2022_Salinas, City of_ACFR_09082023 — Finance Committee, September 12, 2023

City of Salinas
California

Basic Financial Statements
Fiscal Year Ended June 30, 2022

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Basic Financial Statements
Fiscal Year Ended June 30, 2022

PREPARED BY

THE FINANCE DEPARTMENT

Jim Pia
Assistant City Manager /
Acting Finance Director

Eric Burl, Accounting Manager

AUDITORS

The Pun Group LLP
Accountants & Advisors
200 E. Sandpointe Avenue, Suite 600
Santa Ana, CA 92707

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City of Salinas
Basic Financial Statements
For the Year Ended June 30, 2022

Table of Contents

Page

INTRODUCTORY SECTION

Letter of Transmittal ................................................................................................................................................... i List of City Officials ............................................................................................................................................ xxvii Organizational Chart ........................................................................................................................................... xxviii

FINANCIAL SECTION

Independent Auditors’ Report ................................................................................................................................ 1

Management’s Discussion and Analysis (Required Supplementary Information) (Unaudited) ....................... 5

Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position .......................................................................................................................... 20 Statement of Activities and Changes in Net Position ................................................................................ 22

Fund Financial Statements:

Governmental Funds:

Balance Sheet ...................................................................................................................................... 28 Reconciliation of the Governmental Funds Balance Sheet to the Government- Wide Statement of Net Position ................................................................................................... 29 Statement of Revenues, Expenditures, and Changes in Fund Balances .............................................. 30 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Position ........................................................................................ 31

Proprietary Funds:

Statement of Net Position ................................................................................................................... 34 Statement of Revenues, Expenses, and Changes in Fund Net Position .............................................. 36 Statement of Cash Flows ....................................................................................................... ............. 38

Fiduciary Funds:

Statement of Fiduciary Net Position ................................................................................................... 45 Statement of Changes in Fiduciary Net Position ................................................................................ 46

Notes to the Basic Financial Statements ............................................................................................................... 53

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City of Salinas
Basic Financial Statements
For the Year Ended June 30, 2022

Table of Contents (Continued)

Page
FINANCIAL SECTION (Continued)

Required Supplementary Information (Unaudited):

Budgetary Information ................................................................................................................................... 139 Budgetary Comparison Schedules
General Fund ........................................................................................................................................... 142 American Rescue Plan Act Special Revenue Fund ................................................................................. 143 Housing and Urban Development Grants Special Revenue Fund ........................................................... 144 Schedule of Changes in Net Pension Liability and Related Ratios – Miscellaneous Plans ........................... 145 Schedule of Pension Plan Contributions – Miscellaneous Plan ..................................................................... 146 Schedule of Changes in Net Pension Liability and Related Ratios – City Police Plans ................................ 147 Schedule of Pension Plan Contributions – City Police Plans ........................................................................ 148 Schedule of Changes in Net Pension Liability and Related Ratios – City Fire Plans .................................... 149 Schedule of Pension Plan Contributions – City Fire Plans ............................................................................ 150 Schedule of Changes in Net Pension Liability and Related Ratios – Single Employer Plan......................... 151 Schedule of Pension Plan Contributions – Single Employer Plan ................................................................. 152 Schedule of Changes in Net OPEB Liability and Related Ratios .................................................................. 153 Schedule of OPEB Contributions .................................................................................................................. 154

Supplementary Information:

Combining and Individual Fund Statements and Schedules:

Nonmajor Governmental Funds:

Combining Balance Sheet Nonmajor Governmental Funds ............................................................. 157 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds ......................................................................................................................... 158

Nonmajor Special Revenue Funds:

Special Revenue Funds Header
Combining Balance Sheet Special Revenue Funds .......................................................................... 161 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Special Revenue Funds ................................................................................................................................................. 165

Nonmajor Debt Service Funds:

Debt Service Funds Header
Combining Balance Sheet Debt Service Funds ................................................................................ 171 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Debt Service Funds ................................................................................................................................................. 174

Nonmajor Capital Projects Funds:

Capital Projects Funds Header
Combining Balance Sheet Capital Projects Funds ............................................................................ 178 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Capital Projects Funds ................................................................................................................................................. 179 DRAFT 09.08.2023
City of Salinas
Basic Financial Statements
For the Year Ended June 30, 2022

Table of Contents (Continued)

Page

FINANCIAL SECTION (Continued)

Supplementary Information (Continued):

Internal Service Funds:

Description of Internal Service Funds ............................................................................................... 181 Combining Statement of Net Position ............................................................................................... 182 Combining Statement of Revenues, Expenses, and
Changes in Net Position .................................................................................................................... 183 Combining Statement of Cash Flows ................................................................................................ 184

Fiduciary Funds:

Description of Fiduciary Funds ......................................................................................................... 187 Private Purpose Trust Funds:

Combining Statement of Fiduciary Net Position ........................................................................ 188 Combining Statement of Changes in Fiduciary Net Position ..................................................... 189

Custodial Funds:

Description of Custodial Funds ......................................................................................................... 191 Combining Statement of Fiduciary Net Position ............................................................................... 192 Combining Statement of Changes in Fiduciary Net Position ............................................................ 193

General Fund:

Combining Balance Sheet – General, Measure E, & Measure G Funds ........................................... 194 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance – General, Measure E, & Measure G Funds ....................................................................................................... 195 Budgetary Comparison Schedule - Measure E .................................................................................. 196 Budgetary Comparison Schedule - Measure G ................................................................................. 197

Other Information (Unaudited):

Claims Development – Internal Service Funds – General Liability Insurance ........................................ 200 Claims Development – Internal Service Funds – Workers Compensation Insurance ............................. 202

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September 12, 2023

Honorable Mayor and Members of the City Council
City of Salinas, California

We are pleased to submit the City of Salinas (City) Basic Financial Statements for the fiscal year ended June 30, 2022. The financial statements are presented in conformity with generally accepted accounting principles (GAAP) and are audited in accordance with generally accepted auditing standards.

Responsibility for the accuracy of the data and th e fairness of presentation, including all notes and disclosures, rests with the City. We believe the data presented in this report is accurate in all material respects and all statements and disclosure s necessary for the reader to obtain a thorough understanding of the City’s financial activities ha ve been included. Management of the City has established a comprehensive internal control framework that is designed both to protect the City’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their bene fits, the City’s comprehensive framework of internal controls has been designed to provide re asonable rather than abso lute assurance that the financial statements will be free from material misstatements.

While traditionally addressed to the governing body of the City, this report is intended to provide relevant financial information to the residents of the City of Salinas, City staff, creditors, investors and other concerned readers. We encourage all readers to contact the Finance Department with any questions or comments concerning this report.

The Pun Group LLP, a firm of certified public acc ountants, have audited the City’s financial statements. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2022, are free of material misstatements. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Based upon the audit, the independen t auditors concluded that there was reasonable basis for rendering an unmodified opinion that the City’s financial statements for the fiscal year ended June 30, 2022, are fairly presented in conformity with GAAP. The independent auditors’ report is presented as the first component of the financial section of this report.

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The independent audit of the financial statements of the City was part of a broader, federally mandated “Single Au dit” designed to meet the special ne eds of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on fair presentation of the financial statements, but also on the government’s internal controls and compliance with legal requirements, with spec ial emphasis on internal controls and legal requirements involv ing the administratio n of federal awards. These reports are available in the City’s separately issued Single Audit Report.

GAAP requires that management provide a narrat ive introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the independent auditors.

This report is divided into two sections:

 The Introductory Section includes this letter of transmittal and an organizational overview of the City government.
 The Financial Section consists of the independent auditors’ report, Management’s Discussion and Analysis, and the Basic Financial Statements; which include the Government- Wide Financial Statements, Fund Financial Statements, Notes to Financial Statements, Required Supplementary Information and other Supplementary Information.

The Reporting Entity and Its Services

In defining the reporting entity, there are no other governmental units over which the City Council has financial accountability. Under new state law, the Salinas Redevelopment Agency, which was a component unit of the City, ceased to exist as of February 1, 2012, and therefore the assets and activities of the dissolved redevelopment agency are reported in a Fiduciary Fund (private purpose trust fund) in the financial statements of the City.

The City of Salinas was incorporated as a charter City on March 4, 1874 and operates under the Council-Manager form of government. The City is governed by a six-member Council elected by districts for four-year alternating terms and a Mayor elected at large for a two-year term. The Council appoints the City Attorney and the City Manager, who is responsible for day-to-day administration of the City under the policy direction of the Council.

The City of Salinas is the “county seat” of Monterey County and is located in the Central Coast region of California, 17 miles inland from the Monterey Bay, 325 miles north of Los Angeles and 106 miles south of San Francisco. Salinas is a charter City providing all typi cal City services:

Public safety - police a nd fire, Public Works - maintenance services (streets, lighting, signals, facilities, parks and trees), development and perm it services, current an d advanced planning and traffic and facilities engineer ing, Library, Recreation and Gene ral administrative services.

Business-type City services in clude: a Municipal Airport, I ndustrial Waste sy stem, Sanitary Sewer, Water Utility and a Parking District. The State Department of Finance reports the City’s population at 162,222 as of January 1, 2020. The City FY 2021-22 budget includes 606.50 positions authorized on a full-time equivalent basis.

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Three elementary school districts, a unified high school district and several private schools at both the primary and secondary level operate in the City of Salinas. Hartnell College, a State Community College, offers two-year degrees and occupational certificate programs. California State University, Monterey Bay is located less than 15 miles away on the former Fort Ord site.

Graduate studies through Golden Gate University , Monterey Institute of International Studies and Chapman College are available nearby. Also in the area are Moss Landing Marine Laboratory, Monterey College of Law, Stanford University’s Hopkins Marine Station and San Jose State University.

Salinas has extensive health and medical services with two of Monterey County's four hospitals located within the City. Salinas also offers skilled nursing and convalescent homes and residential retirement facilities for seniors, as well as over 220 practicing physicians.

Fire protection and basic and adva nced life support are provided by the City's full-service Fire Department. Advanced life support services are provided by the Fire Department’s paramedic program. The City of Salinas has a Police Department and receives additional support, as required, from the Monterey County Sheriff's Office and other regional, state and federal agencies.

The City's moderate climate encourages year-round use of its 550 plus acres of municipal parks, which include golf courses, tennis courts a nd swimming pools. The Salinas Community Center regularly hosts symphonies, ballets, concerts and conventions. Salinas is host to the annual Steinbeck Festival, the California Rodeo, and the California International Airshow. Salinas has a modern California Sports Complex and the Na tional Steinbeck Center. Surrounding Salinas are diverse recreational opportunities including beauti ful beaches and the world famed golf courses of the Monterey Bay Peninsula.

As the retail hub of the Central Co ast, Salinas enjoys a wide selection and diversity in its stores.

Northridge Shopping Center contains over 120 specialty shops and four major department stores – Macy’s, Sears, Best Buy and J.C. Penney. Harden Ranch Plaza includes Wal-Mart, Target, Safeway, specialty stores, restaurants, and bank ing institutions. The Westridge Shopping Center is home to Costco, Wal-Mart, Office Max, Dick’s Sporting Goods and a variety of national chain restaurants. The Salinas Auto Center houses nine local dealers and its retail area hosts Home Depot, Beverages and More (BevMo ), Kohl’s, and other specialty stores. Additionally, Salinas' location allows quick access to the Monterey Peninsula, as well as the San Jose area.

The City utilizes various Boards and Commissions in the conduct of its affairs. Commissions and Committees established by City Ordinance are:
 Airport Commission
 Library and Community Services Commission
 Traffic and Transportation Commission
 Planning Commission
 Measure G Oversight Committee
 Measure E Oversight Committee

Boards and Committees established by Resolution of the City Council are:

 Police Community Advisory Committee
 Animal Services Committee
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 Design Review Board
 Board of Appeals
 Grievance Advisory Board
 Finance Committee
 Historical Resources Board

FINANCIAL INFORMATION

The City’s management staff is responsible for establishing and maintaining internal controls that safeguard the assets of the government from loss, theft, or misuse and allow the compilation of adequate accounting data for the preparation of financial st atements in conformity with Generally Accepted Accounting Principles (GAAP). Internal controls are designed to provide reasonable, but not absolute, assurance that thes e objectives are met. The concept of reasonable assurance recognizes that the cost of a control should not exceed its likely benefits and that the evaluation of costs and benefits is subject to management estimates and judgments.

Single Audit

As a recipient of Federal, State and County fina ncial assistance, the City is responsible for providing assurance that adequate internal cont rols are in place to ensure compliance with applicable laws and regulations relating to these award programs. Internal controls are subject to periodic evaluation by management, the Finan ce Department staff, and the City's outside independent auditors.

As part of the City's single a udit procedures, tests are performed to determine the effectiveness of the internal controls over major Federal award programs and the City’s compliance with applicable laws and regulations related to these award programs.

Accounting System and Budgetary Control

The City's accounting and budgeting records for ge neral governmental operations are maintained on a modified accrual basis, with the revenues being recorded when available and measurable.

Expenditures are recorded when the services or goods are received or the liabilities incurred.

Accounting and budgeting for the City's proprietary funds are maintained on the accrual basis.

The City also uses encumbrance accounting as another technique for accomplishing budgetary control. An encumbrance is a commitment of a future expenditure earmarked for a particular purpose that reduces the amount of budgetary authority available for general spending. At the end of the fiscal year, encumbered appropriations are carried forward and become part of the following year's budget while appropriations th at have not been encumbered lapse and are available to be appropriated through the following fiscal year’s budget process.

The City Council approves operating appropriations at the department and fund level prior to July 1, each year and may amend the budget during th e fiscal year. Please refer to Required Supplementary Information to the financial statements for a more detailed discussion of budget policy and control. The City continues to meet its responsibility for sound financial management as demonstrated by the statements and schedules included in the financial section of this report.

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Annual Financial Report

The purpose of the City's Annual Financial Repor t is to summarize the administrative and operational performance of the City during the previous fiscal y ear. The report is intended to highlight significant accomplishments that were achieved during the fiscal year ended June 30, 2022 and to provide a financial analysis of City performance.

Capital Assets and Depreciation

As of June 30, 2022, capital assets, in cluding infrastructure assets, of the City of Salinas totaled $862.2 million; accumulated depreciation totaled $454.9 million, with the difference providing net capital assets of $407.2 million. Net capital assets of the City’s governmental activities (general government) are $335.0 million and net capital assets for the City’s business-type activities (enterprise funds) are $72.2 million.

Capital assets include land, buildings, infrastructure (streets, curbs, gutters, sidewalks, bridges, streetlights, traffic signals, etc.), improvements other than buildings (park improvements, etc.), and machinery and equipment.

During FY 2021-22, depreciation expense on capital assets of the City’s governmental activities (general government) was $12.9 million and depreciation expense on capital assets of the City’s business-type activities (enterprise funds) was $3.6 million. Depreciation e xpense represents the amount at which assets are bei ng used-up annually. Due to budget c onstraints over the years, the City has been unable to invest in the maintenance of capital assets at anywhere near the annual depreciation amount.

Please refer to the Notes to Basic Financial Statements, Note 11 for a complete discussion of the City’s Capital Assets.

Long-term Debt Payable

At June 30, 2022, the City had $154.8 million in long-term debt. Long-term debt includes capital leases and notes and bonds payable. While the Ge neral Fund guarantees most of the City’s long- term debt, other funds, agencies or property owners make the majority of principal and interest payments. Examples of other funds, agencies or property owners include, the Industrial Waste Fund, Golf Courses Fund, the Sani tary Sewer Fund, Successor Agency to the former Salinas Redevelopment Agency property tax increments, and payments from property owners who are included in the City’s various assessment districts.

Please refer to the Notes to Basic Financial Statements, Note 13, for a complete discussion of the City’s Long-term Debt.

Fund Financial Statements-General Governmental Revenues

The current governmental operations of the City are accounted for in the General, Special Revenue, Debt Service, and Capital Project Funds. For th e fiscal year ended Ju ne 30, 2022, total revenues for general governmental functions totaled $214.4 million, an increase of 12.0% over the previous fiscal year.

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Sales Tax

The City has a well-diversified economy and sales tax base. The sales and transaction and use tax increased $8.2 million, or 10.2% from FY 2020-21. The increase can be attributed to the recovery from the COVID-19 pandemic and the effects it ha d on the economy. Sales tax was the largest single category of revenue this fiscal year produci ng 17.7% of the combin ed governmental fund type revenues. Transactions and Use Tax (Measures E and G) represents 23.6% of the combined governmental fund type revenues. Measures E and G transactions and use tax is a general tax and is reported as part of the General Fund. Combined, sales tax and transactions and use tax revenue total $88.5 million or 41.3% of the combined governmental fund type revenues.

On November 8, 2005, the voters of Salinas appr oved Measure V, a 0.50% transactions and use tax. On November 6, 2012, the voters of Salinas approved to extend the 0.50% transaction and use tax with no sunset (Measure E). Measure E is a ge neral tax and is reported as part of the General Fund, although the tax is accounted for in a separate sub-fund of the General Fund.

On November 4, 2014, the voters of Salinas ap proved Measure G, an ordinance imposing a one- cent general transactions and use tax. Measure G has a fifteen-yea r term and requires the City Council to establish an Oversight Committee. Measure G is a genera l tax and is reported as part of the General Fund, although the tax is accounted for in a separate sub-fund of the General Fund.

-
10 20
30 40
50 60
70 80
90 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
$34.0 $35.4
$42.0
$62.0 $64.6 $64.9
$72.9 $69.7
$80.3
$88.5
Millions
Fiscal Year
Sales and Measures E & G Tax
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Intergovernmental

Intergovernmental revenue was the second larges t single category of revenue during the fiscal year producing 20.3% of the combined governmental fund revenues. Intergovernmental revenues consist of vehicle licenses fees (1/3 of VLF) , Federal and State Public Safety Funds, Federal Block Grants, State Gas Taxes and Federal and State Construc tion Grants. Intergovernmental revenue recovered from a 10-year low nine years ago. Intergovernmental revenue had an increase from the prior year of $12.1 million, or 38.5%, mainly from increased Federal funding for the pandemic.

Property Tax

Property tax revenue was the thir d largest source of revenue du ring this fiscal year, producing

16.0% of the combined governmental fund type revenues. Property tax revenue includes Property tax-in-lieu of vehicle license fees (2/3 of VLF) of $14.8 million that is now determined by the City’s growth in assessed property values. Pr operty tax experienced a low in 2012 of $21.5 million and is now $34.4 million.

-
10 20
30 40
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
$14.8
$20.1
$17.2 $17.2 $17.4
$24.5
$19.1
$21.3
$31.4
$43.5
Millions
Fiscal Year
Intergovernmental
-
10 20
30 40
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
$21.7 $23.1 $24.4 $25.9 $27.0 $28.5 $30.1 $31.1 $33.2 $34.4 Millions
Fiscal Year
Property Tax
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Utility User’s Tax and Other Taxes

Utility user’s tax and other taxes produced 10.9% of the combined governmental fund type revenues. Other taxes include business license tax and franchise fees, among others. Utility user’s tax increased $0.4 million from the prior year, or 3.8%. Other taxes decreased from the prior year to $11.5 million.

Assessment District Taxes

The Assessment District Debt Service Fund taxes increased by 2.0 million to $0.7 million.

Charges for Services

The Charges for Services revenue increased by $0.9 mil lion, or 13.5% as a re sult of services returning to the pre-COVID-19 pandemic levels.

Revenues from various sources and the resulting changes over the last year are shown below.

2022 Percent 2021
Source of Revenues Am ounts of Total Am ounts Dollars Percent Taxes - Special Assessments 749,723$ 0.3% 2,774,645 $ (2,024,922) $ -73.0% Property tax 34,350,884 16.0% 33,234,237 1,116,647 3.4% Sales/transaction & use tax 88,460,979 41.3% 80,275,160 8,185,819 10.2% Utility user's tax 12,106,526 5.6% 11,664,913 441,613 3.8% Other taxes 11,452,945 5.3% 19,869,125 (8,416,180) -42.4% License & permits 11,655,858 5.4% 812,083 10,843,775 1335.3% Intergovernmental 43,503,917 20.3% 31,404,757 12,099,160 38.5% Charges for service 7,779,989 3.6% 6,854,066 925,923 13.5% Interest (2,221,283) -1.0% 673,582 (2,894,865) -429.8% Rental income 597,016 0.3% 927,623 (330,607) -35.6% Fines/forfeitures 736,590 0.3% 623,400 113,190 18.2% Miscellaneous 5,205,563 2.4% 2,243,489 2,962,074 132.0% TOTAL 214,378,707$ 99.8% 191,357,080$ 23,021,627$ 12.0% 2022 vs. 2021
Increase/(decrease)
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Fund Financial Statements-Genera l Governmental Expenditures

Expenditures for governmental operations durin g the fiscal year ended June 30, 2022 were $198.3 million, a net increase of 3.9% in total expenditures over the previous year.

Changes in expenditures by major function are as follows:

Percent
of
Function 2022 Total 2021 Dollars Percent
General government 41,058,542 $ 20.7% 39,992,586 $ 1,065,956 $ 2.7% Public safety 86,257,361 43.5% 82,842,431 3,414,930 4.1% Public works 21,406,979 10.8% 18,892,966 2,514,013 13.3% Recreation 6,203,379 3.1% 2,935,550 3,267,829 111.3% Library 4,759,516 2.4% 4,363,997 395,519 9.1% Subtotal operations 159,685,777 80.5% 149,027,530 10,658,247 7.2% Capital outlay 18,038,903 9.1% 29,525,238 (11,486,335) -38.9% Debt service:

Principal 15,149,780 7.6% 6,465,528 8,684,252 134.3% Interest 5,474,806 2.8% 5,951,232 (476,426) -8.0% Total 198,349,266 $ 100.0% 190,969,528 $ 7,379,738 $ 3.9% 2022 vs. 2021
Increase/(decrease)
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For the fiscal year ended June 30, 2022, total e xpenditures for general governmental functions totaled $198.3 million, an increase of 3.9% over the previous fiscal year.

General Government increased by $1.1 million, or 2.7%. Recreation increased by $3.3 million, or 111.3%, Public Safety increased by $3.4 million, or 4.1%, Public Works increased by $2.5 million, or 13.3%, and Library expenditures increased by $0.4 million, or 9.1%.

Principal payments increased by $8.7 million while interest payments decreased by $0.5 million, mostly due to a large pay down of the Police Services Building debt in the current year.

Capital Outlay (Project) expenditures decreased $11.5 million or 38.9% from $29.5 million in FY 2020-21 to $18.0 million in FY 2021-22. During th e year, there were 128 capital projects worked on. The largest project was the Bardin Rd. Safe Route to School with $5.9 million spent in 2022. The second largest project was $4.6 million spent on the East Lake Street Sewer Repairs.

The third and fourth largest projects were $2.7 and $1.7 million on the E. Laurel Dr. Sidewalk and Lights and the Industrial Waste Treatment Facility Repairs projects, respectively.

Business-type Activities-Enterprise Funds

Enterprise Funds are the City’s business-type acti vities (activities supported, at least in part, by fees or charges) and include the Salinas Munici pal Airport, the Industrial Waste Facility, the Sanitary Sewer System, the Parking District, and Permit Services.

The Enterprise Fund’s net position totaled $56.2 million at June 30, 2022.

$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
$90.0
$100.0
Public safety General govt. Capital outlay Public works Debt service Recreation Library General Governmental Expenditures
2022 vs. 2021
2022
2021$ Millions
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Internal Service Funds

Internal Service Funds are used to account for the City’s fleet maintenance program and risk management program which administers employee benefits and the City’s insurance programs including; 1) General Insurances-employee assi stance program, unemployment claims, biennial physical exams and property insurance; 2) Work ers’ Compensation self-insurance program; and 3) General Liability self-insurance program.

At June 30, 2022, the Internal Service Funds liabilities for estimated claims payable totaled $29.7 million, with $25.3 million representing Workers’ Compensation and $4.3 million representing General Liability.

Total Workers’ Compensation insurance claims liabilities are $27.0 million at June 30, 2022. A portion of the liability is reported in the Internal Service Fund ($25.3 million) and a portion is treated as long-term debt ($1.6 million). The long-t erm debt portion represents future obligations of the Workers’ Compensation Plan.

Fiduciary Funds

Fiduciary Funds are used to account for assets he ld in trust for others and cannot be used for general government purposes. The City maintains the following Fiduciary Funds: Private Purpose Trust Funds, Pension Trust Funds and Custodial Funds.

Private Purpose Trust Funds include a net position of $1.0 million held by the City, which increased by $0.1 million from the prior year. Of the net position, $0.4 million is held by the City for the dissolved Redevelopment Agency, which is accounted for in the Successor Agency Trust, and a net position of $0.6 million held by the City for Comm unity Center and Sherwood Hall activities, Monterey One Water Fees, Sales Tax, Payroll Taxes, Deposits, Construction Bonds and other trust arrangements not properly reported in a pension trust.

Pension Trust Funds held by the City of $13.6 million are employee deferred compensation funds.

Custodial Funds are assets held by the City for Economic Development, Salinas Valley Enterprise Zone, Employee Cafeteria Plan and Retired Employees Health Insurance Program. Agency assets held by the City total $0.0 million ($22,012).

Cash Management

In accordance with the provisions of Califo rnia Government Code Section 53600 et. seq., the City is restricted to certain types of legal investments. These investments are included in the City’s investment policy and ar e approved by City Council annua lly. In addition, the City’s investment activity is reporte d to the City Council monthly pursuant to the California Government Code.

The City invests all idle funds daily. The cash ma nagement system of the City is designed to monitor revenues and expenditures to ensure the investment of monies to the fullest extent possible. The criteria, in order of priority, fo r selecting investments are safety, liquidity, and yield.

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The City’s investment in certificates of deposit and investment contracts are reported at cost, which is fair value. While recorded at fair market value in the financial statements, the City’s investments are redeemable at 100% of cost.

Please refer to Note 3 for a complete discussion of the City’s Cash and Investments.

The City’s cash and investments at June 30, 2022 is as follows:

Property Assessment

Assessed valuation of citywide taxable pr operties increased $415.2 million to $13,051 million representing an increase of 3.3% over FY 2020-21.

The following table summarizes the growth and declines in assessed valuation.

Cash and Cash Equivalents:

Cash on hand 25,000 $
Dem and accounts at banks 6, 260,469
Money market 16,073,619
Deposits held in trust by fiscal agent 217,200
Money m arket held in trust by fiscal agent -
Local Agency Investment Fund 89,354,488
Total cash and cash equivalents 111,930,776
Investm ents:

Investments held by fiscal agent 137,056,490
Deferred compensation 4,354,495
Total investments 141,410,985
Total cash and investments 253,341,761$
Before Redevelopment After Redevelopment Percent
Increment Increment Change
13,051,285,928$ 12,029,666,454 $ 3.29% 12,636,068,210 11,642,994,299 4.60% 12,080,694,193 11,139,610,620 5.41% 11,460,172,316 10,579,785,927 5.02% 10,912,115,449 10,071,741,861 4.70% 10,422,521,577 9,614,776,155 4.60% 9,963,782,622 9,195,146,472 6.49% 9,356,177,997 8,629,207,052 8.82% 8,597,836,189 7,904,316,402 2.72% 8,370,116,351 7,693,329,440 0.72% 8,310,478,479 7,628,550,860 -0.61% 8,361,701,633 7,473,844,928 -6.75% 8,966,761,801 7,981,760,147 -11.25% 10,102,973,741 9,158,540,984 -5.10% 10,645,974,648 9,750,295,032 7.25% 9,926,023,729 9,107,918,547 12.72% 8,806,009,783 8,305,434,488 12.90% 7,799,653,100 7,373,407,370 10.70% 7,045,521,979 6,643,698,145 6.90% 2012-13
Fiscal year
2019-20
2003-04
2004-05
2005-06
2014-15
2018-19
2017-18
2016-17
2015-16
2013-14
2006-07
2020-21
2021-22
2007-08
2008-09
2009-10
2010-11
2011-12
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Significant Events and Accomplishments

Through the leadership of the City Council and th e City Manager, the city continues to produce amazing accomplishments. The C ity Council is committed to st rategic goals, which guide the initiatives and activities of each City department. The following is a list of accomplishments during the year for each department:

 City Attorney Department

1. Support Efforts to Generate Revenue Sources to Invest in Existing Facilities and Infrastructure. (Infrastructure and Environmental Sustainability) a. Advise on transactional support and fee/ finance issues related to additional investment in existing facilities and infrastructure.
b. Advise on procurement and contracting for American Rescue Plan Act (ARPA) funded projects.

2. Support Efforts to Fund Storm Water Pr ogram and Additional Taxes and Fees. (Infrastructure and Environmental Sustainability)
a. Advise on and support efforts to establish new and additional fees and taxes to fund the City’s storm water management progr am and maintenance of City parks and recreation facilities.

3. Municipal Code Update. (Effective and Culturally Responsive Government; Infrastructure and Environmental Sustainability)
a. Complete update of the M unicipal Code to identify a nd to update self-imposed regulations that hinder operational efficiencies.
a. Update purchasing policies and purchasing manual, to include an environmentally friendly purchasing requirement.
b. Support efforts to establish a Youth Commission. (Youth and Seniors)

4. Cost-Recovery Program. (Effective and Culturally Responsive Government) a. Continue to implement and manage a cost-recovery program so the City can recover its costs and can recover for damaged property.

5. Employment/Human Resources. (Effective and Culturally Responsive Government) a. Continue to review and to update pers onnel policies, as n eeded. Continue to participate in and advise on employee issues during continued negotiations with the remaining bargaining groups.

6. Civil Litigation. (Effective and Culturally Responsive Government) a. Continue to manage the bulk of civil litigation in-house, with less reliance on outside

counsel, except for some unique and particularly specialized cases. b. Work to resolve North of Boronda Future Growth Area-related litigation to facilitate development of new housing. (Housing/Affordable Housing)

7. Prosecution of Municipal Code Violations. (Public Safety) a. Continue to prosecute misdemeanor violations of the Salinas Municipal Code.

8. Continue to address workers’ compensation costs, continue moving toward sound actuarial funding. (Effective and Culturally Responsive Government) a. Reduce general fund costs in management and administration of general liability and workers compensation programs.
b. Identify workers’ compensation cases which are eligible for early resolution. c. Develop and implement a City-wide Safety Training Program; participate in Safety Committee meetings.

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d. Assist with coordination of early Return to Work for Industrial and Non-industrial Injuries.
e. Annually audit workers’ compensation thir d party administrato r’s performance in managing claims and liabilities.
f. Review and update actuarial data in wo rkers’ compensation program to ensure adequate funding and reduction in outstanding accrued liability.

 Community Development Department

1. Continue to implement the Alisal Vibrancy Plan including greening, litter abatement and public art/district identity improvements and the adoptio n of commercial corridor guidelines and a district identity plan. (Strategic Goal: Economic Development)

2. Continue to support small businesses through business navigation, loans, and connection to small business resources. (Strategic Goal: Economic Development)

3. Work with developers to entitle the Ferrasc i Business Center Specific Plan (Target Area K) which will provide new employment and revenue generating opportunities. (Strategic Goal: Economic Development)

4. Evaluate the tax and regulatory environment for commercial cannabis and make data informed recommendations to City Council on improvements to the Commercial Cannabis Ordinance, tax rates, and permitting process to stabilize the industry in Salinas. (Strategic Goal: Economic Development)

5. Continue to work with th e community, food vendors, and nonprofits to expand healthy foods choice and explore entrepreneurship opportunities such as new farmer’s markets, food truck pods, development of a commun ity/commercial kitchen, and community gardens. (Strategic Goal: Economic Development)

6. Coordinate with the County on the implementation of the Downtown Vibrancy and Alisal Vibrancy Plans to include undertaking planning activities for a downtown parking facility and city and county properties around the Division Street Oppor tunity site in the Alisal. (Strategic Goals: Economic Development and Housing/Affordable Housing)

7. Complete the entitlement process for a vibr ant, multi-phase new mixed-use development at the corner of Abbott and John Street to include a 111-room hotel, 242 dwelling units, 107,900 sq ft of retail, and 30,900 sq ft of office. (Strategic Goals: Economic Development and Housing/Affordable Housing)

8. Proactively engage developers and leverage American Rescue Plan Act (ARPA) funding of $7 millio
n and other housing resources to incentivize and promote the production of low- and moderate-income housing for families, workforce, includi ng farmworkers, and seniors. (Strategic Goal: Housing/Affordable Housing)

9. Launch preparation of the East Area Speci fic Plan to increase housing development opportunities and create healthy, walkable and sustainable neighborhoods. (Strategic Goal:

Housing/Affordable Housing)
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10. Continue to partner w ith the County of Monterey to deve lop an affordable multi-family housing project at 855 E. Laurel Drive. (Strategic Goal: Housing/Affordable Housing)

11. Continue to effectively operate an ARPA funded interim housing Motel Program in support of City Health & Safety Days and other emerging City initiatives and priorities. (Strategic Goal: Housing/Affordable Housing)

12. Effectively use SB2 grant funds to facilitate zone changes to mixed-use to increase housing development opportunities in the downtown, North and East Salinas. (Strategic Goal:

Housing/Affordable Housing)

13. Support the continued rehabilitation and fu ll occupancy of 202 un its of affordable, permanent supportive housing at awar ded HCD Homekey project sites. (Strategic Goal:

Housing/Affordable Housing)

14. Continue to promote ADU development by completing pre-approved ADU plans, streamlining approval processes, updating regu lations consistent with State law, and connecting applicants to financing. (Strategic Goal: Housing/Affordable Housing)

15. Facilitate the development of the Future Growth Area (FGA) by coordinating infrastructure investment and processing tentative map applications as quickly as possible. (Strategic Goal: Housing/Affordable Housing)

16. Initiate public engagement to facilitate the preparation of the City’s first Climate Action Plan (CAP). (Strategic Goal: Infrastructure and Environmental Sustainability)

17. Establish a rental registration program to pr omote the life safety of housing units and provide tenant/landlord suppor t to stabilize Sa linas’ housing stock and promote housing preservation. (Strategic Goals: Public Safety and Housing/Affordable Housing)

18. Improve code enforcement outcomes by coor dinating with Fire Prevention, Police Department, Public Works, Monterey Count y Environmental Health, Republic Services, and Homeless Service Providers to address blig hted properties and qual ity of life issues such as noise complaints. (Strategic Goal: Public Safety)

19. Increase inspection warrants and continue to imp
lement administrative and legal remedies
in gaining compliance on nuisance properties th at may have health and safety dangers. (Strategic Goal: Public Safety)

20. Coordinate with Public Works and the Mont erey County Health Department in working with vendors to comply with the City’s vendor regulations and to improve health compliance related to food vending. (Strategic Goal: Public Safety)

21. Continue to expand community engagement opportunities and education to encourage compliance with City codes. (Strategic Goal: Public Safety)

22. Assist in providing funding to organizations in the areas of substance abuse and youth violence prevention. (Strategic Goal: Public Safety)
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23. Effectively implement the Cal ICH Encampmen t Resolution Grant using ‘Housing First’ best practices to provide unhoused residents with viable pathways to housing and to allow for the restoration of form er encampments sites to their intended public use. (Strategic Goal: Public Safety)

24. Coordinate with Library and Community Services and Public Works to implement park and recreational facility improvements includi ng the design and construction of a new Hebbron Family Center to implement the Alisal Vibrancy Plan. (Strategic Goal: Youth and Seniors)

25. Complete the final phase of rehabilitation of the Sherwood Recreati on Center project in collaboration with Library and Community Services. (Strategic Goal: Youth and Seniors)

26. Continue to engage and collaborate with Salinas’ residents and stakeholders to ensure the incorporation of equity in the prep aration of the General Plan Update. (Strategic Goal:

Effective and Culturally Responsive Government)

27. Implement technology improvements at the Permit Center to faci litate the processing of construction permits via Project/Dox/OAS, a paperless system. (Strategic Goal: Effective and Culturally Responsive Government)

28. Increase virtual building inspections by 50% over the next fiscal year. (Strategic Goal:

Effective and Culturally Responsive Government)

29. Implement a customer satisfaction survey to guide Permit Center Improvements (Strategic Goal: Effective and Culturally Responsive Government)

30. Optimize the land use management system – TRAKiT to facilitate data exchange and avoid duplicative entry to improve Permit Center productivity. (Strategic Goal: Effective and Culturally Responsive Government)

 Finance Department

1. Worked collaboratively with departments to balance the fiscal year budget.

2. Implemented group budgeting, wh ich reduces the number of appropriation (i.e., expenditure budget) adjustment s necessary by allowing expenses within a department’s individual accounts within a fund to be exceeded provided the department’s overall appropriation in the same fund is not, a nd zero-based budgeting, which requires that budgeting begin with $0 in appropriations assumed. Together, thes e practices prevent budget “bloat,” inflated appropriations which result from ca rrying forward appropriation amounts year after year without consideration for whether they are necessary.

3. Amended the City’s financial policies, establishing and fundi ng several new reserves to bette
r position the City able to withstand fi nancial emergencies and to make decisions strategically, rather than financially, and establishing minimum targets for annual infrastructure and facilities maintenance appropriations.

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4. Completed the annual audited financial statements and Single Audit of Federally Assisted Grant Programs (Single Audit), receiving unmodified auditor’s opini ons/reports (i.e., opinions/reports wherein the auditor has conc luded that the financial statements are presented fairly, in all material respects, in accordance with the applicable financial reporting framework).

5. Secured American Rescue Plan Act Funds of $51.6 million for the City of Salinas.

6. Improved the calculation of available fund balances.

7. Acquired professional investment management and advisory services consultant, which is expected to significantly increase the City’s investment returns.

8. Acquired property tax services consultant, whic h will assist the City in preparing more accurate property tax revenue projections, provide assessed value and revenue information for secured and unsecured properties in the City, and perform analysis to identify errors in misallocation of property taxes.

9. Completed Technology Current State Assessment and Technology Master Plan.

10. Develop training and educational plans to impr ove help desk “first call” resolution and improve support services across the City.

11. Established Unclaimed Monies webpage wher e outstanding (uncashed) checks issued by the City may be found along with instructions for submitting claims.

12. Supported labor negotiations with labor costing and budgetary/financial updates.

 Fire Department

1. Grants- The Fire Department applied for and was awarded a grant from the Federal Urban Area Security Initiative (UASI) in the amount of $162,000 to upgrade the technology in the City’s Mobile Command and Communicatio ns Vehicle (MCCV). The vehicle was procured in 2008 with State Homeland Security Grant Program (SHSGP) funding and is in need of upgrades to its’ technology systems. This award assu res the serviceability of this valuable resource for many years to come.

Assistance to Firefighters Grant (AFG) - The fire department was rewarded this unique grant for a second year in a row. In cooperation with the City of Monterey Fire Department, this grant provides funding up to $800,000 for existing SFD fire fighters to attend paramedic and offset the associated staffing costs.

2. Recruitment and Hiring - The Fire Depar tment successfully hired and completed an academy of 8 lateral firefighter transfers from neighboring fire departments. This helped the department to hire local candidates and reduce some of the costs associated recruitment and training of personnel with existing firefighting experience.

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Fire department administration was successful in partnering with the South Bay Regional Training Consortium, Hartnell College and Mont erey Peninsula College in establishing a local Paramedic training pr ogram. This program administ ered through the community college system will provide the opportunity fo r local students to obtain this valuable training and will allow local departments to tr ain existing staff to th e advanced level of Paramedic.

SFD has partnered with the Mi ssion Trails Regional Occ upational Program (MTROP) to attract and train local youth for a career of service with the City of Salinas Fire Department.

This supports the City Council’s strategic goal of local recruitment and diversity in the City’s workforce.

3. Emergency Medical Services – Amidst the global pandemic Salinas firefighters responded to several thousand COVID-19 related emergency responses without drastic impacts to continuity of services. The division took a lead role in establ ishing city-wide COVID guidelines and best practices for all City depa rtments and participated in local and State efforts to provide vaccinations and education.

4. Promotional Exams –The Fire Department ha s completed numerous internal promotions to fill vacancies in various ranks, including Battalion Chie f, Fire Captain, and Fire Engineer.

5. Fire Prevention Division – The division was able to fill its’ 3rd vacancy in the full-time Fire Inspector position and is curren tly recruiting to fill vacancies in part-time positions. The division received Council approval to proceed with a re-classificati on/re-organization of inspection personnel to further improve the ef ficiency and accountability of inspections and help with recruitment and re tention of staff. The division has eliminated nearly all of the pandemic-related back-log of inspections.

6. Operations/Suppression -The Fi re Department took delivery of two new fire apparatus.

These new fire engines will replace aged equi pment at fire station #1 on West Alisal St. and fire station #6 on East Bolivar St.as part of the department’s vehicle replacement program.

7. Facilities- Fire station #1 on Wes t Alisal received a much need ed new roof that will help extend the longevity of this facility and greatly improved the visual for the neighborhood.

Additionally, the Council approv ed improvements to the west wing of City Hall have commenced and are anticipated to be completed by the new FY. The improvements to the west wing will combine the fire administratio n and prevention offices into one space and allows for efficiencies in supervision of staff, efficiencies in customer service, provides ample workspace for fire department adminis trative and prevention personnel. It also provides for training facilities that can also serve as the City’s Emergency Operations Center (EOC) in times of crisis . Office spaces vacated in the permit center will allow for expansion of community development programs, services, and staffing as well.

8. Wellness/Safety – The Departme nt has bolstered its’ training and resource availability in the areas of mental health and critical inci dent stress reduction. Several members of the department have received specific training in Critical Incident Stress Management (CISM) as part of a broader national initiative to reduce mental health impacts on public safety personnel. The department has engaged with additional specialized counseling resources to augment and improve existing programs.

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 Human Resources Department

1. Work collaboratively with Departments to administer the personnel recruitment and in- service training programs for City personnel (Strategic Goal: Effective and Culturally Responsive Government)

2. Administer the City’s classification and compensation plans consistent with the Personnel Ordinance and Resolution (Strategic Go al: Effective and Culturally Responsive Government)

3. Continue streamlining hiring and employee onboarding (Strategic Goal: Public Safety and Effective and Culturally Responsive Government)

4. Continue ongoing collaboration with implementation of the Salinas Plan (Strategic Goal:

Public Safety and Effective and Culturally Responsive Government)

5. Continue efforts on Blue Zone worksite designation (Strategic Goal: Effective and Culturally Responsive Government)

6. Streamline payroll for public sa fety - integration into New World ERP (Strategic Goal:

Effective and Culturally Responsive Government)

7. Implement online performance evaluation module (Strategic Goal: Effective and Culturally Responsive Government)

8. Oversee the City’s employer-employee rela tions matters with recognized employee organizations on matters within the scope of representation pursuant to Municipal Code (Strategic Goal: Effective and Culturally Responsive Government)

 Library and Community Services Department

1. Continue to develop and maintain reopening/ongoing operating standards for our libraries and recreation centers that mitigate the risk posed by the on going COVID-19 pandemic. (Youth and Seniors)

2. Continue to identify opportunities that support implementation of the Parks, Recreation & Libraries Master Plan. (Youth and Seniors, Public Saf ety, Effective and Culturally Responsive Government, Infrastructure and Environmental Sustainability)

3. Apply for and leverage multiple funding sources and partnerships to offer better programs and services with improved organizational outcomes. ( Youth and Seniors, Public Safety, Effective and Culturally Res ponsive Government, Infrastructure and Environmental Sustainability)

4. Identify new collaborations with school distri cts to increase acces s to facilities through Joint Use Agreements and student support systems like on-site after school programs. (Youth and Seniors)
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5. Continue to increase city-wide volunteer e fforts to beautify a nd uplift AMOR Salinas Principals. (Youth and Seniors).

6. Continue to provide popular hybrid recreation and library programs, including take-home kits and virtual program options, while fully re-establishing in-person programs. (Youth and Seniors)

7. Complete and Publish the Community Alliance for Safety and Peace Strategic Plan on Violence Reduction for 2022-2025 and present to the City Council. (Public Safety)

8. Assess and prioritize maintenance of Department facilities to ensure a safe and welcoming environment that meets the needs of the community. ( Infrastructure and Environmental Sustainability, Public Safety, Youth and Seniors)

9. Continue to offer prevention and intervention programs and services for at-risk youth and member of other vulnerable populations. (Public Safety, Youth and Seniors, Effective and Culturally Responsive Government)

10. Utilize Crime Prevention Through Environmental Design (CPTED) principles to improve safety in parks and around facilities. ( Infrastructure and Envir onmental Sustainability, Public Safety, Youth and Seniors)

11. Develop a Park Maintenance Standard Manual that will identify standards of work to support a higher standard for upkeep and maintenance of the park system. ( Infrastructure and Environmental Sustainability, Effective and Culturally Responsive Government)

12. Continue to support the Public Arts Commission, implementation of the Public Arts Ordinance and coordination of variety of stakeholders and funders to implement the Public Art Master Plan. ( Economic Development, Effectiv e and Culturally Responsive Government)

13. Leverage existing programs and efforts to de velop a mural program to combat graffiti. (Economic Development)

14. Establish a Race Equity Plan. (Effective and Culturally Responsive Government)

15. Provide Diversity, Equity and Inclusion (DEI) training for policy-makers and staff. (Effective and Culturally Responsive Government)

16. Continue to manage the Hebbron Family Cent er Revitalization Project and enter into a design-build contract. ( Economic Developmen
t, Infrastructure and Environmental
Sustainability, Public Safety, Youth and Seniors)

17. Continue to manage the Closter Park Renovation Project. ( Economic Development, Infrastructure and Environmental Sustainability, Public Safety, Youth and Seniors)

18. Conduct an irrigation assessment of the City's park system. ( Infrastructure and Environmental Sustainability, Public Safety, Youth and Seniors) DRAFT 09.08.2023

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19. Continue to assess and upgrade playground structures, benches, and grills. Infrastructure and Environmental Sustainability, Public Safety, Youth and Seniors)

20. Review the library structure and finalize recommendations for a re-organization to identify a clear structure that improves service delivery. (Effective and Culturally Responsive Government)

21. Seek and implement new techno logies and digital resources to increase the efficiency, convenience, and level of service to the community. (Effective and Culturally Responsive Government)

22. Expand the Library’s device lending program to include laptops and hotspots, to alleviate digital divide in the community. (Effective and Culturally Responsive Government)

23. Continue to provide Adult and Family Lite racy services, including English language and basic computer literacy, citizenship exam, and high school equivalency preparation classes. (Youth and Seniors)

24. Re-establish additional in-person sessions for Read Grow Play playgroup programs, restart Kinder mobile service for Salinas’ kindergarte ners, and continue to provide seasonal reading challenges for Salinas youth to encourage love of reading. (Youth and Seniors)

25. Continue to offer and expand the SMART card program for all school districts in Salinas (Youth and Seniors)

26. Fully launch makerspace for public access at El Gabilan Library and improve technology access at all libraries (Effective and Culturally Responsive Government)

27. Evaluate and expand the Librar y’s digital collection and resources to increase relevancy and diversity of offerings (Effective and Culturally Responsive Government)

28. Expand library programs and partnerships for adults and young adu lts in health and wellness, financial li teracy, local history and gen ealogy, and workforce and business development. (Youth and Seniors, Economic Development)

29. Identify opportunities to improve library staff training, engagement, and wellness to better retain and grow talents locally (Effective and Culturally Responsive Government)

30. Identify funding resources and implement building improvement efforts for John Steinbeck and Cesar Chavez Library. (Effective and Culturally Responsive Government

31. Update the s
pecial event permit process to improve efficiencies, mitigate risk and create a positive customer service experience for the event organizer. ( Effective and Culturally Responsive Government, Economic Development
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 Police Department

1. Continue to secure new grants and supplem ental funding to support police operations and expand services to the community. (Strategic Goal: Public Safety & Effective and Culturally Responsive Government)

2. As recommended in the workload analysis, implement new patrol beat boundaries to greater balance workload. (Strategic Goal: Public Safety)

3. Effective utilization of resour ces and staffing to efficien tly provide services to the community. (Strategic Goal: Public Safety & Effective and Culturally Responsive Government)

4. Maintain CSO staffing to address quality of li fe issues such as abandoned vehicles and community engagement. (Strategic Goal: Public Saf ety & Effective and Culturally Responsive Government)

5. Work collaboratively with Code Enforcement and the City Attorney’s Office to address quality of life issues. (Strategic Goal: Public Safety)

6. Increase community engagement throughout all levels of the department. (Strategic Goal:

Public Safety & Effective and Culturally Responsive Government)

7. Continue to work on evaluating and implemen ting the remaining Department of Justice’s Collaborative Reform Initiative recommendations, as appropriate. (Strategic Goal: Public Safety & Effective and Culturally Responsive Government)

8. Continued to implement and expand the community policing concept to maintain and increase communication and transparency with the community. (Strategic Goal: Public Safety)

 Public Works Department

Investment Strategies/Risk Management

1. Downtown Vibrancy Plan Implementation
a. Complete construction of Main Street for 100, 200 and 300 block. b. Complete construction of Downtown Complete streets, on West Alisal from Front Street to Blanco Road.

2. Support development of Salinas Travel Center project, Airport L ease Project, Unikool (John Street) Project, SkyWest Project, and the Sobel Project.

3. Complete the Mitigated Negative Declaration for Boronda Road Congestion Relief Project (futu
re growth area).

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4. Complete 75% design for Boronda Road and McKinnon roundabout.

5. Submit 90% plans of Williams Road to PG&E for the kickoff of the Utility Undergrounding design project.

6. Technical Support for the West Area and Central Area Specific Plans approval process.

7. Provide engineering and street maintenance support for various City special events.

8. Completed 90% Design for the Williams Road Improvements.

9. Continuing work to develop sustainable parkin g enterprises which help support the city’s economic sectors.

10. Project closeout for the Sanborn/Elvee/HWY 101.

11. Completed the fiberoptic backbone for the Downtown Fiber Optic Network plan.

12. Complete Installation of new metal roof at Fire Station no. 1.

13. Support regional plan to extend commuter rail se rvice to Salinas that will provide access to jobs in the Bay Area and Silicon Valley.

14. Development complete streets, multi-modal corr idors, and a sustainable transportation to support responsible future growth area and mitigate vehicle miles travelled (VMT).

15. Supported the Airport Lease Project MND and began coordination with Caltrans as part of mitigation program to improve Airport Blvd/US 101 Ramps.

16. Support the Salinas Ag Industrial Center Deve lopment Project and continue coordinating with Caltrans and TAMC t improve US 101 access in South Salinas.

17. Completed plans and awarded a bid for the Pedestrian Crossing Enhancements Project.

18. Completed new Franchise Agreement for Soli d Waste Services after over a year of negotiations.

19. Completed new agreement with Salinas Valley Solid Waste Authority which requires the relocation of the Sun Street Transfer Station outside the City.

20. Completed Agreement with California Water Board to accept $8.8M in grant funds for the Industrial Wastewater Treatment Facility.

Public Safety

1. Continuing work with Monterey County Health Department , TAMC, and Blue Zones to develop Traffic Safety education programs.

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2. Continued homeless encampment cleanups.

3. Begin construction of East Laurel Drive Pedestrian Improvements and Street Lighting.

4. Completed construction of Old Muni Pool phase 1, 2 and 3.

5. Begin construction of the Bardin Road Safe Routes to School Improvements.

6. Completed construction of the Alvin Drive Safe Routes to School Project.

7. Completed construction of thr ee new traffic signals (Alvin Drive/Linwood and the Alvin Drive/El Dorado Intersections; and at North Main/Street/Navajo Drive in support of the El Gabilan Library Extension.

8. Completed Council approved Traffic Calming Projects at Geil Street.

9. Completed sidewalk repairs at District 3, District 4 and District 2 in the amount of $900K through the Job Order Contract (JOC) Sidewalk Improvement Program.

10. Continued developing the Salinas Safe Rout es to School Plan with Ecology Action and TAMC.

11. Completed new sidewalks and eliminated the “missing” pedestrian link on Maryal Drive serving Sherwood Park, Tatum’s Garden, the Rodeo Grounds and Boys and Girls Club.

Operational Efficiencies

1. Developing Sustainable Citywide Parking Management Program a. Continued to manage the Parking Enterprise Programs
b. Demonstrated successful implementation of Parking Enforcement Enterprise; improving services while continuing to cover costs at the same time supporting the City’s economic and safety objectives. Expanded parking enforcement services to weekends and early evenings.
c. Indexed the rates in the Downtown Parki ng District to reduce dependence of the enterprise on the City General Fund.
d. Transitioned to a new parking citation management vendor e. Prepared a facility condition assessment report for both Downtown garages to identify deferred maintenance and probable costs to repair

2. Utilized Geographic Information Systems (GIS) fo r spatial analysis. Spatial analysis lets staff evaluate suitability and capability, esti mate, predict, interpret, and understand data.

This capability is delivered to all City Depa rtments to provide new perspectives to data driven decision-making.

3. Implemented innovative and em erging technology solutions to increase efficiency and effectiv
eness of City services.

4. Plan of EV stations transformer for the ITC center.

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5. Embarked upon the development of a Community -Based Public/Private Partnership (P3) process to potentially fund green infrastructure projects throughout the City.

6. Developing Proposition 26 fees to fund the costs of NPDES inspection and plan review activities.

7. Continuing Implementation of the City Traffic Fee Ordinance.

8. Completed draft final plans for the Sherwood/Front St Ad aptive Traffic Signal System Project.

9. Implemented measures to more closely track revenue and manage the City’s Franchise Agreement for Solid Waste Services.

Excellent Infrastructure

1. Completed Mitigated Negative Declarati on for Boronda Road Improvements which provides increase capacity to four lanes and 5 new roundabouts at key intersections.

2. Begin construction of 2021 Chip Seal project City Wide.

3. Complete 80% design of San Juan Grade Road rehabilitation.

4. Continuing Development of City’s Active Transportation Plan.

5. Continue identifying funding for improvements for implementation of the East Alisal Corridor Plan.

6. Secured grant funding to stretch transportation dollars.

7. Hired consultant to update City Standard Plans and Specifications.

8. Updated Pavement Management System for future road maintenance.

9. Applied for HSIP Grants to fund a part of Williams Road Improvements.

10. Refreshed over 17,000 linear feet of crosswalks.

11 Complete Design of 2021 Slurry Seal Project City Wide.

12 Complete Design of Montebella Subdivision Slurry Seal project.

11. Complete Construction of East Alvin Drive Safe Routes to School Project.

12. Complete construction for North Main/Navajo traffic signal project.

13. Complete C
onstruction of Downtown Complete Street Project.

14. Awarded the bid for the traffic signal at Alisal Street and Murphy Street.

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15. Adopted the Vision Zero Plan to reduce severe injuries and fatalities on city streets.

16. Completed sludge removal project at the Industrial Wastewater Treatment Facility.

Labor Relations

The City completed negotiations with the two Fire units, the International Association of Fire Fighters (IAFF) and the Fire Supe rvisors Association. New Compensa tion Plans were approved for the unrepresented units consisting of Confidential Management, Confidential Non-Management, and most recently in February 2023, Department Di rectors. The City’s nego tiation team is starting negotiations with the three Service Employees International Union (SEIU) Local 521 units and with the Association of Management Personnel of Salinas (AMPS) on March 1, 2023. The MOUs for those four units expire June 30, 2023. The Salinas Police Officers Association MOU expires December 31,2023.

Acknowledgements

The preparation of this Annual Financial Report could not have been accomplished without the professional, efficient, and dedicated service of the staff of the Finance Department. In particular, I would like to acknowledge and give a very special thanks to Accounting Manager, Eric Burl, and Finance Management Analyst, Abe Pedroza, both of whom are dedicated to the sound fiscal management of the City. The entire Finance staff deserves a special word of thanks for another year of hard work and quality performance. I also wi sh to thank our audito rs, The Pun Group LLP, Accountants & Advisors, for their diligence, cooperation and assistance.

Sincere appreciation is also expressed to the City Manager and members of the City Council for their support in planning and conducting the financial operations of the City in a responsible, sustainable and progressive manner.

Respectfully submitted,

Jim Pia
Assistant City Manager / Acting Finance Director
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City of Salinas
List of Principal Officials
Carla Viviana Gonzalez Orlando Osornio
Councilmember Councilmember
District 1 District 4
Tony Barre ra Christie Crome e ne s
Councilmember Councilmember
District 2 District 5
Steve McShane Anthony Rocha
Councilmember Councilmember
District 3 District 6
Jim Pia David Jacobs
Assistant City Manager Public Works Director
Kristan Lundquist Megan Hunter
Library and Community Community
Services Director Development Director
Roberto Filice Sam Klemek
Chief of Police Fire Chief
Mark Roberts Marina Horta-Gallegos
Finance Director Human Resources
Director
Kimbley Craig
Ma yor
Steven S. Carrigan Christopher A. Callihan
City Manager City Attorney
xxvii
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CITY OF SALINAS
Organizational Chart
CITY

MANAGER

CITY COUNCIL

FINANCE
Accounting
Revenue &
Licensing
Information
Systems
Purchasing
Successor
Agency
FIRE

PUBLIC WORKS
Engineering &
Transportation
Environmental
Maintenance
Geographic
Information
Systems
Airport
POLICE

LIBRARY &

COMMUNITY

SERVICES
Library
Services
Parks & Sports
Administration
Youth Services
& Community
Engagement

COMMUNITY

DEVELOPMENT
Adv Planning &
Project
Implementation
Administration
Current
Planning
Permit
Services
Housing &
Community
Development
Code
Enforcement
Economic
Development
HUMAN

RESOURCES

CITY ATTORNEY
Administration
Division
City Clerk
Administration
Support
xxviii
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FINANCIAL SECTION
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INDEPENDENT AUDITORS’ REPORT

To the Honorable Mayor and Members
of the City Council of the City of Salinas
Salinas, California

Report on the Audit of the Financial Statements

Opinions

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Salinas, California (the “City”), as of and for the year ended June 30, 2022, and the related notes to the basic 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, 2022, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting prin ciples generally accepted in the United States of America.

Basis for Opinions

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to fi nancial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States. Our responsibilities under tho se standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements secti on of our report. We are requi red 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 prep aration and fair presentation of the fi nancial statements in accordance with accounting principles generally accepted in the United Stat es 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 wh ether 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.

DRAFT 09.08.2023
To the Honorable Mayor and Members
of the City Council of the City of Salinas
Salinas, California

Page 2 ends

2 Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whet her the financial statements as a whole are free from material misstatement, whether due to fraud or error, a nd 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 ge nerally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The ri sk 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 w ould influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with generally accepted auditing standards 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 c ontrol relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.

 Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

 Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.

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-re lated matters that we identified during the audit.

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, Budgetary Comparison Sc hedules, Schedules of Changes in Net Pension Liability a nd Related Ratios, Schedules of Proportionate Share of the Net Pension Liability and Related Ratios, Schedules of Pension Contributions, Schedule of Changes in Net OPEB Liability and Related Ratios, and Schedule of OPEB Contributions be presented to supplement the basic financial statements. Such information is the responsibility of mana gement 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 b asic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the inform ation 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 expr ess an opinion or provide any assurance on the information because the limited procedures do not provide us with su fficient evidence to express an opinion or provide any assurance.

DRAFT 09.08.2023
To the Honorable Mayor and Members
of the City Council of the City of Salinas
Salinas, California

Page 3 ends

3 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 accompanying Comb ining and Individual Fund Statements and Schedules are presented for purposes of additional analysis and are not a re quired 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 informa tion 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 direc tly to the underlying accounting and othe r records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Combining and Individual Fund Statements and Schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information

Management is responsible for the othe r information included in the annual report. The other information comprises the Introductory Section, the Combin ing Balance Sheet – General, Measure E, & Measure G Funds, the Combining Statement of Revenues, Expenditures, and Changes in Fund Balance – General, Measure E, & Measure G Funds, the Budgetary Comparison Schedule – Measure E, the Budgetary Comparison Schedule – Measure G, and the Claims Development for Internal Service Funds Schedules but does not include the basic financial statements and our auditors’ report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.

In connection with our audit of the basi c financial statements, our responsibility is to read the other information and consider whether a material inconsistenc y exists between the other information and the basic financial statements, or the other information otherwise appears to be materially mi sstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated __________, 2023, on our consideration of the City’s internal control over financia l reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreemen ts and other matters. The purpose of that report is solely to describe the scope of our testing of internal control ove r financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Santa Ana, California
__________, 2023
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CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2022

5 This analysis of the City of Salinas (City) fi nancial performance provides an overview of the City’s financial activities for the fiscal year ended June 30, 2022. Please read it in conjunction with the accompanying transmittal letter, the basic financial statements and the accompanying notes to the financial statements.

A. FINANCIAL HIGHLIGHTS
 At June 30, 2022, the City’s net position (excess of assets over liabilities) was $226.1 million.

Of this amount, $329.1 million are invested in capital assets and restricted assets, which is offset by a deficit of $103.0 million classified as unrestricted assets.  During the fiscal year ended June 30, 2022, the City’s total net position increased by $25.5 million from various sources.
 During the fiscal year fund balances i n creased $7.5 million to $143.3 million for governmental funds, of which $137.0 million is either nonspendable, restricted, committed, or assigned and thus unavailable, leaving $6.3 million as unassigned and available.  During the fiscal year the General Fund, Meas ure E, and Measure G fund balance increased $7.5 million to $69.9 million of which $60.3 million is either nonspendable, restricted, committed, or assigned. Unassigned General Fund, Measure E & Measure G fund balance was $9.6 million.
 The City’s total liabilities decreased by $66.3 million during the current fiscal year.

Governmental Activities decreased by $59.6 million, and Business-type Activities decreased by $6.7 million. The lo ng-term debt decrease d $103.2 million primarily as a result of the actuarial valuation of the Ca lPERS retirement system which decreased the Net Pension Liability by $73.4 million. Th is decrease in long-ter m debt was offset by increases in other liabilities.
 The City’s capital assets, net of depreciation, decreased $8.7 million to $407.2 million.  During the fiscal year $25 million in Net position was reclassified from business-type activities to governmental activities due to an accounting change.

B. OVERVIEW OF FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements, which are comprised of three components: 1) Government-Wide Financial Statements, 2) Fund Financial Statements and 3) Notes to the Basic Financial Statements.

The basic financial statements include the City (primary government) and all legally separate entities (component units) for which the g overnment is financially accountable.

This report also contains other supplementary information in addition to the basic financial statements for further information and analysis.

DRAFT 09.08.2023

CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2022

6 Government-Wide Financial Statements
The Government-Wide Financial Statements present the financial picture of the City and provide readers with a broad view of the City’s finances. These statements present governmental activities and business-type activities separately and include all assets of the City (including infrastructure) as well as all liabilities (including long-term debt ). Additionally, certain interfund receivables, payables and other interfund activity have been eliminated as prescribed by GASB Statement No.

34. The Statement of Net Position and the Statement of Activities and Changes in Net Position report information about the City as a whole and about its activities. These statements include all assets and liabilities of the City using the accr ual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year’s revenues and expenses are taken into account, regardless of when cash is received or paid.

The Statement of Net Position presents information on all of the City’s assets and liabilities, with the difference between the two reported as net position. Over time, changes in net position may serve as a useful indicator of whether the fi nancial position of the City is improving or deteriorating.

The Statement of Activities and Changes in Net Position presents information showing how the City’s net position changed during the year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of timing of related cash flows.

In the Statement of Net Position and the Statement of Activities and Changes in Net Position, we separate the City activities as follows:

Governmental Activities—All of the City’s basic services are reported in this category, including general government, public safety, community development, public works, recreation, and library. Property taxes, sales ta xes, user fees, interest income, franchise fees, state grants and federal grants finance these activities. The City’s insurance programs (health, worker’s compensation, liability and property damage) are accounted for in internal service funds, but are reported as part of governmental activities since these programs are used primarily for governmental activities.

Business-Type Activities—The City charges a fee to customers to cover all or most of the costs of certain services it provides. The Ci ty’s Industrial Wastewater System, Airport, Golf Courses, Sanitary Sewer, Hitchcock Wa ter Utility, Storm Sewer, Permit Service, Landfill and Parking District activities are reported as business-type activities.

Fund Financial Statements
The Fund Financial Statements provide detailed information about the City’s major funds — not the City as a whole. Some funds are required to be established by State law and by bond covenants.

However, management establishes many other fu nds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants and other money.

DRAFT 09.08.2023

CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2022

7 The Fund Financial Statements include statements for each of the three categories of activities – governmental, proprietary and fiduciary. The governmental funds are prepared using the current financial resources measurement focus and modified accrual basis of acc ounting. The proprietary funds are prepared using the economic resources measurement focus and the accrual basis of accounting. The fiduciary funds are agency funds, pension trust fund and private purpose trust funds, which only report assets and liabilities and do not have a measurement focus.

Governmental Funds - The Governmental Funds are used to account for essentially the same functions reported as governmental activities in the Government-Wide Financial Statements. However, unlike the Government-Wide Financial Statements, Governmental Funds Financial Statements focus on current financial resources, which emphasize near-term inflows and outflows of expendable resources as well as balances of expendable resources at the end of the fiscal year. This information is essential in evaluating the City’s near-term financial requirements.

In order to better understand the City’s long-term and short-term requirements, it is useful to compare the City’s Governmental Funds Statements with the governmental activities in the Government-Wide Financial Statements. A reconciliation is provided for the Governmental Fund Balance Sheet and the Statement of Revenues, Expenditures and Changes in Fund Balances to facilitate this comparison.

The major governmental funds include the General, Measure E and Measure G Funds, Development Fees Special Revenue Fund, and the Special Construction Assistance Special Revenue Fund, which are reported in detail in the Governmental Fund Financial Statements. All other funds are shown in the aggregate as other non-major governmental funds.

Individual fund data for other non-major gov ernmental funds is provided in the form of supplementary information elsewhere in the report.

Proprietary Funds - The City maintains two types of proprietary funds, enterprise funds and internal service funds. Enterprise funds are used to report the same func tions presented as business-type activities in the Government-Wide Financial Statements. The City uses enterprise funds to account for its Airport, Industrial Wastewater System, Golf Courses, Sanitary Sewer, Parking, Hitchcock Water Well Utility, Storm Sewer, Permit Services and Landfill activ ities. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its general city insurance operations.

Because these services predominantly benefit the governmental rather than business-type activities, they have been included within go vernmental activities in the Government-Wide Financial Statements.

Proprietary funds provide the same type of information as the Government-Wide Financial Statements, only in more detail. A ll enterprise funds are presented in detail as major enterprise funds. The internal service fund s are combined into a single aggregated presentation in the proprietary fund financial statem ents. Individual fund data for th e internal serv ice funds is provided in the form of supplementary information elsewhere in the report.

DRAFT 09.08.2023

CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2022

8 Fiduciary Funds - The City is the trustee, or fiduciary, for certain funds held on behalf of external parties. The City’s fiduciary activities are reported in separate Statements of Fiduciary Net Position. These activities are excluded from the C ity’s other financial statements because the resources of these funds are not available to support the City’s own programs. The City is responsible for ensuring that these funds are used for their intended purpose.

Notes to the Basic Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in the Government-Wide and Fund Financial Statements.

Required Supplementary Information
In addition to the basic financial statements , this report also presents certain Required Supplementary Information including the City’s budgetary comparison schedules for the General, Measure E and Measure G Funds and the Development Fees major special revenue fund, and information concerning the progre ss in funding its obligation to pr ovide pension benefits to its employees.

Other Supplementary Information
Combining statements for the other non-major governmental funds, Internal Service Funds, Fiduciary Funds and General, Measure E and Measure G Funds are presented immediately following the Required Supplementary Information as supplementary information.

C. GOVERNMENT-WIDE FINANCIAL ANALYSIS
The Management Discussion and Analysis (MD&A) includes comparative data for analysis.

Statement of Net Position
Net position is a good indicator of the City’s fina ncial position. During this fiscal year, the net position of the City increased $25.5 million (1 2.7%) over the prior ye ar from $201.1 to $226.1 million.

At June 30, 2022, the largest portio n of net position (112%) consists of the City’s investment in capital assets net of related debt. This component portrays the to tal amount of funds required to acquire those assets less any related outstanding debt used for such acquisition. The City uses these capital assets to provide services to residents. The capital assets of the City are not sources of income for repayment of debt as most assets are not revenue generatin g and generally are not liquidated to repay debt. Debt se rvice payments are funded from ot her resources available to the City.

DRAFT 09.08.2023

CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2022

9 The following is the Condensed Statement of Net Position for the fiscal years ended June 30, 2022 and 2021:

Percent
2022 2021 2022 2021 2022 2021 of Total
Assets:

Current assets 252,665,852 $ 196,759,576 $ 18,311,311 $ 12,424,184 $ 270,977,163 $ 209,183,760 $ 38.6 % Other assets 19,100,010 31,380,413 5,161,303 139,120 24,261,313 31,519,533 3.5 % Capital assets, net 334,963,510 305,549,059 72,245,474 110,385,369 407,208,984 415,934,428 58.0 % Total assets 606,729,372 533,689,048 95,718,088 122,948,673 702,447,460 656,637,721 100.0 % Deferred outflows of resources
Related to pension and OPEB 38,677,100 50,927,609 924,257 1,414,097 39,601,357 52,341,706 98.5 % Loss on refunding of debt 513,705 554,334 103,051 722,009 616,756 1,276,343 1.5 % Total deferred outflows of resources 39,190,805 51,481,943 1,027,308 2,136,106 40,218,113 53,618,049 100.0 % Liabilities :

Current liabilities 10,338,086 13,779,497 2,796,129 1,024,177 13,134,215 14,803,674 3.0 % Other liabilities 63,428,897 34,814,156 2,785,000 - 66,213,897 34,814,156 15.3 % LTD - due in one year 17,738,848 10,022,245 1,746,577 2,270,794 19,485,425 12,293,039 4.5 % Long-term liabilities 308,075,303 400,600,059 25,896,303 36,604,855 333,971,606 437,204,914 77.2 % Total liabilities 399,581,134 459,215,957 33,224,009 39,899,826 432,805,143 499,115,783 100.0 % Deferred inflows of resources
Related to pension, OPEB and leases 76,477,688 9,688,905 7,302,468 314,451 83,780,156 10,003,356 100.0 % G ain on refunding of debt - 13,862 - - - 13,862 - Total deferred inflows of resources 76,477,688 9,702,767 7,302,468 314,451 83,780,156 10,017,218 100.0 % Net Position:

Net investment in Capital Assets 204,559,079 167,726,772 47,973,525 77,467,957 252,532,604 245,194,729 111.7 % Restricted 76,573,216 80,741,294 - 6,807 76,573,216 80,748,101 33.9 % Unrestricted (111,270,940) (132,215,799) 8,245,394 7,395,738 (103,025,546) (124,820,061) (45.6)% Total Net Position 169,861,355$ 116,252,267$ 56,218,919$ 84,870,502$ 226,080,274$ 201,122,769$ 100.0 % City of Salinas
Condensed Statements of Net Position
June 30, 2022
G overnm ental Activities Business-type Activities Total DRAFT 09.08.2023

CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2022

10 Statement of Activities
The following is the Condensed Statement of Activities and Changes in Net Position for the fiscal years ended June 30, 2022 and 2021

Total revenues increased from the prior year by $21.0 million, or 10.1% and total expenses increased by $10.8 million from prior year, or 5.6%. Further analysis is provided within the governmental and business-type activities sections.

2022 2021 2022 2021 2022 2021
Revenues
Program Revenues:

Charges for Services 12,087,995$ 9,531,993$ 13,657,537$ 12,364,295$ 25,745,532$ 21,896,288$ Operating Grants & Contributions 28,921,586 28,601,755 - 901 28,921,586 28,602,656 Capital G rants & Contributions 14,445,606 8,984,014 - 947,593 14,445,606 9,931,607 G eneral Revenues:

Taxes 157,348,620 144,501,118 - - 157,348,620 144,501,118 Unrestricted Investment Earnings (1,572,611) 777,268 (37,810) 87,962 (1,610,421) 865,230 Gain on Disposal of Assets (34,879) 10,926 - 26,200 (34,879) 37,126 Payment from Fiduciary Fund 951,900 - 951,900 - Miscellaneous 1,220,103 1,834,421 1,662,671 - 2,882,774 1,834,421 Total Revenues 212,416,420 194,241,495 16,234,298 13,426,951 228,650,718 207,668,446 Expe ns e s
G eneral G overnment 43,209,427 32,620,008 3,386,841 2,289,202 46,596,268 34,909,210 Public Safety 91,246,533 100,731,223 - - 91,246,533 100,731,223 Public Works 34,883,172 25,350,203 11,549,620 16,639,681 46,432,792 41,989,884 Recreation 8,022,645 4,185,382 496,722 8,022,645 4,682,104 Library 5,377,321 5,079,784 - - 5,377,321 5,079,784 Interest 4,808,025 4,954,767 709,198 - 5,517,223 4,954,767 Total Expenses 187,547,123 172,921,367 15,645,659 19,425,605 203,192,782 192,346,972 Increase (decrease) in Net Position
before Contributions and
Trans fers 24,869,297 21,320,128 588,639 (5,998,654) 25,457,936 15,321,474 Transfers 4,243,402 (3,524,360) (4,243,402) 3,524,360 - - 4,243,402 (3,524,360) (4,243,402) 3,524,360 - - Increase (decrease) in Net Position 29,112,699 17,795,768 (3,654,763) (2,474,294) 25,457,936 15,321,474 Net Pos ition - Beginning of Year 116,252,267 98,456,499 84,870,502 85,740,574 201,122,769 184,197,073 Prior Period Adjustment 24,496,389 - (24,996,820) - (500,431) - Net Position -
Beginning of Year as restated 140,748,656 98,456,499 59,873,682 87,344,796 200,622,338 185,801,295 Net Position - Ending 169,861,355$ 116,252,267$ 56,218,919$ 84,870,502$ 226,080,274$ 201,122,769$ G overnm ental Activities Business-type Activities Total City of Salinas
Condensed Statement of Activities and Changes in Net Position For the Fiscal Y ear E nd ed June 30, 2022
DRAFT 09.08.2023

CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2022

11 Governmental Activities
Governmental activities resour ces total $212.4 million. The City ’s governmental activities increased net position by $29.1 million. The follow ing charts highlight th e sources of revenues and purpose of expenses:

Total expenses for governmental activities, ex cluding transfers and contributions, were $187.5 million including interest on long-term debt of $4.8 million.

DRAFT 09.08.2023

CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2022

12 Functional expenses for the year ended June 30, 2022 were as follows:

Public safety continues to be the single highe st expense for the City followed by general government. Net cost of services, after subtracting fees and grant revenues total $132.1 million.

Business-Type Activities
The City’s business-type activities net position was $56.2 million, a decr ease of $3.6 million for the fiscal year. Total revenues fo r business-type activities were $13.6 million. Total expenses for the business-type activities were $14.9 million during FY 2021-22.

Total Cost of
Services Percent
Net Cost of
Services Percentage
General government 43,209,427$ 23.0 % 13,706,071$ 10.4 % Public safety 91,246,533 48.7 % 86,324,078 65.4 % Public works 34,883,172 18.6 % 14,887,126 11.3 % Recreation 8,022,645 4.3 % 7,503,502 5.7 % Library 5,377,321 2.9 % 4,863,134 3.7 % Interest 4,808,025 2.6 % 4,808,025 3.6 % Total 187,547,123 $ 100 % 132,091,936$ 100 % DRAFT 09.08.2023

CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2022

13 D. FUND FINANCIAL STATEMENT ANALYSIS
The City uses fund accounting to ensure and dem onstrate compliance with finance-related legal requirements.

Governmental Funds
The focus of the City’s governmental funds is to provide information on short-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.

As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $143.3 million. Of the tota l fund balance, $4.2 million was nonspendable and indicates the resources are nonspendable loans, notes, land and property held for resale and are not anticipated to be liquidated in the near-term. Of the total fund balance, $79.0 million was restricted fund balance the use of which is constrained by external parties, resource providers, constitutions or enabling legislations. Fund balance of $38.5 million was committee the City Council for specific purposes. The remainder of the restrictions are listed in the Fund Balance footnote.

The General Fund is the chief operating fund of the City. The General, Measure E and Measure G Funds’ fund balance increased by $7.5 million in FY 2021-22 to $69.9 million, of which $2.8 million was nonspendable and indi cates the resources are nonspe ndable advances and are not anticipated to be liquidated in the near-term. The $36.4 million committed fund balance is committed for capital projects and is limited to specific purposes as defined in the City Charter or through a formal budgetary action of the City Council occurring through adoption of an ordinance or resolution. Assigned fund balance totaled $15.3 million has been allocated by the City Council for specific capital an d operational needs. The remainin g fund balance of $9.5 million is unassigned.

Proprietary Funds
The City’s proprietary funds provide the same type of information found in the government-wide financial statements but in more detail. Factors concerning these funds have been addressed in the discussion of Government-Wide Financial Analysis.

E. GENERAL FUND BUDGE TARY HIGHLIGHTS
The final amended General, Measure E, and Measure G Fund revenue budget, including transfers in, totaled $154.8 million and the expenditure budget totaled $183.1 million including transfers out. Transfers out are budgeted mo stly for capital projects a nd the funds are already on-hand.

Transfers out to the Capital Projects Fund will occur over multiple years.

Significant Appropriations Increases/Decreases
Appropriations during the year were adjust ed upward by $22.0 million, of which $19.9 million were related to transfers for capital projects and $2.1 million in operational changes. Estimated revenue were not adjusted.

DRAFT 09.08.2023

CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2022

14 F. CAPITAL ASSETS AND LONG-TERM OBLIGATIONS
Capital Assets Including Infrastructure
The following is a summary of the City’s capital assets as of June 30, 2022 and 2021:

Capital assets, including infrastructure assets of the City, are those assets which are used in the performance of the City’s functi ons. At June 30, 2022, net capital assets of the Governmental Activities totaled $334.9 million and the net capital as sets of the Business-type Activities totaled $72.2 million. During FY 2002-03, American Appraisal Associates were hired to conduct an inventory and valuation of all th e City’s capital assets. Finance Department staff maintains and updates the Capital Assets inventory by recording all assets acquired or retired at the end of every fiscal year and performs rotating spot inventorie s each year. The City has elected to report and depreciate all infrastructures.

Governmental activities total assets increased by acquired $158.6 million. of which $152.0 million are capital assets that were reclassified from bus iness-type activities to governmental activities. with an offsetting impact on business-type activities.
2022 2021 2022 2021 2022 2021
Land 25,899,986$ 25,899,986$ 3,632,339$ 3,632,339$ 29,532,325$ 29,532,325$ Buildings 135,129,108 46,337,340 25,888,821 27,523,054 161,017,929 73,860,394 Improvements 50,677,352 15,766,022 15,461,105 26,708,254 66,138,457 42,474,276 Equipment 45,951,417 42,133,934 7,779,509 9,332,629 53,730,926 51,466,563 Infrastructure 421,150,155 255,168,975 102,709,198 237,688,120 523,859,353 492,857,095 Right-to-use assets 539,511 - - - 539,511 - Construction in Progress 24,424,091 159,896,482 2,947,566 5,259,442 27,371,657 165,155,924 703,771,620 545,202,739 158,418,538 307,895,568 862,190,158 855,346,577 Accumulated Depreciation (368,808,110) (239,653,680) (86,173,064) (199,758,469) (454,981,174) (439,412,149) 334,963,510$ 305,549,059$ 72,245,474$ 113,916,612$ 407,208,984$ 415,934,428$ City of Salinas' Capital Assets
G overnmental Activities Business-type Activities Totals DRAFT 09.08.2023

CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2022

15 Long-Term Obligations
As of June 30, 2022, the City had $341.5 million in long-term debt.

Further details on the City of Salinas’ long-term debt can be found in Note 18 to the financial statements.

G. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
The City’s underlying structural deficit reported last year has improved. The main reason for the structural deficit, where the expenditure growth exceeds the revenue growth continually each year, is a result of the compensation costs growing faster than the projected revenue. Controlling the main cost drivers of wages, pension, health insurance, and workers’ compensation continues to be the key to managing this projected problem. Additionally, the position of the nation, state and local economy, and any recessionary fact ors, will influence future budgets. The City has been implementing the Salinas Plan and is achieving results that are helping with the structural deficit, such as eliminating flex and management leav e for all thirteen barg aining units, saving around $2,316,000 each year going forward.

The Salinas Plan and Fiscal Sustainability

The Salinas Plan is a Ten-Year Plan designed to provide the City with a path toward maintaining a long-term balanced budget while preserving City services and addressing the affordable housing crisis. The plan provides 32 recommended initiatives. The 32 recommended initiatives are now in various stages of progress and ar e described in more detail in the Salinas Plan section of this budget.
2022 2021 2022 2021 2022 2021
Annual Leave 9,299,959$ 12,375,926$ 438,310$ 607,904$ 9,738,269$ 12,983,830$ Insurance Claims 31,290,195 29,813,871 - - 31,290,195 29,813,871 Capital Leases 51,414,419 65,977,431 8,413,000 9,703,167 59,827,419 75,680,598 Loans and Notes - - 1,015,000 1,953,000 1,015,000 1,953,000 Revenue Bonds - - 13,310,000 14,425,000 13,310,000 14,425,000 Certificates of
Participation 56,590,000 55,620,000 - 6,260,000 56,590,000 61,880,000 Assessment District
Bonds 7,715,000 8,970,000 - - 7,715,000 8,970,000 Unamortized Bond
Premium 7,092,128 7,548,231 - 272,085 7,092,128 7,820,316 Unamortized Bond
Discount (330,999) (344,239) - - (330,999) (344,239) Subtotal 163,070,702 179,961,220 23,176,310 33,221,156 186,247,012 213,182,376 Net OPEB Liability 16,238,956 23,275,132 819,308 1,486,473 17,058,264 24,761,605 Net Pension Liability 136,255,627 207,385,952 1,900,685 4,168,020 138,156,312 211,553,972 Total outstanding debt 315,565,285$ 410,622,304$ 25,896,303 $ 38,875,649 $ 341,461,588 $ 449,497,953$ Governmental Activities Business-type Activities Totals City of Salinas' Outstanding Debt
DRAFT 09.08.2023

CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2022

16 Major Projects and Funding

Amid challenges, the City continues deploying funds for various project City-wide. The City recently appropriated $51.6 million in American Rescue Plan Act (ARPA) funds for 19 projects in the following four areas: public facility improvements, public infrastructure, investments in water and sewer, and to address homelessness and housing issues.

H. REQUEST FOR INFORMATION
This financial report is designed to provide our residents, taxpayers, customers, and investors and creditors with a general overview of the City ’s finances and to demonstrate the City’s accountability for the money it receives. If you have questions about this report or need additional financial information, c ontact the City of Salinas Financ e Department, 200 Lincoln Avenue, Salinas, California 93901.

DRAFT 09.08.2023

BASIC FINANCIAL STATEMENTS
17 DRAFT 09.08.2023
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18 DRAFT 09.08.2023

GOVERNMENT-WIDE FINANCIAL STATEMENTS
19 DRAFT 09.08.2023
Governmental Business-Type
Activities Activities Total
ASSETS
Current assets:

Cash and investments 216,282,792 $ 16,403,450 $ 232,686,242 $ Receivables, net of allowance:

Accounts receivable, net 504,354 1,434,329 1,938,683 Taxes receivable 19,437,488 - 19,437,488 Assessments receivable 8,290,000 - 8,290,000 Due from outside agencies 12,880,254 - 12,880,254 Leases receivable 561,725 429,471 991,196 Interest receivable 1,243,616 44,061 1,287,677 Internal balances:

Due from (to) other funds 1,755,623 (1,755,623) - Advances to (from) other funds 2,785,000 (2,785,000) - Total current assets 263,740,852 13,770,688 277,511,540 Noncurrent assets:

Restricted cash and investments 1,077,537 6,987 1,084,524 Receivables, net of allowance:

Loans receivable 83,139 - 83,139 Leases receivable 5,484,334 5,154,316 10,638,650 Land and properties held for resale 1,380,000 - 1,380,000 Capital assets:

Non-depreciable 50,324,077 6,579,905 56,903,982 Depreciable, net 284,639,433 65,665,569 350,305,002 Total capital assets 334,963,510 72,245,474 407,208,984 Total noncurrent assets 342,988,520 77,406,777 420,395,297 Total assets 606,729,372 91,177,465 697,906,837

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions 33,428,945 659,470 34,088,415 Related to OPEB 5,248,155 264,787 5,512,942 Loss on refunding of debt 513,705 103,051 616,756 Total deferred outflows of resources 39,190,805 1,027,308 40,218,113 June 30, 2022
Statement of Net Position
City of Salinas
Primary Government
See accompanying Notes to the Basic Financial Statements. 20 DRAFT 09.08.2023
Governmental Business-Type
Activities Activities Total

LIABILITIES
Current liabilities:

Accounts payable 9,644,490 731,799 10,376,289 Interest payable 647,315 259,822 907,137 Deposits payable 46,281 48,885 95,166 Unearned revenue 63,428,897 - 63,428,897 Long-term debt - due within one year 7,923,883 1,637,000 9,560,883 Compensated absences - due within one year 2,324,983 109,577 2,434,560 Insurance claims payable - due within one year 7,489,982 - 7,489,982 Total current liabilities 91,505,831 2,787,083 94,292,914 Noncurrent liabilities:

Long-term debt - due in more than one year 122,480,548 22,738,000 145,218,548 Compensated absences - due in more than one year 9,299,959 438,310 9,738,269 Insurance claims payable - due in more than one year 23,800,213 - 23,800,213 Net pension liability 136,255,627 1,900,685 138,156,312 Net OPEB liability 16,238,956 819,308 17,058,264 Total noncurrent liabilities 308,075,303 25,896,303 333,971,606 Total liabilities 399,581,134 28,683,386 428,264,520

DEFERRED INFLOWS OF RESOURCES
Related to pensions 59,208,218 1,264,352 60,472,570 Related to OPEB 11,250,198 567,609 11,817,807 Related to leases 6,019,272 5,470,507 11,489,779 Total deferred inflows of resources 76,477,688 7,302,468 83,780,156

NET POSITION
Net investment in capital assets 204,559,079 47,973,525 252,532,604 Restricted for:

Housing 1,169,045 - 1,169,045 Capital projects 14,678,399 - 14,678,399 Public safety 2,520,642 - 2,520,642

Highways and streets 24,061,474 - 24,061,474 Debt service 4,856,210 - 4,856,210 Special programs 29,287,446 - 29,287,446 Total restricted 76,573,216 - 76,573,216 Unrestricted (deficit) (111,270,940) 8,245,394 (103,025,546) 169,861,355$ 56,218,919$ 226,080,274$ Total net position Primary Government
City of Salinas
Statement of Net Position (Continued)
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 21 DRAFT 09.08.2023
Operating Capital
Charges for Grants an d Grants and
Functions/Programs Expenses Services Contributions Contributions Total Primary government:

Governmental activities:

General government 43,209,427$ 5,304,557 $ 20,842,717 $ 3,356,082 $ 29,503,356 $ Public safety 91,246,533 2,173,480 2,720,849 28,126 4,922,455 Public works 34,883,172 4,471,602 4,475,055 11,049,389 19,996,046 Recreation 8,022,645 99,873 407,261 12,009 519,143 Library 5,377,321 38,483 475,704 - 514,187 Interest on long-term debt 4,808,025 - - - - Total governmental activities 187,547,123 12,087,995 28,921,586 14,445,606 55,455,187 Business-type activities:

Airport 2,481,106 2,083,091 - - 2,083,091 Industrial Waste 2,200,902 3,079,518 - - 3,079,518 Sanitary Sewer 4,673,935 3,773,089 - - 3,773,089 Downtown Parking District 2,193,677 362,087 - - 362,087 Permit Services 3,386,841 4,359,752 - - 4,359,752 Total business-type activities 14,936,461 13,657,537 - - 13,657,537 Total primary government 202,483,584$ 25,745,532 $ 28,921,586 $ 14,445,606 $ 69,112,724 $

City of Salinas
Statement of Activities and Changes in Net Position
For the Year Ended June 30, 2022
Program Revenues
See accompanying Notes to the Basic Financial Statements. 22 DRAFT 09.08.2023
Governmental Business-Type
Functions/Programs Activities Activities Total
Primary government:

Governmental activities:

General government (13,706,071)$ - $ (13,706,071)$ Public safety (86,324,078) - (86,324,078) Public works (14,887,126) - (14,887,126) Recreation (7,503,502) - (7,503,502) Library (4,863,134) - (4,863,134) Interest on long-term debt (4,808,025) (709,198) (5,517,223) Total governmental activities (132,091,936) (709,198) (132,801,134) Business-type activities:

Airport - (398,015) (398,015) Industrial Waste - 878,616 878,616 Sanitary Sewer - (900,846) (900,846) Downtown Parking District - (1,831,590) (1,831,590) Permit Services - 972,911 972,911 Total business-type activities - (1,278,924) (1,278,924) Total primary government (132,091,936) (1,988,122) (134,080,058) General Revenues and Transfers:

General revenues:

Taxes:

Property taxes 34,755,630 - 34,755,630 Sales taxes 88,968,698 - 88,968,698 Utility user tax 12,106,526 - 12,106,526 Business tax 17,835,145 - 17,835,145 Transient occupancy tax 3,682,621 - 3,682,621 Total taxes 157,348,620 - 157,348,620 Revenue from Fiduciary Funds - 951,900 951,900 Investment earnings (loss) (1,572,611) (37,810) (1,610,421) Gain (loss) on sale of capital assets (34,879) - (34,879) Miscellaneous revenue 1,220,103 1,662,671 2,882,774 Transfers 4,243,402 (4,243,402) -
Total general revenues and transfers 161,204,635 (1,666,641) 159,537,994 Change in net position 29,112,699 (3,654,763) 25,457,936 Net Position:

Beginning of year, as restated (Note 23) 140,748,656 59,873,682 200,622,338 End of year 169,861,355$ 56,218,919 $ 226,080,274 $ For the Year Ended June 30, 2022
Statement of Activities and Changes in Net Position (Continued) City of Salinas
Net (Expense) Revenue
and Changes in Net Position
See accompanying Notes to the Basic Financial Statements. 23 DRAFT 09.08.2023
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24 DRAFT 09.08.2023

FUND FINANCIAL STATEMENTS
25 DRAFT 09.08.2023
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26 DRAFT 09.08.2023

GOVERNMENTAL FUNDS FINANCIAL STATEMENTS
General Fund - This fund accounts for all financial resources necessary to carry out basic governmental activities of the City that are not accounted for in another fund. This fund supports essential City services such as police and fire protection, street maintenance, libraries, parks, and open space maintenance.

SPECIAL REVENUE FUNDS
Special revenue funds are used to account for specific revenues that are legally restricted to expenditures for specified purposes. The following funds have been classified as major special revenue funds:

American Rescue Plan Act (ARPA) Special Revenue Fund - On March 11, 2021, President Biden signed the American Rescue Plan Act, which will provide the City with approximately $51 million in relief funds. This fund accounts for the revenues and expenditures of ARPA proceeds.

Housing and Urban Development Grant Special Revenue Fund - This fund accounts for the use of Community Development Block Grant funds received from the federal government. Other revenues in this fund include repayments of commercial and residential loans and rental income from City property. Funds are used for programs or projects that increase affordable housing and benefit people with special needs such as senior and handicapped citizens. 27 DRAFT 09.08.2023
American Housing
Rescue Plan Act and Urban
(ARPA) Development Grant Non-major Total
General Special Revenue Special Revenue Governmental Governmental Fund Fund Fund Funds Funds
ASSETS
Cash and investments 61,594,027 $ 51,179,200 $ 4,961,985 $ 74,555,184 $ 192,290,396 $ Receivables, net:

Accounts 504,354 - - - 504,354 Taxes 19,437,488 - - - 19,437,488 Interest 223,832 - 874 1,001,872 1,226,578 Due from outside agencies 75,000 - 5,111,387 7,693,867 12,880,254 Assessments - - - 8,290,000 8,290,000 Leases 2,004,626 - - 4,041,433 6,046,059 Due from other funds 8,106,123 - - 1,364,533 9,470,656 Advances to other funds 2,785,000 - - - 2,785,000 Restricted cash and investments - - - 686,637 686,637 Loans and notes receivable, net of allowance - - 66,568 16,571 83,139 Land and properties held for resale - - - 1,380,000 1,380,000 Total assets 94,730,450$ 51,179,200 $ 10,140,814 $ 99,030,097 $ 255,080,561 $

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 5,553,370 $ 303,271 1,078,166 2,546,746 $ 9,481,553 $ Due to other funds 17,171,126 - 4,012,495 3,362,874 24,546,495 Deposits payable 46,281 - - - 46,281 Unearned revenues - 50,875,929 4,078,807 8,474,161 63,428,897 Total liabilities 22,770,777 51,179,200 9,169,468 14,383,781 97,503,226

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - 3,743,533 4,487,104 8,230,637 Lease-related deferred inflows 1,975,003 - - 4,044,269 6,019,272 Total deferred inflows of resources 1,975,003 - 3,743,533 8,531,373 14,249,909

Fund Balances (Deficit):

Nonspendable 2,785,000 - 66,568 1,396,571 4,248,139 Restricted 6,000,000 - - 73,000,753 79,000,753 Committed 36,365,323 - - 2,141,985 38,507,308 Assigned 15,266,804 - - - 15,266,804 Unassigned (deficit) 9,567,543 - (2,838,755) (424,366) 6,304,422 Total fund balances (deficit) 69,984,670 - (2,772,187) 76,114,943 143,327,426 Total liabilities, deferred inflows of
resources, and fund balances 94,730,450$ 51,179,200$ 10,140,814$ 99,030,097$ 255,080,561$ Major Funds
City of Salinas
Balance Sheet
Governmental Funds
June 30, 2022
28 DRAFT 09.08.2023
Total Fund Balances - Total Governmental Funds 143,327,426$ Capital assets used in the governmental activities were not financial resources and therefore were not reported in the Governmental Funds Balance Sheet.

Non-depreciable/amortizable 50,324,077
Depreciable/amortizable, net 284,639,433
Total capital assets 334,963,510
Deferred inflows resulting fro m revenues that are not available to pay for current period expenditures are reported as unavailable in the Governmental Funds Balance Sheet. 8,230,637 Long-term liabilities are not due and payable in the current period and therefore were not reported in the Governmental Funds Balance Sheet.

Compensated absences - due within one year, net of $26,138 reported in the Internal Service Funds (2,298,845) Compensated absences - due in more than one year, net of $104,548 reported in the Internal Service Funds (9,195,411)
Insurance c
laims payable - due in more than one year (1,638,485)
Long-term debt - due within one year (7,923,883)
Long-term debt - due in more than one year (122,480,548) Total long-term liabilities (143,537,172)
Governmental funds report the effects of debt refundings and similar items when debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities for the following:

De
ferred loss on refunding of debt 513,705
Total 513,705
Interest payable on long-ter m debt did not require current financial resources. Therefore, interest payable was not reported as a liability in the governmental funds. (647,315) Net pension liability and total OPEB liability used in the governmental activities were not financial resources and therefore were not reported in the Governmental Funds Balance Sheet.

Net pens
ion liability, net of $696,803 reported in the Internal Service Funds (135,558,824) Net OPEB liability, net of $274,297 reported in the Internal Service Funds (15,964,659) Total net pension liability and net OPEB liability (151,523,483) Deferred outflows of resources related to OPEB and pensions are not available for current period and, therefore, are deferred in the governmental funds or not recorded in the governmental funds.

Deferred outflows of resources related to pensions, net of $241,766 reported in the Internal Service Funds 33,187,179
De
ferred outflows of resources related to OPEB, net of $88,648 reported in the Internal Service Funds 5,159,507 Total deferred outflows of resources 38,346,686
Deferred inflows of resources related to OPEB and pensions are not available fo r current period and, therefore, are deferred in the governmental funds or not recorded in the governmental funds.

Deferred inflows of resources related to pensions, net of $463,519 reported in the Internal Service Funds (58,744,699)
De
ferred inflows of resources related to OPEB, net of $190,030 reported in the Internal Service Funds (11,060,168) Total deferred inflows of resources (69,804,867)
Internal service funds are used by management to charge the cost o f information technology, vehicle replacement, fleet management and infrastructure to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net position. 9,992,228 Net Position of Governmental Activities 169,861,355$
Amounts reported for Governmental Activities in the Statement of Net Position were different because:

City of Salinas
Reconciliation of the Governmental Funds Balance Sheet
To the Government-Wide Statement of Net Position
June 30, 2022
29 DRAFT 09.08.2023
American Housing
Rescue Plan Act and Urban
(ARPA) Development Grant Non-major Total
General Special Revenue Special Revenue Governmental Governmental Fund Fund Fund Funds Funds
REVENUES:

Taxes 145,835,874 $ - $ - $ 535,460$ 146,371,334$ Taxes - special assessments - - - 749,723 749,723 Licenses and permits 11,477,723 - - 178,135 11,655,858 Intergovernmental 1,301,666 691,383 7,313,240 34,197,628 43,503,917 Charges for services 5,233,403 - - 2,546,586 7,779,989 Investment income (loss) (1,406,103) - (4,637) (810,543) (2,221,283) Rental income 325,113 - - 271,903 597,016 Fines and forfeitures 426,149 - - 310,441 736,590 Miscellaneous 1,014,576 - 585,715 3,605,272 5,205,563 Total revenues 164,208,401 691,383 7,894,318 41,584,605 214,378,707

EXPENDITURES:

Current:

General government 17,192,429 415,764 9,757,121 13,675,288 41,040,602 Public safety 82,456,087 2,986 - 3,798,288 86,257,361 Public works 12,877,048 224,521 - 8,305,410 21,406,979 Recreation 5,578,195 - - 625,184 6,203,379 Library 4,401,235 - - 358,281 4,759,516 Capital outlay
442,723 48,112 38,097 17,509,971 18,038,903 Debt service:

Principal 655,441 - - 14,512,279 15,167,720 Interest and fiscal charges 217,285 - - 5,257,521 5,474,806 Total expenditures 123,820,443 691,383 9,795,218 64,042,222 198,349,266

REVENUES OVER (UNDER) EXPENDITURES 40,387,958 - (1,900,900) (22,457,617) 16,029,441 OTHER FINANCING SOURCES (USES):

Proceeds from sale of capital assets 1 - - - 1 Transfers in 1,979,099 - 4,424 34,029,963 36,013,486 Transfers out (34,881,666) - - (9,669,718) (44,551,384) Total other financing sources (uses) (32,902,566) - 4,424 24,360,245 (8,537,897) NET CHANGE IN FUND BALANCES 7,485,392 - (1,896,476) 1,902,628 7,491,544 FUND BALANCES (DEFICIT):

Beginning of year, as restated (Note 23) 62,499,278 - (875,711) 74,212,315 135,835,882 End of year 69,984,670$ -$ (2,772,187)$ 76,114,943$ 143,327,426$ Major Funds
City of Salinas
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
For the Year Ended June 30, 2022
30 DRAFT 09.08.2023
Net Change in Fund Balances - Total Governmental Funds 7,491,544$ Governmental funds reported capital outlay as expenditures. However, in the Government-Wide Statement of Activities and Changes in Net Position the cost of those assets was allocated over their estimated useful lives as depreciation expenses. This is the amount of capital assets recorded in the current period. 7,438,217 Depreciation and amortization expense on capital assets was reported in the Government-Wide Statement of Activities and Changes in Net Position, but they did not require the use of current financial resources. Therefore, depreciation expense was not reported as expenditures in the Governmental Funds. (12,950,024) Retirement of capital assets created a loss on the Government-Wide Statement of Activities and Changes in Net Position. (34,880)
Repayment of long-term liabilities was an expenditures in governmental funds, but the repayment reduced long-term liabilities in the Government-Wide Statement of Net Position.

Principal payment of long-term debt 15,167,720
Amortization of bond premiu
m (714,948)
GASB 87 activity for did not require the use of current financial resources. (286,243) Interest expenses on long-term debt was reported in the Government-Wide Statement of Activities, but it did not require the use of current financial resources. This amount represented the changes in accrued interest from prior year. 50,816 Compensated absences expenses reported in the Government-Wide Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. 966,792 Claims payable expenses reported in the Government-Wide Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. 143,745 Revenues in the Government-Wide Statement of Activities that do not provide current financial resources and are not reported as revenue in the governmental funds. (61,405) Certain pension credits reported in the Government-Wide Statement of Activities do not provide current financial resources and therefore, are not reported as expenditures in governmental funds. 6,038,727 Certain OPEB expenses reported in the Government-Wide Statement of Activities do not require the use of current financial resources and therefore, are not reported as expenditures in governmental funds. (236,222) The internal service funds are used by management to charge the costs of fleet maintenance, facilities maintenance, and technology to individual funds. The net revenue of certain activities of internal service funds is reported with governmental activities. 6,098,860
Chan
ge in Net Position of Governmental Activities 29,112,699$ Amounts reported for Governmental Activities in the Statement of Net Position were different because:

City of Salinas
Reconciliation of the Governmental Funds Statement of Revenues, Statement of Activites and Changes in Net Position
For the Year Ended June 30, 2022
Expenditures, and Changes in Fund Balances to the Government-Wide 31 DRAFT 09.08.2023
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32 DRAFT 09.08.2023

PROPRIETARY FUNDS FINANCIAL STATEMENTS
Proprietary Funds are used to account for a government’s business-type activities (activities supported, at least in part, by fees or charges). Proprietary funds are segregated into Enterprise Funds and Internal Service Funds. Enterprise Funds are used to report business-type activities for which a fee is charged to external users for goods or services. Internal Service Funds on the other hand, are used primarily for services provided to internal users.

The City reports the following enterprise funds:

Airport Fund - This fund is used to account for the enterprise operations of the City-owned airport.

Industrial Waste Fund - This fund is used to account for the enterprise operations of the City-operated Industrial Wastewater Treatment Facility.

Sanitary Sewer Fund - This fund is used to account for the maintenance of the City's sanitary sewer collection system, which is funded by user fees and by the Monterey Regional Water Pollution Control Agency sewer user fees.

Downtown Parking District Fund - This fund was established to account for revenues, operating expenses and debt service associated with the City’s parking facilities. The City’s paid parking facilities include the Monterey Street Parking Structure, the Salinas Street Garage and four parking lots.

Permit Services Fund – This fund is used to account for the revenues and expenditures associated with providing permitting services to the community.

Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the government and to other government units, on a cost reimbursement 33 DRAFT 09.08.2023
Downtown
Industrial Sanitar y Parkin g
Airport Waste Sewer District
ASSETS
Current assets:

Cash and cash equivalents 2,007,103$ 8 ,933,064$ 1 ,377,472$ 764 ,768$ Receivables, net:

Accounts 118 ,435 347 ,872 818 ,958 148 ,766 Accrued interest 22,363 13 ,070 2 ,512 - Leases receivable 429,471 - - - Due from other funds - - - - Total current assets 2,577,372 9,294,006 2,198,942 913,534 Noncurrent assets:

Restricted cash and investments - - 6 ,987 - Leases receivable, long term 5,154,316 - - - Capital assets:

Non-depreciable 2,436,613 1,648,802 2,475,732 18,758 Depreciable, net 14,192,734 13,452,315 30,738,486 7,229,914 Total capital assets 16,629,347 15,101,117 33,214,218 7,248,672 Total noncurrent assets 21,783,663 15,101,117 33,221,205 7,248,672 Total assets 24,361,035 24,395,123 35,420,147 8,162,206

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions 109,932 65 ,947 263 ,788 - Related to OPEB 43 ,277 33 ,574 81 ,757 6 ,119 Loss on refunding of debt - - - 103,051 Total deferred outflows of resources 153,209 99,521 345,545 109,170

LIABILITIES
Current liabilities:

Accounts payable 105,856 222 ,732 172 ,883 108 ,271 Interest payable - 16,625 124 ,077 119 ,120 Due to other funds - 26 ,220 12 ,123 1 ,705,208 Deposits payable 48,885 - - - Compensated absences - due within one year 18,357 10 ,612 31 ,561 790 Long-term debt - due within one year - 478 ,000 560 ,000 599 ,000 Insurance claims payable - due within one year - - - - Total current liabilities 173,098 754,189 900,644 2,532,389 Noncurrent liabilities:

Advances from other funds - - - 2 ,785,000 Compensated absences - due in more than one year 73,427 42 ,450 126 ,242 3 ,164 Long term debt - due in more than one year - 1 ,015,000 13 ,310,000 8 ,413,000 Insurance claims payable - due in more than one year - - - - Net pension liability 316,839 190 ,069 760 ,274 - Net OPEB liability 133,907 103 ,885 252 ,974 18 ,935 Total noncurrent liabilities 524,173 1,351,404 14,449,490 11,220,099 Total liabilities 697,271 2,105,593 15,350,134 13,752,488

DEFERRED INFLOWS OF RESOURCES
Related to pensions 210,764 126 ,435 505 ,741 - Related to OPEB 92 ,770 71 ,970 175 ,258 13 ,118 Related to leases 5 ,470,507 - - - Total deferred inflows of resources 5,774,041 198,405 680,999 13,118

NET POSITION (DEFICIT)
Net investment in capital assets 16,629,347 13,608,117 19,344,218 (1,660,277) Unrestricted 1,413,585 8,582,529 390,341 (3,833,953) Total net position (deficit) 18,042,932$ 22,190,646 $ 19,734,559 $ (5,494,230) $ Major Enterprise Funds
City of Salinas
Statement of Net Position
Proprietary Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 34 DRAFT 09.08.2023
Governmental
Activities
Permit Internal
Services Total Service Funds
ASSETS
Current assets:

Cash and cash equivalents 3,321,043$ 16 ,403,450$ 23 ,992,396$ Receivables, net:

Accounts 298 1 ,434,329 - Accrued interest 6,116 44 ,061 17 ,038 Leases receivable - 429 ,471 - Due from other funds - - 16 ,831,462 Total current assets 3,327,457 18,311,311 40,840,896 Noncurrent assets:

Restricted cash and investments - 6 ,987 390 ,900 Leases receivable, long term - 5 ,154,316 - Capital assets:

Non-depreciable - 6,579,905 - Depreciable, net 52,120 65,665,569 - Total capital assets 52,120 72,245,474 - Total noncurrent assets 52,120 77,406,777 390,900 Total assets 3,379,577 95,718,088 41,231,796

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions 219,803 659 ,470 241 ,766 Related to OPEB 100 ,060 264 ,787 88 ,648 Loss on refunding of debt - 103,051 - Total deferred outflows of resources 319,863 1,027,308 330,414

LIABILITIES
Current liabilities:

Accounts payable 122,057 731 ,799 162 ,937 Interest payable - 259 ,822 - Due to other funds 12 ,072 1 ,755,623 - Deposits payable - 48 ,885 - Compensated absences - due within one year 48,257 109 ,577 26 ,138 Long-term debt - due within one year - 1 ,637,000 - Insurance claims payable - due within one year - - 7 ,489,982 Total current liabilities 182,386 4,542,706 7,679,057 Noncurrent liabilities:

Advances from other funds - 2 ,785,000 - Compensated absences - due in more than one year 193,027 438 ,310 104 ,548 Long term debt - due in more than one year - 22 ,738,000 - Insurance claims payable - due in more than one year - - 22 ,161,728 Net pension liability 633,503 1 ,900,685 696 ,803 Net OPEB liability 309,607 819 ,308 274 ,297 Total noncurrent liabilities 1,136,137 28,681,303 23,237,376 Total liabilities 1,318,523 33,224,009 30,916,433

DEFERRED INFLOWS OF RESOURCES
Related to pensions 421,412 1 ,264,352 463 ,519 Related to OPEB 214 ,493 567 ,609 190 ,030 Related to leases - 5 ,470,507 - Total deferred inflows of resources 635,905 7,302,468 653,549

NET POSITION (DEFICIT)
Net investment in capital assets 52,120 47,973,525 - Unrestricted 1,692,892 8,245,394 9,992,228 Total net position (deficit) 1,745,012$ 56,218,919 $ 9,992,228 $ City of Salinas
Statement of Net Position (Continued)
Proprietary Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 35 DRAFT 09.08.2023
Downtown
Industrial Sanitar y Parkin g
Airport Waste Sewer District
OPERATING REVENUES:

Fees 177,084 $ 3,079,518 $ 3,773,089 $ - $ Licenses and permits - - - 362,087 Rental income 1,906,007 - - - Total operating revenues 2,083,091 3,079,518 3,773,089 362,087 OPERATING EXPENSES:

Personnel services 812,453 606,687 2,332,731 82,228 Adminstration 199,652 212,921 308,197 217,437 Contractual services 299,142 767,660 261,128 1,265,525 Supplies 117,924 58,567 134,918 13,989 Insurance 20,636 22,727 46,132 13,051 Insurance claims - - - - Depreciation 957,136 512,071 1,568,293 558,382 Other 74,163 20,269 22,536 43,065 Total operating expenses 2,481,106 2,200,902 4,673,935 2,193,677

OPERATING INCOME (398,015) 878,616 (900,846) (1,831,590) NONOPERATING REVENUES (EXPENSES):

Investment income (loss) 118,917 (89,963) (29,666) - Interest expense - (41,346) (301,593) (366,259) Other nonoperating revenues (expenses) 91,198 (16,469) (7,920) 1,151,488 Total nonoperating revenues (expenses) 210,115 (147,778) (339,179) 785,229 INCOME (LOSS) BEFORE TRANSFERS (187,900) 730,838 (1,240,025) (1,046,361) TRANSFERS:

Transfers in 20,467 1,865,000 45,436 - Transfers out (76,545) (1,811,843) (3,895,108) (32,391) Transfers from fiduciary funds - - - 951,900 Total transfers (56,078) 53,157 (3,849,672) 919,509 Changes in net position (243,978) 783,995 (5,089,697) (126,852) NET POSITION (DEFICIT):

Beginning of year, as restated (Note 23) 18,286,910 21,406,651 24,824,256 (5,367,378) End of year 18,042,932$ 22,190,646$ 19,734,559$ (5,494,230)$ Major Funds
City of Salinas
Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 36 DRAFT 09.08.2023
Governmental
Activities
Permit Internal
Services Total Service Funds
OPERATING REVENUES:

Fees 3,029,777$ 10,059,468 $ 7,320,125 $ Licenses and permits 1,329,975 1,692,062 - Rental income - 1,906,007 - Total operating revenues 4,359,752 13,657,537 7,320,125 OPERATING EXPENSES:

Personnel services 1,743,904 5,578,003 1,997,540 Adminstration 452,434 1,390,641 - Contractual services 1,058,032 3,651,487 144,302 Supplies 30,395 355,793 752,570 Insurance 83,021 185,567 5,456,906 Insurance claims - - 5,388,935 Depreciation 40,289 3,636,171 - Other (21,234) 138,799 140,099 Total operating expenses 3,386,841 14,936,461 13,880,352

OPERATING INCOME 972,911 (1,278,924) (6,560,227) NONOPERATING REVENUES (EXPENSES):

Investment income (loss) (37,098) (37,810) (122,213) Interest expense - (709,198) - Other nonoperating revenues (expenses) 444,374 1,662,671 - Total nonoperating revenues (expenses) 407,276 915,663 (122,213) INCOME (LOSS) BEFORE TRANSFERS 1,380,187 (363,261) (6,682,440) TRANSFERS:

Transfers in - 1,930,903 12,781,300 Transfers out (358,418)
(6,174,305) -
Transfers from fiduciary funds - 951,900 - Total transfers (358,418) (3,291,502) 12,781,300 Changes in net position 1,021,769 (3,654,763) 6,098,860 NET POSITION (DEFICIT):

Beginning of year, as restated (Note 23) 723,243 59,873,682 3,893,368 End of year 1,745,012$ 56,218,919$ 9,992,228$ City of Salinas
Statement of Revenues, Expenses, and Changes in Fund Net Position (Continued) Proprietary Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 37 DRAFT 09.08.2023
Downtown
Industrial Sanitar y Parkin g
Airport Waste Sewer District
CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from customers and users 2,065,653 $ 3,088,186 $ 3,709,297 $ 492,058 $ Payments to suppliers (588,242) (943,789) (696,766) (1,569,799) Payments to employees for services (846,583) (637,401) (2,364,902) (83,293) Payments to claimants - - - - Other (74,163) (20,269) (22,536) (43,065) Net cash provided (used) by operating activities 556,665 1,486,727 625,093 (1,204,099)

CASH FLOWS FROM NONCAPITAL FINANCING
ACTIVITIES:

Borrowing from other funds - 23,567 - 170,030 Repayment to other funds - - (705,858) - Other 91,198 (16,469) (7,920) 1,151,488 Transfers from other funds 20,467 1,865,000 45,436 951,900 Transfers to other funds (76,545) (1,811,843) (3,895,108) (32,391) Net cash provided by (used in) noncapital financing
activities 35,120 60,255 (4,563,450) 2,241,027

CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:

Acquisition of capital assets (20,467) (34,123) (216,864) - Payment on capital debt and loans payable - (460,000) (555,000) (578,000) Interest paid on capital debt and borrowings - (45,795) (304,276) (365,310) Net cash (used in) capital and related financing activities (20,467) (539,918) (1,076,140) (943,310) CASH FLOWS FROM INVESTING ACTIVITIES:

Investment income (loss) 97,556 (97,451) 684,879 - Proceeds from leases (113,280) - - - Net cash provided by (used in) investing activities (15,724) (97,451) 684,879 -
Net change in cash and cash equivalents 555,594 909,613 (4,329,618) 93,618 CASH AND CASH EQUIVALENTS:

Beginning of year 1,451,509 8,023,451 5,714,077 671,150 End of year 2,007,103$ 8,933,064$ 1,384,459$ 764,768$

RECONCILIATION OF CASH AND CASH
EQUIVALENTS TO STATEMENT OF NET POSITION:

Cash and cash investments 2,007,103$ 8,933,064$ 1,377,472$ 764,768$ Restricted cash and investments - - 6,987 - Total cash and cash equivalents 2,007,103$ 8,933,064$ 1,384,459$ 764,768$ City of Salinas
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2022
Major Funds
See accompanying Notes to the Basic Financial Statements. 38 DRAFT 09.08.2023
Governmental
Activities
Permit Internal
Services Total Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from customers and users 4,359,752 $ 13,714,946 $ 14,810,107 $ Payments to suppliers (1,598,112) (5,396,708) (2,522,098) Payments to employees for services (1,790,603) (5,722,782) (1,940,034) Payments to claimants - - (15,058,605) Other 21,234 (138,799) (140,099) Net cash provided (used) by operating activities 992,271 2,456,657 (4,850,729)

CASH FLOWS FROM NONCAPITAL FINANCING
ACTIVITIES:

Borrowing from other funds 1,231 194,828 - Repayment to other funds - (705,858) - Other 444,374 1,662,671 -
Transfers from other funds - 2,882,803 12,781,300 Transfers to other funds (358,418) (6,174,305) - Net cash provided by (used in) noncapital financing
activities 87,187 (2,139,861) 12,781,300

CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:

Acquisition of capital assets (59,330) (330,784) - Payment on capital debt and loans payable - (1,593,000) (141,223) Interest paid on capital debt and borrowings - (715,381) - Net cash (used in) capital and related financing activities (59,330) (2,639,165) (141,223) CASH FLOWS FROM INVESTING ACTIVITIES:

Investment income (loss) (41,623) 643,361 (131,759) Proceeds from leases - (113,280) - Net cash provided by (used in) investing activities (41,623) 530,081 (131,759) Net chan
ge in cash and cash equivalents 978,505 (1,792,288) 7,657,589 CASH AND CASH EQUIVALENTS:

Beginning of year 2,342,538 18,202,725 16,725,707 End of year 3,321,043$ 16,410,437$ 24,383,296$

RECONCILIATION OF CASH AND CASH
EQUIVALENTS TO STATEMENT OF NET POSITION:

Cash and cash investments 3,321,043$ 16,403,450$ 23,992,396$ Restricted cash and investments - 6,987 390,900 Total cash and cash equivalents 3,321,043$ 16,410,437$ 24,383,296$ City of Salinas
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 39 DRAFT 09.08.2023
Downtown
Industrial Sanitar y Parkin g
Airport Waste Sewer District

RECONCILIATION OF OPERATING INCOME TO

NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:

Operating income (398,015) $ 878,616 $ (900,846) $ (1,831,590) $ Adjustments to reconcile operating income to net
cash provided by (used in) operating activities:

Depreciation 957,136 512,071 1,568,293 558,382 Changes in operating assets and liabilities, and
deferred outflows and inflows of resources:

Accounts receivable, net (26,778) 8,668 (63,792) 129,971 Deferred outflows - related to pensions 37,876 22,900 91,599 - Deferred outflows - related to OPEB 6,270 4,860 11,803 857 Accounts payable 49,112 118,086 53,609 (59,797) Accrued liabilities - - - - Deposits payable 9,340 - - - Insurance claims payable - - - - Compensated absences (1,536) (10,940) 49,064 (1,434) Net pension liability (278,128) (167,563) (670,246) - Net OPEB liability (60,586) (47,005) (114,335) (8,454) Deferred inflows - related to pensions 205,781 123,441 493,763 - Deferred inflows - related to OPEB 56,193 43,593 106,181 7,966 Total adjustments 954,680 608,111 1,525,939 627,491 Net cash provided by (used in) operating activities 556,665$ 1,486,727 $ 625,093 $ (1,204,099)$ Major Funds
City of Salinas
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 40 DRAFT 09.08.2023
Governmental
Activities
Permit Internal
Services Total Service Funds

RECONCILIATION OF OPERATING INCOME TO

NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:

Operating income 972,911$ (1,278,924)$ (6,560,227) $ Adjustments to reconcile operating income to net
cash provided by (used in) operating activities:

Depreciation 40,289 3,636,171 - Changes in operating assets and liabilities, and
deferred outflows and inflows of resources:

Accounts receivable, net - 48,069 - Deferred outflows - related to pensions 75,813 228,188 83,735 Deferred outflows - related to OPEB 14,446 38,236 12,796 Accounts payable 25,770 186,780 31,923 Accrued liabilities - - - Deposits payable - 9,340 7,489,982 Insurance claims payable - - (5,869,913) Compensated absences 18,007 53,161 130,686 Net pension liability (556,430) (1,672,367) (613,424) Net OPEB liability (139,935) (370,315) (123,966) Deferred inflows - related to pensions 411,449 1,234,434 452,547 Deferred inflows - related to OPEB 129,951 343,884 115,132 Total adjustments 19,360 3,735,581 1,709,498 Net cash provided by (used in) operating activities 992,271$ 2,456,657 $ (4,850,729) $ City of Salinas
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 41 DRAFT 09.08.2023
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42 DRAFT 09.08.2023
Fiduciary Funds Financial Statements
Fiduciary Funds are used to account for assets held in a trustee or agency capacity for others and therefore cannot be used to support the government’s own programs. The City maintains the following Fiduciary Funds:

PRIVATE PURPOSE TRUST FUNDS
These funds are used to account for any trust arrangement not properly reported in a pension trust fund under which principal and income benefit individuals, private organizations, or other governments. This fund also accounts for the Successor Agency of the former Redevelopment Agency which was dissolved on January 31, 2012 pursuant to state law.

PENSION TRUST FUNDS
These funds are used to account for resources that are required to be held in trust for the members and beneficiaries of defined benefit pension plans, defined contribution plans, or other employee benefit plans. The City’s only pension trust fund is the Deferred Compensation Fund; which allows City employees to invest in trust deeds that are managed by the City with the oversight of an investment committee that is made up of representatives from each of the bargaining units.

CUSTODIAL FUNDS
These funds are used to account for assets held in an agent capacity by the City for individuals, private organizations, other governments and/or other funds that are not required to be reported in pension trust funds, investment trust funds, or private-purpose trust funds.
43 DRAFT 09.08.2023
This page intentionally left blank.
44 DRAFT 09.08.2023
Fiduciary
Private Purpose Pension Trust Custodial Funds
Trust Funds Fund Funds Total
ASSETS
Cash and investments 4,067,905 $ 9,263,792 $ 87,721 $ 13,419,418 $ Restricted cash and investments held by fiscal agent 1,706,907 4,367,611 77,059 6,151,577 Receivables, net:

Accounts 7,673 - - 7,673 Interest 3,968 5,133 - 9,101 Loans and notes receivable 173,900 - - 173,900 Total assets 5,960,353 13,636,536 164,780 19,761,669

LIABILITIES
Accounts payable 93,469 - 142,768 236,237 Interest payable 709,247 - - 709,247 Deposits payable 140,297 - - 140,297 Unearned revenue 2,184,914 - - 2,184,914 Long-term debt:

Due in one year 296,133 - - 296,133 Due in more than one year 1,499,665 - - 1,499,665 Total liabilities 4,923,725 - 142,768 5,066,493

NET POSITION
Restricted for:

Pensions - 13,636,536 - 13,636,536 Individuals and organizations 1,036,628 - 22,012 1,058,640 Total net position 1,036,628$ 13,636,536$ 22,012$ 14,695,176$ City of Salinas
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 45 DRAFT 09.08.2023
Total
Private Purpose Pension Custodial Fiduciary
Trust Funds Trust Fund Funds Funds
ADDITIONS:

Taxes 4,963,103 $ - $ 459,944$ 5,423,047 $ Miscellaneous - 438,866 - 438,866 Contributions:

Plan members - 20,839 296,149 316,988 Employer - 208,396 - 208,396 Private donations 1,350,551 - - 1,350,551 Investment earnings (loss) 40,920 (105,406) - (64,486) Less: investment expense - - - - Net investment earnings 40,920 (105,406) - (64,486) Assessments collected for other governments - - - Total additions 6,354,574 562,695 756,093 7,673,362 DEDUCTIONS:

Expenses 1,345,060 - 275,850 1,620,910 Benefit payments - 5,381,582 75,890 5,457,472 Payments on behalf of trustees 1,400,866 - - 1,400,866 Contributions to other agencies 2,421,954 - - 2,421,954 Payments to City 951,900 - - 951,900 Assessments disbursed to other governments - - 459,914 459,914 Total deductions 6,119,780 5,381,582 811,654 12,313,016 Change in net position 234,794 (4,818,887) (55,561) (4,639,654) NET POSITION:

Beginning of year, as restated (Note 23) 801,834 18,455,423 77,573 19,334,830 End of period
1,036,628$ 13,636,536 $ 22,012 $ 14,695,176 $ City of Salinas
Statement of Change in Fiduciary Net Position
Fiduciary Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 46 DRAFT 09.08.2023

47 NOTES TO THE BASIC FINANCIAL STATEMENTS
DRAFT 09.08.2023

48 This page intentionally left blank.

DRAFT 09.08.2023
City of Salinas
Index to the Notes of the Basic Financial Statements
For the Year Ended June 30, 2022

49 Note 1 – Summary of Significant Accounting Policies ............................................................................................. 53

A. Financial Reporting Entity ......................................................................................................................... 53 B. Basis of Presentation, Accounting and Measurement Focus ..................................................................... 54 C. Cash, Cash Equivalents, and Investments .................................................................................................. 58 D. Restricted Cash and Investments ............................................................................................................... 59 E. Fair Value Measurement ............................................................................................................................ 59 F. Interfund Transactions ............................................................................................................................... 59 G. Receivables ................................................................................................................................................ 60 H. Leases Receivable ...................................................................................................................................... 60 I. Special Assessment Districts ..................................................................................................................... 60 J. Prepaid Bond Insurance, Original Issue Discounts and Premiums, Gain/Loss on Refunding ................... 60 K. Capital Assets ............................................................................................................................................. 61 L. Land Held for Resale ................................................................................................................................. 61 M. Restricted Assets ........................................................................................................................................ 62 N. Claims Payable ........................................................................................................................................... 62 O. Compensated Absences .............................................................................................................................. 62 P. Long-Term Debt and Other Long-Term Obligations ................................................................................. 62 Q. Unearned Revenue ..................................................................................................................................... 63 R. Deferred Outflows and Inflows of Resources ............................................................................................ 63 S. Net Position and Fund Balance .................................................................................................................. 63 T. Property Taxes ........................................................................................................................................... 64 U. Pensions ...................................................................................................................... ............................... 65 V. Other Postemployment Benefits (“OPEB”) .............................................................................................. 66 W. Encumbrances ............................................................................................................................................ 66 X. Use of Accounting Estimates
..................................................................................................................... 66 Y. Self-Insurance ............................................................................................................................................ 66 Z. Implementation of New GASB Pronouncements For the Year Ended June 30, 2022 ............................... 67

Note 2 – Stewardship, Compliance, and Accountability .......................................................................................... 68

A. Budgeting ................................................................................................................................................... 68 B. Deficit Fund Balance .......................................................................................................... ....................... 69 C. Debt Compliance................................................................................................................ ........................ 69

Note 3 – Cash and Investments ................................................................................................. ................................. 70

A. Demand Deposits ....................................................................................................................................... 70 B. Investments Authorized by the California Government
Code and the City’s Investment Policy ............................................................................................... 71 C. Risk Disclosures ......................................................................................................................................... 72 D. Fair Value Measurement ............................................................................................................................ 73

Note 4 – Restricted Assets ........................................................................................................................................... 75

Note 5 – Taxes Receivable ........................................................................................................................................... 76

Note 6 – Assessments Receivable ................................................................................................................................ 76

Note 7 – Due from Other Agencies ............................................................................................................................. 77 DRAFT 09.08.2023
City of Salinas
Index to the Notes of the Basic Financial Statements (Continued) For the Year Ended June 30, 2022

50 Note 8 – Leases Receivable .................................................................................................... ..................................... 77

Note 9 – Loans and Notes Receivable ........................................................................................... ............................. 79

Note 10 – Interfund Receivables, Payables, and Transfers ...................................................................................... 80

A. Due From and To Other Funds .................................................................................................................. 80 B. Long-Term Advances ............................................................................................................ .................... 80 C. Transfers ..................................................................................................................... ............................... 81

Note 11 – Capital Assets .............................................................................................................................................. 82

A. Governmental Activities ............................................................................................................................ 82 B. Business-Type Activities ........................................................................................................................... 83 C. Successor Agency ...................................................................................................................................... 83

Note 12 – Land and Properties Held for Resale ........................................................................................................ 84

Note 13 – Long-Term Debt ......................................................................................................................................... 84

A. Governmental Activities ............................................................................................................................ 84 B. Business-Type Activities ........................................................................................................................... 99 C. Successor Agency .................................................................................................................................... 102

Note 14 – Compensated Absences ............................................................................................................................ 104

Note 15 – Risk Management ..................................................................................................................................... 105

Note 16 – Unearned Revenue and Deferred Inflows of Resources, Net of Allowance ......................................... 106

Note 17 – Retirement Programs ............................................................................................................................... 107

A. Summary .................................................................................................................................................. 107 B. CalPERS Agent-Multiple Employer Plans .............................................................................................. 108 C. CalPERS Cost-Sharing Multiple Employer Plan ..................................................................................... 114 D. New York Life Single Employer Retirement Plan .................................................................................. 119 E. ICMA Retirement Corporation Defined Contribution Plan ..................................................................... 123 F. Deferred Compensation Plans .................................................................................................................. 124

Note 18 – Other Postemployment Benefits .............................................................................................................. 125

A. General Information about the OPEB Plan .............................................................................................. 126 B. Net OPEB Li
ability, OPEB Expense and Deferred Outflows/Inflows
of Resources Related to OPEB ....................................................................................................... 128

Note 19 – Net Position and Fund Balances .............................................................................................................. 130 A. Government-Wide Financial Statements ................................................................................................. 130 B. Fund Financial Statements ....................................................................................................................... 130

DRAFT 09.08.2023
City of Salinas
Index to the Notes of the Basic Financial Statements (Continued) For the Year Ended June 30, 2022

51 Note 20 – Other Required Disclosures ..................................................................................................................... 132

A. Expenditures Exceeding Appropriations .................................................................................................. 132 B. Restricted Net Position ............................................................................................................................. 132

Note 21 – Joint Venture – Salinas Valley Solid Waste Authority ................................................................ ......... 132

Note 22 – Commitments and Contingencies ............................................................................................................ 133

Note 23 – Prior Period Adjustments ........................................................................................................................ 134

DRAFT 09.08.2023

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DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022

53 Note 1 – Summary of Significant Accounting Policies

The basic financial statements of the City of Salinas, California (City) have been prepared in conformity with accounting principles generally accepted in the United States of Am erica (GAAP) as applied to governmental entities. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The most significant of the City’s accounting policies are described below.

A. Financial Reporting Entity

The City was incorporated as a chapter City on March 4, 1874. The City operates under a Council Manager form of government and proves the following services as authori zed: Public Safety, Public Works, Recreation Parks, Library and General Government Administrative Services. The City also operates as Airport, a Downtown Parking District, a Sanitary Sewer System, a Water Utility, a Storm Sewer System and an Industrial Waste Facility.

The basic financial statements of the City, include the financial activities of the City (the primary government) and its component unit. The component unit discussed below is included in the City’s reporting entity because of the significance of their operational or financial relationship with the City. The blended component unit, although a legally separate entity, is, in substance, part of the City’s operations and so data from this unit is combined with data of the primary government. The City has no discrete ly presented component units. The City and its blended component unit have June 30 year ends.

The financial statements and accounting policies of the City conform with generally accepted accounting principles applicable to governments in the United States of Am erica. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for estab lishing governmental accoun ting and financial reporting principles. Significant accounting policies are summarized below:

Blended Component Unit

The financial reporting entity consists of the primary government, the City , and its component unit. Component units are legally separate entities for which the elected officials of the primary government are financially accountable. In addition, component units can be other organizations for which the primary government is accountable and their exclusion would cause the reporting en tity’s financial statements to be misleading or incomplete.

Blended component units, although legally separate entities, are, in substance part of the government’s operation 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 that they are legally separate from the government.

Although the following are legally separate from the City, they have been “blended” as though they are part of the City because the component unit’s governing body is substan tially the same as the City’s and there is a financial benefit or burden relationshi p between the City and the component unit; management of the City has operational responsibilities for the component units; and/or the component units provide services entirely, or almost entirely, to the City or otherwise exclusively, or almost exclus ively, benefits the City, even though it does not provide services directly to it.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

54 Note 1 – Summary of Significant Accounting Policies (Continued)

A. Financial Reporting Entity (Continued)

Blended Component Units (Continued)

The Salinas Public Financing Authority (Authority) – The Authority was established October 6, 1992 pursuant to a Joint Exercise of Powers Agreement by and between the City and the City of Salinas Redevelopment Agency, which is now the Salinas Successor Agency to the former Redevelopment Agency. It was established to refund Central City Revitalization Project tax allocation bonds. The Authority’s pur pose is to assist with financing or refinancing of certain public capital facilities within the City.

The Authority is controlled by the City and has the same governing body as the City, which also performs all accounting and administrative functions for the Authority. The financial activities of the Authority are included in the City’s Debt Service and Enterprise Funds. A financial report is not issued by the Authority.

B. Basis of Presentation, Accounting and Measurement Focus

The accounts of the City are organized on the basis of f unds, each of which is considered a separate accounting entity. The operations of each fund are accounted for by pr oviding a separate set of self-balancing accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity, revenues and expenditures or expenses, as appropriate. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions.

The minimum number of funds is maintained in accordance with legal and managerial requirements.

Government-Wide Financial Statements

The City’s Government-Wide Financial Statements include a Statement of Net Position and a Statement of Activities and Changes in Net Position. These statements present summaries of governmental and business-type activities for the City accompanied by a total column. Fiduc iary activities of the City are not included in these statements.

These financial statements are presented on an “ economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital asset s, as well as infrastructure assets, and long-term liabilities, are included in the acco mpanying Statement of Net Position. The Statement of Activities presents changes in Net Position. Under the accr ual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities, and deferred inflows of resources resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues, expe nses, gains, losses, assets, deferred outflows of resources, liabilities and deferred inflows of resources resulting from non-exchange transactions are recognized in accordance with the requirements of U.S. GAAP.

Program revenues include charges for ser vices, special assessments, and payments made by parties outside of the reporting government's citizenry if that money is restricted to a particular program. Program revenues are netted with program expenses in the statement of activities to present the net cost of each program. Program revenues for the City are classified in three categories:

 Charges for services
 Operating grants and contributions
 Capital grants and contributions
DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

55 Note 1 – Summary of Significant Accounting Policies (Continued)

B. Basis of Presentation, Accounting and Measurement Focus (Continued)

Government-Wide Financial Statements (Continued)

Certain eliminations have been made in regards to interfund activities, pa yables and receivables. All internal balances in the Statement of Net Po sition have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities and Changes in Net Position, internal service fund transactions have been eliminated; however, tho se transactions between governmental and business-type activities have not been eliminated. The following interfund activities have been eliminated:

 Due to/from other funds
 Advances to/from other funds
 Transfers in/out

Governmental Fund Financial Statements

Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances. An accompanying schedule is presented to reconcile and explain the differences in Net Position as presented in these statements to the net position presented in the Government-Wide Financial Statements. The City has presented all major funds that met the applicable criteria.

All governmental funds are accounted for on a spending or "current financial resources" measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in Fund Balances presents increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets.

Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expend itures of the current period. Measurable means that the amounts can be estimated, or otherwise determined. Available means that the amounts were collected during the reporting period or soon enough thereafter to be availa ble to finance the expenditures accrued for the reporting period. The City uses an availability period of 60 days for all revenues except grants, which use a six-month availability period.

Sales taxes, property taxes, franchise taxes, gas taxes, motor vehicle in-lieu, transient occupancy taxes, grants and interest associated with the current fiscal period are all c onsidered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period to the extent normally collected with in the availability period.

Other revenue items are considered to be measurable and available when cash is received by the government.

Revenue recognition is subject to the measurable and av ailable criteria for the governmental funds in the fund financial statements. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or services are provided). Locally imposed derived tax revenues are recognized as revenues in the period in which the underlying exchange transaction upon which they are based takes place.

Imposed non-exchange transactions are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they are recognized as revenues when an enforceable legal claim to the revenues arises or when they are received, whichever occurs first. Government-mandated and voluntary non-exchange transactions have been recognized as revenues when all applicable eligibility requirements have been met.

The Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is provided to explain the differences created by the integrated approach of GASB Statement No. 34.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

56 Note 1 – Summary of Significant Accounting Policies (Continued)

B. Basis of Presentation, Accounting and Measurement Focus (Continued)

Governmental Fund Financial Statements (Continued)

The City reports the following major governmental funds:

 General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in any other funds.

 American Rescue Plan Act (ARPA)Special Revenue Fund On March 11, 2021, President Biden signed the American Rescue Plan Act, which will provide the City with approximate ly $51 million in relief funds. This fund accounts for the revenues and expenditures of ARPA proceeds.

 Housing and Urban Development Grant Special Revenue Fund accounts for the use of Community Development Block Grant funds received from the fe deral government. Other revenues in this fund include repayments of commercial and residential loans and rental income from City property. Funds are used for programs or projects that increase affordable housing and benefit people with special needs such as senior and handicapped citizens.

Proprietary Fund Financial Statements

Proprietary funds are accounted for using the “ economic resources” measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Net Position presents increases (revenues) and decreases (expenses) in total net position. Under the accrua l basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred.

Proprietary funds distinguish opera ting revenues and expenses from nonopera ting items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the proprietary funds are charges to customers for sales and services. Operating expenses for the proprietary funds include the costs of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

A separate column representing internal service funds is also presented in these statem ents. However, internal service balances and activities have been combined with the governmental activities and business-type activities in the Government-Wide Financial Statements.

The City reports the following major enterprise funds:

 Airport Fund is used to account for the enterprise operations of the City-owned airport.

 Industrial Waste Fund is used to account for the enterprise ope rations of the City-operated Industrial Wastewater Treatment Facility.

 Sanitary Sewer Fund is used to account for the maintenance of the City's sanitary sewer collection system, which is funded by user fees and by the Monterey Regional Water Pollution Control Agency sewer user fees.

 Downtown Parking District Fund – is used to account for revenues, operating expenses and debt service associated with the City’s parking facilities. The City’s paid parking facilities include the Monterey Street Parking Structure, the Salinas Street Garage and four parking lots.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

57 Note 1 – Summary of Significant Accounting Policies (Continued)

B. Basis of Presentation, Accounting and Measurement Focus (Continued)

Proprietary Fund Financial Statements (Continued)

The City’s internal service funds include five individual funds which provide services directly to other City funds.

These areas of service include risk management, general in surance, workers’ compensation, general liability, and fleet maintenance. The Internal Service Funds account for financing of goods and services provided by one department to other departments of the City on a cost-reimbursement basis.

Fiduciary Fund Financial Statements

Fiduciary fund financial statements include a Statement of Net Position and a Statement of Changes in Fiduciary Net Position. The City’s fiduciary funds represent private purpose trust funds, pension trust funds, and custodial funds. These funds are accounted for on the full accrual basis of accounting.

Fiduciary fund types are accounted for according to the nature of the fund.

Private Purpose Trust Funds are a fiduciary fund type u sed to account for resources held and administrated under trust or similar arrangement for the benefits of individua ls, private organizations, or other governments. The City reports the following private purpose trust funds:

 Successor Agency Redevelopment Obligation Retirement Fund was created to serve as a custodian for the assets and to wind down the affairs of the RDA on Februa ry 1, 2012, pursuant to Assembly Bill x1 26. Its purpose is to expeditiously wind down the affairs of the dissolved Community Development Commission of the City of Rohnert Park (Commission) subject to the direction of a seven-member Oversight Board. This fund accounts for the receipt of property tax revenues pursuant to the Redevelopment Dissolution Act and the assets transferred from the Commission. The Succes sor Agency’s assets can only be used to pay enforceable obligations in existence at the date of dissolution pursuant to the Recognized Obligation Payment Schedules approved by the California Department of Finance (DOF) under the Redevelopment Dissolution Act.

 Successor Agency Administration – This fund accounts for the administrative activities of the Successor Agency to the former Salinas Rede velopment Agency which was dissolved on February 1, 2012 in accordance with AB 1x26 (enacted June 28, 2011).

 Other Private Purpose Trust Funds – These funds are used to account for other trust arrangements not properly reported in a pension trust fund under whic h principal and income benefit individuals, private organizations, or other governments. The City acco unts for the following trust funds: Community Center, Monterey Regional Water Pollution Control Agency (MRWPCA) Fees, Sales Tax, Payroll Taxes, Developer Deposits, Evidence Room, Construction Bonds, Mont erey County Tourism Improvement District, Leadership Salinas, and miscellaneous.

Pension Trust Fund is used to account for resources that are required to be held in trust for the members and beneficiaries of defined benefit pension plans, defined contribution plans, or other employee benefit plans. The City’s only pension trust fund is the Deferred Compensation Fund; which allows City employees to invest in trust deeds that are managed by the City with the oversight of an investment committee that is made up of representatives from each of the bargaining units.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

58 Note 1 – Summary of Significant Accounting Policies (Continued)

B. Basis of Presentation, Accounting and Measurement Focus (Continued)

Fiduciary Fund Financial Statements (Continued)

Custodial Funds are used to account for assets held in an agent capacity by the City for individuals, private organizations, other governments and/or other funds that are not required to be repor ted in pension trust funds, investment trust funds, or private-purpose trust funds.

C. Cash, Cash Equivalents, and Investments

Cash and Cash Equivalents - Cash and cash equivalents are considered to be amounts in demand deposits, and short-term investments with original, maturity of three months or less from the date of acquisition. For purposes of both the balance sheet and statements of cash flows, cash and cash equivalents include not only currency on hand, but deposits in the City’s cash and investment pool . These deposits have the same characteristics for the participating funds as demand deposit accounts, in that the funds may deposit additional cash at any time and also effectively withdraw cash at any time without prior noti ce or penalty. Cash and cash equivalents also include restricted cash and money market funds held by fiscal agents. For purposes of cash flow s, the City considers all liquid market investments with maturities of one year or less at time of purchase to be cash equivalents. All other investments are stated at fair value. Market value is used as fair valu e for those securities for which market quotations are readily available.

The City pools cash resources from all funds in order to facilitate and maximize the management of cash. The balance in the pooled cash account is available to meet cu rrent operating requirements. Cash in excess of current requirements is invested in various interest-bearing accounts and other fixed income investments with varying terms. Interest earned on investments is allocated to all funds based on average cash and investment balances.

Investments are presented at fair value except as noted below. Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Money market investments (such as short–term , highly liquid debt instruments including bankers’ acceptances) and securities (notes, bills, and obligations of the U.S. government and its agencies), and participating interest-earning investment contracts (such as negotiabl e certificates of deposit and repurchase agreements) that have a remaining maturity at the time of purchase of one year or less, are reported at amortized cost, which approximates fair value.

For purposes of the statement of cash fl ows, amounts reported as cash and cas h equivalents, include amounts on deposit in the City pool and any short-term, highly liqui d investments that are both readily convertible to known amounts of cash or so near their maturity that they present insignificant risk of changes in value because of changes in interest rates.

Investment held in Local Agency Investment Fund - The City participates in the Local Agency Investment Fund (“LAIF”), an investment pool managed by the State of California. LAIF has invested portions of the pool funds in structured notes and asset-backed securiti es. LAIF’s investments are subject to credit risk with the full faith and credit of the State of California collateralizing these inv estments. In addition, these structured notes and asset- backed securities are subject to market risk as a result of changes in interest rates.

LAIF determines fair value on its investments portfolio based on market quotations for those securities where market quotations are readily available and based on amortized cost or best estimate for those securities where market value is not readily available.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

59 Note 1 – Summary of Significant Accounting Policies (Continued)

C. Cash, Cash Equivalents, and Investments (Continued)

The City valued its investments in LAIF as of June 30, 2022, by multiplying its account balance with LAIF times a fair value factor determined by LAIF for all LAIF participants by total aggregate amortized cost.

Other Investments - Investments in nonparticipating interest earning contracts (certificate of deposits) are reported at cost, and all other investments are reported at fair va lue. Fair value is defined as the amount the City could reasonably expect to receive for an investment in a current sale between a willing buyer and seller and is generally measured by quoted market prices.

Deferred Compensation - The Deferred Compensation Plan is invested in deeds of trust secured by real or personal property and in real estate holdings. The trust deeds are considered nonparticipating interest earning investments and are reported at fair market value.

D. Restricted Cash and Investments

Certain restricted cash and investments are held by fiscal agents or the City for the redemption of bonded debt and for acquisition and construction of certain capital projects.

E. Fair Value Measurement

U.S. GAAP establishes a framework for measuring fair value, and establishes disclosures about fair value measurement. Investments, unless otherwise specified, recorded at fair value in the Statements of Net Position, are categorized based upon the level of judgment associated with the inputs used to measure their fair value.

F. Interfund Transactions

Interfund transactions are reflected as loans, services pr ovided, reimbursements and/or transfers. Loans and balances related to unsettled service transactions are reported as receivables and payables as appropriate, are subject to elimination upon consolidation of similar fund types, and are referred to as either “due to/from other funds,” i.e., the current portion of interfund loans and unsettled service transactions, or “advances to/from other funds,” i.e., the noncurrent portion of interfund loans. Any residual bala nces outstanding between the governmental activities and the business-type activities are reported in the government-wide financial statements as “internal balances.”

Services provided are deemed to be at market or near market rates and are treated as revenues and expenditures/expenses. Reimbursements are defined as wh en 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.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

60 Note 1 – Summary of Significant Accounting Policies (Continued)

G. Receivables

All receivables are reported at their gross value and, wh ere appropriate, are reduced by the estimated portion that is expected to be uncollectible. Invoices that remain unpaid after 90 days may be referred to collections. An invoice sent to collection is written off.

H. Leases

The City is a lessor for leases of land and recognizes leases receivable and deferred inflows of resources in the financial statements. Variable payments based on future performance or usage of the underlying asset are not included in the measurement of the lease receivable.

At the commencement of a lease, the lease receivable is measured at the present value of payments expected to be received during the lease term. Subsequently, the lease rece ivable is reduced by the principal portion of lease payments received. The deferred inflows of resources are initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflows of resources are recognized as revenue over the life of the lease term in a systematic and rational method.

Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts.

 The City uses the average of the LAIF rate and the incremental borrowing rate (IBR) provided by our financial institution at July 1, 2021 for existing leases or the current rate at the time a new lease is executed.

 The lease term includes the noncancelable period of the lease plus any option periods that are likely to be exercised.

 Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee.

The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.

I. Special Assessment Districts

Special assessments are recorded as receivables when they become a lie n on property. Special assessments not considered available are recorded as receivables and offset by unearned reve nues. In general, special assessments and special tax bonds are fully secured by liens against the privately owned properties benefited by the improvement for which the bonds were issued. There is no reserve for delinquent receivables since priority liens exist against the related properties and hence the City’s management believes value will ultimately be received by the City.

J. Prepaid Bond Insurance, Original Issue Discounts and Premium, Gain/Loss on Refunding

Prepaid bond insurance costs are amortized using the straight-line method over the life of the bonds. Amortization of these balances are recorded as a component of operating expenses.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

61 Note 1 – Summary of Significant Accounting Policies (Continued)

J. Prepaid Bond Insurance, Original Issue Discounts and Premium, Gain/Loss on Refunding (Continued)

In the government-wide, proprietary fund and fiduciary fund financial statements, long-term debt and other long- term obligations are reported as liabilities in the app licable governmental activities, business-type activities, proprietary fund and fiduciary fund financial statements. Bond premiums and discounts are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. Original issue premiums are amortized using the straight-line method over the life of the bonds. Gains or losses from refunding of debt are reported as deferred inflows or out flows of resources and amortized over the shorter of the life of the refunded debt or new refunding debt. Amortiza tion of these balances are recorded as a component of interest expense.

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. Issuance costs, whether or not w ithheld from the actual debt proceeds received, are reported as debt service expenditures.

K. Capital Assets

Capital assets include land, buildings, improvements, vehicles and equipment, infrastructure, and all other tangible and intangible assets that are used in operations and that have initial useful lives in excess of one year. Capital assets are reported in the applicable governmental or business-type activity columns in the government-wide financial statements, the proprietary funds' statement of net position, and the private-purpose trust fund. Capital assets are defined as assets with an initial individual cost of more than $10,000 for general capital assets and $100,000 for major infrastructure assets, and an estimated useful life in excess of one year.

Such assets are recorded at historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value, market based entry price at the time of contribution. Capital outlay is recorded as expenditures of the governmental funds and as assets in the government- wide financial statements to the extent the City's capitalization threshold is met. Amortization of assets ac quired under capital leases is based on the shorter of the lease term or the estimated useful life of the asset and is included in depreciation and amortization.

Buildings, improvements, infrastructure, vehicles and equi pment, and furniture and fixtures are depreciated using the straight-line method (depreciation is calculated starting with the month following the date the asset was placed in service) over the following estimated useful lives:

Asset Type Years
Buildings and improvements 20-50
Other improvements 15-45
Infrastructure 10-50
Machinery and equipment 5-20

L. Land Held for Resale

Land held for resale is being carried at cost, but no greater than the net realizable value. In the fund financial statements, this amount is recorded as a restricted por tion of fund balance due to externally imposed grantor restrictions.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

62 Note 1 – Summary of Significant Accounting Policies (Continued)

M. Restricted Assets

Assets that are restricted for specific uses by bonded debt requirements, grant provisions or other requirements are classified as restricted because their use is limited by applicable bond covenants or agreements.

N. Claims Payable

Claims and judgments are recognized as expenditures when it is probable that the liability has been incurred and the amount of the loss can be reasonably estimated. This liability is recorded in the internal service fund that accounts for the City’s self-insurance activities.

O. Compensated Absences

Vacation, compensatory time, and related benefits are accr ued as determined by the agreement between the City and the respective employees' collective bargaining group. For governmental funds, compensated absence obligations are recorded in the appropriate governmental funds when due. The portion not currently due is recorded in the government-wide financial statements. For propr ietary funds, compensated ab sences are expensed when earned by employees. At year-end, the accrued but unpaid compensated absence obligations are recorded as current and non-current liabilities in the appropriate proprietary funds.

Eligible employees may accrue a maximum of 600 annual leave hours (75 days). Any hours accumulated in excess of 600 hours are paid at the employee’s adjusted hourly rate of pay. For the Firefighter group the maximum is 840 hours for 56 hour shift employees and 600 for 40 hour shif t employees. Employees with fewer than 20 years of service may request pay in lieu of annual leave up to a maximum of 10 days. Employees with more than 20 years of service may request a maximum of 15 days pay in lieu of annual leave.

Government-Wide Financial Statements

For governmental and business-type activities, compensated absences are recorded as expenses when earned.

Governmental Fund Financial Statements

For governmental funds, compensated absences are recorded as expenditures in the year paid. The General Fund is typically used to liquidate compensated absences. In proprietary funds, compensated absences are expensed to the various funds in the period they are earned, and such fund’s share of the unpaid liability is recorded as a long-term liability of the fund.

P. Long-Term Debt and Other Long-Term Obligations

Government-Wide Financial Statements and Proprietary Fund Financial Statements

In the Government-Wide Financial Statements and the propr ietary fund types in the Fund Financial Statements, long-term debt and other obligations are reported as liabilities in the applicab le governmental activities, business- type activities, or proprietary fund statement of net positions. Bond premiums and discounts are deferred and amortized over the life of the bonds using effective interest methods. Bonds payable are reported net of the applicable bond premium or discount. In the governmental funds statement of revenue, expenditures and changes in fund balance, issuance of debt is recorded as another financing source (use) in the respective fund. Issuance costs and payment of principal are reported as debt service expenditures.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

63 Note 1 – Summary of Significant Accounting Policies (Continued)

P. Long-Term Debt and Other Long-Term Obligations (Continued)

Governmental Fund Financial Statements

The governmental fund financial statements do not present long-term debt but are show n in the Reconciliation of the Governmental Funds Balance Sheet to the Governme nt-Wide Statement of Net Position. Governmental fund types recognize bond premiums and discounts during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Debt issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

Q. Unearned Revenue

Unearned revenues arise when the City receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures or when monies are received before the related services are performed. In subsequent periods, when both revenue recognition criteria are met or when the City has a legal claim to the resources, the liability for unearned revenue is removed from the balance sheet and revenue is recognized.

R. Deferred Outflows and Inflows of Resources

The Statement of Net Position and Ba lance Sheet – Governmental Funds reports separate sections for Deferred Outflows of Resources, and Deferred In flows of Resources, when applicable.

Deferred Outflows of Resources – represent a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/ expenditure) until then.

Deferred Inflows of Resources – represent an acquisition of net position th at applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time.

S. Net Position and Fund Balance

Net Position Classifications

In the government-wide financial statements, net position is classified in three categories:

Net Investment in Capital Assets – This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation, outstanding balances of debt and any debt-related deferred outflows and inflows of resources that are attributable to the acquisition, constructi on, or improvement of these assets reduce the balance of this category.

Restricted Net Position – This category consists of restricted asse ts reduced by liabilities and deferred inflows of resources related to those assets. Enabling legislation auth orizes the City to assess, levy, charge, or otherwise mandate payment of resources and includes a legally enforceable requirement that those resources be used only for the specific purposes stipulated in the legislation.

Unrestricted Net Position – This category represents net position of the City that is not restricted for any project or purpose and does not meet the criteria for “net investment in capital assets.”

The City first applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position are available.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

64 Note 1 – Summary of Significant Accounting Policies (Continued)

S. Net Position and Fund Balance (Continued)

Fund Balances Classifications

As prescribed by U.S. GAAP, governmental funds report fund balance in classifications based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the funds can be spent. As of June 30, 2022, fund balances for governmental funds are made up of the following:

Nonspendable Fund Balance – includes amounts that cannot be spent because they are either (a) not in a spendable form, or (b) legally or contractually required to be maintained intact. The “not in spendable form” criterion includes items that are not expected to be converted to cash, fo r example: prepaid items and long-term loans and notes receivable.

Restricted Fund Balance – includes amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governm ents; or (b) imposed by law through constitutional provisions or enabling legislation. Restrictions may effectively be changed or lifted only with the consent of resource providers.

Committed Fund Balance – includes amounts that can only be used for the specific purposes determined by a formal action of the City’s highest level of decision-making aut hority. The City Council is the highest level of decision- making authority for the City that can, by adoption of an ordinance, commit fund balances. Commitments may be changed or lifted only by the City Council taking the sam e formal actions that imposed the original constraint occurring no later than the close of the reporting period.

Assigned Fund Balance – includes amounts intended to be used by the City for specific purposes through budgetary actions or delegation of authority by the City Council. Intent is expressed by the City Council or an official to whom the City Council has delegated the authority (generally, the City Manager) to assign amounts to be used for specific purposes. This is also the classification for residual funds in the governmental funds other than General Fund.

Unassigned Fund Balance – includes amounts that have not been restricted, committed, or assigned. This includes the residual fund balance of General Fund and residual fund deficits of other governmental funds.

In circumstances when an expenditure is made for a purpose for which amounts are available in multiple fund balance categories, fund balance is depleted in the order of restricted, committed, assigned, and unassigned.

T. Property Taxes

Property taxes are collected on behalf of and remitted to the City by the County of Monterey (the “County”). The amount of property tax levies is restricted by Article 13 A of the California State Constitution (commonly referred to as Proposition 13). The County assesses property values, le vies, bills, and collects the related property taxes as follows:

Secured Unsecured
Lien Dates January 1 January 1
Levy Dates January 1 January 1
Due Dates 50% on November 1 July 1
50% on February 1
Delinquent after December 10 (for November) August 31
April 10 (for February)
DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

65 Note 1 – Summary of Significant Accounting Policies (Continued)

T. Property Taxes (Continued)

The City does not have the ability to control the levy rate or the amount of property taxes remitted by the County because these are governed by State law.

The City has not elected to participate in the “Teeter Plan” offered by the County whereby cities receive 100% of secured property and supplemental propert y taxes levied in exchange for foregoing any interest and penalties collected on the related delinquent taxes. The City retain s the right to any interest and penalties collected on the related delinquent taxes. Accordingly, property tax revenues are recognized in the fiscal period for which they are levied and collected, adjusted for any amounts deemed unco llectible and amounts expected to be collected more than 60 days after the fiscal year.

General property taxes are based on either a flat 1% rate applied to the fiscal year 1976 full value of the property or on 1% of the sales price of the property on sales tran sactions and construction that occur after the fiscal year 1976 valuation. Assessed values on properties (exclusive of increases related to sales and construction) can rise at a maximum of 2% per year depending on increases in the consumer price index.

U. Pensions

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiducia ry net position of the plans and additions to/deductions from the plans’ fiduciary net position have been determined on the same basis as they are reported by the plans. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with benefit terms. Investments are reported at fair value.

The following timeframes are used for pension reporting:

CalPERS Pension Plans
Valuation date June 30, 2020
Measurement date June 30, 2021
Measurement period July 1, 2020 to June 30, 2021

NY Life Pension Plan
Valuation date September 1, 2021
Measurement date September 1, 2021
Measurement period October 1, 2020 to September 30, 2021

Gains and losses related to changes in total pension liab ility and fiduciary net position are recognized in pension expense systematically over time. The first amortized am ounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be r ecognized in future pension expense. The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is amortized straight-line over 5 years. All other amounts are amortized straight-line over the average expected remaining service lives of all members that are provided with benefits (active, inactiv e, and retired) as of the beginning of the measurement period.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

66 Note 1 – Summary of Significant Accounting Policies (Continued)

V. Other Postemployment Benefits (“OPEB”)

For the purpose of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, informati on about the fiduciary net position of the City’s OPEB Plan and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis as they are reported by the Plan. For this purpose, the OPEB Plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investment s are reported at fair value, except for money market investments, which are reported at amortized cost.

The following timeframes are reported OPEB reporting:

OPEB
Valuation date June 30, 2021
Measurement date June 30, 2021
Measurement period July 1, 2020 to June 30, 2021

Gains and losses related to changes in total OPEB liab ility and fiduciary net position are recognized in OPEB expense systematically over time. The first amortized amounts are recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense. The amortization period differs depending on the sources of gain or loss. The difference between project ed and actual earnings is amortized on a straight-line basis over 5 years. All other amounts are amortized on a st raight-line basis over the av erage expected remaining service lives of all members that are provided with benefits (active, inactive, and retir ed) at the beginning of the measurement period.

W. Encumbrances

Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the General, Spec ial Revenue, and Capital Projects Funds. Encumbrances outstanding at year-end are reported as reservations of fund balance since they do not constitute expenditures or liabilities.

X. Use of Accounting Estimates

The preparation of the basic financial statements in c onformity with U.S. GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. In addition, estimates affect the reported amount of revenues and expenses. Actual results could differ from these estimates and assumptions.

Y. Self-Insurance

The City is self-insured for workers’ compensation, ge neral, automobile, and public liability claims. The City’s estimated liability for claims as of June 30, 2022 is based on the claim manager’s estimate of probable losses plus an amount estimated for incurred but not reported claims. An Internal Service Fund is used to account for the collection of premiums from various City departments related to workers’ compensation claims and general claims liabilities. Premiums are established based on historical cl aims experience. Additionally, the City contracts with third party administrators for claims management.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

67 Note 1 – Summary of Significant Accounting Policies (Continued)

Z. Implementation of New GASB Pronouncements For the Year Ended June 30, 2022

During fiscal year ended June 30, 2022, the City implemented the following new GASB Pronouncements:

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

GASB Statement No. 89 – In June 20 18, GASB issued Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period . This Statement establishes accounting requirements for interest cost incurred before the end of a construction period. Such in terest cost includes all interest that previously was accounted for in accordance with the requirements of pa ragraphs 5–22 of Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contai ned in Pre–November 30, 1989 FASB and AICPA Pronouncements, which are superseded by this Statement. This Statement requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. As a result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset reported in a business–type activity or enterprise fund. Implementation of this Statement did not have a significant effect on the City’s financial statements for the fiscal year ended June 30, 2022.

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

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

The objective of this Statement is to address those and other accounting and financial reporting implications that result from the replacement of an IBOR. Implementation of th is Statement did not have a significant effect on the City’s financial statements for the fiscal year ended June 30, 2022.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

68 Note 1 – Summary of Significant Accounting Policies (Continued)

Z. Implementation of New GASB Pronouncements For the Year Ended June 30, 2022 (Continued)

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

Note 2 – Stewardship, Compliance, and Accountability

A. Budgeting

The Budget is prepared by the City Manager and adopt ed by City Council. Formal budgetary integration was employed as a management control device during the fiscal year for the General Fund, Special Revenue Funds, and Capital Projects Funds. The City Manager may transfer budget appropriations between departments and Department Directors may transfer appropriations between program s and accounts within their individual departments and divisions, but only the Council by resolution may appropriate funds from reserves or fund balances.

Budgets for General, Special Revenue and Capital Projects Funds are adopted on a basis consistent with generally accepted accounting principles (GAAP). Reserves for future lease commit ments have been established for accounting purposes and the fund balance is reserved for the total lease commitment consistent with budget policies.

Budget policy excludes taxes, interest, and accounts receiva ble assets, which are not currently available resources for budget purposes, and condemnation deposits which are returned upon right of way acquisition.

Expenditures may not legally exceed bu dgeted appropriations at the governme nt level. Budgeted amounts shown are as originally adopted or as amended by the City Council during the year. Additional supplementary appropriations were adopted during the mid-year review.

Appropriations lapse at fiscal year end and then are re-budgeted for the coming year. Project-length financial plans are adopted for all capital projects funds and appropriati ons are carried forward until project completion. Grant funds are carried forward until the grant expires.

Encumbrances outstanding at year-end are recorded as reservations of fund balance and do not constitute expenditures or liabilities because the commitments will be honored during the subsequent year.

For additional information on budgetary policy and control see Required Supplementary Information.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

69 Note 2 – Stewardship, Compliance, and Accountability (Continued)

B. Deficit Fund Balances and Net Position

At June 30, 2022, the following funds had a deficit fund balance or deficit net position:

Fund Type Fund Deficit
Governmental Housing and Urban Development Grant (2,772,187) $ Governmental Emergency Medical Services (378,482)
Governmental Traffic Safety (27,135)
Governmental Assessment District Administration (2,178) Enterprise Downtown Parking District Fund (5,494,230)
Internal Service Fund General Liability (3,014,068)

Governmental Funds – Housing and Urban Development Grant Fund The deficit net position in the Housing and Urban Development Grant Fund of $2,772,187 is a result of an increase in Community and Development and related Housing reimbursable grants in Emergency Shelter Grants related to COVID 19 mitigation program and relate d expenditures. This deficit will decline as claims are submitted for reimbursement to state and federal agencies and becomes available.

Non-Major Funds
The deficit fund balances in the Special Revenue Funds Emergency Medical Services f und of $378,482 is due to increased expenditures in emergency equipment and supplies. The deficit fund balance in the Traffic Safety Special Revenue Fund of $27,135 is a result of increased services in vehicle code violations provided by Monterey County.

These deficits will decline as claims are submitted for reimbursement to state and federal agencies and unavailable funds become available. The deficit fund balance in the Debt Service Funds Assessment District Administration fund of $2,178 is due to amounts owed to the General Fund. This will be cleared in fiscal year 2023 and the fund will be closed out.

Enterprise Funds – Downtown Parking District Fund
The deficit net position in the Downtown Parking District Fund of $5,494,230 is a result of operating cost in excess of operating revenues and the long-term lease payable amounting to $9,012,000. This deficit will continue to decline over time as the lease payable is collected.

Internal Service Funds
The deficit net position in General Liability internal service fund of $3,014,068 is the result of insurance costs exceeding charges for services in the fund. The City is reevaluating their internal service fund allocations in order to ensure that charges for services in internal service funds are sufficient to cover the costs of providing services moving forward.

C. Debt Compliance

There are a number of limitations and restrictions contained in the various bond indentures. The City believes it is in compliance with all significant limitations and restrictions.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

70 Note 3 – Cash and Investments

Cash and investments are presented in the accompanying financial statements at June 30, 2022 as follows:

Fiduciary Funds
Governmental Business-Type Statement of
Activities Activities Total Net Position Total
Cash and investments 216,282,792 $ 16,403,450 $ 232,686,242 $ 13,419,418 $ 246,105,660 $ Restricted cash and investments 1,077,537 6,987 1,084,524 6,151,577 7,236,101 Total cash and inv estments 217,360,329$ 16,410,437 $ 233,770,766 $ 19,570,995 $ 253,341,761 $ Government-Wide Statement of Net Position

Cash and investments at June 30, 2022, consisted of the following:

Cash and Cash Equivalents:

Cash on hand 25,000 $
Demand accounts at banks 6,260,470
Money market 16,073,619
Deposits held in trust by fiscal agent 217,200
Money market held in trust by fiscal agent 2,595,751
Local Agency Investment Fund 89,354,488
Total cash and cash equivalents 114,526,528
Investments:

Investments held by fiscal agent 134,460,738
Deferred compensation 4,354,495
Total inv estments 138,815,233
Total cash and inv estments 253,341,761$

A. Demand Deposits

The carrying amounts of the City’s demand deposits we re $6,260,469 at June 30, 2022. Bank balances were $8,938,429 at that date. The total am ount of which was collateralized or insured with securities held by the pledging financial institutions in the City’s name is discussed below.

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

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

The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. In terest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the period-end cash and investment balances.

Interest income from cash and investments with fiscal agents is credited directly to the related fund.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

71 Note 3 – Cash and Investments (Continued)

B. Investments

The table below identifies the investment types that are authorized for the City by the California Government Code (or the City’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code that address interest rate risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provision of the California Government Code or the City’s investment policy:

Ma x i m um Ma x i m um
Ma x i m um Percentage Investment in
Authorized Investment Types Maturity of Portfolio One Issuer* Certificates of deposit 5 years None None
Repurchase agreements 5 years None None
Bankers' acceptances 5 years None None
Guaranteed investment contracts 5 years None None
U.S. Treasury bills and notes 5 years None None
State of California Local Agency Investment Fund N/A None None Government agency securities 5 years None None
Passbook savings accounts 5 years None None
Mutual funds 5 years None None
Interest bearing checking accounts N/A None None
Commercial paper 5 years None None
* Based on state law requirements or City investment policy requirements, whichever is more restrictive.

The Deferred Compensation Plan is permitted by City resolu tion to invest in deeds of trust secured by real or personal property.

In accordance with Section 53651 of the California Governme nt Code, the City cannot invest in inverse floaters, range notes, or interest-only strips that are derived from a pool of mortgages, or in any security that could result in zero interest accrual if held to maturity. The limitation does not apply to investments in shares of beneficial interest issued under the Investment Company Act of 1940 that are authorized investments under Section 53601 of the California Government Code. A five-year maximum matu rity for each investment is allowed unless approved by the City Council.

Investment income from cash and invest ments held by fiscal agents are credit ed directly to the related funds.

The City is a participant in LAIF which is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City’s investments with LAIF at June 30, 2022, included a portion of the pool funds invested in Structured Notes and Asset-Backed Securities:

Structured Notes: debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated ma turity) depend upon one or more indi ces and/or that have embedded forwards or options.

Asset-Backed Securities: generally, mortgage-backed securities that entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (for example, Collateralized Mortgage Obligations) or credit card receivables.

As of June 30, 2022, the City had $89,354,488 invested in LAIF, which had invested 1.88% of the pool investment funds in Structured Notes and Asset-Backed Securities. The fair value of the City’s portion in the pool is the same as the value of the pool shares and reported at amortized cost.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

72 Note 3 – Cash and Investments (Continued)

C. Risk Disclosures

Disclosures Relating to Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment.

As a means of limiting exposure to fair value losses from rising interest rates, the City’s investment policy limits the maturity of investments in accordance with Government Code Sections 53601(a)-(n) and 53636(a)-(m). It is the City’s policy to ladder investments so that there are always investments coming due to meet cash flow requirements.

Because the Local Agency Investment Fund as of June 30, 2022 had an average life of 290 days, it was presented as a cash equivalent with a maturity of 0-12 months. However, LAIF allows the City to make withdrawals of any amount within 24 hours.

At June 30, 2022, the City had the following investment maturities:

Investment Type Total 1 year or fewer 1 to 5 years Over 5 years Investment agreements - BNY 128,108,969$ 20,179,656$ 107,929,313$ -$ New York Life Pension 6,351,769 6,351,769 - - Trust deeds - deferred compensation 4,354,495 - 4,354,495 - Total inv estments 138,815,233$ 26,531,425$ 112,283,808$ -$ Investment Maturities

For deposits, custodial credit risk is the risk that, in the event of the failure of a depository financial institution, the City 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. For an i nvestment, custodial credit risk is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer), the City will no t be able to recover the value of its investments or collateral securities that are in th e possession of an outside party.

The City’s investment policy limits safekeeping of investments to third-party custody. All of the City’s deposits are either insured by the Federal Depository Insurance Corpor ation (“FDIC”) up to $250,00 0 or collateralized with pledge securities held in the trust department of the financial institution in the City’s name.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

73 Note 3 – Cash and Investments (Continued)

C. Risk Disclosures (Continued)

Disclosures Relating to Concentration of Credit Risk

The City places no limit on the amount the City may invest in any one issu er. However, the City’s investment policy calls for portfoli o diversification by avoiding over concentrat ion in a specific maturi ty sector or specific investments. The City’s portfolio is detailed below:

Investment Type Value S&P Moody's % of Total
Investment agreements:

Municipal bonds 23,670,530$ AA NR 17.05%
US Treasuries 50,382,947 A Aaa 36.29%
FHLB 11,885,081 AA+ Aaa 8.56%
FHLMC 3,550,086 AA+ Aaa 2.56%
FNMA 2,995,232 AA+ Aaa 2.16%
FFCB 3,424,822 AA+ Aaa 2.47%
Corporate bonds 8,529,741 A+ to A2 A1 to A2 6.14% Trust deeds - deferred compensation 4,354,495 NR NR 3.14% Money market funds: 0.00%
Wilmington Trust, NA 23,670,530 A- A2 17.05%
New York Life Fixed Dollar Account 6,351,769 NR NR 4.58% Total inv estments 138,815,233$ 100.00%

D. Fair Value Measurement

The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuati on inputs used to measure the fair value of the asset.

The hierarchy gives the highest priority to unadjusted quoted prices in active market s for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the 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 that the City has the ability to access.

Level 2 – Inputs to the valuation methodology include:

• Quoted prices for similar assets or liabilities in active markets; • Quoted prices for identical or similar assets or liabilities in inactive markets; • Inputs other than quoted prices that are observable for the asset or liability; and • 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. 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). Unobservable inputs are developed based on the best information available in the circumstances and may include the City’s own data.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

74 Note 3 – Cash and Investments (Continued)

D. Fair Value Measurement (Continued)

The asset’s level within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. Valuation techniques used, need to maximize the use of observable inputs and minimize the use of unobservable inputs. The determination of what constitutes observable requires judgment by the City’s management. City management consider s observable data to be that market data, which is readily available, regularly distributed or updated, reliable, and verifi able, not proprietary, and pr ovided by multiple independent sources that are actively involved in the relevant market. The categorization of an investment within the hierarchy is based upon the relative observab ility of the inputs to its fair value measurement and does not necessarily correspond to City management’s perceived risk of that investment.

In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety ar e categorized based on the lowest level input that is significant to the valuation. The City’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.

Deposits and withdrawals in governmental investment pool s, such as LAIF, are made on the basis of $1 and not fair value. Accordingly, the City’s measured fair value of its proportionate share in these types of investments is based on uncategorized inputs not defined as a Level 1, Le vel 2, or Level 3 input. N on-negotiable FDIC-insured bank certificates of deposit are priced at par.

The City had the following recurring fair value measurements as of June 30, 2022:

Inv estments measured by fair v alue lev el: June 30, 2022 Level 1 Level 2 Level 3 Investment agreements:

Municipal bonds 23,670,530 $ 23,670,530 $ - $ - $ US Treasuries 50,382,947 50,382,947 - - FHLB 11,885,081 11,885,081 - - FHLMC 3,550,086 3,550,086 - - FNMA 2,995,232 2,995,232 - - FFCB 3,424,822 3,424,822 - - Corporate bonds 8,529,741 8,529,741 - - Trust deeds - deferred compensation 4,354,495 - - 4,354,495 Total inv estments by fair v alue lev el 108,792,934 104,438,439 $ - $ 4,354,495$ Investments not subject to the fair value hierarchy:

Money market funds:

Wilmington Trust, NA 23,670,530
New York Life Fixed Dollar Account 6,351,769
Total investments not subject to the fair value hierarchy 30,022,299 Total inv estments 138,815,233$

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

75 Note 3 – Cash and Investments (Continued)

D. Fair Value Measurement (Continued)

The following is a description of the valuation methods and assumptions used by the City to estimate the fair value of its investments:

• Investments classified within Level 1 of the fair value hierarchy are valued using quoted prices in active markets when available.

• The City held one type of investment that is measured using Level 3 inputs, Trust Deeds. The City administers a Trust Deposit Fund that includes a Deferred Comp ensation Plan funded solely by the voluntary salary reductions. Trust Deed notes secured by property taken back in foreclosure and held for resale, are valued by independent real estate professionals (market approach), and trust deed notes are valued at their present value (income approach). The valuations are considered Level 3. The value of properties held for resale are reduced for cost of sales. The notes (loans) are valued b ased on amounts investors would likely pay for notes with interest rates ranging from 6% to 11% discounted to provide loan to values ranging from 50% to 70% depending on property type and condition, borrowers payment history, and term remaining on note.

There have been no changes in the methods and assumptions used at June 30, 2022. The methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.

City management believes its valuation methods are appropriate and consistent with other market participants. The use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Note 4 – Restricted Assets

Certain cash and investments are reported as restricted assets at June 30, 2022 as follows:

Governmental Funds:

Assessment District Debt Service Fund - restricted for debt service 124,466 $ Assessment District Reserve Debt Service Fund - restricted for debt service 234,528 2019 Special Tax Bond Monte Bella Debt Service Fund - restricted for debt service 327,643 Enterprise Funds:

Sanitary Sewer Fund - restricted for debt service 6,987 Internal S ervice Funds:

Workers Compensation Internal Service Fund 274,506
General Liability Internal Service Fund 116,394
Total restricted assets - primary government 1,084,524$ Fiduciary Funds:

Private Purpose Trust Funds 1,706,907$
Pension Trust Fun d 4,367,611
Custodial Funds 77,059
Total restricted assets - fiduciary funds 6,151,577$

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

76 Note 5 – Taxes Receivable

Taxes receivable recorded in the General Fund of $19,437,488 represent amounts due for the quarter ended June 30, 2022 for the following taxes:

Sales tax 6,997,902$
Measure E transaction and use tax 2,928,655
Measure G transaction and use tax 5,892,370
Utility users tax 1,255,792
Transient occupancy tax 1,029,507
Franchise tax 728,720
Cannabis tax 377,652
Other taxes 145,441
Property transfer tax 81,449
19,437,488$

Note 6 – Assessments Receivable

Debt Service Fund – Assessments receivab le recorded in the Assessment District Debt Service Fund of $8,970,000 at June 30, 2022, will be collected from property owners to re tire outstanding bond principal issued for improvements in special assessment districts.

Assessment receivables in the amount of $8,290,000 are not expected to be collected within the subsequent year.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

77 Note 7 – Due From Other Agencies

At June 30, 2022, amounts due from other agencies consisted of the following:

Federal State Other Total
Governmental Activities:

General Fund:

Welcome Center -$ -$ 75,000$ 75,000$ Special Rev enue Funds:

Association of M onterey Bay Area Govts. - 3,484 - 3,484 CA Emergency Solutions & Housing - 394,272 - 394,272 CA Highway Users Tax - 637,441 - 637,441 CA Housing & Community Development - 77,016 - 77,016 CA State Library - - 4,705 4,705 Cable Franchise - - 43,942 43,942 CDBG Improvement Program 356,421 - - 356,421 City of Pacific Grove - - 174,495 174,495 County of Monterey - 49,029 3,305,793 3,354,822 Department of Alcoholic Beverage Control - - 4,520 4,520 Emergency Shelter Grant 2,618,155 - - 2,618,155 Federal Drug Enforcement 2,172 - - 2,172 HOME Investment Program 28,927 - - 28,927 Office of Traffic Safety 56,590 - - 56,590 SB1 Road Maintenance & Rehab - 562,987 - 562,987 SB2 Permanent Local Housing Allocation - 172,423 - 172,423 U.S. Department of Justice 138,716 - - 138,716 U.S. Department of Treasury 405,783 - - 405,783 Capital Projects Funds:

CA Dept. of Transportation - 9,942 - 9,942 CA Office of Emergency Services - 8,850 - 8,850 Developers - - 1,821,196 1,821,196 Federal ATP Grant 390,715 - - 390,715 Federal Aviation Administration 128,978 - - 128,978 Federal HSIP 29,774 - - 29,774 Homeland Security - FEMA 93,794 - - 93,794 M onterey Bay Air Resource District - 36,200 - 36,200 Monterey Bay Unified Air Pollution Control Dist. - 148,479 - 148,479 Monterey County - RSTP - 928,823 - 928,823 State Dept. of Forestry and Fire - 29,161 - 29,161 State Water Grant - 133,801 - 133,801 Transportation Agency for Monterey County - 8,670 - 8,670 Primary government total 4,250,025$ 3,200,578$ 5,429,651$ 12,880,254$

Note 8 – Leases Receivable

The City leases land and easements to third parties. Leases receivable consist of agreements with third parties for the “right-to-use” the underlying assets owned by the City. The remaining terms of the agreements range from one to 28 years. The calculated interest rates used match the City’s incremental borrowing rate at July 1, 2021.

For fiscal year ended June 30, 2022, the City recognized $1,219,733 in lease revenue and $237,791 in interest revenue, and the outstanding receivable amount is $11,629,846.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

78 Note 8 – Leases Receivable (Continued)

A summary of changes in the leases receivable for the fiscal year ended June 30, 2022 is as follows:

Amounts Amounts
Balance due within due in more
July 1, 2021 Additions Reductions June 30, 2022 one year than one year Governmental activities 6,694,836$ - $ (648,777)$ 6,046,059 $ 561,725 $ 5,484,334 $ Business-type activities 6,014,676 - (430,889) 5,583,787 429,471 5,154,316 Total 12,709,512 $ - $ (1,079,666)$ 11,629,846 $ 991,196 $ 10,638,650 $

Future lease payments are as follows as of June 30, 2022:

Year Ending Lease
June 30 Receivable Interest Total
2023 991,196$ 396,542$ 1,387,738$ 2024 943,755 363,066 1,306,821 2025 813,685 334,209 1,147,894 2026 711,687 307,723 1,019,410 2027 587,282 284,785 872,067 2028-2032 2,751,304 1,129,241 3,880,545 2033-2037 2,982,455 605,999 3,588,454 2038-2042 1,229,849 204,293 1,434,142 2043-2047 446,813 70,787 517,600 2048-2050 171,820 7,364 179,184 Total 11,629,846$ 3,704,009$ 15,333,855$

As of June 30, 2022, the amounts re ported as deferred inflows of resources will be recognized as lease revenue as follows:

Year Ending
June 30 Total
2023 1,267,881 $
2024 1,162,821
2025 990,183
2026 842,795
2027 728,387
2028-2032 2,892,397
2033-2037 2,316,768
2038-2042 851,310
2043-2047 324,909
2048-2050 112,328
Total 11,489,779$

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

79 Note 9 – Loans and Notes Receivable

At June 30, 2022, loans and notes receivable of the City's major individual funds and non-major funds taken in aggregate, including the applicable allowance for uncollectible accounts are as follows:

Low
& Moderate Total
Income Governmental Fiduciary
CDBG Housing Asset Activ ities Funds
Loans funded by federal grants: 22,453,556$ - $ 22,453,556$ - $ Economic development real estate
developer and other loans - 10,022,690 10,022,690 173,900 Less: allowance for uncollectibles (22,386,988) (10,006,119) (32,393,107) - Total loans, net 66,568$ 16,571 $ 83,139 $ 173,900 $

The City uses funds generated from the former Agency Housing Loans as well as other state and federal funding sources to offer financial assistance to qualif ied developers, individuals and families by providing loans at “below market” interest rates.

Typical loans and related terms are summarized as follows:

Loan Type Interest Rates Due
Affordable housing 0 - 4% up to 55 years
Multi-unit rental rehabilitation 3% 5 or more years
First time home buyer 3% 7 to 40 years
Home improvement 3 - 6% 1 to 30 years

Loans are secured by first or second in lien-property deeds of trust except for first time homebuyer loans, which are all secured by second deeds of trust. Interest and principal are typically due in installments, except for first time homebuyer, which do not require payments until their maturity dates.

The City has also invested in multi-family rental housing projects serving low to moderate income individuals through subordinate loans with terms of up to 55 years. Generally, th ese loans are to be repaid th rough fixed payments or net cash flow payments from project operations and the term and potential risk of each loan varies. Because of the net cash flow feature of these subordinate loans, there is greater risk of variability in the timing of payments and, potentially, a lower probability of eventual repayment on these subordinate loans than on other loan types.

Accordingly, for financial statement purposes, the City has established an allowance account for these loans receivable due to the contingent nature of the repayment schedules of these loans.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

80 Note 10 – Interfund Receivables, Payable, and Transfers

A. Due From and To Other Funds

At June 30, 2022, the balances of due from and to other funds were as follows:

Receivable Fund Payable Fund Amount Purpose
General Fund Grants Special Revenue Fund 717,402$ Cash overdraft General Fund Housing and Urban Development Special Revenue Fund 4,012,495 Cash overdraft General Fund Downtown Parking District Enterprise Fund 1,705,208 Cash overdraft General Fund Emergency Medical Services Special Revenue Fund 300,365 Cash overdraft General Fund Development Fees Special Revenue Fund 268 Cash overdraft General Fund Lighting, Landscape, and Maintenance Dist Special Revenue Fund 51,188 Cash overdraft General Fund Special Construction Assistance Capital Projects Fund 1,235,128 Cash overdraft General Fund Traffic Safety Special Revenue Fund 81,891 Cash overdraft General Fund Assessment District Administration Debt Service Fund 2,178 Cash overdraft 8,106,123
Capital Projects Capital Projects Fund General Fund 339,665 Capital projects Capital Projects Capital Projects Fund Industrial Waste Enterprise Fund 26,220 Capital projects Capital Projects Capital Projects Fund Emergency M edical Services Special Revenue Fund 15,792 Capital projects Capital Projects Capital Projects Fund Gas Tax Special Revenue Fund 81,232 Capital projects Capital Projects Capital Projects Fund Development Fees Special Revenue Fund 413,561 Capital projects Capital Projects Capital Projects Fund Measure X Special Revenue Fund 272,811 Capital projects Capital Projects Capital Projects Fund Permit Services Enterprise Fund 12,072 Capital projects Capital Projects Capital Projects Fund Sanitary Sewer Enterprise Fund 12,123 Capital projects Capital Projects Capital Projects Fund SB1 Road Maintenance & Rehab Special Revenue Fund 191,057 Capital projects 1,364,533
Workers Compensation Internal Service Fund General Fund 16,831,462 Claims Total 26,302,118$

B. Long-Term Advances

At June 30, 2022, the balances of long-term advances were as follows:

Adv ances Due To
Governmental
Activities
General Fund
Adv ances Due From
Business-Type Activities:

Downtown Parking 2,785,000 $
Total business-type activities 2,785,000
Total primary government 2,785,000 $

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

81 Note 10 – Interfund Receivables, Payable, and Transfers (Continued)

C. Transfers

Interfund transfers during the year ended June 30, 2022, consisted of the following:

Transfers In Transfers Out Amount Purpose
General Fund Gas Tax Special Revenue Fund 1,725,000$ Capital projects/debt service General Fund Traffic Safety Special Revenue Fund 250,000 Capital projects/debt service General Fund Grants Special Revenue Fund 4,099 Capital projects/debt service Subtotal General Fund 1,979,099
Housing and Urban Development Special Revenue Fund General Fund 4,424 Grant projects Airport Enterprise Fund Capital Projects Capital Projects Fund 20,467 Contribute capital assets Industrial Waste Enterprise Fund General Fund 1,865,000 Operating subsidy Sanitary Sewer Enterprise Fund Capital Projects Capital Projects Fund 45,436 Capital projects Emergency Medical Services Special Revenue Fund General Fund 850,000 Operating subsidy Vehicle Abatement Special Revenue Fund General Fund 50,000 Operating subsidy Grants Special Revenue Fund General Fund 2 Operating subsidy 2018 Lease-PS Building Police Debt Service Fund General Fund 11,938,298 Debt Service COP 2018B T.R.I.P. Debt Service Fund Measure X Special Revenue Fund 2,340,074 Debt Service 2018 Lease El Gabilan Library Debt Service Fund General Fund 788,457 Debt Service 2020A Refunding Energy Debt Service Fund General Fund 1,177,177 Debt Service 2020A Refunding Energy Debt Service Fund Energy Improvement Lease Debt Service Fund 36,001 Debt Service 2020A Refunding Energy Debt Service Fund Airport Enterprise Fund 76,545 Debt Service 2020A Refunding Energy Debt Service Fund Industrial Waste Enterprise Fund 71,658 Debt Service 2020A Refunding Energy Debt Service Fund Sanitary Sewer Enterprise Fund 95,495 Debt Service 2020A Refunding Energy Debt Service Fund Downtown Parking District Enterprise Fund 32,391 Debt Service Subtotal 2020A Refunding Energy Debt Service Fund 1,489,267 2020A Refunding SVSWA Debt Service Fund General Fund 602,794 Debt Service 2020A Refunding SVSWA Debt Service Fund 2015 Refunding COP 2005 A&B Debt Service Fund 87,010 Debt Service Subtotal 2020A Refunding SVSWA Debt Service Fund 689,804 Capital Projects Capital Projects Fund General Fund 4,918,635 Capital Projects Capital Projects Capital Projects Fund Monte Bella Maint District Special Revenue Fund 4,110 Capital Projects Capital Projects Capital Projects Fund Development Fees Special Revenue Fund 1,603,186 Capital Projects Capital Projects Capital Projects Fund Gas Tax Special Revenue Fund 552,775 Capital Projects Capital Projects Capital Projects Fund Emergency Medical Services Special Revenue Fund 120,792 Capital Projects Capital Projects Capital Projects Fund Measure X Special Revenue Fund 1,308,013 Capital Projects Capital Projects Capital Projects Fund SB1 Road Maintenance & Rehab Special Revenue Fund 1,556,858 Capital Projects Capital Projects Capital Projects Fund Affordable Housing Special Revenue Fund 6,800 Capital Projects Capital Projects Capital Projects Fund Special Construction Assistance Capital Projects Fund - Capital Projects Capital Projects Capital Projects Fund Industrial Waste Enterprise Fund 1,758,837 Capital Projects Capital Projects Capital Projects Fund Sanitary Sewer Enterprise Fund 3,971,041 Capital Projects Capital Projects Capital Projects Fund Permit Services Enterprise Fund 358,418 Capital Projects Subtotal Capital Project Capital Projects Fund 15,884,062 General Liabiilty Internal Service Fund General Fund 1,661,300 Operating Subsidy Fleet Internal Service Fund General Fund 11,120,000 Operating Subsidy Total 50,725,690$

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

82 Note 11 – Capital Assets

A. Governmental Activities

The summary of changes in governmental activities capital assets for the year ended June 30, 2022, is as follows:

Balance
July 1, 2021, Prior Period Balance
Gove rnme ntal Acti vi ti e s: as Restated Adjustment Additions Retirements Transfers June 30, 2022 Nondepreciable assets:

Land 25,899,986$ -$ -$ -$ -$ 25,899,986$ Construction in progress 159,896,482 1,667,376 6,712,551 - (143,852,318) 24,424,091 Total nondepreciable assets 185,796,468 1,667,376 6,712,551 - (143,852,318) 50,324,077 Depreciable assets
Buildings and improvements 46,337,340 1,634,233 - - 87,157,535 135,129,108 Improvements other than buildings 15,766,022 11,749,332 - - 23,161,998 50,677,352 Machinery and equipment 42,133,934 1,844,782 312,789 (1,052,050) 2,711,962 45,951,417 Infrastructure 255,168,975 135,160,357 - - 30,820,823 421,150,155 Right-to-use assets 126,634 - 412,877 - - 539,511 Total depreciable/amortizable assets 359,532,905 150,388,704 725,666 (1,052,050) 143,852,318 653,447,543 Accumulated depreciation/amortization
Buildings and improvements (22,484,365) (772,320) (889,092) - - (24,145,777) Improvements other than buildings (11,388,190) (11,311,523) (588,458) - - (23,288,171) M achinery and equipment (31,453,429) (1,644,102) (3,298,504) 1,017,170 - (35,378,865) Infrastructure (174,327,696) (103,493,631) (7,969,057) - - (285,790,384) Rig ht-to-use assets - - (204,913) - - (204,913) Total accumulated depreciation/amortization (239,653,680) (117,221,576) (12,950,024) 1,017,170 - (368,808,110) Total depreciable/amortizable assets, net 119,879,225 33,167,128 (12,224,358) (34,880) 143,852,318 284,639,433 Governmental activities
capital assets, net 305,675,693$ 34,834,504$ (5,511,807)$ (34,880)$ -$ 334,963,510$

Prior period adjustments in the amount of $34,834,504 were made to move capital assets from business-type activities. The beginning balance was also restated in the amount of $126,634 for GASB 87 Leases implementation.

Depreciation and amortization expense was charged to the functions/programs of the governmental activities as follows:

Gove rnme ntal Acti vi ti e s:

General government 583,471$
Police 1,333,392
Fire 1,087,348
Public works, including infrastructure 8,905,398
Recreation and parks 856,166
Library 184,249
Total depreciation/amortization expense - governmental activities 12,950,024$

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

83 Note 11 – Capital Assets (Continued)

B. Business-Type Activities

The summary of changes in business-type activities capital assets for the year ended June 30, 2022, is as follows:

Balance Prior Period Balance
Business-Type Activities: July 1, 2021 Adjustment Additions Retirements Transfers June 30, 2022 Nondepreciable assets:

Land 3,632,339$ -$ -$ -$ -$ 3,632,339$ Construction in progress 5,259,442 (1,667,376) 1,928,508 (1,796,095) (776,913) 2,947,566 Total nondepreciable assets 8,891,781 (1,667,376) 1,928,508 (1,796,095) (776,913) 6,579,905 Depreciable assets
Buildings and improvements 27,523,054 (1,634,233) - - - 25,888,821 Improvements other than buildings 26,708,254 (11,749,332) - - 502,183 15,461,105 M achinery and equipment 9,332,629 (1,844,782) 198,367 - 93,295 7,779,509 Infrastructure 237,688,120 (135,160,357) - - 181,435 102,709,198 Rig ht-to-use assets - - - - - - Total depreciable assets 301,252,057 (150,388,704) 198,367 - 776,913 151,838,633 Accumulated depreciation/amortization:

Buildings and improvements (15,943,528) 772,320 (730,298) - - (15,901,506) Improvements other than buildings (16,495,799) 11,311,523 (719,769) - - (5,904,045) Machinery and equipment (6,575,105) 1,644,102 (331,308) - - (5,262,311) Infrastructure (160,744,037) 103,493,631 (1,854,796) - - (59,105,202) Rig ht-to-use assets - - - - - - Total accumulated depreciation/amortization ( 199,758,469) 117,221,576 (3,636,171) - - (86,173,064) Total depreciable assets, net 101,493,588 (33,167,128) (3,437,804) - 776,913 65,665,569 Business-type activities
capital assets, net 110,385,369$ (34,834,504)$ (1,509,296)$ (1,796,095)$ -$ 72,245,474$

Prior period adjustments in the amount of $(34,834,504) were made to move capital assets governmental activities.

Depreciation expense was charged to the functions/programs of the business-type activities as follows:

Business-type Activities:

Airport 957,136 $
Industrial Waste 512,071
Sanitary Sewer 1,568,293
Downtown Parking 558,382
Permit Services 40,289
Total depreciation expense - business-type activities 3,636,171$

C. Successor Agency

The summary of changes in capital assets for the Successor Agency for the year ended June 30, 2022, is as follows:

Balance Prior Period Balance
Fiduciary Activities: July 1, 2021 Adjustment Additions Retirements Transfers June 30, 2022 Nondepreciable assets:

Land 149,270$ (149,270)$ -$ -$ -$ -$ Total nondepreciable assets 149,270 (149,270) - - - - Fiduciary activities
capital assets, net 149,270$ (149,270)$ -$ -$ -$ -$

A prior period adjustment was made to remove land that was no longer owned by the Successor Agency.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

84 Note 12 – Land and Properties Held For Resale

Land and properties held for resale at June 30, 2022 consisted of the following:

Special Revenue Fund
137, 145, & 151 Division Street 584,419$
Affordable Housing Fund - Sunset Avenue Merged Housing
115 Division Street 230,981
123 Division Street 206,265
923 E. Market Street 358,335
795,581
Total land and properties held for resale 1,380,000$

Note 13 – Long-Term Debt

A. Governmental Activities

A summary of changes in long-term debt for governmental activities for the year ended June 30, 2022 is as follows:

Balance Period Balance within one more than one
July 1, 2021 Adjustments Additions Retirements June 30, 2022 year year Governmental Activities
Direct Borrowings - leases 65,977,431$ 239,801$ 1,743,790$ (11,902,720) $ 56,058,302 $ 4,643,883$ 51,414,419$ Certificates of Participation:

TRIP 2018B 36,110,000 - - (740,000) 35,370,000 750,000 34,620,000 Series 2020A-Twin Creeks - 2,330,000 - (355,000) 1,975,000 365,000 1,610,000 Series 2020B Fairways - 3,930,000 - (100,000) 3,830,000 110,000 3,720,000 Series 2020A-Energy (2014) 15,650,000 - - (865,000) 14,785,000 935,000 13,850,000 Series 2020A-SVSWA (2015B) 3,860,000 - - (525,000) 3,335,000 545,000 2,790,000 Bond premium/(discount):

TRIP 2018B 3,556,183 - - (354,682) 3,201,501 - 3,201,501 TRIP 2018B (344,239) - - 13,240 (330,999) - (330,999) Series 2020A-Twin Creeks - 272,085 - (45,348) 226,737 - 226,737 Series 2020A-Energy (2014) 2,981,656 - - (248,472) 2,733,184 - 2,733,184 Series 2020A-SVSWA (2015B) 491,089 - - (70,156) 420,933 - 420,933 Total Certificates of Participation: 62,304,689 6,532,085 - (3,290,418) 65,546,356 2,705,000 62,841,356 Assessment District Bonds:

A
ssessment District 2017 Act Bonds 1,560,000 - - (590,000) 970,000 430,000 540,000 CFD Monte Bella-2019 #1 2,625,000 - - (50,000) 2,575,000 55,000 2,520,000 CFD Monte Bella-2019 #2 2,090,000 - - (40,000) 2,050,000 40,000 2,010,000 CFD Monte Bella-2019 #3 2,695,000 - - - 2,695,000 50,000 2,645,000 Bond premium/(discount):

CFD Monte Bella-2019 #1 72,436 - - (2,498) 69,938 - 69,938 CFD Monte Bella-2019 #2 203,920 - - (7,032) 196,888 - 196,888 CFD Monte Bella-2019 #3 242,947 - - - 242,947 - 242,947 Total Assessment District Bonds 9,489,303 - - (689,530) 8,799,773 575,000 8,224,773 Total governmental activities 137,771,423$ 6,771,886 $ 1,743,790 $ (15,882,668) $ 130,404,431 $ 7,923,883 $ 122,480,548 $

A prior period adjustment of $6,771,886 was made to move certain debts from business-type activities and to implement GASB 87 Leases.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

85 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Direct Borrowing – Leases

Annual debt service requirements to maturity for the City’s leases are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 4,643,883$ 2,315,583$ 6,959,466$
2024 4,732,630 2,110,407 6,843,037
2025 4,642,843 1,899,896 6,542,739
2026 4,633,821 1,688,306 6,322,127
2027 4,280,125 1,473,155 5,753,280
2028-2032 21,328,000 4,331,337 25,659,337 2033-2037 3,617,000 1,852,843 5,469,843 2038-2042 2,960,000 1,324,872 4,284,872 2043-2047 3,585,000 687,562 4,272,562 2048-2051 1,635,000 65,213 1,700,213 Total 56,058,302$ 17,749,174$ 73,807,476$

Quantum Tiller Ladder Truck

On January 21, 2014, the City, using lease purchase financing, purchased a Quantum Tiller Ladder Truck for a total of $1,087,053. The City will make ten annual payments of $124,848, beginning on March 17, 2015 and ending March 17, 2024 at 2.60% interest. Debt payable of $240,285 is recorded as Governmental Activities at June 30, 2022.

Debt service requirements to maturity for the Quantum Tiller Ladder Truck are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 118,601$ 6,247$ 124,848$
2024 121,684 3,164 124,848
Total 240,285$ 9,411$ 249,696$

Pierce Pumper & Tiller

On March 6, 2015, the City, using lease purchase financing, purchased a Pierce Pumper and Tiller for a total of $1,628,839. The City will make ten annual payments beginning on March 6, 2016 and ending March 6, 2025 at

2.51% interest. Debt payable of $357,364 is recorded as Governmental Activities at June 30, 2022.

If any event of default occurs, and if the lessee agrees to pay, the lessor may require the lessee to pay all amounts currently due and all remaining rent payments due during th e fiscal year in effect when the default occurs with interest at the highest lawful rate from the date of th e lessor’s demand for such payment. Also included in this scenario are additional out-of-pocket expenses incurred by the lessor including a ttorney fees, repossession, safekeeping, storage, repair, reconditioning, and disposition costs. Alternatively, the lessor can require the lessee to return all equipment for the purpose of lease, sale, or otherwise disposition by the lessor.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

86 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Direct Borrowing – Leases (Continued)

Pierce Pumper & Tiller (Continued)

Debt service requirements to maturity for the Pierce Pumper & Tiller are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 116,185$ 8,958$ 125,143$
2024 119,097 6,046 125,143
2025 122,082 3,060 125,142
Total 357,364$ 18,064$ 375,428$

2014 Lease/Purchase Agreement

The City of Salinas 2014 Lease/Purchase Agreement was issued by the Sali nas Facilities Financing Authority on January 29, 2014. The financing was issued to refund the Animal Shelter COP Series A-1999 ($2,812,000) and the Monterey Street Parking Structure COP Series A-2004 ($13,253,000). The Animal Shelter portion of the financing was issued for 19 years (ending September 1, 2032), at an average interest rate of 4.02%. Maximum annual debt service is $278,646. Debt payable of $1,644,000 is recorded as Governmental Activities at June 30, 2022.

Upon the occurrence of an event of default, the trustee may pursue any available remedy by law or pursuant to the lease agreement to enforce payment of the outstanding amounts. However, there shall be no right under any circumstance to accelerate the lease payments or otherwi se declare any lease payments not then in default to be immediately due and payable. After the occurrence of an event of default, the City will surrender possession of the property to the financing authority, if requested to do so.

Debt service requirements to maturity for 2014 Lease/Purchase Agreement are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 163,000 $ 62,813 $ 225,813$
2024 171,000 56,099 227,099
2025 179,000 49,064 228,064
2026 191,000 41,627 232,627
2027 120,000 35,376 155,376
2028-2032 668,000 99,816 767,816 2033 152,000 3,055 155,055
Total 1,644,000$ 347,850$ 1,991,850$

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

87 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Direct Borrowing – Leases (Continued)

Pierce Enforcer Pumper

On October 18, 2017, the City, using lease purchase financing, purchased a Pierce Enforcer Pumper fire engine for a total of $561,605. The City will make six annua l payments of $101,822, begi nning on October 18, 2018 and ending October 18, 2023 at 2.40% interest. Debt payabl e of $169,370 is recorded as Governmental Activities on June 30, 2022.

Debt service requirements to maturity for Pierce Enforcer Pumper are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 96,992 $ 4,830 $ 101,822 $ 2024 99,378 2,444 101,822 Total 196,370 $ 7,274 $ 203,644 $

Altec Aerial Lift

On December 19, 2017, the City, using lease purchase financing, purchased an Altec Aerial Lift Truck for a total of $157,983. The City will make six annual payments of $28,903, beginning on December 19, 2018 and ending December 19, 2023. Debt payable of $55,522 is recorded as Governmental Activities on June 30, 2022.

If any event of default occurs, and if the lessee agrees to pay, the lessor may require the lessee to pay all amounts currently due and all remaining rent payments due during th e fiscal year in effect when the default occurs with interest at the highest lawful rate from the date of th e lessor’s demand for such payment. Also included in this scenario are additional out-of-pocket expenses incurred by the lessor including a ttorney fees, repossession, safekeeping, storage, repair, reconditioning, and disposition costs. Alternatively, the lessor can require the lessee to return all equipment for
the purpose of lease, sale, or otherwise disposition by the lessor.

Debt service requirements to maturity for Altec Aerial Lift are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 27,387 $ 1,516 $ 28,903 $
2024 28,135 768 28,903 Total 55,522 $ 2,284 $ 57,806 $ DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

88 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Direct Borrowing – Leases (Continued)

Public Safety Building 2018A

The City of Salinas 2018A Capital Lease was issued by Salinas Public Facilities, Inc. in the amount of $48,825,000 on June 28, 2018. The purpose of this financing was to ra ise funds for the construction of a new Public Safety Building (Police Department) within City limits. The City started making semi-a nnual payments beginning on December 1, 2018 and ending December 1, 2034 at an aver age interest rate of 3.375%. Maximum annual debt service is $4,799,181. Debt payable of $35,775,000 is recorded as Governmental Activities on June 30, 2022.

In the event of an event of default, the trustee shall be entitled to declar e the principal of all the bonds then outstanding, and the interest accrued thereon, to be due and payable immediately. Upon such declaration, anything in the indenture or in the bonds contained to the contrary notwithstanding, shall also be due and payable immediately, and interest on the bonds shall cease to accrue on the date of such declaration.

Debt service requirements to maturity for Public Safety Building 2018A are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 2,910,000$ 1,564,194 $ 4,474,194$
2024 3,060,000 1,414,944 4,474,944
2025 3,210,000 1,258,194 4,468,194
2026 3,370,000 1,093,694 4,463,694
2027 3,540,000 920,944 4,460,944
2028-2032 18,675,000 1,935,259 20,610,259 2033-2036 1,010,000 16,413 1,026,413 Total 35,775,000$ 8,203,642$ 43,978,642$

El Gabilan Library 2018B

The City of Salinas 2018B Capital Lease was issued by Salinas Public Facilities, Inc. in the amount of $19,830,000 on June 28, 2018. The purpose of this financing was to raise funds for the construction of a new Public Library (El Gabilan) within City limits. The City started making semi-annual payments beginni ng on December 1, 2018 and ending December 1, 2048 at an average interest rate of 3.900%. Maximum annual debt service is $1,152,781. Debt payable of $13,915,000 is recorded as Governmental Activities on June 30, 2022.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

89 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Direct Borrowing – Leases (Continued)

El Gabilan Library 2018B (Continued)

Debt service requirements to maturity for El Gabilan Library 2018B are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 220,000 $ 562,369 $ 782,369$
2024 235,000 550,994 785,994
2025 240,000 539,119 779,119
2026 255,000 526,744 781,744
2027 345,000 512,213 857,213
2028-2032 1,985,000 2,296,262 4,281,262 2033-2037 2,455,000 1,833,375 4,288,375 2038-2042 2,960,000 1,324,872 4,284,872 2043-2047 3,585,000 687,562 4,272,562 2048-2051 1,635,000 65,213 1,700,213 Total 13,915,000$ 8,898,723$ 22,813,723$

Police/Fire Radios & PW Equipment

The City of Salinas Motorola Radios and Public Work Eq uipment was issued by Banc of America Public Capital Corporation in the amount of $3,500,000 on August 17, 2018. This equipment replaces old manufactured models and will make Police, Fire, and Public Work operations more efficient. The lease consists of 84 payments, beginning on August 17, 2019 and ending on August 17, 2025 at an average interest rate of 3.120%. Debt payable of $2,091,610 is recorded as Governmental Activities on June 30, 2022.

Upon the occurrence of an event of default, legal title and physical position of the equipment shall pass to the Lessor, and the City shall have no further interest therein.

Debt service requirements to maturity for Police/Fire Radios & PW Equipment are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 499,057 $ 65,258 $ 564,315$
2024 514,627 49,688 564,315
2025 530,684 33,631 564,315
2026 547,242 17,073 564,315
Total 2,091,610$ 165,650$ 2,257,260$

2021 Pierce Enforcer Pumpers

In fiscal year 2022, the City, using lease purchase financing, purchased a Pierce Enforcer Pumper fire engine for a total of $1,330,913. The City w ill make six annual payments of $279, 747, beginning on December 17, 2021 and ending December 17, 2026 at 1.68% interest. Debt payable of $1,330,913 is recorded as Governmental Activities on June 30, 2022.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

90 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Direct Borrowing – Leases (Continued)

2021 Pierce Enforcer Pumpers (Continued)

Debt service requirements to maturity for the 2021 Pierce Enforcer Pumper are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 257,388$ 22,359$ 279,747$
2024 261,712 18,035 279,747
2025 266,109 13,638 279,747
2026 270,579 9,168 279,747
2027 275,125 4,622 279,747
Total 1,330,913$ 67,822$ 1,398,735$

Street Sweepers

On April 6, 2017 the City, using lease purchase financing, purchased a second street sweeper. The City will make six annual payments of $58,774 at 2.57 % interest. Debt payable of $57,301 is recorded governmental activities at June 30, 2022.

Upon the occurrence of an event of default, the trustee may pursue any available remedy by law or pursuant to the lease agreement to enforce payment of the outstanding amounts. However, there shall be no right under any circumstance to accelerate the lease payments or otherwi se declare any lease payments not then in default to be immediately due and payable. The financing authority may also elect to terminate the lease, with the City liable for all costs, losses, or damages incurred by the financing authority.

Debt service requirements to maturity for the Street Sweepers are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 57,301 $ 1,473 $ 58,774$
Total 57,301$ 1,473$ 58,774$

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

91 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Direct Borrowing – Leases (Continued)

Minor Leases

The City has entered into various minor leases for equipment such as copiers, etc. that were subject to GASB 87 Leases implementation in fiscal year 2022.

Debt service requirements to maturity for these leases are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 177,972 $ 15,566 $ 193,538 $
2024 121,997 8,225 130,222
2025 94,968 3,190 98,158
Total 394,937 $ 26,981 $ 421,918 $

Certificates of Participation Bonds

Series 2018B – TRIP

On July 18, 2108, the California Statewide Communities Development Authority Transportation Revenue issued City of Salinas Certificates of Participation, Series 2018B totaling $37,500,000 at various interest rates plus premium and discounts. The purpose of this financing was to provide expedited funding for the design, acquisition, and construction of local roadway and street improvement projects within the jurisdiction of the City. Debt payable of $35,370,000 plus premiums and discounts of $2,870,502 are record ed as Governmental Activities at June 30, 2022.

In the event of an event of default, the trustee shall be entitled to exercise the remedies provided under the agreement to collect the outstanding payments in full, with no grace period permitted.

The annual debt service requirements to maturity for the certificates are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 750,000$ 1,561,575$ 2,311,575$
2024 800,000 1,522,825 2,322,825
2025 850,000 1,481,575 2,331,575
2026 890,000 1,442,525 2,332,525
2027 925,000 1,406,225 2,331,225
2028-2032 5,285,000 6,320,150 11,605,150 2033-2037 6,710,000 4,866,625 11,576,625 2038-2042 8,565,000 2,966,750 11,531,750 2043-2047 10,595,000 952,788 11,547,788 Total 35,370,000$ 22,521,038$ 57,891,038$

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

92 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Certificates of Participation Bonds (Continued)

Series 2020A Twin Creeks

On March 16, 1999, the Salinas Public Financing Authority issued City of Salinas Certificates of Participation (Certificates) Series A-1999 totaling $14,315,000. A portion of the Certificates was allocated for the construction of an animal shelter, $1,250,338, and the balance of the Certificates, $13,064,662 was allocated for construction of the new Twin Creeks (9-hole) Golf Course. On August 24, 2004, the City entered into a sublease agreement with the Monterey Peninsula Foundation and its related foundation, Future Citizen s Foundation, dba the First Tee of Monterey County providing for the lease of Twin Creeks golf course to Future Citizens Foundation. As a condition of the lease, the City repaid the portion of the 1999 Certificates attributable to the Twin Creeks golf course facility (about 57.5% of the lease payments of $575,000) and refinanced that golf course portion with a new Refunding issue of Certificate of Participation. On September 14, 2005, the Salinas Public Financing Authority issued City of Salinas Refunding Certificates of Participation Series 2005A, in the amount of $8,005,000, to refund the portion of the 1999 Certificates attributed to Twin Creeks. Refunding Certificates Series 2005A we re issued for 24 years at

4.22%, and were secured by a lien on Twin Creeks golf course. The net value expense of the funding was $117,298.

The refunding was completed to issue qualified 501 (c) 3 bonds to provide for the operation of Twin Creeks golf course by First Tee of Monterey County. Annual debt ser vice for the 2005A Certificates ($572,308) was paid by the annual lease payments ($575,000) from Future Citizens Foundation and guaranteed by the Monterey Peninsula Foundation. At the request of First Tee of Monterey Count y, on December 6, 2011, the City approved a sublease payment reduction from $575,000 to $125,000 (an annual re duction of $450,000). This request was the result of First Tee’s significant golf course operating losses. With the goal of maintaining a quality of level of service to the thousands of golf youth participants and as the most cost effective alternative, the City Council approved the General Fund support through fiscal year 2015-16 to offset the reduced amount of the sublease to the First Tee of Monterey County.

On September 1, 2015, the City issued Refunding Cer tificates of Participation Series 2015, in the amount of $11,440,000 at a 2.53% interest rate, to refund the outstanding portion of the 2005A Certificates of Participation (Twin Creeks) and the 2005B Certificates of Participation (Capital Improvements). Bond started September 1, 2015 and will end after 12 years on September 1, 2027.

On August 19, 2020, the Salinas Public Financing Authority issued City of Salinas Certif icates of Participation, Series 2020A totaling $2,715,000. The Advance Refunding Certificates were issued to refund the 2015A Twin Creeks Golf Project. Bond started November 1, 2020 and will end after 6 years on November 1, 2026. The advance refunding of the 2015A Twin Creeks Golf Project reduced total debt service payments over the next 6 years by $134,501. This results is an economic gain (difference between the present values of the debt service payments on the old and new debt) of $222,408. Debt payable of $1,9 75,000 is recorded in the governmental activities at June 30, 2022.

In the event of an event of default, the Trustee may and, at the direction of the owners of not less than a majority of the aggregate principal amount of bonds then outstanding, and upon being indemnified to its reasonable satisfaction therefore, shall, upon notice in writing to the City and the Salinas Financing Authority, exercise any of the remedies granted to the Salinas Financing Authority under the lease agreement and, in addition, take whatever action at law or in equity may appear necessary or desirable to enforce its rights as assignee pursuant to the Assignment Agreement or to protect and enforce any of the rights vested in the Trustee or the owners, either at law or in equity bankruptcy or otherwise, whether for specific enforcement of any covenant or agreement or for the enforcement of any other legal or equitable right.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

93 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Certificates of Participation Bonds (Continued)

Series 2020A Twin Creeks (Continued)

The annual debt service requirements to maturity for the certificates are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 365,000 $ 71,700 $ 436,700$
2024 380,000 56,800 436,800
2025 395,000 41,300 436,300
2026 410,000 25,200 435,200
2027 425,000 8,500 433,500
Total 1,975,000$ 203,500$ 2,178,500$

Series 2020B Fairways

On August 2008, the City of Salinas was issued Refunding Certificates of Participation Series 2008, in the amount of $4,660,000 at a variable interest rate, to refund the outstanding portion of the 1999 Certificate pertaining to the Fairways Golf Project. Bond started September 1, 2008 and will end after 30 years on September 1, 2038. Following the execution and delivery of the Certificates of Participa tion Series 2008, the 1999 Certificates, attributed to the animal shelter, will remain outstanding.

On August 19, 2020, the Salinas Public Financing Authority issued City of Salinas Certif icates of Participation, Series 2020B totaling $4,040,000. The Advance Refunding Ce rtificates were issued to refund the 2008 COP Fairways Golf Project. Bond started November 1, 2020 and will end after 18 years on November 1, 2038. The advance refunding of the 2008 COP Fairways Golf Project reduced total debt service payments over the next 18 years by $1,311,557. This results is an economic loss (difference between th e present values of the debt service payments on the old and new debt) of $222,581. Debt paya ble of $3,830,000 is recorded in the governmental activities at June 30, 2022.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

94 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Certificates of Participation Bonds (Continued)

Series 2020B Fairways (Continued)

The annual debt service requirements to maturity for the certificates are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 110,000$ 95,118$ 205,118$
2024 120,000 93,997 213,997
2025 135,000 92,537 227,537
2026 155,000 90,619 245,619
2027 165,000 88,184 253,184
2028-2032 1,075,000 380,989 1,455,989 2033-2037 1,400,000 210,000 1,610,000 2038-2041 670,000 20,400 690,400 Total 3,830,000$ 1,071,844$ 4,901,844$

Series 2020A Energy (2014)

On November 1, 2014, the City entered into a lease agreement funded through private placement in the amount of $21,908,000. The project will install LED lighting on streetlights and parking lots in addition to building solar PV installations at the Hitchcock Road Animal Shelter, th e Industrial Waste Treatment Plant, the Salinas Municipal Airport, the Permit Center, Sherwood Hall, and the Sewer Lift Station site off Work Street. The Debt Service repayment were set to be over a 17-year period at 3.03% interest beginning May 1, 2016 and ending November 1, 2032. Maximum annual debt service was $2,005,124.

On August 19, 2020, the Salinas Public Financing Authority issued City of Salinas Certif icates of Participation, Series 2020A totaling $16,190,000. The Advance Refunding Certificates were issued to refund the 2014 Energy Improvement Lease. Bond started Novemb er 1, 2020 and will end after 12 years on November 1, 2032. The advanced refunding of the 2014 Energy Lease reduced tota l debt service payments over the next 12 years by $1,513,227. This results is an econom ic gain (difference between the presen t values of the debt service payments on the old and new debt) of $1,425,483. Debt payable of $14,785,000 is recorded as Governmental Activities at June 30, 2022.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

95 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Certificates of Participation Bonds (Continued)

Series 2020A Energy (2014) (Continued)

The annual debt service requirements to maturity for the certificates are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 935,000 $ 589,750 $ 1,524,750$
2024 1,005,000 550,950 1,555,950
2025 1,080,000 509,250 1,589,250
2026 1,155,000 464,550 1,619,550
2027 1,235,000 416,750 1,651,750
2028-2032 7,545,000 1,235,825 8,780,825 2033-2036 1,830,000 36,600 1,866,600 Total 14,785,000$ 3,803,675$ 18,588,675$

Series 2020A SVSWA (2015B)

On October 24, 1997, the Salinas Public Financing Authority issued City of Salinas Certificates of Participation (Certificates) Series A-1997 totaling $11,960,000. The purpo se of this financing was to raise money for capital improvement projects and to refund the Authority’s Variab le Rate Lease Revenue Bonds , which were issued to purchase the 65 W. Alisal Building. The Variable Ra te Lease Revenue Bonds Series A-1997 and Series B-1997 were fully retired on November 20, 1997. The outstanding Certificates were secured by liens on City owned assets that included City Hall; Public Safety Building; Steinbeck Library, and 65 W. Alisal Building.

On September 14, 2005, the Salinas Public Financing Authority issued City of Salinas Refunding Certificates of Participation Series 2005B (1997 Capital Improvement Projects). The Refunding Certificates were issued to refund Series A-1997 Certificates. Series 2005B Refunding Certificat es were issued in the amount of $11,705,000 for 24 years at 4.22%. The Refunding Certificates were secure d by a lien on the Salinas Community Center with an appraised value of $13,415,000. With these refunding, liens were removed from the City’s Public Safety Building, 65 West Alisal Building and Steinbeck Library.

On August 19, 2020, the Salinas Public Financing Authority issued City of Salinas Certif icates of Participation, Series 2020A totaling $4,440,000. The Advance Refunding Ce rtificates were issued to refund the 2015B Salinas Valley Solid Waste Authority Bonds. Bond started N ovember 1, 2020 and will end after 7 years on November 1, 2027. The advance refunding of the 2015B Salinas Valley Solid Waste Authority advance refunding reduced total debt service payments over the next 7 years by $241,953. This results is an economic gain (difference between the present values of the debt service payments on the old and new debt) of $244,664. Debt payable of $3,335,000 is recorded as Governmental Activities at June 30, 2022.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

96 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Certificates of Participation Bonds (Continued)

Series 2020A SVSWA (2015B) (Continued)

The annual debt service requirements to maturity for the certificates are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 545,000 $ 122,500 $ 667,500$
2024 565,000 100,300 665,300
2025 585,000 77,300 662,300
2026 610,000 53,400 663,400
2027 630,000 28,600 658,600
2028 400,000 8,000 408,000
Total 3,335,000$ 390,100$ 3,725,100$

Assessment District Bonds

At June 30, 2022, outstanding Assessment District Bonds totaled $8,290,000 plus bond premiums of $509,773.

Bonds issued for improvements in special assessment districts are liabilities of the property owners and are secured by liens against the assessed property. In the case of default, the City has the authority to advance bonds payments from the special reserve fund and to foreclosure on delinquent property. The bonds are secured by a pledge of the net revenue of the Assessment District and may not be u sed for any other purpose. The total Assessment District Reserve Fund balance was $1,822,791 at June 30, 2022.

Assessment District 2017 Act Bonds

On July 28, 2017 the City issued $4,555,000 in bonds to refinance the following special assessment district debt:

 1998 AD 98-1 – Bella Vista III Refunding ($2,665,000)  2000 AD 96-2 – Acacia Park Refunding ($340,000)
 2002 RADA – Bella Vista Refunding ($1,365,000)
 2002 RADB – Bella Vista Refunding ($185,000)

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

97 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Assessment District Bonds (Continued)

Assessment District 2017 Act Bonds (Continued)

The refunding of the assessment districts debt reduced total debt service payments over 9 years by $937,889. This results was an economic gain (difference between the pr esent values of the debt service payments on the old and new debt) of $318,303. Maximum debt service is $882,065, including interest ranging from 2.3% to 2.7% for 9 years. Debt payable of $970,000 is recorded in Governmental Activities at June 30, 2022.

Upon the occurrence of an event of default, the trustee shall be entitled to exercise the remedies provided under the agreement to compel the City to perfo rm and carry out their duties under the 1913 Act, the 1915 Act, or the 1984 Act and their agreements with the owners provided in the Bond agreement.

Annual debt service requirements to maturity for Assessment District 2017 Act Bonds are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 430,000 $ 19,170 $ 449,170 $
2024 450,000 8,095 458,095
2025 45,000 1,823 46,823
2026 45,000 608 45,608 Total 970,000 $ 29,696 $ 999,696 $

CFD Monte Bella-2019 – Community Facilities District No . 2016-1 (Monte Bella) of the City of Salinas 2019 Special Tax Bonds (Improvement Area No. 1)

On February 21, 2019, the Bond Purchase Agreement was si gned in the amount of $2,675,000 at various interest rates to finance the acquisition and/or construction of certain public facilities and improvements within Community Facilities District (CFD) No. 2016-1 Improvement Area No. 1 of the district. Debt payable net of premiums of $2,644,938 is recorded as Governmental Activities at June 30, 2022.

Upon the occurrence of an event of default, the trust ee may pursue any available remedy by law to enforce the payment of principal, premium and interest on the outstanding bonds.

Annual debt service requirements to maturity CFD Monte Bella-2019 #1 bonds are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 55,000 $ 104,769 $ 159,769$
2024 55,000 103,669 158,669
2025 55,000 102,534 157,534
2026 55,000 100,575 155,575
2027 60,000 97,700 157,700
2028-2032 340,000 441,675 781,675 2033-2037 410,000 369,988 779,988 2038-2042 490,000 286,225 776,225 2043-2047 620,000 156,875 776,875 2048-2051 435,000 26,500 461,500 Total 2,575,000$ 1,790,510$ 4,365,510$
DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

98 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Assessment District Bonds (Continued)

CFD Monte Bella-2019 #2 – Community Facilities District No. 2016-1 (Monte Bella) of the City of Salinas 2019 Special Tax Bonds (Improvement Area No. 2)

On December 1, 2019, the Bond Purchase Agreement was si gned in the amount of $2,090,000 at various interest rates to finance the acquisition and/or construction of certain public facilities and improvements within Community Facilities District (CFD) No. 2016- Improvement Area 2 of the district. Debt payable net of premiums of $2,246,888 is recorded as Governmental Activities at June 30, 2022.

Upon the occurrence of an event of default, the trust ee may pursue any available remedy by law to enforce the payment of principal, premium and interest on the outstanding bonds.

Annual debt service requirements to maturity CFD Monte Bella-2019 #2 bonds are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 40,000 $ 87,350 $ 127,350$
2024 45,000 85,850 130,850
2025 45,000 84,050 129,050
2026 45,000 82,250 127,250
2027 50,000 80,350 130,350
2028-2032 270,000 370,750 640,750 2033-2037 330,000 312,150 642,150 2038-2042 390,000 252,000 642,000 2043-2047 480,000 150,750 630,750 2048-2051 355,000 27,375 382,375 Total 2,050,000$ 1,532,875$ 3,582,875$

CFD Monte Bella-2019 #3 – Community Facilities District No. 2016-1 (Monte Bella) of the City of Salinas 2019 Special Tax Bonds (Improvement Area No. 3)

On December 20, 2020, the Bond Purchase Agreement was signed in the amount of $2,695,000 at various interest rates to finance the acquisition and/or construction of certain public facilities and improvements within Community Facilities District (CFD) No. 2016- Improvement Area 3 of the District. Debt payable net of premiums of $2,937,947 is recorded as Governmental Activities at June 30, 2022.

Upon the occurrence of an event of default, the trust ee may pursue any available remedy by law to enforce the payment of principal, premium and interest on the outstanding bonds.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

99 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Assessment District Bonds (Continued)

CFD Monte Bella-2019 #3 – Community Facilities District No. 2016-1 (Monte Bella) of the City of Salinas 2019 Special Tax Bonds (Improvement Area No. 3) (Continued)

Annual debt service requirements to maturity CFD Monte Bella-2019 #3 bonds are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 50,000 $ 106,550 $ 156,550$
2024 55,000 104,700 159,700
2025 55,000 102,500 157,500
2026 55,000 100,300 155,300
2027 60,000 98,000 158,000
2028-2032 335,000 451,900 786,900 2033-2037 410,000 377,400 787,400 2038-2042 500,000 287,000 787,000 2043-2047 600,000 177,000 777,000 2048-2051 575,000 47,300 622,300 Total 2,695,000$ 1,852,650$ 4,547,650$

B. Business-Type Activities

A summary of changes in long-term debt for business-type activities for the year ended June 30, 2022 is as follows:

Prior Amount due Amount due in
Balance Period Balance within one more than one
July 1, 2021 Adjustments Additions Retirements June 30, 2022 year year Business-type Activities
Direct borrowings and placements:

Monterey Parking Garage 2014 lease 9,590,000$ -$ -$ (578,000)$ 9,012,000$ 599,000$ 8,413,000$ Street sweeper lease 113,167 (113,167) - - - - HUD Section 108 loan 1,953,000 (460,000) 1,493,000 478,000 1,015,000 Total direct borrowings and placements 11,656,167 (113,167) - (1,038,000) 10,505,000 1,077,000 9,428,000 Certificates of Participation:

Series 2020A-Twin Creeks 2,330,000 (2,330,000) - - - - - Series 2020B Fairways 3,930,000 (3,930,000) - - - - - Bond premium/(discount):

Series 2020A-Twin Creeks 272,085 (272,085) - - - - - Total Certificates of Participation: 6,532,085 (6,532,085) - - - - - Revenue Bonds:

Wastewater 2020A 14,425,000 - - (555,000) 13,870,000 560,000 13,310,000 Total Revenue Bonds 14,425,000 - - (555,000) 13,870,000 560,000 13,310,000 Total business-t ype activities 32,613,252$ (6,645,252) $ - $ (1,593,000)$ 24,375,000 $ 1,637,000 $ 22,738,000 $

A prior period adjustment of $(6,645,252) was made to move certain debts to Governmental Activities.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

100
Note 13 – Long-Term Debt (Continued)

B. Business-Type Activities (Continued)

2014 Lease/Purchase Agreement

The 2014 Lease/Purchase Agreement was issued by the Salinas Facilities Financing Authority on January 29, 2014.

The financing was issued to refund the Animal Shelte r COP Series A-1999 ($2,812,000) and the Monterey Street Parking Structure COP Series A-2004 ($13,253,000). The Monterey Street Parking Structure portion of the financing was issued for 20 years (ending September 1, 203 3), at an average interest rate of 4.02%. Maximum annual debt service is $963,518. Debt payable of $9,012,000 is recorded in the Downtown Parking District Enterprise Fund at June 30, 2022 and reported is reported as business-type activities.

Debt service requirements to maturity is as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 599,000 $ 350,243 $ 949,243$
2024 625,000 325,640 950,640
2025 646,000 300,093 946,093
2026 674,000 273,561 947,561
2027 700,000 245,944 945,944
2028-2032 3,954,000 774,654 4,728,654 2033-2036 1,814,000 73,606 1,887,606 Total 9,012,000$ 2,343,741$ 11,355,741$

Direct Placement Debt

HUD Section 108 Loan

On March 28, 2015, the City entered into a contract fo r Loan Guarantee Assistance with the Housing and Urban Development Department (HUD), pursuant to which the City will derive funds fo r the purposes permitted under the agreement, and will execute one or more City Not es in the maximum aggregate principal amount of up to $9,390,000. The City executed a note numbered as B-12-MC-06-0005 (Community and Economic Development Fund – Industrial Waste Water Conveyance System Project) in the principal amount of $4,000,000. The City of Salinas has pledged current and future Community Development Block Grants (CDBG) funds as principal security for the loan. The loan carries a variable interest rate of 20 points (0.2%) above the applicable LIBOR rate. Debt payable of $1,493,000 is recorded in the Industrial Wast e Enterprise Fund at June 30, 2022 and is reported as business-type activities.

Upon the event of default, the custodian may take any action available by law, subject to the sections of the agreement, to pursue payment of the outstanding amount , including any additional fees, costs, and expenses incurred by the custodian in connection therewith.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

101
Note 13 – Long-Term Debt (Continued)

B. Business-Type Activities (Continued)

Direct Placement Debt (Continued)

Debt service requirements to maturity is as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 478,000 $ 34,535 $ 512,535$
2024 497,000 21,721 518,721
2025 518,000 7,382 525,382
Total 1,493,000$ 63,638$ 1,556,638$

2020A Wastewater Revenue Refunding Bonds – Series 2020A

On February 8, 2012, the City of Salinas issued Sanitary Sewer System Revenue Bonds, Series 2012 in the amount of $17,995,000 to provide funds for the current refunding of the City’s Sanitary Sewer System Revenue Bonds, Series 1998 and to finance capital replacement of existing sewer mains and other sewer related capital replacement.

Maximum annual debt service is $1,022,406, including interest ranging from 1.0% to 4.4% for 30 years. The City is authorized under Chapter 36, Article II, Division 5 of the Salinas City Code, to levy a sewer fee for the purpose of paying sanitary sewer related expenses of the City. On January 10, 2012, the City Council approved adjustments to wastewater collection fees effective February 1, 2012 to reflect the cost of wastewater conveyance through the Enterprise and an amount to cover debt service. The fee is billed by the Monterey Regional Water Pollution Control Agency.

On December 20, 2020, the Salinas Public Financing Authority issued City of Salinas Certificates of Participation, Series 2020A totaling $14,425,000. The Advance Refunding Certificates were issued to refund the 2012 Sewer Bonds. Bond started August 1, 2021 a nd will end after 21 years on August 1, 2042. The advance refunding of the 2012 Sewer Bonds reduced total debt serv ice payments over the next 21 years by $3,764,601. This results is an economic gain (difference between the present values of th e debt service payments on the old and new debt) of $1,346,741. Debt payable of $13,870,000 is recorded as Business-type Activities at June 30, 2022.

In the event of an event of default, the trustee shall, at written direction of the owners of not less than a majority in aggregate principal amount of the bonds at the time out standing, in each case, upon written notice to the City, declare the principal of all the bonds then outstanding, and the interest accr ued thereon, to be due and payable immediately.

Debt service requirements and maturity are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 560,000 $ 300,293 $ 860,293$
2024 565,000 297,532 862,532
2025 565,000 293,504 858,504
2026 565,000 288,233 853,233
2027 580,000 281,693 861,693
2028-2032 3,025,000 1,259,853 4,284,853 2033-2037 3,345,000 911,032 4,256,032 2038-2042 3,830,000 410,564 4,240,564 2043-2046 835,000 12,279 847,279 Total 13,870,000$ 4,054,983$ 17,077,704$
DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

102
Note 13 – Long-Term Debt (Continued)

B. Business-Type Activities (Continued)

Conduit Debt

In June 1999, the City of Salinas issued Multifamily Housing Revenue Bonds, Series 1999A ($5,310,000 tax- exempt) and 1999A-T ($390,000 taxable) for the constr uction of a 132-unit senior apartment project. Twenty percent (20%) of the project is designated to be affordable to seniors. As of June 30, 2022, the total conduit debt outstanding related to these bonds is $3,070,000.

On June 2007, the City of Salinas issued Economi cs Development Revenue Bonds, Series 2007A ($18,655,000 tax-exempt) and 2007B ($1,570,000 taxable) for the acquisition of a building located at 1000 Main Street in Salinas.

The building is currently leased in part to the County of Monterey Department of Social Services. The project intends to provide monthly rental at below the market value rates to the County of Monterey, a one-million-dollar premise improvement allowance to the Department of So cial Services to renovate and upgrade its space in the building and to generate charitable support for the County’s residents. The debt was refinanced in 2016 as series 2016A and 2016B. As of June 30, 2022, total conduit de bt outstanding related to the Economic Development Revenue Bonds is $13,760,000.

Pursuant to the bond purchase agreements, the City of Sa linas has no obligation related to the repayment of these bonds. Accordingly, the bonds are not reported as liabilities in the City’s financial statements.

C. Fiduciary Activities

A summary of changes in long-term debt for fiduciary activities for the year ended June 30, 2022 is as follows:

Amount due Amount due in
Balance Balance within one more than one
July 1, 2021 Additions Retirements June 30, 2022 year year Fiduciary Activities
Direct borrowings and placements:

Homeless Shelter loan payable 157,500 $ - $ - $ 157,500$ -$ 157,500$ Total direct borrowings and placements 157,500 - - 157,500 - 157,500 Tax Allocation Refunding Bonds:
1996 Series A 1,625,000 - (130,000) 1,495,000 135,000 1,360,000 1992 Series A 333,539 - (172,406) 161,133 161,133 - Bond premium/(discount):
1996 Series A (26,754) - 8,919 (17,835) - (17,835) Total Tax Allocation Refunding Bonds 1,931,785 - (293,487) 1,638,298 296,133 1,342,165 Total fiduciary activities 2,089,285$ - $ (293,487)$ 1,795,798 $ 296,133 $ 1,499,665 $

Loans and Notes Payable

Homeless Shelter Loan – Green Gold Inn

On March 7, 1995, the Salinas Redevelopment Agency – Ce ntral Agency Revitalization Project entered into a funding agreement and received a loan from the City of Salinas Community Development Block Grant Fund for the acquisition of property, Green Gold Inn at 28-32 Sole dad Street, to establish a homeless center/shelter. The Agency agreed that the property woul d be used solely for a homeless center/shelter for a period not less than ten years. If the Agency or the organization holding title to the property disposes of the property or alters the use of the property prior to expiration of the ten year period, the Agency will reimburse the City the full amount of the current fair market value less improvement costs.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

103
Note 13 – Long-Term Debt (Continued)

C. Successor Agency (Continued)

Loans and Notes Payable (Continued)

Upon completion of the ten-year period, one half of the debt, $157,500, was forgiven. Upon cessation of the homeless center/shelter operations, the City will be reimbursed the fair market value of the property less the portion of the loan paid and improvement costs.

Debt service requirements for Green Gold Inn homeless center/shelter no interest loan are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 -$ -$ -$ 2024 - - - 2025 - - - 2026 - - - 2027 - - - 2028-2032 - - - 2033-2037 - - - 2038-2041 157,500 - 157,500 Total 157,500$ -$ 157,500$

Tax Allocation Bonds

On August 28, 1996, the former Salinas Redevelopment Agency issued $11,145,000 of Tax Allocation Bonds Series A-1996. On October 27, 1992, the former Redevelopment Agency issued $6,541,178 of Refunding Tax Allocation Bonds Series A-1992. The bonds were issued to comple te project improvements in the Central Agency Revitalization Project area. The bonds were repaid from property taxes levied within the Salinas Redevelopment Agency Central City Revitalization Project through January 31, 2012, the dissolution date. This debt is now being paid with taxes received from the Redevelopment Property Tax Trust Fund in accord ance with the Recognized Obligation Payments Schedule submitted by the Successor Agency and approved by the State Department of Finance.

The Series A-1996 bond issue has a term bond of $4,510,000 that matures on November 1, 2023. Debt service payments beginning in fiscal year 2011-2012 are deposits into a sinking fund. The term bonds are subject to redemption prior to maturity from the sinking fund installments on each November 1 on and after November 1, 2011 without premium according to a speci fied schedule, which is used in these debt service requirements. The outstanding balance at June 30, 2022 was $1,495,000.

The annual debt service requirements for the 1996 Series A bonds at June 30, 2022 are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 135,000 $ 78,512 $ 213,512$
2024 1,360,000 37,400 1,397,400
Total 1,495,000$ 115,912$ 1,610,912$

The Series A-1992 bond issue has a term bond of $2,638,475 that matures on November 1, 2022. Debt service payments beginning in fiscal year 2009-2010 are deposits into a sinking fund. The term bonds are subject to redemption prior to maturity from the sinking fund installments on each November 1 on and after November 1, 2009 without premium according to a specified schedule that is used in these debt service requirements. The outstanding balance at June 30, 2022 was $161,133.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

104
Note 13 – Long-Term Debt (Continued)

C. Successor Agency (Continued)

Tax Allocation Bonds (Continued)

The annual debt service requirements for the 1992 Series A bonds at June 30, 2022 are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2023 161,133 $ 1,053,867 $ 1,215,000$
Total 161,133$ 1,053,867$ 1,215,000$

Commitment to Monterey Street Parking Structure

In November 2001, the City Council and the Agency en tered into a Disposition and Development Agreement (DDA) with Maya Cinema Holding Company LLC for the development of a 14-Screen, 2,916-seat multiplex movie theater complex on the 100 block of Main Street. To serve this and other developments within the 100 blocks, the DDA committed the City/Agency to construct a five-lev el, 435-space public parking structure on the corner of Monterey Street and Market Street adjacent to the National Steinbeck Center and the Maya Cineplex Theater. The public parking garage opened in June 2005, while the Maya Cinemas Multiplex was completed and opened during July 2005. During FY 2013-14 the Certificates of Particip ation 2004 that funded the construction of the Monterey Street Parking Structure with a balance of $13,870,00 0 at January 2014, was refinanced through the Salinas Facilities Financing Authority by a direct private lease placement with Western Alliance Bancorporation. Because the debt service for the 2004 Certificates was reimbursed to the City from redevelopment tax increment, the savings from the 2004 Certificates was distri buted to affected taxing entities as apportioned by the County of Monterey, including a portion for the City, due to the dissolution of the City’s Redevelopment Agency. With this refinancing, the average annual debt service requirement was reduced by approximately $123,000.

Note 14 – Compensated Absences

Compensated absences are reported on the Government-Wid e Statements for Governmental Activities and Business- type Activities in Long-Term Debt. At June 30, 2022 the liability for all compensated absences totaled $12,172,829.

Compensated absences are reported on the financial statements in the following funds:

Prior Period Due within Due in more than
June 30, 2021 Adjustment Increases Decreases June 30, 2022 one year one year Governmental activities:

General Fund 9,548,105 $ 226,345 $ 77,845 $ (1,189,104)$ 8,663,191 $ 1,732,632 $ 6,930,559 $ Measure E 1,005,718 - 85,315 - 1,091,033 218,207 872,826 Measure G 1,372,191 - 112,766 - 1,484,957 296,991 1,187,966 Special revenue funds 308,687 - - (53,612) 255,075 51,015 204,060 Internal service funds 141,223 - - (10,537) 130,686 26,138 104,548 Total governmental activities 12,375,924 226,345 275,926 (1,253,253) 11,624,942 2,324,983 9,299,959 Business-type activities
Enterprise funds 607,904 (226,345) 166,328 - 547,887 109,577 438,310 Total business-type activities 607,904 (226,345) 166,328 - 547,887 109,577 438,310 Total primary government 12,983,828$ - $ 442,254$ (1,253,253) $ 12,172,829 $ 2,434,560 $ 9,738,269 $

A prior period adjustment in the amount of $226,345 was made to move the liability from business-type activities to governmental activities.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

105
Note 15 – Risk Management

The City has a self-insurance program and carries excess insurance for catastrophic losses. National Casualty Company combined with Berkley National Insurance Company pr ovides General Liability cove rage up to a maximum of $15,000,000 after the self-insured retention of $1,000,000 per occurrence met. Safety National Casualty Corporation provides Worker’s Compensation excess coverage with st atutory coverage (pursuant to California Worker’s Compensation Act) after the self-insurance retention of $1,000,000 for Public Safety and $750,000 for non-Public Safety is met.

Liabilities for estimated claims payable for the self-insurance programs represent settled claims, claims incurred but not paid and claims incurred but not reported based upon past experience, modified for current trends and information.

While the ultimate amount of losses incurred through June 30, 2022 is dependent on fu ture developments, City management has determined the desired reserve level for each self-insurance program as follows and believes the estimates are adequate to cover such losses.

Worker’s Compensation insurance liability of $26,950,000 includes $22,331,055 for claims incurred but not paid and $4,618,945 for claims incurred but not reported which is based on expected cl aims and past claims history. At June 30, 2022, Worker’s Compensation Insurance liability is reported on the st atement of net position. The worker’s compensation fund was established as an Internal Servi ce Fund on July 1, 1991. The portion of the worker’s compensation insurance liability since July 1, 1991, at June 30, 2022 is $25,311, 515 and is reported in the Internal Service Fund and $1,638,485 is treated as general long-term debt.

General liability insurance liability at June 30, 2022 of $4,340,195 that is reported in the Internal Service Fund includes $3,261,437 for claims incurred but not paid and $1,078,758 for claims incurred but not reported which is based on expected claims and past cl aims history. A deficit is reported with the internal service funds of $3,014,068 at June 30, 2022 and is short the City’s goal of reserving three times the self-insured retention plus full funding of all past claims history. The City’s self-insured retention is $1,000,000 at June 30, 2022.

At June 30, 2022, the City’s insurance claims liability is recorded as follows:

Internal Serv ice General
Funds Long-term Debt Total
Worker's compensation 25,311,515$ 1,638,485$ 26,950,000$ General liability 4,340,195 - 4,340,195 Total 29,651,710$ 1,638,485 $ 31,290,195 $

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

106
Note 15 – Risk Management (Continued)

Changes to the claims liability for fiscal year ended June 30, 2022 are as follows:

Worker's General
Compensation L iability Total
Beginning balance of claims liability 26,656,171$ 3,157,700$ 29,813,871$ Less beginning provisions for incurred
but not reported claims (5,331,234) (1,076,220) (6,407,454) Beginning provisions for incurred but
not paid claims 21,324,937 2,081,480 23,406,417 Increase (decrease) in claims incurred
and reported 5,964,695 2,789,033 8,753,728 Claims expenses paid (4,958,577) (1,609,076) (6,567,653) Ending balance provision for incurred
but not paid claims 22,331,055 3,261,437 25,592,492 Provisions for incurred but not
reported claims 4,618,945 1,078,758 5,697,703 Ending balance of claims liability 26,950,000$ 4,340,195$ 31,290,195$ Amount due within one year 4,420,503$ 3,069,479$ 7,489,982$ Amount due in more than one year 22,529,497 1,270,716 23,800,213 Total 26,950,000$ 4,340,195 $ 31,290,195 $

Note 16 – Unearned Revenues and Deferred Inflows of Resources

Governmental funds report unearned re venues in connection with funds recei ved, in advance for which assets recognition criteria have been met, but for which revenue recognition criteria have not been met. Receivables for revenues not considered available to liquidate liabilities of the current period are considered unavailable revenues and reported as deferred inflows of resources on the governmenta l funds. Unearned revenues are stated at $63,428,897, in the Government-Wide Statements. Governmental funds report $63,428,897 of unearned revenues and $8,230,637 of unavailable revenues as deferred inflows of resources that are not available resources.

Unearned revenues of the governmental activities at June 30, 2022 consist of the following:

Gove rnme ntal Acti vi ti e s:

Major funds:

American Rescue Plan Act (ARPA) Fund 50,875,929$
Housing and Urban Development Grant Fund 4,078,807
Nonmajor funds:

Special revenue funds:

Grants Fund 184,161
Debt service funds:

Assessment District Debt Service 970,000
2019 Special Tax Montebella 7,320,000
Total governmental activities 63,428,897 $

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

107
Note 16 – Unearned Revenues and Deferred Inflows of Resources, Net of Allowance (Continued)

Unavailable revenues of the governmental activities at June 30, 2022 consist of the following:

Gove rnme ntal Acti vi ti e s: Type
Major funds:

Housing and Urban Development Fund 3,743,533$ Housing loans Special revenue funds:

Vehicle Abatement Fund 40,121 Unavailable grants receivable Affordable Housing Fund 756,258 Housing loans Grants Fund 345,800 Unavailable grants receivable Capital projects funds:

Special Construction Assistance Fund 3,215,947 Unavailable grants receivable Special Aviation Fund 128,978 Unavailable grants receivable Total governmental activities 8,230,637$

Note 17 – Retirement Programs

A. Summary

The City of Salinas provides defined benefit retirement program benefits through the California Public Employees’ Retirement System (“CalPERS”) and New York Life. As of June 30, 2022, the City was contributing to agent multiple-employer defined benefit pension plans and cost-sharing multiple-employer defined benefit pension plans through CalPERS, and was also contributing to a single-employer defined benefit pension plan through New York Life.

Net pension liabilities are reported in the financial statements as follows:

Governmental Business-Type
Net Pension Liability Activities Activities Total
CalPERS pension plans:

Agent multiple-employer - Miscellaneous 15,393,994$ 1,900,685 $ 17,294,679 $ Agent multiple-employer - Safety-Police 84,155,587 - 84,155,587 Cost sharing multiple-employer - Safety Fire 33,145,570 - 33,145,570 New York Life - single employer 3,560,476 - 3,560,476 Total net pension liability 136,255,627 $ 1,900,685 $ 138,156,312 $

Deferred outflows of resources related to pensions are reported in the financial statements as follows:

Governmental Business-Type
Deferred Outflows of Resources Activities Activities Total CalPERS pension plans:

Agent multiple-employer - M iscellaneous 5,341,164$ 659,470 $ 6,000,634 $ Agent multiple-employer - Safety-Police 13,918,001 - 13,918,001 Cost sharing multiple-employer - Safety Fire 14,007,322 - 14,007,322 New York Life - single employer 162,458 - 162,458 Total deferred outflows of resources 33,428,945$ 659,470 $ 34,088,415 $

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

108
Note 17 – Retirement Programs

A. Summary (Continued)

Deferred inflows of resources related to pensions are reported in the financial statements as follows:

Governmental Business-Type
Deferred Inflows of Resources Activities Activities Total CalPERS pension plans:

Agent multiple-employer - Miscellaneous 10,240,212$ 1,264,352 $ 11,504,564 $ Agent multiple-employer - Safety-Police 25,134,766 - 25,134,766 Cost sharing multiple-employer - Safety Fire 23,042,424 - 23,042,424 New York Life - single employer 790,816 - 790,816 Total deferred inflows of resources 59,208,218$ 1,264,352 $ 60,472,570 $

Pension expense reported in the financial statements as follows:

Governmental Business-Type
Pension Expense Activities Activities Total
CalPERS pension plans:

Agent multiple-employer - M iscellaneous 2,033,692$ 251,099 $ 2,284,791 $ Agent multiple-employer - Safety-Police 7,191,658 - 7,191,658 Cost sharing multiple-employer - Safety Fire 5,941,674 - 5,941,674 New York Life - single employer 1,856,239 - 1,856,239 Total pension expense 17,023,263 $ 251,099 $ 17,274,362 $

B. California Public Employees Retirement System Agent Multiple-Employer Plans

Plan Description

All qualified permanent and probationary employees are eligible to participate in the City of Salinas’ separate Safety (police) and Miscellaneous (all other) Plans, agent multiple -employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are established by State statute and Local Government resolution. CalPERS i ssues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.

Employees Covered

At June 30, 2021, the measurement date, the following employees were covered by the benefit terms for the Plan:

M iscellaneous Safety - Police
Inactive employees or beneficiaries currently receiving benefits 196 269 Inactive employees entitled to, but not yet receiving benefits 268 117 Active employees 269 156
Total 733 542

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

109
Note 17 – Retirement Programs (Continued)

B. California Public Employees Retirement System Agent Multiple-Employer Plans (Continued)

Benefits Provided

CalPERS provides service retirement and disability benefits, a nnual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment.

The City’s provisions and benefits in effect at June 30, 2022 are summarized as follows:

Prior to On or After
January 1, 2013* January 1, 2013
Benefit formula 2.0% @ 55 2.0% @ 62
Benefit vesting schedule 5 years of service 5 years of service Benefit payments Monthly for life Monthly for life
Retirement age 50-55 52-67
Monthly benefits, as a % of eligible 2.0% to 2.45% 1.0% to 2.5% Required employee contribution rates 7.00% 7.00%
Required employer contribution rates 8.62% 8.62%
Miscellaneous
Hire date

Prior to On or After
January 1, 2013* January 1, 2013
Benefit formula 3.0% @ 50 2.7% @ 57
Benefit vesting schedule 5 years of service 5 years of service Benefit payments Monthly for life Monthly for life
Retirement age 50 52-57
Monthly benefits, as a % of eligible 3.00% 2.0% to 2.7% Required employee contribution rates 9.00% 13.50%
Required employer contribution rates 21.98% 21.98%
Safety - Police
Hire date

Contribution Description - Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employe rs are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended.

Payments made by the City to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements are classified as plan member contributions.

The contributions made by the City were as follows:

Employer Contributions
Miscellaneous 4,193,288 $
Safety - Police 12,406,841

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

110
Note 17 – Retirement Programs (Continued)

B. California Public Employees Retirement System Agent Multiple-Employer Plans (Continued)

Benefits Provided (Continued)

Actuarial Methods and Assumptions used to determine Total Pension Liability - The June 30, 2020 valuation was rolled forward to determine the June 30, 2020 total pension liability, based on the following actuarial methods and assumptions:

Valuation Date
M easurement Date
Actuarial Cost Method
Actuarial Assumptions:

Discount Rate
Inflation
Salary Increases
Morta l i ty Ra te Ta bl e
Post Retirement Benefit Increase
June 30, 2020
June 30, 2021
Entry Age Normal

7.15%

2.50%
Varies by Entry Age and Service
Derived using CalPERS’ Membership Data for all Funds. Contract COLA up to 2.50% until purchasing power applies.

Protection allowance floor on purchasing power applies.

(1) The mortality table used was developed based on Ca lPERS-specific data. The ta ble includes 15 years of mortality improvement using Society of Actuaries 90% of Scale MP 2016. For more details on this table, please refer to the December 2017 Experience Study report ( based on CalPERS demographic data from 1997 to 2015) that can be found on the CalPERS website.

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

In determining the long-term expected rate of return , CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all of the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ 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 rounded 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 equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.

The expected rates of return by asset class are as follows:

Asset Class New S trategic Allocation Real Return Years 1 - 10 1 Real Return Years 11 +
2 Global equity 50.00% 4.80% 5.98%
Global fixed income 28.00% 1.00% 2.62%
Inflation sensitive assets 0.00% 7.00% 1.81%
Private equity 8.00% 6.30% 7.23%
Real assets 13.00% 3.75% 4.93%
Liquidity 1.00% 0.00% -0.92%
Total 100.00%
1 An expected inflation of 2.00% was used for this period. 2 An expected inflation of 2.92% was used for this period.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

111
Note 17 – Retirement Programs (Continued)

B. California Public Employees Retirement System Agent Multiple-Employer Plans (Continued)

Benefits Provided (Continued)

Discount Rate - The discount rate used to measure the total pension liability was 7. 15%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Amortization of Deferred Outflows and Deferred Inflows of Resources - Under GASB 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time.

The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense.

The amortization period differs depending on the source of the gain or loss:

Difference between projected and actual earnings on pension plan investments:

 5 years straight-line amortization

All other amounts:

 Straight-line amortization over the average expected remaining service lives (EARLS) of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period.

Deferred outflows of resources and deferred inflows of resources relating to Differences between Expected and Actual Experience, Changes of Assumptions and employer-specific amounts should be amortized over the EARSL of members provided with pensions through the Plan. The EARSL for the miscellaneous and safety (police) plans for the June 30, 2021 measurement date are 4.1 and 3.5 years, respectively, which was obtained by dividing the total service years by the total number of participants (active, inactive, and retired) in the Plan. Inactive employees and retirees have remaining service lifetimes equal to zero. Total future service is based on the members' probability of decrementing due to an event other than receiving a cash refund.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

112
Note 17 – Retirement Programs (Continued)

B. California Public Employees Retirement System Agent Multiple-Employer Plans (Continued)

Benefits Provided (Continued)

Changes in Net Pension Liability – The following tables show the changes in the net pe nsion liability for each of the City’s agent multiple-employer defined benefit pension plans recognized over the measurement period:

Total Pension Liability
Plan Fiduciary Net
Position Net Pension Liability
Balance at June 30, 2020 (Valuation Date) 133,299,386 $ 100,787,549 $ 32,511,837 $ Changes in the year:

Service cost 3,130,339 - 3,130,339 Interest on the total pension liabilities 9,498,842 - 9,498,842 Changes in assumptions - - - Differences between expected and actual experience 727,132 - 727,132 Benefit payments, including refunds of members contributions (5,481,505) (5,481,505) - Plan to plan resource movement - - - Contributions - employer - 4,273,977 (4,273,977) Contributions - employee - 1,464,611 (1,464,611) Net investment income - 22,935,564 (22,935,564) Administrative expenses - (100,681) 100,681 Net changes 7,874,808 23,091,966 (15,217,158) Balance at June 30, 2021 (Measurement Date) 141,174,194$ 123,879,515$ 17,294,679$ Miscellaneous Plan

Total Pension Liability
Plan Fiduciary Net
Position Net Pension Liability
Balance at June 30, 2020 (Valuation Date) 325,186,524 $ 206,759,103 $ 118,427,421 $ Changes in the year:

Service cost 6,086,593 - 6,086,593 Interest on the total pension liabilities 22,716,035 - 22,716,035 Changes in assumptions - - - Differences between expected and actual experience (2,364,429) - (2,364,429) Benefit payments, including refunds of members contributions (16,317,199) (16,317,199) - Plan to plan resource movement - - - Contributions - employer - 11,629,887 (11,629,887) Contributions - employee - 2,305,151 (2,305,151) Net investment income - 46,981,535 (46,981,535) Administrative expenses - (206,540) 206,540 Net changes 10,121,000 44,392,834 (34,271,834) Balance at June 30, 2021 (Measurement Date) 335,307,524$ 251,151,937$ 84,155,587$ Safety - Police

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

113
Note 17 – Retirement Programs (Continued)

B. California Public Employees Retirement System Agent Multiple-Employer Plans (Continued)

Benefits Provided (Continued)

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

Sensitivity of the Net Pension Liability to Changes in the Discount Rate – The following presents the net pension liability of the Plan as of the Measurement Date, calculated using the discount rate of 7.15 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (6.15 percent) or 1 percentage-point higher (8.15 percent) than the current rate:

Discount Rate - 1% Current Discount Discount Rate + 1%
(6.15%) Rate (7.15%) (8.15%)
Miscellaneous 36,786,033$ 17,294,679$ 1,200,340$ Safety - Police 130,063,023$ 84,155,587$ 46,590,081$ Plan's Aggregate Net Pension L iability/(Asset)

Pension Expense and Deferred Outflows and Deferred Inflows of Resour ces Related to Pensions For the measurement period ending June 30, 2021 (the measurement date), the City of Salinas recognized a pension expense of $9,476,449 for the miscellaneous and safety (police) plans.

For the measurement period ending June 30,2021 (the measurement date), the City of Salinas reports other amounts for the miscellaneous and safety (police) plans as deferred outflow and deferred inflow of resources related to pensions as follows:

Deferred outflows Deferred inflows
of Resources of Resources
Pension contributions made subsequent
to measurement date 4,193,288$ -$ Difference between projected and actual
earning on pension plan investments - (11,392,473) Changes in assumptions - (112,091) Differences between expected and actual experience 1,807,346 - Total 6,000,634$ (11,504,564)$ Miscellaneous

Deferred outflows Deferred inflows
of Resources of Resources
Pension contributions made subsequent
to measurement date 12,406,841$ -$ Difference between projected and actual
earning on pension plan investments - (23,445,888) Changes in assumptions - - Differences between expected and actual experience 1,511,160 (1,688,878) Total 13,918,001$ (25,134,766)$ Safety - Police
DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

114
Note 17 – Retirement Programs (Continued)

B. California Public Employees Retirement System Agent Multiple-Employer Plans (Continued)

Benefits Provided (Continued)

$4,193,288 and $12,406, 841 reported as deferred outflows of resources to contributions subsequent to the measurement date for the miscellaneous and safety police pl ans, respectively, will be recognized as a reduction of the net pension liability in the year ending June 30, 2023.

Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Miscellaneous Safety - Police
Year Ended June 30,
2023 (2,017,896)$ (5,348,547)$ 2024 (2,033,398) (5,860,355) 2025 (2,517,796) (5,955,333) 2026 (3,128,128) (6,459,371) 2027 - -
Thereafter - - (9,697,218)$ (23,623,606)$
Deferred Outflows/(Inflows)
of Resources
Deferred Outflows/(Inflows)
of Resources

C. California Public Employees Retirement System Cost-Sharing Multiple Employer Plan

Plan Description – All qualified permanent and probationary employees are eligible to participate in the City’s separate Safety risk pool (Fire Tier 1 & Tier 2), cost -sharing multiple-employer defined benefit pension plans administered by CalPERS, which acts as a common invest ment and administrative agent for its participating member employers. Benefit provisions under the Plans ar e established by State statute and Local Government resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.

Benefits Provided - CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment.

The City’s plans provisions and benefits in effect at June 30, 2022, are summarized as follows:

Prior to On or After Prior to On or After
January 1, 2013* January 1, 2013 January 1, 2013* January 1, 2013 Benefit formula 3.0% @ 50 2.7% @ 57 3.0% @ 55 2.5% @ 57 Benefit vesting schedule 5 years of service 5 years of service 5 years of service 5 years of service Benefit payments Monthly for life Monthly for life Monthly for life Monthly for life Retirement age 50 52-57 55 52-57
Monthly benefits, as a % of eligible 3.00% 2.0% to 2.7% 3.00% 2.0% to 2.7% Required employee contribution rates 9.00% 13.75% 9.00% 13.25% Required employer contribution rates 25.59% 13.75% 22.47% 13.25% Hire date
Safety - Fire
Tier 1 Tier 2
DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

115
Note 17 – Retirement Programs (Continued)

C. California Public Employees Retirement System Cost-Sharing Multiple Employer Plan (Continued)

Contribution Description - Section 20814(c) of the Ca lifornia Public Employees’ Retirement Law (“PERL”) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through the CalPERS annual actuarial valua tion process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employe r is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.

The City’s contribution for the safety fire plan were as follows:

Employer Contributions
Safety - Fire 6,791,444 $

Pension Liabilities, Pension Expense and Deferred Outflows/Deferred Inflows of Resources Related to Pensions – As of June 30, 2022, the City reported net pension liabilities for its proportionate share of the net pension liability as of June 30, 2022 and 2021 were as follows:

Plan Total Pension Plan Fiduciary Net Plan Net Pension
L iability Position L iability/(Asset)
Balance at: 6/30/20 (Valuation date) 187,360,606 $ 134,725,054 $ 52,635,552 $ Balance at: 6/30/21 (Measurement date) 193,123,087 159,977,517 33,145,570 Net changes during 2020-2021 5,762,481 $ 25,252,463 $ (19,489,982) $ Increase (Decrease)

The City’s net pension liability is measured as the proportionate share of the net pension liability. The net pension liability is measured as of June 30, 2021, and the total pe nsion liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 20 20 rolled forward to June 30, 2021 using the standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long- term share of contributions to the pension plans relative to the projected contributions for all participating employers actuarially determined.

The City’s proportionate share of the net pension liability as of the June 30, 2021 and 2020 measurement dates were as follows:

Proportion June 30, 2020 0.483764%
Proportion June 30, 2021 0.612870%
Change - Increase (Decrease) 0.129106%
Percentage Share of Risk Pool

For the year ended June 30, 2022 (m easurement date June 30, 2021), the City of Salinas recognized a pension expense of $5,941,674 for the Safety Plan (Fire).

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

116
Note 17 – Retirement Programs (Continued)

C. California Public Employees Retirement System Cost-Sharing Multiple Employer Plan (Continued)

As of June 30, 2022 the City of Salinas reports deferred outflow and deferred inflow of resources related to pensions as follows:

Deferred outflows Deferred inflows
of Resources of Resources
Pension contributions made subsequent
to measurement date 6,791,444 $ - $ Difference between projected and actual earning on
pension plan investments - (19,727,986) Adjustment due to differences in proportions 1,552,985 (39,252) Changes in assumptions - - Difference between actual and expected experience 5,662,893 - Difference between employer's actual contributions
and proportionate share of contributions - (3,275,186) Total 14,007,322 $ (23,042,424) $ Safety - Fire

$6,791,444 reported as deferred outflows of resources for c ontributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2023.

Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expenses as follows:

Year Ended June 30,
Deferred Outflows/
(Inflows) of Resources
2023 (2,910,422)$
2024 (3,247,609)
2025 (4,239,649)
2026 (5,428,866)
2027 -
Thereafter -
(15,826,546)$

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

117
Note 17 – Retirement Programs (Continued)

C. California Public Employees Retirement System Cost-Sharing Multiple Employer Plan (Continued)

Actuarial Methods and Assumptions used to determine Total Pension Liability - The June 30, 2020 valuation was rolled forward to determine the June 30, 2021 total pension liability, based on the following actuarial methods and assumptions:

Actuarial Cost Method
Actuarial Assumptions:

Discount Rate 7.15%
Inflation 2.50%
Salary Increases
Morta l i ty Ra te Ta bl e
Post Retirement Benefit Increase
Derived using CalPERS’ Membership Data for all Funds.

The mortality table The mortality table used was
developed based on CalPERSspecific data. The table
includes 15 years of mortality improvements using Society of Actuaries Scale 90% of Scale MP 2016. For more
details on this table, please refer to the December 2017 experience study report (based on CalPERS demographic
data from 1997 to 2015) that can be found on the CalPERS website.

Contract COLA up to 2.50% until Purchasing Power
Protection Allowance Floor on Purchasing Power applies.

Entry Age Normal in accordance with the requirement of
GASB Statement No. 68
Varies by Entry Age and Service

Discount Rate - The discount rate used to measure the total pension liability for PERF C was 7.15%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all peri ods of projected benefit paym ents to determine the total pension liability.

In determining the long-term expected rate of return , CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all of the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ 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 rounded 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 equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

118
Note 17 – Retirement Programs (Continued)

C. California Public Employees Retirement System Cost-Sharing Multiple Employer Plan (Continued)

The expected real rates of return by asset class are as follows:

Asset Class
New
S trategic
Allocation
Real Return
Years 1 -
10 1
Real Return
Years 11 +
2 Global equity 50.00% 4.80% 5.98%
Global fixed income 28.00% 1.00% 2.62%
Inflation sensitive assets 0.00% 0.77% 1.81%
Private equity 8.00% 6.30% 7.23%
Real assets 13.00% 3.75% 4.93%
Liquidity 1.00% 0.00% -0.92%
Total 100.00%
1 An expected inflation of 2.00% was used for this period. 2 An expected inflation of 2.92% was used for this period.

Amortization of Deferred Outflows and Deferred Inflow s of Resources – The Net Difference Between Projected and Actual Investment Earnings on Pension Plan Investments is amortized over a five-year period on a straight-line basis. One-fifth is recognized in pension expense during the measurement period, and the remaining Net Difference Between Projected and Actual Investment Earnings on Pe nsion Plan Investments is amortized over the remaining amortization periods. The Net Difference Between Projected and Actual Investment Earnings on Pension Plan Investments in the Schedule of Collective Pension Am ounts represents the unamortized balance relating to the current measurement period and the prior measurement periods on a net basis.

Deferred Outflows of Resources and Deferred Inflows of Resources relating to Differences Between Expected and Actual Experience and Changes of Assumptions are am ortized over the Expected Average Remaining Service Lifetime (EARSL) of members provided with pensions th rough the Plan determined as of the beginning of the related measurement period. The EARSL for PERF C for the measurement date ending June 30, 2020 is 3.8 years, which was obtained by dividing the total service years of 548,581 (the sum of remaining service lifetimes of the active employees) by 145,663 (the total num ber of participants: active, inactiv e, and retired) in PERF C. Inactive employees and retirees have remaining service lifetimes equal to 0. Total future service is based on the members’ probability of decrementing due to an event other than receiving a cash refund.

Sensitivity of Proportionate Share of Net Pension Liability (Asset) to Changes in the Discount Rate – The following presents the proportionate share of the net pension liability of the City’s Plan as of the Measurement Date, calculated using the discount rate of 7.15 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (6.15 per cent) or 1 percentage-point higher (8.15) than the current rate:

Discount Rate - 1% Current Discount Discount Rate + 1%
(6.15%) Rate (7.15%) (8.15%)
59,141,605$ 33,145,570$ 11,793,039$ Plan's Aggregate Net Pension L iability/(Asset)

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

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

119
Note 17 – Retirement Programs (Continued)

D. New York Life Single Employer Retirement Plan

Plan Description – The New York Life retirement plan is a closed single-employer defined benefit pension plan that covers Non-Public Safety Employees. The plan’s benefits offers a formula of 2% @ 60 for vested employees.

The Plan was established on September 1, 1954 and has been amended and restated from time to time since that date. Prior Plan amendments eliminated the six-month service requirement for entry into the plan and credited participants with up to six-months of service from hire to plan entry prior to time change. The Plan was amended and restated effective September 1, 1996 to bring the Plan into compliance with the Internal Revenue Code and Regulations promulgated there by to provide for the City’s pick-up of em ployee eligible participants equal to the present value of vested accrued benefits. Effective June 1, 2001, the Plan amended its be nefit formula to one that uses an average salary computed from the twelve-month period, replacing the old formul a that used an average salary computed from a thirty six month period. As of June 19, 1995, all new regular non-public safety employees are enrolled in CalPERS.

The City has an agreement with New York Life to hold and invest plan assets of the Retirement Plan, which covers employees other than Police and Fire. New York Life holds assets in NYL Fixed Dollar Account, NYL Mainstay Total Return Bond Fund, and NYL Guaranteed Annuity Contracts.

New York Life Guaranteed Annuity Contracts in the amount of $5,813,965 are allocated insurance contracts set up to pay benefits and accordingly are excluded from the tota l pension liability, and are not reported in the City’s financial statements.

Employees Covered – As of September 1, 2021 (valuation date), the followi ng employees were covered by the benefit terms for the single-employer defined benefit pension plan:

NY Life Plan
Inactive employees or beneficiaries currently receiving benefits 41 Inactive employees entitled to, but not yet receiving benefits 7 Active employees 7
Total 55

Benefits - Non-Public Safety personnel benefits vest after five years of service. The vested benefit would be in the form of a pension beginning after attaining age 60 equal to the benefits accrued at time of termination, or for a reduced amount if an election is made to have payments commence before attaining the normal retirement age of

60. City employees who retire at or after age of 60 with five years of credited service are entitled to an annual retirement benefit payable monthly, as a straight line annu ity, as a ten year certain and life annuity, or as a lump sum, in an amount equal to 2% of the average earnings paid to the employee during the twelve consecutive months of service with the City during which their earnings were highest, multiplied by the number of years and completed months of plan participation.

The plan allows early retirement after reaching age 55 and completing five years of plan participation. The plan also provides death and survivor benefits.

Funding Policy – The contribution requirements of Plan members and the City are established and may be amended by the City Council. Prior to January 1, 1979, participants were required to make specified levels of contributions to the plan in order to accrue benefits under the Pl an. For the period commencing January 1, 1979 through December 31, 1993, there were no participants’ contributions under this Plan. Since January 1, 1994, participants are required to contribute 4.5% of their compensation to the Plan. Since September 1, 1996, participant contributions are made by the City under the employee pretax pick-up provision for government-sponsored plans allowed under the Internal Revenue Code. As establishe d in their Memorandum of Understanding document for personnel of the SEIU Blue Collar bargaining group, the C ity will contribute four and one-half percent of the employee retirement contribution.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

120
Note 17 – Retirement Programs (Continued)

D. New York Life Single Employer Retirement Plan (Continued)

Pension Liabilities, Pension Expense and Deferred Outflows /Inflows of Resources Relate d to Pensions – As of June 30, 2022 (Measurement Date - August 31, 2021) and June 30, 2021, (Measurement Date – August 31, 2020), the City reported net pension liability as follows:

Plan Total Pension Plan Fiduciary Net Plan Net Pension
L iability Position L iability/(Asset)
Balance at: 8/31/20 (measurement date) 13,890,599$ 5,911,440$ 7,979,159$ Balance at: 8/31/21 (measurement date) 13,422,823 9,862,347 3,560,476 Net changes during 2020-2021 (467,776)$ 3,950,907$ (4,418,683)$ Funded Status @ 8/31/21 measurement date 73.47%
Increase (Decrease)

The City’s net pension liability is measured as of August 31, 2021, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of September 1, 2021.

Changes in Net Pension Liability – The following tables show the changes in the net pension liability for the City’s Single-Employer Pension Plan recognized over the measurement period:

Total Pension
Liability
Plan Fiduciary Net
Position
Net Pension
Liability
Balance at 6/30/2021 (8/31/20 measurement date) 13,890,599 $ 5,911,440 $ 7,979,159 $ Changes in the year:

Service cost 345,756 - 345,756 Interest on the total pension liabilities 283,983 - 283,983 Changes in assumptions (37,244) - (37,244) Differences between expected and actual experience 1,595,858 - 1,595,858 Benefit payments, including refunds of members contributions (2,656,129) (2,656,129) - Plan to plan resource movement - - - Contributions - employer - 5,695,926 (5,695,926) Contributions - employee - 34,635 (34,635) Net investment income - 894,536 (894,536) Administrative expenses - (18,061) 18,061 Net changes (467,776) 3,950,907 (4,418,683) Balance at June 30, 2022 (8/31/21 measurement date) 13,422,823 $ 9,862,347 $ 3,560,476 $ New York Life Plan

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

121
Note 17 – Retirement Programs (Continued)

D. New York Life Single Employer Retirement Plan (Continued)

Sensitivity of the Net Pension Liability to Changes in the Discount Rate – The following presents the net pension liability of the Plan as of the Measurement Date, calculated using the discount rate of 2.14 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (1.14 percent) or 1 percentage-point higher (3.14 percent) than the current rate:

Discount Rate - 1% Current Discount Discount Rate + 1%
(1.14%) Rate (2.14%) (3.14%)
4,708,758$ 3,560,476$ 2,652,390$ Plan's Aggregate Net Pension L iability/(Asset)

As of June 30, 2022, the City reports deferred outflows and deferred inflows of resources related to pensions as follows:

Deferred outflows Deferred inflows
of Resources of Resources
Pension contributions made subsequent
to measurement date 162,458 $ - $
Difference between projected and actual earning on pension plan investments - (790,816) Total 162,458 $ (790,816) $
Ne w York Li fe Plan

$162,458 reported as deferred outflows of resources for cont ributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2023.

Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expenses as follows:

Year Ended June 30, Deferred Outflows/
2023 (233,661) $
2024 (245,627)
2025 (177,398)
2026 (134,130)
2027 -
Thereafter -
(790,816)$

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

122
Note 17 – Retirement Programs (Continued)

D. New York Life Single Employer Retirement Plan (Continued)

Actuarial Methods and Assumptions used to Determine Total Pension Liability - For the measurement period ended August 31, 2021 (measurement date), the total pension liability was determined by using the following actuarial assumptions, applied to all periods included in the measurement:

Valuation date
M easurement date
Contribution policy
Actuarial cost method
Actuarial assumptions:

Discount rate
Long-term expected rate of return on
assets

3.4% at August 31,
2020
Inflation
Morta l i ty
Mortality improvement
Salary Increases
Retirement
Disability, termination
Benefit form for current actives
NY Life guaranteed annuity contract
September 1, 2021
Value of payments expected to be made under contract excluded from total pension liability (contract assets not included in fiduciary net position) August 31, 2021
Entry Age Normal

2.14% at August 31, 2021 - discount rate used is the lower of (1) expected long-term rate of return on investments, and (2) Bond Buyer 20-Bond GO Index as of the measurement date

2.25%
Aggregate - 2.5% annually; merit - CalPERS 2000-2019 Experience Study 100% retire once the retirement benefit reaches 70% of the average monthly compensation
None
City contributes full ADC
CalPERS 2000-2019 Experience Study
Post-retirement mortality projected fully generational with Scale MP-2021.

Disability - annuity for all participants; lump sum for all other participants, valued using UP-1984 Mortality Table with 1% interest rate

Changes Since Prior Measurement Date – The following changes were applied since the prior measurement date of August 31, 2021:

Changes of assumptions - discount rate was updated based on municipal bond rate as of the measurement date.

Changes of benefit terms - none

Discount Rate – The discount rate used to measure the total pension liability was 2.14%. The discount rate is based on the expected rate of return which is lower than th e 20 year municipal bond rate. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at current contribution rates and City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the employee rate.

Based on those assumptions, the pension plan’s fiduciary net position was not projected to be available to make all projected future benefit payments of current active and inactive employees. The City’s annual contributions will be adjusted to keep the plan solvent.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

123
Note 17 – Retirement Programs (Continued)

E. ICMA Retirement Corporation Defined Contribution Plan

Investments are with New York Life. Expected rate of return is as follows:

Target Expected Rate
Asset Class Allocation of Return
Fixed income 100.00% 0.78%
Assumed long-term rate of inflation 2.25%
Expected long-term rate of return, rounded 2.75%

Pension Plan Fiduciary Net Position - Detailed information about the pensio n plan’s fiduciary net position as of August 31, 2021 is as follows:

New York
Li fe
Assets:

Investments:

New York Life Fixed Dollar Account 537,804 $
New York Life Mainstay Total Return Bond Fund 5,813,965 Total investments 6,351,769
Liabilities:

Accrued expenses -
Fiduciary net position 634,129 $

Plan Description – On June 19, 1995, the City established a qualified retirement program in accordance with Internal Revenue Code Section 401(a). This defined contribution 401(a) Money Purchase Retirement Plan was established with International City Managers Association Retirement Corporation (ICMA). Non-Public Safety Mid- Management employees that were participating in the ICMA 457 non-qualified deferred compensation plan in-lieu of participation in the New York Life Retirement Program, were required to transfer to one of the other City’s three qualified retirement plans. The City’s annual contribution to this plan is determined by the employer required contribution to the New York Life Plan Retirement Plan in accordance with Internal Revenue contribution limits.

Significant Accounting Policies

Basis of Accounting – Financial statements are prepared using the cash basis of accounting. Employer contributions are recognized in the period that the contributions are made.

Method Used to Value Investments – Participants direct their investments, without restriction, among various investments options available under the ICMA 401(a) Plan. Retirement Buyback Program During Fiscal Year 1995- 96, the City established a deferred compensation retirement buyback program for Department Directors where the City contributes a flat dollar amount based on tenure with the City. The 401(a) Money Purchase Retirement Plan is administered by the ICMA Retirement Corporation. The program requires employee-matching contributions for every dollar contributed by the City. At June 30, 2022, th ere were 5 participants rece iving a total of $114,127 in this form of benefit while there were 2 participants in the ICMA 401(a) money Purchase Plan with a City annual contribution was $19,781 while the employees had an equal mandatory matching contribution of $19,781.

DRAFT 09.08.2023
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

124
Note 17 – Retirement Programs (Continued)

F. Deferred Compensation Plans

The City has four deferred compensation plans created in accordance with Internal Revenue Code Section 457. The Small Business Job Protection Act of 1996 requires the establishment of a trust or similar vehicle to ensure that the assets of Deferred Compensation Plans under the Internal Revenue Code Section 457 are protected and used exclusively for the benefit of Plan participants and/or their beneficiaries. According to these laws the City established Employer Trust arrangements for each of the Plans before January 1, 1999.

The City has established Employer Trust agreements with ICMA Retirement Corporation, Mass Mutual Financial Group, and Central Coast Credit Union. In 1998, the City Council adopted a Resolution amending the City administered deferred compensation plans to conform to the new law protecting the plan participant assets from any claim against the City. Under the Trust arrangement, individual accounts maintained by the record-keeper used for receiving contributions and paying di stributions must be subject to the Tr ust. The existence of the Trust does little to change the Plan structure excep t to add a layer of protection for money set aside for the employee against claims of the Employer’s creditors. The law also allows an increase in the amount a participant may contribute to differ each year, based on changes in the consumer price index.

International City Manager’s Association (ICMA) Retirement Corporation

As of June 2021, the International City Manager’s A ssociation Retirement, Inc., (ICMA-RC), is now Mission Square Retirement and the Plan had 418 participants and a balance of $55,295,611 at June 30, 2022. All employees are eligible to participate through voluntary salary deduction. Some management employees participated in lieu of participation in the New York Life Retirement Program until June 19, 1995 when a qualified 401(a) retirement program was established. These assets are not reported on the City’s financial statements at June 30, 2022 pursuant to the Employer Trust established by the City with ICMA Retirement Corporation during November 1997.

Trust Deed Program

The City administers a Trust Deposit Fund that includes a deferred compensation plan funded solely by the voluntary salary reductions. The goal of the Trust Deed program is to invest participants’ funds in short-term deeds of trust (notes). This investment option is administer ed within the City of Salinas by the City’s appointed administrator of the Deferred Compen sation Plan. Loans are based on equity after obtaining a fee appraisal. All property is physically inspected and the loan package is reviewed and appr oved/disapproved by a Deferred Compensation Committee. All employees are eligible to participate. The Plan had 228 participants and a balance of $7,275,923 in net assets at June 30, 2022. The balance in these plans is available to employees only upon termination, retirement, death or unforeseen emergenc y. While the Employer Trust established by the City on December 15, 1998 protects these funds from creditors of the City, because the City ad ministers the plan assets, they are included in the City’s financial statements at June 30, 2022.

The Trust Deed Program is managed on a cash basis with interest posted when received and expenditures posted when paid. Interest and expenditures are allocated to pa rticipants based on month end cash balances. Trust deed notes secured by property taken back in foreclosure, are reevaluated based on the current market value of the property. When the value of property taken back in for eclosure is less than the note secured by that property, the note is written-down to current market value (less forecl osure and sales expenses) of the property. Gains are recognized only when properties are sold. Gains or losses ar e allocated to plan participants based on month end cash balances.

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Note 17 – Retirement Programs (Continued)

F. Deferred Compensation Plans (Continued)

Trust Deed Program (Continued)

As of June 30, 2022, pursuant to GAS B 72, properties held for resale were valued by independent real estate professionals (market approach) and trust deed notes were valued at their present value (income approach). The valuations are considered Level 3. Th e value of properties held for resale are reduced for cost of sales. The notes (loans) are valued based on amounts investors would likel y pay for notes with interest rates ranging from 6% for all current loans discounted to provide loan to valu es ranging from 70% to 50% depending on property type and condition, borrowers payment history and term remaining on note. The change in net realizable values are reflected in the Statement of Changes in Fiduciary Net Assets.

Central Coast Federal Credit Union (CCFCU)

This third deferred compensation plan was established in August 1993. The plan funds are backed by the full faith and credit of the U.S. Government and are also insure d by the National Credit Union Administration (NCUA), an agency of the federal government for up to $250,000. Central Coast collateralizes any amounts invested in their savings accounts in excess of NCUA insurance limits in accordance with applicable law. As of December 31, 2020, CCFCU became the service provider for the plan and th e City keeps the employees’ enrollment and send their payroll elective deduction to CCFCU.

There were 78 participants with a balance at June 30, 2022 is $7,074,352. All employees are eligible to participate through voluntary salary deductions. The assets for this plan are not reported on the City’s financial statements.

Mass Mutual Financial Group (Empower Retirement)

The fourth Deferred Compensation plan was established in September 2000. This retirement savings plan enables employees to defer a portion of their current compensation for payment at later date, generally retirement. Salary deferrals (or contributions) are voluntary and are made through the ease of payroll deduction. Empower Retirement former Mass Mutual offers a variety of investment vehicles that vary in risks, term and return to the investment.

These investment options are offered through a group variable annuity contract. There were 28 participants with a balance of $3,448,722 at June 30, 2022. All employees are eligible to participate through voluntary salary deductions. The assets for this plan are not reported on the City’s financial statements.

Note 18 – Other Postemployment Benefits

Items related to other postemployment benefits are recorded in the financial statements as follow:

Governmental Business-Type
Activities Activities Total
Net OPEB Liability 16,238,956 $ 819,308 $ 17,058,264 $ Deferred outflows of resources 5,248,155 264,787 5,512,942 Deferred inflows of resources 11,250,198 567,609 11,817,807 OPEB expense 1,134,784 57,254 1,192,038

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Note 18 – Other Postemployment Benefits (Continued)

A. General Information About the OPEB Plan

For purposes of measuring the net OPEB liability, deferred outflows of resources, and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s plan (OPEB Plan) and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis.

Generally accepted accounting principles require that th e reported results must pertain to liability and asset information within certain defined timeframes.

For this report, the following timeframes are used:

Valuation date June 30, 2021
Measurement date June 30, 2021
Measurement period July 1, 2020 to June 30, 2021
Fiscal year end June 30, 2022

Plan Description: The City joined the Public Employees' Medical & Hospital Care Act (PEMHCA) in 2000 for Police and Miscellaneous employees, offered through the California Public Employees’ Retirement System (CalPERS). It is an agent multiple-employer plan administered by California Public Employees’ Retirement System (CalPERS). The healthcare plan which provides medical insurance benefits to active and eligible retirees and their families in accordance with various la bor agreements. Fire employees receiv e healthcare benefits for active and retiree members from a union sponsored plan.

OPEB Trust: The City joined The California Employer s’ Retiree Benefit Trust (CERBT) in 2011 to prefund it’s OPEB liability. CERBT is an agent multiple employer defined plan for other postemployment benefits administered by CalPERS. The Plan includes participating employers of the State of California and public agencies. CalPERS is governed by a 13-member Board of Administration (the Board); two elected by CalPERS members, one elected by retired members of CalPERS, two appointed by the Gove rnor, one public representative appointed jointly by the Speaker of the Assembly and Senate Rules Committee, and four ex-officio members: State Treasurer, State Controller, Director of California Department of Human Resources, and Designee of the State Personal Board. The Board is responsible for the management and control of CalPERS, including the exclusive control of the administration and investments of the Plan.

The plan information is as follows:

Fiscal year end June 30, 2022
Plan type Agent multiple-employer
OPEB trust Yes
Special funding situations No
Nonemployer contributing entities No

Post-Employment Benefits Eligibility: The City provides post-retirement healthcare benefits to eligible employees who retire directly from the City after the age of 50 years (Age 52 for Miscellaneous PEPRA employees) and with five years of service or disability retirement. For Police a nd Fire Supervisors, the City pays 25% of retiree and spouse health insurance premium up to $100 per month plus PEMHCA AB2544 “unequal method” monthly benefit to retirees ($139 per month in 2021). The payment is made until Medicare eligibility, but no more than 10 years for non-supervisory Police retirees. For Miscellaneous employees, the City pays the PEMHCA “unequal method” monthly benefit to retirees ($143 per month in 2021). For IAFF (Fire employee), the City pays 25% of retiree and spouse health insurance premium up to $100 per month. The payment is made until Medicare eligibility.

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Notes to the Basic Financial Statements (Continued)
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Note 18 – Other Postemployment Benefits (Continued)

A. General Information About the OPEB Plan (Continued)

Employees Covered: As of the June 30, 2021 actuarial valuation, the following current and former employees were covered by the benefit terms under the PEMHCA and Union Sponsor Plans:

Number of
Covered
Participants
Inactive employees currently receiving benefits 144
Inactive employees entitled to, but not yet receiving benefits 352 Active employees 501
Total 997

Contributions: The City intends to contribute to the Trust the actuarially determined contribution (“ADC”) net of the pay-as-you-go benefits paid annually directly from employer resources. For the fiscal year ended June 30, 2022, the City’s cash contributions were $300,206 in premium payments made on behalf of retirees, $250,000 payments to the trust, implied subsidy payments of $385,000, and administrative e xpenses of $4,845, resulting in total payments of $941,051.

Discount Rate: The discount rate used to measure the total OPEB liability was 3.87%. The projection of cash flows used to determine the discount rate assumed that City cont ributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees and beneficiaries.

Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.

Expected Long Rate of Return: The long-term expected ra te of return on OPEB plan investments was determined using a building block method in which expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future r eal rates of return by the target asset allocation percentage and by adding expected inflation. Th e target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset Class
Target
Allocation*
CERBT-Strategy
Expe cte d Re al
Rate of Return
Global equity 59.00% 4.82%
Fixed income 25.00% 1.47%
TIPS 5.00% 1.29%
Commodities 3.00% 0.84%
REITs 8.00% 3.76%
100.00%
Assumed long-term rate of inflation 2.75%
Expected long-term rate of return, rounded 6.75%
* Policy target effective October 1, 2018

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Notes to the Basic Financial Statements (Continued)
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128
Note 18 – Other Postemployment Benefits (Continued)

B. Net OPEB Liabilities, Expense, and Deferred Outflows/Inflows of Resources

Changes in the OPEB Liability: The changes in the net OPEB liability for the City Plan are as follows:

Total Plan Net
OPEB Fiduciary OPEB
Liability Net Position Liability
Balance at June 30, 2021 27,819,852$ 3,058,247$ 24,761,605$ Changes Recognized for the M easurement Period:

Service Cost 1,639,274 - 1,639,274 Interest on the total OPEB liability 884,846 - 884,846 Changes in benefit terms - - - Difference between expected and actual experience (4,117,866) - (4,117,866) Changes in assumptions (4,258,871) - (4,258,871) Contribution from the employer - 959,007 (959,007) Net investment income - 897,217 (897,217) Administrative expenses - (5,500) 5,500 Benefit payments (704,749) (704,749) - Net changes during July 1, 2021 to June 30, 2022 (6,557,366) 1,145,975 (7,703,341) Balance at June 30, 2022 21,262,486$ 4,204,222$ 17,058,264$

Discount Rate Sensitivity Analysis: The following schedul e shows the impact of the Net OPEB Liability if the discount rate used was 1% less than and 1% greater than the discount rate that was u sed (3.87%) in measuring the Net OPEB Liability.

Discount Rate -1% Current Discount Rate Discount Rate +1% (2.87%) (3.87%) (4.87%)
20,457,340$ 17,058,264 $ 14,325,309 $ Plan's Total OPEB Liabiltiy

Healthcare Trend Sensitivity Analysis: The following presents the net OPEB liability of the City if it were calculated using healthcare cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2021:

Healthcare Cost
-1% Trend Rate +1%
13,993,313$ 17,058,264 $ 20,994,494 $ Plan's Total OPEB Liabiltiy

OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB:

For the fiscal year ended June 30, 2022, the City recognized OPEB expense of $1,192,038.

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Note 18 – Other Postemployment Benefits (Continued)

B. Net OPEB Liabilities, Expense, and Deferred Outflows/Inflows of Resources (Continued)

As of fiscal year ended June 30, 2022 , the City reported deferred outflows of resources and inflows of resources related to OPEB from the following sources:

Deferred Deferred
Outflows of Inflows of
Resources Resources
Contributions made after measurement date 940,051 $ - $ Differences between expected and actual experience - (6,392,087) Changes in assumptions 4,572,891 (4,945,910)
Net difference between projected and actual
earnings of OPEB Plan investments - (479,810) 5,512,942$ (11,817,807)$

Deferred outflows of resources in the amount of $940,051 related to contributions subsequent to the measurement date and will be recognized as a reduction of the net OPEB liability during the fiscal year ending June 30, 2023.

Other amounts reported as deferred inflows of resources related to OPEB will be recognized as OPEB expenses as follows:

Year Ending
June 30 Amount
2023 (1,104,499)$
2024 (1,099,953)
2025 (1,103,502)
2026 (1,122,748)
2027 (892,723)
Thereafter (1,921,491)
Total (7,244,916)$

Recognition of Deferred Outflows and Deferred Inflows of Resources: To smooth market volatility, gains and losses related to changes in total OPEB liability and fiduciary net position are recognized over nine and half years.

Amounts are first recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense.

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Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

130
Note 18 – Other Postemployment Benefits (Continued)

B. Net OPEB Liabilities, Expense, and Deferred Outflows/Inflows of Resources (Continued)

Actuarial Methods and Assumptions Used to Determine the OPEB Liability: The City’s net OPEB liability was measured as of June 30, 2020. The total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2019 based on the following significant actuarial methods and assumptions:

Actuarial valuation date June 30, 2021
Contribution policy City contributes $250,000 annually and pays benefit outside of trust Discount rate 3.87%
Municipal bond rate 3.87% (Bond Buyer 20-bond Index)s
Expected long-term rate of return on investment 6.25%
General inflation 2.50%
Mortality, retirement, disability, termination CalPERS 2000-2019 experience study Mortality improvement Mortality projected fully generational with Scale MP-2021 Salary increases Aggregate - 2.75% annually; merit - CalPERS 2000-2019 experience study M edical trend
PEM HCA minimum increases 4.00% annually
Cap increases None
Healthcare participation
Non-Medicare - 6.50% for 2023, decreasing to an ultimate rate of 3.75% in 2076
Medicare - 5.65% for 2023, decreasing to an ultimate rate of 3.75% in 2076 100% for Safety $100 benefit
50% for PEMHCA benefit if covered is active
50% for PEMHCA benefit if waived is active

Note 19 – Net Position and Fund Balances

A. Government-Wide Statements

Net Investment in Capital Assets

The following is the calculation of net investment in capital assets at June 30, 2022:

Governmental Business-type
Activities Activities Total
Capital assets, net of accumulated depreciation
and amortization 334,963,510$ 72,245,474$ 407,208,984$ Less: outstanding principal on capital related debt, net (130,404,431) (24,375,000) (154,779,431) Add: loss on refunding of debt - 103,051 103,051 Net investment in capital assets 204,559,079$ 47,973,525$ 252,532,604$

B. Fund Financial Statements

Fund Balance Classification

It is the policy of the City to maintain a minimum reserve for a reasonable level of assurance that the City’s day-to- day operations will be able to continue even if circumstances occur where revenues are insufficient to cover expenditures. The minimum reserve of the General Fund is 5% of the next year’s General Fund annual budgeted operating expenditures, as calculated by the Finance Director. The minimum fund balance is shown as unassigned in the General Fund.

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Note 19 – Net Position and Fund Balances (Continued)

B. Fund Financial Statements (Continued)

At June 30, 2022, fund balances are classified in the governmental funds as follows:

American Housing and
Rescue Plan Act Urban Development
(ARPA) Grant Non-major Total
General Special Revenue Special Revenue Governmental Governmental Fund Fund Fund Funds Funds
Nonspendable
Loans and notes receivable - $ -$ 66,568$ 16,571$ 83,139$ Advances (long-term portion) 2,785,000 - - - 2,785,000 Land held for resale - - - 1,380,000 1,380,000 Total nonspendable 2,785,000 - 66,568 1,396,571 4,248,139 Restricted
Public safety - - - 1,628,387 1,628,387 Future development - - - 16,896,096 16,896,096 M aintenance districts - - - 8,897,158 8,897,158 Street repairs - - - 23,711,730 23,711,730 Grants/special projects - - - 1,974,244 1,974,244 Low/moderate income housing - - - 3,145,651 3,145,651 115 trust reserve 6,000,000 - - - 6,000,000 Capital projects - - - 12,536,414 12,536,414 Debt service - - - 4,211,073 4,211,073 Total restricted 6,000,000 - - 73,000,753 79,000,753 Committed
Capital projects 5,319,323 - - 2,141,985 7,461,308 Economic contingency reserve 16,685,000 - - - 16,685,000 Infrastructure maintenance reserve 3,684,000 - - - 3,684,000 OPEB reserve 1,000,000 - - - 1,000,000 Facilities maintenance reserve 1,577,000 - - - 1,577,000 Community Center reserve 8,100,000 - - - 8,100,000 Total committed 36,365,323 - - 2,141,985 38,507,308 Assigned
Carryover appropriations 15,266,804 - - - 15,266,804 Total assigned 15,266,804 - - - 15,266,804 Unassigned (deficit) 9,567,543 - (2,838,755) (424,366) 6,304,422 Total fund balances 69,984,670$ -$ (2,772,187)$ 76,114,943$ 143,327,426$

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Notes to the Basic Financial Statements (Continued)
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Note 19 – Net Position and Fund Balances (Continued)

B. Encumbrances (Continued)

The City uses encumbrances to control expenditure commitments for the year and to enhance cash management.

Encumbrances represent commitments related to contract s not yet performed and purchase orders not yet filled (executor contracts; and open purchase orders). Commitments for such expenditures of monies are encumbered to reserve a portion of applicable appropriations. Encumb rances still open at year end are not accounted for as expenditures and liabilities but, rather, as restricted, committed, or assigned governmental fund balance.

As of June 30, 2022, total governmental fund encumbrance balances for the City are as follows:

General Fund 3,458,878$
Nonmajor governmental funds 41,594,635
Total encumbrances 45,053,513$

Note 20 – Other Required Disclosures

A. Expenditures Exceeding Appropriations

For the year ended June 30, 2022, the following fund s had excess expenditures over appropriations, which are expected to be covered with existing fund balance or had sufficient available revenue:

Excess Expenditures
Fund Function over Appropriations
General Fund Public safety 432,075$
General Fund Interest and fiscal charges 20,285
Emergency Medical Service Special Revenue Fund General Government 223,939 Emergency Medical Service Special Revenue Fund Public safety 73,463 2020A Refunding SVSWA Debt Service Fund DS: Principal 400,000

B. Net Position Deficit and Restrictions

The government-wide statement of net position reports an unrestricted deficit of $(111,270,940) and $76,573,216 of restricted net position.

Note 21 – Joint Venture – Salinas Valley Solid Waste Authority

The Salinas Valley Solid Waste Authority (“Authority”) is a joint exercise of powers authority, created pursuant to an agreement dated as of January 1, 1997 (the “Authority Ag reement) among the County of Monterey, and the cities of Salinas, Gonzales, Greenfield, Soledad, and King City (the “Members”). The Authority was established to acquire and manage the landfill assets of each member, ensure long-term landfill capacity of the Authority service area and provide a unified and coordinated solid waste management for the members.

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Note 21 – Joint Venture – Salinas Valley Solid Waste Authority (Continued)

The Authority is governed by a nine member governing board, consisting of three members of the Salinas City Council, two members of the Monterey County Board of Supervisors, and one member from each patriating city. Pursuant to the Authority Agreement, while the City does not have unilateral control over the activities of the Authority, the affirmative vote of at least one member of the Authority Board who is a member of the Salinas City Council is required to approve Board actions.

With the formation of the Authority, each participating juri sdiction contractually agreed to its responsibilities. In addition, the Authority adopted waste delivery agreements with each Member of the Authority. Each member has committed to deliver waste generated w ithin its boundaries to the Authority’s solid waste facilities, to direct its franchise/permitted solid waste haulers to dispose of waste at these facilities, and to pay tipping fees set by the Authority to cover all Authority-related costs.

The agreement may be terminated under specific terms of withdrawal, which includes a majority vote of the City Council, repayment of all outstanding debt and funding of closure, post closure and site remediation costs upon withdrawal from or termination of the Authority. The member s have made no equity contri butions, or have sold their interest in their assets to the Authority, and there is no explicit, measurable equity interest in this joint venture.

The City had no measurable equity interest in the Aut hority and does not receive a share of operating results. The Authority is currently funding the closur e, post closure and site remediation co sts based on estimates of these future costs. The Annual Financial Report of the Salinas Valley Solid Waste Authority is published and available from the Authority Treasurer at the Authority’s Finance Department located at 128 Sun Street, Suite 101, Salinas, CA 93901.

On December 6, 2018, the City issued a notice of inte ntion to withdraw from the Jo int Powers Agreement (the “Agreement”) Pursuant to Section 19 of the Joint Powers Agreement, the notice serves as a one-year notice. The City’s notice of intent to withdraw as a member of the Authority merely served as notice to the Authority and its remaining members. The one-year term has passed without any further action from the City or the Authority. However, the City and Authority representatives are working on finding a resolution to the notice.

The City understands and acknowledges its obligation to c ontinue paying its share of the 2014 Bonds as regularly scheduled and agrees to continue paying its share of the obligation after withdrawal from the Authority, should withdrawal occur. In addition, the City understands and acknowledges its obligation to pay its share of financial liability for closure and post-closure and site remediation costs as fu rther described in Section 19(a) of the Agreement. If the City withdraws from the Authority arrangements must be made to meet this obligation.

Note 22 – Commitments and Contingencies

A. Claims and Litigation

The City is directly and indirectly involved in various suits relating principally to claims arising from construction contracts, personal injury, and propert y damage. In the opinion of the City Attorney and City’s management, potential claims against the City resulting from such litiga tion, not covered by insurance, would not materially affect the basic financial statements of the City. As a result, no liability has been accrued by the City relating to these matters as of June 30, 2022.

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134
Note 23 – Prior Period Adjustments

Net position at July 1, 2021 for the Governmental Activities, Business-type Activities, and Fiduciary Activities was restated as follows:

Governmental Business-Type Fiduciary
Activities Activities Activities
Net position, as previously reported, at July 1, 2021 116,252,267$ 84,870,502$ 19,484,100$ Move enterprise funds to General Fund 24,996,820 (24,996,820) - Remove land disposed in previous year - - (149,270) Remove land and properties held for resale disposed in previous year (500,431) - - Net position at July 1, 2021, as restated 140,748,656$ 59,873,682$ 19,334,830$

Fund balance/net position at July 1, 2021 was restated at the fund level as follows:

Recreation Municipal Affordable
Parks Art Housing
General Special Revenue Special Revenue Special Revenue Fund Fund Fund Fund
Fund balance/net position, as previously reported, at July 1, 2021 64,495,539$ 71,498 $ 10,911 $ 4,737,817 $ Group special revenue funds into General Fund 82,409 (71,498) (10,911) - Move beginning net position of enterprise funds into General Fund 24,996,820 - - - Remove land disposed in previous year - - - - Remove land and properties held for resale disposed in previous year - - - (500,431) Remove beginning balances transferred from enterprise funds:

Non-depreciable capital assets (1,667,376) - - - Depreciable capital assets (33,167,128) - - - Interest payable 31,579 - - - Long-terrm debt 6,771,886 - - - Compensated absences 226,345 - - - Net pension liability 594,968 - - - Pension-related deferred outflows of resources (147,809) - - - Pension-related deferred inflows of resources 4,982 - - - Net OPEB liability 296,850 - - - OPEB-related deferred outflows of resources (75,613) - - - OPEB-related deferred inflows of resources 55,826 - - - Fund balance/net position at July 1, 2021, as restated 62,499,278$ - $ - $ 4,237,386$

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Note 23 – Prior Period Adjustments (Continued)

L andfill Redev elopment
Municipal Storm Garbage Water Obligation
Golf Courses Sewer Surcharge Utility Retirement Fund
Enterprise Enterprise Enterprise Enterprise Fiduciary
Fund Fund Fund Fund Fund
Fund balance/net position, as previously reported, at July 1, 2021 (9,566,038)$ 34,219,186$ 283,158$ 60,514$ 97,672$ Group special revenue funds into General Fund - - - - - Move beginning net position of enterprise funds into General Fund 9,566,038 (34,219,186) (283,158) (60,514) Remove land disposed in previous year - - - - (149,270) Remove land and properties held for resale disposed in previous year - - - - - Remove beginning balances transferred from enterprise funds:

Non-depreciable capital assets - - - - - Depreciable capital assets - - - - - Interest payable - - - - - Long-terrm debt - - - - - Compensated absences - - - - - Net pension liability - - - - - Pension-related deferred outflows of resources - - - - - Pension-related deferred inflows of resources - - - - - Net OPEB liability - - - - - OPEB-related deferred outflows of resources - - - - - OPEB-related deferred inflows of resources - - - - - Fund balance/net position at July 1, 2021, as restated -$ -$ -$ -$ (51,598)$

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REQUIRED SUPPLEMENTARY INFORMATION
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Budgetary Information
For the Year Ended June 30, 2022

139
Budgetary Information

The budget is prepared by the City Manager and adopted by the City Council. The City Council approves operating appropriations at the department and fund level prior to July 1, each year and may amend the budget during the fiscal year. Budgetary control is maintained at the program level. Formal budgetary in tegration was employed as a management control device during the fiscal year for the Ge neral Fund, Special Revenue Funds, Debt Service Funds, Capital Projects Funds, Enterprise Funds and Internal Service Funds.

Budgets are legally adopted for all Governmental and Proprietary Fund Types. Fiduciary Funds and Agency Funds have no adopted budgets because the City is only required to make payments to the extent funds are available. Agency Fund budgets that are approved by their respective governing boards are recorded in the City’s accounting system.

The City Manager may transfer budget appropriations between departments and Department Directors may transfer appropriations between programs and accounts within their individual departments and divisions, but only the Council may appropriate funds from reserves or fund balances.

Budget policy excludes the use of taxes, accounts receivable, interest receivable assets and long-term advances that are not currently available resources for budget purposes. Condemnation deposits, are also excluded because they are returned upon right of way acquisition.

Expenditures may not legally exceed budgeted appropriations at the department level. Budgeted amounts shown are as originally adopted and as amended by the City Council dur ing the year. During the year, Council amends the budget with the approval of supplemental appropriations and reviews and amends the budget at mid-year and at year-end.

Appropriations lapse at fiscal year end to the extent th ey have not been expended. New budget appropriations are approved for the coming year. Project-length financial plans are adopted for all capital projects funds and appropriations are carried forward until project completion. Grant funds are carried forward until the grant expires.

Encumbrances represent commitments related to unperfo rmed contracts for goods or services. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of th e applicable appropriation, is employed as an extens ion of formal budgetary integration in the governmental funds. Encumbrances outsta nding at year-end are recorded as reservations of fund balance and do not constitute expenditures or liabilities because the commitments will be honored during the subsequent year.

On November 8, 2005, the voters of Salinas approved Measure V, a 0.50% transactions and use tax. Measure V is a general tax and is reported as part of the General Fund. The tax was effective April 1, 2005 and had an original sunset of ten (10) years. Measure V was revised by the voters on November 6, 2012 eliminati ng a termination date on the imposition of the tax through Measure E. The Measure E Oversight Committee is a fundamental provision of the voter- approved tax. The Mayor and City Council each annually appoints one member of the public to serve on the Oversight Committee. The committee is responsible for and overseeing the use of Measure E funds to assure consistency with the voter approved tax and the appropriated use of Measure E funds.

On November 4, 2014, the voters of Salinas approved Measure G (For a Safer Better Salinas), a 1.00% transactions and use tax. Measure G is a general tax and is reported as part of the General Fund. The tax was effective April 1, 2015 and had a sunset date of fifteen (15) years. The Measure G Oversight Committee is a fundamental provision of the voter- approved tax. The Mayor and City Council each annually appoints one member of the public to serve on the Oversight Committee. The committees’ main responsibilities include the re view of the auditor’s report of the specific uses of Measure G funds and to issue a public report to the City Co uncil regarding the use of re venue and such other matters as the City Council may assign.

DRAFT 09.08.2023
City of Salinas
Budgetary Information (Continued)
For the Year Ended June 30, 2022

140

BUDGETARY INFORMATION

The adopted FY 2022 budget represents the financial and organizational plan by which the policies and programs approved by the City Council will be implemented. It includes: (1) the programs, projects, services and activities to be provided during the fiscal year; (2) estimated revenues availa ble to finance the operating plan; and (3) the estimated spending requirements of the operating plan. The City’s goals and objectives identified by the City Council in the Strategic Plan thru 2025 was approved on March 8, 2022, following a strategic planning session on December 4, 2021 and are as follows:

• Economic Development
• Affordable Housing
• Infrastructure and Environmental Sustainability
• Excellent Infrastructure
• Public Safety
• Youth and Seniors
• Effective and Culturally Responsive Government

On May 25, 2021, the City Council was introduced and reviewed the proposed operating budget for the City of Salinas and Successor Agency. The Salinas City Council adopted FY 2022 Annual Operating Budgets on June 8, 2021. Capital project budget is updated annually.

Annual budgets are prepared for General Governmental Funds , Internal Service, Enterprise Operations, Assessment and maintenance Districts, Block Grant and Home programs, certain Grant and City Agencies, Deferred Compensation and Retirement, Debt Service, Successor Agency and Capital Project Funds.

The annual appropriation resolution adopts the budget at an appropriation level by fund, w ith detail expenditure by departments and programs included in the budget document.

GENERAL FUND

The General Fund fund balance increased $2,059,849 to $28,802,620, of which $2,785 ,000 is Nonspendable, $20,960,197 is Committed, $7,321,952 is Assigned and $(8,264,529) is Unassigned.

General Fund reserves have been set-aside by Council for specific purposes. Under the Reserved fund balance category, the General Fund Non-spendable fund balance of $2,7 85,000 includes Advances ($2,785,000). Committed funds balance of $36,365,323 are co mmitted for capital projects, reserves, and future encumbrances. Carryover Appropriations of $15,266,804 are under the Assigned fund balance category.

MEASURE E

Measure E is a general tax (discretionary) and is reported as part of the General Fund. The Measure E fund balance increased $4,773,803 to $14,374,790, of which $9,205,721 is committed for future encumbrances, $863,153 is assigned and $4,305,916 is unassigned.

DRAFT 09.08.2023
City of Salinas
Budgetary Information (Continued)
For the Year Ended June 30, 2022

141

MEASURE G

Measure G is a general tax (discretionary) and is reporte d as part of the General Fund. The Measure G fund balance increased $651,740 to $26,807,260, of which $6,199,405 is Committed for fu ture encumbrances, $7,081,699 is Assigned and $13,526,156 is Unassigned.

BUDGETARY RESULTS RECONCILED TO GAAP

The budgetary process is based upon accounting for certain transactions on a basis other than the accounting principles generally accepted in the United States (GAAP) basis. The results of operations are presented in the accompanying budget and actual comparison schedules in accordance with the budgetary process (budgetary basis) to provide a meaningful comparison with the budget. The major differences between the budgetary basis actual and GAAP basis are as follows:

• Year-end encumbrances are recognized as the equivalent of expenditures in the budgetary basis financial statements, while encumbered amounts are not recognized as expenditures on the GAAP basis until the equipment, supplies, or services are received.

• Certain loan transactions are recognized as expenditures for the budgetary basis but not for the GAAP basis.

When these loans are made, they are recorded as receivables for the GAAP basis and as expenditures for the budgetary basis. When loan repayments are received, they are recorded as reductions to receivables for the GAAP basis, but are recognized as revenues for the budgetary basis.

• Certain accounts such as the change in fair market value of investment s included in the City’s GAAP basis amounts, for which no formal budgets are prepared, are excluded from the budgetary basis financial statements.

• Certain grant revenues received in advance are recogni zed on the budgetary basis fina ncial statements, but are deferred and not recognized as revenue on the GAAP basis financial statements. This process normally creates a variance in recognized revenue from the prior year to the current year.

DRAFT 09.08.2023
City of Salinas
Budgetary Comparison Schedules – General Fund
For the Year Ended June 30, 2022

142
Variance with
Final Budget
Actual Favorable/
Original Final Amounts (Unfavorable)
REVENUES :

Taxes 129,554,000 $ 129,554,000 $ 145,835,874 $ 16,281,874 $ Licenses and permits 10,257,650 10,257,650 11,477,723 1,220,073 Intergovernmental 421,200 421,200 1,301,666 880,466 Charges for services 4,823,075 4,823,075 5,233,403 410,328 Investment income (loss) 673,200 673,200 (1,406,103) (2,079,303) Rental income 509,000 509,000 325,113 (183,887) Fines and forfeitures 340,000 340,000 426,149 86,149 Miscellaneous 979,000 979,000 1,014,576 35,576 Total revenues 147,557,125 147,557,125 164,208,401 16,651,276 EXPENDITURES:

Current:

General government 20,570,978 20,912,328 17,192,429 3,719,899 Public safety 81,521,389 82,024,012 82,456,087 (432,075) Public works 15,889,605 16,806,666 12,877,048 3,929,618 Recreation 7,045,882 7,086,533 5,578,195 1,508,338 Library 5,624,242 5,624,241 4,401,235 1,223,006 Capital outlay 65,000 395,955 442,723 (259,486) Debt Service:

Principal 555,900 555,900 655,441 555,900 Interest and fiscal charges 197,000 197,000 217,285 (20,285) Total expenditures 131,469,996 133,602,635 123,820,443 10,224,915 RE
VENUES OVER (UNDER) EXPENDITURES 16,087,129 13,954,490 40,387,958 6,426,361 OTH E R F I NA NCI NG SOU R CE S (U SE S):

Proceeds from sale of capital assets 1,000 1,000 1 (999) Transfers in 7,184,200 7,315,200 1,979,099 (5,336,101) Transfers out (29,508,725) (49,454,854) (34,881,666) (14,573,188) Total other financing sources (uses) (22,323,525) (42,138,654) (32,902,566) (19,910,288) Net change in fund balance (6,236,396)$ (28,184,164)$ 7,485,392 35,669,556$ FUND BALANCE:

Beginning of y ear 62,499,278
End of year 69,984,670$
Budgeted Amounts

DRAFT 09.08.2023
City of Salinas
Budgetary Comparison Schedules – ARPA Fund
Special Revenue Fund
For the Year Ended June 30, 2022

143
Variance with
Final Budget
Actual Favorable/
Original Final Amounts (Unfavorable)
REVENUES :

Intergovernmental - $ - $ 691,383$ 691,383 $ Total revenues - - 691,383 691,383 EXPENDITURES:

Current:

General government - 12,600,000 415,764 12,184,236 Public safety - 390,000 2,986 387,014 Public works - 10,745,000 224,521 10,520,479 Recreation - 1,100,000 - 1,100,000 Capital outlay - 26,732,313 48,112 26,732,313 Total expenditures - 51,567,313 691,383 50,924,042 Net change in fund balance -$ (51,567,313)$ - 51,567,313$ FUND BALANCE:

Beginning of y ear -
End of year -$
Budgeted Amounts

DRAFT 09.08.2023
City of Salinas
Budgetary Comparison Schedules – HUD Fund
Special Revenue Fund
For the Year Ended June 30, 2022

144
Variance with
Final Budget
Actual Favorable/
Original Final Amounts (Unfavorable)
REVENUES :

Intergovernmental 10,104,632$ 23,457,781$ 7,313,240$ (16,144,541)$ Interest - - (4,637) (4,637) Miscellaneous 539,099 539,099 585,715 46,616 Total revenues 10,643,731 23,996,880 7,894,318 (16,102,562) EXPENDITURES:

Current:

General government 5,051,982 17,269,623 9,757,121 7,512,502 Capital outlay 1,231,244 329,156 38,097 329,156 Total expenditures 6,283,226 17,598,779 9,795,218 7,841,658 REVENUES OVER (UNDER) EXPENDITURES 4,360,505 6,398,101 (1,900,900) (23,944,220) OTH E R F I NA NCI NG SOU R CE S (U SE S):

Transfers in - - 4,424 4,424 Transfers out - (74,964) - (74,964) Total other financing sources (uses) - (74,964) 4,424 (70,540) Net change in fund balance 4,360,505$ 6,323,137$ (1,896,476) (8,219,613)$ FUND BALAN CE (D EFICIT):

Beginning of y ear (875,711)
End of year (2,772,187)$
Budgeted Amounts

DRAFT 09.08.2023
City of Salinas
Required Supplemental Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios – Miscellaneous Plan

145
2022 2021 2020 2019 2018 2017 2016 2015
Measurement Period, Year Ended June 30: 2021 2020 2019 2018 2017 2016 2015 2014 1 T otal Pension L iability
Service Cost 3,130,339$ 3,162,904 $ 3,157,247 $ 3,099,429 $ 2,873,548 $ 2,135,480 $ 2,197,484 $ 2,331,545 $ Interest on total pension liability 9,498,842 8,959,786 8,430,817 7,806,166 7,282,974 6,801,939 6,445,778 6,154,034 Changes in benefit t erms - - - - - - - - Differences between expected and actual
experience 727,132 588,822 2,005,995 1,457,261 489,759 (996,921) (1,789,044) - Changes in assumptions - - - (752,607) 6,388,079 - (1,686,636) - Benefit payments, including refunds of
employee contributions (5,481,505) (5,107,076) (4,456,008) (3,952,236) (3,361,268) (3,116,204) (2,803,130) (2,673,091) Net change in total pension liability 7,874,808 7,604,436 9,138,051 7,658,013 13,673,092 4,824,294 2,364,452 5,812,488 T otal pension liability - beginning 133,299,386 125,694,950 116,556,899 108,898,886 95,225,794 90,401,500 88,037,048 82,224,560 T otal pension liability - ending (a) 141,174,194$ 133,299,386 $ 125,694,950 $ 116,556,899 $ 108,898,886 $ 95,225,794 $ 90,401,500 $ 88,037,048 $ Plan fiduciary net position
Contributions - employer 4,273,977$ 7,793,322 $ 3,511,716 $ 3,133,948 $ 3,232,477 $ 2,635,818 $ 2,037,528$ 2,010,590$ Contributions - employee 1,464,611 1,411,627 1,501,635 1,403,836 1,331,850 1,339,737 987,786 959,420 Net investment income 22,935,564 4,662,415 5,681,706 6,712,207 7,844,830 375,028 1,500,373 9,911,526 Benefit payments, including refunds of
employee contributions (5,481,505) (5,107,076) (4,456,008) (3,952,236) (3,361,268) (3,116,204) (2,803,130) (2,673,091) Net plan to plan resource movement - 383,290 - (199) - 365 - - Administrative expense (100,678) (129,381) (61,083) (122,563) (102,919) (41,756) (77,059) - Other miscellaneous income/expense - - 199 (232,749) - - - - Net change in plan fiduciary net
position 23,091,969 9,014,197 6,178,165 6,942,244 8,944,970 1,192,988 1,645,498 10,208,445 Plan fiduciary net position - beginning 100,787,546 91,773,349 85,595,184 78,652,940 69,707,970 68,514,982 66,869,484 56,661,039 Plan fiduciary net position - ending (b) 123,879,515$ 100,787,546$ 91,773,349$ 85,595,184$ 78,652,940$ 69,707,970$ 68,514,982$ 66,869,484$ Net pension liability - ending (a) - (b) 17,294,679$ 32,511,840$ 33,921,601$ 30,961,715$ 30,245,946$ 25,517,824$ 21,886,518$ 21,167,564$ Plan fid u ciary net position as a percentag e
of the total pension liability 87.75% 75.61% 73.01% 73.44% 72.23% 73.20% 75.79% 75.96% Covered payroll 20,799,596$ 20,946,385$ 20,634,254$ 20,051,944$ 18,618,295$ 15,300,421$ 15,513,480$ 15,831,777$ Plan net pension liability as a percentage of
covered payroll 83.15% 155.21% 164.39% 154.41% 162.45% 166.78% 141.08% 133.70% 1Information only presented from the implementation year City Miscellaneous Plans

DRAFT 09.08.2023
City of Salinas
Required Supplemental Information (Unaudited)
Schedule of Pension Plan Contributions
Miscellaneous Plan

146
Fiscal Year Ended June 30: 2022 2021 2020 2019 2018 2017 2016 2015 Actuarially determined
contribution 4,193,288$ 4,273,977$ 3,857,093$ 3,511,716$ 3,133,731$ 3,231,650$ 2,635,818$ 2,037,528$ Contributions in relation to
the actuarially determined
contribution (4,193,288) (4,273,977) (7,788,891) (3,511,716) (3,133,731) (3,231,650) (2,635,818) (2,037,528) Contribution deficiency
(excess) -$ -$ (3,931,798)$ -$ -$ -$ -$ -$ Covered payroll 21,509,329$ 20,882,844$ 20,508,948$ 21,485,315$ 20,577,688$ 19,120,162$ 16,519,247$ 13,444,769$ Contributions as a percentage
of covered payroll 19.50% 20.47% 37.98% 16.34% 15.23% 16.90% 15.96% 15.15% Notes to Schedule:

Methods and assumptions used to determine contribution rates:

The actuarial methods and assumption used to set the actuarially determined contributions for Fiscal Year 2022 w ere derived fro m the June 30, 2020 funding valuation report.

Actuarial cost method
Amortization method/period For details, see June 30, 2020 Funding V aluation Report Asset valuation method
Inflation
Salary increases Varies based on entry age and service Payroll grow th
Investment rate of return
Ret irement age
Mortality
City M iscellaneous Plans
The probabilities of retirement are based on the 2014 CalPERS Experience S tudy for the period from 1997 to 2015.

The probabilities of mortality are based on the 2017 CalPERS Experience S tudy for the period from 1997 to 2015. Pre-retirement and post-retirement mortality rates include 20 years of projected mortality improvement using S cale BB published by the Actuaries. 1Information only presented from the implementation year Entry Age Normal
Market value of assets

2.500%

2.750%

7.00% net of pension plan investment and administrative expenses DRAFT 09.08.2023
City of Salinas
Required Supplemental Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios – City Police Plans

147
2022 2021 2020 2019 2018 2017 2016 2015
Measurement Period, Year Ended June 30: 2021 2020 2019 2018 2017 2016 2015 2014 1 T otal Pension L iability
Service Cost 6,086,593$ 6,156,433 $ 6,076,786 $ 5,603,486 $ 5,171,913 $ 4,462,598 $ 4,440,981 $ 4,932,982 $ Interest on total pension liability 22,716,035 22,017,085 21,051,415 19,772,458 18,658,643 17,933,618 17,475,350 17,097,550 Changes in benefit t erms - - - - - - - - Differences between expected and actual
experience (2,364,429) 1,696,481 6,664,829 6,096,574 (2,807) (4,299,665) (5,739,808) - Changes in assumptions - - - (1,307,343) 16,117,523 - (4,436,648) - Benefit payments, including refunds of
employee contributions (16,317,199) (15,680,099) (15,037,162) (13,742,608) (12,772,896) (11,890,953) (11,383,179) (10,895,705) Net change in total pension liability 10,121,000 14,189,900 18,755,868 16,422,567 27,172,376 6,205,598 356,696 11,134,827 T otal pension liability - beginning 325,186,524 310,996,624 292,240,756 275,818,189 248,645,813 242,440,215 242,083,519 230,948,692 T otal pension liability - ending (a) 335,307,524$ 325,186,524$ 310,996,624$ 292,240,756$ 275,818,189$ 248,645,813$ 242,440,215$ 242,083,519$ Plan fiduciary net position
Contributions - employer 11,629,887$ 10,297,024$ 9,485,870$ 8,260,458$ 7,798,560$ 6,462,584$ 5,540,793$ 5,285,903$ Contributions - employee 2,305,151 1,946,146 1,993,713 1,816,971 1,625,541 1,512,655 1,350,215 1,375,826 Net investment income 46,981,535 9,999,235 12,630,434 15,347,329 18,439,075 800,238 3,733,737 25,664,291 Benefit payments, including refunds of
employee contributions (16,317,199) (15,680,099) (15,037,162) (13,742,608) (12,772,896) (11,890,953) (11,383,179) (10,895,705) Net plan to plan resource movement - (383,290) - (447) - 19,216 - - Administrative expense (206,540) (283,165) (136,963) (282,146) (245,410) (103,251) (190,690) - Other miscellaneous income/expense - - 444 (535,801) - - - - Net change in plan fiduciary net
position 44,392,834 5,895,851 8,936,336 10,863,756 14,844,870 (3,199,511) (949,124) 21,430,315 Plan fiduciary net position - beginning 206,759,103 200,863,252 191,926,916 181,063,160 166,218,290 169,417,801 170,366,925 148,936,610 Plan fiduciary net position - ending (b) 251,151,937$ 206,759,103$ 200,863,252$ 191,926,916$ 181,063,160$ 166,218,290$ 169,417,801$ 170,366,925$ Net pension liability - ending (a) - (b) 84,155,587$ 118,427,421$ 110,133,372$ 100,313,840$ 94,755,029$ 82,427,523$ 73,022,414$ 71,716,594$ Plan fid u ciary net position as a percentag e
of the total pension liability 74.90% 63.58% 64.59% 65.67% 65.65% 66.85% 69.88% 70.38% Covered payroll 19,916,863$ 19,776,528$ 19,051,278$ 17,967,376$ 16,214,420$ 15,715,033$ 15,494,316$ 16,589,818$ Plan net pension liability as a percentage of
covered payroll 422.53% 598.83% 578.09% 558.31% 584.39% 524.51% 471.29% 432.29% 1Information only presented from the implementation year City Police Plans

DRAFT 09.08.2023
City of Salinas
Required Supplemental Information (Unaudited)
Schedule of Pension Plan Contributions
City Police Plans

148
Fiscal Year Ended June 30: 2022 2021 2020 2019 2018 2017 2016 2015 2014 Actuarially determined
contribution 12,406,841$ 11,629,887$ 10,297,024$ 9,481,034$ 8,260,675$ 7,799,085$ 6,462,584$ 5,540,793$ 5,285,903$ Contributions in relation to
the actu arially d etermined
contribution (12,406,841) (11,629,887) (10,296,552) (9,481,034) (8,260,675) (7,799,085) (6,462,584) (5,540,793) (5,285,903) Cont ribut ion deficiency
(excess) -$ -$ 472$ -$ -$ -$ -$ -$ -$ Covered payroll 20,514,369$ 19,916,863$ 19,776,528$ 19,051,278$ 17,967,376$ 16,214,420$ 15,715,033$ 15,494,316$ 16,589,818$ Contributions as a percentage
of covered payroll 60.48% 58.39% 52.06% 49.77% 45.98% 48.10% 41.12% 35.76% 31.86% Notes to Schedule:

Methods and assumptions used to determine contribution rates:

7.00% net of pension plan investment and administrative expenses The probabilities of retirement are based on the 2014 CalPERS Experience S tudy for the period from 1997 to 2015.

The probabilities of mortality are based on the 2014 CalPERS Experience S tudy for the period from 1997 to 2015. Pre-retirement and post-retirement mortality rates include 20 years of projected mortality improvement using S cale BB published by the Actuaries. 1Information only presented from the implementation year The actuarial methods and assumption used to set the actuarially determined contributions for Fiscal Year 2022 were derived fro m the June 30, 2020 funding valuation report.

Entry Age Normal
Market value of assets

2.500%

2.875%

DRAFT 09.08.2023
City of Salinas
Required Supplemental Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios – City Fire Plans

149
2022 2021 2020 2019 2018 2017 2016 2015
Measurement Period, Year Ended June 30: 2021 2020 2019 2018 2017 2016 2015 2014 1 Proportion of the net pension liability 0.61287% 0.48376% 0.46772% 0.46967% 0.58010% 0.60039% 0.64362% 0.64195% Proportionate share of the net pension
liability 33,145,570$ 52,635,552 $ 47,927,704 $ 45,259,034 $ 57,529,594 $ 51,951,899 $ 44,177,449 $ 39,944,785 $ Covered payroll 11,387,448 $ 11,013,870 $ 10,748,465 $ 9,763,022 $ 9,636,368 $ 9,436,688 $ 9,158,594 $ 9,531,935 $ Proportionate share of the net pension
liability as percentage of covered payroll 291.07% 477.90% 445.90% 463.58% 597.00% 550.53% 482.36% 419.06% Plan's fiduciary net position as percentage
of the total pension liability 88.29% 75.10% 75.26% 75.26% 73.31% 74.06% 78.40% 79.82% 1Information only presented from the implementation year City Fire Plans

DRAFT 09.08.2023
City of Salinas
Required Supplemental Information (Unaudited)
Schedule of Pension Plan Contributions
City Fire Plans

150
Fiscal Year Ended June 30: 2022 2021 2020 2019 2018 2017 2016 2015 Actuarially determined
contribution 6,791,444 $ 5,708,093 $ 5,058,738 $ 4,369,284 $ 5,440,481 $ 5,132,440 $ 4,732,759 $ 3,811,507 $ Contributions in relation to
the actuarially determined
contribution (6,791,444) (5,708,093) (5,058,738) (4,369,284) (16,741,091) (5,132,440) (4,732,759) (3,811,507) Contribution deficiency
(excess) -$ -$ -$ -$ (11,300,610)$ -$ -$ -$ Covered payroll 11,615,639$ 11,387,448$ 11,013,870$ 10,748,465$ 9,763,022$ 9,636,368$ 9,436,668$ 9,158,594$ Contributions as a percentage
of covered payroll 58.47% 50.13% 45.93% 40.65% 171.47% 53.26% 50.15% 41.62% Notes to Schedule:

Methods and assumptions used to determine contribution rates:

Actuarial cost method
Amortization method /period
Asset valuation method
Inflation
Salar y in cr e ases Varies based on entry age and service Payroll grow th 2.875%
Investment rate of return
Ret irement age
Mortality The probabilities of mortality are based on the 2017 CalPERS Experience S tudy for the period from 1997 to 2015. Pre-retirement and post-retirement mortality rates include 20 years of projected mortality improvement using S cale BB published by the Actuaries.

The actuarial methods and assumption used to set the actuarially determined contributions for Fiscal Year 2021 w ere derived fro m the June 30, 2018 funding valuation report. 1Information only presented from the implementation year City Fire Plans
Entry Age Normal
For details, see June 30, 2019 Funding V aluation Report Market value of assets

2.50%

7.000% net of pension plan investment and administrative expenses The probabilities of retirement are based on the 2014 CalPERS Experience S tudy for the period from 1997 and 2015.

DRAFT 09.08.2023
City of Salinas
Required Supplemental Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios – Single Employer Plan

151
2022 2021 2020 2019 2018 2017 2016
Measurement Period, Year Ended June 30: 2021 2020 2019 2018 2017 2016 2015 1 T otal Pension Liability
Se r v ice Co st 345,756$ 325,385 $ 232,193 $ 302,184 $ 279,000 $ 336,000 $ 436,000 $ Interest on total pension liability 283,983 506,095 684,730 679,330 537,000 655,000 676,000 Changes in benefit t erms - - - - - 531,000 - Differences between expected and actual
experience 1,595,858 - 889,365 - 2,172,000 - - Changes in assumptions (37,244) 907,299 217,496 - (106,000) - - Benefit payments, including refunds of
employee contributions (2,656,129) (9,123,048) (1,305,661) (199,769) (3,508,000) (87,000) (3,139,000) Net change in total pension liability (467,776) (7,384,269) 718,123 781,745 (626,000) 1,435,000 (2,027,000) T otal pension liability - beginning 13,893,599 21,277,868 20,559,745 19,778,000 20,404,000 18,969,000 20,996,000 T otal pension liability - ending (a) 13,425,823$ 13,893,599 $ 21,277,868 $ 20,559,745 $ 19,778,000 $ 20,404,000 $ 18,969,000 $ Plan fiduciary net position
Contributions - employer 5,695,926$ 8,030,028 $ 2,919,589 $ 1,927,686 $ 1,654,000 $ 1,483,000 $ 1,340,000 $ Contributions - employee 34,635 52,751 71,806 70,043 69,000 82,000 77,000 Net investment income 894,536 338,833 503,893 60,254 (506,000) 84,000 (85,000) Benefit payments, including refunds of
employee contributions (2,656,129) (9,123,048) (1,305,661) (199,769) (3,508,000) (87,000) (3,139,000) Administrative expense (18,061) (18,582) (19,188) (54,195) (75,000) (83,000) (100,000) Net change in plan fiduciary net
position 3,950,907 (720,018) 2,170,439 1,804,019 (2,366,000) 1,479,000 (1,907,000) Plan fiduciary net position - beginning 5,914,440 6,634,458 4,464,019 2,660,000 5,026,000 3,547,000 5,454,000 Plan fiduciary net position - ending (b) 9,865,347$ 5,914,440$ 6,634,458$ 4,464,019$ 2,660,000$ 5,026,000$ 3,547,000$ Net pension liability - ending (a) - (b) 3,560,476$ 7,979,159$ 14,643,410$ 16,095,726$ 17,118,000$ 15,378,000$ 15,422,000$ Plan fiduciary net position as a percentage
of the total pension liability 73.48% 42.57% 31.18% 21.71% 13.45% 24.63% 18.70% Covered payroll 768,725$ 1,176,879$ 1,628,432$ 1,610,679$ 1,649,359$ 1,461,000$ 1,738,432$ Plan net pension liability as a percentage of
covered payroll 463.17% 677.99% 899.23% 999.31% 1037.86% 1052.57% 887.12% 1Information only presented from the implementation year Single-Employer Plan

DRAFT 09.08.2023
City of Salinas
Required Supplemental Information (Unaudited)
Schedule of Pension Plan Contributions
Single Employer Plan

152
Fiscal Year Ended June 30: 2022 2021 2020 2019 2018 2017 2016 Actuarially determined
contribution 2,963,000 $ 4,252,000 $ 4,114,000 $ 2,000,000 $ 1,932,000 $ 1,583,000 $ 1,520,000 $ Contributions in relation to
the actuarially determined
contribution (208,396) (10,212,240) (5,573,828) (2,135,107) (1,614,000) (1,571,000) (1,107,000) Contribution deficiency
(excess) 2,754,604$ (5,960,240) $ (1,459,828) $ (135,107) $ 318,000 $ 12,000 $ 413,000 $ Covered payroll 463,101$ 804,977$ 1,273,326$ 1,664,538$ 1,693,493$ 1,796,000$ 1,872,000$ Contributions as a percentage
of covered payroll 45.00% 1268.64% 437.74% 128.27% 95.31% 87.47% 59.13% Notes to Schedule:

Methods and assumptions used to determine contribution rates:

Actuarial cost method
Amortization method/period
Asset valuation method
Discount rate
Inflation
Salary increases 2.5% annually
Payroll grow th 2.875%
Mortality T he probabilities of mortality are based on the CalPERS Experience Study for the period from 2000 to 2019. Pre-retirement and post- retirement mortality rates include 20 years of projected mortality improvement using S cale BB published by the Actuaries. 1Information only presented from the implementation year

3.40%
Single-Employer Plan
The actuarial methods and assumption used to set the actuarially determined contributions for Fiscal Year 2022 were derived fro m the S eptember 1, 2020 funding valuation report.

Individual aggregate cost method
N/A
Cash value as reported by New York Life Investment Management, LLC

2.25%

DRAFT 09.08.2023
City of Salinas
Required Supplemental Information (Unaudited)
Schedule of Changes in the City’s Net OPEB Liability –

153
2022 2021 2020 2019 2018
For the Measurement Period: 2020-2021 2019-2020 2018-2019 2017-2018 2016-20171 Total OPE B L iability:

Service Cost 1,639,274 $ 1,169,996 $ 1,065,470 $ 1,085,475 $ 1,209,000 $ Interest on the total OPEB liability 884,846 974,493 1,143,094 1,064,391 951,000 Chang es in benefit terms - - 574,467 - - Difference between expected and actual experience (4,117,866) - (4,138,016) - - Changes in assumptions (4,258,871) 4,678,007 1,474,189 (609,871) (1,765,000) Benefit payments (704,749) (676,514) (945,329) (915,000) (861,000) Net changes in Total OPEB Liability (6,557,366) 6,145,982 (826,125) 624,995 (466,000) Beginning of Year 27,819,852 21,673,870 22,499,995 21,875,000 22,341,000 End of Ye ar 21,262,486$ 27,819,852 $ 21,673,870 $ 22,499,995 $ 21,875,000 $ Plan Fiduciary Net Position:

Employer contribution 959,007 $ 931,063 $ 1,195,329 $ 1,165,000 $ 1,111,000 $ Employee contributions - - - - - Net investment income 897,217 102,633 152,998 159,215 171,000 Benefit payments (704,749) (676,514) (945,329) (915,000) (861,000) Administrative expenses (5,500) (5,988) (541) (3,619) (1,000) Net changes in Fiduciary Net Position 1,145,975 351,194 402,457 405,596 420,000 Beginning of Year 3,058,247 2,707,053 2,304,596 1,899,000 1,479,000 End of Ye ar 4,204,222$ 3,058,247$ 2,707,053$ 2,304,596$ 1,899,000$ Ne t O PEB Li abi l i ty 17,058,264$ 24,761,605$ 18,966,817$ 20,195,399$ 19,976,000$ Fiduciary Net Position as a % of Total OPEB Liability 19.77% 10.99% 12.49% 10.24% 8.68% Covered Payroll 64,469,561$ 64,146,096$ 64,026,542$ 62,965,263$ 48,821,000$ Net OPEB Liability as a % of Payroll 26.46% 38.60% 29.62% 32.07% 40.92% Notes to Schedule:
1 Information only presented from the implementation year Change of assumptions: For the measure period ended June 30, 2020, the ACA excise tax was removed. Tax was repealed in December 2019.

Sched ule of Changes in the City's Net OPE B Liab ility

DRAFT 09.08.2023
City of Salinas
Required Supplemental Information (Unaudited)
Schedule of OPEB Contributions –

154
2021-22 2020-21 2019-20 2018-19 2017-18
Actuarially determined contribution 1,687,000$ 1,997,000$ 1,938,000$ 2,322,000$ 2,188,000$ Contributions in relation to the
actuarially determined contributions (940,051) (959,007) (931,063) (1,195,329) (1,165,000) Contribution deficiency (excess) 746,949$ 1,037,993$ 1,006,937$ 1,126,671$ 1,023,000$ Covered payroll 67,797,683$ 64,469,561$ 64,146,096$ 64,026,452$ 51,530,000$ Contributions as a percentage of
covered payroll 1.39% 1.49% 1.45% 1.87% 2.26%
Notes to Schedule:

Methods and assumptions used to determine contribution rates:

ADC for fiscal year 6/30/2021
Actuarial valuation date 6/30/2021
Actuarial cost method Entry-Ag e Normal Cost Method
Asset valuation method Actuarial value of assets
Inflation 2.50%
Investment rate of return 6.25%
Healthcare cost trend rate Non-Medicare - 6.50% for 2023, decreasing to an ultimate rate of 3.75% in 2076; Medicare - 5.65% for 2023, decreasing to an ultimate rate of 3.75% in 2076; Projected salary growth and increase Not applicable
Mortality CalPERS 2000-2019 Experience Study
1 Information only presented from the implementation year The actuarial methods and assumptions used to set the actuarially determined contributions for the fiscal year ended June 30, 2021 were as follows:

Schedule of OPEB Contributions
DRAFT 09.08.2023

155

SUPPLEMENTARY INFORMATION
DRAFT 09.08.2023

156
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SUPPLEMENTARY INFORMATION
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142
DRAFT 09.08.2023
Nonmajor Nonmajor Nonmajor Total
Special Debt Capital Nonmajor
Revenue Service Projects Governmental
Funds Funds Funds Funds
ASSETS
Cash and investments 54,943,750$ 3,529,170$ 16,082,264$ 74,555,184$ Receivables, net:

Interest 843,468 5,243 153,161 1,001,872 Due from outside agencies 3,925,486 - 3,768,381 7,693,867 Assessments - 8,290,000 - 8,290,000 Leases 270,234 - 3,771,199 4,041,433 Due from other funds - - 1,364,533 1,364,533 Restricted cash and investments - 686,637 - 686,637 Loans and notes receivable, net of allowance 16,571 - - 16,571 Land and properties held for resale 1,380,000 - - 1,380,000 Total assets 61,379,509$ 12,511,050$ 25,139,538$ 99,030,097$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 435,473$ 9,977$ 2,101,296$ 2,546,746$ Due to other funds 2,125,568 2,178 1,235,128 3,362,874 Unearned revenues 184,161 8,290,000 - 8,474,161 Total liabilities 2,745,202 8,302,155 3,336,424 14,383,781

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 1,142,179 - 3,344,925 4,487,104 Related to leases 264,479 - 3,779,790 4,044,269 Total deferred inflows of resources 1,406,658 - 7,124,715 8,531,373

Fund Balances:

Nonspendable
1,380,000 - - 1,380,000 Restricted 56,253,266 4,211,073 12,536,414 73,000,753 Committed - - 2,141,985 2,141,985 Assigned - - - - Unassigned (405,617) (2,178) - (407,795) Total fund balances 57,227,649 4,208,895 14,678,399 76,114,943 Total liabilities, deferred inflows of
resources, and fund balances 61,379,509$ 12,511,050$ 25,139,538$ 99,030,097$ June 30, 2022
City of Salinas
Combing Balance Sheet
Nonmajor Governmental Funds
See accompanying Notes to the Basic Financial Statements. 157
DRAFT 09.08.2023
Non-major Non-major Non-major Total
Special Debt Capital Non-Major
Revenue Service Projects Governmental
Funds Funds Funds Funds
REVENUES:

Taxes 535,460$ -$ -$ 535,460$ Taxes - special assessments - 749,723 - 749,723 Licenses and permits 178,135 - - 178,135 Intergovernmental 25,506,143 - 8,691,485 34,197,628 Charges for services 2,078,142 - 468,444 2,546,586 Investment income (loss) (1,194,053) 254,778 128,732 (810,543) Rental income 280,494 - (8,591) 271,903 Fines and forfeitures 310,441 - - 310,441 Miscellaneous 2,906,595 - 698,677 3,605,272 Total revenues 30,601,357 1,004,501 9,978,747 41,584,605

EXPENDITURES:

Current:

General government 11,923,311 15,200 1,736,777 13,675,288 Public safety 2,728,039 - 1,070,249 3,798,288 Public works 1,146,430 - 7,158,980 8,305,410 Recreation 468,673 - 156,511 625,184 Library 358,281 - - 358,281 Capital outlay 377,426 - 17,132,545 17,509,971 Debt service:

Principal - 13,596,000 916,279 14,512,279 Interest and fiscal charges - 5,144,651 112,870 5,257,521 Total expenditures 17,002,160
18,755,851 28,284,211 64,042,222

REVENUES OVER (UNDER) EXPENDITURES 13,599,197 (17,751,350) (18,305,464) (22,457,617) OTHER FINANCING SOURCES (USES):

Transfers in 900,002 17,245,901 15,884,060 34,029,963 Transfers out (9,546,707) (123,011) - (9,669,718) Total other financing sources (uses) (8,646,705) 17,122,890 15,884,060 24,360,245 NET CHANGE IN FUND BALANCES 4,952,492 (628,460) (2,421,404) 1,902,628 FUND BALANCES:

Beginning of year, as restated (Note 23) 52,275,157 4,837,355 17,099,803 74,212,315 End of year 57,227,649$ 4,208,895$ 14,678,399$ 76,114,943$ For the Year Ended June 30, 2022
City of Salinas
Combing Statement of Revenues, Expenditures, and Changes in Fund Balances Non-Major Governmental Funds
See accompanying Notes to the Basic Financial Statements. 158
DRAFT 09.08.2023
Special Revenue Funds
Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditure for specified purposes. The Special Revenue Funds used by the City in this report are as follows:

Lighting, Landscape and Maintenance District - This fund accounts for monies received from the various maintenance districts throughout the City. Funds are used to pay for the lighting and landscape maintenance of the respective districts.

Local Public Safety Fund - This fund accounts for monies received from federal and state grants, which are expended to enhance law enforcement services.

Development Fees - This fund accounts for the fees that subdividers and developers of property are required to pay, by Resolution 3823 (N.C.S.), covering traffic impact, annexation, use of existing or new sewers, storm drains, park facilities, library facilities, and street trees.

Gas Tax - This fund accounts for gas tax revenues received from State apportionments of gasoline taxes. Expenditures are restricted to street maintenance and street improvements. No expenditures are made directly from this fund, but transfers are made to the General Fund for street maintenance and engineering salaries and to the Capital Projects Fund for street improvements based on actual expenditures.

Emergency Medical Services Fund - This fund accounts for monies received from County Service Area (CSA) 74.

Funds are used to purchase emergency medical and safety equipment under the capital improvement program.

Asset Seizure - This fund accounts for the proceeds from sale of assets seized primarily from illegal narcotics activity.

These funds are used for law enforcement.

Traffic Safety - This fund accounts for revenues derived from traffic violations whose use is restricted by State statute for traffic safety and street maintenance purposes. No expenditures are made directly from this fund, but transfers are made to the General Fund for traffic safety expenditures and street maintenance.

Vehicle Abatement - This fund accounts for monies allocated by the State to fund the vehicle abatement program.

Cable - This funds accounts for revenues received for public, educational and governmental (PEG) fees from video service providers. Its use is restricted to provide non-commercial public, educational and government channels.

Contributions and Donations - This fund accounts for contributions and donations from different individuals and agencies to the Library, Rec-Park, Fire and Police Department. Use of the funds are restricted for use of the appropriate Department.

Non-Major Governmental Funds
159
DRAFT 09.08.2023
Special Revenue Funds (Continued)
KDF Los Padres Dev Social Services - This fund accounts for social services provided by the City of Salinas to lower income residents of the Development. On June 1, 2003, the Salinas Redevelopment Agency, the City of Salinas and the KDF Los Padres, L.P. entered into a loan agreement where loan payments will be collected annually by the City and used to provide recreational and social services to lower income residents of the Development. Term of the loan is 55 years commencing in 2006. Payment will increase by 3% annually.

Measure X Transport Safety & Inv Plan Fund - This fund accounts for revenues allocated by TAMC from the transportation sales and use tax. Expenditures are restricted to road improvements, pothole repairs, street and road maintenance, traffic deduction and regional safety, mobility and walkability.

SB1 Road Maintenance & Rehab & SB1 Traffic Congestion Relief - This fund accounts for gas tax revenues received from State apportionments of an increased tax on gasoline and a new vehicle license fee from Senate Bill 1 (SB 1), the Road Repair and Accountability Act of 2017. Expenditures are restricted to street maintenance and street improvements including facilities for bicycles and pedestrians. No expenditures are made directly from this fund, but transfers are made to the General Fund for street maintenance and engineering salaries and to the Capital Projects Fund for street improvements based on actual expenditures.

SRA Public Improvement Grant - This fund accounts for the use of monies received from proceeds of the land sale located in Main Street where the “Taylor Farms” headquarters is constructed and other properties held for re-sale.

Affordable Housing Fund - These funds are used to improve and increase the supply of low income housing within the City.

Grants Fund - This fund accounts for various minor grants received for purposes ranging from library to police operations.

Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) - This fund accounts for monies awarded through the state’s Coronavirus Relief Funds (CRF) and funded entirely through the federal stimulus funding under the CARES Act provided by the U.S. Department of Treasury (US Treasury) to the Governor via the Office of Financial Management (OFM). The City of Salinas allocation was determined by the OFM. The Coronavirus Relief Funds may only be used for costs incurred by local governments in response to the COVID-19 public health emergency during the period of March 1, 2020, thru October 31, 2020.

Non-Major Governmental Funds (Continued)
160
DRAFT 09.08.2023
Lighting,
Landscape,
and Local Emergency
Maintenance Public Development Gas Medical
District Safety Fees Tax Services
ASSETS
Cash and investments 8,971,473$ 1,112,819$ 17,280,729$ 3,089,090$ -$ Receivables, net:

Interest 15,290 1,092 29,197 5,468 - Due from outside agencies - 117,688 - 637,442 - Leases - - - 96,989 - Loans and notes receivable, net of allowance - - - - - Land and properties held for resale - - - - - Total assets 8,986,763$ 1,231,599$ 17,309,926$ 3,828,989$ -$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 38,417$ 110,021$ -$ -$ 62,325$ Due to other funds 51,188 - 413,830 81,232 316,157 Unearned revenues - - - - - Total liabilities 89,605 110,021 413,830 81,232 378,482

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - - Related to leases - - - 95,453 - Total deferred inflows of resources - - - 95,453 -

Fund Balances:

Nonspendable - - - - - Restricted 8,897,158 1,121,578 16,896,096 3,652,304 - Committed - - - - - Assigned - - - - - Unassigned - - - - (378,482) Total fund balances 8,897,158 1,121,578 16,896,096 3,652,304 (378,482) Total liabilities, deferred inflows of
resources, and fund balances 8,986,763$ 1,231,599$ 17,309,926$ 3,828,989$ -$ City of Salinas
Combining Balance Sheet
Nonmajor Special Revenue Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 161
DRAFT 09.08.2023
Asset Traffic Vehicle Contributions &
Seizure Safety Abatement Cable Donations
ASSETS
Cash and investments 151,583$ -$ 325,258$ 520,768$ 494,365$ Receivables, net:

Interest 546 - - - - Due from outside agencies - 54,756 78,356 43,942 - Leases - - - - - Loans and notes receivable, net of allowance - - - - - Land and properties held for resale - - - - - Total assets 152,129$ 54,756$ 403,614$ 564,710$ 494,365$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 351$ -$ 8,462$ 36,670$ -$ Due to other funds - 81,891 - - - Unearned revenues - - - - - Total liabilities 351 81,891 8,462 36,670 -

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - 40,121 - - Related to leases - - - - - Total deferred inflows of resources - - 40,121 - -

Fund Balances:

Nonspendable
- - - - - Restricted 151,778 - 355,031 528,040 494,365 Committed - - - - - Assigned - - - - - Unassigned - (27,135) - - - Total fund balances 151,778 (27,135) 355,031 528,040 494,365 Total liabilities, deferred inflows of
resources, and fund balances 152,129$ 54,756$ 403,614$ 564,710$ 494,365$ (continued)
City of Salinas
Combining Balance Sheet (Continued)
Nonmajor Special Revenue Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 162
DRAFT 09.08.2023
KDF Measure X SRA
Los Padres Transport SB1 Road SB1 Traffic Public
Dev Social Safety & Maintenance & Congestion Improvement Services Inv Plan Rehab Relief Grant
ASSETS
Cash and investments 283,330$ 9,894,999$ 6,323,959$ 559,475$ 1,603,300$ Receivables, net:

Interest - 15,764 10,412 947 2,694 Due from outside agencies - 1,548,757 562,987 - - Leases - - - - - Loans and notes receivable, net of allowance - - - - - Land and properties held for resale - - - - 584,419 Total assets 283,330$ 11,459,520$ 6,897,358$ 560,422$ 2,190,413$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 1,956$ -$ -$ -$ -$ Due to other funds - 272,811 191,057 - - Unearned revenues - - - - - Total liabilities 1,956 272,811 191,057 - -

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - - Related to leases - - - - - Total deferred inflows of resources - - - - -

Fund Balances:

Nonspendable - - - - 584,419 Restricted 281,374 11,186,709 6,706,301 560,422 1,605,994 Committed - - - - - Assigned - - - - - Unassigned - - - - - Total fund balances 281,374 11,186,709 6,706,301 560,422 2,190,413 Total liabilities, deferred inflows of
resources, and fund balances 283,330$ 11,459,520$ 6,897,358$ 560,422$ 2,190,413$ (Continued)
City of Salinas
Combining Balance Sheet (Continued)
Nonmajor Special Revenue Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 163
DRAFT 09.08.2023
Affordable CARES
Housing Grants Act Total
ASSETS
Cash and investments 3,124,600 $ 1,208,002 $ - $ 54,943,750$ Receivables, net:

Interest 761,501 557 - 843,468 Due from outside agencies - 881,558 - 3,925,486 Leases - 173,245 - 270,234 Loans and notes receivable, net of allowance 16,571 - - 16,571 Land and properties held for resale 795,581 - - 1,380,000 Total assets 4,698,253$ 2,263,362 $ - $ 61,379,509$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 763 $ 176,508$ - $ 435,473 Due to other funds - 717,402 - 2,125,568 Unearned revenues - 184,161 - 184,161 Total liabilities 763 1,078,071 - 2,745,202

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 756,258 345,800 - 1,142,179 Related to leases - 169,026 - 264,479 Total deferred inflows of resources 756,258 514,826 - 1,406,658

Fund Balances:

Nonspendable 795,581 - - 1,380,000 Restricted 3,145,651 670,465 - 56,253,266 Committed - - - - Assigned - - - - Unassigned - - - (405,617) Total fund balances 3,941,232 670,465 - 57,227,649 Total liabilities, deferred inflows of
resources, and fund balances 4,698,253$ 2,263,362$ -$ 61,379,509$ (Concluded)
City of Salinas
Combining Balance Sheet (Continued)
Nonmajor Special Revenue Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 164
DRAFT 09.08.2023
Lighting,
Landscape,
and Local Emergency
Maintenance Public Development Gas Medical
District Safety Fees Tax Services
REVENUES:

Taxes -$ 535,460$ -$ -$ -$ Licenses and permits - - - - - Intergovernmental - 451,330 - 3,588,055 137,952 Charges for services - - 2,078,142 - - Investment income (loss) (103,643) (5,640) (198,686) (31,073) - Rental income - - - 229,075 - Fines and forfeitures - - - - - Miscellaneous 1,966,689 - - - - Total revenues 1,863,046 981,150 1,879,456 3,786,057 137,952

EXPENDITURES:

Current:

General government - - - - - Public safety - 600,000 - - 1,306,044 Public works 1,140,798 - - - - Recreation - - - - - Library - - - - - Capital outlay - - - - - Debt service:

Principal
- - - - - Interest and fiscal charges - - - - - Total expenditures 1,140,798 600,000 - - 1,306,044

REVENUES OVER (UNDER) EXPENDITURES 722,248 381,150 1,879,456 3,786,057 (1,168,092) OTHER FINANCING SOURCES (USES):

Transfers in - - - - 850,000 Transfers out (4,110) - (1,603,186) (2,352,775) (120,792) Total other financing sources (uses) (4,110) - (1,603,186) (2,352,775) 729,208 NET CHANGE IN FUND BALANCES 718,138 381,150 276,270 1,433,282 (438,884) FUND BALANCES (DEFICIT):

Beginning of year, as restated (Note 23) 8,179,020 740,428 16,619,826 2,219,022 60,402 End of year 8,897,158$ 1,121,578$ 16,896,096$ 3,652,304$ (378,482)$ City of Salinas
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 165
DRAFT 09.08.2023
Asset Traffic Vehicle Contributions &
Seizure Safety Abatement Cable Donations
REVENUES:

Taxes -$ -$ -$ -$ -$ Licenses and permits - - - 178,135 - Intergovernmental 104,718 - 138,992 - - Charges for services - - - - - Investment income (loss) (3,694) - - - - Rental income - - - - - Fines and forfeitures - 305,695 4,746 - - Miscellaneous - - - - 383,658 Total revenues 101,024 305,695 143,738 178,135 383,658

EXPENDITURES:

Current:

General government - 123,887 - 130,420 - Public safety 2,253 - 219,287 - 75,520 Public works - - - - - Recreation - - - - 60 Library - - - - - Capital outlay 71,175 - - (2) - Debt service:

Principal - - - - - Interest and fiscal charges - - - - - Total expenditures 73,428 123,887 219,287 130,418 75,580

REVENUES OVER (UNDER) EXPENDITURES 27,596 181,808 (75,549) 47,717 308,078 OTHER FINANCING SOURCES (USES):

Transfers in - - 50,000 - - Transfers out - (250,000) - - - Total other financing sources (uses) - (250,000) 50,000 - - NET CHANGE IN FUND BALANCES 27,596 (68,192) (25,549) 47,717 308,078 FUND BALANCES (DEFICIT):

Beginning of year, as restated (Note 23) 124,182 41,057 380,580 480,323 186,287 End of year 151,778$ (27,135)$ 355,031$ 528,040$ 494,365$ City of Salinas
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Special Revenue Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 166
DRAFT 09.08.2023
KDF Measure X SRA
Los Padres Transport SB1 Road SB1 Traffic Public
Dev Social Safety & Maintenance & Congestion Improvement Services Inv Plan Rehab Relief Grant
REVENUES:

Taxes -$ -$ -$ -$ -$ Licenses and permits - - - - - Intergovernmental - 5,801,801 3,235,152 - - Charges for services - - - - - Investment income (loss) (1,402) (103,081) (64,622) (6,444) (284,042) Rental income - - - - - Fines and forfeitures - - - - - Miscellaneous 20,472 - - - - Total revenues 19,070 5,698,720 3,170,530 (6,444) (284,042)

EXPENDITURES:

Current:

General government - - - - - Public safety - - - - - Public works - - - - - Recreation 11,015 - - - - Library - - - - - Capital outlay - - - - - Debt service:

Principal
- - - - - Interest and fiscal charges - - - - - Total expenditures 11,015 - - - -

REVENUES OVER (UNDER) EXPENDITURES 8,055 5,698,720 3,170,530 (6,444) (284,042) OTHER FINANCING SOURCES (USES):

Transfers in - - - - - Transfers out - (3,648,087) (1,556,858) - - Total other financing sources (uses) - (3,648,087) (1,556,858) - - NET CHANGE IN FUND BALANCES 8,055 2,050,633 1,613,672 (6,444) (284,042) FUND BALANCES (DEFICIT):

Beginning of year, as restated (Note 23) 273,319 9,136,076 5,092,629 566,866 2,474,455 End of year 281,374$ 11,186,709$ 6,706,301$ 560,422$ 2,190,413$ City of Salinas
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Special Revenue Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 167
DRAFT 09.08.2023
Affordable CARES
Housing Grants Act Total
REVENUES:

Taxes -$ - $ - $ 535,460$ Licenses and permits - - - 178,135 Intergovernmental - 12,048,143 - 25,506,143 Charges for services - - - 2,078,142 Investment income (loss) (397,179) 5,453 - (1,194,053) Rental income - 51,419 - 280,494 Fines and forfeitures - - - 310,441 Miscellaneous 121,813 413,963 - 2,906,595 Total revenues (275,366) 12,518,978 - 30,601,357

EXPENDITURES:

Current:

General government 13,988 11,655,016 - 11,923,311 Public safety - 524,935 - 2,728,039 Public works - 5,632 - 1,146,430 Recreation - 457,598 - 468,673 Library - 358,281 - 358,281 Capital outlay - 306,253 - 377,426 Debt service:

Principal - - - - Interest and fiscal charges - - - - Total expenditures 13,988 13,307,715 - 17,002,160

REVENUES OVER (UNDER) EXPENDITURES (289,354)
(788,737) - 13,599,197
OTHER FINANCING SOURCES (USES):

Transfers in - 2 - 900,002 Transfers out (6,800) (4,099) - (9,546,707) Total other financing sources (uses) (6,800) (4,097) - (8,646,705) NET CHANGE IN FUND BALANCES (296,154) (792,834) - 4,952,492 FUND BALANCES (DEFICIT):

Beginning of year, as restated (Note 23) 4,237,386 1,463,299 - 52,275,157 End of year 3,941,232$ 670,465$ -$ 57,227,649$ City of Salinas
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Special Revenue Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 168
DRAFT 09.08.2023
Debt Service Funds
Debt Service Funds are used for the accumulation and disbursement of financial resources that will be used to make principal and interest payments on general long-term debt. The non-major debt service funds include the following debt issuances:

Assessment District Debt Service Fund - This fund is used to accumulate monies for payment of the City's Assessment Districts Improvement Bonds. Debt service is financed with special assessments levied against property owners within the respective improvement districts.

COP 1999 & COP 2004 Consolidation (2014) - This fund is used to accumulate funds for the payment of principal and interest on the 2014 Lease Purchase/Agreement that was issued on January 29, 2014 to refinance the portion of the 1999 Certificates of Participation that were used to finance the construction of the City Animal Shelter. Debt service for the Animal Shelter is used to finance the City’s General Fund. 2018 Lease-PS Building Police - This fund is used to accumulate monies for the designing, permitting, constructing and equipping the new public safety building, including ancillary parking and related facilities, located at 312 E Alisal Street in Salinas. Salinas Public Safety Facilities Inc. (SPF) issued lease revenue bonds to finance the construction of the new building. Lease payments are made from the City’s Measure G Funds.

COP 2018B T.R.I.P. Total Road Improvement - This fund is used to accumulate monies for the principal and interest payments for the Transportation Revenue COP Certificates issued to finance large scale street improvement projects.

COPs will be secured by Measure X Revenues the City receives from the Transportation Agency of Monterey County (TAMC).

Energy Improvement Lease Fund - This fund is used to account for lease payments on debt incurred in fiscal year 2014-15 that funds the City’s ongoing efforts to reduce energy consumption and to develop long-term cost savings through increased energy efficiency. The project will install LED lighting on street lights and parking lots in addition to building solar PV installations at the Hitchcock Road Animal Shelter, the Industrial Waste Treatment Plant, the Salinas Municipal Airport, the Permit Center, Sherwood Hall, and the Sewer Lift Station site off Work Street. The Funding came through a private placement in the amount of $21,908,000. The Debt Service repayment will be over a 17 year period at an interest rate of 3.03%.

Certificates of Participation (2005 A & B) 2015 Refunding Fund - This fund is used to accumulate funds for the payment of principal and interest on the 2005B Certificates of Participation. Proceeds were used to refund the Certificates of Participation 1997. The proceeds from the Certificates of Participation 1997 were used for capital improvements and to refund the Salinas Public Financing Authority’s Variable Rate Lease Revenue Bonds that were used to purchase the 65 W. Alisal building. Debt service is financed from installment payments from the Salinas Valley Solid Waste Authority (SVSWA) for the purchase of Crazy Horse Landfill and a lease on the 65 W. Alisal Building.

Non-Major Governmental Funds
169
DRAFT 09.08.2023
Debt Service Funds (Continued)
2018 Lease-El Gabilan Library - This fund is used to accumulate monies for the designing, permitting, constructing and equipping the El Gabilan Library expansion, including ancillary parking, located at 1400 N Main Street in Salinas.

Salinas Public Safety Facilities, Inc. (SPF) issued lease revenue bonds to facilitate the construction of the El Gabilan Library. Lease payments are made from the City’s Measure E Funds. 2020A Refunding Energy - This fund is used to account for the refunding of the 2014 Energy Improvement Lease and accumulate monies for the payment of principal and interest. 2020A Refunding SVSWA - for the refunding of the outstanding portion of the Certificates of Participation Series 2015B (1997 Capital Improvement Projects) and accumulate monies for the payment of principal and interest.

Assessment District Administration Fund - This fund accounts for the cost of administering the City’s assessment district bonds used to finance improvements within those districts. Funding is provided by an assessment equal to 5% of the assessment amount with a maximum $16 levy per parcel per bond.

Assessment District Reserve Fund - This fund accounts for the reserves on outstanding assessment districts bonds. 2019 Special Tax Bond Monte Bella - This fund is used to accumulate monies for the principal and interest payments for the 2019 Special Tax Bonds to finance the acquisition and/or construction of certain public facilities and improvements within the Community Facilities District No. 2016-1 (Monte Bella) Area No. 1-3. The annual levy of special taxes on that area would be used to pay for principal and interest payments on the bonds.

Non-Major Governmental Funds (Continued)
170
DRAFT 09.08.2023
COP 1999 & 2018 COP 2018B
Assessment 2004 Lease-PS T.R.I.P. Energy
District Consolidation Building Total Road Improvement
Debt Service (2014) Police Improvement Lease
ASSETS
Cash and investments 72,684 $ 165,473 $ 3,661 $ 1,170,896$ - $ Receivables, net:

Interest - 291 - 1,930 - Assessments 970,000 - - - - Restricted cash and investments 124,466 - - - - Total assets 1,167,150$ 165,764 $ 3,661 $ 1,172,826$ - $

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 1,000 $ - $ 2,270$ 250 $ - $ Due to other funds - - - - - Unearned revenues 970,000 - - - - Total liabilities 971,000 - 2,270 250 -

Fund Balances:

Nonspendable - - - - - Restricted 196,150 165,764 1,391 1,172,576 - Committed - - - - - Assigned - - - - - Unassigned - - - - - Total fund balances 196,150 165,764 1,391 1,172,576 - Total liabilities, deferred inflows of
resources, and fund balances 1,167,150$ 165,764$ 3,661$ 1,172,826$ -$ (Continued)
City of Salinas
Combining Balance Sheet
Nonmajor Debt Service Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 171
DRAFT 09.08.2023
2018
COP 2005 Lease 2020A 2020A Assessment
A&B 2015 El Gabilan Refunding Refunding District
Refunding Library Energy SVSWA Administration
ASSETS
Cash and investments - $ 2,030$ 70 $ 23,763$ - $ Receivables, net:

Interest - - - - - Assessments - - - - - Restricted cash and investments - - - - - Total assets -$ 2,030$ 70 $ 23,763$ - $

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable - $ 2,030$ 70 $ 45 $ - $ Due to other funds - - - - 2,178 Unearned revenues - - - - - Total liabilities - 2,030 70 45 2,178

Fund Balances:

Nonspendable - - - - - Restricted - - - 23,718 - Committed - - - - - Assigned - - - - - Unassigned - - - - (2,178) Total fund balances - - - 23,718 (2,178) Total liabilities, deferred inflows of
resources, and fund balances -$ 2,030$ 70$ 23,763$ -$ (Continued)
City of Salinas
Combining Balance Sheet (Continued)
Nonmajor Debt Service Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 172
DRAFT 09.08.2023
Assessment 2019 Special
District Tax Bond
Reserve Monte Bella Total
ASSETS
Cash and investments 1,585,241 $ 505,352 $ 3,529,170 $ Receivables, net:

Interest 3,022 - 5,243 Assessments - 7,320,000 8,290,000 Restricted cash and investments 234,528 327,643 686,637 Total assets 1,822,791$ 8,152,995 $ 12,511,050 $

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable -$ 4,312$ 9,977 $ Due to other funds - - 2,178 Unearned revenues - 7,320,000 8,290,000 Total liabilities - 7,324,312 8,302,155

Fund Balances:

Nonspendable - - - Restricted 1,822,791 828,683 4,211,073 Committed - - - Assigned - - - Unassigned - - (2,178) Total fund balances 1,822,791 828,683 4,208,895 Total liabilities, deferred inflows of
resources, and fund balances 1,822,791$ 8,152,995 $ 12,511,050 $ (Concluded)
City of Salinas
Combining Balance Sheet (Continued)
Nonmajor Debt Service Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 173
DRAFT 09.08.2023
COP 1999 & 2018 COP 2018B
Assessment 2004 Lease-PS T.R.I.P. Energy
District Consolidation Building Total Road Improvement
Debt Service (2014) Police Improvement Lease
REVENUES:

Taxes -$ -$ -$ -$ -$ Taxes - special assessments 255,452 - - - - Investment income (loss) 88 (2,851) 247,921 30,643 (116) Total revenues 255,540 (2,851) 247,921 30,643 (116)

EXPENDITURES:

Current:

General government - - - - - Debt service:

Principal 590,000 161,000 10,410,000 740,000 - Interest and fiscal charges 37,036 69,324 1,774,828 1,600,076 - Total expenditures 627,036 230,324 12,184,828 2,340,076 -

REVENUES OVER (UNDER) EXPENDITURES (371,496) (233,175) (11,936,907) (2,309,433) (116) OTHER FINANCING SOURCES (USES):

Transfers in - - 11,938,298 2,340,075 - Transfers out - - - - (36,001) Total other financing sources (uses) - - 11,938,298 2,340,075 (36,001) NET CHANGE IN FUND BALANCES (371,496) (233,175) 1,391 30,642 (36,117) FUND BALANCES (DEFICIT):

Beginning of year, as restated (Note 23) 567,646 398,939 - 1,141,934 36,117 End of year 196,150$ 165,764$ 1,391$ 1,172,576$ -$ (Continued)
For the Year Ended June 30, 2022
City of Salinas
Combining Statement of Revenues, Expenditures, and Changes in Fund Balance Nonmajor Debt Service Funds
See accompanying Notes to the Basic Financial Statements. 174
DRAFT 09.08.2023
2018
COP 2005 Lease 2020A 2020A Assessment
A&B 2015 El Gabilan Refunding Refunding District
Refunding Library Energy SVSWA Administration
REVENUES:

Taxes -$ -$ -$ -$ -$ Taxes - special assessments - - - - - Investment income (loss) (290) 17 - (15) - Total revenues (290) 17 - (15) -

EXPENDITURES:

Current:

General government - - - - - Debt service:

Principal - 215,000 865,000 525,000 - Interest and fiscal charges - 573,474 628,134 146,305 - Total expenditures - 788,474 1,493,134 671,305 -

REVENUES OVER (UNDER) EXPENDITURES (290) (788,457) (1,493,134) (671,320) - OTHER FINANCING SOURCES (USES):

Transfers in - 788,457 1,489,267 689,804 - Transfers out (87,010) - - - - Total other financing sources (uses) (87,010) 788,457 1,489,267 689,804 - NET CHANGE IN FUND BALANCES (87,300) - (3,867) 18,484 - FUND BALANCES (DEFICIT):

Beginning of year, as restated (Note 23) 87,300 - 3,867 5,234 (2,178) End of year -$ -$ -$ 23,718$ (2,178)$ (Continued)
City of Salinas
Combining Statement of Revenues, Expenditures, and Changes in Fund Balance (Continued) Nonmajor Debt Service Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 175
DRAFT 09.08.2023
Assessment 2019 Special
District Tax Bond
Reserve Monte Bella Total
REVENUES:

Taxes -$ - $ - $ Taxes - special assessments - 494,271 749,723 Investment income (loss) (20,835) 216 254,778 Total revenues (20,835) 494,487 1,004,501

EXPENDITURES:

Current:

General government - 15,200 15,200 Debt service:

Principal - 90,000 13,596,000 Interest and fiscal charges - 315,474 5,144,651 Total expenditures - 420,674 18,755,851

REVENUES OVER (UNDER) EXPENDITURES (20,835) 73,813 (17,751,350) OTHER FINANCING SOURCES (USES):

Transfers in - - 17,245,901 Transfers out - - (123,011) Total other financing sources (uses) - - 17,122,890 NET CHANGE IN FUND BALANCES (20,835) 73,813 (628,460) FUND BALANCES (DEFICIT):

Beginning of year, as restated (Note 23) 1,843,626 754,870 4,837,355 End of year 1,822,791$ 828,683 $ 4,208,895 $ (Concluded)
Combining Statement of Revenues, Expenditures, and Changes in Fund Balance (Continued) Nonmajor Debt Service Funds
For the Year Ended June 30, 2022
City of Salinas
See accompanying Notes to the Basic Financial Statements. 176
DRAFT 09.08.2023
Capital Projects Funds
Capital Projects Funds are used to account for major capital acquisition and construction activities. The non-major Capital Projects Funds used by the City in this report are as follows:

Special Construction Assistance Capital Projects Fund - This fund accounts for proceeds of long-term borrowings resulting from the sale of Certificates of Participation to finance the acquisition and construction of capital projects.

Special Aviation Fund - This fund accounts for federal and state airport grants. Funds are used to reimburse the Capital Projects Fund for airport capital expenditures.

Assessment District Projects Fund - This fund accounts for bond proceeds from assessment districts used for capital improvements. Funds are used to reimburse the Capital Projects Fund for assessment district capital project expenditures.
2019 Special Tax Bond Monte Bella - This fund accounts for bond proceeds from assessments from the Monte Bella District for Capital Improvements. Funds are used to reimburse the Capital Projects Fund for Monte Bella District Capital Project Expenditures.

Capital Projects - This fund accounts for all capital project expenditures. Funds are transferred in from various other funds after expenditures are made. This revolving fund was established with $2,000,000 and is used to advance capital project expenditures prior to reimbursement of Federal, State, and other construction grants and bond financing.

Non-Major Governmental Funds
177
DRAFT 09.08.2023
Special Assessment 2019 Special
Construction Special District Tax Bond Capital
Assistance Aviation Project Monte Bella Projects Total
ASSETS
Cash and investments 12,524,028$ 1,121,021 $ 411,125 $ 26,090$ 2,000,000 $ 16,082,264$ Receivables, net:

Interest 150,576 1,857 692 36 - 153,161 Due from outside agencies 3,639,403 128,978 - - - 3,768,381 Leases 3,771,199 - - - - 3,771,199 Due from other funds - - - - 1,364,533 1,364,533 Total assets 20,085,206$ 1,251,856 $ 411,817 $ 26,126$ 3,364,533 $ 25,139,538$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 696,889 $ 39,874$ -$ -$ 1,364,533 $ 2,101,296 $ Due to other funds 1,235,128 - - - - 1,235,128 Total liabilities 1,932,017 39,874 - - 1,364,533 3,336,424

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 3,215,947 128,978 - - - 3,344,925 Related to leases 3,779,790 - - - - 3,779,790 Total deferred inflows of resources 6,995,737 128,978 - - - 7,124,715

Fund Balances:

Restricted 11,015,467 1,083,004 411,817 26,126 - 12,536,414 Committed 141,985 - - - 2,000,000 2,141,985 Total fund balances 11,157,452 1,083,004 411,817 26,126 2,000,000 14,678,399 Total liabilities, deferred inflows of
resources, and fund balances 20,085,206$ 1,251,856 $ 411,817 $ 26,126$ 3,364,533 $ 25,139,538$ June 30, 2022
City of Salinas
Combining Balance Sheet
Nonmajor Capital Projects Funds
See accompanying Notes to the Basic Financial Statements. 178
DRAFT 09.08.2023
Special Assessment 2019 Special
Construction Special District Tax Bond Capital
Assistance Aviation Project Monte Bella Projects Total
REVENUES:

Intergovernmental 8,237,267 $ 454,218 $ -$ -$ -$ 8,691,485 $ Charges for services 468,444 - - - - 468,444 Investment income (loss) 150,576 (13,267) (4,763) (3,814) - 128,732 Rental income (8,591) - - - - (8,591) Miscellaneous 698,677 - - - - 698,677 Total revenues 9,546,373 440,951 (4,763) (3,814) - 9,978,747

EXPENDITURES:

Current:

General government - - - - 1,736,777 1,736,777 Public works - - - - 7,158,980 7,158,980 Capital outlay 12,175,167 224,984 - - 4,732,394 17,132,545 Debt service:

Principal - - - - 916,279 916,279 Interest and fiscal charges - - - - 112,870 112,870 Total expenditures 12,175,167 224,984 - - 15,884,060 28,284,211

REVENUES OVER (UNDER) EXPENDITUR (2,628,794) 215,967 (4,763) (3,814) (15,884,060) (18,305,464) OTHER FINANCING SOURCES (USES):

Transfers in - - - - 15,884,060 15,884,060 Total other financing sources (uses) - - - - 15,884,060 15,884,060 NET CHANGE IN FUND BALANCES (2,628,794) 215,967 (4,763) (3,814) - (2,421,404) FUND BALANCES:

Beginning of year, as restated (Note 23) 13,786,246 867,037 416,580 29,940 2,000,000 17,099,803 End of year 11,157,452$ 1,083,004 $ 411,817 $ 26,126$ 2,000,000 $ 14,678,399$ For the Year Ended June 30, 2022
City of Salinas
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Capital Projects Funds
See accompanying Notes to the Basic Financial Statements. 179
DRAFT 09.08.2023
This page intentionally left blank.
180
DRAFT 09.08.2023
Internal Service Funds
Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the government and to other government units, on a cost reimbursement basis.

Risk Management Fund - This fund is used to account for the City’s risk management program which administers employee benefits and the Internal Service Funds insurance programs.

General Insurance Fund - This fund is used to account for city-wide safety programs, employee assistance programs, unemployment claims, biennial physical exams, and insurance for property, fine arts, and reimbursable damages.

Workers Compensation Fund - This fund is used to account for the City’s self-insured workers compensation program.

General Liability Fund - This fund is used to account for the City’s self-insured general liability insurance program.

Fleet Maintenance Fund - This fund is used to account for the inspection, maintenance, and repair of all the City’s vehicles and equipment.
181
DRAFT 09.08.2023
Risk General Workers General Fleet
Management Insurance Compensation Liability Maintenance Total ASSETS
Current assets:

Cash and cash equivalents 1,944,407 $ 1,858,885 $ 8,420,733 $ 1,504,424 $ 10,263,947 $ 23,992,396 $ Due from other funds - - 16,831,462 - - 16,831,462 Accrued interest - - 14,453 2,585 - 17,038 Total current assets 1,944,407 1,858,885 25,266,648 1,507,009 10,263,947 40,840,896 Noncurrent assets:

Restricted cash and investments - - 274,506 116,394 - 390,900 Total noncurrent assets - - 274,506 116,394 - 390,900 Total assets 1,944,407 1,858,885 25,541,154 1,623,403 10,263,947 41,231,796

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions - - 21,962 43,985 175,819 241,766 Related to OPEB - - 10,585 26,407 51,656 88,648 Total deferred outflows of resources - - 32,547 70,392 227,475 330,414

LIABILITIES
Current liabilities:

Accounts payable - 49,804 26,159 8,105 78,869 162,937 Insurance claims payable - due within one year - - 4,420,503 3,069,479 - 7,489,982 Compensated absences - due within one year - - 2,030 2,030 22,078 26,138 Total current liabilities
- 49,804 4,448,692 3,079,614 100,947 7,679,057 Noncurrent liabilities:

Insurance claims payable - due in more than one year - - 20,891,012 1,270,716 - 22,161,728 Compensated absences - due in more than one year - - 8,119 8,119 88,310 104,548 Net pension liability - - 63,299 126,770 506,734 696,803 Net OPEB liability - - 32,752 81,709 159,836 274,297 Total noncurrent liabilities - - 20,995,182 1,487,314 754,880 23,237,376 Total liabilities - 49,804 25,443,874 4,566,928 855,827 30,916,433

DEFERRED INFLOWS OF RESOURCES
Related to pensions - - 42,107 84,328 337,084 463,519 Related to OPEB - - 22,690 56,607 110,733 190,030 Total deferred inflows of resources - - 64,797 140,935 447,817 653,549

NET POSITION
Unrestricted (deficit) 1,944,407 1,809,081 65,030 (3,014,068) 9,187,778 9,992,228 Total net position 1,944,407$ 1,809,081 $ 65,030 $ (3,014,068)$ 9,187,778 $ 9,992,228 $ June 30, 2022
All Internal Service Funds
Combining Statement of Net Position
City of Salinas
182
DRAFT 09.08.2023
Risk General Workers General Fleet
Management Insurance Compensation Liability Maintenance Total OPERATING REVENUES:

Charges for services 2,040 $ 790,495 $ 5,274,068$ 1,253,522 $ -$ 7,320,125$ Total operating revenues 2,040 790,495 5,274,068 1,253,522 - 7,320,125 OPERATING EXPENSES:

Personnel services - - 393,309 452,286 1,151,945 1,997,540 Contractual services - 19,898 5,000 - 119,404 144,302 Supplies - - - - 752,570 752,570 Insurance - 1,657,149 413,210 3,386,547 - 5,456,906 Insurance claims - - 4,206,440 1,182,495 - 5,388,935 Other 149 120,250 - - 19,700 140,099 Total operating expenses 149 1,797,297 5,017,959 5,021,328 2,043,619 13,880,352 OPERATING INCOME (LOSS) 1,891 (1,006,802) 256,109 (3,767,806) (2,043,619) (6,560,227) NONOPERATING REVENUES (EXPENSES):

Investment income (loss) - - (97,269) (24,944) - (122,213) Total nonoperating revenues (expenses) - - (97,269) (24,944) - (122,213) INCOME (LOSS) BEFORE TRANSFERS 1,891 (1,006,802) 158,840 (3,792,750) (2,043,619) (6,682,440) TRANSFERS:

Transfers in
- - - 1,661,300 11,120,000 12,781,300 Transfers out - - - - - - Total transfers - - - 1,661,300 11,120,000 12,781,300 Changes in net position 1,891 (1,006,802) 158,840 (2,131,450) 9,076,381 6,098,860 NET POSITION (DEFICIT):

Beginning of year 1,942,516 2,815,883 (93,810) (882,618) 111,397 3,893,368 End of year 1,944,407$ 1,809,081 $ 65,030$ (3,014,068)$ 9,187,778 $ 9,992,228 $ For the Year Ended June 30, 2022
All Internal Service Funds
Combining Statement of Revenues, Expenses, and Changes in Net Position City of Salinas
183
DRAFT 09.08.2023
Risk General Workers General Fleet
Management Insurance Compensation Liability Maintenance Total CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from customers 2,040$ 790 ,495 $ 9,694,571 $ 4,323,001 $ -$ 14 ,810,107$ Payments to suppliers for goods and services - (1,650,612) 13,854 (9,029) (876,311) (2,522,098) Payments to employees for services - - (390,691) (454,219) (1,095,124) (1,940,034) Payments to claimants - - (8,602,579) (6,456,026) - (15,058,605) Other (149) (120,250) - - (19,700) (140,099) Net cash provided by (used in)
operating activities 1,891 (980,367) 715,155 (2,596,273) (1,991,135) (4,850,729)

CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:

Transfers from other funds - - - 1 ,661,300 11,120,000 12,781,300
Net cash provided by noncapital financing
activities - - - 1,661,300 11,120,000 12,781,300

CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:

Payment on capital debt and loans payable - - (3,723) (38,665) (98,835) (141,223) Net cash (used in) capital
and related financing activities - - (3,723) (38,665) (98,835) (141,223) CASH FLOWS FROM INVESTING ACTIVITIES:

Investment income (loss) - - (106,192) (25,567) - (131,759) Net cash provided by investing activities - - (106,192) (25,567) - (131,759) Net change in cash and cash equivalents 1,891 (980,367) 605,240 (999,205) 9,030,030 7,657,589 CASH AND CASH EQUIVALENTS:

Beginning of year 1,942,516 2,839,252 8,089,999 2,620,023 1,233,917 16,725,707 End of year 1,944,407 $ 1,858,885 $ 8,695,239 $ 1,620,818 $ 10,263,947$ 24 ,383,296$

RECONCILIATION OF CASH AND

CASH EQUIVALENTS TO
STATEMENT OF NET POSITION:

Cash and cash investments 1,944,407 $ 1,858,885 $ 8,420,733 $ 1,504,424 $ 10,263,947$ 23,992,396 $ Restricted cash and investments - - 274,506 116,394 - 390,900 Total cash and cash equivalents 1,944,407 $ 1,858,885 $ 8,695,239 $ 1,620,818 $ 10,263,947$ 24,383,296 $ City of Salinas
For the Year Ended June 30, 2022
All Internal Service Funds
Combining Statement of Cash Flows
184
DRAFT 09.08.2023
Risk General Workers General Fleet
Management Insurance Compensation Liability Maintenance Total

RECONCILIATION OF OPERATING

INCOME (LOSS) TO NET CASH PROVIDED
BY (USED IN) OPERATING ACTIVITIES:

Operating income (loss) 1,891 $ (1,006,802)$ 256,109 $ (3,767,806)$ (2,043,619) $ (6,560,227) $ Adjustments to reconcile operating (loss) to net
cash provided by (used in) operating activities:

Changes in operating assets and liabilities, and
deferred outflows and inflows of resources:

Deferred outflows - related to pensions - - 7,923 14,977 60,835 83,735 Deferred outflows - related to OPEB - - 1,536 3,815 7,445 12,796 Accounts payable - 26,435 18,854 (9,029) (4,337) 31,923 Accrued liabilities - - - - - - Deposits payable - - 4,420,503 3,069,479 - 7,489,982 Unearned revenue - - - - - - Insurance claims payable - - (3,982,929) (1,886,984) - (5,869,913) Compensated absences - - 10,149 10,149 110,388 130,686 Net pension liability - - (56,995) (110,566) (445,863) (613,424) Net OPEB liability - - (14,835) (36,941) (72,190) (123,966) Deferred inflows - related to pensions - - 41,099 82,340 329,108 452,547 Deferred inflows - related to OPEB - - 13,741 34,293 67,098 115,132 Total adjustments - 26,435 459,046 1,171,533 52,484 1,709,498
Net cash provided by (used in)
operating activities 1,891$ (980,367)$ 715,155 $ (2,596,273)$ (1,991,135) $ (4,850,729) $ For the Year Ended June 30, 2022
All Internal Service Funds
Combining Statement of Cash Flows (Continued)
City of Salinas
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PRIVATE PURPOSE TRUST FUNDS
The private-purpose trust funds accounts for assets and activities of the dissolved Redevelopment Agency, which is accounted for in the Successor Agency Trust, and other trust arrangement not otherwise reported in a pension trust.

Successor Agency Redevelopment Obligation Retirement Fund - This fund accounts for all the financial activities of the Redevelopment Obligation Retirement Fund (RORF) related to the former Redevelopment Project Area in accordance with AB 1x26 and AB 1484 which unwind the Redevelopment Agency of the City of Salinas.

Successor Agency Administration – This fund accounts for the administrative activities of the Successor Agency to the former Salinas Redevelopment Agency which was dissolved on February 1, 2012 in accordance with AB 1x26 (enacted June 28, 2011).

Other Private Purpose Trust Funds – These funds are used to account for other trust arrangements not properly reported in a pension trust fund under which principal and income benefit individuals, private organizations, or other governments. The City accounts for the following trust funds: Community Center, Monterey Regional Water Pollution Control Agency (MRWPCA) Fees, Sales Tax, Payroll Taxes, Developer Deposits, Evidence Room, Construction Bonds, Monterey County Tourism Improvement District, Leadership Salinas, and miscellaneous.

Fiduciary Funds
187
DRAFT 09.08.2023
Redevelopment Total Other Total
Obligation Successor Agency Private Purpose Private Purpose Retirement Fund Administration Trust Trust Fund Trust Funds ASSETS
Cash and investments 3,071,482$ 19,334$ 3,090,816$ 977,089$ 4,067,905$ Cash and investments held by fiscal agent 1,706,907 - 1,706,907 - 1,706,907 Receivables:

Accounts - - - 7,673 7,673 Interest 3,968 - 3,968 - 3,968 Loans and notes 173,900 - 173,900 - 173,900 Total assets 4,956,257 19,334 4,975,591 984,762 5,960,353

LIABILITIES
Accounts payable - 76 76 93,393 93,469 Interest payable 709,247 - 709,247 - 709,247 Deposits payable - - - 140,297 140,297 Unearned revenue 2,174,914 10,000 2,184,914 - 2,184,914 Long-term debt:

Due in one year 296,133 - 296,133 - 296,133 Due in more than one year 1,499,665 - 1,499,665 - 1,499,665 Total liabilities 4,679,959 10,076 4,690,035 233,690 4,923,725

NET POSITION (DEFICIT)
Restricted for individuals and organizations 276,298 9,258 285,556 751,072 1,036,628 Total net position (deficit) 276,298$ 9,258$ 285,556$ 751,072$ 1,036,628$ Combining Statement of Fiduciary Net Position
Successor Agency Trust
City of Salinas
Private Purpose Trust Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 188
DRAFT 09.08.2023
Redevelopment Total Other Total
Obligation Successor Agency Private Purpose Private Purpose Retirement Fund Administration Trust Trust Fund Trust Funds ADDITIONS:

Taxes 4,953,103$ 10,000$ 4,963,103$ -$ 4,963,103$ Private contributions - - - 1,350,551 1,350,551 Interest 40,920 - 40,920 - 40,920 Total additions 4,994,023 10,000 5,004,023 1,350,551 6,354,574 DEDUCTIONS:

Expenses 1,292,273 1,363 1,293,636 51,424 1,345,060 Payments on behalf of trustees - 3,911 3,911 1,396,955 1,400,866 Contributions to other agencies 2,421,954 - 2,421,954 - 2,421,954 Payments to City 951,900 - 951,900 - 951,900 Total deductions 4,666,127 5,274 4,671,401 1,448,379 6,119,780 Change in net position 327,896 4,726 332,622 (97,828) 234,794 NET POSITION (DEFICIT):

Beginning of year, as restated (Note 23) (51,598) 4,532 (47,066) 848,900 801,834 End of period 276,298$ 9,258$ 285,556$ 751,072$ 1,036,628$ City of Salinas
Combining Statement of Changes in Fiduciary Net Position Successor Agency Trust
Private Purpose Trust Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 189
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Custodial Funds
Custodial Funds are used to account for assets held by the City as an agent for individuals, private organizations, other governments and/or other funds. Agency Funds operate as a clearing mechanism. Cash resources are collected, held for a brief period and then distributed to the proper recipients. The City has a fiduciary responsibility for the assets, which it does not own outright.

SUBA Business Improvement District Fund - This fund accounts for the business license surcharged assessment imposed on Alisal businesses, and are used to promote and revitalize the business district. Expenditures are determined by the districts’ Board of Directors and approved by the City Council.

Flexible Spending - This fund is used to account for revenues resulting of employee concessions contributions used to reduce the cost of medical, vision and dental health insurance premiums.

Cafeteria Plan - This fund is used to account for the City’s Cafeteria Plan for unreimbursed medical and dependent care payments (Flexible Spending Account) operated under Section 125 of the Internal Revenue Code. Pre-tax monies are deducted from employees in accordance with their Salary Redirection Agreements and used to reimburse employees for qualified unreimbursed medical and dependent care expenses after obtaining approval from the City’s cafeteria plan administrator.

Downtown Community Benefit District - This fund accounts for the property assessment generated revenues imposed on the Downtown Community Benefit District. The concept is that eventually the Downtown Community Benefit District will grow and receive revenues from multiple sources within a defined boundary that can among other things, including entrepreneurial activities, special mandate, are not be excluded, and no exemptions for not-for-profit entities are being considered. It can be governed by a 501(c)3 non-profit corporation, merging the existing energies in Downtown into just one organization, rather than the 501(c)6 BID and the OSA Foundation. It can receive grants and donations, and merge these with more assessments that are powerful.

Fiduciary Funds
191
DRAFT 09.08.2023
SUBA Business Downtown Total
Improvement Flexible Cafeteria Community Custodial
District Spending Plan Benefit District Funds
ASSETS
Cash and investments 548$ 75,228$ -$ 11,945$ 87,721$ Cash and investments held by fiscal agent - 77,059 - - 77,059 Total assets 548 152,287 - 11,945 164,780

LIABILITIES
Accounts payable - 130,823 - 11,945 142,768 Total liabilities - 130,823 - 11,945 142,768

NET POSITION (DEFICIT)
Restricted for individuals and organizations 548 21,464 - - 22,012 Total net position (deficit) 548$ 21,464$ -$ -$ 22,012$ Combining Statement of Fiduciary Net Position
City of Salinas
Custodial Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 192
DRAFT 09.08.2023
SUBA Business Downtown Total
Improvement Flexible Cafeteria Community Custodial
District Spending Plan Benefit District Funds
ADDITIONS:

Taxes 30$ -$ -$ 459,914$ 459,944$ Plan member contributions - 296,149 - - 296,149 Total additions 30 296,149 - 459,914 756,093 DEDUCTIONS:

Expenses - 275,849 1 - 275,850 Benefit payments - 75,890 - - 75,890 Assessments disbursed to other governments - - - 459,914 459,914 Total deductions - 351,739 1 459,914 811,654 Change in net position 30 (55,590) (1) - (55,561) NET POSITION (DEFICIT):

Beginning of year 518 77,054 1 - 77,573 End of period 548$ 21,464$ -$ -$ 22,012$ City of Salinas
Combining Statement of Changes of Fiduciary Net Position Custodial Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 193
DRAFT 09.08.2023
General Measure E Measure G
Fund Fund Fund Total
ASSETS
Cash and investments 27,936,778$ 11,918,925$ 21,738,324$ 61,594,027$ Receivables, net:

Accounts 504,234 120 - 504,354 Taxes 10,616,463 2,928,655 5,892,370 19,437,488 Interest 168,968 19,332 35,532 223,832 Due from outside agencies 75,000 - - 75,000 Leases 2,004,626 - - 2,004,626 Due from other funds 8,106,123 - - 8,106,123 Advances to other funds 2,785,000 - - 2,785,000 Total assets 52,197,192$ 14,867,032$ 27,666,226$ 94,730,450$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 4,377,959$ 492,242$ 683,169$ 5,553,370$ Due to other funds 16,995,329 - 175,797 17,171,126 Deposits payable 46,281 - - 46,281 Total liabilities 21,419,569 492,242 858,966 22,770,777

DEFERRED INFLOWS OF RESOURCES
Related to leases 1,975,003 - - 1,975,003 Total deferred inflows of resources 1,975,003 - - 1,975,003

Fund Balances:

Nonspendable 2,785,000 - - 2,785,000 Restricted 6,000,000 - - 6,000,000 Committed 20,960,197 9,205,721 6,199,405 36,365,323 Assigned 7,321,952 863,153 7,081,699 15,266,804 Unassigned (8,264,529) 4,305,916 13,526,156 9,567,543 Total fund balances 28,802,620 14,374,790 26,807,260 69,984,670 Total liabilities, deferred inflows of
resources, and fund balances 52,197,192$ 14,867,032$ 27,666,226$ 94,730,450$ June 30, 2022
City of Salinas
Combining Balance Sheet
General, Measure E, & Measure G Funds
See accompanying Notes to the Basic Financial Statements. 194
DRAFT 09.08.2023
General Measure E Measure G Intrafund
Fund Fund Fund Eliminations Total
REVENUES:

Taxes 95,276,944$ 16,816,255$ 33,742,675$ -$ 145,835,874$ Taxes - special assessments - - - - - Licenses and permits 11,477,723 - - - 11,477,723 Intergovernmental 1,301,666 - - - 1,301,666 Charges for services 5,233,403 - - - 5,233,403 Interest (loss) (1,038,960) (116,298) (250,845) - (1,406,103) Rental income 325,113 - - - 325,113 Fines and forfeitures 426,149 - - - 426,149 Miscellaneous 1,014,336 240 - - 1,014,576 Total revenues 114,016,374 16,700,197 33,491,830 - 164,208,401

EXPENDITURES:

Current:

General government 15,168,042 518,166 1,506,221 - 17,192,429 Public safety 65,247,274 4,515,778 12,693,035 - 82,456,087 Public works 11,768,225 258,132 850,691 - 12,877,048 Recreation 2,550,067 2,007,836 1,020,292 - 5,578,195 Library - 4,401,235 - - 4,401,235 Capital outlay 362,275 - 80,448 - 442,723 Debt service:

Principal 655,441 - - - 655,441 Interest and fiscal charges 217,285 - - - 217,285 Total expenditures 95,968,609 11,701,147 16,150,687 - 123,820,443

REVENUES OVER (UNDER) EXPENDITURES 18,047,765 4,999,050 17,341,143 - 40,387,958 OTHER FINANCING SOURCES (USES):

Proceeds from sale of capital assets 1 - - - 1 Transfers in 6,188,719 700,000 - (4,909,620) 1,979,099 Transfers out (22,176,636) (925,247) (16,689,403) 4,909,620 (34,881,666) Total other financing sources (uses) (15,987,916) (225,247) (16,689,403) - (32,902,566) NET CHANGE IN FUND BALANCES 2,059,849 4,773,803 651,740 - 7,485,392 FUND BALANCES:

Beginning of year, as previously reported 28,739,032 9,600,987 26,155,520 - 64,495,539 Prior period adjustment (Note 23) (1,996,261) - - - (1,996,261) Beginning of year, as adjusted 26,742,771 9,600,987 26,155,520 - 62,499,278 End of year 28,802,620$ 14,374,790$ 26,807,260$ -$ 69,984,670$ For the Year Ended June 30, 2022
City of Salinas
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances General, Measure E, & Measure G Funds
See accompanying Notes to the Basic Financial Statements. 195
DRAFT 09.08.2023
Variance with
Final Budget
Actual Favorable/
Original Final Amounts (Unfavorable)
REVENUES:

Taxes 14,190,000 $ 14,190,000 $ 16,816,255 $ 2,626,255 $ Interest 40,000 40,000 (116,298) (156,298) Miscellaneous - - 240 240 total revenues 14,230,000 14,230,000 16,700,197 2,470,197 EXPENDITURES:

Current:

General government 525,661 527,130 518,166 8,964 Public safety 4,575,478 4,700,737 4,515,778 184,959 Public works 357,212 358,712 258,132 100,580 Recreation 2,240,785 2,288,728 2,007,836 280,892 Library 5,624,242 5,624,241 4,401,235 1,223,006 Capital outlay - - - - Total expenditures 13,323,378 13,499,548 11,701,147 1,798,401 REVENUES OVER (UNDER) EXPENDITURES 906,622 730,452 4,999,050 671,796 OTHER FINANCING SOURCES (USES):

Transfers in 700,000 700,000 700,000 - Transfers out (1,762,000) (2,143,542) (925,247) (1,218,295) Total other financing sources (uses) (1,062,000) (1,443,542) (225,247) (1,218,295) Net change in fund balance (155,378)$ (713,090) $ 4,773,803 5,486,893 $ FUND BALANCE:

Beginning of year 9,600,987
End of year 14,374,790$
City of Salinas
Budgetary Comparison Schedule
Measure E
For the Year Ended June 30, 2022
Budgeted Amounts
196
DRAFT 09.08.2023
Variance with
Final Budget
Actual Favorable/
Original Final Amounts (Unfavorable)
REVENUES:

Taxes 27,865,000 $ 27,865,000 $ 33,742,675 $ 5,877,675 $ Interest 130,000 130,000 (250,845) (380,845) total revenues 27,995,000 27,995,000 33,491,830 5,496,830 EXPENDITURES:

Current:

General government 1,400,197 1,406,192 1,506,221 (100,029) Public safety 11,928,136 11,985,191 12,693,035 (707,844) Public works 947,755 1,033,527 850,691 182,836 Recreation 1,383,971 1,383,971 1,020,292 363,679 Capital outlay 30,000 30,500 80,448 30,500 Total expenditures 15,690,059 15,839,381 16,150,687 (230,858) REVENUES OVER (UNDER) EXPENDITURES 12,304,941 12,155,619 17,341,143 5,727,688 OTHER FINANCING SOURCES (USES):

Transfers in - - - - Transfers out (12,959,415) (26,504,311) (16,689,403) (9,814,908) Total other financing sources (uses) (12,959,415) (26,504,311) (16,689,403) (9,814,908) Net change in fund balance (654,474)$ (14,348,692) $ 651,740 15,000,432 $ FUND BALANCE:

Beginning of year 26,155,520
End of year 26,807,260$
City of Salinas
Budgetary Comparison Schedule
Measure G
For the Year Ended June 30, 2022
Budgeted Amounts
197
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OTHER INFORMATION
199
DRAFT 09.08.2023
2013 2014 2015 2016 2017
Net earned required contribution
and investment revenues 952,735$ 971,785$ 1,892,297$ 1,019,378$ 1,074,526$ Unallocated expenses 338,630 353,537 334,291 339,171 314,127 Estimated incurred claims and expenses,
end of policy year 522,131 161,668 965,536 534,565 36,271 Paid claims as of:

End of policy year 30,214 18,140 55,188 116,262 15,603 One year later 172,798 635,352 282,538 20,991 227,379 Two years later 375,290 842,560 570,687 64,153 846,232 Three years later 1,021,746 1,345,021 679,871 65,043 947,734 Four years later 1,133,620 1,635,636 732,404 66,412 1,019,825 Five years later 1,135,208 1,676,450 779,178 835,586 1,721,882 Six years later 1,217,035 1,926,852 788,081 588,263 Seven years later 1,332,414 1,926,852 1,195,953 Eight years later 1,375,687 1,549,519
Nine years later 1,400,748
Reestimated incurred claims and expenses:

End of policy year 522,131 161,668 965,536 234,565 36,271 One year later 638,797 2,233,535 1,390,213 194,433 357,416 Two years later 1,085,173 2,280,849 1,554,039 79,955 1,714,261 Three years later 1,046,887 1,960,665 730,656 94,678 949,419 Four years later 1,549,402 1,748,340 1,296,507 80,580 1,041,511 Five years later 1,697,321 1,742,087 1,091,507 835,586 - Six years later 9,802,320 1,930,214 1,121,507 - Seven years later 5,399,014 1,926,852 -
Eight years later 1,399,014 -
Nine years later -
Increase/(decrease) in estimated incurred
claims and expenses 876,883 1,765,184 155,971 601,021 1,005,241 City of Salinas
Other Information (Unaudited)
Claims Development
Internal Service Funds - General Liability Insurance
Last Ten Fiscal Years
200
DRAFT 09.08.2023
2018 2019 2020 2021 2022
Net earned required contribution
and investment revenues 863,563$ 342,324$ 263,104$ 276,393$ 276,393$ Unallocated expenses 374,303 651,645 748,046 1,090,415 1,090,415 Estimated incurred claims and expenses,
end of policy year 7,532 892,986 4,006 53,317 53,317 Paid claims as of:

End of policy year 6,310 75,401 3,618 2,999 233,121 One year later 22,088 387,594 7,635 33,435 Two years later 285,818 2,660,599 312,080 Three years later 340,771 2,723,293
Four years later 1,072,628
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Reestimated incurred claims and expenses:

End of policy year 7,532 892,986 4,006 53,317 - One year later 796,619 1,583,466 42,411 - Two years later 327,418 3,952,801 -
Three years later 666,518 -
Four years later -
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Increase/(decrease) in estimated incurred
claims and expenses 658,986 3,059,815 38,405 - - City of Salinas
Other Information (Unaudited)
Claims Development
Internal Service Funds - General Liability Insurance (Continued) Last Ten Fiscal Years
201
DRAFT 09.08.2023
2013 2014 2015 2016 2017
Net earned required contribution
and investment revenues 7,472,705$ 4,377,426$ 6,130,921$ 13,748,053$ 4,743,276$ Unallocated expenses 323,122 360,203 335,408 471,472 334,542 Estimated incurred claims and expenses,
end of policy year 2,243,630 1,666,909 1,432,032 813,874 953,545 Paid claims as of:

End of policy year 646,857 950,284 334,257 333,561 357,390 One year later 1,634,364 1,371,978 1,597,521 1,061,264 1,070,983 Two years later 1,959,739 1,927,023 2,162,775 1,602,857 1,997,607 Three years later 2,340,805 2,409,062 2,554,090 1,895,742 2,329,308 Four years later 2,907,257 2,621,000 2,706,246 2,014,757 2,558,332 Five years later 3,137,059 2,699,388 2,878,566 2,044,352 - Six years later 4,169,602 2,783,374 2,985,635 - Seven years later 4,208,586 3,670,222 -
Eight years later 4,235,413 -
Nine years later -
Reestimated incurred claims and expenses:

End of policy year 2,243,630 1,666,909 1,432,032 813,874 953,545 One year later 3,285,111 2,218,693 2,641,671 1,711,199 1,934,390 Two years later 3,764,688 3,204,843 3,520,776 2,433,616 2,924,696 Three years later 4,196,279 3,674,042 3,793,217 2,406,924 2,932,147 Four years later 4,760,993 3,643,183 3,694,285 2,505,621 3,111,763 Five years later 4,849,355 3,745,001 3,718,134 2,618,375 3,804,982 Six years later 5,004,810 4,104,444 3,779,664 2,636,313 Seven years later 4,612,669 3,971,493 4,108,102 Eight years later 4,625,068 4,015,971
Nine years later 4,722,472
Increase/(decrease) in estimated incurred
claims and expenses - - - - - City of Salinas
Other Information (Unaudited)
Claims Development
Internal Service Funds - Workers Compensation Insurance Last Ten Fiscal Years
202
DRAFT 09.08.2023
2018 2019 2020 2021 2022
Net earned required contribution
and investment revenues 4,922,253$ 6,079,547$ 10,151,619$ 8,119,793$ 5,176,801$ Unallocated expenses 1,056,134 210,341 436,618 323,042 216,651 Estimated incurred claims and expenses,
end of policy year 1,284,514 1,222,180 1,638,983 4,366,805 2,233,467 Paid claims as of:

End of policy year 346,475 725,652 567,497 1,420,172 930,895 One year later 1,177,834 1,580,493 1,844,018 2,372,771 Two years later 1,617,945 1,987,948 -
Three years later 1,937,327 -
Four years later -
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Reestimated incurred claims and expenses:

End of policy year 1,284,514 1,222,180 1,638,983 4,366,805 2,223,467 One year later 1,833,783 2,488,357 3,759,255 5,391,076 Two years later 2,290,339 3,269,045 4,558,744 Three years later 3,249,184 4,060,647
Four years later 3,195,733
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Increase/(decrease) in estimated incurred
claims and expenses - - - - - City of Salinas
Other Information (Unaudited)
Claims Development
Internal Service Funds - General Liability Insurance (Continued) Last Ten Fiscal Years
203
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Finance CommitteeSeptember 12, 2023

Finance Committee
September 12, 2023