Portola City Council
December 11, 2024

1 City of Portola
AGENDA
Regular Meeting
December 11, 2024 06:00 PM
35 Third Ave, Portola, CA 96122
https://www.cityofportola.com/
Mayor Pat Morton • Mayor Pro-Tem Jim Murphy • Councilmember Bill Powers • Councilmember Leah Turner • Councilmember Mikki Battaglia

REASONABLE ACCOMMODATIONS
The City Council welcomes you to its meetings which are regularly held the second and fourth Wednesday of each month at 6:00 p.m. at the City Hall Council Chambers. Your interest and participation is encouraged and welcome.

As a courtesy, the City Council meeting is also accessible to the public via live streaming at:
https://zoom.us/j/3583067836 or by phone at: Phone Number 1.669.900.6833; Meeting ID: 358 306 7836. Online and telephonic access does not guarantee the public the ability to observe the meeting in the event there is a disruption or connectivity issues that affect broadcasting.

Members of the public who want to be assured that they have the ability to observe the meeting and make comment during the meeting, should attend the meeting in-person.

Any person desiring to address the City Council or any committee, commission or agency under the jurisdiction of the City Council, on any item not on the agenda may do so during public comment period. Public comment during the meeting will be accepted in person only.

Public Comment can be made by clicking on the "comment" section directly from the agenda, next to each agenda item.

Public comment for regular meetings will also be accepted via email sent to the Administrative Clerk, at [email protected] which if received at least 24 hours prior to commencement of the meeting will be distributed to the Council and posted to the City’s website prior to the meeting.

Meeting facilities are accessible to persons with disabilities. Reasonable efforts will be made to accommodate the participation of the disabled in the City’s public meetings. If special accommodation for the disabled is needed, please notify the City at 530.832.6801 at least 48 hours prior to the meeting.
2 1. Call to Order
A. Roll Call
B. Pledge of Allegiance

2. Public Comments
Discussion Comment
This section is intended to provide members of the public with an opportunity to comment on any subject that does not appear on this agenda. Please note that California law prohibits the City Council from taking action on any matter which is not on the posted agenda, unless it is determined to be an urgency item by the City Council. Any member of the public wishing to address the City Council during “PUBLIC COMMENT” shall first secure permission of the presiding officer, stand; may give his/her name and address to the Clerk for the record. Each person addressing the City Council shall be limited to five minutes ordinarily, unless the presiding officer indicates a different amount will be allotted.

3. Council Reorganization
Discussion Possible Action Comment
Annually the City Council reorganizes and changes Mayor and Mayor Pro-tem. Consider nominations and make appointments for Mayor and Mayor Pro-tem

4. City Communications
Discussion Comment View Item
A. City Council Communications
B. Reports: Beckwourth Peak Fire Protection District/Plumas County Sheriff/Northern Sierra Air Quality District.

C. Staff Communications
D. City Manager Report (Attached)

5. Consent Agenda
Discussion Possible Action Comment View Item
These items are expected to be routine and non-controversial. The City Council will act upon them at one time without discussion. Any Councilmembers, staff member or interested party may request that an item be removed from the consent agenda for discussion. Additional budget appropriations will require a four/fifths roll call vote.

A. Claims - Adopt Resolution No. 2600 authorizing payment of claims for Payroll for the period October 10, 2024 through December 11, 2024 and Accounts Payable for the period of November 14, 2024 through December 11, 2024.

Total Accounts Payable Claims: $222,920.84
Total Payroll Claims: $135,496.92
Total Claims: $358,417.76
3 B. Minutes of the Regular meeting November 13, 2024- Approve the minutes of the Regular meeting from November 13, 2024

6. Refuse Collection Rate Increase 2025 – Public Hearing for Resolution No. 2601 Discussion Possible Action Comment View Item
A public hearing will be held to receive public comment on the rate increase. Adopt Resolution No. 2601 for 2025 Refuse Collection Rates.

7. 2024 City Audit
Discussion Possible Action Comment View Item
Review the City Audit for the 2023-2024 Fiscal year.

8. American Rescue Plan Act
Discussion Possible Action Comment View Item
Discuss the use of the balance of American Rescue Plan Act funds. Approve the staff recommendations for use of the balance of the funds.

9. Update the salary schedule in compliance with California Code of Regulations 570.5 Discussion Possible Action Comment View Item
Review and approve an updated salary schedule

10. City Policy on Communication and Engagement Restrictions for Active Legal Matters Discussion Possible Action Comment View Item
Review policy and adopt Resolution No. 2602

11. Closed Session
Discussion Possible Action Comment
A. Litigation - Pending/Existing Litigation
Conference with Legal Counsel - Existing Litigation Pursuant to Gov. Code Section 54956.9 (d)(1) – Claim of Jason Shaw
B. Litigation - Pending/Existing Litigation
Conference with Legal Counsel - Existing Litigation Pursuant to Gov. Code Section 54956.9 (d)(1) – Claim of Lindsey Shaw

12. Adjournment
Document Name City Manager Report
Document Number TBD Revision Letter A
Document Location Server Revision Date 12/06/2024
Document Type Report Council Adoption Date Not Applicable Resolution No. Not Applicable
Page
1 | 3
City Manager Report
12/11/2024
General Updates
Staffing
• City Hall is now fully staffed with the filling of the Administrative Clerk position
• Deputy City Clerk has been appointed and previous Deputy City Clerks have been rescinded by the elected City Clerk
• No current open positions
Public Works (PW)
• Storm Response: 11/20/24 through 11/24/2024
o Prepped for the potential of flooding and/or significant snowfall with the anticipated atmospheric river conditions
o Sandbags were made available to the citizens of Portola during the event with notice being placed on City’s website
o Minor flooding reported was addressed by staff
Gulling Street Bridge
• Current monitoring:
o Continuous monitoring at the designated monitoring points by PW staff
• Automated monitoring system development and implementation:
o Currently being prepared and assessed by ETI instruments o Staff is working to finalize contract for installation of monitoring system
o Meeting scheduled for Tuesday 12/10/2024 with all parties Document Name City Manager Report
Document Number TBD Revision Letter A
Document Location Server Revision Date 12/06/2024
Document Type Report Council Adoption Date Not Applicable Resolution No. Not Applicable
Page
2 | 3
National Firewise USA® Program
• Councilmember Battaglia spearheaded the initiative to obtain the certificate of recognition issued through 2025
• Posted information on the program as well as the certificate to City website for use by the public
Planning
• Update meeting held on 11/20/2024 with Karen Downs (Planning Consultant) o Continuing to work through long range and current planning items o Update meetings to be held monthly with the next meeting scheduled for 12/18/2024
Public Relations
City Website Enhancements
• General website maintenance is underway with the focus on:
o News & notice section cleanup
o Staffing updates and edits
o Deadlink resolution
• Use of banner for public notifications:
o City Hall office hours during holidays
o Urgent public messaging
• Highlighting of community events sponsored by other organizations on landing page
o Christmas in Old Town
o Santa Trains
City Facebook
• Currently is not in use
• Staff is utilizing website for public outreach
• In the processes of identifying the most effective method for public outreach communication moving forward
Document Name City Manager Report
Document Number TBD Revision Letter A
Document Location Server Revision Date 12/06/2024
Document Type Report Council Adoption Date Not Applicable Resolution No. Not Applicable
Page
3 | 3
Public Records Requests (PRR)
November PRR Metrics
Total Number of PRR 8
Number of Unique Requestor(s)
2 0
Number of Repeat Requestor(s)3 8
Repeat Requestor(s)
Name (CivAssist): Ashlee 2
Name (CivAssist): Lindsey 2
Name (CivAssist): Scrintch 3
Name (Oral): Lindsey Shaw 1
1 Total PRR indicates PRR entered via the CivAssist system during the calendar year 2 Unique Requestor(s): Individuals or entities that have submitted at least one request within the reporting period, with each requestor counted only once
3 Repeat Requestor(s): Individuals or entities that submit multiple requests over the reporting period 3 3
0 1
8 3
28 17
10 15
8 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV
2024 Monthly PRR Total
2024 Total PRR1
(Through November)
96 2022-2023 Total PRR
85 Resolution No. 2600 December 11, 2024
RESOLUTION NO. 2600

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PORTOLA

AUTHORIZING PAYMENT OF CLAIMS FOR PAYROLL FOR THE PERIOD OCTOBER 10, 2024 THROUGH DECEMBER 11, 2024 AND ACCOUNTS PAYABLE FROM NOVEMBER 14, 2024 THROUGH DECEMBER 11, 2024.

WHEREAS, the City Council of the City of Portola has been fully advised that all such claims and demands are legal obligations of the City; and,
WHEREAS, the City Council has fully considered the claims and money demands and payment thereof as set forth below and in "Exhibit A" attached hereto and incorporated herein.

CHECK NO’S 46435-46472 $146,588.39
CHECK NO’S 46525-46566 $ 75,921.30
CHECK NO’S 46474 & 46475 $ 411.15 (utility refunds)
VOID CHECKS 46542, 46561
TOTAL ACCOUNTS PAYABLE: $ 222,920.84
PAYROLL 10/05/2024-10/18/2024 $ 26,107.46
PAYROLL 10/19/2024-11/01/2024 $ 37,819.16
PAYROLL 11/02/2024-11/15/2024 $ 25,815.55
PAYROLL 11/16/2024-11/29/2024 $ 45,754.75
TOTAL PAYROLL $135,496.92
TOTAL CLAIMS: $358,417.76
NOW THEREFORE BE IT RESOLVED THAT all claims and demands represented are just and proper and legal demands or claims against the City of Portola, and the payment of any such demands is approved and authorized.

PASSED, APPROVED AND ADOPTED this 11
th day of December 2024 by the following vote:

AYES:

NOES
ABSTAIN:

ABSENT:
, Mayor
ATTEST:

Malachi Mansfield, Deputy City Clerk
I, Malachi Mansfield, Deputy City Clerk of the City of Portola, do hereby certify that the above and foregoing Resolution was duly passed and adopted by the City Council at the City of Portola Regular meeting thereof held on December 11, 2024.

Malachi Mansfield, Deputy City Clerk

1 City of Portola
Minutes
Regular Meeting
November 13, 2024 06:00 PM
35 Third Ave, Portola, CA 96122
https://www.cityofportola.com/

1. Call to Order
The meeting was called to order at 6:00 pm by Mayor Pat Morton.

A. Roll Call

Present: Mayor Pat Morton, Mayor Pro-Tem Jim Murphy, Councilmember Bill Powers, Councilmember Leah Turner

Absent: Councilmember Mikki Battaglia
Staff Present: Susan Scarlett, Interim City Manager/Finance Officer, Steve Gross, City Attorney
B. Pledge of Allegiance
Led by Mayor Pat Morton

2. Public Comments
None

3. City Communications
A. City Council Communications
Councilmember Bill Powers - Juvenile Justice Coordinating Council Mayor Pro-Tem Jim Murphy - Meeting with US Representative, Kevin Kyle regarding the Portola bridge project; LAFCo meeting; Airport Land Use Commission meeting; meeting with Regina Martinez of Plumas Rural Services; compliments the Portola Historical Society on the completion of a building to house the 32 Le France Fire Engine Councilmember Leah Turner - No report
Mayor Pat Morton - Meeting with staff member of US Representative, Kevin Kyle regarding Portola bridge project; attended the Beckwourth Peak Fire Protection District meeting; attended LAFCo
B. Reports: Beckwourth Peak Fire Protection District/Plumas County Sheriff/Northern Sierra Air Quality
2 Beckwourth Peak Fire Protection District: Jack Rosevear, Fire Chief provided a written report and update on the Fire District which was included in the agenda packet.

Plumas County Sheriff: No report
Northern Sierra Air Quality: Susan Scarlett, Interim City Manager provides a report and update from Councilmember Mikki Battaglia regarding Northern Sierra Air Quality.

C. Staff Communications
None
D. Interim City Manager Report
Susan Scarlett, Interim City Manager reports the annual audit is complete, the audit is clean with no findings. The audit will be on the December 11, 2024 agenda.

4. Consent Agenda
A. Claims - Resolution No. 2599
October 23, 2024 Checks 46333-46387 $117,692.73
November 13, 2024 Checks 46388-46519 $112,070.21
Total AP $229,762.94
Updated information on check numbers and the resolution will be available by the meeting.

B. Adopt minutes of the October 9, 2024 Regular Meeting C. Proclamations for Emergencies - Renew the Emergency declaration for both the 2023 Winter storms and the Gold Complex Fire.

A) Adopted Resolution No. 2599, as presented and amended B) Adopted Minutes of October 9, 2024 Regular Meeting
C) Renewed Emergency Declaration for both the 2023 winter storms and the Gold Complex Fires
Mayor Pro-Tem Jim Murphy motioned to approve. A second was made by Councilmember Bill Powers.

The roll call vote:

Aye Mayor Pat Morton Aye Mayor Pro-Tem Jim Murphy Aye Councilmember Bill Powers Aye Councilmember Leah Turner Absent Councilmember Mikki Battaglia

5. Modify the meeting dates for November and December
Regular Meeting dates are confirmed for November 13, 2024 and December 11, 2024.

Mayor Pro-Tem Jim Murphy motioned to approve. A second was made by Councilmember Bill Powers.

The roll call vote:
3 Aye Mayor Pat Morton Aye Mayor Pro-Tem Jim Murphy Aye Councilmember Bill Powers Aye Councilmember Leah Turner Absent Councilmember Mikki Battaglia

6. "Plan for Power Outage" Flyer
Upon report and recommendation of Susan Scarlett, Interim City Manager, the Council directed staff to copy the "Plan for Power Outage", in the blue colored copy as presented, and include the flyer in the utility bills at the beginning of December.

The "Plan for Power Outage" flyer has been prepared by Lori Pini of CalOES.

Councilmember Leah Turner motioned to approve. A second was made by Mayor Pro-Tem Jim Murphy.

The roll call vote:

Aye Mayor Pat Morton Aye Mayor Pro-Tem Jim Murphy Aye Councilmember Bill Powers Aye Councilmember Leah Turner Absent Councilmember Mikki Battaglia

7. American Rescue Plan Act/State and Local Fiscal Recovery Fund usage of balance.

Discussion is held regarding the American Rescue Plan Act/State and Local Fiscal Recovery Funds. In 2021-2022 the City of Portola received $461,697 of Fiscal Recovery Funds as part of the pandemic recovery efforts. At this time, the balance of the funds is $87,809.75. Funds need to be fully obligated by December 31, 2024. Following discussion, Mayor Pro-Tem, Jim Murphy requests a detailed list of projects approved for the December 11, 2024 regular meeting. This matter is continued to December 11, 2024 to determine use of the remaining funds.

8. Closed Session
A. Closed Session Pursuant to Government Code Section 54956.9(d)(1), Conference with Legal Counsel, Existing Litigation – Claim of Jason Shaw With regard to the claim of Jason Shaw, the Council took action to reject all portions of the claim that are timely (within the 180 days) and no action on the untimely portion of the claim.

Mayor Pro-Tem Jim Murphy motioned to approve. A second was made by Councilmember Bill Powers.

The roll call vote:

Aye Mayor Pat Morton Aye Mayor Pro-Tem Jim Murphy Aye Councilmember Bill Powers Aye Councilmember Leah Turner Absent Councilmember Mikki Battaglia
B. Conference with Legal Counsel - Existing Litigation Pursuant to Gov. Code Section 54956.9 (d)(1) Conference with Legal Counsel, Existing Litigation – Claim of Lindsey Shaw With regard to the claim of Lindsey Shaw, the Council took action to reject all portions of the claim that are timely (within the 180 days) and no action on the untimely portion of the claim.

Councilmember Leah Turner motioned to approve. A second was made by Mayor Pro-Tem Jim Murphy.

The roll call vote:

Aye Mayor Pat Morton Aye Mayor Pro-Tem Jim Murphy Aye Councilmember 4 Bill Powers Aye Councilmember Leah Turner Absent Councilmember Mikki Battaglia
C. Closed Session pursuant to Government Code Section 54957 – Public Employee Appointment City Manager
The Council took no reportable action on item 8C

9. Report from Closed Session Items A and B are summarized in the minutes. In addition the City Council approved the Interim City Manager to execute an agreement with the Law Firm Jackson Lewis.

Mayor Pro-Tem Jim Murphy motioned to approve. A second was made by Councilmember Bill Powers.

The roll call vote:

Aye Mayor Pat Morton Aye Mayor Pro-Tem Jim Murphy Aye Councilmember Bill Powers Aye Councilmember Leah Turner Absent Councilmember Mikki Battaglia

10. City Manager Employment Agreement
The City Council reviewed the City Manager employment agreement that had been presented in the agenda packet without a named candidate. City Attorney Steve Gross said that the agreement is between the City and Ryan Bonk. Attorney Gross reviewed the agreement terms including salary and benefits. After a unanimous vote of the Council members present Mr. Bonk was welcomed by the Council as the new City Manager
Mayor Pro-Tem Jim Murphy motioned to approve. A second was made by Councilmember Bill Powers.

The roll call vote:

Aye Mayor Pat Morton Aye Mayor Pro-Tem Jim Murphy Aye Councilmember Bill Powers Aye Councilmember Leah Turner Absent Councilmember Mikki Battaglia

11. Adjournment
The meeting was adjourned at 7:51 p.m.
1 MEETING DATE: December 11, 2024
AGENDA ITEM: 6. Refuse Collection Rate Increase 2025 – Public Hearing for Resolution No. 2601
FROM: Ryan Bonk & Tom Valentino
RE: Resolution No. 2601 - 2025 Refuse Collection Rate Increase – Public Hearing
BACKGROUND:

Under the revised and amended franchise agreement between the City of Portola and Intermountain Disposal Company, the company is entitled to an annual rate adjustment for changes in the cost of doing business, consistent with Section 5.3 of the agreement.

IMD is able to petition the city council for increased refuse collection rates for certain passthrough expenses, as described in Section 5.5 of the franchise agreement. Increased trash disposal fees at the Delleker Transfer Station over the past two qualify as a pass-through expense and are incorporated into some, but not all, of the proposed 2025 refuse collection rates.

The 2025 proposed rates were presented to the Portola City Council at the October 9, 2024, meeting. The council approved starting the rate increase process, consistent with California State Proposition 218 guidelines, by authorizing issuance of the proposed refuse collection rates to Portola property owners and IMD customers by postal service and commencing the 45-day public comment period.

A year ago, the City Council approved a refuse collection services rate increase of 2.51% for the 2024 calendar year.

Changes in the Cost of Doing Business
The adjustment for increases of the cost of doing business is based on U.S. Bureau of Labor Statistics and the U.S. Energy Information Administration data for consumer indices and fuel price changes over a one-year period (August 2023 to August 2024). Specifically, the two Federal agency statistics used to calculate the annual increase are:
 Bureau of Labor Statistics Consumer Price Index for All West Urban Consumers, NonSeasonally Adjusted; and  Energy Information Administration California No. 2 Diesel Retail Prices.

Staff calculated the inflation and diesel fuel increases using August 2023 and August 2024 federal data and the calculation procedure stated in section 5.3 of the franchise agreement.

The combined CPI/Diesel Fuel rate increase is 0.61%. Intermountain Disposal’s accounting firm VT Accounting Associates separately calculated the CPI and Fuel increases and agreed with our calculation.
2 Transfer Station Fee Increases
The Plumas County Board of Supervisors approved fee increases at the Delleker Transfer Station of 8.91% (effective July 5, 2022) and 6.09% (effective July 1, 2024). IMD seeks to increase refuse collection rates for the transfer station increases, consistent with section 5.5 of the franchise agreement – Pass-Through Costs.

To determine the percentage of the two transfer station increases to pass-through to the refuse collection rates, VT Accounting Associates provided IMD financial information for 2023.

VT states IMD had total revenue of $627,927 and disposal fees at the transfer station of $150,777 in 2023. Disposal expenses ($150,777) as a percentage of revenue ($627,927) is

24.0 percent.

To calculate the transfer station fee increases on the 2025 refuse collection rates, we sum the two fee increases percentages and multiply the sum by 24.0%. The result is a 3.60% increase for trash disposal services, effective 2025.

The 2025 rates for residential and commercial refuse collection and related services in the city of Portola are attached. These rates are the only fees IMD can assess residential and commercial customers in the city.

Proposition 218 Compliance Process
In compliance with state Proposition No. 218, a notice of the proposed rate increase was mailed to all property owners and IMD customers (including tenants) within the City (see attached notice). In accordance with noticing procedures, a public hearing was established and scheduled for December 11, 2024. Although notices were sent to property owners and customer’s only one protest can be accepted from each parcel within the City.

At the time of staff report publication, the city has received 3 written protests.

Without the sufficient number of protests (50% plus one of affected properties in Portola) the rate increase may move forward by City Council approval of a resolution. Accordingly, Resolution No. 2601 has been prepared for Council review and possible action (attached).

RECOMMENDATION:

Staff recommends that the City Council open the public hearing, receive public comment on the rate increase, close the public hearing and approve Resolution No. 2601 to adopt the 2025 refuse collection rates.

ATTACHMENTS:

A. RESOLUTION 2601 IMD RATE INCREASE
B. IMD FRANCHISE AGREEMENT
C. INTERMOUNTAIN DISPOSAL PROPOSED 2025 RATE INCREASE
3 D. PROTESTS RECEIVED 20241204
Resolution No. 2601 December 11, 2024
RESOLUTION 2601

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PORTOLA

ADOPTING WASTE COLLECTION AND RESIDENTIAL RECYCLING RATES WHEREAS, in accordance with the Franchise Agreement between the City of Portola and Intermountain Disposal the Portola City Council is considering an increase to waste collection and residential recycling rates billed by Intermountain Disposal to customers within the City; and,
WHEREAS, the City Council has determined that the rate increase requested by Intermountain Disposal complies with the approved Franchise Agreement; and, WHEREAS, in accordance with Government Code section 54515, Government Code Section 54300, Part I of Division 2 of Title 5 of the Government Code and Proposition 218, a Public Hearing was held on December 11, 2024 to consider changes to waste collection and residential recycling rates billed by Intermountain Disposal to property owners within the City of Portola and at the hearing the City Council received comments from the public regarding the proposed changes; and,
WHEREAS, the City received fewer protests to the proposed increase in rates for waste collection and residential recycling than is required to prevent the City Council from increasing the fees.

NOW THEREFORE, BE IT HEREBY RESOLVED by the City Council of the City of Portola that the waste collection and recycling rates charged to customers within the City of Portola by Intermountain Disposal in accordance with its franchise agreement as shown on Exhibit “A”, which is attached hereto and incorporated herein, are hereby adopted and shall take effect on January 1, 2025.

PASSED, APPROVED AND ADOPTED this 11th day of December 2024 by the following vote:

AYES: _______________________
NOES: _______________________
ABSTAIN: ___________________
ABSENT: ____________________

, Mayor
ATTEST:
_______________________________
Malachi Mansfield, Deputy City Clerk
I, Malachi Mansfield, Deputy City Clerk of the City of Portola, do hereby certify that the above and foregoing Resolution was duly passed and adopted by the City Council of the City of Portola at a regular meeting thereof held on December 11, 2024.

________________________________
Malachi Mansfield, Deputy City Clerk

AMENDED AND EXTENDED

EXCLUSIVE FRANCHISE AGREEMENT

BETWEEN

THE CITY OF PORTOLA AND
INTERMOUNTAIN DISPOSAL, INC. FOR

SOLID WASTE AND RECYCLABLE MATERIAL

COLLECTION SERVICES
AND

OPERATION OF THE ENVIRONMENTAL RECLAMATION
CENTER

AT PORTOLA LANDFILL
AMENDMENT NO. 1, MODIFY SECTION 5.3, EXECUTED AUGUST 25, 2021 AMENDMENT NO. 2, ADD SECTION 5.6, EXECUTED APRIL 13, 2022 Exhibit A
1 AMENDED AND EXTENDED EXCLUSIVE FRANCHISE AGREEMENT FOR SOLID

WASTE AND RECYCLABLE MATERIALS COLLECTION SERVICES AND

OPERATION OF THE ENVIRONMENTAL RECLAMATION CENTER AT PORTOLA

LANDFILL
This Amended and Extended Exclusive Franchise Agreement for Solid Waste Collection and Recycling Services, (“Agreement”) is entered into this ____ day of ____________, 2017 by and between the City of Portola (“City”) and Intermountain Disposal, Inc., a California corporation (“Company”).

RECITALS
WHEREAS, the Legislature of the State of California, by enactment of the California Integrated Waste Management Act of 1989 (California Public Resources Code Section 40000 et. seq.) ("AB 939”), has declared that it is in the public interest to authorize and require local agencies to make adequate provisions for Solid Waste handling within their jurisdictions to meet the goals and requirements of AB 939 and its successor legislation;
WHEREAS, pursuant to California Public Resources Code Section 40059(a)(2), the City has determined that in order to protect the public health and safety of the residents and business within the City of Portola, it is appropriate to provide for solid waste collection and disposal by a private waste hauler as an alternative to providing such services through public resources; and to that end has determined that an exclusive Franchise be awarded to a qualified company for the Collection, transportation, Recycling, processing, and Disposal of Solid Waste and Recyclable Materials and other services to meet the goals and requirements of AB 939; which Franchise can be appropriately integrated into and function as part of the solid waste system provided by the City;
WHEREAS, Public Resources Code Section 40059 permits the City to impose terms and conditions on the award of a solid waste franchise if, in the opinion of the governing body, the public health, safety and well-being require the imposition of those terms and conditions; WHEREAS, Company has represented and warranted to the City that it has the experience, responsibility, and qualifications to conduct the services detailed herein for the collection, safe transportation and disposal of Franchise Materials as described herein; WHEREAS, the City Council of the City of Portola determines and finds that: (i) based on Company’s qualifications, technical proposal, and financial strength, as well as cost to the City, the proposal of the Company’s to provide Collection, transportation, Recycling, and Disposal of Solid Waste services for single family residences, multifamily dwellings and commercial service Customers, as described in this Franchise, is in the best interest of the City and the public health and safety; and, (ii) the public health, safety and well-being require the grant of a franchise on the terms and conditions contained in this Franchise;
2 WHEREAS, Chapter 8.04.031 of the City of Portola Municipal Code (City Code) requires, among other things, that a commercial collector or transporter of solid waste be properly franchised by the City;
WHEREAS, the Company agrees to and acknowledges that it shall lawfully dispose of all Solid Waste collected pursuant to this Agreement at a permitted disposal facility; and WHEREAS, the City and the Company (“Parties”) initially entered into a franchise agreement effective November 1, 2002 and hereto desire to enter into this amended and extended Agreement.

NOW, THEREFORE, in consideration of the Recitals stated above, for good and valuable consideration, and of the terms, conditions, covenants and agreements contained herein, the Parties hereby agree as follows:

ARTICLE 1. DEFINITIONS
Whenever any term used in this Agreement has been defined by the provisions of the City of Portola Municipal Code or by Division 30, Part 1, Chapter 2 of the California Public Resources Code, the definitions in the City Code shall apply first and then the Public Resources Code shall apply, unless the term is otherwise defined in this Agreement, in which case this Agreement shall control.

Except as provided in Article 1, words beginning with lower case letters are being used with their common ordinary meanings, not as defined terms. Otherwise, the following capitalized words and terms shall have the following meanings:

1.1 AB 939
"AB 939" means the California Integrated Waste Management Act of 1989 (California Public Resources Code Section 40000 et. seq.), as it may be amended from time to time.

1.2 Agreement
"Agreement" means this Franchise Agreement between the City and the Company for the Collection, transportation, Recycling, and Disposal of Solid Waste, Recyclable Materials, and other services related to meeting the goals and requirements of AB 939, including all exhibits and attachments, and any amendments thereto.

1.3 Appliances
“Appliances” means refrigerator, freezers, ovens, ranges, clothes washers and dryers, water heaters and dishwashers.

1.4 Billings
“Billings” means invoices generated by the Company for the purpose of collection of payments for the residential and commercial solid waste collection services. 3 1.5 Bin
“Bin” means a solid waste container possessing a lid, the top of which shall not exceed 72 inches in height from the surface of the ground and having a capacity of at least one cubic yard, but not more than eight cubic yards.

1.6 Bulky Waste
"Bulky Waste" means large, oversize items such as an appliance, furniture, mattress and box spring.

1.7 Can
“Can” means a solid waste container provided by the Customer, serviced by manual collection and not exceeding thirty-two (32) gallons in volume and not exceeding 40 pounds in weight.

1.8 Cart
"Cart" means a plastic container with a hinged lid and wheels with a capacity of thirty-two (32), sixty-four (64) and/or ninety-six (96) gallons.

1.9 City
“City” means the City of Portola, a California Public agency.

1.10 City Manager
"City Manager” means the city council appointed manager of the affairs of the city of Portola.

1.11 City Code
“City Code” means the City of Portola Municipal Code – Solid Waste Ordinance, as it may be amended from time to time.

1.12 Collect/Collection
"Collect" or "Collection" means to take physical possession, transport, and remove Solid Waste and Recyclable Materials within and from the City of Portola.

1.13 Collection Vehicle
"Collection Vehicle" means any vehicle or equipment specifically designed and manufactured for the purpose of Solid Waste and Recyclable Materials Collection. 4 1.14 Company
"Company" means Intermountain Disposal, and its officers, directors, employees, agents, companies owned by Company and, if the City approves a subcontractor pursuant to Section

10.4, its Subcontractors and/or, in the event of an assignment pursuant to Section 10.3, its assignees.

1.15 Company Compensation
"Company Compensation" means the revenue received by the Company from Billings in return for providing services in accordance with this Agreement and any amendments to this Agreement.

1.16 Commercial Customer
“Commercial Customer” means any person who produces commercial solid waste and uses a container, bin or debris box for accumulation thereof.

1.17 Construction and Demolition Debris
“Construction and Demolition Debris” means waste building materials and rubble resulting from construction, remodeling, repair and demolition operations on pavements, houses, commercial buildings and other structures.

1.18 Containers
"Containers" means any and all types of Solid Waste and Recycling receptacles, including Carts, Bins, and Debris Boxes.

1.19 County
“County” means the County of Plumas, California

1.20 Customer
"Customer" means the Person having the care and control of any Premises in the City of Portola who receives Solid Waste and Recyclable Material Collection services from the Company.

1.21 Debris Box
“Debris Box” means an open-top solid waste container with a capacity of at least 10 cubic yards, but not greater than 50 cubic yards.

1.22 Disposal Site
“Disposal Site” means the facility at which the City directs the Company to Dispose of Solid Waste. The Disposal Site may not be the site of ultimate disposition of Collected Solid Wastes. 5 1.23 Dispose or Disposal
"Dispose" or "Disposal" means the disposition of Solid Waste Collected by the Company at the Disposal Site.

1.24 Disposal Cost
"Disposal Cost" means the portion of the fee charged to the Customer that represents the cost of Disposal of the Solid Waste Collected, commonly referred to as the “gate fee.”

1.25 Effective Date
“Effective Date” means the date this Agreement takes effect, as defined in Section 2.3.

1.26 "Electronic Waste" or "E-Waste"
"Electronic Waste" and "E-Waste" means discarded consumer products such as computers, televisions, monitors, cell phones, radios and stereo equipment.

1.27 End Market
“End Market” means the established destination for recyclable material that qualifies as a waste diversion credit for the purpose of compliance with AB 939.

1.28 Environmental Laws
"Environmental Laws" means all federal and state statutes, County and City ordinances concerning public health, safety and the environment including, without limitation, the Collection, transport and Disposal of Solid Waste, Hazardous Wastes and/or Recyclables, by way of example and not limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 USC §9601 et. seq.; the Resource Conservation and Recovery Act, 42 USC §6902 et. seq.; the Federal Clean Water Act, 33 USC §1251 et. seq.; the Toxic Substances Control Act, 15 USC §1601 et. seq.; the Occupational Safety and Health Act, 29 USC §651 et. seq.; the California Hazardous Waste Control Act, California Health and Safety Code §25100 et. seq.; the California Toxic Substances Control Act, California Health and Safety Code §25300 et. seq.; the Porter-Cologne Water Quality Control Act, California Water Code §13000 et. seq.; the Safe Drinking Water and Toxic Enforcement Act, California Health and Safety Code §25249.5 et. seq.; as currently in force or as hereafter amended, and all rules and regulations promulgated thereunder.

1.29 Facility
"Facility" means any plant or site, owned or leased and maintained, operated or used by the Company for purposes of performing under this Agreement. 6 1.30 Franchise
"Franchise" means the exclusive right granted by the City to provide Solid Waste and Recyclable Materials Collection services within the incorporated boundaries of the City of Portola.

1.31 Franchise Fee
"Franchise Fee" means the fee paid by the Company to the City for the right to hold the Franchise granted by this Agreement.

1.32 Gross Receipts
"Gross Receipts" means any and all revenues, receipts, or compensation in any form received by the Company for Solid Waste and Recyclable Materials Collection pursuant to this Agreement, in accordance with Generally Accepted Accounting Principles (GAAP), including, but not limited to, Customer fees for Collection of Solid Waste and Recyclable Materials. Sales revenue from the sale of Recyclable Materials is excluded from Gross Receipts; revenue generated by Company as the operator of a transfer station is also excluded to the extent the fees charged under this Agreement for such services are no more than the fair market value for such expenses.

1.33 Hazardous Substance
"Hazardous Substance" shall mean any of the following: (a) any substances defined, regulated or listed (directly or by reference) as "Hazardous Substances", "hazardous materials", "Hazardous wastes", "toxic waste", "pollutant" or "toxic substances" or similarly identified as hazardous to human health or the environment, in or pursuant to (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 USC §9601. et. seq. (CERCLA); (ii) the Hazardous Materials Transportation Act, 49 USC §1802 et. seq.; (iii) the Resource Conservation and Recovery Act, 42 USC §6901 et. seq.; (iv) the Clean Water Act, 33 USC §1251 et. seq.; (v) California Health and Safety Code §§25115-25117, 25249.8,25281, and 25316; (vi) the Clean Air Act, 42 USC §7901; (vii) California Water Code §13050; (viii) any amendments, rules or regulations promulgated to such enumerated statutes or acts currently existing or hereafter enacted; and (c) any other hazardous or toxic substance, material, chemical, waste or pollutant identified as hazardous or toxic or regulated under any other applicable federal, state or local environmental laws currently existing or hereinafter enacted, including, without limitation, friable asbestos, polychlorinated biphenyl's ("PCBs"), petroleum, natural gas and synthetic fuel products, and by-products.

1.34 Hazardous Waste
"Hazardous Waste" means all substances defined as Hazardous Waste, acutely Hazardous Waste, or extremely Hazardous Waste by the State of California in Health and Safety Code §25110.02, §25115, and §25117 or in the future amendments to or recodifications of such statutes or identified and listed as Hazardous Waste by the US Environmental Protection Agency (EPA), pursuant to the Federal Resource Conservation and Recovery Act (42 USC §6901), all future amendments thereto, and all rules and regulations promulgated thereunder. 7 1.35 Holiday
“Holiday” means the days defined as holidays in City of Portola Municipal Code section

8.04.052C, which, as of the date this Agreement is executed, are New Year’s Day, Independence Day, Thanksgiving Day, and Christmas Day.

1.36 Inert Wastes
“Inert Wastes” means broken pieces of concrete and/or asphalt, free of reinforcing wire or steel bars and free of other decomposable materials.

1.37 Minimum Service
“Minimum Service” means the required minimum level of Solid Waste Collection service and includes one 32-gallon Cart collected at least once per week. Minimum Service includes Recycling service for Commercial Customers but not for Residential Customers.

1.38 Multi-Family Residential Complex
“Multi-Family Residential Complex” means complexes with three or more residential dwelling units including apartments, condominiums, triplexes, four-plexes and mobile home parks which are located on a single parcel.

1.39 Occupied
“Occupied” means to dwell in a premise on a continuous, permanent basis, be it a residence or commercial structure. A primary residence is considered “occupied,” whereas a secondary or weekend residence is not. Proof of primary residency outside of Portola City limits may be established through documentation, including tax documents, credit card statements and voter registration documents.

1.40 Owner
"Owner" means the Person or Persons holding the legal title to the real property constituting the Premises to which Solid Waste or Recyclable Materials Collection service is to be provided under this Agreement.

1.41 Party/Parties
“Party” means either the Company or the City, and “Parties” means both the Company and the City.

1.42 Pass-Through Cost
“Pass-Through Cost” means any cost controlled and/or imposed by the City, county, state or federal government, over which the Company has no control, including, for example, tipping fees, increased franchise fees by the City, or other governmental mandates which has an effect upon the costs of fulfilling this Agreement which are not fully accounted for in the change in the 8 Consumer Price Index. A complete list of the Pass-Through Costs is attached hereto as Exhibit A.

1.43 Person
"Person" means any individual, firm, association, organization, partnership, corporation, business trust, joint venture, the United States, the State of California, the County of Plumas, the City of Portola, or special purpose district.

1.44 Premises
"Premises" means any land or building in the City of Portola where Solid Waste and/or Recyclable Materials are generated or accumulated.

1.45 Putrescible Waste
“Putrescible Waste” means wastes that are capable of being decomposed by micro-organisms with sufficient rapidity as to cause nuisances of odors, gases or other offensive conditions, and includes materials such as food wastes, offal, and dead animals.

1.46 Rates
“Rates” mean the compensation Customers must pay Company for the Solid Waste and/or Recyclable Materials Collection Services, as detailed in Exhibit B.

1.47 Rate Year
"Rate Year" means the twelve-month period from January 1st to December 31st, for each year of the Franchise agreement, except for year one of this Agreement which shall be from November 1, 2017 to December 31, 2018.

1.48 Recycle or Recycling
"Recycle" or "Recycling” means any process by which materials which would otherwise become Solid Waste are Collected (source-separated, co-mingled, or as mixed waste), separated and/or processed and returned to the economic mainstream in the form of raw materials or products or materials which are otherwise salvaged or recovered for reuse.

1.49 Recyclable Materials
"Recyclable Materials" means those materials that are normally part of the solid waste stream which have market value and can be segregated from non-recyclable wastes.

1.50 Residential Customer
“Residential Customer” means that Customer receiving services for a residential Property. 9 1.51 Scrap Metal
“Scrap Metal” means discarded metallic materials, generally free wood, plastic, paper and glass, including steel, tin, iron, aluminum and copper. Scrap metal does not include wire.

1.52 Solid Waste
"Solid Waste" means putrescible and non-putrescible solid and semi-solid non-hazardous wastes generated by residential and commercial enterprises including, without limitation, garbage, refuse, trash, yard waste, construction and demolition debris, industrial wastes, and inert wastes.

1.53 Universal Waste
“Universal Waste” means waste antifreeze, vehicle batteries and waste motor oil and used oil filters.

1.54 Waste Tire
"Waste Tire" means a tire that is not on the wheel of a vehicle and is not suitable for its original intended use due to wear or damage

1.55 Yard Waste or Green Waste
“Yard Waste” or "Green Waste" means lawn cuttings, weeds, leaves, and shrub and tree pruning materials which are less than six inches in diameter and less than four feet long. 10 ARTICLE 2. GRANT AND ACCEPTANCE OF FRANCHISE

2.1 Grant and Acceptance of Franchise
Subject to the terms and conditions of this Agreement, and all applicable federal, state and local laws, regulations and/or ordinances, the City hereby grants to the Company an exclusive Franchise to Collect, transport, recycle, process, and Dispose of Solid Waste and Recyclable Materials accumulating in the City of Portola.

The Company hereby accepts the exclusive Franchise on the terms and conditions set forth in this Agreement. Company acknowledges and agrees that the grant of the Franchise hereunder is intended to benefit the public interest in securing appropriate Solid Waste and Recyclable Materials services. The grant of this Franchise shall not preclude the City from adopting such ordinances or regulations as the City may determine are necessary for the public interest (including, but not limited to, the protection of the public health, safety and welfare). Company shall be entitled to an increase in Rates, pursuant to Section 5.4, in the event that any such ordinance or regulation the City promulgates subsequent to the grant of this Franchise financially impacts the Company’s cost(s) of performing this Agreement.

2.2 Exclusive Nature of Franchise
During the term of this Agreement, except as otherwise provided in Section 2.6 below, or as may otherwise be provided by federal or state law, the rights granted to the Company under this Agreement shall be exclusive to the Company. Except as otherwise provided for herein, the City will not enter into any agreement with any other Person for the performance of the services exclusively granted to Company pursuant to Section 2.1.

Company shall have the right to take such legal action against third parties as it deems appropriate to protect the exclusive nature of its Franchise. City shall, so long as it is at no cost to the City, cooperate with Company to protect the Company's exclusive rights.

2.3 Effective Date
The Effective Date of this Agreement shall be November 1, 2017.

2.4 Term of Agreement
The term of this Agreement shall be ten (10) years and two (2) months, commencing November 1, 2017 and ending December 31, 2027, with an option for a five (5) year extension following the ten year and two month term, upon the mutual consent and agreement of the City and Company.

2.5 Delegation of Authority
The administration of this Agreement by the City shall be under the supervision and direction of the City Manager, and the actions of the City specified in this Agreement, unless otherwise stated, shall be taken by the City Manager. The City Manager shall not have any authority to 11 issue any instructions to or to authorize any actions by Company that are inconsistent with this Franchise, the City Code or any federal/state law or regulation.

2.6 Limitations on Scope of Franchise
The Franchise granted to the Company shall be exclusive except as to the categories of Solid Waste and Recyclables listed in this Section. The granting of this Franchise shall not preclude the categories of Solid Waste and Recyclables listed below from being delivered to and Collected and transported by others provided that nothing in this Agreement is intended to or shall be construed to excuse any Person from obtaining any authorization from the City, which is otherwise required by law:
(a) Solid Waste and Recyclable Materials which are removed from any Premises by the occupant and which are transported personally by the occupant of such Premises, by his relatives or friends without compensation of any type or form, or by his or her full-time employees, to a processing or Disposal Site;
(b) Recyclable Materials which are donated to youth, civic, nonprofit, or charitable organizations and containers delivered for recycling under the California Beverage Container Recycling Litter Reduction Act, Section 14500, et. seq., California Public Resources Code;
(c) Construction and demolition waste that is removed by a duly licensed construction or demolition company as part of a total service offered by said licensed company (provided that such construction and demolition waste is separated from Solid Waste), or by the City or by an other governmental entity;
(d) Animal waste and remains from slaughterhouse or butcher shops for use as tallow; (e) By-products of sewage treatment, including sludge, sludge ash, grit and screenings; (f) Hazardous Waste, Hazardous Substances and radioactive waste, regardless of its source; (g) The Disposal, diversion, or casual Collection or removal of Solid Waste by the City, the County and/or any government entity by their officers or employees in the normal course of their employment; and,
(h) Any public or semi-public entity removing Solid Waste from its facilities or property with any public or semi-public entity equipment.
(i) Industrial wastes, motor vehicles and parts thereof, discarded home and industrial appliances, and dewatered, treated, or chemically fixed sewage sludge which is not hazardous waste.

This grant to the Company of an exclusive Franchise, right and privilege to Collect, transport, or process and Dispose of Solid Waste and Recyclable Materials shall be interpreted to be consistent with state, federal and local laws and regulations, now existing or hereafter enacted during the term of the Franchise, and the scope of this exclusive Franchise shall be limited by 12 current and any future state, federal and local laws and regulations with regard to Solid Waste handling, exclusive Franchise, control of Recyclable Materials, Solid Waste flow control, and related doctrines. In the event that future interpretations of current law, enactment or developing legal trends limit the ability of the City to lawfully provide for the scope of Franchise services as specifically set forth herein, the Company agrees that the scope of the Franchise will be limited to those services and materials which may be lawfully provided for under this Agreement.

2.7 City’s Right to Direct Changes
The City may direct the Company to perform additional services (including new diversion programs, etc.) or to modify the manner in which it performs existing services. Pilot programs and innovative services which may entail new Collection methods, different kinds of services and new requirements for Customers are included among the kinds of changes which the City may direct. Pursuant to Section 5.4, the Company shall be entitled to an adjustment in its Rates for providing any additional or modified services the City may request or require pursuant to this Section 2.7. Within ninety (90) days from the date when the City first requests the Company to perform such services, the Company and the City shall, in good faith, negotiate the terms and conditions of such additional or expanded services and the additional compensation due Company for the additional or expanded services. The Company shall be allowed such retroactive adjustments to its compensation, to be reflected in the Rates, to compensate the Company for any such additional services. The City shall also have the right, upon ninety (90) day written notice, to order the reduction or elimination of such additional services and to require a corresponding reduction in the Rates.

2.8 Ownership of Solid Waste
Once Solid Waste and Recyclable Materials are placed in Containers and properly placed at the designated Collection location, ownership and the right to possession shall transfer directly from the Customer to the Company by operation of this Agreement. The Company is hereby granted the right to retain, Recycle, process, Dispose of, and otherwise use such Solid Waste, or any part thereof, in any lawful fashion or for any lawful purpose desired by the Company. Subject to the provisions of this Agreement, the Company shall have the right to retain any benefit resulting from its right to retain, Recycle, process, Dispose of, or reuse the Solid Waste and Recyclable Materials which it Collects. Solid Waste, and Recyclable Materials, or any part thereof, which is disposed of at a Disposal Site shall become the property of the Owner or operator of the Disposal Site(s) once deposited there by the Company. In no event shall Company Dispose of Recyclable Materials without first advising City, and obtaining City’s consent that no viable market options then exist for the Recyclable Materials; Company shall provide City with such information as City may request with regard to any such proposed Disposal of Recyclable Materials by Company.

2.9 Company Status
The Company represents and warrants that it is duly organized, validly existing and in good standing under applicable laws. It is qualified to transact business in the State of California and has the power to provide services as required by this Agreement. 13 2.10 Company Authorization
The Company has the authority to enter into and perform its obligations under this Agreement.

The Board of Directors or partners of the Company (or the shareholders, if necessary) have taken all actions required by law, its articles of incorporation, its bylaws or otherwise to authorize the execution of this Agreement. The Person(s) signing this Agreement on behalf of the Company have authority to do so. Company shall designate one employee as a single point of contact for the City for issues arising under this Agreement, and this employee's actions shall be conclusively presumed to be taken on behalf of and with the full approval of the Company.

2.11 Validity of Company’s Information and Representations Company warrants that the information supplied by Company and all representations made by Company and its officers, employees, agents and representatives in anticipation of the grant of this Franchise and as part of the negotiations leading to said grant are true and correct in all material respects.

2.12 Mandatory Service
All Premises within City limits which are Occupied shall subscribe to Solid Waste Collection service provided by the Company. Any Person electing not to accept such service shall be required to pay the Minimum Service charge for solid waste service. Solid Waste Collection services shall be in the name and responsibility of the property owner. Property owners or representatives of Occupied property shall make arrangements for Solid Waste Collection services directly with the Company. A current owner of an Occupied property is not responsible for a prior owner's payment of Collection fees to the Company. Failure to pay such Minimum Service charge shall constitute a violation of section 8.04.100 of the City Code. 14 ARTICLE 3. SERVICES

3.1 General Scope of Services
The work to be done by the Company pursuant to this Agreement shall include, but not be limited to, the furnishing of all labor, supervision, equipment, materials, supplies, and all other items necessary to perform the services required. The work to be done by the Company pursuant to this Agreement shall be accomplished in a thorough and professional manner so that the residents within the City are provided reliable, courteous and high-quality Solid Waste and Recyclable Materials Collection at all times.

3.2 Disposal Site
The City shall have the right to direct Solid Waste Collected under this Agreement to a Disposal Site. Unless and until City notifies the Company of a change, Solid Waste shall be transported for Disposal to the Delleker Transfer Station in Plumas County. If the City elects to designate an alternate disposal site, any and all additional costs, including, without limitation, additional gate fees and transportation costs, shall be deemed a Pass-Through Cost and the Rates shall be adjusted accordingly in accord with Section 5.4.

3.3 Collection Services
Customers shall receive: Solid Waste Collection services not less than one (1) time per week; curbside Recyclable Materials Collection shall be not less than once every other week; and elective curbside Yard Waste Collection services shall be once per week during the months of April through October.

Collection services shall occur Monday through Friday between the hours of 7:00 A.M. and 6:00 P.M., unless Saturday collection shall be necessary due to Holiday scheduling. If the regularly scheduled collection day falls on a Holiday, alternate collection shall be performed on the day prior to or following the Holiday, unless the alternate day falls on a Sunday; if the alternate day falls on a Sunday, then Collection shall be performed on the following Monday. Collection services are not allowed on Sundays unless explicitly directed by the City Manager. The Company shall notify Customers in advance of changes in Collection services schedules.

3.3.1 Carts
Upon request of a Customer, Company shall supply the Customer with one 32-gallon or one 64-gallon or one 96-gallon Cart (unless a Commercial Customer requests Bin service) with an option to obtain additional Carts at the Rates shown in Exhibit B. Carts shall be the property of Company during the term of this Agreement.

3.3.2. Bins
A Commercial Customer may request the Company provide Bin service. In this event, Company shall provide the Commercial Customer with the requested Bin at the Rates shown on Exhibit B. Bins shall be the property of the Company during the term of this Agreement.
15 3.3.3 Recyclable Materials Collection

3.3.3.1 Curbside Recyclables Collection
Company shall provide curbside Recyclable Materials Collection services.

Company shall issue each Residential Customer requesting Curbside Recycling Collection services with a 64 gallon Cart and shall assess charges for the Cart at the Rates shown in Exhibit B. Recycling Carts shall be Collected by Company biweekly.

Additional 64 gallon Carts for Recycling service shall be assessed monthly charges at the Rates shown in Exhibit B. Fees shall not be assessed to Customers for delivery and/or pick-up of Recycling Carts.

Company shall Collect and remove all Recyclable Materials placed in Carts at the curbside. Recyclable Materials Collection from Carts within the City shall include, at a minimum, the following types of recyclable materials from Residential Customers: newsprint; cardboard; plastic containers (Nos. 1 to 6); glass containers; and aluminum containers
Recycling Carts shall remain the property of Company at all times during the term of this Agreement and at termination.

3.3.3.2 Curbside Green Waste Collection
Company shall provide curbside Green Waste Collection services. Company shall issue each Customer requesting Green Waste Collection services with at 96 gallon Cart and shall assess charges for the Cart at the Rates shown in Exhibit B.

Green Waste Carts shall be Collected by Company weekly during the months of April through October.

Additional 96 gallon Carts for Green Waste service shall be assessed monthly charges at the Rates shown in Exhibit B. Fees shall not be assessed to Customers for delivery and/or pick-up of Green Waste Carts.

Green Waste Carts shall remain the property of Company at all times during the term of this Agreement and at termination.

3.3.4 Double-Up
Customers who forget or who are unable to put their Containers out for Collection on any given week shall be allowed to put out their previous week’s Solid Waste and/or Recyclable Materials, along with the current week’s Solid Waste and/or Recyclable Materials, on their next scheduled Collection day.
16 3.3.5 Other Services on Exhibit B
The Company shall provide additional Collection services, including, without limitation, Disposal of car and truck tires, Freon-free appliances, and mattresses. The Company shall charge the Rates stated in Exhibit B

3.3.6 Collection Location
In the event physical conditions or safety concerns prevent curbside placement of Solid Waste and/or Recyclable Materials Containers, Company shall immediately notify Customer, in writing, of the reasons for the need to change the Container(s) location.

Customer and Company shall mutually agree on an alternate Container(s) location. If the parties cannot agree on the alternate Container(s) location, the City and the Company shall mutually agree on the appropriate Container(s) location.

Debris Boxes shall not be dropped or placed on a public sidewalk, street or way, except:
1) in that portion of a sidewalk, street or way that may have been temporarily closed during the course of construction of an improvement on an adjoining property by order of the city; or 2) if an encroachment permit is obtained in advance from the City of Portola.

3.3.6.1 Enclosures
Where the Collection location is within an enclosure, Company shall be responsible for the removal and replacement of all Bins or Containers placed therein that are at street level. Company shall use sufficient care in the handling of such Bins or Containers to prevent damage to the enclosure, the enclosure doors, and adjacent facilities or improvements, so long as such items do not obstruct access to the enclosure. Company shall repair, at its own expense, any damage to such enclosure or adjacent facility or improvement within thirty (30) days of receipt of notice from City.

Company shall not be responsible for repair of damage to buildings, grounds and appurtenances on Customer Premises, except for damage that was caused by Company negligence or willful misconduct.

3.4 Other Services

3.4.1 Debris Box Services
The Company shall offer Debris Box Services for the Collection of Non-Putrescible Solid Wastes and/or Construction and Demolition Debris. Putrescible Wastes shall be prohibited from disposal in Debris Boxes. The Company shall deliver and Collect Debris Boxes and shall access Customer charges at the Rates shown in Exhibit B. 17 3.4.2 Free Clean-up Day
The Company operates the Delleker Transfer Station under an agreement with Plumas County. On the second Saturday of May each calendar year, Company shall allow City of Portola Residential Customers free access to the Delleker Transfer Station for Disposal of Solid Wastes the entire day the transfer station is open for trash Disposal. The quantity of free Disposal shall not exceed five (5) cubic yards (roughly equivalent to one standard size pick-up truck bed capacity) per Residential Customer. Free disposal shall not include car and truck tires and bulky items (such as appliances). Residential Customers shall be required to provide proof of City residence in a manner acceptable to Company for free clean-up day services.

3.4.3 Free Yard Waste Disposal
The Company operates the Environmental Reclamation Center at Portola Landfill under agreement with the City. Company shall, in conjunction with this Agreement, allow City of Portola Residential Customers free access for Yard Waste Disposal at the Recycling Facility at Portola Landfill during the month of May annually. Residential Customers shall be required to provide proof of City residence in a manner acceptable to Company for free Yard Waste disposal services.

3.5 Litter Abatement
The Company shall use due care to prevent Solid Waste, Recyclable Materials or fluids from leaking, being spilled and/or scattered during the Collection or transportation process. If any Solid Waste or fluids leak or are spilled during Collection, the Company shall promptly clean up all such materials. Each Collection vehicle shall carry a broom and shovel at all times for this purpose. The Company shall not transfer loads from one vehicle to another on any public street unless it is necessary to do so because of mechanical failure, accidental damage to a vehicle, or a method pre-approved by the City for Solid Waste transfer between vehicles.

3.6 Service Exceptions; Hazardous Waste Notifications

3.6.1 Contaminated Recycling and Green Waste Carts
The Company shall warn Customers who have non-recyclables and non-green wastes in their Recycling and Green Waste Carts, respectively. If, after two (2) sequential written warnings, the Recycling or Green Waste Cart continues to be contaminated, the Company may remove the Cart from the Customer’s Premises. The Company shall report monthly to the City any such warning notices issued and Recycling and Green Waste Carts that have been removed from a Customer’s Premises.

3.6.2 Hazardous Materials
The Company reserves the right to inspect Solid Waste and Recyclable Materials put out for Collection, the right to reject Solid Waste and Recyclable Materials observed to be contaminated with Hazardous Waste and/or Hazardous Substances, and the right to not Collect Hazardous Waste and/or Hazardous Substances put out with Solid Waste. 18 Further, the Company shall reasonably inspect Solid Waste and Recyclable Materials for Hazardous Waste and/or Hazardous Substances that are exposed and obvious during the normal and customary provision of the services, and shall not Collect such Hazardous Waste and/or Hazardous Substances. The Company shall notify all agencies with jurisdiction, if appropriate, including the California Department of Toxic Substances Control and Local Emergency Response Providers and the National Response Center of reportable quantities of Hazardous Waste, found or observed in Solid Waste or Recyclable Materials anywhere within the City. In addition to other required notifications, if the Company observes any substances which it or its employees reasonably believe or suspect to contain Hazardous Wastes or Hazardous Substances unlawfully disposed of or released on any City or other public property, including storm drains, streets or other public rights of way, the Company will immediately notify the City or the appropriate public entity.

3.6.3 Failure to Collect Notices
When Solid Waste or Recyclable Materials are not Collected from any Customer, the Company shall notify the Customer in writing, at the time Collection is not made, through the use of a "tag" or similar written notice, explaining the reasons why the Collection was not made.

3.7 Missed Collections; Requested Pick-ups
Under City Code, Customers shall set-out Containers by 7:00 AM on regularly scheduled Collection days. If the Customer has set-out Container by 7:00 AM and the Company misses the pick-up, the Company shall Collect the Solid Waste and/or Recyclable Materials within one (1) business day at no additional charge to Customer. If the Customer does not set-out the container by 7:00 AM, Customer is allowed to double-up on the next scheduled Collection day, in accordance with Section 3.3.4. If the Customer does not set-out the container by 7:00 AM and desires for pick-up within one (1) day, Company may assess Customer a return trip charge, in accordance with Exhibit B.

3.8 Customer Service

3.8.1 Company Office
Company shall provide an office proximately located to Portola, California, and office hours shall be, at a minimum, from 8:00 A.M. to 5:00 P.M., Monday through Friday, excluding holidays. A responsible and qualified representative of the Company shall be available during office hours for communication with the public at the office. Automated telephone answering systems with menu-driven options must provide callers with an option to connect to a live operator. Phone answering staff shall be competent to handle questions on Company’s specific programs. The Company shall also maintain a telephone number for use during other than normal business hours. The Company shall have a representative, answering service, or message providing/receiving live or voicemail service available at said after-hours telephone number. After-hours calls shall be responded to on the next business day. Company shall provide the City with the phone number of a representative who may be reached twenty-four (24) hours a day. 19 3.8.2 Customer Service Complaints
All service complaints shall be directed to the Company. Daily logs of complaints concerning Collection of Solid Waste shall be retained for a minimum of twenty-four (24) months and shall be available to the City at all reasonable times upon request.

The Company shall log all complaints received by telephone and said log shall include the date and time the complaint was received, name, address and telephone number of caller, description of complaint, employee recording complaint and the action taken by the Company to respond to and remedy complaint. All written Customer complaints and inquiries shall be date-stamped when received. All complaints shall be initially responded to within one (1) business day of receipt. The Company shall log action taken by the Company to respond to and remedy all complaints.

All Customer service complaint records and logs kept by the Company shall be provided to the City on a quarterly basis. Company shall supply the City, within fifteen (15) days of end of the calendar quarter, copies of all complaints, and the Company shall indicate the disposition of each complaint. The City shall, at any time during regular Company business hours, have access to the Company's Customer service department for purposes that may include monitoring the quality of Customer service or researching Customer complaints.

3.9 Education and Public Awareness

3.9.1 General
Company acknowledges and agrees that education and public awareness are critical and essential elements of any efforts to achieve AB 939 goals and subsequent legislation regarding waste reduction and diversion from landfill disposal. Accordingly, the Company agrees to implement a public education program to expand public and Customer awareness concerning the need to and methods of reducing, reusing and Recycling appropriate Recyclable materials. City shall cooperate fully with Company in this regard.

All public education materials shall be approved in advance by the City. All printed materials shall be printed on recycled paper.

City may require the Company to perform mailing services, related to Solid Waste matters, on the City’s behalf. City will provide not less than thirty (30) days notice to the Company prior to the mailing date of any proposed mailing to permit the Company to make appropriate arrangements for inclusion of the City’s materials. The City will provide the Company the mailers at least fifteen (15) days prior to the mailing date. The City shall bear the expense of reproduction and distribution of such additional information, including, without limitation, postage and insertion costs, only to the extent it is in excess of the Company's normal billing costs and represents services beyond the approved public education plan.
20 Company will provide a minimum of the following public education items to be developed and distributed at Company's expense:
 Annual Brochures – The Company shall prepare and distribute a brochure informing customers of the available services, how to use such services, rates for services, Holiday schedules, and of the Recycling programs the Company offers.
 Corrective Action Notice – For use in instances where the Customer sets out inappropriate materials.
 Public Service Announcements – Company shall produce and distribute two (2) public service announcements per year to advertise such events as, for example, Free Disposal Day. Such announcements shall be at least 1/8 of a newspaper page in size.
 Recycling information, tips, state requirements and how to instructions related to AB 341 and AB 1826 regarding commercial recycling and organic wastes diversion.

All brochures, mailings, and other educational materials shall bear the City of Portola seal, unless otherwise approved by the City. The Company shall obtain the City’s approval, which shall not be unreasonably withheld, before distributing any public education materials.

3.10 Personnel

3.10.1 General
The Company shall furnish such qualified drivers, mechanical, supervisory, clerical, management and other personnel as may be necessary to provide the services required by this Agreement in a satisfactory, safe, economical and efficient manner. All drivers shall be trained and qualified in the operation of vehicles they operate and must possess a valid license, of the appropriate class, issued by the California Department of Motor Vehicles.

The Company also agrees to establish and vigorously enforce an educational program which will train the Company's employees in the identification of Hazardous Waste. The Company's employees shall not knowingly place such Hazardous Waste in the Collection vehicles.

The Company shall use its best efforts to assure that all employees present a neat appearance and conduct themselves in a courteous manner. If any employee is found to be discourteous or not to be performing services in the manner required by this Agreement, the Company shall take necessary corrective measures. If the City has notified the Company of a complaint related to discourteous or improper behavior, the Company will consider reassigning the employee to duties not entailing contact with the public while the Company is pursuing its investigation and corrective action process. 21 The Company shall provide suitable health and safety training for all of its employees who use or operate equipment or who are otherwise directly involved in Collection or other related operations.

3.10.2 Identification Required
The Company shall provide its employees with identification for all individuals who may make personal contact with residents or businesses in the City of Portola. The City may require the Company to notify Customers yearly of the form of said identification.

Company shall require its drivers and helpers to wear clean, standardized shirts and/or safety vests bearing the name “Intermountain Disposal.”

3.10.3 Fees and Gratuities
Company shall not permit its employees or agents to demand or solicit, directly or indirectly, any additional compensation or gratuity from members of the public for the services under this Agreement. Notwithstanding the foregoing, Company’s employees shall be entitled to receive unsolicited de minimus gratuities including, but not limited to, Christmas tips or presents.

3.10.4 Non-Discrimination
The Company shall not discriminate in the provision of service or the employment of Persons engaged in performance of this Agreement on account of race, color, religion, sex, sexual orientation, age, physical handicap or medical condition in violation of any applicable federal or state law.

3.11 Equipment

3.11.1 Collection Vehicles
The Company shall not use any truck or other vehicle for the removal or transportation of any Solid Wastes and Recyclable Materials from any property within the City unless the same conforms to the specifications set forth in this section.

Vehicles used for the collection of any and all Solid Wastes shall be of the mechanicalcompaction type, provided that in the case of an emergency such as mechanical breakdown or other cause beyond the control of the Company, the City Manager may, upon the request of the Company, approve the use of non-mechanical compaction-type equipment for a limited period of time during such emergency, as determined by the City Manager. Only enclosed covered-body-type vehicles shall be used for the collection of solid wastes.

Each collection vehicle shall be maintained in a clean and mechanically safe condition.

Each collection vehicle shall be constructed and maintained in such manner that it is watertight and free from odor leakage.
22 All vehicles shall be painted and legibly bear the name of the Company. Said company name, colors, and size of lettering must first be approved by the City Manager.

Advertising on the Company’s refuse collection vehicles for companies or entities other than the Company is prohibited.

Doors and openings to collection vehicle bodies shall be kept closed at all times when said vehicles are not being loaded or unloaded of Solid Wastes and Recyclable Materials.

All vehicles shall be of such type and design and shall be operated in such manner so as not to incur any damage to public or private property in their use and operation.

3.11.2 Solid Waste Containers
Except as otherwise provided in this chapter, Carts for the storage of Solid Wastes shall:
 Have tight-fitting covers for holding garbage without leakage or escape of odors;  Have suitable handles and wheels;
 Be constructed of watertight metal or plastic materials;  Be provided to residences in sizes of 32, 64 and 96 gallons, as specified by each Residential or Commercial Customer.

3.11.3 Bins
Bins for the collection of commercial solid wastes shall possess a tight-fitting lid, the top of which shall not exceed 72 inches in height from the surface of the ground and shall have a capacity of at least one cubic yard, but not more than eight cubic yards. Bins shall be water tight and shall not be in such a state of disrepair as to constitute an unsightly nuisance. Bins shall contain the Company name in a conspicuous place on the exterior of the bin.

3.11.4 Debris Boxes
Debris boxes for collection of dry solid wastes (non-putrescible) shall be an open-top container with a capacity of at least 10 cubic yards and not greater than 50 cubic yards.

Such boxes shall be so maintained and handled as to not permit the contents placed therein to fall or be blown from to create litter. To this end, all filled or partially-filled debris boxes shall be covered during transport to prevent litter generation.

Debris Boxes shall not be in such a state of disrepair as to constitute an unsightly nuisance. Debris Boxes shall contain the Company name and phone number in a conspicuous place on the exterior of the box

3.12 Operation of the Environmental Reclamation Center at Portola Landfill

3.12.1 Scope
The Company shall operate Environmental Reclamation Center (ERC) sited at Portola Landfill. The following materials shall be accepted by the Company at the ERC:
23  Yard Wastes
 Tree Stumps
Yard wastes, defined as grass, leaves, and branches, shall be accepted for disposal. Any ash generated by burning of yard wastes shall be disposed of by the Company at an approved facility, but not at Portola Landfill. Company shall be responsible for lawful Disposal of all Yard Wastes.

The Company may accept additional materials for recycling at the ERC, provided, however, that the City grants approval to do so and appropriate permit modifications are obtained from state and local environmental agencies.

3.12.2 Hours of Operation
The ERC shall be open to the public (includes both City of Portola and County of Plumas residents) on Saturday’s, during the hours of 10 a.m. to 2 p.m. from the first Saturday in April through the last Saturday in October. The ERC may be closed if a national holiday, such as Independence Day, falls on a Saturday. The ERC shall be fully staffed by the Company, including personnel to inspect loads and assess and collect fees and to monitor the public for safe and proper unloading of the recyclable materials.

The Company may, at the Company’s discretion, allow commercial generators access to the ERC during times and hours mutually agreed to between the Company and the commercial entity.

3.12.3 Term
Company operation of the ERC shall coincide with Section 2.4 of this Agreement.

3.12.4 Compensation for Operation of the ERC
The Company shall be compensated for operation of the ERC solely from gate fees collected during the Hours of Operation. The gate fee schedule for the ERC is included in Exhibit B. The Company may petition the City Council for modifications to the ERC fee schedule, as necessary. The City shall have access for disposal of tree trimmings and Yard Wastes at the ERC free of charge.

3.14.5 Permit Compliance
The Company shall abide by all conditions established for operation of the ERC, as enforced by the State of California, and all state and federal laws and regulations applicable to operation of the ERC. This includes, but is not limited to, those portions of the Solid Waste Facility Permit No. 32-AA-0007 and Waste Discharge Requirements Order No. R5-2015-0083 which directly affect operation of the ERC (such as storm water runoff controls), and applicable regulations enforced by the Northern Sierra Air Quality Management District.
24 3.14.6 Health and Safety
The Company shall ensure that all employees working at the ERC are provided appropriate health and safety equipment (such as safety vests, glasses and shoes) and have appropriate training to handle both exposure and response to hazardous materials and/or other emergency conditions. To this end, the Company shall file with the City and keep current the Company’s Injury and Illness Prevention Plan prior to commencing operation of the ERC. The Company shall be responsible for the clean-up of any spills of hazardous materials associated with operation of the ERC.

3.14.7 Equipment
The Company shall provide all equipment necessary for operation of the ERC and shall maintain equipment in good working order, including compliance with all state and federal OSHA regulations

3.14.8 Records
The Company shall maintain all records of receipt of materials at the ERC and dates and disposition of all materials. The Company shall report recorded data to the City by the 15th day following the calendar quarter in which the materials were collected and/or disposed of.

3.14.9 Additional Services
The City shall be entitled to request additional services of the Company for mutually agreed to compensation regarding other needed activities at Portola Landfill.

3.14.10 Insurance for Operation of the ERC
The Company shall procure and keep in force the following insurance policies and minimum coverage amounts during the term of this agreement for operation of the ERC.

The City, and its elected and appointed officers, employees, agents and assigns shall be named as additional insured on said policies. The Company shall deliver the insurance policies with endorsements to the City at least 7 days prior to commencement of operation of the ERC.
 $1,000,000 for the death of or injury to any one person in any one accident;  $2,000,000 for the death of or injury to more than one person in any one accident; and
 $1,000,000 for property damage in any one accident.

3.14.11 Violations
Company shall be responsible for regulatory agency issued violations (and noted areas of concern) of the permits required for operation of the ERC. City shall be responsible for regulatory agency issued violations (and noted areas of concern) of the permits required for Portola Landfill.
25 ARTICLE 4. BILLINGS AND OTHER FEES

4.1 Billing for Services
Company shall bill Customers directly for Solid Waste, Recyclable Materials and Green Waste Collection services provided pursuant to this Agreement. Company shall design billing formats that show a composite fee reflecting the total cost of the service provided. New Customers shall be billed on a pro-rata basis based upon the date services for that Customer commence. The Franchise Fee the City may set in accord with this Agreement shall not be separately itemized on the bill unless otherwise directed by the City. Company shall bill Commercial Customers monthly in advance and Residential Customers quarterly in advance. Customers who request Debris Box services shall pay for such services in advance. Customers may also be billed for replacement of containers if damaged beyond normal wear. Company shall retain all billing records for not less than five (5) years. In the event of a billing dispute with a Customer, Company and City will mutually agree on a resolution.

4.2 Delinquencies; Termination of Service
All Company billings shall be paid in full within 30 days of the billing date. For any bills that become delinquent due to no fault of the Company, Company shall send Customer a notice of delinquency. Arrangements for collection of delinquent payments shall be made between the Company and an individual customer. Late fees for past due invoices may be assessed by the Company at an interest rate of not more than eighteen percent (18%) per annum (or 1.5% per month).

4.3 Franchise Fee
Company shall pay the City for the privilege, and as the sole and exclusive consideration of the licenses granted hereby, a ten percent (10%) Franchise Fee on all Gross Receipts generated as a result of Company providing service in the City of Portola. In no event shall Company pay the City a Franchise Fee on the receipts from the sale of Recyclable Materials the Company may Collect in the City of Portola. Company shall remit the Franchise Fee semi-annually on or before May 15th and November 15th for the prior six (6) month period. In the event that Company fails to timely pay the Franchise Fee, the City shall be entitled to make a demand on the Performance Bond required pursuant to Section 7.3 to secure payment of the fees; provided, however, that the City must first provide Company reasonable written notice of its intent to make a demand against the Performance Bond to offer the Company the opportunity to seek dispute resolution procedures pursuant to Section 9.6.

Documentation to support the Franchise Fee amount shall be included with the semi-annual payment. Documentation shall include the basis of calculation for the Franchise Fee amount and shall be certified as true and correct by an officer of the Company. Said documentation shall include revenues received under this Agreement, outstanding accounts receivable, bad debt write-offs and recoveries.

City may raise or lower the Franchise Fee above or below ten percent (10%) during the term of this Agreement. If City elects to increase the Franchise Fee percentage, such fees shall be deemed a Pass-Through Cost and Company shall be entitled to an immediate adjustment in 26 accordance with section 5.4 of this Agreement. If City lowers the Franchise Fee, Company and City shall negotiate an adjusted fee schedule commensurate with the lower fee.

4.4 Other Fees
The City shall reserve the right to set other fees, as it deems reasonably necessary. The amount, time and method of payment will be set as provided in Section 4.3 above. Such fees shall be deemed a Pass-Through Cost and Company shall be entitled to an immediate adjustment retroactive to the date of implementation in accordance with section 5.4 of this Agreement. 27 ARTICLE 5. COMPANY COMPENSATION AND RATES

5.1 Receipts from the Sale of Recyclable Materials
The City and Company agree that the Company will retain all proceeds from the sale of Recyclable Materials.

5.2 Initial Rates
Except as provided in Paragraph 5.4 below, the Rates for the first year of this amended and extended Agreement (November 1, 2017 through December 31, 2018) shall not exceed those set forth in Exhibit B. Thereafter, Rates will be adjusted annually based on the formula set forth in section 5.3.

5.3 Annual Adjustments to Rates (Amendment No. 1)
Effective January 1st of each Rate Year, commencing on the 1st day of Rate Year 2 (January 1, 2019) the Company shall automatically be entitled to increase the Rates for all services by an amount equal to the following formula:
 Annual Rate Adjustment = Current Rate x [1 + {(0.9 x Percent Change CPI Index) + (0.1 x Percent Change Fuel Index)}], where:

Percent Change CPI Index = Annual Percent Change in the September August Consumer Price Index for All West Urban Consumers, Nonseasonally Adjusted, for the Preceding Year (Bureau of Labor Statistics Series ID CUUR400SAO), and
Percent Change Fuel Index = Annual Percent Change in the September August California No. 2 Diesel Retail Sales by All Sellers, as published by the U.S. Energy Information Administration.

For Rate Year 5 (commencing January 1, 2022), the annual adjustment to Rates shall base the CPI and fuel calculations using indices from September 2020 through August 2021. For Rates which were adjusted on April 1, 2021, the CPI and fuel calculation shall use indices from April 2021 through August 2021. Thereafter, all subsequent annual Rate increases (commencing Rate Year 6) shall use August to August CPI and fuel indices.

In the event the change in the rate increase, under the above formula, is greater than five percent (5%) in any given Rate Year, then the percentage increase in excess of the five percent (5%) shall be carried over to the next Rate Year, subject to the five percent maximum annual increase.

Company may petition City for a waiver of the Rate adjustment 5% cap if the calculated increase exceeds 5% annually for two consecutive years. No Rate increase pursuant to this Section 5.3 shall be effective until, and unless, Company provides the City sixty (60) day written notice of its intent to exercise its right to an annual Rate increase and after compliance with Proposition 218, provided there has been an insufficient protest to prohibit an increase in Rates. 28 The City and the Company may mutually agree for the City to adopt a schedule of rates authorizing automatic adjustments for inflation for up to five (5) years in accordance with California Government Code section 53756.

5.4 Proposition 218 Compliance
Company shall prepare and issue State of California Proposition 218 compliance notices to all Customers in conjunction with any increase to Rates. City shall provide to Company written Proposition 218 notice language. For annual adjustment to Rates, all Proposition 218 notices shall be prepared and mailed to Customers no later than October 31st.

Company shall be entitled to charge Customers no more than $0.10 per month per Customer monthly invoice for expenses related to printing and mailing of City-supplied Proposition 218 notices.

5.5 Pass-Through Costs
The Company shall be entitled to petition the Portola City Council for Rate increases based on increases in the cost of doing business for costs other than those normally associated with the Consumer Price Index and California Diesel Retail Sales costs. Those Pass-Through Costs are described in Exhibit B.

For adjustments to the Rates above and beyond the annual increases, the Company shall document the changed conditions that have caused increases in the cost of doing business and provide justification for the requested Rate increases. The Portola City Council shall consider the Company’s documentation and any other relevant information prior to approving any PassThrough Cost Rate increase. The City Council may, at its sole discretion, after compliance with Proposition 218 and provided that there has been an insufficient protest to prohibit an increase in Rates, approve all, a portion, or none of the Company’s request for a Rates adjustment.

If the City Council does not approve, or the Parties cannot otherwise agree on, the Rate increase, then, within ten (10) days of the City Council denying the Rate increase, the Company may seek mediation, in which case, the Parties shall mediate the dispute pursuant to Section 9.6. If mediation is unsuccessful, then the Company may request arbitrations, in which case the Parties shall arbitrate the dispute pursuant to Section 9.6. The decision of the arbitrator shall be final and non-appealable by either Party.

5.6 Elimination of Customer-Supplied Cans (Amendment No. 2) To facilitate Company's transition to new Residential Solid Waste Collection equipment during calendar year 2022, Company shall replace Customer-supplied Cans with a Waste Cart coincident with Company's deployment of an automated side-loader Collection vehicle.

Company shall contact each Customer who uses and are charged fees for Customer-supplied Cans at least two (2) weeks prior to the date of the anticipated change to an automated sideloader Collection vehicle. Company shall confirm with each affected Customer the size of Waste Cart to replace the Customer-supplied Can(s).
29 Company shall waive Waste Cart delivery charge for all affected Customers who subscribe to and pay fees for Customer-supplied Cans at the time of Company's transition to an automated side-loader Collection vehicle.

The Rates for Customer-supplied Cans in the Rates schedule shall be eliminated upon Company's commencement of Residential Solid Waste Collection using an automated sideloader Collection vehicle. 30 ARTICLE 6. RECORDS AND REPORTS

6.1 General
The Company shall maintain such accounting, statistical and other records related to its performance under this Agreement as shall be necessary to develop the financial statements and other reports required by this Agreement. Also, the Company agrees to conduct data collection, information and record keeping, and reporting activities needed to comply with applicable laws and regulation and to meet the reporting and Solid Waste program management needs of the City.

6.2 Records

6.2.1 General
The Company shall maintain records required to conduct its operations, to support requests it may make to the City, and to respond to requests from the City. Adequate record security shall be maintained to preserve records from events that can be reasonably anticipated such as a fire, theft and earthquake. Electronically maintained data records shall be protected and backed up. All records shall be maintained for three (3) years after the expiration of this Agreement.

The Company agrees that the records of operations addressed in the Agreement shall be provided or made available to the City during normal business hours. The City may review or utilize any of the records described in this section for any purpose whatsoever.

6.2.2 Solid Waste and Recycling Records
Records shall be maintained by the Company for the City relating to:
(a) Customer services and billing;
(b) Routes;
(c) Facilities, equipment and personnel used;
(d) Complaints;
(e) Missed pick ups;
(f) Number of Solid Waste and Recycling Containers; and (g) Tons of Solid Waste Company Collects, processes, diverts, Recycles, and Disposes; and
(h) Any other records that City may request in order to comply with any reporting obligations under any federal, state or local law or regulation 31 and/or as a condition of any grant, loan or other funding agreement to which City may presently or hereinafter be a party.

6.2.3 CERCLA Defense Records
The City views the ability to defend against the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and related litigation as a matter of great importance. For this reason, the City regards the ability to prove where Solid Waste Collected in the City was taken for Disposal, as well as where it was not taken, to be matters of concern. The Company shall maintain data retention and preservation systems which can establish where Solid Waste Collected in the City was landfilled (and therefore establish where it was not landfilled) and provide a copy of the reports required in Section 8.3 for five (5) years after the term of this Agreement, or provide copies of such records to the City.

6.2.4 Complied Financial Statements
Company shall provide City with full disclosure compiled financial statements no less than every six months. Company shall provide City with access to financial records that pertain to services performed under this Agreement. The Company shall cooperate in making financial records available to City at reasonable times. The City Manager (or designee) may inspect financial records in the Company’s business office. City shall have the right to examine revenue and other related records as deemed necessary by the City. At the City’s request, the Company financial statements shall be examined by an independent Certified Public Accountant, at the City’s expense. If significant and/or material discrepancies are found during the examination by the Certified Public Accountant, a more comprehensive review or audit shall be conducted at the Company’s expense.

6.3 Reports

6.3.1 Report Formats and Schedule
The Company shall submit quarterly and annual reports to the City in a form prescribed by the City Manager and which provides information on the Company's solid waste Solid Waste and Recyclable Materials Collection operations, within the boundaries of the City.

Said reports shall be submitted to the city no later than thirty (30) days after the end of each calendar quarter. Documentation supporting the amount of Recyclable Materials Collected, delivered to appropriate End Markets, or otherwise disposed of, and any other documentation and necessary to verify the Company's Recycling operations, shall be maintained by the Company for at least three years
All reports shall be submitted to:

City Manager
City of Portola
P.O. Box 1225
Portola, CA 96122
32 6.3.2 Quarterly Reports
The information listed shall be the minimum reported:
(a) Solid Waste Collected, Recycled, and Disposed of by the Company for the quarter (in tons).
(b) Materials Recovered. Statement showing kinds of material and quantity sold (in tons).
(c) Complaint summary for the quarter summarized by nature of complaints on a compatible computer disc.
(d) Narrative summary of problems encountered (including scavenging) and actions taken with recommendations for the City, as appropriate. (e) Number of accounts by category shown for each month for Customers billed by the Company.
(f) Copies of promotional and public education materials sent during the quarter.

6.3.4 Annual Report
The Annual Report is to be essentially in the form and content of the quarterly reports combined, but shall also include:
(a) An account list of all commercial Customers billed by the Company, including service address, billing address, service levels (i.e. number of Containers, Container size, and frequency of service) and monthly rates. (b) Number of Carts in service by type of Customer (Residential, Commercial), service (Solid Waste, Recycling).
(c) CERCLA Defense records required under Section 6.2.3. (d) Name, address, and phone numbers of all residential Customers. 33 ARTICLE 7. INDEMNIFICATION, INSURANCE AND BOND

7.1 Indemnification
The Company hereby agrees to and shall defend, indemnify and hold harmless the City, its elected and appointed officers, employees, and agents (collectively the “Indemnitees”) from and against any and all loss, liability, penalty, forfeiture, claim, demand, action, proceeding or suit in law or equity of any and every kind and description (including, but not limited to, injury to and death of any Person and damage to property, or for contribution or indemnity claimed by third parties) arising or resulting from and in any way connected with (1) the actions, omissions, negligence or willful misconduct of the Company, its officers, employees, agents, and Subcontractors in performing services under this Agreement; (2) the failure of the Company, its officers, employees, agents, and Subcontractors to comply in any and/or all respects with the provisions of this Agreement, applicable laws (including, without limitation, the Environmental Laws), ordinances and regulations, and/or applicable permits and licenses; (3) the acts of the Company, its officers, employees, and agents in performing services under this Agreement for which strict liability is imposed by law (including, without limitation, the Environmental Laws).

The Company further agrees to and shall, upon demand of the City, at the Company's sole cost and expense, defend (with attorneys reasonably acceptable to the City) the Indemnitees against any claims, actions, suits in law or equity or other proceedings, whether judicial, quasi-judicial or administrative in nature, arising or resulting from any of the aforementioned events.

7.2 Insurance

The City does not, and shall not, waive any rights against the Company which it may have by reason of the aforesaid defense, indemnity and hold harmless obligations, because of acceptance by the City or the deposit with the City by the Company of the insurance policies described in this provision.

Company shall procure and maintain for the duration of this Agreement insurance against claims for injuries to persons or damage to property which may arise from or in connection with the performance of the work hereunder and the results of that work by the Company, his agents, representatives, employees, or subcontractors. With respect to General Liability, Errors & Omissions, Contractors Pollution Liability, and/or Asbestos Pollution Liability, coverage should be maintained for a minimum of five (5) years after contract completion.

A. Minimum Scope and Limit of Insurance.

The Company shall maintain in force for the term of this Agreement insurance coverage as broad as:

1. Commercial General Liability (CGL): Insurance Services Office Form CG 00 01 covering CGL on an “occurrence” basis, including products and completed operations, property damage, bodily injury and personal & advertising injury with limits no less than $2,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit.
34 2. Automobile Liability: Insurance Services Office Form Number CA 0001 covering any auto (Code 1), or if Company has no owned autos, hired (Code 8) and non-owned (Code 9) autos, with limit no less than $1,000,000 per accident for bodily injury and property damage.

3. Workers’ Compensation insurance as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limit of no less than $1,000,000 per accident for bodily injury or disease.

4. Contractors Pollution Liability and/or Asbestos Pollution Liability and/or Errors & Omissions applicable to the work being performed, with a limit no less than $2,000,000 per claim or occurrence and $2,000,000 aggregate per policy period of one year.

If the Company maintains broader coverage and/or higher limits than the minimums set forth above, the City requires and shall be entitled to the broader coverage and/or higher limits maintained by the Company. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City.

B. Self Insured Retentions
Self-insured retentions must be declared to and approved by the City. At the option of the City, the Company shall provide coverage to reduce or eliminate such self-insured retentions as respects the City, its officers, officials, employees, and volunteers; or the Company shall provide evidence satisfactory to the City guaranteeing payment of losses and related investigations, claim administration, and defense expenses. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City.

C. Other Insurance Provisions

1. The General Liability, Automobile Liability, Contractors Pollution Liability, and/or Asbestos Pollution policies are to contain, or be endorsed to contain, the following provisions:
a. The City, its officers, officials, employees, and volunteers are to be covered as additional insureds with respect to liability arising out of work or operations performed by or on behalf of the Company including materials, parts or equipment furnished in connection with such work or operations. General liability coverage can be provided in the form of an endorsement to the Company’s insurance (at least as broad as ISO Form CG 20 10, CG 11 85 or both CG 20 10, CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 forms if later revisions used).
b. For any claims related to this project, the Company’s insurance coverage shall be primary insurance coverage at least as broad as ISO CG 20 01 04 13 as respects the City, its officers, officials, employees, agents, and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, 35 employees, agents, or volunteers shall be excess of the Company’s insurance and shall not contribute with it.
c. Each insurance policy required above shall provide that coverage shall not be canceled, except with notice to the City.

2. The Automobile Liability policy shall be endorsed to include Transportation Pollution Liability insurance, covering materials to be transported by Company pursuant to this Agreement. This coverage may also be provided on the Contractors Pollution Liability policy.

3. If General Liability, Contractors Pollution Liability and/or Asbestos Pollution Liability and/or Errors & Omissions coverages are written on a claims-made form:
a. The retroactive date must be shown, and must be before the date of this Agreement or the beginning of contract work.
b. Insurance must be maintained and evidence of insurance must be provided for at least five (5) years after completion of the contract of work. c. If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a retroactive date prior to the contract effective date, the Company must purchase an extended period coverage for a minimum of five (5) years after completion of contract work.
d. A copy of the claims reporting requirements must be submitted to the City for review.
e. If the services involve lead-based paint or asbestos identification / remediation, the Contractors Pollution Liability shall not contain lead-based paint or asbestos exclusions. If the services involve mold identification / remediation, the Contractors Pollution Liability shall not contain a mold exclusion and the definition of “Pollution” shall include microbial matter including mold.

D. Acceptability of Insurers
Insurance is to be placed with insurers authorized to conduct business in the state with a current A.M. Best rating of no less than A:VII if admitted in the State of California.

E. Verification of Coverage
Contractor shall furnish the City with original Certificates of Insurance including all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this Agreement) and a copy of the Declarations and Endorsement Page of the CGL policy listing all policy endorsements to City before work begins. However, failure to obtain the required documents prior to the work beginning shall not waive the Company’s obligation to provide them. The City reserves the right 36 to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time.

F. Waiver of Subrogation
Company hereby grants to City a waiver of subrogation which any insurer may acquire against City, its officers, officials, employees, and volunteers, from Company by virtue of the payment of any loss. Company agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation but this provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer.

The Workers’ Compensation policy shall be endorsed with a waiver of subrogation in favor of the City for all work performed by the Company, its employees, agents, and subcontractors.

G. Subcontractors
Company shall require and verify that all subcontractors maintain insurance meeting all the requirements stated herein, and Company shall ensure that City is an additional insured on insurance required from subcontractors. For CGL coverage subcontractors shall provide coverage with a format least as broad as CG 20 38 04 13.

H. Special Risks or Circumstances
City reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances.

I. No Limitation of Liability
The minimum amounts set forth in this Agreement for such insurance shall not be construed to limit the liability of the Company to the City under this Agreement to the amounts of such insurance

7.3 Faithful Performance Bond
The Company shall, at least fourteen (14) days prior to the commencement of operation, file with the City a performance bond in the amount of fifty thousand dollars ($50,000) payable to the City for all losses and damages the City may sustain as a result of any act or omission of the Company, its employees and agents arising from the operation or termination of the services under this Agreement, and including any payments required to be made to the City hereunder.

Such bond shall be obtained from an insurance company licensed to do business in the State of California with a Best's Guide rating of "B" or better, or, in the alternative, an unlicensed, U.S. domiciled company with a Best's Guide rating of "A", and shall be in a form approved by the City Manager. In no event shall the amount of such bond be construed to limit the liability of the Company for damages.
37 ARTICLE 8. FAILURE TO PERFORM

8.1 City’s Right to Perform Services
In the event that Company fails, refuses, or is unable to Collect and Dispose of Solid Waste or operate the ERC at Portola Landfill, as this Agreement requires, at the time and manner provided in this Agreement, for a period of ten (10) days, then the City shall have the right, but not the obligation, upon written notice to Company, to perform, or cause to be performed, such services itself with its own personnel and/or with the services of any other person, firm, entity or corporation. In such an event, Company shall not be liable for the actions or omissions of the City or any other party with whom City engages to perform the services; provided, however, Company shall be liable to the City for the cost of providing the Solid Waste services until such time as either Company fully resumes proper and appropriate services or this Agreement is terminated pursuant to Article 9; provided, however, that Company’s liability to City for the cost of providing the services pursuant to this Section 8.1 shall be limited to the cost City incurs, either directly or indirectly under a contract with a third party. Notice of Company’s failure, refusal or neglect to Collect and Dispose of Solid Waste may be faxed to Company at its principal office and shall be effective immediately. Written confirmation of such faxed notification shall be sent to Company within twenty-four (24) hours of the faxed notification. 38 ARTICLE 9. DEFAULT, REMEDIES AND LIQUIDATED DAMAGES

9.1 Events of Default
The Company shall be deemed to be in default with respect to the performance of its obligations under its this Agreement upon the occurrence of any of the following events:

A. The Company is in violation of the provisions of this Agreement, the Solid Waste Ordinance portion of the City Code, or any federal or state law or regulation applicable to the operation of the Company's service in the City and such violation is not corrected within thirty (30) days following receipt of written notice thereof from the City Manager specifying such violation or, if more than thirty (30) days are reasonably required to correct such violation, within such additional time as the City Manager shall consider reasonably necessary to effect such correction.

B. The Company has failed to perform according to the specifications and standards in this Agreement, including, but not limited to, any required standards for the maintenance of collection schedules, hours of collection, vehicle and equipment maintenance and condition, collection of missed collections within a specified time, and maintenance of a business office location with specified hours of operation and procedures for responding to customer complaints.

C. The Company has engaged in repeated violations of any of its material obligations under this Agreement, the Solid Waste Ordinance portion of the City Code or any material federal or state law or regulation applicable to the operation of the Company's service in the City, which shall be deemed to exist if the same or similar violation occurs three (3) or more times within any twelve (12) month period. In any such case, the Company shall not be entitled to notice or a period to correct the third such violation.

9.2 Remedies upon Default
Upon the occurrence of any event of default by the Company, the City Council may invoke any or all of the following remedies upon default:

A. Assess against the Company monetary penalties not to exceed One Thousand Dollars ($ 1,000.00) for each such event of default or series of related events of default and/or require the Company to cure each such event of default within such time, in such manner, and upon such terms and conditions as the City Council shall designate; or
A. Implement the procedures required to exercise the City’s rights under the conditions of the Performance Bond; or
B. Revoke and terminate the Company's franchise and this Agreement. 39 9.3 Public Hearing
Prior to imposing any such remedy or remedies upon the Company upon the occurrence of any such event of default, the City shall do the following:

A. The City shall provide the Company with at least fifteen (15) days prior written notice of the time and place of a public hearing to be held before the City Council for purposes of determining whether such event of default has occurred and, if it has occurred, whether such event of default was for just cause. Notice as to the time and place of such hearing shall be published at least once ten (10) days before such hearing in a newspaper of general circulation within the City; B. The Company shall be afforded full due process in connection with such hearing, including, but not limited to, an opportunity to introduce evidence, to require the production of evidence, and to introduce and/or question persons connected with or having knowledge of the alleged default. A transcript may be made of the hearing at the Company's expense;
C. The City Council shall hear any persons interested therein and, based upon the evidence presented at such hearing, shall determine whether or not an event of default by the Company has occurred;
D. If the City Council shall determine that an event of default occurred by the Company and such default was with just cause, the City Council shall direct the Company to correct or remedy the same within such additional time, in such manner, and upon such terms and conditions as the Council determines to be necessary; or
E. If the City Council shall determine that an event of default occurred by the Company and such default was without just cause, then the City Council may, by resolution, impose any one or more of the remedies set forth in section 9.2 and 9.4 of this Agreement.

9.4 Liquidated Damages
The City finds, and the Company agrees, that as of the time of the execution of this Agreement, it is impractical, if not impossible, to reasonably ascertain the extent of damages which shall be incurred by the City as a result of a breach by the Company of its obligations under this Agreement. The parties further acknowledge that consistent, reliable Solid Waste Collection service is of utmost importance to the City and that the City has considered and relied on the Company's representations as to its quality of service commitment in awarding the Franchise to it. The parties further recognize that some quantified standards of performance are necessary and appropriate to ensure consistent and reliable service and performance. The parties further recognize that if the Company fails to achieve the performance standards, or fails to submit required documents in a timely manner, the City and its residents will suffer damages and that it is and will be impractical and extremely difficult to ascertain and determine the exact amount of damages that the City will suffer. Therefore, the parties agree that the following liquidated 40 damage amounts represent a reasonable estimate of the amount of such damages considering all of the circumstances existing on the date of this Agreement A. Collection Reliability

1. For each failure to Collect Solid Waste, which has been properly set out for Collection on the scheduled Collection day and not Collected within the period described in this Agreement which exceeds ten (10) such failures annually: $100.00

2. For each failure to Collect Solid Waste, which has been properly set out for Collection, from the same Customer on two (2) consecutive scheduled pickup days: $100.00
B. Collection Quality

1. For each occurrence of uncompensated damage to private property which exceeds five (5) such occurrences annually: $200.00

2. For each occurrence of excessive noise or discourteous behavior:
$200.00

3. For each failure to clean up Solid Waste spilled from Solid Waste Containers which exceeds ten (10) such failures annually:
$100.00

4. For each occurrence of Collecting Solid Waste during unauthorized hours which exceeds five (5) such occurrences annually: $200.00

5. For each failure to clean or replace Containers in accordance with this Agreement which exceeds ten (10) such failures annually:
$50.00
C. Customer Responsiveness

1. For each failure to initially respond to a Customer complaint within one (1) business day: $75.00

2. For each failure to process Customer complaints to the City as required by this Agreement: $250.00
D. Timeliness of Submissions to the City
Any report shall be considered late until such time as a correct and complete report is received by the City. For each calendar day a report is late, the daily liquidated damage amount shall be:
41 1. Quarterly Reports: $75 per day

2. Annual Reports: $150 per day
Liquidated damages will only be assessed after the Company has been given the opportunity but failed to rectify the damages as described in this Agreement.

The City may determine the occurrence of events giving rise to liquidated damages through the observation of its own employees or representative or investigation of Customer complaints.

Prior to assessing liquidated damages, the City shall follow the procedure set forth in section

9.4.1. 9.4.1 Procedure for Review of Liquidated Damages City may assess liquidated damages pursuant to this Section 9.4 on a quarterly basis. At the end of each month during the term of this Agreement, City shall issue a written notice to Company of the liquidated damages assessed and the basis for each assessment. The assessment shall become final unless, within ten (10) days of the day Company receives such notice, Company provides a written request for a meeting with the City to present evidence that the assessment should not be made. The Parties shall meet with ten (10) days of City’s receipt of Company’s notice. City shall consider Company’s evidence in good-faith and render a written decision sustaining or reversing any disputed liquidated damages within five (5) days of the meeting. If the total assessed charges for any one (1) quarterly assessment are equal to or less than One Thousand Five Hundred Dollars and No/100 Cents ($1,500.00), then the decision of the City shall be final and non-appealable. If the total assessed damages are greater than One Thousand Five Hundred Dollars and No/100 Cents ($1,500.00), then, within five (5) days of receiving the City’s written decision, the Company may seek alternate dispute resolution pursuant to Section 9.6.

9.4.2 Non-Exclusive Damages
City’s assessment or collection of liquidated damages shall not preclude or prevent City from exercising or seeking any other right or remedy, including, without limitation, the assessment of any administrative penalties, termination, or seeking legal recourse in a court of equity or in law.

9.5 Excuse from Performance
The parties shall be excused from performing their respective obligations hereunder in the event they are prevented from so performing by reason of floods, earthquakes, other natural disasters, war, civil insurrection, riots, acts of any government (including judicial action), picketing at Customer Collection locations that blocks access to container pick up points, and other similar catastrophic events which are beyond the control of and not the fault of the party claiming excuse from performance hereunder. Labor unrest, including but not limited to strike, work stoppage or slowdown, sick-out, picketing, or other concerted job action conducted by the Company's 42 employees or directed at the Company is not an excuse from performance and the Company shall be obligated to continue to provide service notwithstanding the occurrence of any or all of such events. The party claiming excuse from performance shall, within two (2) days after such party has notice of such cause, give the other party notice of the facts constituting such cause and asserting its claim to excuse under this Section. The interruption or discontinuance of the Company's services caused by one or more of the events excused shall not constitute a default by the Company under this Agreement.

9.6 Mediation and Arbitration
Any dispute arising out of or relating to this Agreement shall first be mediated between the Parties. Within five (5) days of receiving notice from the other Party of a request to mediate a dispute, the Parties shall mutually agree on a mediator. Meditation shall occur within fifteen (15) days of receiving notice from the other Party of the request to mediate a dispute. Unless otherwise agreed at mediation, the costs of mediation shall be borne equally between the Parties.

Unless agreed otherwise by the parties, mediation shall take place in Portola, California.

Upon the written request of a Party, any dispute arising out of or relating to this Agreement which was not resolved by mediation as required herein shall be submitted within five (5) days for binding arbitration in accordance with its Commercial Comprehensive Rules of the American Arbitration Association, unless the Parties agree otherwise and consent, in writing, to a different method of dispute resolution. The Parties agree to use their best efforts to arbitrate the dispute within thirty (30) days of a Party making a written request for arbitration. The arbitrator shall be vested with the power to allocate the costs of arbitration as it deems appropriate. The decision of the arbitrator shall be in writing. Unless agreed otherwise by the parties, arbitration shall take place in Portola, California.

Until the arbitrator makes its final decision, the parties shall maintain the status quo and all terms and conditions of this Agreement shall remain in full force and effect, including, without limitation, the Company’s obligation to perform Solid Waste Collection services and the Company’s right to bill Customers and receive Company Compensation for such services.

9.7 Assurance of Performance
The City may, at its option and in addition to all other remedies it may have, demand from the Company reasonable assurances of timely and proper performance of this Agreement, in such form and substance as the City may require. If the Company fails or refuses to provide satisfactory assurances of timely and proper performance in the form and by the date required by the City, such failure or refusal shall be an event of default. 43 ARTICLE 10. MISCELLANEOUS

10.1 Relationship of Parties
The parties intend that the Company shall perform the services required by this Agreement as an independent contractor engaged by the City and not as an officer or employee of the City nor as a partner of or joint venture with the City. No employee or agent of Company shall be or shall be deemed to be an employee or agent of the City. Except as expressly provided herein, the Company shall have the exclusive control over the manner and means of conducting the Solid Waste Collection services performed under this Agreement, and all Persons performing such services. The Company shall be solely responsible for the acts and omissions of its officers, employees, and agents. Neither the Company nor its officers, employees, and agents shall obtain any rights to retirement benefits, workers' compensation benefits, or any other benefits which accrue to the City employees by virtue of their employment with the City.

10.2 Compliance with Law
In providing the services required under this Agreement, the Company shall comply with all applicable laws and regulations of the United States, the State of California, the County and the City, now in force and as they may be enacted, issued or amended during the term of this Agreement. The City shall comply with all applicable regulations promulgated by federal, state, regional or local administrative and regulatory agencies, now in force and as they may be enacted, issued or amended during the term of this Agreement.

Company acknowledges and warrants that it is fully acquainted with the provisions of the City Code; Company agrees that, in performing this Agreement, it will comply with those provisions of the City Code that are applicable to the work or business in which it is herein licensed or engaged, and with any and all amendments to those provisions of said City Code during the term of this Agreement. If the City or the County should enact any law, regulation, ordinance that materially impacts the terms of this Agreement, the Company shall be entitled to increase the Rates in accord with Section 5.4.

10.3 Assignment
This Franchise is awarded based in the selection of Company, its demonstrated ability to perform, and the relationship previously established between Company’s personnel and the City.

Accordingly, this Franchise shall not be transferred, sold, pledged, hypothecated, leased, or assigned, nor shall any of the rights or privileges herein be transferred, sold, pledged, hypothecated, leased or assigned, either in whole or in part, without the prior written approval of the Portola City Council. Any attempt by Company to effectuate any of the foregoing without the City Council’s approval shall be null and void. City may impose conditions and restrictions on any assignment or request for assignment, including, without limitation, conditions relating to payment of all of City’s costs relating to such transfer and the acceptance of amendments to this Franchise.
44 10.4 Subcontracting
The Company shall not engage any companies or Subcontractors for Collection, transfer, Recycling or Disposal of Solid Waste without the prior written approval of the City Council.

10.5 Notice
All notices, demands, requests, proposals, approvals, consents and other communications which this Agreement requires, authorizes or contemplates shall be in writing and shall either be personally delivered to a representative of the parties at the address below or be deposited in the United States mail, first class postage prepaid, addressed as follows:

If to City: City Manager
City of Portola
P.O. Box 1225
Portola, CA 96122
If to the Company: General Manager
Intermountain Disposal, Inc.

P.O. Box 1596
Portola, CA 96122
Notice shall be deemed given on the day it is personally delivered or, if mailed, three (3) days from the date of the postmark.

10.6 City Free to Negotiate with Third Parties
Notwithstanding the exclusive nature of the Franchise, the City may investigate all options for the Collection, transporting, Recycling, processing and Disposal of Solid Waste and Recyclable Materials at any time prior to the expiration of the term of this Agreement. Without limiting the generality of the foregoing, the City may solicit proposals from the Company and from third parties for the provision of Collection services, Disposal services, Recycling services, and any combination thereof, and may negotiate and execute agreements for such services which will take effect upon the expiration or earlier termination of this Agreement.

10.7 Privacy
The Company shall strictly observe and protect the rights of privacy of Customers. Information identifying individual Customers or the composition or contents of a Customer's waste stream shall not be revealed to any Person, governmental unit, private agency, or company, unless upon the authority of a court of law, by statute, or upon valid authorization of the Customer. This provision shall not be construed to preclude the Company from preparing, participating in, or assisting in the preparation of waste characterization studies or waste stream analyses which may be required by AB 939. This provision shall not apply to reports or records provided to City pursuant to this Agreement.
45 10.8 Cooperation Following Termination
At the end of the term of this Agreement or in the event this Agreement is terminated for cause prior to the end of the term of this Agreement, the Company agrees to immediately pay all amounts due to the City, cooperate fully with the City and any subsequent company to assure a smooth transition of Solid Waste management services. The Company's cooperation shall include, but not be limited to, providing operating records needed to service all properties covered by this Agreement.

10.9 Proprietary Information, Public Records
The City acknowledges that a number of the records and reports of the Company are proprietary and confidential. Regular monthly, quarterly, and annual reports are not proprietary. The City will endeavor to maintain the confidentiality of all proprietary information provided by the Company. Notwithstanding the foregoing, any documents provided by the Company to the City that are public records may be disclosed pursuant to a proper public records request.

10.10 Waiver
The waiver by either party of any breach or violation of any provisions of this Agreement shall not be deemed to be a waiver of any breach or violation of any other provision nor of any subsequent breach of violation of the same or any other provision. The subsequent acceptance by either party of any moneys which become due hereunder shall not be deemed to be a waiver of any pre-existing or concurrent breach or violation by the other party of any provision of this Agreement.

10.11 Binding on Assigns
The provisions of this Agreement shall inure to the benefit of and be binding on the permitted assigns of the parties.

10.12 Governing Law; Jurisdiction; Attorney's Fees
This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California. Any lawsuits, mediation, or arbitration between the parties arising out of this Agreement shall be brought and concluded in the Superior Court in and for the County of Plumas, State of California, if in state court, or in the Federal District Court for the Eastern District of California, if in federal court, which shall have exclusive jurisdiction over such lawsuits. The prevailing party in any arbitration or court action to enforce or interpret this Agreement shall be entitled to an award of reasonable attorneys’ fees and costs, except if that Party did not request or participate in mediation when required to so pursuant to this Agreement.

10.13 Entire Agreement
This Agreement, including the Exhibits, represents the full and entire Agreement between the parties with respect to the matters covered herein. No verbal agreement or conversation with any office, agent, or employee of the City, either before, during, or after the execution of this Agreement, shall affect or modify any of the terms or obligations herein contained nor shall such 46 verbal agreement or conversation entitle the Company to any additional payment whatsoever under the terms of this Agreement.

10.14 Section Headings
The article headings and section headings in this Agreement are for convenience of reference only and are not intended to be used in the construction of this Agreement nor to alter or affect any of its provisions.

10.15 Amendment
This Agreement may be amended or modified only by written agreement duly authorized by the Portola City Council and executed by the parties hereto.

10.16 Interpretation
This Agreement, including the exhibits attached hereto, shall be interpreted and construed reasonably and neither for nor against either party, regardless of the degree to which either party participated in its drafting.

10.17 Severability
Except as may otherwise be expressly provided for herein, if any non-material provision of this Agreement is for any reason deemed to be invalid and unenforceable, the invalidity or unenforceability of such provision shall not affect any of the remaining provisions of this Agreement which shall be enforced as if such invalid or unenforceable provision had not been contained herein. If any material provision of this Agreement is for any reason deemed to be invalid and unenforceable, the parties agree to negotiate, in good faith, valid and enforceable provisions to replace the invalid or unenforceable provision. If, after good faith negotiations, the Parties are not able to agree on such alternate terms, then either Party may terminate this Agreement in accord with Section 9.3; provided; however, that the parties have exhausted all dispute resolution procedures pursuant to this Agreement.

10.18 Exhibits
Each of the Exhibits identified in this Agreement is attached hereto and incorporated herein and made a part hereof by this reference.
47 IN WITNESS WHEREOF, the City and the Company have executed this Agreement as of the day and year first above written at the top of this Agreement.

CITY OF PORTOLA
______________________________________
By: ROBERT MEACHER
Its: CITY MANAGER
INTERMOUNTAIN DISPOSAL, INC.
a California corporation
______________________________________
By: RICKY ROSS
Its: VICE PRESIDENT/GENERAL MANAGER
ATTEST: APPROVED AS TO FORM:
__________________________ _____________________________

MELISSA KLUNDBY STEVEN GROSS
City Clerk City of Portola Counsel
Exhibit A – Pass Through Costs
Exhibit B – Rate Schedules

INTERMOUNTAIN DISPOSAL COMPANY
ANNUAL ADJUSTMENT OF RATES FOR THE 2025 CALENDAR YEAR (RATE YEAR 8) Annual Rate Adjustment Calculated per Section 5.3 of the Franchise Agreement, as Amended August 25, 2021 Rate Adjustment Calculations
Adjust for Changes in CPI and Fuel Costs August 2023 through August 2024 % Increase = 90% Annual Change West Region CPI (Aug/Aug) + 10% Annual Change California Fuel (Aug/Aug) August 2022 West Urban CPI: 326.234 Data Reference: https://data.bls.gov/cgi-bin/surveymost?cu August 2023 West Urban CPI: 333.442
August 2022 EIA Cal Diesel Fuel: $5.518 Date Reference: www.eia.gov/dnav/pet/pet_pri_gnd_dcus_sca_m .htm August 2023 EIA Cal Diesel Fuel: $4.758
CPI/Fuel Rate Increase = 0.61%
Adjust for Increased Disposal Fees at Delleker Transfer Station DTS Disposal Fee Increase Effective July 5, 2022 8.91%
DTS Disposal Fee Increase Effective July 1, 2024 6.09%
Disposal Cost as Percentage of Total IMD Revenues (2023) 24.0% Disposal Fee Rate Increase (15.00% x 0.240) = 3.60%
INTERMOUNTAIN DISPOSAL PROPOSED 2025 RATE INCREASE
RATES EFFECTIVE JANUARY 1, 2025 UPON APPROVAL FROM PORTOLA CITY COUNCIL

COMMERCIAL AND RESIDENTIAL CAN RATES
2025 RATE INCREASE (RATE YEAR 8)
Item
Current 2024 Monthly
Rates
CPI/Diesel Fuel Increase
(0.61%)
Delleker Transfer Station
Fee Increases (3.60%)
Proposed 2025 Monthly
Rates
Wastecarts
32 Gallon Cart $15.39 $0.09 $0.55 $16.03
64 Gallon Cart $20.92 $0.13 $0.75 $21.80
96 Gallon Cart $26.48 $0.16 $0.95 $27.59
Replace Carts
32 Gallon Cart $77.84 $0.47 - $78.31
64 Gallon Cart $88.23 $0.54 - $88.77
96 Gallon Cart $108.99 $0.66 - $109.65
Recycling Service
64 Gallon Cart $5.43 $0.03 - $5.46
Green Waste Service
96 Gallon Cart $16.75 $0.10 $0.60 $17.45
Extra Services
New Service &
Reinstatement Fee $8.66 $0.05 - $8.71
Backyard Collection $8.67 $0.05 - $8.72
Car Tire $5.50 $0.03 $0.20 $5.73
Truck Tire $11.19 $0.07 $0.40 $11.66
Appliances $26.36 $0.16 $0.95 $27.47
Mattress/Box Spring $52.59 $0.32 $1.89 $54.80
Waste Cart Delivery $15.60 $0.10 - $15.70
One-Time Collection, Up to
Four Cans
$26.09 $0.16 - $26.25
Returned Check Fee $54.30 $0.33 - $54.63
INTERMOUNTAIN DISPOSAL PROPOSED 2025 RATE INCREASE
RATES EFFECTIVE JANUARY 1, 2025 UPON APPROVAL FROM PORTOLA CITY COUNCIL

COMMERCIAL BIN SERVICE RATES
2025 RATE INCREASE (RATE YEAR 8)
Item
Pick-ups Per
Week
Current 2024 Monthly
Rates
CPI/Diesel Fuel Increase
(0.61%)
Delleker Transfer Station
Fee Increases (3.60%)
Proposed 2025 Monthly
Rates
Bin Size
1 CY 1x $67.87 $0.41 $2.44 $70.72
2x $135.63 $0.83 $4.88 $141.34
3x $203.29 $1.24 $7.32 $211.85
.

1.5 Cy 1x $102.16 $0.62 $3.68 $106.46
2x $204.18 $1.25 $7.35 $212.78
3x $306.21 $1.87 $11.02 $319.10
2 CY 1x $150.80 $0.92 $5.43 $157.15
2x $301.47 $1.84 $10.85 $314.16
3x $452.11 $2.76 $16.28 $471.15
3 CY 1x $254.66 $1.55 $9.17 $265.38
2x $509.17 $3.11 $18.33 $530.61
4 CY 1x $271.06 $1.65 $9.76 $282.47
2x $542.01 $3.31 $19.51 $564.83
5 CY 1x $338.78 $2.07 $12.20 $353.05
2x $677.40 $4.13 $24.39 $705.92
6 CY 1x $421.70 $2.57 $15.18 $439.45
2x $843.27 $5.14 $30.36 $878.77
8 CY 1x $593.28 $3.62 $21.36 $618.26
2x $1,186.39 $7.24 $42.71 $1,236.34
Extra Services
New Service &
Reinstatement Fee $8.66 $0.05 - $8.71
Extra Yardage $17.55 $0.11 $0.63 $18.29
Extra Cans $6.69 $0.04 $0.24 $6.97
Container Delivery $58.82 $0.36 - $59.18
Container Relocation $29.39 $0.18 - $29.57
Weekly Rental Charge
1 CY $10.83 $0.07 - $10.90

1.5 CY $16.28 $0.10 - $16.38
2 CY $23.97 $0.15 - $24.12
3 Cy $40.57 $0.25 - $40.82
4 CY $43.02 $0.26 - $43.28
5 Cy $53.99 $0.33 - $54.32
Car Tire $5.50 $0.03 $0.20 $5.73
Truck Tire $11.19 $0.07 $0.40 $11.66
Return Charge $12.99 $0.08 - $13.07
Off-Day Collection $25.96 $0.16 - $26.12
Bear-Resistant Bin $22.21 $0.14 - $22.35
Bin Unlock/Lock $42.23 $0.26 - $42.49
Bin Repair Per Hour $78.43 $0.48 - $78.91
INTERMOUNTAIN DISPOSAL PROPOSED 2025 RATE INCREASE
RATES EFFECTIVE JANUARY 1, 2025 UPON APPROVAL FROM PORTOLA CITY COUNCIL ROLL-0FF BOX RATES
2025 RATE INCREASE (RATE YEAR 8)
Current 2024 Rates
CPI/Diesel Fuel Increase
(0.61%)
Delleker Transfer Station
Fee Increases (3.60%) Proposed 2025 Rates Current 2024 Rates CPI/Diesel Fuel Increase
(0.61%) Proposed 2025 Rates
Box Size
10 CY $328.28 $2.00 $11.82 $342.10 $57.39 $0.35 $57.74
12 CY $409.58 $2.50 $14.74 $426.82 $57.39 $0.35 $57.74
20 CY $569.04 $3.47 $20.49 $593.00 $57.39 $0.35 $57.74
25 CY $685.67 $4.18 $24.68 $714.53 $57.39 $0.35 $57.74
30 CY $835.65 $5.10 $30.08 $870.83 $57.39 $0.35 $57.74
40 CY $1,135.21 $6.92 $40.87 $1,183.00 $57.39 $0.35 $57.74 Demurrage Charge
Daily $17.37 $0.11 - $17.48
Weekly $50.69 $0.31 - $51.00
Extra Services
Off-Day Relocation,
Per Hour
$113.55 $0.69 - $114.24
Overweight Per ton
(>8Tons) $100.82 $0.62 $3.63 $105.07
Standby MondayFriday, Per Hour $109.93 $0.67 - $110.60 Standby Off Hours,
Per Hour $170.33 $1.04 - $171.37
ROLL-OFF BOXES Delivery Charge
Databases, Tables & Calculators by Subject
Special Notices 4/25/2024
Change Output Options: From: 2014 To: 2024
include graphs include annual averages
Data extracted on: September 11, 2024 (11:52:08 AM)
Consumer Price Index for All Urban Consumers (CPI-U)
Series Id: CUUR0400SA0
Not Seasonally Adjusted
Series Title: All items in West urban, all urban consumers, not seasonally adjusted Area: West
Item: All items
Base Period: 1982-84=100
Download:

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual HALF1 HALF2 2014 236.707 237.614 239.092 239.808 241.350 241.616 241.850 241.660 241.920 241.650 240.220 239.095 240.215 239.365 241.066 2015 238.318 239.748 241.690 242.302 244.227 244.332 245.040 244.737 244.257 244.341 243.749 243.434 243.015 241.770 244.260 2016 244.600 244.821 245.404 246.589 247.855 248.228 248.375 248.498 249.234 249.897 249.448 249.516 247.705 246.250 249.161 2017 250.814 252.252 252.949 253.806 254.380 254.469 254.708 255.282 256.504 257.223 257.126 257.347 254.738 253.112 256.365 2018 258.638 259.986 260.994 262.037 263.240 263.732 263.971 264.395 265.105 266.195 265.658 265.209 263.263 261.438 265.089 2019 265.624 266.215 267.370 269.522 270.880 270.957 271.029 271.264 272.102 273.524 273.128 272.584 270.350 268.428 272.272 2020 273.340 274.412 273.995 272.913 273.062 274.155 275.597 276.443 276.422 276.876 276.875 276.593 275.057 273.646 276.468 2021 277.238 278.702 280.625 283.507 285.793 288.263 289.863 290.393 291.053 293.397 294.986 296.102 287.494 282.355 292.632 2022 298.705 301.158 305.082 307.145 309.645 313.496 313.951 314.013 315.094 317.299 315.919 314.599 310.509 305.872 315.146 2023 317.477 319.130 320.715 322.187 323.525 324.448 324.865 326.234 327.491 327.708 326.299 325.932 323.834 321.247 326.422 2024 328.053 329.339 332.202 334.050 334.292 333.662 333.174 333.442 331.933 U.S. BUREAU OF LABOR STATISTICS
U.S. BUREAU OF LABOR STATISTICS Postal Square Building 2 Massachusetts Avenue NE Washington, DC 20212-0001 Telephone:1-202-691-5200 Telecommunications Relay Service:7-1-1 www.bls.gov Contact Us Petroleum & Other Liquids
Weekly Retail Gasoline and Diesel Prices
(Dollars per Gallon, Including Taxes)
Area: California Period: Monthly
Product Area Graph Clear Mar-24 Apr-24 May-24 Jun-24 Jul-24 Aug-24 View
History
Gasoline - All Grades 4.831 5.255 5.118 4.777 4.590 4.451 2000-2024 All Grades - Reformulated Areas 4.831 5.255 5.118 4.777 4.590 4.451 1995-2024 Regular 4.720 5.145 5.005 4.663 4.471 4.332 2000-2024
Reformulated Areas 4.720 5.145 5.005 4.663 4.471 4.332 1995-2024 Midgrade 5.028 5.433 5.310 4.982 4.796 4.663 2000-2024
Reformulated Areas 5.028 5.433 5.310 4.982 4.796 4.663 1995-2024 Premium 5.159 5.590 5.454 5.112 4.944 4.801 2000-2024
Reformulated Areas 5.159 5.590 5.454 5.112 4.944 4.801 1995-2024 Diesel (On-Highway) - All Types 5.216 5.239 5.078 4.927 4.901 4.758 1995-2024 Ultra Low Sulfur (15 ppm and Under) 5.216 5.239 5.078 4.927 4.901 4.758 2007-2024 Click on the source key icon to learn how to download series into Excel, or to embed a chart or map on your website. - = No Data Reported; -- = Not Applicable; NA = Not Available; W = Withheld to avoid disclosure of individual company data.

Notes: Conventional area is any area that does not require the sale of reformulated gasoline. All types of finished motor gasoline may be sold in this area. RFG area is an ozone nonattainment area designated by the U.S. Environmental Protection Agency (EPA), which requires the use of reformulated gasoline. We stopped publishing Low Sulfur On-Highway Diesel (LSD) prices at the U.S. level on December 8, 2008, because fewer stations were selling LSD as a result of EPA diesel fuel regulations. We continued to collect LSD prices from retail outlets and included them in the Diesel Average All Types price until July 26, 2010, when no more outlets reported LSD sales.

Beginning July 26, 2010, publication of Ultra Low Sulfur Diesel (ULSD) price became fully represented by the Diesel Average All Types price. As of December 1, 2010 (September 1, 2006 in California), any on-highway diesel fuel sold is ULSD as mandated by EPA on-highway diesel fuel regulations. We did not collect weekly retail motor gasoline data between December 10, 1990, and January 14, 1991. Monthly and annual averages are simple averages of the weekly data. For months and years with incomplete weekly data series, the monthly and/or annual averages are not available. On May 14, 2018, we implemented statistical methodology changes to improve the accuracy of the weekly retail gasoline price estimates. As a result of these statistical methodology changes, the published retail gasoline estimates for May 14, 2018, are not directly comparable to those published for May 7, 2018. On June 13, 2023, we implemented statistical methodology changes to improve the accuracy of the weekly retail on-highway diesel fuel price estimates. As a result of these statistical methodology changes, the published retail on-highway diesel fuel prices for June 13, 2022 are not directly comparable to those published for June 6, 2022. See Definitions, Sources, and Notes link above for more information on this table.

Release Date: 9/9/2024
Next Release Date: 9/16/2024
Show Data By:

1 MEETING DATE: December 11, 2024
AGENDA ITEM: 7. 2024 City Audit
FROM: Susan Scarlett
RE: 2024 City of Portola Audit
BACKGROUND:

The City audit for 2024 was issued on November 5, 2024. An electronic copy is attached and will be posted to the website once accepted by the City Council. Also attached is the GANN letter and the Governance Communication letter.

RECOMMENDATION:

Review of the City audit and acceptance by the City Council.

ATTACHMENTS:

A. 2024 CITY OF PORTOLA AUDITED FINANCIAL STATEMENTS
B. 2024 CITY OF PORTOLA GANN REPORT
C. 2024 CITY OF PORTOLA GOVERNANCE COMMUNICATION

CITY OF PORTOLA

FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2024

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CITY OF PORTOLA

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2024
INDEPENDENT AUDITORS’ REPORT 1
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) 4

BASIC FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS
STATEMENT OF NET POSITION 13
STATEMENT OF ACTIVITIES 14

FUND FINANCIAL STATEMENTS

GOVERNMENTAL FUNDS
BALANCE SHEET 15

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE GOVERNMENT-WIDE STATEMENT OF NET POSITION 16

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES 17

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO
THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES 18

PROPRIETARY FUNDS
STATEMENT OF FUND NET POSITION 19

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION 20
STATEMENT OF CASH FLOWS 21
NOTES TO FINANCIAL STATEMENTS 23

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION
LIABILITY/(ASSET) AND RELATED RATIOS 45
SCHEDULE OF PENSION PLAN CONTRIBUTIONS 46

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL 47

CITY OF PORTOLA

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2024

GENERAL FUND
STATE TRANSPORTATION IMPROVEMENT FUND 48
GAS TAX 2107 FUND 49

NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
BUDGETS AND BUDGETARY ACCOUNTING 50

SUPPLEMENTARY INFORMATION

COMBINING NONMAJOR FUND STATEMENTS

NONMAJOR SPECIAL REVENUE FUNDS
COMBINING BALANCE SHEET 52

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES 53

OTHER REPORTS
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 54
CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer.

CliftonLarsonAllen LLP
CLAconnect.com
(1)
INDEPENDENT AUDITORS’ REPORT
Honorable Mayor and Council Members
City of Portola, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the City of Portola (City), as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2024, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

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

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

Honorable Mayor and Council Members
City of Portola
(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. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

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

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

Emphasis of Matter
Change in Fund Presentation from Major to Nonmajor
As discussed in note 15 to the financial statements, the snow removal fund, presented as a major fund in the prior year, is now presented as a nonmajor fund as it no longer meets the criteria to be a major fund in the current year. Our opinions are not modified with respect to this matter. (3)
Honorable Mayor and Council Members
City of Portola
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, schedule of proportionate share of the net pension liability/(asset) and related ratios, schedule of pension plan contributions, and budgetary comparison information be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining nonmajor financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 5, 2024, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City’s internal control over financial reporting and compliance.

CliftonLarsonAllen LLP
Roseville, California
November 5, 2024

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MANAGEMENT’S DISCUSSION

AND ANALYSIS (MD&A)

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CITY OF PORTOLA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2024
(4)
This section of the City of Portola (City) annual financial report presents a discussion and analysis of the City’s financial performance during the fiscal year ended June 30, 2024. It should be read in conjunction with the City’s basic financial statements following this section.

I. FINANCIAL HIGHLIGHTS
A. Government-Wide Financial Analysis
The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $19,423,953:
• $11,612,012 represents the City’s investment in capital assets, less any related outstanding debt used to acquire those assets (net investment in capital assets). • $1,503,639 is available for the City’s ongoing obligations related to programs with external restrictions (restricted net position).
• $6,308,302 is available to fund City programs for citizens and debt obligations to creditors (unrestricted net position).

The City’s total net position increased by $1,557,887 from the prior year:
• The $1,329,821 increase in net investment in capital assets represents infrastructure and other additions of $2,168,441 less depreciation of $997,881, and the retirement of related long-term debt of $35,000.
• The $350,950 increase in restricted net position represents the change in resources that are subject to external restrictions on their use and is detailed in the government-wide financial analysis section on page 6.

B. Financial Analysis of the City’s Funds
The City’s governmental funds combined ending fund balance of $2,698,775 was a decrease of $19,053 from the prior year ending fund balance. Amounts available for spending include restricted and unassigned fund balances; these totaled $2,698,775, or 100% of ending fund balance. Of this amount, $315,406 is restricted by law or externally imposed requirements.

II. OVERVIEW OF THE FINANCIAL STATEMENTS
A. Government-Wide Financial Statements
The government-wide financial statements provide an overview of the City’s finances in a manner similar to a private sector business that is using the accrual basis of accounting. They demonstrate accountability of the City of Portola by showing the extent to which it has met operating objectives efficiently and effectively, using all resources available, and whether it can continue to do so.

CITY OF PORTOLA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2024
(5)
The statement of net position presents information on all of the City’s assets, deferred outflows, and deferred inflows, liabilities, with the difference reported as net position. Over time, increases and decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

The statement of activities presents information on expenses and revenues to show how the government’s net position changed during the fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues are reported as soon as earned and expenses are reported as soon as incurred even though the related cash flows may not have taken place until future fiscal periods (e.g., earned but unused vacation leave).

Both of these government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, planning and community development, public safety, streets and roads, public works and parks and recreation.

The business type activities of the City include water, sewer, and solid waste services.

B. Fund Financial Statements
The fund financial statements provide evidence of accountability by demonstrating compliance with budgetary decisions made in a public forum. A fund is a group of related accounts that are used to maintain control over resources that have been segregated for specific activities or purposes stipulated by laws, regulations or policies. The funds of the City are divided into two categories: governmental and proprietary.

Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near term inflows and outflows of spending resources, as well as on balances of spending available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements.

The City maintains six individual governmental funds. On the financial statements for governmental funds, information is presented separately for the General Fund and for the Gas Tax, and State Transportation Improvement Plan funds. Data from nonmajor governmental funds are aggregated into a single column.

Proprietary funds consist of three enterprise funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water, sewer, and solid waste services.

The Notes to Financial Statements provide additional information that is essential to a full understanding of the information provided in the financial statements.

C. Required Supplementary Information
In addition to the basic financial statements, this report presents actuarial information related to the City’s pension plans as well as budgetary comparisons for the General Fund and major special revenue funds as required supplementary information.

CITY OF PORTOLA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2024
(6)
III. GOVERNMENT-WIDE FINANCIAL ANALYSIS
The City presents its financial statements under the reporting model required by the Governmental and Accounting Standards Board Statement No. 34.

Dollar Percent
2024 2023 2024 2023 2024 2023 Change Change
Current and Other Assets $ 3,215,602 $ 3,300,156 $ 6,634,283 $ 6,404,790 $ 9,849,885 $ 9,704,946 $ 144,939 1% Capital Assets 8,017,431 6,707,888 4,257,690 4,459,702 12,275,121 11,167,590 1,107,531 10% Total Assets 11,233,033 10,008,044 10,891,973 10,864,492 22,125,006 20,872,536 1,252,470 6% Deferred Outflows of Resources 168,769 189,928 302,643 362,678 471,412 552,606 (81,194) -15% Current and Other Liabilities 210,429 557,769 100,981 132,616 311,410 690,385 (378,975) -55% Long-Term Liabilities 285,327 252,603 2,502,538 2,519,970 2,787,865 2,772,573 15,292 1% Total Liabilities 495,756 810,372 2,603,519 2,652,586 3,099,275 3,462,958 (363,683) -11% Deferred Inflows of Resources 26,203 33,035 46,987 63,083 73,190 268,695 (195,505) -73% Net Invested in Capital Assets 7,997,151 6,500,318 3,614,861 3,781,873 11,612,012 10,282,191 1,329,821 13% Restricted:

General Government 95,425 107,052 - - 95,425 107,052 (11,627) -11% Community Development 43,525 43,525 - - 43,525 43,525 - 0% Streets and Roads 306,398 - - - 306,398 - 306,398 100%
Capital Improvements 168,443 133,279 227,654 218,667 396,097 351,946 44,151 13% Debt Service - - 68,362 68,362 68,362 68,362 - 0%
Facility Fees - - 593,832 589,817 593,832 589,817 4,015 1% Unrestricted 2,268,901 2,570,391 4,039,401 3,852,782 6,308,302 6,423,173 (114,871) -2% Total Net Position $ 10,879,843 $ 9,354,565 $ 8,544,110 $ 8,511,501 $ 19,423,953 $ 17,866,066 $ 1,557,887 9% Condensed Statement of Net Position
June 30, 2024 and 2023
Governmental
Activities
Business-Type
Activities Total
Total
Net investment in capital assets reflects the City’s investment in capital assets (i.e., its land, structures and improvements, infrastructure, and equipment). The City uses the capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

Restricted net position represents 7.78% of the total net position and are resources subject to external restrictions on how they may be used.

Unrestricted net position represents 32.44% of the total net position and may be used to meet the City’s ongoing obligations to citizens and creditors.

CITY OF PORTOLA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2024
(7)
The following highlights significant factors that affected the governmental and business-type activities and contributed to the change in net position:

Dollar Percent
2024 2023 2024 2023 2024 2023 Change Change
Program Revenues:

Charges for Services $ 131,035 $ 103,914 $ 2,040,860 $ 2,037,705 $ 2,171,895 $ 2,141,619 $ 30,276 1% Operating Grants and Contributions 1,255,312 810,575 - 20,000 1,255,312 830,575 424,737 51% Capital Grants and Contributions 1,746,223 332,310 - - 1,746,223 332,310 1,413,913 425% General Revenues:

Property Taxes 351,778 294,992 - - 351,778 294,992 56,786 19% Other Taxes 459,499 404,569 - - 459,499 404,569 54,930 14% Other Revenue 99,426 61,272 225,935 123,566 325,361 184,838 140,523 76% Total Revenues 4,043,273 2,007,632 2,266,795 2,181,271 6,310,068 4,188,903 2,121,165 51% Expenses:

General Government 253,654 287,155 - - 253,654 287,155 (33,501) -12% Planning and
Community Development 147,866 133,190 - - 147,866 133,190 14,676 11% Public Safety 455,915 481,570 - - 455,915 481,570 (25,655) -5% Streets and Roads 1,044,486 1,168,552 - - 1,044,486 1,168,552 (124,066) -11% Public Works 325,155 381,014 - - 325,155 381,014 (55,859) -15% Parks and Recreation 290,919 283,228 - - 290,919 283,228 7,691 3% Water Service - - 1,198,044 1,075,877 1,198,044 1,075,877 122,167 11% Sewer Service - - 904,398 862,500 904,398 862,500 41,898 5% Solid Waste - - 131,744 130,898 131,744 130,898 846 1%
Total Expenses 2,517,995 2,734,709 2,234,186 2,069,275 4,752,181 4,803,984 (51,803) -1% Change in Net Position 1,525,278 (727,077) 32,609 111,996 1,557,887 (615,081) 2,172,968 -353% Net Position - July 1 9,354,565 10,081,642 8,511,501 8,399,505 17,866,066 18,481,147 (615,081) -3% Net Position - June 30 $ 10,879,843 $ 9,354,565 $ 8,544,110 $ 8,511,501 $ 19,423,953 $ 17,866,066 $ 1,557,887 9% Statement of Activities
For the Years Ended June 30, 2024 and 2023
Governmental
Activities
Business-Type
Activities Total
Total
• Governmental activities reported a $1,525,278 increase in net position, and business-type activities reported an increase of $32,609, for a net increase of $1,557,887.

IV. FINANCIAL ANALYSIS OF THE CITY’S FUNDS
The City uses fund accounting to ensure and demonstrate compliance with budgetary and legal requirements.

Governmental funds. The general government functions are included in the General and Special Revenue Funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, total fund balance less the nonspendable portion is a useful measure of the City’s resources available for spending at the end of the fiscal year.

At June 30, 2024, the City’s governmental funds reported combined ending fund balances of $2,698,775, 88.31% of which is available to meet the City’s ongoing general obligation to citizens and creditors.

CITY OF PORTOLA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2024
(8)
The General Fund is the main operating fund of the City. At June 30, 2024, total fund balance was $2,774,087, 96.56% of which was available for spending. As measures of the general fund’s liquidity, it is useful to note that available fund balance represents 228% of total fund expenditures. It is the City’s goal to maintain a minimum level of fund balance sufficient to preserve the City’s credit rating in the event that the City needs financing and to maintain sufficient working capital. It is also the City’s goal to maintain a comfortable margin of safety to address emergencies and unexpected declines in revenue without borrowing. The City therefore adopted a policy that directs management to maintain a minimum level of unassigned fund balance in the City’s General Fund as follows:

The City will strive to maintain an unassigned fund balance in the General Fund of 100% of budgeted general fund operating expenditures each fiscal year. In the event that the balance drops below the established minimum level, the City’s governing body will develop a plan to replenish the fund balance.

The following table presents the revenues from various sources as well as increases or decreases from the prior year in the governmental funds.
% of % of % of
Revenue Sources Amount Total Amount Total Amount Change Taxes $ 811,277 22% $ 699,561 33% $ 111,716 16%
Licenses and Permits 79,594 2% 69,134 3% 10,460 15%
Fines and Forfeitures 13,208 0% 190 0% 13,018 6852%
Use of Money and Property 91,896 2% 54,414 3% 37,482 69% Intergovernmental 2,719,696 72% 1,245,453 59% 1,474,243 118% Charges for Services 38,233 1% 34,590 2% 3,643 11%
Other 7,530 0% 6,858 0% 672 10%
Total 3,761,434 $ 100% 2,110,200 $ 100% 1,651,234 $ 78% Revenues Classified by Source
Governmental Funds
2024 2023 Change
Significant changes for major revenue sources are explained below.  Secured Property Tax increased $56,786, Sales Tax increased $33,629, and Other Taxes increased $21,301.
 Licenses and Permits and Fines and Forfeitures both increased because building permits increased $5,675 and franchise fees increased $16,857 from the prior year amount and business licenses decreased by $499.
 There was an increase in the Use of Money and Property due to increased interest rates.  Intergovernmental includes an increase of $67,510 in Snow Removal Funds based on the expenses from the prior year, a decrease of $94,268 in Coronavirus Relief Funds used and an increase of $1,413,913 in reimbursements from the State for STIP projects based on work completed by the Contractor. In addition, there was an increase in the COPS funding of $151,430 due to an updated calculation for prior years and a decrease in grant funding of $66,495.  Charges for Services had a slight increase due to the City Pool being open more days a week than the prior year.

CITY OF PORTOLA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2024
(9)
• The following table presents expenditures by function compared to prior year’s amounts in the governmental funds.
% of % of % of
Amount Total Amount Total Amount Change
General Government $ 224,317 6% 215,290 $ 10% $ 9,027 4% Planning and Community
Development 137,913 4% 112,812 5% 25,101 22%
Public Safety 421,516 11% 448,508 20% (26,992) -6%
Streets and Roads 2,481,169 65% 867,162 39% 1,614,007 186% Public Works 302,173 8% 324,841 15% (22,668) -7%
Parks and Recreation 213,399 6% 238,203 11% (24,804) -10% Total Expenditures $ 3,780,487 100% 2,206,816 $ 100% 1,573,671 $ 71% Expenditures by Function
Governmental Funds
2024 2023 Change
Significant changes for major functions are explained below:
• General government had a slight increase overall. There was a slight increase in City Manager total and City Attorney and a decrease in Public records requests not being tracked. Various other minor changes
• Planning and Community Development had a decrease in Grant expenditures. There was an increase in Local Agency Formation Commission (LAFCO) fees of $17,883 and an increase in Professional Services due to additional planning work.
• Public safety has a number of changes that make up this $26,992 decrease. The Fire department had a decrease partly due to expenditures decreasing related to the PG&E settlement funds, Local Emergency Services Study Group (LESSG) funds and the winding down of the Fire department in anticipation of the consolidation. Law enforcement had a decrease due to the code enforcement contract termination.
• In Street and Roads, the STIP Fund construction phase for the North Loop project continued with an increase of $1,708,019 and snow removal expenses were reduced due to a dryer winter. • Public Works had changes that netted to the small decrease. The work on the Community Cleanup State and Local Fiscal Recovery project was reduced by $112,918 but consulting on the Gulling St. Bridge began and was $42,835. Payroll was higher by $25,648, gas and electric was higher by $3,097. The purchase of tax lien sale properties of $18,650 was included under ARPA as that is where it was funded.
• Parks and Recreation decreased as the additional costs for damages to the City parks due to the heavy winter was in the prior year. The prior year also had a Riverwalk paving project. • Proprietary funds. The City’s proprietary funds provide the same type of information found in the government wide financial statements, but in more detail. These funds include the following enterprise funds: Water Service Fund, Sewer Service Fund, and Solid Waste Fund. As of June 30, 2024, the proprietary (enterprise) funds net position was a combined $8,544,110 with a net investment in capital assets of $3,614,861 and an unrestricted net position of $4,039,401.

CITY OF PORTOLA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2024
(10)
V. BUDGETARY HIGHLIGHTS
The budget documents normally represent a financial plan for the City with four central goals in mind:
(1) sustaining the level and quality of basic municipal services currently being provided our residents (2) maintaining the City’s infrastructure while implementing scheduled and unscheduled improvements determined at the time of the budget process; (3) providing for some opportunity for investment in additional tools, equipment, and programs that foster improvement in the overall aesthetics of the City as well as investment in social activities; and (4) developing plans for improved municipal services with a vision that will lead our community toward growth and tourism. This year’s budget, while keeping all four goals in mind, addressed mainly goals number (1) sustaining the level and quality of services currently being provided to our residents and (2) maintaining the City’s infrastructure. In addition to the past goals, there is a renewed emphasis on economic development, blight reduction, and code compliance.

Differences between the original budget and the final amended budget are mainly due to the revenue and expenditures from Grant funds and from Capital projects that are “reimbursed” and in many cases are not reflected in the original budget figures.

The 2023-2024 budget had projected the use of $215,345 of the General Fund’s fund balance to eliminate a shortfall of revenues over expenditures.

After amending the budget for the fiscal year 2023/2024 General Fund revenues were more than budget by $132,155 and General Fund expenditures were $190,209 less than budgeted. While the City had originally budgeted a decrease of $215,345 in fund balance the final fund balance was an increase of $258,474. The City received additional revenue in Sales Tax, prior years Supplemental Law Enforcement Services funding, Secured property tax and Transient Occupancy Tax.

The major special revenue funds include Streets, and the North Loop STIP project. It is difficult to budget the North Loop project ahead of time as these projects can be programmed and go on for years.

VI. CAPITAL ASSETS AND DEBT ADMINISTRATION
A. Capital Assets
The change in capital assets for the Governmental Activities totaled $1,309,543, net of depreciation for an ending balance of $8,017,431.

Business-type capital assets for the fiscal year ending June 30, 2024, were $4,257,690, net of depreciation. This is a decrease in capital assets of $202,012. More detailed information about the City’s capital assets is presented in Note 5 of the basic financial statements.

CITY OF PORTOLA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2024
(11)
B. Long-Term Debt
At June 30, 2024, the City had long-term debt outstanding of $642,829. This is a decrease over June 30, 2023 of $35,000. The entire long-term debt was attributable to Business-type activities. There is no long-term debt in the Governmental Activities.

More detailed information about the City’s long-term liabilities is presented in Note 6 of the basic financial statements.

VII. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES
Management presented a budget document that attempted to address the current national, state, and local economic conditions and to serve as the City’s policy document, as an operations guide, as a financial plan and as a communication document to guide the City staff and Portola residents on how the City of Portola conducts its financial business. The challenges of economic conditions, the need to comply with state regulations and the desire to be conservative with the fiscal position of the City are reflected.

For the 2024-2025 budget the process began as usual with City staff preparing draft level of services budgets for each area of the City. The budget process began in February and continued through March, April, and May with revisions to the level of services budgets, additions of “add-ons”, and discussion of what would be needed to provide a balanced budget. Step increases were included and the budget included a 3.6% cost of living increase. The critical need to maintain healthy cash balances is always in the forefront of finance discussions. The City has been able to fund major projects in advance of reimbursements because of the balances that it currently maintains. This has been evident with the construction phase of the North Loop project.

While the City always pays close attention to budget amendments and to the use of additional fund balance, some purchases are critical, and the Council has an understanding of when those are onetime expenditures. The Council is always aware of the expenses that are reimbursable by another entity including grant funding and the Caltrans reimbursement of the North Loop project.

The Gulling Street bridge is in need of scour mitigation and the City is pursuing funding availability including FEMA funding that was previously applied for but has not been obligated, the Caltrans Highway Bridge Program and other possibilities for repairs to the bridge.

Even with no increase in staffing the General Fund supports the services necessary for the residents of Portola, including parks, planning, building, streets, snow removal, animal control, and law enforcement through a Sheriff’s contract for services. The City no longer has a Fire Department as the new consolidated Fire District, Beckwourth Peak Fire Protection District, began on July 1, 2024. The City has a contract Planner who assists the City in required documents such as the Local Hazard Mitigation Plan and the General Plan and Housing Elements. These are complex processes with a multitude of regulations and compliance requirements.

In the 2024-2025 budget the City included a Community Engagement Officer for code enforcement, abandoned vehicle abatement and other services to the community. The City continues to utilize contract services for code enforcement and abandoned vehicle abatement on a limited basis to train the new employee.

CITY OF PORTOLA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2024
(12)
Over the last few years an SB2 Planning Grant, and a related Local Early Action Planning Grant were used to improve and streamline the permit process in an attempt to attract growth. A housing development package was part of the grant as was the implementation of Mango Maps which can be found on the City Website. This grant work may also make other services the City provides more efficient as well, including easier acquisition of public records and parcel information. The City completed the implementation of new software that provides utility customers the ability to pay online as well as see their bills and usage and will allow payment of building permits and licenses online.

These kinds of improvements are important to the overall functioning of the City and communication with the citizens. This grant has now been closed out and all available funds used.

With regard to the City Enterprise Funds the effects and impacts of changing state and federal government regulation is a constant challenge, but the major challenge the Enterprise Funds face is the aging infrastructure in the City. This was never more evident than after the major storms. In the 2024- 2025 budget Water and Sewer rates were not increased. While the Council has been able to reduce the Solid Waste Administration fees over the past few years it was not able to do so in the upcoming budget due to challenges with administering the Solid Waste Franchise agreement. The Landfill closure fee is reserved for future needs at the landfill. The Enterprise Funds are “business-type” activities whose expenses need to be covered by the rate payers. The City Council will continue to review the need for any future rate increases each year during the budget process. Staff and the City Council are always looking for funding opportunities for infrastructure and have been working for quite some time toward that goal. A grant through the Clean Water State Revolving Fund is being worked on by a team that includes California State University, Pace Engineer, City Staff and the State Water Resources Control Board. There is currently no timeline for funding.

It is important to remember that in November 2018 the Council voted to pay down $400,000 of the unfunded liability which has the potential to save over $500,000 in interest over time. While CalPERS unfunded liability is a moving target, this was a major and proactive step for the City to try and manage the annual payments going forward.

Staff keeps a watchful eye on state and federal issues as well as on the financial health of the City and continually reviews these issues and the possibility of budget adjustments with the City Council.

VIII. REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the financial activity and condition of the City of Portola to all having such an interest in the City of Portola. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Portola Finance Department, 35 Third Avenue, P.O. Box 1225, Portola, California, 96122.

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BASIC FINANCIAL STATEMENTS –

GOVERNMENT-WIDE FINANCIAL STATEMENTS

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CITY OF PORTOLA

STATEMENT OF NET POSITION
JUNE 30, 2024
See accompanying Notes to Financial Statements.
(13)
Governmental Business-Type
Activities Activities Totals
ASSETS
Cash and Investments $ 2,624,798 $ 5,224,238 $ 7,849,036 Restricted Assets:

Restricted Cash - 889,848 889,848
Imprest Cash 375 - 375
Accounts Receivable 21,077 457,244 478,321
Interest Receivable 26,869 62,953 89,822
Due from Other Governments 424,400 - 424,400
Loans and Notes Receivable, Net 118,083 - 118,083
Capital Assets:

Nondepreciable 3,612,231 188,896 3,801,127
Depreciable, Net 4,405,200 4,068,794 8,473,994
Total Assets 11,233,033 10,891,973 22,125,006

DEFERRED OUTFLOWS OF RESOURCES
Deferred Pensions 168,769 302,643 471,412

LIABILITIES
Accounts Payable 75,421 51,019 126,440
Accrued Salaries and Benefits Payable 14,688 16,664 31,352 Deposits 6,433 33,298 39,731
Unearned Revenue 113,887 - 113,887
Long-Term Liabilities:

Portion Due or Payable Within One Year:

Compensated Absences 7,886 17,421 25,307
Notes Payable - 37,000 37,000
Portion Due or Payable After One Year:

Compensated Absences 13,108 28,954 42,062
Notes Payable - 605,829 605,829
Liability for Landfill Postclosure - 1,339,325 1,339,325 Net Pension Liability 264,333 474,009 738,342
Total Liabilities 495,756 2,603,519 3,099,275

DEFERRED INFLOWS OF RESOURCES
Deferred Pensions 26,203 46,987 73,190

NET POSITION
Net Investment in Capital Assets 7,997,151 3,614,861 11,612,012 Restricted:

General Government 95,425 - 95,425
Community Development 43,525 - 43,525
Streets and Roads 306,398 - 306,398
Capital Improvements 168,443 227,654 396,097
Facility Fees - 593,832 593,832
Debt Service - 68,362 68,362
Unrestricted 2,268,901 4,039,401 6,308,302
Total Net Position $ 10,879,843 $ 8,544,110 $ 19,423,953 Primary Government

CITY OF PORTOLA

STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Financial Statements.
(14)
Fees, Fines, and Operating Capital
Charges for Grants and Grants and Governmental Business-Type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Primary Government
Governmental Activities:

General Government $ 253,654 $ 57,886 $ 303,450 $ - $ 107,682 $ - $ 107,682 Planning and Community Development 147,866 420 52,418 - (95,028) - (95,028) Public Safety 455,915 34,495 275,382 - (146,038) - (146,038) Streets and Roads 1,044,486 - 306,398 1,746,223 1,008,135 - 1,008,135 Public Works 325,155 - 317,664 - (7,491) - (7,491)
Parks and Recreation 290,919 38,234 - - (252,685) - (252,685) Total Governmental Activities 2,517,995 131,035 1,255,312 1,746,223 614,575 - 614,575 Business-Type Activities:

Water Service 1,198,044 1,011,154 - - - (186,890) (186,890) Sewer Service 904,398 751,734 - - - (152,664) (152,664) Solid Waste 131,744 277,972 - - - 146,228 146,228
Total Business-Type Activities 2,234,186 2,040,860 - - - (193,326) (193,326) Total City of Portola $ 4,752,181 $ 2,171,895 $ 1,255,312 $ 1,746,223 614,575 (193,326) 421,249 General Revenues
Taxes:

Property Taxes 351,778 - 351,778
Sales and Use Taxes 364,140 - 364,140
Other 95,359 - 95,359
Unrestricted Interest and Investment Earnings 91,896 225,935 317,831 Miscellaneous 7,530 - 7,530
Total General Revenues 910,703 225,935 1,136,638
Change in Net Position 1,525,278 32,609 1,557,887
Net Position - Beginning of Year 9,354,565 8,511,501 17,866,066 Net Position - End of Year $ 10,879,843 $ 8,544,110 $ 19,423,953 Primary Government
Net (Expense) Revenue and
Program Revenues Changes in Net Position

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BASIC FINANCIAL STATEMENTS –

FUND FINANCIAL STATEMENTS

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CITY OF PORTOLA

BALANCE SHEET

GOVERNMENTAL FUNDS
JUNE 30, 2024
See accompanying Notes to Financial Statements.
(15)
State
Transportation Other
Improvement Gas Tax Governmental
General Plan 2107 Funds Total
ASSETS
Cash and Investments $ 2,422,873 $ - $ 8,951 $ 192,974 $ 2,624,798 Imprest Cash 375 - - - 375
Notes Receivable 74,558 - - 43,525 118,083
Accounts Receivable 21,077 - - - 21,077
Interest Receivable 24,925 - - 1,944 26,869
Due from Other Funds 295,293 - - - 295,293
Due from Other Governmental Agencies 103,470 306,398 5,087 9,445 424,400 Total Assets $ 2,942,571 $ 306,398 $ 14,038 $ 247,888 $ 3,510,895

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCE
Liabilities:

Accounts Payable $ 39,051 $ - $ 9,313 $ 24,810 $ 73,174 Accrued Salaries and Benefits Payable 9,113 - 4,725 850 14,688 Accrued Expenses - - - 2,247 2,247
Unearned Revenue 113,887 - - - 113,887
Deposits from Others 6,433 - - - 6,433
Due to Other Funds - 295,293 - - 295,293
Total Liabilities 168,484 295,293 14,038 27,907 505,722 Deferred Inflows of Resources:

Unavailable Revenue - 306,398 - - 306,398
Total Deferred Inflows of Resources - 306,398 - - 306,398 Fund Balance:

Restricted 95,425 - - 211,968 307,393
Assigned - - - 8,013 8,013
Unassigned 2,678,662 (295,293) - - 2,383,369
Total Fund Balance 2,774,087 (295,293) - 219,981 2,698,775 Total Liabilities, Deferred Inflows
of Resources, and Fund Balance $ 2,942,571 $ 306,398 $ 14,038 $ 247,888 $ 3,510,895

CITY OF PORTOLA

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE GOVERNMENT-WIDE STATEMENT OF NET POSITION

GOVERNMENTAL FUNDS
JUNE 30, 2024
See accompanying Notes to Financial Statements.
(16)
Fund Balance - Total Governmental Funds (From Previous Page) $ 2,698,775 Amounts Reported for Governmental Activities in the Statement of Net Position are Different Because:

Capital Assets Used in Governmental Activities are not Financial Resources and, therefore, are not Reported in the Governmental Funds. 8,017,431 Deferred Outflows of Resources as Reported in the Statement of Net Position 168,769 Deferred Inflows of Resources as Reported in the Statement of Net Position (26,203) Unavailable Revenues and Long-Term Assets Represent Amounts That are not Available to Fund Current Expenditures and, therefore, are not Reported in the Governmental Funds:

Unavailable Revenues 306,398
Some Liabilities are not Due and Payable in the Current Period, and therefore, are not Reported in the Governmental Funds:

Compensated Absences (20,994)
Net Pension Liability (264,333)
Net Position of Governmental Activities $ 10,879,843

CITY OF PORTOLA

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Financial Statements.
(17)
State
Transportation Other
Improvement Gas Tax Governmental
General Plan 2107 Funds Total

REVENUES
Taxes $ 811,277 $ - $ - $ - $ 811,277
Licenses and Permits 79,594 - - - 79,594
Fines, Forfeitures, and Penalties 13,208 - - - 13,208
Use of Money and Property 85,410 - - 6,486 91,896
Intergovernmental 655,809 1,746,223 59,630 258,034 2,719,696 Charges for Services 38,233 - - - 38,233
Other Revenues 7,530 - - - 7,530
Total Revenues 1,691,061 1,746,223 59,630 264,520 3,761,434

EXPENDITURES
Current:

General Government 224,317 - - - 224,317
Planning and Community Development 120,257 - - 17,656 137,913 Public Safety 356,251 - 65,265 - 421,516
Streets and Roads - 2,041,805 168,423 270,941 2,481,169 Public Works 302,173 - - - 302,173
Parks and Recreation 213,399 - - - 213,399
Total Expenditures 1,216,397 2,041,805 233,688 288,597 3,780,487 Excess (Deficiency) of Revenues Over
(Under) Expenditures 474,664 (295,582) (174,058) (24,077) (19,053)

OTHER FINANCING SOURCES (USES)
Transfers In - - 174,058 42,132 216,190
Transfers Out (216,190) - - - (216,190)
Total Other Financing Sources (Uses) (216,190) - 174,058 42,132 - Net Change in Fund Balances 258,474 (295,582) - 18,055 (19,053) Fund Balances - Beginning of Year 2,515,613 289 - 201,926 2,717,828 Fund Balances - End of Year $ 2,774,087 $ (295,293) $ - $ 219,981 $ 2,698,775

CITY OF PORTOLA

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE

GOVERNMENT-WIDE STATEMENT OF ACTIVITIES

GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Financial Statements.
(18)
Net Change to Fund Balance - Total Governmental Funds $ (19,053) Amounts Reported for Governmental Activities in the
Statement of Activities are Different Because:

Governmental Funds Report Capital Outlay as Expenditures. However, in the Statement of Activities, the Cost of Those Assets is Allocated Over Their Estimated Useful Lives and Reported as Depreciation Expense.

Expenditures for General Capital Assets, Infrastructure, and Other Related Capital Assets Adjustments $ 2,060,455
Less: Current Year Depreciation (750,912)
1,309,543
Revenues in the Statement of Activities That do not Provide Current Financial Resources are not Reported as Revenues in the Governmental Funds. 281,839
Some Expenses Reported in the Statement of Activities do not Require the Use of Current Financial Resources and, therefore, are not Reported as Expenditures in Governmental Funds:

Change in Compensated Absences 7,186
Change in Accrued Net Pension Liability (54,237)
Change in Net Position of Governmental Activities $ 1,525,278

CITY OF PORTOLA

STATEMENT OF FUND NET POSITION

PROPRIETARY FUNDS
JUNE 30, 2024
See accompanying Notes to Financial Statements.
(19)
Water Sewer Solid
Service Service Waste Total
ASSETS
Current Assets:

Cash and Investments $ 2,454,514 $ 1,856,798 $ 912,926 $ 5,224,238 Interest Receivable 29,203 24,341 9,409 62,953
Accounts Receivable 249,304 173,071 34,869 457,244
Restricted Assets:

Restricted Cash 383,113 506,735 - 889,848
Total Current Assets 3,116,134 2,560,945 957,204 6,634,283 Noncurrent Assets:

Capital Assets:

Nondepreciable 126,052 31,422 31,422 188,896
Depreciable, Net 2,188,695 1,878,148 1,951 4,068,794
Total Noncurrent Assets 2,314,747 1,909,570 33,373 4,257,690 Total Assets 5,430,881 4,470,515 990,577 10,891,973
DEFERRED OUTFLOWS OF RESOURCES 152,265 130,109 20,269 302,643

LIABILITIES
Current Liabilities:

Accounts Payable 17,728 19,387 13,904 51,019
Accrued Salaries and Benefits Payable 10,475 4,823 1,366 16,664 Deposits 33,298 - - 33,298
Liability for Compensated Absences 9,365 6,861 1,195 17,421 Notes Payable - Current Portion 37,000 - - 37,000
Total Current Liabilities 107,866 31,071 16,465 155,402 Noncurrent Liabilities:

Liability for Compensated Absences 15,566 11,402 1,986 28,954 Landfill Closure and Postclosure - - 1,339,325 1,339,325 Notes Payable 605,829 - - 605,829
Net Pension Liability 238,483 203,781 31,745 474,009
Total Noncurrent Liabilities 859,878 215,183 1,373,056 2,448,117 Total Liabilities 967,744 246,254 1,389,521 2,603,519
DEFERRED INFLOWS OF RESOURCES 23,640 20,200 3,147 46,987

NET POSITION
Net Investment in Capital Assets 1,671,918 1,909,570 33,373 3,614,861 Restricted:

Debt Service 68,362 - - 68,362
Facility Fees 314,751 279,081 - 593,832
Capital Improvements - 227,654 - 227,654
Unrestricted 2,536,731 1,917,865 (415,195) 4,039,401
Total Net Position $ 4,591,762 $ 4,334,170 $ (381,822) $ 8,544,110 Business-Type Activities - Enterprise Funds

CITY OF PORTOLA

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION

PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Financial Statements.
(20)
Water Sewer Solid
Service Service Waste Total

OPERATING REVENUES
Charges for Services $ 1,011,154 $ 751,734 $ 277,972 $ 2,040,860 Total Operating Revenues 1,011,154 751,734 277,972 2,040,860

OPERATING EXPENSES
Salaries and Wages 458,351 331,031 52,142 841,524
Services and Supplies 566,202 466,252 29,958 1,062,412
Landfill Closure Costs - - 49,390 49,390
Depreciation 139,600 107,115 254 246,969
Total Operating Expenses 1,164,153 904,398 131,744 2,200,295 Operating Income (Loss) (152,999) (152,664) 146,228 (159,435)

NONOPERATING REVENUE (EXPENSE)
Interest Income (Loss) 107,059 87,104 31,772 225,935
Debt Service Interest and Fiscal Charges (33,891) - - (33,891) Total Nonoperating Revenue
(Expense) 73,168 87,104 31,772 192,044
Changes in Net Position (79,831) (65,560) 178,000 32,609 Net Position - Beginning of Year 4,671,593 4,399,730 (559,822) 8,511,501 Net Position - End of Year $ 4,591,762 $ 4,334,170 $ (381,822) $ 8,544,110 Business-Type Activities - Enterprise Funds

CITY OF PORTOLA

STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Financial Statements.
(21)
Water Sewer Solid
Service Service Waste Total

CASH FLOWS FROM OPERATING ACTIVITIES
Cash Receipts from Customers $ 1,004,621 $ 763,693 $ 290,428 $ 2,058,742 Cash Paid to Suppliers for Goods
and Services (584,525) (486,301) (101,974) (1,172,800)
Cash Paid to Employees for Services (417,715) (292,724) (42,354) (752,793) Net Cash Provided (Used) by Operating Activities 2,381 (15,332) 146,100 133,149

CASH FLOWS FROM CAPITAL AND

RELATED FINANCING ACTIVITIES
Principal Repayments on Long-Term Debt (35,000) - - (35,000) Interest Repayments Related to
Capital Purposes (33,891) - - (33,891)
Payments Related to the Acquisition
of Capital Assets (107,986) - - (107,986)
Net Cash Provided by Capital
and Related Financing Activities (176,877) - - (176,877)

CASH FLOWS FROM INVESTING ACTIVITIES
Interest Payments Received 98,528 79,262 27,697 205,487 Loss on Disposal of Asset 44,005 19,024 - 63,029
Net Cash Provided by Investing Activities 142,533 98,286 27,697 268,516 NET INCREASE IN CASH AND CASH EQUIVALENTS (31,963) 82,954 173,797 224,788 Cash and Cash Equivalents - Beginning of Year 2,869,590 2,280,579 739,129 5,889,298 CASH AND CASH EQUIVALENTS - END OF YEAR $ 2,837,627 $ 2,363,533 $ 912,926 $ 6,114,086

RECONCILIATION OF CASH AND CASH

EQUIVALENTS TO THE STATEMENT OF

NET POSITION
Cash and Cash Equivalents in Current Assets $ 2,454,514 $ 1,856,798 $ 912,926 $ 5,224,238 Cash and Cash Equivalents in Restricted Assets 383,113 506,735 - 889,848 Total Cash and Cash Equivalents $ 2,837,627 $ 2,363,533 $ 912,926 $ 6,114,086 Business-Type Activities - Enterprise Funds

CITY OF PORTOLA

STATEMENT OF CASH FLOWS (CONTINUED)

PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2024
See accompanying Notes to Financial Statements.
(22)
Water Sewer Solid
Service Service Waste Total

RECONCILIATION OF OPERATING INCOME
(LOSS) TO NET CASH PROVIDED (USED) BY

OPERATING ACTIVITIES
Operating Income (Loss) $ (152,999) $ (152,664) $ 146,228 $ (159,435) Adjustments to Reconcile Operating Income
(Loss) to Cash Flows from Operating Activities:

Depreciation 139,600 107,115 254 246,969
Changes in Assets and Liabilities:
(Increase) Decrease in:

Utilities Receivable (8,672) 11,959 12,456 15,743
Customer Deposits 2,139 - - 2,139
Deferred Outflows 39,547 22,964 (2,476) 60,035
Increase (Decrease) in:

Accounts Payable (18,323) (20,049) 9,993 (28,379)
Accrued Expenses (3,781) (2,003) 389 (5,395)
Liability for Compensated Absences 2,760 864 1,103 4,727 Closure/Postclosure Liability - - (32,619) (32,619)
Net Pension Liability 11,833 22,907 10,720 45,460
Deferred Inflows (9,723) (6,425) 52 (16,096)
Net Cash Provided (Used) by Operating
Activities $ 2,381 $ (15,332) $ 146,100 $ 133,149
Business-Type Activities - Enterprise Funds
(23)

NOTES TO FINANCIAL STATEMENTS
The notes provided in the Financial Section of this report are considered an integral and essential part of adequate disclosure and fair presentation of this report. The notes include a Summary of Significant Accounting Policies for the City, and other necessary disclosures of pertinent matter relating to the financial position of the City. The notes express significant insight to the financial statements and are conjunctive to understanding the rationale for presentation of the financial statements and information contained in this document.

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(24)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Portola is governed by an appointed City Manager and elected five-member Council, from which a mayor is elected annually.

A. Description of Reporting Entity
The accounting methods and procedures adopted by the City conform to generally accepted accounting principles as applied to governmental entities. These financial statements present the government and its component units, entities for which the government is considered to be financially accountable.

Reporting for component units on the City’s financial statements can be blended or discretely presented. Blended component units, although legally separate entities, are, in substance, part of the government’s operations. Blended component units are an extension of the City and so data from these units are combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the combined financial statements to emphasize they are legally separate from the City.

The City had no blended or discretely presented component units as of June 30, 2024.

B. Basis of Financial Presentation

1. Government-Wide Financial Statements
The statement of net position and statement of activities display information about the City and its components. These statements include the financial activities of the overall government. These statements distinguish between the governmental and business-type activities of the City. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which are primarily supported by fees charged to external parties.

The statement of activities presents a comparison between direct and indirect expenses and program revenues for each segment of the business-type activities of the City and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or a function and; therefore, are clearly identifiable to a particular function. Indirect expenses are those that are allocated to a program or a function from the City’s centralized general service function based on the cost allocation principles established by the Federal Office of Management and Budget (OMB). Program revenues include 1) charges paid by the recipients of goods or services offered by the programs, 2) fines and penalties ordered by the courts, 3) licenses and permits charged by the programs, and 4) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented instead as general revenues.

When both restricted and unrestricted net positions are available, restricted resources are used first then the unrestricted resources are depleted.

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(25)

2. Fund Financial Statements
The fund financial statements provide information about the City’s funds. Separate statements for each fund category – governmental and proprietary – are presented.

The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. The City reports all enterprise funds as major funds. All remaining governmental funds are separately aggregated and reported as nonmajor funds.

Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities.

The City reports the following major governmental funds:
• The General Fund is the primary operating fund of the City. It is used to account for all financial resources and transactions except those required to be accounted for in another fund.
• The State Transportation Improvement Plan (STIP) Fund is used to account for projects that are funded using State Transportation Improvement Program monies.
• The Gas Tax 2107 Fund is used to account for State Gas Tax Funds and transactions associated with street maintenance and repair.

The City reports all of its enterprise funds as major funds:
• The Water Service Fund is used to account for water services provided to the residents of the City and for a small number of residents directly outside the City.
• The Sewer Service Fund is used to account for sewer services. • The Solid Waste Fund is used to account for the franchised curbside refuse and recycling collection provided to residences and businesses within the City and for the landfill post closure maintenance costs.

C. Basis of Accounting
The government-wide and proprietary financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the City gives (or receives) values without directly receiving (or giving) equal value in exchange, include property and sales taxes, grants, entitlements, and donation. On the accrual basis, property tax revenues are recognized in the fiscal year for which the taxes are levied. Sales taxes are recognized when the underlying transactions take place.

Revenues from grants, entitlements, and donations are recognized in the fiscal year in which all eligible requirements have been satisfied.

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(26)
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, expenditures are recorded when the related liability is incurred except the unmatured interest on long-term debt, and expenses related to compensated absences and claims and judgments are recorded only when payment is due. General capital assets acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and right-touse leases are reported as other financial sources. Revenues are recorded when they are both measurable and available to finance expenditures during the fiscal period.

Property and sales taxes, interest, state and federal grants, and charges for services are accrued when their receipt occurs within 60 days after the end of the accounting period so as to be both measurable and available. Revenues earned but not received within sixty days after the end of the accounting period, on the other hand, are recorded as receivables and deferred inflows.

Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities.

D. Use of Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the general-purpose financial statements and the reported amount of revenue and expenditures or expenses during the reporting period. Actual results could differ from those estimates.

E. Interfund Transactions and Balances
Interfund transactions are either reflected as loans, services provided, reimbursements, or transfers. Loans are reported as receivable and payables as appropriate, are subject to elimination upon consolidation and are referred to as either “due to/due from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the noncurrent portion of interfund loans). Any residual balances outstanding between the governmental activities and the business-type activities are reported in the government-wide financial statements as “internal balances”.

Advances between funds, are reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not available financial resources.

Reimbursements are when one fund incurs a cost, charges the appropriate benefiting fund, and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government-wide presentation.

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(27)
F. Capital Assets
Capital assets (including infrastructure) are recorded at historical cost or estimated historical cost if actual historical cost is not available. Contributed capital assets are valued at their acquisition value. Capital assets include public domain (infrastructure) consisting of certain improvements including roads, bridges and water/sewer systems.

The City is not required to retroactively report infrastructure and therefore has elected not to do so. The City defines capital assets as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. Capital assets used in operations are depreciated or amortized ( right to use assets under leases) using the straight-line method over the lesser of the lease period or their estimated useful lives in the government-wide statements.

The estimated useful lives are as follows:

Buildings 50 Years
Infrastructure 15 to 30 Years
Building Improvements 10 to 30 Years
Equipment 3 to 20 Years
G. Property Tax
Plumas County assesses properties, bills, collects, and distributes property taxes to the City. For this service, the County charges the City an administration fee.

Property taxes attach as an enforceable lien on property as of March 1. Taxes are levied on July 1, and are payable in two installments on December 10 and April 10. The County bills and collects property taxes and remits them to the City in installments during the year.

H. Cash and Investments
For purposes of the Statement of Cash Flows – Proprietary Funds, the City considers all short-term highly liquid investments, including restricted cash and investments, to be cash and cash equivalents. Amounts held in the City’s investment pool are available on demand; thus, they are considered highly liquid and cash equivalents for purposes of the Statement of Cash Flows – Proprietary Funds.

I. Fair Value Measurements
Certain assets and liabilities are required to be reported at fair value. The fair value framework provides a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy are described as follows:

Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(28)
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly and fair value is determined through the use of models or other valuation methodologies including:
• Quoted prices for similar assets or liabilities in active markets; • Quoted prices for identical or similar assets or liabilities in markets that are inactive;
• Inputs other than quoted prices that are observable for the asset or liability; • Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. These unobservable inputs reflect the City’s own assumptions about the inputs market participants would use in pricing the asset or liability (including assumptions about risk). These unobservable inputs are developed based on the best information available in the circumstances and may include the City’s own data.

J. Receivables
Receivables consist of property taxes, sales taxes, and grants from other governmental agencies. As of June 30, 2024, no balance has been provided as an allowance for doubtful accounts because in the opinion of management all receivables are considered collectible.

K. Compensated Absences
The following is the City’s policy on compensated absences upon discontinuation of services:

Percent of Percent of
Sick Hours Vacation Hours
Employee Status Received Received
Part-Time 25 100
Full-Time 25 100
The annual leave includes vacation and sick leave. City employees have vested interests in the amount of annual leave accrued and are paid on termination.

The city accrues accumulated unpaid compensated absences when earned (or estimated to be earned) by the employee. The noncurrent (the amount estimated to be used in subsequent fiscal years) for governmental funds is maintained separately and represents a reconciling item between the fund and government-wide presentation.

In accordance with the provisions of the GASB No. 16, Accounting for Compensated Absences, no liability is recorded for nonvesting accumulated rights to receive sick pay benefits.

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(29)
L. Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s California Public Employees’ Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

M. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has two items which qualify for reporting in this category. See pension disclosure Footnote 9.

In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. The City has two items which qualify for reporting in this category. See pension disclosure Footnote 9. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from intergovernmental revenues. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.

N. New Accounting Pronouncements
For the fiscal year ended June 30, 2024, the City implemented the following Governmental Accounting Standards Board (GASB) Statement:
• GASB Statement No. 100, Accounting Changes and Error Corrections. In June of 2022, the GASB issued GASB Statement No. 100, Accounting Changes and Error Corrections. This standard requires the effects on beginning balances for each accounting change or error correction to be disclosed by reporting unit in a tabular format that reconciles beginning balances as previously reported to beginning balances adjusted or restated. The City adopted the requirements of the guidance effective July 1, 2023, and has applied the provision of this standard to the beginning of the period of adoption. The results of this implementation are discussed in note

15. CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(30)
NOTE 2 NET POSITION/FUND BALANCE
Net Position
The government-wide activities financial statements utilize a net position presentation. Net position is categorized as net investment in capital assets, restricted and unrestricted.

Net Investment in Capital Assets – This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt or other liabilities that are attributable to the acquisition, construction, or improvement of these assets reduce the balance in this category.

Restricted Net Position – This category presents external restrictions imposed by creditors, grantors, contributors or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation.

Unrestricted Net Position – This category represents net position of the City, not restricted for any project or other purpose.

Fund Equity
In the fund financial statements, governmental funds report fund balance as nonspendable, restricted, committed, assigned, or unassigned based primarily on the extent to which the City is bound to honor constraints on how specific amounts can be spent.

Nonspendable Fund Balance – amounts that cannot be spent because they are either (a) not spendable in form or (b) legally or contractually required to be maintained intact.

Restricted Fund Balance – amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation.

Committed Fund Balance – amounts that can only be used for specific purposes determined by formal action of the highest level of decision-making authority and that remain binding unless removed in the same manner.

The underlying action that imposed the limitation needs to occur no later than the close of the reporting period.

Assigned Fund Balance – amounts that are constrained by the intent to be used for specific purposes. The intent can be established at either the highest level of decisionmaking, or by a body or an official designated for that purpose. This is also the classification for residual funds in the special revenue funds.

Unassigned Fund Balance – the residual classification for the General Fund that includes amounts not contained in the other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes.

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(31)
The City Council establishes, modifies, or rescinds fund balance commitments and assignments by passage of an ordinance or resolution. This is done through adoption of the budget and subsequent budget amendments that occur throughout the year. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, followed by the unrestricted, committed, assigned and unassigned resources as they are needed.

NOTE 3 CASH AND INVESTMENTS
At June 30, 2024, total City cash and investments at fair value were as follows:

Petty Cash $ 375
Cash in Bank 778,129
LAIF 7,960,755
Total $ 8,739,259
Total cash and investments at June 30, 2024 were presented on the City’s financial statements as follows:

Cash and Investments $ 7,849,036
Imprest Cash 375
Restricted Assets:

Cash 889,848
Total $ 8,739,259
Restricted cash and investments in the enterprise fund are comprised of funds held for debt service, facility fees, and wastewater treatment capital improvements.

Investments
At June 30, 2024, the City had the following investments:

Amortized
Par Cost Cost
Investments:

Local Agency Investment Fund (LAIF) $ 7,960,755 $ 7,960,755 $ 7,960,755 Total Investments $ 7,960,755 $ 7,960,755 $ 7,960,755
Interest Rate Risk
The City manages its exposure to declines in fair values by investing excess cash in the State’s Local Agency Investment Fund. Funds held in this account are available on demand.

Credit Risk
The City authorizes participation in the following types of investments: FDIC Insured Accounts, Local Agency Investment Fund, and United States Government Securities. The following is a summary of the credit quality distribution and concentration of credit risk by investment type as a percentage of the City’s Investment Pool at June 30, 2024.

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(32)
Percent of
Moody's Portfolio
Local Agency Investment Fund (LAIF) Unrated 100.00%
Total Pooled Investments 100.00%
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of a failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. As of June 30, 2024, the recorded amount of the City’s deposits was $778,129 and the bank balance was $837,950. Of the bank statement balance, $250,000 was covered by federal depository insurance and $587,950 was subject to collateralization.

Local Agency Investment Fund
The City maintains an investment in the state of California Local Agency Investment Fund (LAIF). LAIF is part of the Pooled Money Investment Account (PMIA), an investment pool consisting of funds held by the state in addition to those deposited in LAIF. All PMIA funds are managed by the Investment Division of the State Treasurer’s Office. This fund is not registered with the Securities and Exchange Commission as an investment company but is required to invest according to California Government Code.

The Local Investment Advisory Board (Board) has oversight responsibility for LAIF. The Board consists of five members as designated by State Statute. At June 30, 2024, the City’s investment position in LAIF was $7,960,755 which approximates fair value and is the same as value of the pool shares. The total amount invested by all public agencies in PMIA on that day was $179,046,993.600. Of that amount, 81.33% was invested in structured notes and asset-backed securities with the remaining 18.67% invested in other nonderivatives financial reports.

Fair Value Measurement
The City categorizes its fair value investments within the fair value hierarchy established by generally accepted accounting principles. LAIF is the City’s only investment, and it is measured on amortized cost basis as of June 30, 2024.

NOTE 4 LOANS AND NOTES RECEIVABLE
During the fiscal year ended June 30, 2012, the City extended a loan to Eastern Plumas Health Care District in the amount of $348,000. The loan bears initial interest of 1.48% per year to be adjusted annually to reflect LAIF interest rate plus 1%. The term of the loan is 168 months. As of June 30, 2024, the outstanding balance was $74,558. The City also issued Community Development Block Grant (CDBG) loans in the amount of $43,525. The total loans and notes receivable at June 30, 2024 is $118,083.

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(33)
NOTE 5 CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2024 was as follows:

Balance Transfers and Balance
Governmental Activities July 01, 2023 Additions Retirements June 30, 2024 Capital Assets, Not Being Depreciated:

Land $ 746,277 $ 18,650 $ - $ 764,927
Construction in Progress 805,499 2,041,805 - 2,847,304
Total Capital Assets, Not Being
Depreciated 1,551,776 2,060,455 - 3,612,231
Capital Assets, Being Depreciated:

Infrastructure 13,713,793 - - 13,713,793
Buildings and Improvements 1,711,614 - - 1,711,614
Machinery and Equipment 1,608,138 - - 1,608,138
Intangible Assets 58,297 - - 58,297
Total Capital Assets, Being
Depreciated 17,091,842 - - 17,091,842
Less: Accumulated Depreciation for:

Infrastructure (9,096,665) (617,207) - (9,713,872)
Buildings and Improvements (1,422,295) (56,078) - (1,478,373) Machinery and Equipment (1,395,719) (58,194) - (1,453,913) Intangible Assets (21,051) (19,433) - (40,484)
Total Accumulated Depreciation (11,935,730) (750,912) - (12,686,642) Total Capital Assets, Being
Depreciated, Net 5,156,112 (750,912) - 4,405,200
Governmental Activities
Capital Assets, Net $ 6,707,888 $ 1,309,543 $ - $ 8,017,431

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(34)
Balance Transfers and Balance
Business-Type Activities July 01, 2023 Additions Retirements June 30, 2024 Capital Assets, Not Being Depreciated:

Land $ 62,844 $ - $ - $ 62,844
Construction in Progress 189,081 - (63,029) 126,052
Total Capital Assets, Not Being
Depreciated 251,925 - (63,029) 188,896
Capital Assets, Being Depreciated:

Buildings and Improvements 8,593,575 59,724 - 8,653,299 Machinery and Equipment 1,306,832 48,262 - 1,355,094
Total Capital Assets, Being
Depreciated 9,900,407 107,986 - 10,008,393
Less: Accumulated Depreciation for:

Buildings and Improvements (4,513,304) (203,066) - (4,716,370) Machinery and Equipment (1,179,326) (43,903) - (1,223,229) Total Accumulated Depreciation (5,692,630) (246,969) - (5,939,599) Total Capital Assets, Being
Depreciated, Net 4,207,777 (138,983) - 4,068,794
Business-Type Activities, Net $ 4,459,702 $ (138,983) $ (63,029) $ 4,257,690 Depreciation expense was charged to functions/programs of the primary government as follows:

Governmental Activities:

General Government $ 41,448
Public Protection 30,005
Public Ways and Facilities 1,124
Streets and Roads 600,815
Recreation and Culture 77,520
Total Depreciation Expense -
Governmental Activities $ 750,912
Business-Type Activities:

Water Fund $ 139,600
Sewer Fund 107,115
Solid Waste Fund 254
Total Depreciation Expense -
Business-Type Activities $ 246,969

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(35)
NOTE 6 LONG-TERM LIABILITIES
Long-term liabilities at June 30, 2024 consisted of the following:

Annual Original
Date of Date of Interest Principal Issue Outstanding at Business-Type Activities Issue Maturity Rates Installments Amount June 30, 2024 1997 Special Assessment
Water Improvement
Note Payable from Direct Borrowing 1997 5/1/2037 5.00% $5,000-$25,000 1,173,000 $ $ 642,829 (to Finance Improvements to
the City's Water System)
Total Business-Type Activities $ 1,173,000 $ 642,829
The following is a summary of long-term liabilities transactions for the year ended June 30, 2024:

Amounts
Balance Balance Due Within
July 1, 2023 Additions Deletions June 30, 2024 One Year Governmental Activities:

Compensated Absences $ 28,180 $ 7,886 $ (15,072) $ 20,994 $ 7,886 Total $ 28,180 $ 7,886 $ (15,072) $ 20,994 $ 7,886
Business-Type Activities:

Notes Payable from
Direct Borrowing $ 677,829 $ - $ (35,000) $ 642,829 $ 37,000 Postclosure Costs 1,371,944 49,390 (82,009) 1,339,325 - Compensated Absences 41,648 17,421 (12,694) 46,375 17,421 Total $ 2,093,918 $ 66,811 $ (129,703) $ 2,028,529 $ 54,421

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(36)
The City’s outstanding note payable for business-type activities is secured by water service revenue. As of June 30, 2024, annual debt service requirements of business-type activities to maturity are as follows:

Year Ending June 30, Principal Interest
2025 $ 37,000 $ 32,150
2026 38,000 32,150
2027 40,000 30,300
2028 42,000 28,400
2029 44,000 26,400
2030-2034 257,000 98,200
2035-2037 184,829 30,800
Total $ 642,829 $ 278,400
Notes Payable from Direct Borrowing
Business-Type Activities
NOTE 7 INTERFUND TRANSACTIONS AND BALANCES
The composition of interfund balances as of June 30, 2024 is as follows:

Due To/From Other Funds:

Receivable Fund Payable Fund Amount Purpose
To cover cash deficit expected to be
General Fund STIP $ 295,293 recovered through future revenues.

Transfers:

Transfers are used to subsidize various City operations. The following schedule briefly summarizes the City’s transfer activity for the fiscal year ended June 30, 2024:

Transfer from Transfer to Amount
General Fund Gax Tax 2107 $ 174,058
Non-Major Governmental Funds 42,132
$ 216,190

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(37)
NOTE 8 FUND DISCLOSURES
The following funds had a net position/fund balance deficit at the end of the fiscal year:

Governmental Funds:

STIP $ (295,293)
Enterprise Funds:

Solid Waste Fund $ (381,822)
The Solid Waste Fund has incurred a deficit net position balance as a result of recognition of the estimated liability for the landfill post closure care costs. The City has established a solid waste surcharge included in its utility billings to reduce the deficit in this fund.

NOTE 9 DEFINED BENEFIT PENSION PLANS
A. General Information about the Pension Plans

1. Plan Description
The City of Portola provides pension benefits to eligible employees through cost sharing multiple-employer defined benefit pension plans (pension plans) administered by the California Public Employees Retirement System (PERS), a public employee retirement system which acts as a common investment and administrative agent for participating public entities within the state of California. All qualified permanent and probationary employees are eligible to participate in the City’s pension plans. The City’s Miscellaneous Plans (Tier I and Tier II) and PEPRA Miscellaneous Plan are cost-sharing multiple-employer defined benefit plans. Benefit provisions and other requirements are established by state statute and City resolution. The City’s defined benefit pension plans provide retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members and their beneficiaries. The City selects optional benefit provisions by contract with PERS and adopts those benefits through City ordinance. Copies of PERS annual financial reports which include required supplementary information (RSI) for each plan may be obtained from PERS Executive Offices, Lincoln Plaza North, 400 Q Street, Sacramento, CA 95811.

2. Benefits Provided
All pension plans provide benefits, upon retirement, disability, or death of members.

Retirement benefits are based on years of service, final average compensation, and retirement age. Employees terminating before accruing five years of retirement service credit forfeit the right to receive retirement benefits unless they establish reciprocity with another public agency within a prescribed time period. Nonvested employees who terminate service are entitled to withdraw their accumulated contributions plus accrued interest. Employees who terminate service after earning five years of retirement service credit may leave their contributions on deposit and elect to take a deferred retirement. Differences between expected and actual experience for vested and nonvested benefits may result in an increase or decrease to pension expense and net pension liability.

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(38)
Nonservice related disability benefits are provided to miscellaneous members. The benefit is based on final compensation, multiplied by service, which is determined as follows:
• Service is CalPERS credited service, for members with less than 10 years of service or greater than 18.518 years of service; or
• Service is CalPERS credited service plus the additional number of years that the member would have worked until age 60, for members with at least 10 years but not more than 18.518 years of service. Death benefits are based upon a variety of factors including whether the participant was retired or not.

Annual cost-of-living adjustments (COLAs) after retirement are provided in all plans.

COLAs are granted to retired members each May based upon the Bureau of Labor Statistics Average Consumer Price Index for All Urban Consumers for the previous calendar year and is subject to a maximum of 2% per annum.

The Plans’ provisions and benefits in effect at June 30, 2024, are summarized as follows:

Miscellaneous Miscellaneous
Tier I Tier II PEPRA
Hire Date Prior to On or After On or After
July 1, 2012 July 1, 2012 January 2, 2013
Benefit Formula 2.7% at 55 2.0% at 60 2.0% at 62
Benefit Vesting Schedule 5 Years of 5 Years of 5 Years of Credited Service Credited Service Credited Service
Benefit Payments Monthly for Life Monthly for Life Monthly for Life Retirement Age 50 50 52
Monthly Benefits, as % of
Eligible Compensation 2.0%-2.7% 1.1%-2.4% 1.0%-2.5%
Required Employee
Contribution Rates 8.0% 6.93% 7.75%
Required Employer
Contribution Rates 15.170% 8.630% 7.680%
Status Open Open Open

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(39)

3. Employees Covered
Information regarding the number of employees covered by the benefit terms for the Miscellaneous Plans is not available for cost-sharing multiple-employer defined benefit pension plans.

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

The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. During the year ended June 30, 2024, the City made contributions totaling $120,338 to the Plan.

B. Net Pension Liability
The City’s net pension liability for the Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of the Plan is measured as of June 30, 2023, using an annual actuarial valuation as of June 30, 2022 rolled forward to June 30, 2023 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below.

1. Actuarial Assumptions
The total pension liabilities in the June 30, 2022 actuarial valuations were determined using the following actuarial assumptions:

Miscellaneous PEPRA
Valuation Date June 30, 2022 June 30, 2022
Measurement Date June 30, 2023 June 30, 2023
Actuarial Cost Method
Actuarial Assumptions:

Discount Rate 6.90% 6.90%
Inflation 2.30% 2.30%
Payroll Growth 2.80% 2.80%
Projected Salary Increase
Investment Rate of Return 6.80% 6.80%
Mortality
(1) Net of Pension Plan Investment Expenses, Including Inflation.

Entry-Age Normal
Varies by Entry Age and Service
Derived Using CalPERS'
Membership Data for All Funds
The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2022 valuation were based on the results of a 2022 actuarial experience study for the period 2000 to 2019. Further details of the Experience Study can be found on the CalPERS website.

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(40)

2. Change of Assumption
Demographic assumptions and the inflation rate assumption were changed in accordance with the 2022 CalPERS Experience Study and Review of Actuarial Assumptions.

3. Discount Rate
Effective with the June 30, 2022 valuation date (2023 measurement date), the accounting discount rate was remained the same at 6.90%. In determining the longterm expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return.

Any changes to the discount rate will require Board action and proper stakeholder outreach. CalPERS will continue to check the materiality of the difference in calculation until there is a change in methodology.

The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension investment expense and inflation) are developed for each major asset class.

The long-term expected rate of return includes both short-term and long-term market return expectations as well as the expected pension fund cash flows. Such cash flows were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. Using historical returns of all the funds’ asset classes, expected compound (geometric)returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of 1%.

The long-term expected real rates by asset class can be found in CalPERS’ Annual Comprehensive Financial Report for the fiscal year ended June 30, 2023.

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(41)

4. Proportionate Share of the Net Pension Liability
The Miscellaneous plans are part of a Risk Pool, which is part of the Public Agency Cost-Sharing Multiple-Employer Defined Benefit Pension Plan. The City’s net pension liability for the Miscellaneous Plan was based on a projection of the City’s long-term share of contributions to the pension plan relative to the projected contributions of all plan participants, actuarially determined. The City’s net pension liability and related Plan proportion for the Miscellaneous Plan is as follows:

Miscellaneous
Proportion - June 30, 2023 0.01395%
Proportion - June 30, 2024 0.01403%
Change - Increase/(Decrease) 0.00008%
C. Changes in the Net Pension Liability

1. Sensitivity of the Net Pension Liability to Change in the Discount Rate The following presents the net pension liability of the City for each Plan, calculated using the discount rate for each Plan, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1-percentage points lower or 1-percentage point higher than the current rate:

Current
1% Decrease Discount Rate 1% Increase

5.90% 6.90% 7.90%
Net Pension Liability $ 1,331,614 $ 738,342 $ 250,029

2. Pension Plan Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

D. Pension Revenue and Deferred Outflows/Inflows of Resources Related to Pensions
For the year ended June 30, 2024, the City recognized pension expense of $263,976.

Pension expense represents the change in the net pension liability during the measurement period, adjusted for actual contributions and the deferred recognition of changes in investment gain/loss, actuarial gain/loss, actuarial assumptions or method, and plan benefits.

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(42)
At June 30, 2024, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences Between Expected and Actual
Experience $ 37,719 $ 5,851
Changes in Assumptions 44,577 -
Differences Between Employer's Contributions
and Proportionate Share of Contributions - 67,339
Net Difference Between Projected and Actual
Earnings on Pension Plan Investments 119,544 -
Change in Employer's Proportion 149,234 -
City Contribution Subsequent to the
Measurement Date 120,338
Total $ 471,412 $ 73,190
$120,338 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2025. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Outflows/(Inflows)
Year Ending June 30, of Resources
2024 $ 113,356
2025 72,819
2026 88,279
2027 3,430
Total $ 277,884
NOTE 10 OTHER POSTEMPLOYMENT BENEFITS
The City does not offer health insurance benefits to its retirees. By resolution number 2071 the City has confirmed that retirees are only eligible to receive those benefits offered to them by participation in the state of California Public Employees Retirement System (PERS), as well as those that they may be eligible for under the federal Medicare program.

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(43)
NOTE 11 LANDFILL CLOSURE AND POST CLOSURE CARE COST
The City is responsible for one closed landfill site. State and federal laws and regulations require the City to place a final cover on its landfill site when it stops accepting waste and perform certain maintenance and monitoring functions at the site for 30 years after closure.

GASB Statement No. 18 requires a portion of these closure and post closure care costs be reported as an operating expense in each period based on landfill capacity used as of each statement of net position date. Since the landfill is no longer accepting waste, the entire estimated expense and related liability have been reported.

As of June 30, 2024, the City’s estimated liability for post closure maintenance costs for the landfill was $1,339,325. This estimate is based on the amount that would be paid if all equipment, facilities, and services required to close and/or monitor the landfills were acquired as of the balance sheet date. The costs for landfill post closure maintenance costs are based on yearly estimates, reviewed by the California Integrated Waste Management Board, as prepared by TGV Solid Waste, Inc. Actual costs may be higher due to inflation, change in technology, or changes in regulations. The City has applied the annual inflation factor to the liability each year and has reduced the liability by actual expenses incurred.

The City is required by the California Code of Regulations to demonstrate financial responsibility for post closure maintenance costs. The City has met this requirement for the Portola landfill through a pledge of revenue.

NOTE 12 RISK MANAGEMENT
The City of Portola is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; error and omissions; injuries to employees; and natural disasters.

The City participates in joint powers agreements through the Small Cities Organized Risk Effort (SCORE) and California Joint Powers Risk Management Authority (CJPRMA). The relationship between the City and the JPAs is such that the JPAs are not considered a component unit of the City for financial reporting purposes.

The JPAs arrange for and provide liability coverage for members. Each JPA is governed by a board consisting of a representative from each member. The Board controls the operations of the JPA including selection of management and approval of operating budgets, independent of any influence by the members beyond their representation on the board. Each member pays a premium commensurate with the level of coverage requested and shares surpluses and deficits proportionate to their participation in the JPA.

The City participates in a Banking Plan for the first $25,000 of loss. The portion of loss greater than $25,000 but less than $500,000 is shared among the Member Cities in the Shared Risk Pool. The City participates in the CJPRMA for the portion of losses greater than $500,000 to a maximum of $10,000,000. The liability related to the Banking Plan was deemed immaterial.

CITY OF PORTOLA

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2024
(44)
The Authority establishes claims liabilities based on estimates of the ultimate cost of claims (including future claim adjustment expenses that have been reported but not settled, and of claims that have been incurred but not reported (IBNR)). The length of time for which such costs must be estimated varies in the coverage involved. Estimated amounts of salvage and subrogation and excess-insurance recoverable on unpaid claims are deducted from the liability for unpaid claims.

NOTE 13 COMMITMENTS AND CONTINGENCIES
A. Construction Commitments
At June 30, 2024, the City has commitments of approximately $1.3 million for construction contracts, awarded but not completed. The major contract outstanding is for the completion of the STIP North Loop Project. All costs on this project are 100% reimbursable by the State.

B. Litigation
The City is subject to various lawsuits, inverse condemnation cases, personnel actions, and other actions incidental to the ordinary course of City operations. In the opinion of the City attorney, the total potential claims against the City covered by insurance resulting from litigation would not materially affect the financial statements of the City at June 30, 2024.

NOTE 14 EXCESS EXPENDITURES OVER BUDGET
The City had expenditures that exceeded its budget in the Gas Tax Fund by $18,945.

NOTE 15 ACCOUNTING CHANGES
Change in Fund Presentation from Major to Nonmajor
The Snow Removal Fund previously met the criteria to be reported as a major governmental fund. However, effective July 1, 2023, the fund no longer met the criteria to be reported as a major fund and is reported as a nonmajor governmental fund for the fiscal year ended June 30, 2024. There was no effect as a result of that change to the financial reporting entity as the fund did not have any fund balance.

REQUIRED SUPPLEMENTARY INFORMATION

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CITY OF PORTOLA

SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY/ (ASSET) AND RELATED RATIOS
YEAR ENDED JUNE 30, 2024
(45)
Miscellaneous Plans – Cost-Sharing Multiple-Employer Defined Benefit Pension Plans Last 10 Fiscal Years
6/30/2024 6/30/2023 6/30/2022 6/30/2021 6/30/2020 6/30/2019 6/30/2018 6/30/2017 6/30/2016 6/30/2015 6/30/2023 6/30/2022 6/30/2021 6/30/2020 6/30/2019 6/30/2018 6/30/2017 6/30/2016 6/30/2015 6/30/2014 Proportionate Share of the Net Pension Liability $ 738,342 $ 652,972 $ 22,269 $ 483,829 $ 391,142 $ 709,707 $ 708,789 $ 577,890 $ 394,917 $ 237,694 Proportion of the Net Pension Liability 0.014% 0.014% 0.001% 0.011% 0.010% 0.019% 0.018% 0.017% 0.014% 0.010% Covered Payroll $ 169,537 $ 164,599 $ 152,062 $ 167,300 $ 194,362 $ 181,423 $ 259,958 $ 317,876 $ 337,555 $ 580,058 Proportionate Share of the Net Pension Liability
as a Percentage of Covered Payroll 435.5% 396.7% 14.6% 289.2% 201.2% 391.2% 272.7% 181.8% 117.0% 41.0% Plan Fiduciary Net Position as a Percentage of
the Total Pension Liability 77.97% 78.19% 90.49% 77.71% 77.73% 77.69% 75.39% 75.87% 79.89% 81.15% Reporting Date
Measurement Date

CITY OF PORTOLA

SCHEDULE OF PENSION PLAN CONTRIBUTIONS
YEAR ENDED JUNE 30, 2024
(46)
Miscellaneous Plans – Cost-Sharing Multiple-Employer Defined Benefit Pension Plans Last 10 Fiscal Years
6/30/2024 6/30/2023 6/30/2022 6/30/2021 6/30/2020 6/30/2019 6/30/2018 6/30/2017 6/30/2016 6/30/2015 Actuarially Determined Contribution $ 69,588 $ 56,192 $ 41,694 $ 46,122 $ 39,456 $ 34,427 $ 48,061 $ 48,041 $ 52,222 $ 24,089 Contributions in Relation to the Actuarially
Determined Contributions 120,338 118,141 112,052 97,709 94,059 471,085 64,595 45,970 43,236 41,882 Contributions Deficiency (Excess) $ (50,750) $ (61,949) $ (70,358) $ (51,587) $ (54,603) $ (436,658) $ (16,534) $ 2,071 $ 8,986 $ (17,793) Covered Payroll $ 174,623 $ 169,537 $ 164,599 $ 152,062 $ 167,300 $ 194,362 $ 181,423 $ 259,958 $ 317,876 $ 337,555 Contributions as a Percentage of
Covered Payroll 68.91% 69.68% 68.08% 64.26% 56.22% 242.37% 35.60% 17.68% 13.60% 12.41%

CITY OF PORTOLA

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCES – BUDGET AND ACTUAL

GENERAL FUND
YEAR ENDED JUNE 30, 2024
(47)
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)

REVENUES
Taxes $ 626,850 $ 736,850 $ 811,277 $ 74,427
Licenses and Permits 66,400 66,400 79,594 13,194
Fines, Forfeitures, and Penalties 75 75 13,208 13,133
Use of Money and Property 41,581 81,581 85,410 3,829
Intergovernmental 498,000 628,000 655,809 27,809
Charges for Services 19,000 31,000 38,233 7,233
Other Revenues 15,000 15,000 7,530 (7,470)
Total Revenues 1,266,906 1,558,906 1,691,061 132,155

EXPENDITURES
Current:

General Government 243,085 243,085 224,317 18,768
Planning and Community Development 120,637 120,637 120,257 380 Public Safety 401,873 401,873 356,251 45,622
Public Works 240,044 422,812 302,173 120,639
Parks and Recreation 218,199 218,199 213,399 4,800
Total Expenditures 1,223,838 1,406,606 1,216,397 190,209 Excess (Deficiency) of Revenues
Over Expenditures 43,068 152,300 474,664 322,364

OTHER FINANCING SOURCES (USES)
Transfers Out (258,413) (258,413) (216,190) 42,223
Total Other Financing Sources (Uses) (258,413) (258,413) (216,190) 42,223 Net Change in Fund Balances (215,345) (106,113) 258,474 364,587 Fund Balances - Beginning of Year 2,515,613 2,515,613 2,515,613 - Fund Balances - End of Year $ 2,300,268 $ 2,409,500 $ 2,774,087 $ 364,587 Budgeted Amounts

CITY OF PORTOLA

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCES – BUDGET AND ACTUAL

STATE TRANSPORTATION IMPROVEMENT FUND
YEAR ENDED JUNE 30, 2024
(48)
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)

REVENUES
Intergovernmental $ - $ 2,050,000 $ 1,746,223 $ (303,777) Total Revenues - 2,050,000 1,746,223 (303,777)

EXPENDITURES
Current:

Streets and Roads 10,000 2,050,000 2,041,805 8,195
Total Expenditures 10,000 2,050,000 2,041,805 8,195
Excess (Deficiency) of Revenues
Over Expenditures (10,000) - (295,582) (311,972)

OTHER FINANCING SOURCES (USES)
Transfers In 10,000 10,000 - (10,000)
Total Other Financing Sources (Uses) 10,000 10,000 - (10,000) Net Change in Fund Balances - 10,000 (295,582) (305,582) Fund Balances - Beginning of Year 289 289 289 -
Fund Balances - End of Year $ 289 $ 10,289 $ (295,293) $ (305,582) Budgeted Amounts

CITY OF PORTOLA

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCES – BUDGET AND ACTUAL
GAS TAX 2107 FUND
YEAR ENDED JUNE 30, 2024
(49)
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)

REVENUES
Intergovernmental $ 58,667 $ 58,667 $ 59,630 $ 963
Total Revenues 58,667 58,667 59,630 963

EXPENDITURES
Current:

Public Safety 39,000 39,000 65,265 (26,265)
Streets and Roads 125,743 175,743 168,423 7,320
Total Expenditures 164,743 214,743 233,688 (18,945)
Excess (Deficiency) of Revenues
Over Expenditures (106,076) (156,076) (174,058) (17,982)

OTHER FINANCING SOURCES (USES)
Transfers In 106,076 156,076 174,058 17,982
Total Other Financing Sources (Uses) 106,076 156,076 174,058 17,982 Net Change in Fund Balances - - - -
Fund Balances - Beginning of Year - - - -
Fund Balances - End of Year $ - $ - $ - $ -
Budgeted Amounts

CITY OF PORTOLA

NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2024
(50)

BUDGETS AND BUDGETARY ACCOUNTING
The City follows these procedures in establishing the budgetary data reflected in the financial statements:

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

2. Public hearings are conducted to obtain taxpayer comments.

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

4. Budget adjustments from reserves and between funds are approved by the City Council and budget transfers within fund or department are approved by the City Manager. Expenditures may not legally exceed budgeted appropriations at the fund level for all funds without the City Council’s approval.

5. Budgets are adopted for the General Fund and Special Revenue Funds.

6. Formal budgetary integration is employed as a management control device during the year in all funds.

Budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP) for all funds.

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SUPPLEMENTARY INFORMATION

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NONMAJOR SPECIAL REVENUE FUNDS

CITY OF PORTOLA

COMBINING BALANCE SHEET

NONMAJOR SPECIAL REVENUE FUNDS
JUNE 30, 2024
(52)
Road
Maintenance Community
and Development
Snow Rehabilitation Block
Removal Account Grant Total
ASSETS
Cash and Investments $ 3,951 $ 179,678 $ 9,345 $ 192,974 Due from Other Governments - 9,445 - 9,445
Interest Receivable - 1,847 97 1,944
Notes Receivable, Net - - 43,525 43,525
Total Assets $ 3,951 $ 190,970 $ 52,967 $ 247,888

LIABILITIES AND FUND BALANCE
Liabilities:

Accounts Payable $ 3,180 $ 20,280 $ 1,350 $ 24,810
Accrued Salaries and Benefits Payable 771 - 79 850
Accrued Expenses - 2,247 - 2,247
Total Liabilities 3,951 22,527 1,429 27,907
Fund Balance:

Restricted - 168,443 43,525 211,968
Assigned - - 8,013 8,013
Total Fund Balance - 168,443 51,538 219,981
Total Liabilities and Fund Balance $ 3,951 $ 190,970 $ 52,967 $ 247,888

CITY OF PORTOLA

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES

NONMAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 2024
(53)
Road
Maintenance Community
and Development
Snow Rehabilitation Block
Removal Account Grant Total

REVENUES
Use of Money and Property $ - $ 5,939 $ 547 $ 6,486
Intergovernmental 203,841 54,193 - 258,034
Total Revenues 203,841 60,132 547 264,520

EXPENDITURES
Current:

Streets and Roads 245,973 24,968 - 270,941
Planning and Community
Development - - 17,656 17,656
Total Expenditures 245,973 24,968 17,656 288,597

OTHER FINANCING SOURCES (USES)
Transfers In 42,132 - - 42,132
Total Other Financing Sources (Uses) 42,132 - - 42,132
Net Change in Fund Balances - 35,164 (17,109) 18,055
Fund Balances - Beginning of Year - 133,279 68,647 201,926 Fund Balances - End of Year $ - $ 168,443 $ 51,538 $ 219,981

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OTHER REPORTS

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CliftonLarsonAllen LLP
CLAconnect.com
(54)
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
Honorable Mayor and Council Members
Portola, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Portola (City), as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated November 5, 2024.

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

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

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

CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer. (55)
Honorable Mayor and Council Members
City of Portola
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

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

CliftonLarsonAllen LLP
Roseville, California
November 5, 2024

1 INDEPENDENT ACCOUNTANTS’ REPORT

ON APPLYING AGREED-UPON PROCEDURES
Honorable Mayor and Council Members
City of Portola, California
We have performed the procedures enumerated below on the Appropriations Limit calculation of the City of Portola as of and for the year ended June 30, 2024. The City of Portola management is responsible for the Appropriations Limit calculation.

The City of Portola has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of presenting the Appropriation Limit calculation in accordance with the requirements of Section 1.5 of Article XIII-B of the California Constitution.

This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.

The procedures and the associated findings are as follows:

1. We obtained the completed Appropriations Limit Calculation, and compared the limit and annual adjustment factors in those calculation to the limit and annual adjustment factors that were adopted by resolution of the City Council. We also compared the population and inflation options included in the aforementioned calculation to those that were selected by a recorded vote of the City Council.

Finding: No exceptions were noted as a result of our procedures.

2. We computed current year adjustments based on the selected population and inflation option, using information provided by Department of Finance.

Finding: No exceptions were noted as a result of our procedures.

3. We compared the prior year appropriations limit presented in the Appropriations Limit Calculation to the prior year appropriations limit adopted by the City Council for the prior year.

Finding: No exceptions were noted as a result of our procedures.

CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer.

CliftonLarsonAllen LLP
CLAconnect.com
Honorable Mayor and Council Members
City of Portola, California
2 4. We added the results of step two (2) to the prior year Appropriations Limit, and compared the resulting amount to the current year approved limit.

Finding: No exceptions were noted as a result of our procedures.

We were engaged by the City of Portola to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the AICPA. We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on Appropriations Limit calculation of the City of Portola. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

We are required to be independent of the City of Portola and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.

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

CliftonLarsonAllen LLP
Roseville, California
October 21, 2024
CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer.

CliftonLarsonAllen LLP
CLAconnect.com
To the Honorable Members of the
City Council of Portola
City of Portola
Portola, 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 City of Portola as of and for the year ended June 30, 2024, and have issued our report thereon dated November 5, 2024. We have previously communicated to you 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 in our statement of work dated August 12, 2024.

Professional standards also require that we communicate to you the following information related to our audit.

Significant audit findings or issues
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 City of Portola are described in Note 1 to the financial statements.

As described in Note 15, the entity changed accounting policies related to the change of the snow removal fund from major to nonmajor by adopting Statement of Governmental Accounting Standards Board (GASB Statement) No. 100, Accounting Changes, in 2024. Accordingly, the cumulative effect of the accounting change as of the beginning of the year is reported in the Balance Sheet of Governmental Funds.

We noted no transactions entered into by the entity 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 financial statements were:
 Management’s estimate of the landfill liability is based on an engineering estimate. We evaluated the key factors and assumptions used to develop the landfill liability in determining that it is reasonable in relation to the financial statements taken as a whole.

Financial statement disclosures
Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. There were no particularly sensitive financial statement disclosures.

The financial statement disclosures are neutral, consistent, and clear.

City Council
City of Portola

Significant unusual transactions
We identified no significant unusual transactions.

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

Uncorrected misstatements
Professional standards require us to accumulate all misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management.

Management has determined that the effects of uncorrected misstatements are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. The following summarizes uncorrected misstatements of the financial statements:
o Receivables in the amount of $23,892, $13,914, and $4,066 for the water, sewer, and solid waste funds, respectively, were not recorded. These are for unbilled utility receivables and this is a known non-GAAP policy.

Uncorrected misstatements or the matters underlying uncorrected misstatements could potentially cause future-period financial statements to be materially misstated, even if management has concluded that the uncorrected misstatements are immaterial to the financial statements under audit.

Corrected misstatements
Management did not identify and we did not notify them of any financial statement misstatements detected as a result of audit procedures.

Disagreements with management
For purposes of this communication, a disagreement with management is a disagreement on a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors’ report. No such disagreements arose during our audit.

Circumstances that affect the form and content of the auditors’ report As previously communicated to you, the report was modified to implement GASB No. 100, Accounting Changes and Error Corrections by presenting the snow removal fund as nonmajor that was reported as major in the prior year.

Management representations
We have requested certain representations from management that are included in the management representation letter dated November 5, 2024.

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 entity’s financial statements or a determination of the type of auditors’ 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. To our knowledge, there were no such consultations with other accountants.

City Council
City of Portola

Significant issues discussed with management prior to engagement We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to engagement as the entity’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our engagement.

Required supplementary information
With respect to the required supplementary information (RSI) accompanying the financial statements, we made certain inquiries of management about the methods of preparing the RSI, including whether the RSI has been measured and presented in accordance with prescribed guidelines, whether the methods of measurement and preparation have been changed from the prior period and the reasons for any such changes, and whether there were any significant assumptions or interpretations underlying the measurement or presentation of the RSI. We compared the RSI for consistency with management’s responses to the foregoing inquiries, the basic financial statements, and other knowledge obtained during the audit of the basic financial statements. Because these limited procedures do not provide sufficient evidence, we did not express an opinion or provide any assurance on the RSI.

Supplementary information in relation to the financial statements as a whole With respect to the Combining Nonmajor Fund Statements (collectively, the supplementary information) accompanying the financial statements, on which we were engaged to report in relation to the financial statements as a whole, 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 or the reasons for such changes, 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 have issued our report thereon dated November 5, 2024. * * *
This communication is intended solely for the information and use of the City Council and management of City of Portola and is not intended to be, and should not be, used by anyone other than these specified parties.

CliftonLarsonAllen LLP
Roseville, California
November 5, 2024
1 MEETING DATE: December 11, 2024
AGENDA ITEM: 8. American Rescue Plan Act
FROM: Susan Scarlett
RE: American Rescue Plan Act/State and Local Fiscal Recovery Funds BACKGROUND:

In 2021-2022 the City of Portola received $461,697 of Fiscal Recovery Funds as part of the pandemic recovery efforts. The City Council approved the use of the funds for Community Clean up and the purchase of the tax lien properties.

Original amount $461,697
Community Clean Up $355,237.25
Tax Lien properties $18,650
The balance of the funds available is $87,809.75. Of this $15,000 was originally allocated toward the dog park. At this time staff is estimating the dog park costs as the materials attached. Funds must be fully obligated by December 31, 2024, with all contracts, deliverables, and agreements in place by this date. All funds must be spent (fully liquidated) by December 31, 2026.

Although Treasury said that funds must be obligated they are permitting ARPA recipients to establish a contingency reserve for currently approved projects that may not be completed.

Staff would like to purchase outdoor water fountains for the parks and new water fountains at City hall and the Pool, all of which would have bottle fillers. Health issues were a large part of the final rules for the use of the funds. The fountains would all have bottle fillers and promote less plastic as well as provide water in outdoor/park environments. The City has towing and code enforcement expenditures that could qualify as part of the funds and would be used under the revenue replacement rules.

Discuss the balance of the Fiscal Recovery Funds and the purchase of outdoor fountains and new fountains for City Hall and the Pool as well as the materials for the dog park.

RECOMMENDATION:

Approve the funds as follows:

Balance of the funds $87,809.75
2 Quote from Global industrial* for fountains $62,591.16 (* an Omnia Partner) Estimated installation costs for concrete pad, water hookup and staff time for fountain and dog park projects $15,000
Estimate for materials for the dog park $7,337.10
Contingency/or revenue replacement estimate $2,881.49
These are estimates and there may be unallocated funds that can be used as revenue replacement to cover public safety/code compliance.

FISCAL IMPACT:

The City has these funds. If they are not spent or identified as revenue replacement items then there would be a reversion of the balance unspent.

ATTACHMENTS:

A. QUOTE DRINKING FOUNTAINS
B. FOUNTAIN
C. DOG PARK FENCING ESTIMATE

SALES QUOTE
QUOTE ISSUED: 12/04/2024
ACCOUNT NO. 7429638
QUOTE NO. 7632345
Click Here To Place Order Online
*Pricing valid for 30 days from quote issue date. subject to change based on product availability and/or extraordinary market conditions

CUSTOMER INFORMATION
Account Name: CITY OF PORTOLA
Name: TODD ROBERTS
Address: 35 3RD AVE
PORTOLA, California 96122
Email: [email protected]
Phone: (530) 832-6809
Part# Description Shipping Qty Price Extended
761221GN Global Industrial™Outdoor Bottle Filler w/Bi-Level Drinking Fountain & Pet Station, Green TRUCK 15 $3,609.05 $54,135.75 B384182NG Elkay LZS8WSLP ezH2O Enhanced Bottle Filling Station, Refrig., Filtered, Light Gray, w/51300C TRUCK 3 $1,347.09 $4,041.27 Notes ItemTotal: $58,177.02
Tax: $4,231.10
Shipping and
Handling: $183.04
**Total: $62,591.16
**Applicable taxes and shipping charges will be added to invoice.

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1 MEETING DATE: December 11, 2024
AGENDA ITEM: 9. Update the salary schedule in compliance with California Code of Regulations 570.5
FROM: Susan Scarlett
RE: Update 570.5 for City Manager Salary
BACKGROUND:

Update to the pay schedule in compliance with CCR 570.5 for the Position of City Manager EXECUTIVE SUMMARY:

The City is required by the California Code of Regulations to have an updated pay schedule that is publicly available. Once approved this will replace the schedule that is currently on the City website.

Publicly available pay schedules are required by CalPERS and are a critical component to verify all members’ pay rates when calculating members’ retirement benefits. Maintaining a compliant publicly available pay schedule will support transparency and expedite CalPERS review process.

RECOMMENDATION:

Adopt the updated required Publicly Available Pay Schedule ATTACHMENTS:

A. PAY SCHEDULE FOR CCR 570.5 COMPLIANCE
California Code of Regulations 570.5 - Publicly Available Pay Schedule

HOURLY RATES
POSITION Step 1 Step 2 Step 3 Step 4 Step 5 L 1 L 2 L 3 City Manager (1) 69.72 0 0 0 0 73.21 76.87 80.71
Administrative Services Manager (Not currently filled) 37.85 0 0 0 0 39.74 41.73 43.82 Public Works & Building Services Manager (1) 52.03 0 0 0 0 54.63 57.36 60.23 Public Engagement Officer Part-time 30.00 31.50 33.08 34.73 36.47 0.00 0.00 0.00 Water/Sewer Utility Technician (or Public Works Supervisor) (2) 31.74 33.33 35 36.75 38.58 40.51 42.53 44.66 Public Works Maintenance (1) 24.09 25.29 26.55 27.88 29.27 30.73 32.27 33.88 Accounting Technician (1) 29.34 30.81 32.35 33.97 35.67 37.45 39.33 41.29 Administrative Clerk (1) 24.76 26.00 27.30 28.67 30.10 31.61 33.19 34.84 Office Clerk (1) 21.12 22.18 23.29 24.45 25.68 26.96 28.31 29.73 Management does not have steps
There are 5 Steps and are every two years
Longevity is 5% at 15, 20 and 25 years Full-time employees with continuous service measured from date of hire Revised November 18, 2024 and Adopted by the City Council December 11, 2024 1 MEETING DATE: December 11, 2024
AGENDA ITEM: 10. City Policy on Communication and Engagement Restrictions for Active Legal Matters
FROM: Ryan Bonk
RE: Resolution No. 2602 - City Policy- Communication and Engagement Restrictions for Active or Threatened Legal Matters
BACKGROUND:

Portola City Council wishes to establish policies to ensure proper communication and engagement restrictions for active or threatened legal matters.

EXECUTIVE SUMMARY:

This policy outlines the procedures and restrictions for elected and appointed City Officials and City staff when interacting with individuals or parties engaged in active or threatened legal claims or matters against the City of Portola. The goal is to protect the integrity of legal proceedings, minimize risk, and ensure compliance with legal requirements.

FISCAL IMPACT:

There is no fiscal impact associated with the adoption of the resolution and policy.

RECOMMENDATION:

Adopt the Communication and Engagement Restrictions for Active or Threatened Legal Matters Policy
ATTACHMENTS:

A. RESOLUTION NO. 2602 FINAL
2 Resolution No. 2602 December 11, 2024
RESOLUTION NO. 2602

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PORTOLA

ADOPTING THE COMMUNICATION AND ENGAGEMENT RESTRICTIONS

FOR ACTIVE OR THREATENED LEGAL MATTERS POLICY
WHEREAS, Portola City Council wishes to establish policies to ensure proper communication and engagement restrictions for active or threatened legal matters; and WHEREAS, the Policy: Communication and Engagement Restrictions for Active or Threatened Legal Matters was reviewed by the City Council at a regularly scheduled meeting; and
WHEREAS, the City Council took public comment on the communication and engagement restrictions for active or threatened legal matters; and WHEREAS, the City Council has reviewed and determined that the City should adopt the Communication and Engagement Restrictions for Active or Threatened Legal Matters policy so that it creates clear policies to ensure proper communication and engagement restrictions for active or threatened legal matters that are consistent with the goals of the City and Council; and
NOW THEREFORE, BE IT HEREBY RESOLVED by the City Council of the City of Portola that the Policy: Communication and Engagement Restrictions for Active or Threatened Legal Matters attached hereto as Exhibit “A”, is hereby adopted and shall take effect as of December 11th, 2024.

PASSED, APPROVED AND ADOPTED this 11th day of December 2024, by the following vote:

AYES: _______________________
NOES: _______________________
ABSTAIN: ___________________
ABSENT: ____________________
, Mayor
ATTEST:
_______________________________
Malachi Mansfield, Deputy City Clerk
I, Malachi Mansfield, Deputy City Clerk of the City of Portola, do hereby certify that the above and foregoing Resolution was duly passed and adopted by the City Council of the City of Portola at a regular meeting thereof held on December 11, 2024. ________________________________
Malachi Mansfield, Deputy City Clerk
Document Name Communication and Engagement Restrictions for Active or Threatened Legal Matters
Document Number Revision Letter A
Document Location Server Revision Date 12/06/2024
Document Type Policy Council Adoption Date
Resolution No.

Page
1 | 2

1. Purpose
This policy outlines the procedures and restrictions for elected and appointed City Officials and City staff when interacting with individuals or parties engaged in active or threatened legal claims or matters against the City of Portola. The goal is to protect the integrity of legal proceedings, minimize risk, and ensure compliance with legal requirements.

2. Policy Statement
City staff shall not communicate, engage, or participate in discussions with any individual or party involved in active or threatened legal claims, lawsuits, or disputes with the City of Portola. This restriction applies to all formal and informal communications, whether verbal, written, electronic, or in-person.

3. Exceptions to this policy include:
a) Authorized communications through the City Attorney or designated legal representatives.
b) Situations required by law, such as responding to subpoenas or fulfilling public records requests in compliance with the California Public Records Act (CPRA).

4. Procedures for Interaction with Restricted Individuals or Parties a) Identifying Restricted Parties
City staff will be informed of relevant restrictions as necessary to perform their duties by the City Manager, City Attorney, or designated legal representatives.
b) Redirecting Communication
If a restricted party attempts to communicate with City staff:

Politely inform the individual that staff members are unable to discuss the matter.

Redirect them to the City Manager. Example language:
"Thank you for reaching out. Unfortunately, I am unable to discuss this matter. Please direct all communication to the City Manager. " Exhibit A
Document Name Communication and Engagement Restrictions for Active or Threatened Legal Matters
Document Number Revision Letter A
Document Location Server Revision Date 12/06/2024
Document Type Policy Council Adoption Date
Resolution No.

Page
2 | 2
c) Reporting Unauthorized Contact
Any unauthorized contact or attempts by restricted individuals or parties to bypass this policy must be reported to the City Manager immediately.

5. Training and Awareness
All City staff will receive periodic training to ensure awareness and understanding of this policy.

6. Scope
This policy applies to all the City of Portola’s employees, contractors, and elected and appointed officials during the course of their official duties.

7. Enforcement
Violations of this policy may result in disciplinary action.

8. Contact for Questions
For questions regarding this policy or specific situations, please contact the City Manager.