2
On August 14, 2013, the Authority issued $29,486,669 of special tax refunding bonds (Series 2013-A-2) to repay, in part, the principal of the Authority's Special Tax Bond Series 2002-A, 2003-A, 2003-B, 2004-A, 2004-B, 2009-A, and 2009-B. Interest on the bonds is payable semi-annually on March 1 and September 1 of each year through September 1, 2039, beginning on March 1, 2014. The interest rate on the bonds is 6.61%. Principal payments are due annually beginning on September 1, 2014. The bonds are secured by a first pledge of the special tax revenues and funds on deposit in the Bond Fund, Reserve Fund, and Special Tax Fund. The outstanding balance of the Series 2013- A-2 bonds at June 30, 2022 was $24,776,210.

The annual debt service requirements are as follows:

Year Ending
June 30, Principal Interest Total
2023 817,289 $ 1,610,696 $ 2,427,985 $
2024 898,196 1,553,999 2,452,195
2025 997,623 1,491,342 2,488,965
2026 1,099,955 1,422,017 2,521,972
2027 1,195,843 1,346,141 2,541,984
2028-2032 7,810,710 5,329,877 13,140,587
2033-2037 8,290,767 2,501,642 10,792,409
2038-2040 3,665,827 286,657 3,952,484
Total 24,776,210 $ 15,542,371 $ 40,318,581 $
Special Tax Refunding Bonds, Series 2013-B
On August 14, 2013, the Authority issued $4,353,803 of special tax refunding bonds (Series 2013-B) to repay, in part, the principal of the Authority's Special Tax Bond Series 2002-A, 2003-A, 2003-B, 2004-A, 2004-B, 2009-A, and 2009- B. Interest on the bonds is payable semi-annually on March 1 and September 1 of each year through September 1, 2039, beginning on March 1, 2014. The interest rate on the bonds is 6.61%. Principal payments are due annually beginning on September 1, 2014. The bonds are secured by a first pledge of the special tax revenues and funds on deposit in the Bond Fund, Reserve Fund, and Special Tax Fund. The outstanding balance of the Series 2013-A-1 bonds at June 30, 2022 was $3,596,672.

7.3.a
Packet Pg. 898 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) West Patterson Financing Authority
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
34 Note 5 – Long-Term Debt (Continued)
Special Tax Refunding Bonds, Series 2013-B (Continued)
The annual debt service requirements are as follows:

Year Ending
June 30, Principal Interest Total
2023 109,811 $ 234,111 $ 343,922 $
2024 117,073 226,612 343,685
2025 124,812 218,618 343,430
2026 133,062 210,095 343,157
2027 141,858 201,009 342,867
2028-2032 862,968 846,287 1,709,255
2033-2037 1,188,460 510,038 1,698,498
2038-2040 918,628 93,671 1,012,299
Total 3,596,672 $ 2,540,441 $ 6,137,113 $
Community Facilities District No. 2005-1 (West Patterson Business Park) Special Tax Bonds, Series 2015 On September 29, 2015, the Authority issued $9,630,000 of special tax refunding bonds (Series 2015) to finance a portion of the costs of acquiring and constructing certain public infrastructure improvements necessary for development of property within the District. The bonds were issued with an original issue discount of $302,797.

Interest on the bonds is payable semi-annually on March 1 and September 1 of each year through September 1, 2045, beginning on March 1, 2016. The bonds bear interest ranging from 2.00% to 4.50%. Principal payments are due annually beginning on September 1, 2016. The bonds are secured by a first pledge of the special tax revenues and funds on deposit in the Bond Fund, Reserve Fund, and Special Tax Fund. The outstanding balance of the CFD 2005-1 Special Tax bonds at June 30, 2022 was $9,165,000.

The annual debt service requirements are as follows:

Year Ending
June 30, Principal Interest Total
2023 115,000 $ 398,869 $ 513,869 $
2024 130,000 394,419 524,419
2025 145,000 389,263 534,263
2026 160,000 383,544 543,544
2027 180,000 377,056 557,056
2028-2032 1,185,000 1,755,884 2,940,884
2033-2037 1,800,000 1,437,956 3,237,956
2038-2043 2,615,000 948,938 3,563,938
2043-2046 2,835,000 265,613 3,100,613
Total 9,165,000 $ 6,351,542 $ 15,516,542 $

7.3.a
Packet Pg. 899 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) West Patterson Financing Authority
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
35 Note 5 – Long-Term Debt (Continued)
Community Facilities District 2005-1 (West Patterson Business Park) Special Tax Bonds, Series 2021 In December 2021, the West Patterson Financing Authority issued $6,800,000 Community Facilities District No. 2005-1 (West Patterson Business Park) Special Tax Bonds, Series 2021 (“CFD 2005-1 Series 2021”). The CFD 2005-1 Series 2021 bonds were sold as non-rated securities and have a final maturity date of 2049. The CFD 2005-1 Series 2021 bonds are being issued to (i) construct and acquire certain public facilities of benefit to the District, (ii) provide for the establishment of a reserve fund, and (iii) pay the costs of issuance of the 2021 Bonds. The bonds were issued with an original issue premium of $680,313. Interest on the CFD 2005-1 Series 2021 bonds is payable semiannually on March 1 and September 1 of each year, commencing March 1,2022. Principal on the 2021 Bonds is payable annually beginning September 1, 2022 and each year thereafter until September 1, 2049. The outstanding balance of the CFD 2005-1 Series 2021 bonds at June 30, 2022 was $6,800,000.

The annual debt service requirements are as follows:

Year Ending
June 30, Principal Interest Total
2023 25,000 $ 222,167 $ 247,167 $
2024 5,000 262,806 267,806
2025 10,000 262,638 272,638
2026 15,000 262,356 277,356
2027 20,000 261,963 281,963
2028-2032 205,000 1,298,506 1,503,506
2033-2037 395,000 1,262,013 1,657,013
2038-2043 660,000 1,163,600 1,823,600
2043-2047 1,845,000 981,500 2,826,500
2048-2050 3,620,000 223,000 3,843,000
Total 6,800,000 $ 6,200,549 $ 13,000,549 $
Community Facilities District No. 2015-1 (Arambel-KND) Special Tax Bonds On September 29, 2015, the Authority issued $4,775,000 of special tax refunding bonds (Series 2015) to finance a portion of the costs of acquiring and constructing certain public infrastructure improvements necessary for development of property within the District. The bonds were issued with an original issue premium of $10,861. Interest on the bonds is payable semi-annually on March 1 and September 1 of each year through September 1, 2045, beginning on March 1, 2016. The bonds bear interest ranging from 5.00% to 5.25%. Principal payments are due annually beginning on September 1, 2016. The bonds are secured by a first pledge of the special tax revenues and funds on deposit in the Bond Fund, Reserve Fund, and Special Tax Fund. The outstanding balance of the CFD 2015-1 Special Tax bonds at June 30, 2022 was $4,650,000.

The annual debt service requirements are as follows:

Year Ending
June 30, Principal Interest Total
2023 40,000 $ 237,588 $ 277,588 $
2024 50,000 234,463 284,463
2025 60,000 230,869 290,869
2026 65,000 1,079,531 1,144,531
2027 75,000 891,056 966,056
2028-2032 545,000 596,531 1,141,531
2033-2037 905,000 169,706 1,074,706
2038-2043 1,365,000 698,513 2,063,513
2043-2046 1,545,000 308,175 1,853,175
Total 4,650,000 $ 4,446,432 $ 9,096,432 $

7.3.a
Packet Pg. 900 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) West Patterson Financing Authority
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022
36 Note 5 – Long-Term Debt (Continued)
Community Facilities District 2018-1 (Villages of Patterson) Special Tax Bonds, Series 2021 On October 27, 2021 the West Patterson Financing Authority issued $4,465,000 Community Facilities District No. 2018-1 (Villages of Patterson) Special Tax Bonds, Series 2021 (“CFD 2018-1 Series 2021”). The bonds were issued with an original issue premium of $486,498. The bonds were sold as non-rated securities, have a final maturity date of 2051 with coupons ranging from 3.00% to 4.00% and yields ranging from 1.51% to 2.74%. The CFD 2018-1 Series 2021 bonds were issued to (i) construct and acquire certain public facilities of benefit to the district, (ii) provide for the establishment of a reserve fund, and (iii) pay the costs of issuance of the CFD 2018-1 Series 2021 bonds. Interest on the Bonds is payable semiannually on March 1 and September 1 of each year, commencing March 1, 2022.

Principal on the CFD 2018-1 Series 2021 bonds is payable annually beginning September 1, 2022 and each year thereafter until September 1, 2051. The outstanding balance of the CFD 2018-1 Series 2021 bonds at June 30, 2022 was $4,465,000.

The annual debt service requirements are as follows:

Year Ending
June 30, Principal Interest Total
2023 50,000 $ 162,114 $ 212,114 $
2024 30,000 174,650 204,650
2025 35,000 173,675 208,675
2026 40,000 172,550 212,550
2027 45,000 171,275 216,275
2028-2032 320,000 824,000 1,144,000
2033-2037 525,000 740,500 1,265,500
2038-2043 785,000 610,100 1,395,100
2043-2047 1,105,000 422,100 1,527,100
2048-2052 1,530,000 160,600 1,690,600
Total 4,465,000 $ 3,611,564 $ 8,076,564 $
Note 6 – Other Required Disclosures
A. Unrestricted Net Position (Deficit)
At June 30, 2022, the Governmental Activities of the Authority had an unrestricted net deficit of $(75,143,557). The deficit will be eliminated through future secured revenues which will be used to pay outstanding debt.

B. Expenditures in Excess of Appropriations
For the year ended June 30, 2022, the CFD 2005-1 Special Tax Bonds Fund incurred expenditures in excess of budgets by $73,926. For the year ended June 30, 2022, the CFD 2018-1 Special Tax Bonds Fund incurred expenditures in excess of budgets by $291,382. Sufficient resources were available in the fund balance of the funds to cover the excess of expenditures.

7.3.a
Packet Pg. 901 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) 37 REQUIRED SUPPLEMENTARY INFORMATION

7.3.a
Packet Pg. 902 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) 38 This page intentionally left blank.

7.3.a
Packet Pg. 903 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) Western Patterson Financing Authority
Required Supplementary Information (Unaudited)
For the Year Ended June 30, 2022
39 Budgetary Information
The Authority maintains budgetary controls in order to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. The Authority maintains an encumbrance accounting system to provide management with information regarding obligations against appropriations. Budgetary compliance is based on expenditures during the period (U.S.GAAP), rather than expenditures and encumbrances (non-GAAP).

The following procedures are performed by the Authority in establishing the budgetary data reflected in the financial statements:

2. Public hearings are conducted to obtain taxpayers' comments.

4. The budget is legally adopted through the passage of a council resolution.

6. A budget review is presented to the City Council by the City Manager mid-year and approved additions or changes are legally adopted through Council resolution.

7. Formal budgetary integration is employed as a management control device during the year for the funds.

8. Budgets for the funds are adopted on a basis consistent with United States generally accepted accounting principles.

7.3.a
Packet Pg. 904 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) West Patterson Financing Authority
Required Supplementary Information (Unaudited) (Continued) For the Year Ended June 30, 2022
40 Budgetary Comparison Schedule – CFD 2001-1 Special Tax Bonds Variance with
Final Budget
Favorable
Original Final Actual (Unfavorable)
REVENUES:

Assessment fee 6,131,948 $ 6,248,749 $ 5,623,105 $ (625,644) $ Interest 160,333 160,333 63,853 (96,480)
Total revenues 6,409,082 6,292,281 5,686,958 (722,124)
EXPENDITURES:

General administration 586 586 569 17
Project payments 1,700,000 1,700,000 - 1,700,000
Debt service:

Principal 1,576,843 1,626,843 1,784,879 (158,036)
Interest and fiscal charges 3,655,232 3,655,232 3,650,750 4,482 Total expenditures 6,982,661 6,932,661 5,436,198 1,546,463 Net change in fund balance $ (573,579) (640,380) $ 250,760 824,339 $ FUND BALANCE:

Beginning of year 9,572,359
End of year $ 9,823,119
Budgeted Amounts

7.3.a
Packet Pg. 905 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) West Patterson Financing Authority
Required Supplementary Information (Unaudited) (Continued) For the Year Ended June 30, 2022
41 Budgetary Comparison Schedule – CFD 2005-1 Special Tax Bonds Variance with
Final Budget
Favorable
Original Final Actual (Unfavorable)
REVENUES:

Assessment fee 741,049 $ 756,049 $ 788,166 $ 32,117 $
Interest 25,184 25,184 10,260 (14,924)
Total revenues 781,233 766,233 798,426 17,193
EXPENDITURES:

General administration 15,486 15,486 70,953 (55,467)
Debt service:

Principal 100,000 100,000 100,000 -
Interest and fiscal charges 402,506 708,506 726,964 (18,458) Total expenditures 823,992 517,992 897,917 (73,925)

REVENUES OVER (UNDER)
EXPENDITURES (42,759) 248,241 (99,491) (56,732)
OTHER FINANCING SOURCES (USES):

Proceeds from issuance of debt - 6,738,324 6,799,999 61,675 Premium on debt issuance - 680,313 680,313 -
Total other financing sources (uses) 7,418,637 - 7,480,312 61,675 Net change in fund balance $ 7,375,878 248,241 $ 7,380,821 4,943 $ FUND BALANCE:

Beginning of year 4,235,825
End of year $ 11,616,646
Budgeted Amounts

7.3.a
Packet Pg. 906 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) West Patterson Financing Authority
Required Supplementary Information (Unaudited) (Continued) For the Year Ended June 30, 2022
42 Budgetary Comparison Schedule – CFD 2015-1 Special Tax Bonds Variance with
Final Budget
Favorable
Original Final Actual (Unfavorable)
REVENUES:

Assessment fee 326,047 $ 326,047 $ 283,659 $ (42,388) $ Interest 878 878 385 (493)
Total revenues 326,925 326,925 284,044 (42,881)
EXPENDITURES:

General administration 11,363 11,363 6,126 5,237
Debt service:

Principal 35,000 35,000 35,000 -
Interest and fiscal charges 245,338 245,338 244,463 875 Total expenditures 291,701 291,701 285,589 6,112
Net change in fund balance $ 35,224 35,224 $ (1,545) (36,769) $ FUND BALANCE:

Beginning of year 362,660
End of year $ 361,115
Budgeted Amounts

7.3.a
Packet Pg. 907 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) West Patterson Financing Authority
Required Supplementary Information (Unaudited) (Continued) For the Year Ended June 30, 2022
43 Budgetary Comparison Schedule – CFD 2018-1 Special Tax Bonds Variance with
Final Budget
Favorable
Original Final Actual (Unfavorable)
REVENUES:

Assessment fee 91,786 $ 890,738 $ 1,058,941 $ 168,203 $ Interest 100 100 4,265 4,165
Total revenues 890,838 91,886 1,063,206 172,368
EXPENDITURES:

General administration 12,981 17,315 57,869 (40,554)
Capital outlay - - 190,000 (190,000)
Debt service:

Interest and fiscal charges - 263,193 324,022 (60,829)
Total expenditures 280,508 12,981 571,891 (291,383)

REVENUES OVER (UNDER)
EXPENDITURES 610,330 78,905 491,315 (119,015)
OTHER FINANCING SOURCES (USES):

Proceeds from issuance of debt - 4,424,502 4,465,000 40,498 Premium on debt issuance - 486,498 486,498 -
Total other financing sources (uses) 4,911,000 - 4,951,498 40,498 Net change in fund balance $ 5,521,330 78,905 $ 5,442,813 (78,517) $ FUND BALANCE:

Beginning of year 406,574
End of year $ 5,849,387
Budgeted Amounts

7.3.a
Packet Pg. 908 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) 44 This page intentionally left blank.

7.3.a
Packet Pg. 909 Attachment: 2022_Patterson_WPFA_FINAL Report_ (West Patterson Financing Authority’s 2021-22 Financial Audit Report) City Council Agenda Report
TO: Mayor Clauzel and Members of the City Council
FROM: Ken Irwin, City Manager
BY: Nubia Goldstein, City Attorney
MEETING DATE: May 16, 2023
ITEM NO: 8.1
SUBJECT: Approve First Reading and Introduction of Ordinance No. 869 Reading by Title Only, Waving Further Readings, an Ordinance of the City Council of the City of Patterson amending Sections 2.40.030, 2.48.030, and 2.50.040 of the Patterson Municipal Code to Exclude City Employees and Staff from Serving On Committees and Commissions.

RECOMMENDATION
Motion to Approve First Reading and Introduction of Ordinance No. 869 Reading by Title Only, Waving Further Readings, an Ordinance of the City Council of the City of Patterson amending Sections 2.40.030, 2.48.030, and 2.50.040 of the Patterson Municipal Code to Exclude City Employees and Staff from Serving On Committees and Commissions.

BACKGROUND
The Patterson Municipal Code (the “Code”) is the compilation of ordinances adopted by the City Council, which establish the City’s laws regulating matters pertaining to City business. It is necessary to periodically make updates to the Code to ensure it adequately addresses the needs of the City and aligns with the mission of the City Council. State law authorizes the City Council to form committees and commissions which are normally volunteer positions, to address special matters of the City and report community needs and recommendations to the City Council for consideration.

The Code establishes the qualifications for membership on the existing committees and commissions within the City. The proposed Ordinance will amend Chapters 2.40, 2.48, and 2.50 of the Code to clarify that City employees and staff, whether they are compensated or serve in a volunteer capacity, are ineligible to serve on City committees and commissions. This recommendation is being made to alleviate actual or perceived conflicts of interest which could

8.1 Packet Pg. 910
arise by City staff’s dual interests in representing the City as an employee and as a member of the community on a committee or commission. Commission and committee members are representatives of the community as a whole and should bring independent and unbiased perspectives in order to participate in an advisory role to the City Council.

The Ordinance also limits commissioners and committee members to serving on one commission or committee at a time. This will restrict members from serving on multiple committees and will help encourage wider public participation.

The Ordinance does not impact the provisions of the Code that allow City staff to serve in an ex officio capacity (advisory and non-voting) on commissions and committees. There are no other substantive changes to the existing language in the Code.

FISCAL IMPACT
Adoption of this Ordinance will have no fiscal impact.

POLICY ALTERNATIVES
The City Council’s options are:

1. Introduction and first reading of Ordinance No. 869 without any changes;

2. Introduction and first reading of Ordinance No. 869 with changes or direction to staff; or

3. Reject Ordinance No. 869 entirely.

8.1 Packet Pg. 911
{CW128999.2}
ORDINANCE NO. 869

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PATTERSON, AMENDING SECTION 2.40.030, MEMBERS, OF CHAPTER 2.40 PLANNING COMMISSION; SECTION 2.48.030, MEMBERS, OF CHAPTER 2.48, ECONOMIC STRATEGIC COMMISSION; AND SECTION 2.50.040, MEMBERS, OF CHAPTER

2.50, PARKS, RECREATION, AND BEAUTIFICATION COMMISSION, OF TITLE 2,

ADMINISTRATION AND PERSONNEL, OF THE PATTERSON MUNICIPAL CODE

TO EXCLUDE CITY EMPLOYEES AND STAFF FROM PARTICIPATING IN CITY

COMMITTEES OR COMMISSIONS
WHEREAS, the City of Patterson (“City”) is committed to ensuring that its City commissions and committees operate in an ethical and impartial manner; and WHEREAS, City employees and staff members have a unique position of trust and responsibility within City government; and
WHEREAS, there is a possibility for potential for conflicts of interest between City staff members serving on City commissions and their official duties as City employees; and WHEREAS, it is in the best interest of the City to limit the potential for conflicts of interest and to promote transparency and accountability in its decision-making processes; and WHEREAS, the City Council has determined that prohibiting City staff members from serving on City commissions and committees as voting members is necessary to achieve these goals; and WHEREAS, the City Council has also determined that limiting the number of committees and commissions any individual can serve on will help encourage wider public participation; and WHEREAS, the Patterson Municipal Code sets forth the candidate qualifications for each of the City’s commissions and committees, including the Planning Commission; the Economic Strategic Commission; and the Parks, Recreation and Beautification Commission; and WHEREAS, the Patterson City Council seeks to adopt an ordinance amending Sections

2.40.030(B), 2.48.030(I), and 2.50.040(I) of the Patterson Municipal Code to restrict City employees and staff from serving on the enumerated committees and commissions.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PATTERSON ORDAINS AS FOLLOWS:

SECTION 1. Section 2.40.030(B) of Chapter 2.40, Planning Commission, of the Patterson Municipal Code shall be amended to read as follows:

2.40.030 Members.

8.1.a
Packet Pg. 912 Attachment: Ordinance No. 869 Exclude City Employees and Staff from Serving On Committees and Commissions (First Reading & {CW128999.2}
B. Qualifications. Each commission member shall be a resident of the City. Both City employees and staff, whether they are compensated or serve as a volunteer, and City officers, whether they are elected or appointed, shall not be eligible for membership on the Planning Commission. A commission member may only serve on one City commission or committee at a time.

SECTION 2. Section 2.48.030(I) of Chapter 2.48, Economic Strategic Commission, of the Patterson Municipal Code shall be amended to read as follows:

2.48.30 Members.

I. Qualifications. Each commissioner shall have a basic knowledge of economic development, and shall have a strong desire to be active in the work of the commission. Each commission member shall be a resident of the City. Both City employees and staff, whether they are compensated or serve as a volunteer, and City officers, whether they are elected or appointed, shall not be eligible for membership on the Economic Strategic Commission. A commission member may only serve on one City commission or committee at a time.

SECTION 3. Section 2.50.040(I) of Chapter 2.50, Parks, Recreation and Beautification Commission, of the Patterson Municipal Code shall be amended to read as follows:

2.50.040 Members.

I. Each commission member shall be a resident of the City. Both City employees and staff, whether they are compensated or serve as a volunteer, and City officers, whether they are elected or appointed, shall not be eligible for membership on the Parks, Recreation and Beautification Commission. A commission member may only serve on one City commission or committee at a time. The city recreation and community services director or his or her designee shall be an ex officio member of the commission with no voting power. The public works director or his or her designee shall be an ex officio member of the commission with no voting power.

SECTION 4. All other City committees not otherwise codified in the Patterson Municipal Code, including but not limited to the Public Safety Committee, Downtown Revitalization Committee and the Senior Center Board of Directors, shall have the following membership requirements.

Each committee member shall be a resident of the City. Both City employees and staff, whether they are compensated or serve as a volunteer, and City officers, whether they are elected or appointed, shall not be eligible for membership on a City committee. A committee member may only serve on one City commission or committee at a time.

SECTION 5. If any section, subdivision, sentence, clause, phrase or portion of this Ordinance is, for any reason, held invalid or unconstitutional by any court of competent jurisdiction, such portion shall be deemed a separate, distinct and independent provision, and such holding shall not affect the validity of the remaining portions thereof.

8.1.a
Packet Pg. 913 Attachment: Ordinance No. 869 Exclude City Employees and Staff from Serving On Committees and Commissions (First Reading & {CW128999.2}
SECTION 6. This Ordinance shall be published by one insertion in The Patterson Irrigator, a newspaper of general circulation, printed and published in the City of Patterson, within fifteen (15) days after its final passage and shall take effect, and be in force, thirty (30) days after its final passage.

The foregoing Ordinance was introduced at a regular meeting of the City Council of the City of Patterson, held on the 16th day of May 2023, by __________________, who moved its introduction, which motion was duly seconded by ___________________. Said Ordinance was given a second reading at a regular meeting of the City Council held on the ___, day of __________, 2023, and after such reading, _________________ moved its adoption, seconded by _____ , and said Ordinance was thereupon adopted by the following roll call vote:

AYES:

NOES:

EXCUSED:

APPROVED:
_________________________
Michael Clauzel
Mayor of the City of Patterson
ATTEST:
___________________________
Aracely Alegre
City Clerk of the City of Patterson

8.1.a
Packet Pg. 914 Attachment: Ordinance No. 869 Exclude City Employees and Staff from Serving On Committees and Commissions (First Reading &

Patterson City CouncilMay 16, 2023

Patterson City Council
May 16, 2023