Agenda packet — San Carlos City Council, November 24, 2025 (part 1 of 3)

CITY OF SAN CARLOS
City Council/Successor Agency to the
Redevelopment Agency/Housing Authority
Regular Meeting
November 24, 2025 7:00 PM
Council Chambers, City Hall
600 Elm Street, San Carlos, CA 94070
www.cityofsancarlos.org

AGENDA
This meeting will be conducted both in-person at City Hall and virtually via Zoom. Members of the public will have the option to observe the meeting and address the City Council as outlined below.

In-Person Participation:
•
Location.

City Hall – 600 Elm Street, Council Chambers.

•
Provide Public Comment.

T o address the City Council on any item on the posted agenda, fill out a Request to Speak Form located in the back of the Council Chambers and submit it to the City Clerk; or, you may raise your hand when the Mayor calls for public comments.

Remote Participation
:
•
Observe via:
-
Zoom.
https://us02web.zoom.us/j/88256140939; or call 1-669-900-9128 and enter the Meeting ID #: 882 5614 0939
-
Meeting Webportal
. www.cityofsancarlos.org/agenda
-
Local TV.

Comcast Channel 27 and AT&T Uverse Channel 99

•
Provide Public Comment.

If you plan to make a public comment on any item on the posted agenda, please observe the meeting via Zoom (see above access information), and during the public comment period for the agenda item you wish to address, use the “raise hand” feature. If joining Zoom by phone, press *9 to “raise hand”.

Councilmembers may participate in this meeting remotely pursuant to Assembly Bill 2449.

MAYOR:

Sara McDowell

COUNCIL:

John Dugan, Neil Layton, Adam Rak, Pranita Venkatesh

1 1.

CALL TO ORDER

2. ASSEMBLY BILL 2449 TELECONFERENCE REQUESTS

3. PLEDGE OF ALLEGIANCE

4. CHANGES TO THE ORDER OF THE AGENDA

5. REPORT FROM CLOSED SESSION

6. COUNCIL COMMUNICATIONS AND ANNOUNCEMENTS

Council

Communications

and

Announcements

are

brief

items

from

members

the

City
Council

regarding

upcoming

events

the

community

and

correspondence

that

they

have
received.

They

are

informational

nature

and

action

will

taken

these

items

this
meeting.

7. PUBLIC COMMENT
Persons

wishing

address

the

City

Council

matters

NOT

the

posted

agenda

may
do so. Each speaker is limited to two minutes.

the

item

you

are

speaking

not

listed

the

agenda,

please

advised

that

the

City
Council

may

briefly

respond

statements

made

questions

posed

allowed

under

the
Brown

Act

(Government

Code

Section

54954.2).

The

City

Council's

general

policy

to
refer

items

staff

for

attention,

have

matter

placed

future

City

Council

agenda
for

comprehensive

action

report

and

formal

public

discussion

and

input

that
time.

8. CONSENT CALENDAR

Motion to Waive Reading of All Ordinances.
b.

Approve the City Council October 14, 2025 Special Meeting Minutes. c.

Approve the City Council October 14, 2025 Regular Meeting Minutes. d.

the

Fiscal

Year

2025-26

First

Quarter

Investment

Report

for

the

Period
Ending September 30, 2025.
e.

the

Fiscal

Year

2025-26

First

Quarter

Financial

Report

for

the

Period
Ending September 30, 2025.
f.

Adopt

Resolution

Accepting

the

Annual

Report

for

the

Year

Ended

June

30,

2025
on

Development

Impact

Fees,

Reaffirming

the

Necessity

for

the

Development

2 Impact

Fees,

and

Making

Findings

Impact

Fee

Balances

and

In-Lieu
Fees.
g.

Adopt

Resolution

Accepting

the

City

San

Carlos'

Annual

Comprehensive
Financial Report (ACFR) for the Fiscal Year Ending June 30, 2025. h.

Adopt

Resolution

Authorizing

the

Execution

Products

and/or

Services
Agreement

with

Crayon

(Formerly

SoftwareOne)

for

the

Renewal

the

Annual
Microsoft

Corporation

Enterprise

Agreement

Until

the

Microsoft

Applications

Are
Replaced.
i.

Adopt

Resolution

Authorizing

the

Execution

Professional

Service

Agreements
with

Goldfarb

Lipman

LLP

and

Burke,

Williams

Sorensen,

LLP

for

On-Call
Legal

Services

Economic

Development

and

Housing,

Each

with

an
Initial

T erm

Three

Years

(with

the

Option

Extend

for

Two

Additional

Years)

and
an Annual Not-to-Exceed Amount of $200,000.
j.
Adopt

Resolution

Authorizing

the

Execution

Five-Year

Professional

Services
Agreement

with

the

County

San

Mateo

for

Code

Enforcement

Services

an
Amount Not to Exceed $1,255,181.34.
k.

Adopt

Resolution

Authorizing

the

Execution

Amendment

the
Professional

Services

Contract

with

T eri

Black

and

Company,

LLC

for

Interim

City
Manager

Recruitment

Services

the

Amount

$9,400

with

10%

Contingency
for

T otal

Amended

Not-to-Exceed

Professional

Services

Contract

Amount

of
$54,400.

9. PUBLIC HEARING

Consideration

Adopting

Resolution

Approving

the

Addendum

the

City

of
San

Carlos

2045

General

Plan

Reset

Environmental

Impact

Report;

Adopting

a
Resolution

Amending

the

San

Carlos

General

Plan

Land

Use

Map,

Land

Use
Element,

and

Circulation

and

Scenic

Highways

Element;

Introducing

Ordinance
Amending

the

San

Carlos

Zoning

Map

and

Municipal

Code,

Title

18 -

Zoning
Ordinance,

Codify

the

Downtown

Specific

Plan;

and

Introducing

Ordinance
Adopting the San Carlos Downtown Specific Plan.

10. AGENDA SETTING
Items

discussed

this

Agenda

Setting

Section

will

considered

the

Council

for
placing on a future agenda. No action will be taken on these items at this meeting.

11. ADJOURNMENT

3 Any

writings

documents

provided

majority

the

City

Council

regarding

any

item

this

agenda
will be made available for public inspection upon request.

compliance

with

the

Americans

with

Disabilities

Act

and

Title

VI,

and

outlined

the

City’s
Reasonable

Accommodations

Policy,

you

need

special

assistance

translation

services

participate
in

this

meeting,

please

contact

the

City

Clerk’s

Office

(650)

802-4222

via

at
[email protected].

Notification

advance

the

meeting

will

enable

the

City

make
reasonable arrangements to ensure accessibility to this meeting.

4 San Carlos City Council/Successor Agency to the
Redevelopment Agency/Housing Authority Special Meeting
Collaboration Room, City Hall
600 Elm Street, San Carlos, CA 94070
October 14, 2025 6:30 PM

MINUTES

ROLL CALL

City Council Present: Sara McDowell, Mayor
Pranita Venkatesh, Vice Mayor
John Dugan, Councilmember
Adam Rak, Councilmember
Neil Layton, Councilmember

Staff Present: Nil Blackburn, Assistant City Manager
Jeff Maltbie, City Manager
Rebecca Mendenhall, Administrative Services Director
Crystal Mui, City Clerk
Gregory Rubens, City Attorney

1. CALL TO ORDER

Mayor McDowell called the meeting to order at 6:00 p.m.

2. PUBLIC COMMENT

None.

3. CLOSED SESSION

a. Conference with Legal Counsel - Existing Litigation (Closed Session Held Pursuant to Government Code Section 54956.9(A)); County of San Mateo vs. State of California et al., San Francisco Superior Court Case No. CPF25519270.

b. Conference with Legal Counsel Anticipated Litigation (Closed Session Pursuant to Govt. Code Section 54956.9(D)(2) and (4)) - 1 Case

4. REPORT FROM CLOSED SESSION

City Attorney Greg Rubens reported Council’s unanimous approval to join in the lawsuit titled County of San Mateo versus State of California.

5. ADJOURNMENT

The meeting adjourned at 6:48 p.m.

Crystal Mui
City Clerk

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San Carlos City Council/Successor Agency to the
Redevelopment Agency/Housing Authority Regular Meeting
Council Chambers, City Hall
600 Elm Street, San Carlos, CA 94070
October 14, 2025 7:00 PM

MINUTES

ROLL CALL

City Council Present: Sara McDowell, Mayor
Pranita Venkatesh, Vice Mayor
John Dugan, Councilmember
Neil Layton, Councilmember
Adam Rak, Councilmember

Staff Present: Nil Blackburn, Assistant City Manager
Barack Carter, Fire Chief
Janice Cheung, Fire Marshall
Lisa Costa Sanders, Principal Planner Consultant
Greg DaCunha, Deputy Fire Chief
Paul Harris, Financial Services Manager
Steven Machida, Public Works Director
Jeff Maltbie, City Manager
Rebecca Mendenhall, Administrative Services Director
Crystal Mui, City Clerk
Lisa Porras, Planning Manager
Gregory Rubens, City Attorney
Al Savay, Community Development Director

1. CALL TO ORDER

Mayor McDowell called the meeting to order at 7:00 p.m.

2. ASSEMBLY BILL 2449 TELECONFERENCE REQUESTS

None.

3. PLEDGE OF ALLEGIANCE

Mayor McDowell led the Pledge of Allegiance.

4. CHANGES TO THE ORDER OF THE AGENDA

None.

5. REPORT FROM CLOSED SESSION

City Attorney Greg Rubens reported that in the closed sessions earlier this evening, Council voted unanimously to join a lawsuit titled County of San Mateo versus State of California.

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6. PRESENTATIONS

a. Present a Proclamation Recognizing the San Carlos Youth Softball Summer Force Program.

Mayor McDowell presented Robert Bollier, President of the San Carlos Youth Softball Association, with a proclamation recognizing the San Carlos Youth Softball Summer Force Program. Mr. Bollier thanked the Council for the recognition and expressed appreciation to the volunteers, parents, and players. The Association thanked Council for the recognition and presented them with a commemorative pin.

b. Present a Proclamation Recognizing October 5 – 11, 2025 as Fire Prevention Week.

Mayor McDowell presented Fire Marshal Janice Cheung with a proclamation recognizing Fire Prevention Week. Ms. Cheung thanked the Council for the recognition and highlighted her department’s activities in celebration of Fire Prevention Week. Councilmember Rak thanked Fire Marshal Cheung for her work and reminded residents that they may drop off batteries for free seven days a week at the recycling center. Fire Marshal Cheung offered to collaborate with RethinkWaste on outreach.

7. COUNCIL COMMUNICATIONS AND ANNOUNCEMENTS

Council commended the Parks and Recreation Department for the successful Art and Wine Faire held this past weekend, noting the strong community turnout.

8. PUBLIC COMMENT

None.

9. CONSENT CALENDAR

Mayor McDowell provided details on the process for selecting a firm to provide professional recruitment services for the City Manager position (Item ‘g’).

MOTION: Adopt City Council Consent Calendar items ‘a’ through ‘m’ and Item ‘m’ – Ordinance No. 1626 Amending San Carlos Municipal Code Title 18 – Zoning, to Create Objective Design Standards (ODS) for Development within the Multi-family (RM) Housing and Mixed -use (MU) Zoning Districts: Chapter 18.03 (Rules of Measurement), 18.04 (Residential Districts), 18.05 (Mixed- Use Districts), 18.06 (Commercial Districts), 18.15 (General Site Regulations), 18.18 (Landscaping), 18.26 (Planning Authorities), 18.27 (Common Procedures), 18.29 (Design Review and Objective Design Standards Com pliance Review), 18.30 (Use Permits), and 18.41 (Terms and Definitions) of the San Carlos Municipal Code.

MOVER: Layton
SECONDER: Rak
AYES: Dugan, Layton, Rak, Venkatesh, McDowell
NAYS: None
RESULT: Motion Passed 5 – 0

a. Motion to Waive Reading of All Ordinances.

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b. Approve the September 8, 2025 City Council Special Meeting Minutes.

c. Approve the September 8, 2025 City Council Regular Meeting Minutes.

d. Adopt a Resolution Adopting the Sewer Collection System Master Plan 2025 Update.

Resolution 2025-107

e. Deny Claim of Parvin Falahpour.

f. Accept the Quarterly Reports from City Commissions and Boards.

g. Adopt a Resolution Authorizing the Execution of a Professional Services Agreement with Teri Black and Company, LLC For Professional Recruiting Services for the Position of City Manager in a Not-to-Exceed Contract Amount of $40,000. Resolution 2025-108

h. Adopt a Resolution Approving Additional Cash Payments to Silicon Valley Clean Water (SVCW), Over Three Years Starting in Fiscal Year (FY) 2025 -26, to Meet the City’s Funding Contribution Requirement for SVCW Infrastructure, and Appropriating $755,000 in FY 2025-26, $2,275,000 in FY 2026-27, and Approving Future Payment in the Amount of $780,000 in FY 2027- 28 from the Wastewater (Sewer) Fund Balance, for Cash Payments to SVCW. Resolution 2025-109

i. Adopt a Resolution Authorizing the Execution of a Professional Services Agreement with Collections Bureau of America (CBA) to Provide Collections Agency Services to the City.

Resolution 2025-110

j. Adopt a Resolution Accepting the 2024 Sewer Lateral Replacement Project (C1737) and Authorizing the Public Works Director to Issue and Record a Notice of Completion. Resolution 2025-111

k. Adopt a Resolution Accepting the Arroyo Avenue and Chestnut Street Safe Routes to School Improvements (C2201) and Authorizing the Public Works Director to Issue and Record a Notice of Completion. Resolution 2025-112

l. Adopt a Resolution Accepting the 2023 On-Call Traffic Striping and Marking Project (C9417) and Authorizing the Public Works Director to Issue and Record a Notice of Completion. Resolution 2025-113

m. Adopt a Resolution Awarding the 2025 On-Call Sewer Replacement Project (C1702); Authorizing the Execution of an Agreement with C2R Engineering Inc. in the Amount of $758,290.00; and Authorizing the Expenditure of a Contingency of $141,616.77, or Approximat ely 18.7% of the Budget, for a Total Not-to-Exceed Contract Amount of $899,906.77. Resolution 2025-114

n. Adopt Ordinance 1626 Amending San Carlos Municipal Code Title 18 – Zoning, to Create Objective Design Standards (ODS) for Development within the Multi -family (RM) Housing and Mixed-use (MU) Zoning Districts: Chapter 18.03 (Rules of Measurement), 18.04 (Res idential Districts), 18.05 (Mixed -Use Districts), 18.06 (Commercial Districts), 18.15 (General Site Regulations), 18.18 (Landscaping), 18.26 (Planning Authorities), 18.27 (Common Procedures),

18.29 (Design Review and Objective Design Standards Compliance R eview), 18.30 (Use Permits), and 18.41 (Terms and Definitions) of the San Carlos Municipal Code.

10. NEW BUSINESS

a. Consideration of Adopting a Resolution Approving the Final Design for the 700 Block of Laurel Street (Phase 1B Downtown Streetscape Master Plan Implementation).

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Advance Planning Manager Lisa Porras commenced the item. She noted for the record that corrections were needed to the study session notes (enclosed in the staff report as Attachments 3, 4, and 5) including the correction of misspelled names and clarification of the Mayor’s comment from the March 10, 2025 study session, specifying that the fountain operate throughout the year rather than 24/7 as stated.

Architect Consultant Jim Stickley presented the final design for the 700 block of Laurel Street and provided a breakdown of the project cost estimate. Ms. Porras wrapped up the presentation with next steps. Mr. Stickley and City Manager Jeff Maltbie responded to Council questions.

Public Comment
- Greg St. Claire, resident and downtown business owner, expressed concerns with the proposed design for the 700 block of Laurel Street.

- John Durkin, resident, expressed concerns with the proposed design for the 700 block of Laurel Street.

Councilmembers provided the following suggestions to consider:
- extend the benches so that they do not slope down in a way that invites children to climb on them
- relocate the newspaper rack to the side rather than in the center - e xtend the café lighting to complete the “m” shape and create a more symmetrical appearance
- confirm that the trees are not heavy fruit-bearing
- consider Greg St. Claire’s input on the next phase of the process

MOTION: Adopt Resolution 2025-115 Approving the Final Design for the 700 Block of Laurel Street (Phase 1B Downtown Streetscape Master Plan Implementation).

MOVER: Dugan
SECONDER: Rak
AYES: Rak, Dugan, Layton, Venkatesh, McDowell
NAYS: None
RESULT: Motion Passed 5 – 0

Council recessed at 8:34 p.m. and reconvened the meeting at 8:41 p.m.

11. PUBLIC HEARING

a. Consideration of Actions for the Minkoff Project Located at 789 Old County Road (APNs 046-131- 610 and 046-131-630).

Principal Planner Consultant Lisa Costa Sanders presented on the proposed Minkoff Project.

Applicant Will Birdsey, along with his design and landscape architects Tony Markese and Dawn Jedkins, presented their project.

Councilmembers Rak and Layton, Vice Mayor Venkatesh, and Mayor McDowell disclosed that they met with the developer a few years ago but stated that it would not affect their decision.

Ms. Costa Sanders, Mr. Birdsey, City Attorney Greg Rubens, and Ms. Jedkins responded to Council questions.

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Public Comment
- Georganne Morin, Executive Director of Healthy Cities Tutoring, spoke in support of the Minkoff Project.

- Jay Strauss, resident and Board Member of the Healthy Cities Tutoring and the Elms, spoke in support of the Project.

- Max Schaumkel, with the San Mateo County Joint Electrical Apprenticeship, spoke in support of the Project.

- Jennifer Rosse, resident and Co-President for Greater East San Carlos Board, spoke in opposition to the Project.

- Dimitri Vandellos, resident, spoke in opposition to the Project.

- Peter Nguyen, resident, spoke in support of the Project.

- Emily McLuhan, resident, spoke in support of the Project.

- Michael, resident, spoke in support of the Project.

- Michelle Williams, resident, spoke in support of the Project.

MOTION: Close the Public Hearing.

MOVER: Rak
SECONDER: Dugan
AYES: Venkatesh, Rak, Dugan, Layton, McDowell
NAYS: None
RESULT: Motion Passed 5 – 0

Ms. Costa Sanders and Traffic Consultant Mark Spencer responded to Council’s additional questions.

Council provided the following direction to staff:
- review the bike plan on Old County Road to improve conditions for cyclists (outside the scope of this project)
- explore adding shade as a new code requirement for tall buildings - f ollow-up expeditiously on construction noise complaints and enforce violations - in future discussions, when referencing an “amenity”, clarify whether it is public or private

MOTION: At 10:22 p.m. extend meeting to 11:00 p.m.

MOVER: Rak
SECONDER: Dugan
AYES: Layton, Venkatesh, Rak, Dugan, McDowell
NAYS: None
RESULT: Motion Passed 5 – 0

i. Adopt a Resolution Adopting the Mitigated Negative Declaration and the Associated Mitigation Monitoring and Reporting Program;

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MOTION: Adopt Resolution 2025-116 Adopting the Mitigated Negative Declaration and the Associated Mitigation Monitoring and Reporting Program for the 789 Old County Road Project.

MOVER: Layton
SECONDER: Rak
AYES: Dugan, Layton, Venkatesh, Rak, McDowell
NAYS: None
RESULT: Motion Passed 5 – 0

ii. Introduce an Ordinance Approving the 789 Old County Road Project Planned Development Plan, Sign Program and Related Zoning Map Amendment to Rezone the Project Site from Heavy Industrial (IH) to Planned Development (PD); and

MOTION: Introduce Ordinance 1627 Approving the 789 Old County Road Project Planned Development Plan, Sign Program, and Related Zoning Map Amendment to Rezone the Project Site from Heavy Industrial (IH) to Planned Development (PD) at 789 Old County Road (APNs 046- 131- 610 & 046- 131-630) with an a mendment to require automatic window shades installed on the complete side of the west building at 1% and shading on the 5th floor of the east building facing west at 1%.

MOVER: Rak
SECONDER: McDowell
AYES: Rak, Dugan, Layton, Venkatesh, McDowell
NAYS: None
RESULT: Motion Passed 5 – 0

iii. Introduce an Ordinance Approving a Development Agreement with Bransten Road Associate LLC.

MOTION: Introduce Ordinance 1628 Approving a Development Agreement with Bransten Road Associates LLC, for the 789 Old County Road Project with an amendment to add the following provisions:
- if a multi -tenant occupies the space and restaurant, cafe, or other retail is provided, it shall be open to the public and public parking shall be provided
- allow public access to the courtyard
MOVER: Dugan
SECONDER: Venkatesh
AYES: Venkatesh, Rak, Dugan, Layton, McDowell
NAYS: None
RESULT: Motion Passed 5 – 0

12. AGENDA SETTING

a. Consideration of Agendizing an Item to Reconsider Construction Time Limits (Municipal Code Chapter 15.60) to Limit the Number of Requested Time Extensions and Limit the Conditions for Exception.

Councilmember Rak suggested that Council reconsider the Ordinance for construction time limits, noting that the current law provides too much flexibility for construction projects to continue indefinitely. The Council expressed support, and the item will be scheduled for future discussion.

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13. ADJOURNMENT

Mayor McDowell adjourned the meeting at 10:42 p.m. in memory of Jean Dehner. She and Council shared tributes honoring Ms. Dehner ’s legacy as a longtime educator and dedicated community leader.

Crystal Mui,
City Clerk

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CITY COUNCIL

STAFF REPORT
MEETING DATE: November 24, 2025
ITEM TITLE: Accept the Fiscal Year 2025-26 First Quarter Investment Report for the Period Ending September 30, 2025.

RECOMMENDATION:

Staff recommend that the City Council review and accept the Quarterly Investment Report (“Report”) for the first quarter of the fiscal year (FY) 2025-26 ending September 30, 2025.

FISCAL IMPLICATIONS:

There is no fiscal impact associated with accepting the Report.

BACKGROUND:

On May 12, 2025, the City Council approved the Annual Investment Policy (“Policy”) per Resolution No. 2025-034. In accordance with the Policy, the City Administrative Services Director is responsible for investing the unexpended cash used for funding operations of the City of San Carlos (“City”).

The investment of funds for the City is directed by the goals of safety, liquidity, and yield. The authority governing investments for municipal governments is set forth in California Government Code, sections 53601 through 53686 (Code). Effective January 1, 2023, per section 53646 (b)(1) of the Code, the Investment Committee serving as the legislative body will have the quarterly reports for its review within forty-five (45) days following the end of the quarter. Thus, this Report and its attachments are furnished for review and information.

Beginning in FY 2016-17, the City included the checking account balance as part of this Report.

Although a checking account is not a typical investment account, this balance is included to show the total cash on hand for the quarter. The City typically maintains approximately $1 million, and a larger balance at the end of the calendar year, in the checking account to meet cash disbursement needs. Transfers are usually made into the investment accounts during the quarter to account for receipts that exceed disbursements.

The difference between historical value and market value of the City’s held investments, as shown in the attached investment report, may be due to the timing of purchase. Investments in the pools may have been purchased when interest rates were lower or higher than the end date of this report. As interest rates increase or decrease, the value of the investment pools will decrease or increase accordingly. However, interest rate fluctuations do not impact the City's balance in the investment pools. The market values are presented as a reference only.

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Investment Strategy
The City’s investment priorities, in order, are “Safety, Liquidity, and Yield,” while meeting the cash flow needs of the City through prudent investment of unexpended cash.

Compliance with Policy
Historical cash flow trends are compared to current cash flow requirements on an ongoing basis to ensure the City’s investment portfolio will remain sufficiently liquid to enable the City to meet all reasonably anticipated operating requirements. As of September 30, 2025, the portfolio contains sufficient liquidity to meet the next six months of expected expenditures by the City.

As of September 30, 2025, the City has no investment instruments with a maturity date longer than one year. All investments are in highly liquid accounts, using the State of California and County of San Mateo investment pools, and follow the Policy.

The primary objective of the Policy of the City of San Carlos is “safety of principal”. The permitted investments section of the Policy also states:

Local Agency Investment Fund (LAIF), which is a State of California managed investment pool, and San Mateo County Investment pool, may be used up to the maximum permitted by California State Law. A review of the pool/fund is required when they are part of the list of authorized investments, with the knowledge that the pool/fund may include some investments allowed by statute but not explicitly identified in this investment policy.

The City’s Investment Committee, consisting of Jeff Maltbie, City Manager; Inge Tiegel, City Treasurer; and Rebecca Mendenhall, Administrative Services Director, has reviewed and approved this Report.

ANALYSIS:

The Investment Portfolio (Attachment 1) indicates that on September 30, 2025, City funds in the amount of $174,569,789 were invested, producing a weighted average yield of 4.02% for this quarter. The amount in the checking account was $2,004,134. The Local Agency Investment Fund (LAIF), the City’s benchmark for comparison of investment yield, was 4.24% for the quarter. The investment yield, net of administrative fees, for the County Pool was 3.85%. The allocation of the investment portfolio balance to various City funds and various sub-categories of General Fund fund balance is included on page 3 of the attachment. Below is a summary of the changes from the last quarter.

Quarter Ended
09/30/25
% of
Total
Quarter Ended
06/30/25
% of
Total
Increase
(Decrease)
City-Checking 2,004,134$ 1% 1,215,591$ 1% 788,543$ City-SM County Pool 100,607,085 57% 109,320,683 60% (8,713,598) City-LAIF 73,962,704 42% 73,163,020 40% 799,684
Total 176,573,923$ 100% 183,699,294$ 100% (7,125,371)$ The portfolio balance at the end of the third quarter is $176,573,923, a decrease of $7,125,371.

The decrease in the portfolio balance was due to the timing of the cash receipts and cash

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payments. The City draws on the investment portfolio throughout the year for normal operating activity typically with the more significant levels of draw occurring in the first quarter (July through September) and fourth quarter (April through June). The City’s cash position typically improves in late December and April due to the receipt of property tax collections from San Mateo County.

The decrease in the first quarter was driven by several major distributions: (1) $2.7 million payment to CalPERS for the annual Unfunded Actuarial Liability (UAL) payment; (2) $3.9 million principal and interest payments and cash-in-lieu of debt payments relating to Silicon Valley Clean Water (SVCW) bonds and loans; (3) $2.3 million contribution for the Belmont-San Carlos Fire Department FY 2024-25 UAL; (4) $1.1 million general liability and property member contribution to PLAN JPA; (5) $2.1 million in drawdowns for the Cherry Street Below Market Rate Housing project for the 1 st quarter. These drawdowns were partially offset by $2.1 million in sales taxes, $2 million from charges for services, $1.5 million vehicle-in-lieu revenues and $0.9 million from licenses and permits.

Below is a comparison of quarterly cash position for the past three years.

Below is a summary of the changes in the total investment interest earnings from the prior quarter.

Qtr Ended
9/30/25
Qtr Ended
6/30/25
Increase
(Decrease)
Investment Portfolio 174,569,788$ 182,483,703$ (7,913,915)$ Weighted Avg Yield 4.06% 4.14% -0.08%
Accrued Interest Earnings 1,774,531$ 1,918,330$ (143,799)$ The decrease in interest earnings this quarter occurred due to the lower yield for the San Mateo County Pool which accounts for approximately 57% of the investment portfolio offsetting the slight increase yield of LAIF compared to the previous quarter. Interest in the investment accounts was $1,774,531 and $4,673 for the checking account.

ALTERNATIVES:

The alternatives available to the City Council include:
$140
$150
$160
$170
$180
$190
Sept 30 Dec 31 March 31 June 30
FY26
FY 25
FY 24
Cash Position of Investments
($ in millions)

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1. Accept the Quarterly Investment Report for the first quarter of fiscal year 2025-26 as of September 30, 2025; or

2. Do not accept the Report; or

3. Provide staff with alternative direction.

Respectfully submitted by:

Rebecca Mendenhall, Administrative Services Director
Approved for submission by:
_______________________
Jeff Maltbie, City Manager
ATTACHMENT(S):

1. Q1 Investment Portfolio Summary FY 2025-26

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CITY OF SAN CARLOS Historical GASB 31
Date Purchase Boo k % of Marke t Quarterly
Investment Type Account/CUSIP # Purchased Price ($) Qtr. Year-to-date Value ($) Portfolio Value ($)* Incom e

LIQUID ACCOUNTS
Checking Account 2,004,134$ 0.08% 0.08% 2,004,134 $ 1% 2,004,134 $ 4,673 $ Investment Accounts
San Mateo County Pool-City of San Carlos 100,607,085$ 3.85% 3.85% 100,607,085 57% 101,944,153 1,008,235 State of California LAIF-City of San Carlos 73,962,704$ 4.24% 4.24% 73,962,704 42% 74,105,421 766,296 Total Liquid Accounts 174,569,789 $ 4.02 % 4.02% 174,569,789$ 99 % 176,049,574$ 1,774,531 $ Total for City of San Carlos 176,573,923 $ 3.97% 3.97% 176,573,923 $ 100% 178,053,708 $ 1,779,205 $

* Notes:
2) Effective January 1, 2020, the LAIF deposit limit was increased from $65 million to $75 million. The limit remains in effect until updated by the State Treasurer. 1) Difference in value between Historical Value and Market Value may be due to timing of purchase. Investments in the investment pools may have been purchased when interest rates were lower or higher than the end date of this report. As interest rates increase or decrease, the value of the investment pools will decrease or increase accordingly. However, the interest rate fluctuations do not have an impact on the City's balance in the investment pools. The market values are presented as a reference only.

Yield
%

INVESTMENT PORTFOLIO

CITY OF SAN CARLOS
September 30, 2025

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Investment Portfolio Diversification
City of San Carlos Checking Account 2,004,134 $ 1% City of San Carlos SM County Pool 100,607,085 57% City of San Carlos LAIF-General 73,962,704 42% Total 176,573,923 $ 100%
City - Checking
1%
City - SMC Pool
57%
City - LAIF
42%
City - Checking City - SMC Pool City - LAIF
City of San Carlos
Investment Portfolio
as of September 30, 2025

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Funds Cash Balance
% of Total
Balance
Capital Projects Funds (Fund 10, 14, 16, 18, 25, 26 and 27) 65,974,335$ 37.4% Sewer Fund (Fund 6) 46,595,806 26.4% Housing Funds (Funds 29 and 31) 4,932,093 2.8% Facility/Infrastructure Improvements 30, 741,500 17.4% General Fund Operations (includes checking account) 2,269,121 1.3% Unfunded Liabilities 3, 000,000 1.7% Economic Uncertainties Reserve 9,846,816 5.6% Assigned Property Acquistion 2,000,000 1.1% Strategic Property Acquisition 7, 144,220 4.0% Restricted by contract or outside party 1,090,471 0.6% Special Revenue Funds (Funds 15 and 17) 1,134,018 0.6% Internal Service Funds (Funds 32, 33, and 35) 1,845,543 1.0% Total 176,573,923$ 100.0%
City of San Carlos
Investment Allocations
as of September 30, 2025
37%
26%3%
17%
1%
2%
6%
1%
4%
1%1% 1%
Capital Projects Funds (Fund 10, 14, 16, 18, 25, 26 and 27) Sewer Fund (Fund 6) Housing Funds (Funds 29 and 31) Facility/Infrastructure Improvements General Fund Operations (includes checking account) Unfunded Liabilities Economic Uncertainties Reserve Assigned Property Acquistion Strategic Property Acquisition Restricted by contract or outside party Special Revenue Funds (Funds 15 and 17) Internal Service Funds (Funds 32, 33, and 35)

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City of San Carlos Investment Portfolio
Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 City - Checking 2,259,219 2,521,232 2,521,232 1,888,533 3,001,417 4,941,377 1,146,208 1,215,591 2,004,134 City - SM County Pool 112,625,276 110,321,073 111,771,738 109,670,755 101,170,418 101,449,858 109,827,080 109,320,683 100,607,085 City - LAIF 74,882,268 73,048,078 73,221,839 72,694,145 67,225,571 73,903,796 71,758,513 73,163,020 73,962,704 Total 189,766,763$ 185,890,383 $ 187,514,809 $ 184,253,433 $ 171,397,406 $ 180,295,031 $ 182,731,801 $ 183,699,294 $ 176,573,923 $ 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Sep-23 Dec-23 Mar-24 Jun-24 Sep- 24 Dec-24 Mar-25 Jun-25 Sep-25 City of San Carlos Historical Summary of Investment Portfolio City - Checking
City - LAIF
City - SM County
Pool

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Investment Accounts Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 San Mateo County Pool-City of San Carlos 2.12% 3.13% 3.19% 3.39% 4.18% 3.94% 3.89% 3.99% 4.01% State of California LAIF-City of San Carlos 2.28% 3.56% 3.62% 3.82% 4.63% 4.34% 4.39% 4.32% 4.14% Annualized Rate of Return

CITY OF SAN CARLOS

INVESTMENT ANNUALIZED RATE OF RETURN
September 30, 2025

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

5.00%
Sep-23 Dec-23 Mar-24 Jun-24 Sep- 24 Dec-24 Mar-25 Jun-25 Sep-25 Investment Annualized Rate of Return
San Mateo County Pool-City of San Carlos State of California LAIF-City of San Carlos

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CITY COUNCIL

STAFF REPORT
MEETING DATE: November 24, 2025
ITEM TITLE: Accept the Fiscal Year 2025-26 First Quarter Financial Report for the Period Ending September 30, 2025.

RECOMMENDATION:

Staff recommend that the City Council accept the Quarterly Financial Report (“Report”) for the first quarter of fiscal year (FY) 2025-26 ended September 30, 2025.

FISCAL IMPLICATIONS:

There is no financial impact associated with accepting this report.

BACKGROUND:

In May 2023, the City Council approved financial policies formalizing long standing practices. The policies were established to ensure that the City's finances are managed in a manner that will: (1) continue to provide for the delivery of quality services; (2) maintain and enhance service delivery as the community grows, in accordance with the General Plan; (3) guarantee a balanced budget annually assuring that the City is operating within its means; and (4) establish reserves necessary to meet known and unknown future obligations.

A key component of these policies includes the preparation of a quarterly financial report. This Report provides an executive summary of the City’s current financial status as it relates to the adopted operating budget.

Attached is the Report for the first quarter that reflects the City’s overall General Fund financial position as of September 30, 2025. Included in the Report is an update on the General Fund balance, analysis of revenues earned to date, and expenses incurred for the first quarter of the fiscal year.

ANALYSIS:

Revenues
The Report for the first quarter is prepared on a cash basis, therefore only revenue received by September 30 is reflected. Since revenue is received on many different schedules depending on type, it is useful to compare the year-to-date (“YTD”) actual amounts to the prior year’s actual amounts.

Overall, fiscal year-to-date revenues were approximately $8.14 million, or $0.65 million and 8.6% higher than last year at the end of the first quarter, and represented 13.2% of the budget. As

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discussed in the attached Report, charges for services were lower than the prior year. This is mainly due to the timing of building plan check and inspection fee revenues which can vary from year to year due to the timing of large-scale development projects.

Property tax, sales tax, vehicle in-lieu fees (“VLF”), other taxes, licenses and permits, use of money and property, and other revenues were higher compared to quarter one of last year. As discussed in the attached Report, it was due to an increase in assessed properties, spending surge in anticipation of the federal tariffs, the receipt of the countywide VLF shortfall payment relating to FY 2023-24 in the current year, the timing of franchise fee and TOT payments, and increase in business registration due to increased audit activities. Interest rates continue to be a positive driver as well.

Expenditures
Expenditures are recorded when paid, using the cash basis method of accounting. Overall, expenditures were $17 million, or 25.4%, of the budget, and $0.81 million higher compared to quarter one of the prior year. This was due to higher public safety contract costs, higher CalPERS contributions related to the legacy Belmont-San Carlos Fire Department, decrease in vacancy rates which are reflected in higher salaries, and higher benefits costs compared to the prior year.

Additional details can be found in the attached Report.

ALTERNATIVES:

The alternatives available to the City Council include:

1. Accept the Quarterly Financial Report for the first quarter of FY 2025-26 ended September 30, 2025; or

2. Do not accept the Quarterly Financial Report; or

3. Provide staff with alternative direction.

Respectfully submitted by:

Rebecca Mendenhall, Administrative Services Director
Approved for submission by:
_______________________
Jeff Maltbie, City Manager
ATTACHMENT(S):

1. Q1 FY26 Financial Report

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CITY OF SAN CARLOS

First Quarter of Fiscal Year 2025-26

The City has completed the first quarter of the fiscal year (“FY”) 2025-26 ended September 30, 2025. This report summarizes the activities of the City’s General Fund, which is the primary operating fund of the City and is used to account for most operating activities. This report is not meant to be inclusive of all finance and accounting transactions. It is intended only to provide the Council and the public with an overview of the state of the City’s general fiscal condition.

GENERAL FUND FINANCIAL POSITION
The General Fund is comprised of budgeted operating r evenues of $61,584,200 and operating expenditures of $66,973,825 for FY 2025-26. Expenditures in the General Fund account for direct services provided to the residents of San Carlos , including General Government services, Police services, Fire services, Parks and Recreation, Community Development and Public Works.

TOP SEVEN GENERAL FUND REVENUES
The City’s seven main revenue sources accounted for approximately 91% of the General Fund’s year-to- date total operating revenue in FY 2025-26.

Overall, these key operating revenues largely performed as projected based on payment schedules, past trends, and the expectation of continuing economic growth . Any significant variations in the different revenue categories compared to the first quarter of the prior year and the budget are noted below:
• Property tax. Most of the City’s property taxes are received in December and April. The property taxes received through the first quarter were $80,000 higher compared to the first quarter of last fiscal year due to higher assessed property values from San Mateo County. We expect that the property tax payments will be on target with budget this year.

GENERA L FUND FY 2024-2025 F Y 2025-2026
numbers in 000's
Revis ed
Budget
1st Qtr
YTD Actual % of budget
Revis ed
Budget
1st Qtr
YTD Actual % of budget
Revenues 57,243$ 7,490$ 13.1% 61,584$ 8,136$ 13.2% Expenditures 62,010 16,193 26.1% 66,974 17,008 25.4% Net Alloc & Transfers (579) 1,068 -184.5% (8,124) (2,031) 25.0% Net Change in Fund Balance (5,346) (7,635) 142.8% (13,514) (10,903) 80.7% Balance, Start of Year 58,985 58,985 100% 62,810 62,810 100% Balance Year-to-Date 53,639$ 51,350$ 95.7% 49,296$ 51,907$ 105.3%

Quarterly Financial Report

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• Sales Tax. Revenues for the quarter were $1 07,000 higher than in the same period of the prior year. A reduction in the federal funds rate contributed to more favorable borrowing conditions, while consumer spending surged in anticipation of upcoming federal tariffs. New vehicle sales were also elevated as buyers moved quickly to take advantage of expiring federal electric vehicle (EV) tax credits.
• Charges for Services. Revenues were at 30.5% of the full year’s budget and compared to the first quarter of the prior year, there was a decrease of $60,000 mainly due to the timing of building plan check and inspection fee revenues which can vary from year to year due to the timing of large - scale development projects.
• Vehicle in-lieu (VLF). The revenue received in this fiscal year was $167,000 more than the prior year mainly due to the receipt of the county-wide shortfall from fiscal year 2023-24. • Other Taxes. These include Transient Occupancy Tax (“TOT”) and Franchise fees , which largely begin to be received in the second quarter. Total revenue was $9,000 higher than in the first quarter of the prior year. The budgeted Other Tax revenues for the full year are $37,000 more than the prior year.
• Licenses & Permits. Revenues were $64,000 higher than at the same point in the prior year and have achieved 28% of this year’s budget. Similar to Charges for Services, this revenue category can vary from year to year due to the timing of development projects. • Use of Money and Property . This revenue stream was $85,000 higher than in the first quarter of the prior year due to new revenue coming from the billboard at 611 Industrial. • Other Revenues. This revenue category includes business registration fees, vehicle code fines, various cost reimbursements, and grants. It was higher by $194,000 compared to the first quarter of the prior year mainly due to the Discovery program which audits unregistered businesses and seeks to bring them into compliance with the City’s business registration requirements.

GENERAL FUND EXPENDITURES
In June 2025, the City Council approved several program changes and additional staffing changes for FY 2025-26 that were necessary to implement the strategic plan objectives, support the continued high level of development activity, manage the infrastructure projects, and advance the increased communication needs. As a result, the total expenditures for the first quarter of the current fiscal year were 5% higher than last year. As shown in the table below, expenditures are generally on target for the first quarter of the fiscal year when compared to budget. Any significant variations are noted below.

• General Government. Expenditures were $74,000 higher than in the first quarter of the prior year primarily due to higher equipment maintenance costs related to the implementation of a new permit system and increased professional services cost.
• Community Development. Expenditures were $110,000 less than the prior year due to the timing of professional services costs.
• Fire. Expenditures were $375,000 greater than in the first quarter of the last fiscal year. This was primarily due to increases in costs for contracted fire services from the City of Redwood City and an increase in the annual pension payment related to the former Belmont -San Carlos Fire Department.
• Police. Expenditures were greater than the same period last year by $3 87,000 due to the cost increases in the agreed law enforcement services contract with the San Mateo County Sheriff ’s Office and an increase in the annual pension payment to CalPERS. • Parks and Recreation. Expenditures were $13,000 lower which is broadly in line with quarter one of the prior year.

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• Public Works. Expenditures were $102,000 higher than the prior year primarily due to the addition of the Assistant Public Works Director position.

• Salaries and benefits. Expenditures were $833,000 greater than in the first quarter of last year due to increases in negotiated salary and benefit costs including the Fire and Police pension payments. • Professional Services. Expenditures were lower by $10,000 compared to the prior year due to the timing of invoices received.
• Other Operating. Expenditures were $13,000 lower in the first quarter when compared to the same period in the prior year , mainly due to miscellaneous expenditures such as office supplies and utilities.
• Capital Outlay costs were $5,000 greater than quarter one in the last fiscal year due to equipment purchases.

FOR MORE INFORMATION
This summary is based on detailed information produced by the City’s Finance Division. If you would like additional information or have any questions about this report, please call (650) 802-4213.

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CITY COUNCIL

STAFF REPORT
MEETING DATE: November 24, 2025
ITEM TITLE: Adopt a Resolution Accepting the Annual Report for the Year Ended June 30, 2025 on Development Impact Fees, Reaffirming the Necessity for the Development Impact Fees, and Making Findings Related to Impact Fee Balances and In-Lieu Fees.

RECOMMENDATION:

Staff recommend that the City Council adopt a Resolution accepting the annual report for the year ended June 30, 2025 on development impact fees, reaffirming the necessity for the development impact fees, and making findings related to impact fee balances and in-lieu fees.

FISCAL IMPLICATIONS:

There are no fiscal implications associated with accepting this report.

BACKGROUND:

This administrative report serves as the City’s annual report on development impact fees, as required by Government Code section 66006 and in accordance with the Mitigation Fee Act, specifically Government Code section 66001(d). It includes details of the City’s park in-lieu fees, which are governed by Government Code section 66477, and addresses the City’s other in-lieu and linkage fees for informational purposes.

ANALYSIS:

The City has a number of development impact fees (DIFs) including the traffic impact fee, park facility development fee, affordable housing impact fee, commercial linkage fee, sewer capacity charge, childcare development fee, and the sewer connection pass-through fee. Detailed descriptions of these fees are available to the public on the City’s website and in their respective sections of the Municipal Code.

In California, state legislation sets certain legal and procedural parameters for the charging of DIFs. This legislation was passed as Assembly Bill (AB) 1600 by the California Legislature.

Government Code section 66006(b) states the following requirements with respect to DIFs:

For each separate account or fund established, the local agency shall, within 180 days after the last day of each fiscal year, accept the report and make available to the public the following information for the fiscal year:

A. A brief description of the type of fee in the account or fund.

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B. The amount of the fee.

C. The beginning and ending balance of the account or fund.

D. The amount of the fees collected and interest earned.

E. An identification of each public improvement on which fees were expended and the amount of expenditures on each improvement, including the total percentage of the cost of the public improvement that was funded with the fees.

F. An identification of an approximate date by which the construction of the public improvement will commence if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement and the public improvement remains incomplete.

G. A description of each interfund transfer or loan made from the account or fund, including the public improvement on which the transferred or loaned fees will be expended, and, in the case of an interfund loan, the date on which the loan will be repaid, and the rate of interest that the account or fund will receive on the loan.

H. The amount of refunds made (pursuant to Government Code section 66001(e)) due to sufficient funds being collected to complete financing on incomplete public improvements, and the amount of reallocation of funds made (pursuant to Government Code section 66001(f)) due to administrative costs of refunding unexpended revenues exceeding the amount to be refunded.

In addition, the Mitigation Fee Act requires local agencies to adopt “five-year findings” in accounting for development impact fee proceeds.

The following findings are made as required by the Government Code Section 66001:

1. The purpose to which each development impact fee is collected for has been identified.

2. There is a continued need for the improvements and there is a reasonable relationship between the fee and the purpose for which it is charged.

3. The sources and amounts of funding anticipated to complete the financing of capital projects have been identified and will be deposited into the appropriate account upon receipt or during the normal capital improvement program budget cycle. For the fiscal year 2024-25 ended June 30, 2025, none of the impact fees collected by the City have been held for a period greater than five years.

4. A copy of the Resolution will be posted on the website and forwarded to the Administrative Services Director for use in overseeing these monies.

5. These findings are based, in part, on information provided in the City’s Capital Improvement Program.

The attached report contains details to satisfy the requirements of Government Code section 66006 and 66001. Once accepted by the City Council, it will be made available to the public on the Financial Reports and Policies page of the City’s website. It also describes the City’s park land dedication in-lieu fee, which is governed by Government Code section 66477, and the City’s affordable housing in-lieu fee and parking in-lieu fee. The report shows these fees grouped by fund.

Many projects have been either partially or fully funded over the past five fiscal years through the City’s DIFs and in-lieu fees. These include the San Carlos Avenue Pedestrian Safety

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Improvements Phase III Project ($2.6 million) through the traffic impact fee; the Family and Commercial Daycare Grant Program ($0.5 million) through the childcare development in-lieu fee; the Installation of New Sports Field Lighting at Flanagan and Stadium Fields Project ($1.5 million); the Parks Master Plan Project ($0.4 million) through the park land dedication in-lieu fee and park facility development fee; the Cherry Street Below Market Rate Housing Project and the Affordable Housing Site Acquisition/Construction Project at 1800 El Camino Real and 1131-1133 Eaton Avenue ($12.5 million) through the commercial linkage fee and affordable housing in-lieu fee; and sewer system improvements ($3.8 million) through collection of the sewer capacity charge.

ALTERNATIVES:

The alternatives available to the City Council include:

1. Adopt a Resolution accepting the annual report for the year ended June 30, 2025 on development impact fees, reaffirming the necessity for development impact fees, and making findings related to impact fee balances and in-lieu fees; or

2. Do not adopt the Resolution; or

3. Provide staff with alternative direction.

Respectfully submitted by:

Rebecca Mendenhall, Administrative Services Director
Approved for submission by:
_______________________
Jeff Maltbie, City Manager
ATTACHMENT(S):

1. Resolution

2. Development Impact Fee Annual Report FY 2024-25

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RESOLUTION NO. 2025 – ____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN CARLOS ACCEPTING THE ANNUAL REPORT FOR THE YEAR ENDED JUNE 30, 2025 ON

DEVELOPMENT IMPACT FEES, REAFFIRMING THE NECESSITY FOR

DEVELOPMENT IMPACT FEES, AND MAKING FINDINGS RELATED TO IMPACT FEE BALANCES AND IN-LIEU FEES.

WHEREAS, Government Code Sections 66000 et seq., commonly known as the Mitigation Fee Act, regulate the imposition, collections, expenditure, and reporting of development impact fees; and
WHEREAS, Government Code Section 66006 requires that certain information be made available to the public regarding development impact fees on an annual basis; and WHEREAS, Government Code Section 66001 requires that local agencies adopt “five- year findings” in accounting for development impact fee proceeds; and WHEREAS, Government Code Sections 66477 et seq. regulate the imposition, collections, and expenditure of park in-lieu fees; and
WHEREAS, the City of San Carlos assesses a number of development impact fees – traffic impact fee, park facility development fee, commercial linkage fee, childcare development fee, and sewer capacity charge; and
WHEREAS, the City of San Carlos also collects a number of in-lieu fees – park land dedication in-lieu fee, affordable housing in-lieu fee, and parking in-lieu fee; and WHEREAS, the City Council of the City of San Carlos has read and considered the development impact fees and in-lieu fees annual report for the year ended June 30, 2025; and WHEREAS, the following findings have been made as required by the Government Code Section 66001:

1. The purpose to which each development impact fee is collected for has been identified.

2. There is a continued need for the improvements and there is a reasonable relationship between the fee and the purpose for which it is charged.

4. A copy of the Resolution will be posted on the website and forwarded to the Administrative Services Director for use in overseeing these monies.

5. These findings are based, in part, on information provided in the City’s Capital Improvement Program.

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NOW, THEREFORE BE IT RESOLVED, that the San Carlos City Council hereby accepts the Development Impact Fees and In-Lieu Fees Annual Report for Fiscal Year 2024-25 and reaffirms the necessity for development impact fees and has made findings related to impact fee balances and in-lieu fees.
* * * * *
I, City Clerk Crystal Mui, hereby certify that the foregoing Resolution was duly and regularly passed and adopted by the City Council of the City of San Carlos at a scheduled meeting thereof held on the 24th day of November 2025, by the following vote:
________________________________
CITY CLERK of the City of San Carlos
APPROVED:
___________________________
MAYOR of the City of San Carlos
AYES, COUNCILMEMBERS:

NOES, COUNCILMEMBERS:

ABSENT, COUNCILMEMBERS:

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City of San Carlos

Development Impact Fees and In-Lieu Fees – Annual Report Fiscal Year Ended June 30, 2025

This Administrative Report serves as the City’s annual report on development impact fees, as required by Government Code Section 66000- 66008, and on park in-lieu fees, as required by Government Code Section 66477. This report also includes the City’s other fees not governed by these specific Government Code sections.

Development Impact Fees

The City of San Carlos assesses several development impact fees – Traffic Impact Fee, Park Facility Deve lopment Fee, Commercial Linkage Fee, Sewer Capacity Charge , Childcare Development Impact Fee, and the Silicon Valley Clean Water (SVCW) Sewer Connection Pass- through Fee.

Local governments often charge fees as a condition of approval for development projects to fund public improvements to compensate for the demands that the developments have on publ ic infrastructure. These fees are commonly known as development impact fees. In 1989, the S tate Legislature passed Assembly Bill 1600 (AB 1600), which added Sections 66000 et seq. to the California Government Code, commonly known as the Mitigation Fee Act. As required by law, these fees are segregated and accounted for in a separate fund. Per AB1600, each fee collected to mitigate a specific impact must be spent within five years of collection. If the fee is held over this five-year period due to specific circumstances or insufficient collection for the need improvements, the City Council must take specific findings to continue holding the fees, otherwise, the fees are subject to refund. For the FY 2024-25 ended June 30, 2025, none of the impact fees collected by the city have been held for a period greater than five years. Government Code Section 66001 requires the city to make available to the public certain information regarding these fees for each fund within 180 days after the end of each fiscal year.

In-Lieu Fees
In-lieu fees are fees that are also collected by the city instead of requiring developers to provide or construct specified improvements or amenities with their projects. The City of San Carlos assesses a few in-lieu fees – Park Land Dedication In-Lieu Fee, Affordable Housing In-Lieu Fee, and Parking In-Lieu Fee.

This report summarizes the following information for each of the development impact fee programs and in-lieu fees, categorized by the funds in which the fees are collected:
• A brief description of the fee program
• A schedule of fees, where applicable, or reference to it in the City’s Municipal Code • Beginning and Ending fund balances of the fee program • Total fees collected and the interest earned, if applicable • Disbursement information

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The table below shows the summary of the development impact and in- lieu fees for Fiscal Year 2024-25:

Fund 25
Traffic Impact Fee
City of San Carlos Municipal Code Chapter 8.50 establishes a Traffic Impact Fee to fund transportation improvements to help accommodate new residents and businesses brought to San Carlos as a result of new development projects . The Traffic Impact Fee is accounted for in the General Capital Project Fund (0025) restricted account.

Traffic Impact Fee Schedule
Category Fee Basis
Office $8,598.55 Per 1,000 Square Foot
Lab $3,663.73 Per 1,000 Square Foot
Manufacturing $5,009.59 Per 1,000 Square Foot
Warehouse $1,420.63 Per 1,000 Square Foot
Restaurant (High Turnover) $73,050.29 Per 1,000 Square Foot Retail $28,487.37 Per 1,000 Square Foot
Single Family Residential $7,402.23 Per Dwelling Unit
Apartment $4,187.12 Per Dwelling Unit
Condominium $4,187.12 Per Dwelling Unit
Hotel $4,187.12 Per Room
Medical Office $25,870.42 Per 1,000 Square Foot

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Traffic Impact Fee Collection and Expenditure Schedule
June 30, 2021 – June 30, 2025

The total ending balance for Fiscal Year 2024-25 was $1,100,000 and no Traffic Impact Fees funds have been held longer than five years. The San Carlos Ave Pedestrian Safety Improvements Phase III project, the Brittan Avenue Sidewalk Improvements (Between Rogers Ave & Sunset Drive) and Arroyo Avenue and Chestnut Street Safe Routes to School Improvements and Paving are currently identified in the capital improvement five- year plan as a recipient of funds. The City is continuing to collect fees for future projects.

Fund 26
Child Care Development Impact Fee
On June 27th, 2022, the City Council introduced Ordinance 1585 adding Chapter 8.52 to the San Carlos Municipal Code, establishing a C hildcare Development Impact Fee program for new nonresidential developments in the City. On August 22, 2022, the Council completed the second reading of Ordinance 1585, which became effective 30 days thereafter.

Child Care Development Impact Fee Schedule

Child Care Development Impact Fee Collection and Expenditure Schedule

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June 30, 2021 – June 30, 2025

The total ending balance for Fiscal Year 2024 -25 was $ 662,995 and no Child Care Development Impact Fee funds have been held for longer than five years. This fee will continue to be collected to build the fund balance, and potential projects will be identified as the fund balance reaches an appropriate level. The Council has adopted a Child Care Grant Program beginning in FY 2024-25 that will utilize these funds.

Fund 27
Park Land Dedication In-Lieu Fee
Park In-Lieu Fees are assessed pursuant t o the Quimby Act under Government Code Section 66447. Under the Quimby Act, local governments may require the dedication of land for parks or the payment of fees in-lieu of land dedication as a condition of subdivision map approval.

The Park Land Dedication In-Lieu Fee is collected and expended to purchase land, buy equipment, or construct improvements in neighborhood parks and recreation facilities serving such subdivisions. The fee is accounted for in the Park In-Lieu Fund (0027).

Calculation of Subdivision Park Land Dedication In-Lieu Fee The Municipal Zoning Code section 17.32.030 requires new subdivisions to pay Park and Recreation land dedication fees in-lieu of land dedication: Fee = A x B x C A = The acreage required per dwelling unit within the proposed subdivision for park and recreational facilities from this title (see Table 17.32.030), e.g. 0.00475

B = The number of dwelling units in the proposed subdivision, e.g. 18

C = The fair market value per acre of land in the proposed subdivision, e.g. $18,708,871

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Fee Example Calculation: Fee = (0.00475) x (18) x ($18,708,871) = $1,599,608.47

However, Code section 17.32.030 caps these fees at 50% of the highest in-lieu fee collected by the City for single-family residential subdivisions since March 1, 1976 (on an average, per dwelling basis). The highest fee collected for a single- family subdivision since 1976 was $38,084.63 per unit (in 2016: 2 lot subdivision at 1985 Carmelita).

Park In-Lieu Fee = 50% x ($38,084.63) = $19,042.32 per unit Total Fee = $342,761.76 ($19,042.32 x 18 units)
Park Facility Development Fee
Park Facility Development Fees are assessed pursuant to Law of the City of San Carlos (Ord. 1007 § 1 (part), 1988) per Municipal Code section 3.34. The fee is accounted for in the Park In-Lieu Fund (0027) and is used for the acquisition, development, renovation, and replacement of parks and recreational areas and their development, including equipment for recreational purposes.

The Park Facility Development Fee for Fiscal Year 2024-25 = $2,709 per bedroom

Park Land Dedication In-Lieu Fee and Park Facility Development Fee Collection and Expenditures Schedule
June 30, 2021 – June 30, 2025

The total ending balance for F iscal Year 2024-25 was $536,750 and no Park Facility Development Fee funds have been held for longer than five years. The Park Land Dedication In-Lieu Fee and the Park Facility Development Fee will continue to be collected to build the Fiscal Year 2021 2022 2023 2024 2025
% of Project
funded by
Fee to date
Commence
Approximate
Date
Beginning Fund Balance 1,533,928 $ 1,585,257 $ 2,055,962 $ 1,053,022 $ 914,223$ Revenues
Interest 321 (40,831) 18,948 48,684 27, 148 Park Facility Development Fees 194,212 150,248 95,455 34,914 75,794 P&R Dedication in-Lieu Fees 152,388 571,270 342,762 - 76,169 Total Revenues 346,921 680,687 457,164 83,598 179,111 Expenditures
Chilton Park Improvements 269,095 185,482 104 100% Completed Highland Park Tennis Court Resurfacing - 24,500 - 100% Completed Shade Structure Improvements 26,497 - - 100% Completed Installation of New Sports Field Lighting
at Flanagan and Stadium Fields - - 1,460,000 63% In progress North Crestview Park New Master Plan 145,049 20,778 74% In progress Parks Master Plan 3,052 362,170 81% In progress Trail Improvements, expansion and
connections 74,296 168,828 43% In progress Burton Park Infield Rennovations 4,808 3% In progress Total Expenditures 295,592 209,982 1,460,104 222,397 556,584 Revenues over (under) Expenditures 51,329 470,705 (1,002,940) (138,799) (377,473) Fund Balance June 30 1,585,257 $ 2,055,962 $ 1,053,022 $ 914,223$ 536,750$

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fund balance, and potential projects will be identified as the fund balance reaches an appropriate level.

Fund 28
Parking In-Lieu Fee
City of San Carlos Municipal Code Chapter 18.20 established a Parking In-Lieu fee to fund programs to reduce parking impacts including acquisition, development, and maintenance of parking facilities located in the parking assessment district; transportation system management projects (Ord. 1537 (Exh. C (part)), 2018; Ord. 1438 § 4 (Exh. A (part)), 2011); transit or paratransit passes, coupons, and tickets to be made available at a discount to employees and customers and to promote and support incentives for employee ride-sharing and transit use.

Parking In-Lieu Fee Collection and Expenditures Schedule June 30, 2021 – June 30, 2025

The total ending balance for Fiscal Year 2024-25 was zero as all funds have been allocated to capital projects. This fee has not been collected for the last few years due to the passage of AB 2097 which became effective on January 1, 2023. It eliminated the ability of local agencies to impose minimum parking requirements for development projects within a half-mile of a major transit stop, thereby rendering this in-lieu fee defunct.

Fund 29
Commercial Linkage Fee
The City of San Carlos Municipal Code Chapter 8.51 establishes a development impact fee for fund construction, acquisition , or financing of new existing multi -family affordable

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housing projects. The purpose of the Commercial Linkage Fee is to encourage the development and availability of housing affordable to a broad range of individuals and families with varying income levels within the city as mandated by State law, California Government Code Section 65580.

The Linkage Fee applies to commercial projects including changes in use, additions to floor area, and new developments as noted below.

Commercial Linkage Fee Schedule
Category Fee
Retail, Restaurant, & Personal Service $ 5.00 per net new square foot Hotel $10.00 per net new square foot
Office, Medical Office, Research & Development $20.00 per net new square foot Affordable Housing In-Lieu Fee for Residential Development Per Municipal Code section 18.16.030, for all residential ownership developments of five or more dwelling units, at least twenty percent of the total units shall be Below Market Rate (“BMR”) units restricted for sale to and occupancy by low -income households unless the residential development is exempt under Section 18.16.040. For all residential rental developments of seven (7) or more dwelling units, at least fifteen percent (15%) of the total units shall be below market rate units restricted for rent to and occupancy by low and very low- income households unless the residential development is exempt under Section 18.16.040.

At least fifteen percent of the total units in a residential rental development shall be below market rate units, of which ten percent shall be affordable to very low-income households and five percent affordable to low-income households.

For a residential ownership development of one (1) dwelling unit, or for an addition of one thousand (1,000) square feet or more to an existing dwelling unit that may be sold individually, the builder shall pay an in-lieu fee or construct an accessory dwelling unit.

For a residential development that creates one (1) additional lot, or two (2) to six (6) rental dwelling units and/or lots, or two (2) to four (4) ownership dwelling units and/or lots, or for a residential development that triggers a decimal fraction of less than one-half (0.5), the builder shall pay an in lieu fee for the fractional unit requirement or build a below market rate unit affordable to a low-income household.

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For residential rental developments, the following table applies:

Commercial Linkage and Affordable Housing In-Lieu Fees deposited in the Housing In-Lieu Fund (0029) shall be used in accordance with the City’s Housing Element, or subsequent plan adopted by the City Council to maintain or increase the quantity, quality , and variety of affordable housing units or assist other governmental entities, private organizations , or individuals to do so. Permissible uses include, but are not limited to, land acquisition, new construction, and other pursuits associated with providing affordable housing. It may also be used to cover reasonable administrative or overhead related expenses associated with the administration of the program.

For Partial Fee based on Applicable Project Size:

Step 1: Find line for Total Units in project under Column A Step 2: Go to Column H for Partial Fee Obligation per square foot S
tep 3: Multiply figure in Column H by the actual average square feet per unit in project

A B D F G H
Total
Units
BMR 20%
Obligation
Low
Units
Partial
Low Unit
Obligation
Incremental
Partial Fee
Obligation
P
er Avg. Sq. Ft.

Cumulative
Project Partial
Fee Obligation
P
er Avg. Sq. Ft.

Total
Units
1 0.20 0.00 0. 20 4.22 4.22 2 0.40 0.00 0.40 11.82 23.63 2 3 0.60 0.00 0.60 19.41 58.24 3 4 0.80 0.00 0.80 27.01 108.04 4 5 1.00 1.00 - - - 5 6 1.20 1.00 0.20 42.20 42.20 6 7 1.40 1.00 0.40 42.20 84.40 7 8 1.60 2.00 - - - 8 9 1.80 2.00 - - - 9 10 2.00 2.00 - - - 10 11 2.20 2.00 0.20 42.20 42.20 11 12 2.40 2.00 0.40 42.20 84.40 12

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Commercial Linkage and Affordable Housing In-Lieu Fees
Collection and Expenditures Schedule
June 30, 2021 – June 30, 2025

The total ending balance for Fiscal Year 2024-25 was $3,215,160 and no Commercial Linkage and Affordable Housing In-Lieu Fees funds have been held longer than five years. On June 26, 2023, the City Council adopted Resolution 2023-086 to approve a total City loan amount of $12,860,000 to the existing predevelopment loan and to appropriate an additional $1,000,000 from the City’s Affordable Housing In-Lieu Fund to capital project C9754 (Affordable Housing Site Acquisition/Construction) to cover these costs and support the construction of an affordable housing project at 1232-1244 Cherry Street.

Fund 6
Sewer Capacity Charge
San Carlos Municipal Code Chapter 13.04 establishes a sewer capacity charge to recover costs for the City’s sewer system infrastructure and assets that provide benefit to the new or expanded connection. Water and sewer capacity charges are governed by Califor nia Government Code section 66013. The sewer capacity charge applies based on the estimated increase in volume of wastewater discharge from each new or expanded connection and shall be adjusted annually based on the change in the Engineering News-Record Construction Cost Index (20-Cities Average) from the March 2016 Index. The fee is accounted for in the Sewer Enterprise Fund (0006).

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Sewer Capacity Charge Schedule

Sewer Capacity Charge Collection and Expenditures Schedule June 30, 2021 – June 30, 2025

The total ending balance for Fiscal Year 2024-25 was zero as revenues were equal to expenditures as they are every year as all funds received are utilized in the annual sewer system rehabilitation program capital project. The fund balance and continued collection of sewer capacity charge will be used for improvement and expansion of sewer facilities, including the collection system, and any other purpose allowed by State and Federal law.

Sewer Connection Fee
In accordance with Municipal Code section 13.04.025 paragraph F, the City has, until recently, collected the sewer connection fees adopted by Silicon Valley Clean Water (“SVCW”) from Fiscal Year 2021 2022 2023 2024 2025
% of Project
funded by
Fee to date
Commence
Approximate
Date
Beginning Fund Balance -$ - $ - $ - $ - $ Revenues
Sewer Capacity Fees 813,350 1,424,311 207,778 1,289,901 39,218 Total Revenues 813,350 1,424,311 207,778 1,289,901 39,218 Expenditures
Sewer System Improvements 813,350 1,424,311 207,778 1,289,901 39,218 44% Annual Total Expenditures 813,350 1,424,311 207,778 1,289,901 39,218 Revenues over (less than)
Expenditures - - - - - Fund Balance June 30 -$ - $ - $ - $ - $

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new or expanded connections to the sewer system in conformance with the City’s obligations under the Joint Powers of Authority Agreement between the City and SVCW. The adopted rate was $7.91 per gallon per day. The City ceased collecting this fee during the year after reaching its full allotment of additional sewer treatment capacity stipulated in the original Silicon Valley Clean Water Joint Powers Agreement.

Sewer Connection Fee Pass-Through Collection and Disbursement Schedule June 30, 2021 – June 30, 2025

The total fund balance for Fiscal Year 2024-25 was $523,383 and no Sewer Connection Fee funds have been held for longer than five years.

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CITY COUNCIL

STAFF REPORT
MEETING DATE: November 24, 2025
ITEM TITLE: Adopt a Resolution Accepting the City of San Carlos' Annual Comprehensive Financial Report (ACFR) for the Fiscal Year Ending June 30, 2025.

RECOMMENDATION:

Staff recommend that the City Council adopt a Resolution accepting the City of San Carlos’ Annual Comprehensive Financial Report (ACFR) for the fiscal year (FY) ending June 30, 2025.

FISCAL IMPLICATIONS:

There is no fiscal impact associated with accepting the FY 2024-25 ACFR.

BACKGROUND:

The financial statements of the City of San Carlos for the fiscal year ending June 30, 2025 were prepared by the Administrative Services Department staff and examined by independent auditing firm, Badawi and Associates, in accordance with Governmental Accounting Standards Board (GASB) Statement 34. It is the opinion of the auditors that the financial statements present fairly, in all material respects, the respective financial position of the City as of June 30, 2025, and that the financial statements were prepared in conformity with generally accepted accounting principles (GAAP).

The Administrative Services Department incorporates the financial statements into the ACFR, the purpose of which is to present an easily readable and organized report on the financial transactions of the City. The ACFR provides members of the public with a wide variety of information needed to evaluate the financial condition of the City. The final step in the formal process of preparing these financial statements is to transmit them to the City Council for acceptance.

ANALYSIS:

During its audit, Badawi and Associates also assessed the City’s internal controls over financial reporting to determine whether the City’s audit procedures are appropriate for the purpose of expressing opinions on the financial statements. Badawi and Associates did not find any deficiencies and issued a clean report. The Transmittal Letter and the Management, Discussion and Analysis (MD&A) sections of the ACFR summarize the financial results for the fiscal year ending June 30, 2025.

The change in net position, compared to the previous fiscal year, was an increase of $14.0 million.

As of June 30, 2025, the citywide net position was $421.2 million.

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The City’s General Fund revenues increased by $0.2 million, or 0.4%, compared to the prior fiscal year amount of $65.9 million. General Fund revenues, including vehicle in-lieu, charges for services, business registration, property tax, and transient occupancy tax increased compared to the prior year.

The City’s General Fund expenditures totaled $59.1 million, an increase of $5.3 million, or 9.9%, from prior year expenditures of $53.8 million. The increase in expenditures was primarily caused by making a $4 million additional discretionary contribution (ADC) payment to CalPERS towards the unfunded pension liability (an increase of $1 million compared to the prior year), increases in the public safety agreements, higher professional services expenses to assist with the increase in the City’s development and public works projects, and increases in salaries and benefits per the negotiated employee agreements.

The net increase in fund balance for the year ending June 30, 2025, in the General Fund was $3.8 million bringing the balance to $62.8 million.

Additional details and information regarding the other operating and capital funds can be found in the attached financial statements, MD&A, and notes to the financial statements.

ALTERNATIVES:

The alternatives available to the City Council include:

1. Adopt a Resolution accepting the City of San Carlos’ Annual Comprehensive Financial Report for the fiscal year ending June 30, 2025; or

2. Do not adopt the Resolution; or

3. Provide staff with alternative direction.

Respectfully submitted by:

Rebecca Mendenhall, Administrative Services Director
Approved for submission by:
_______________________
Jeff Maltbie, City Manager
ATTACHMENT(S):

1. Resolution

2. FY 2024-25 Annual Comprehensive Financial Report

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RESOLUTION NO. 2025 – ____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN CARLOS ACCEPTING THE CITY OF SAN CARLOS’ ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR) FOR THE FISCAL YEAR ENDING JUNE 30, 2025.

WHEREAS, the City of San Carlos contracted with the audit firm Badawi and Associates to conduct an audit of the City’s financial records in accordance with Governmental Accounting Standards Board Statement 34; and

WHEREAS, the financial statements for the fiscal year ending June 30, 2025, as prepared by said firm, have been completed; and

WHEREAS, it is recommended that the City Council accept the financial statements, known as the Annual Comprehensive Financial Report.

NOW, THEREFORE BE IT RESOLVED, that the San Carlos City Council hereby accepts the City’s Annual Comprehensive Financial Report for the fiscal year ending June 30, 2025. * * * * *
I, City Clerk Crystal Mui, hereby certify that the foregoing Resolution was duly and regularly passed and adopted by the City Council of the City of San Carlos at a scheduled meeting thereof held on the 24th day of November 2025 by the following vote:
________________________________
CITY CLERK of the City of San Carlos
APPROVED:
___________________________
MAYOR of the City of San Carlos
AYES, COUNCILMEMBERS:

NOES, COUNCILMEMBERS:

ABSENT, COUNCILMEMBERS:

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CITY OF SAN CARLOS, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2025

Prepared by

CITY OF SAN CARLOS FINANCE DIVISION

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City of San Carlos
Annual Comprehensive Financial Report
For the year ended June 30, 2025

Table of Contents

Page
i

INTRODUCTORY SECTION

Letter of Transmittal .......................................................................................................................................................... v Elected and Appointed Officials ..................................................................................................................................... xxii The Residents of the City of San Carlos ....................................................................................................................... xxiii City-Wide Organizational Chart .................................................................................................................................... xxiv GFOA Certificate of Achievement for Excellence in Financial Reporting ..................................................................... xxvi

FINANCIAL SECTION

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

Management’s Discussion and Analysis ..................................................................................................................... 5

Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position ......................................................................................................................................... 26 Statement of Activities .............................................................................................................................................. 28

Fund Financial Statements:

Governmental Fund Financial Statements:

Balanc e Sheet ....................................................................................................................................................... 34 Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position .......................................................................................... 35 Statement of Revenues, Expenditures and
Changes in Fund Balances ................................................................................................................................ 36 Reconciliation of the Governme ntal Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities ................................................................................................... .................................... 37 Budgetary Comparison Statement by Department – General Fund ..................................................................... 38

Proprietary Fund Financial Statements:

Statement of Net Position ..................................................................................................................................... 42 Statement of Revenues, Expens es and Changes in Net Position ........................................................................ 43 Statement of Cash Flows .................................................................................................... .................................. 44

Fiduciary Fund Financial Statements:

Statement of Fiduc iary Net Position ...................................................................................................................... 47 Statement of Changes in Fiduciary Net Position .................................................................................................. 48

Notes to the Basic Financial Statements ..................................................................................................................... 51

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City of San Carlos
Annual Comprehensive Financial Report
For the year ended June 30, 2025

Table of Contents

Page
ii
FINANCIAL SECTION (Continued)

Required Supplementary Information:

Defined Benefit Pension Plans:

Schedule of the City’s Proportionate Share of the Net Pension Liability and Related Rati os – CalPERS Cost-Sharing Plan ........................................................................ 108 Schedule of Pension Plan Contri butions – CalPERS Cost-Sharing Plan ........................................................... 110 Schedule of Changes in the Net Pens ion Liability and Related Ratios – PARS Agent Multiple-Employer Longevity Recognition Plan .................................................................................. 112 Schedule of Plan Contributions – PARS Agent Mu ltiple-Employer Longevity Recognition Plan ....................... 114

Other Post Employment Benefit Plan:

Schedule of Changes in OPEB Liability and Related Ratios – Other Post-Employment Benefits Plan ............. 116 Schedule of Plan Contributions – Other Post-Employment Benefits Plan .......................................................... 118

Supplementary Information:

Statements of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual:

City Capital Improvement Fund........................................................................................................................... 122 Housing Capital Projects Fund ............................................................................................................................ 123 Gas Tax .................................................................................................................... ........................................... 124

Nonmajor Governmental Funds:

Combining Balance Sheet ................................................................................................................................... 126 Combining Statement of Revenues, Expenditures and Changes in Fund Balances .......................................... 128 Statements of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual:

Special Revenue Funds:

NPDES .................................................................................................................... ..................................... 130 Po lice Grants ................................................................................................................................................ 131 San Carlos Library Tenant ............................................................................................................................ 132 Capital Projects Funds:

Equipment Replacement .................................................................................................... .......................... 133 Measure A ................................................................................................................ .................................... 134 Measure W ................................................................................................................ ................................... 135 Park Fee ................................................................................................................. ...................................... 136 P a r k i n g I n - L i e u .............................................................................................................................................. 137 Child Ca re Development .............................................................................................................................. 138 Debt Service Fund:

San Carlos Library Bonds ................................................................................................. ............................ 139

Internal Service Funds:

Combining Statement s of Net Position ............................................................................................................... 142 Combining Statements of Revenues, Ex penses, and Changes in Net Position ................................................. 143 Combining Statem ents of Cash Flows ................................................................................................................ 144

Custodial Funds:

Combining Statement of Fiduciary Net Position ................................................................................................. 146 Combining Statement of Chang es in Fiduciary Net Position ................................................................... ........... 147

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City of San Carlos
Annual Comprehensive Financial Report
For the year ended June 30, 2025

Table of Contents

Page
iii
STATISTICAL SECTION (Unaudited)

Financial Trends:

Net Positions by Component ............................................................................................................................... 151 Changes in Net Position ...................................................................................................................................... 152 Fund Balances of Governmental Funds ............................................................................................................. 156 Changes in Fund Balances of Governmental Funds .......................................................................................... 157

Revenue Capacity:

Assessed Valuation, Tax Rates and Tax Levies ................................................................................................. 158 Direct and Overlappi ng Property Tax Rates ....................................................................................................... 159 Principal Property Tax Payers ............................................................................................................................. 160 Property Tax Levie s and Collections .................................................................................................................. 161 Taxable Sale s by Category ................................................................................................................................. 162

Debt Capacity:

Ratios of Outs tanding Debt by Type ................................................................................................................... 163 Ratio of General Bonded Debt Outstanding ...................................................................................................... 164 Pledged Rev enue Coverage ............................................................................................................................... 165 Direct and Ov erlapping Debt ............................................................................................................................... 166 Computation of Legal Bonded Debt Margin ........................................................................................................ 167

Demographic and Economic Information:

Demographic and Ec onomic Statistics ............................................................................................................... 168 Principal Employers ............................................................................................................................................ 169 Full Time Equivalent Ci ty Personnel by Function ............................................................................................... 170

Operating Information:

Operating Indicators by Function/Program ......................................................................................................... 171 Capital Asset Statisti cs by Function/Program ..................................................................................................... 172

OTHER INDEPENDENT AUDITOR’S REPORTS

Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statement s Performed in Accordance With Government Auditing Standards .................. 173

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iv

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No
vember 24, 2025
To the Members of the City Council and Residents of San Carlos:

It is the policy of the City of San Carlos to annually publish a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by an independent firm of certified public accountants. Pursuant to that requirement, we hereby issue the annual comprehensive financial statements of the City of San Carlos (the City) for the fiscal year ended June 30, 2025.

This report consists of management’s representations concerning the finances of the City .

Consequently, management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, management of the City established a comprehensive internal control framework that is designed both to protect the City’s assets from loss, theft, or misuse and to compile sufficiently 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 benefits, the City’s comprehensive framework of internal controls was designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.

The City’s financial statements have been audited by Badawi & Associates, a firm of certified public accountants. The goal of the independent audit is to provide reasonable assurance that the financial statements of the City for the fiscal year that ended June 30, 2025 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. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City’s financial statements for the fiscal year that ended June 30, 2025 were fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report.

GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of a 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 rep ort of the independent auditors.
v

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Profile of the Government
San C
arlos was incorporated 100 years ago, in 1925. This Annual Comprehensive Financial Report (ACFR) helps to mark this centennial year as we celebrate this historical milestone and also the people - past and present – that have shaped this wonderful city, throughout the last century, and maintained its id entity as the “City of Good Living”. San Carlos is located in the center of the San Francisco Bay Area region of the State of California, which is considered to be one of the most expensive areas of the state and country in which to live. San Francisco is 25 miles north and San Jose is 25 miles south.

San Carlos boasts an ideal climate, good government, an outstanding school system, attractive residential areas, a fine shopping district, excellent restaurants, a modern industrial and commercial area, and plenty of open space. As part of the northern end of Silicon Valley, San Carlos hosts several technology companies and is the address of many West Coast biotech and medical instrumentation firms. The City currently occupies a land area of six square miles and serves a population of approximately 30,000.

The City is a General Law city, empowered to levy a transient occupancy tax on hotel/motel stays and a business registration fee on for-profit businesses within its boundaries. It also is empowered by state statute to extend its corporate limits by annexation, which occurs periodically when deemed appropriate by the City Council.

The City has operated under the council-manager form of government since 1925. Policy- making and legislative authority are vested in a City Council consisting of the Mayor, selected by the Council, and four other Councilmembers. The City Council is responsible for, among other things, passing ordinances, adopting the budget, appointing advisory commissions/committees, and hiring both the City Manager and City Attorney. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day-to-day operations of the City, and for appointing the heads of the various departments. The City Council is elected on a non-partisan, at large basis.

Councilmembers serve four-year staggered terms, with two or three Councilmembers elected every two years. The Mayor and Vice Mayor are selected from among the five Councilmembers to serve one-year terms.

The City provides a full range of services, including: police and fire; the construction and maintenance of highways, streets, and other infrastructure; and recreational activities and cultural events.

Budget Process
Th
e goals of the City’s budget process are to identify necessary and/or desirable service increase options and identify possible service reduction options, which are all combined to reach a balanced and sustainable budget. Each City department is provided with a base budget with certain inflationary increases and is given an opportunity to request additional funding, if needed. The City Manager, Assistant City Manager, Administrative Services Director, and the Financial Services Manager meet with each department individually to discuss and finalize the proposed budget recommendations. In the second year of the two-year budget cycle, departments are given another opportunity to review their projections and budgets and request additional funding, if needed. Those recommendations are also reviewed by the City Manager, Assistant City Manager, Administrative Services Director, and Financial Services Manager. The City Manager then vi

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presents the proposed biennial budget or mid-cycle review budget to the Council for review prior to the end of June every year. The Council holds a public hearing on the proposed budget and adopts a final budget by the end of June, the close of the City’s fiscal year. The appropriated budget is prepared by fund, function/program (e.g., public safety) and department (e.g., Community Development). Department heads may make transfers of appropriations within a department. Transfers of appropriations between departments, but within the same fund, can be approved administratively (by the Administrative Services Director or City Manager). However, transfers of appropriations that change total fund appropriations must be approved by the City Council. Expenditures that exceed appropriations at the fund level must be approved by the City Council.

Budgets are adopted on a basis consistent with GAAP. A budget-to-actual comparison for the General Fund is presented in the Fund Financial section of the accompanying financial statements and comparisons for all other individual governmental funds for which an appropriated annual budget has been adopted are presented in the Supplementary Information section of the accompanying financial statements.

The Biennial Budget for Fiscal Years (FY) 2023-25 was adopted by the Council via Resolution 2023-066 on June 12, 2023. The Mid-Cycle Budget Update for FY 2024-25, or the period ending June 30, 2025, was adopted by the Council via Resolution 2024-069 on June 10, 2024.

Economic Condition and Financial Outlook
Th
e information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment in which the City operates.

Labor Market . According to the August 2025 report from the California Employment Development Department (EDD), California’s unemployment rate was 5.5% compared to

5.3% in August of the previous year. Over the past year, California employers have added 137,900 jobs, which averages out to 11,492 jobs gained per month since August 2024.

There were 367,379 people certifying for unemployment insurance benefits during the August 2025 sample week which compares to 386,665 people in July 2025 and 382,640 people in August 2024.

At a more local level, according to the EDD, as of August 2025, there were an estimated 404,1
00 people in employment in San Mateo County, an increase of 3,400 from August 2024. The unemployment rate in the county has remained level over the last year at 4.1% with some fluctuations over the period, driven largely by a broader trend of slowing job growth particularly in the technology and biotechnology sectors. Related to this, the San Carlos unemployment rate has climbed slightly to 4.0% from 3.4% a year earlier. This compares with an adjusted unemployment rate of 5.5% for California as of August 2025 and 4.3% for the nation during the same period.

Inflation. As of September 2025, U.S. inflation has eased but remains slightly above the Federal Reserve’s 2% target over the longer term. The Consumer Price Index (CPI) rose about 2.9 percent year-over-year in August 2025. Economic growth has slowed, with Gross Domestic Product (GDP) projected to rise 1.6 percent in 2025, reflecting a cooling labor market and weaker demand. In response, the Federal Open Market Committee vii

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(FOMC) cut the federal funds rate by 0.25% in September 2025 to a target range of 4.00–

4.25 percent — the first rate cut of the year. The Fed reaffirmed its long-run 2 percent inflation goal and noted that while inflation pressures have moderated, risks to employment and growth have increased.

Sales Taxes. San Carlos’s sales tax receipts adjusted for economic data for FY 2024-25 were 0.8% above the prior year. Building and Construction, Business and Industry, and Restaurants and Hotels were the main categories that experienced an increase in revenue, while General Consumer Goods, Autos and Transportation, Fuel and Service Stations, Food and Drugs, and the State and County pools saw a decline in revenue. The September Federal Funds rate reduction may spur some changes in consumer spending patterns but overall does not translate into a short-term gain in sales taxes. Given other challenges at the macroeconomic level, such as tariffs driving uncertainty, it is expected that there will be a slight reduction in sales tax revenue in the next fiscal year, returning to growth again the year after.

Property Taxes. On July 2, 2024, the San Mateo County Assessor's Office released the 2025-26 Local Assessment Rolls for each agency in the county. Countywide, the assessment roll increased by $15.6 billion, or 4.8%, to a record high of $341.1 billion in assessed value. The assessment roll for San Carlos increased by $890 million, or 5.13%, for a total of $18.4 billion. In comparison, in 2024-25, the City's assessment roll increased by 5.64%. The changes compared to the prior year reflect the continued impact of higher mortgage rates, a slowdown in commercial construction, and a low inventory of single- family homes available for sale.
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 Autos & Transportation
Building & Construction
Business & Industry
Food & Drugs
Fuel & Service Stations
General Consumer Goods
Restaurants & Hotels
State & County Pools
Thousands
Sales Tax by Category
Fiscal Year 2024 Fiscal Year 2025
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Ho
me Sales. According to the San Mateo County Association of Realtors (SAMCAR), as of June 2025, the median sale price of a single-family residential home in San Carlos is $2.755 million, as compared to $2.155 million in June 2024. This is a 9% decrease in median sale price and contrasts with a countywide median sales price of $2 million. The median price per square foot in the city has increased by 5.7% since June 2024. This represents a strong upward trend in home valuations over the last year following a gradual decline seen during the prior year.

Building Activity. Commercial and residential building permits issued for FY 2024-25 totaled $5,139,723. Permit totals were down 58.6% from a year ago. Permits issued for the first quarter of FY 2025-26 totaled $1,092,198, which represents an increase of 26.9% from the first quarter of FY 2024-25. Both of these changes are due to the timing of large development projects. As noted later in this report, there are a number of large projects in process and we expect permit revenue to increase over the next few years accordingly.

Net Pension Liability. The CalPERS Public Employees’ Retirement Fund (PERF) is the primary pension fund in the City. The PERF has experienced significant fluctuations in returns over the last several years. The CalPERS Board made changes in the discount rate assumptions in FY 2021-22, lowering it from 7.0% to 6.8%, which has the effect of increasing the Unfunded Actuarial Liability (UAL) and the overall total Net Pension Liability (NPL). Discount rate changes, in addition to volatility in investment, drive the annual pension obligations of the City. Since the actuarial reports are done following the end of the fiscal year, there is a delay in the impact to the City. In FY 2021-22, the PERF experienced a -6.1% return which, combined with the reduction in the discount rate, increased our net pension obligation significantly in FY 2022-23 as shown in the chart below.
$0
$2,000,000,000
$4,000,000,000
$6,000,000,000
$8,000,000,000
$10,000,000,000
$12,000,000,000
$14,000,000,000
$16,000,000,000
$18,000,000,000
$20,000,000,000

TAXABLE ASSESSED VALUE
Secured Unsecured Total AV
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The C
ity has previously used $12 million of prior years’ savings/surpluses to pay down our unfunded pension liabilities. This has resulted in annual and long-term savings. Following the large increases in CalPERS costs in FY 2022-23, in January 2024, the City paid a further $3 million of prior years’ savings toward the UAL and in April 2025, another $4 million towards the UAL. These additional payments over the last two years are estimated to generate combined gross savings of approximately $10.6 million through 2045, or operating savings of $829,000 annually, on average, over the next ten years.

As the attached financial statements will reflect, the City’s conservative budgeting coupled with the unexpected growth, kept the City in strong financial shape.

Financial Policies
In
June 2008, the City Council approved financial policies formalizing long-standing practices used in the past to prepare the budget. The policies were established to ensure that the City's finances are managed in a manner that will: (1) continue to provide for the delivery of quality services; (2) maintain and enhance service delivery as the community grows in accordance with the City’s General Plan; (3) guarantee a balanced budget annually assuring that the City is always living within its means; and (4) establish reserves necessary to meet known and unknown future obligations. These financial policies are reviewed and updated as needed, every two years, as part of the biennial budget process.

The City Council most recently adopted the financial policies on May 12, 2025 via Resolution 2025-033.

Financial Control
Th
e Finance Division of the City is responsible for: establishing and maintaining an appropriate internal control structure surrounding the safeguarding of assets; the reliability of financial records to prepare the financial statements in conformity with GAAP; and $-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 Safety Miscellaneous Total Net Pension Liability
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maintaining asset accountability. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. We believe the City's systems of internal accounting controls adequately safeguard assets and provide reasonable assurance that financial transactions are properly recorded.

Long-term Financial Planning and Major Initiatives
Long-term Financial Planning

The City Council and City management continue to emphasize “structural balance” in the City’s financial planning. The City has established economic reserves to meet future opportunities and unexpected changes and has structurally aligned its revenues and expenditures to provide for a sustainable financial balance. To that end, the City:
x Budgets revenues conservatively and expenditures at full cost; x Maintains the condition of City facilities and infrastructure to optimize use and minimize future repair/replacement costs;
x Maintains a highly motivated, talented, and well-trained workforce to serve the needs of the community;
x Retains municipal ownership of commercial properties and uses ground leases to diversify the City’s revenue streams;
x Sets aside City resources to pay for capital improvement program projects and secure outside funding and/or low-cost debt financing, if needed; and x Limits the growth of on-going expenses for City services to a financially sustainable level.

In FY 2024-25, the City Council and executive management staff continued the Strategic Planning process begun in FY 2005-06. As part of this process, the City retained two facilitators to lead councilmembers and staff through the City’s Strategic Planning process.

The process resulted in the review of the City’s Mission Statement, Vision Statement, Core Values, and the establishment of Goals and Objectives. The City Council adopted the 2025 Strategic Plan at its April 14, 2025 meeting after a series of three strategic planning meetings. The three meetings included a public Council Mini Retreat on October 14, 2024, a public Strategic Planning Retreat on February 6, 2025, and an Executive and Management Team Meeting on March 20, 2025. The City Council appropriates the funds necessary to meet operating and capital activities and the adopted strategic goals and objectives.

Major Events and Initiatives
Hi
ghlights of the City’s major events and initiatives that were in progress as of June 30, 2025, or soon after the year end, are as follows:
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Downtown Specific Plan
The City kicked off the Downtown Specific Plan (Plan) project in March 2022, to create a new vision for Downtown San Carlos, including Laurel Street, El Camino Real, and the cross streets from Holly Street to Greenwood Avenue. Since then, the project has advanced significantly with the production of a public draft Downtown Specific Plan document during FY 2024-25, following extensive community engagement.

The final Downtown Specific Plan is a policy document that will:
x Guide the evolution of the downtown area for the next twenty years. x Create welcoming, well-designed spaces that reflect the charm and character of San Carlos.
x Support local businesses, attract innovation, and keep our downtown thriving.
x Make it easier and safer to get around - on foot, by bicycle, car, or transit. x Offer smart solutions to balance parking needs and reduce congestion. x Enhance parks, plazas, and shared spaces that bring people together. x Celebrate creativity and community identity through meaningful public art installations.
x Build a greener, more resilient downtown that’s ready for the future. x Upgrade the systems that keep our city running smoothly. x Turn vision into reality with clear steps and ongoing community partnership.

To implement improvements contained in the Plan, a strategic phasing plan was developed due to the scale and complexity of the project. Thirteen different segments were identified and designed to minimize disruptions while ensuring continuous community access. The precise sequencing of the phases will ultimately be decided by the City Council and based on funding availability. This approach allows for flexibility and adaptation as the project progresses, ensuring that the improvements align with the long-term vision for the area. These phases, mapped across different streets, are:

Phase 1A – Harrington Park
Phase 1B - 700 Block of Laurel
Phase 2 – 600 Block East Alley Parking Improvements
Phase 3 - 600 Block Laurel Street and the New Plaza
Phase 4 - San Carlos Avenue 1100 and 1200
Phase 5 - 700 and 800 Block Alleyways
Phase 6 – 800 Block Laurel Street
Phase 7 – Arroyo Avenue
Phase 8 – Olive Street
Phase 9 – Cherry Street (between El Camino Real and Walnut Street) Phase 10 – Walnut Street
Phase 11 – Elm Street
Phase 12 – San Carlos Avenue 1300 and 1400 Blocks and Cherry Street (Between Walnut Street and Chestnut Street)
During FY 2024-25, a number of City Council study sessions were held to review the broader Plan and to discuss specific design elements of Phases 1A and 1B. At the June 9, 2025 City Council meeting, the City’s Capital Improvement Program xii

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(CIP) budget was adopted which included funding for design and construction of Phase 1A and partial funding for design and construction of Phase 1B.

A public hearing to consider the final Downtown Specific Plan for adoption will take place on November 24, 2025.

Below Market Rate (BMR) Housing and Accessory Dwelling Units (ADUs) The City’s 2025 Strategic Plan set objectives to increase the number of below market rate (BMR) housing units to meet local and regional housing requirements.

The City continues to pursue development of a 33-unit affordable housing project at 1232-1244 Cherry Street. The project is a partnership between the City and non- profit affordable housing developers, HIP Housing and Eden Housing. The City acquired the property in February 2022 to create a 100% affordable housing project. Since then, the City has approved a total loan amount of $12.9 million to the developer, which includes the predevelopment loan, to facilitate the purchase of the property from the City and construction of the housing units. Purchase of the property from the City was finalized in July 2025. Residential construction has begun and is expected to be completed late 2026.

The City had previously completed a 23-unit, 100% affordable project at 817 Walnut Street with a $7.3 million loan from the City of San Carlos, and a generous partnership with Charities Housing, the local nonprofit organization that developed the property and manages the 23-unit building.

The City is also planning a future affordable housing development on the properties located at 1800 El Camino Real and 1131-1133 Eaton Avenue. It is estimated that this site has a realistic capacity to produce 77 units of housing, of which 65 could be affordable to Very Low-, Low-, and Moderate-Income households. It is possible that the site could provide for 99 units or more of housing, depending on the impact of site constraints such as creek setbacks, building design options, and density bonuses that may be granted for achieving certain affordable housing goals. The City anticipates releasing a request for proposals (RFP) in the near future to identify a non-profit affordable housing developer to assist with the project.

Alternative dwelling units (ADUs) are also being leveraged by the City to create additional housing in San Carlos. During the year ended June 30, 2025, the City approved a total of 26 dwelling units, including one single-family unit and 25 ADUs.

In addition, the City is an active member of a non-profit ADU Resource Center (21 Elements) that began assisting San Carlos for ADU-related activities in June 2024.

Northeast Area Specific Plan
As a part of the City's 2022 Strategic Plan, the City Council established a goal to create a Northeast Area Specific Plan in response to continued development interest in the area. The Plan focuses on the area north of Holly Street, to the San Carlos City limits at Belmont Creek, and between U.S. Highway 101 and Old County Road. The Northeast Area Specific Plan aims to create a vision, policies, xiii

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and standards to guide new development in the northeast area of San Carlos in a way that supports existing and new businesses, residents, and the overall community.

Since the City Council’s endorsement of the Draft Land Use Plan in February 2024, City staff and the consultant team have begun drafting the Specific Plan and initiated the environmental and technical analyses. Work to date has included studies on traffic and circulation, strategizing a mobility action plan, streetscape design, infrastructure assessment, development of design standards, review of community benefits and open space requirements, and an Environmental Impact Review study, as well as involvement of the broader community through regular meetings and study sessions to gather input and feedback on the plan. All these efforts will help create the Draft Northeast Area Specific Plan, which is expected to be ready for adoption in spring 2026.

The Specific Plan will:
Carefully and creatively plan for new development and construction Celebrate the area’s industrial legacy and leverage new opportunities Introduce housing within the area
Support industrial access and provide ways for people to walk, bicycle, take transit, and drive to and through the area
Champion district resiliency and thoughtfully plan for the future of both the natural and built environments
Address environmental needs, including flooding from Belmont Creek, the potential presence of hazardous substances, and other needs.

Infrastructure Improvements
The City of San Carlos has allocated over $164 million over the next five years through June 30, 2030. These major infrastructure projects can be broken down into the following categories:
Sewage Improvements and Replacements - $60.0 million
Street Improvements - $44.4 million
Safe Routes to Schools - $7.4 million
Storm Drainage System Improvements - $5.2 million
Parks and Recreation Projects - $1.5 million
Traffic and Transit - $18.3 million
General Planning and Zoning Amendments - $16.5 million Childcare investments - $8 million
Facilities and Technology Improvements - $3.2 million The City continues to implement the Bicycle and Pedestrian Master Plan to encourage alternative modes of transportation and improve mobility. The San Carlos Avenue pedestrian safety improvements phase III – Wellington to Beverly project was substantially complete by the end of the year. The Brittan Avenue Sidewalk Construction – Sunset Drive to Rogers Avenue project has progressed towards completion projected for December 2025, and the Alameda de las Pulgas Corridor Improvement project is in progress and due to be completed in 2027. xiv

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The City also continues to identify and implement citywide street and intersection projects and initiatives to improve traffic flow and parking, utilizing smart technologies, in San Carlos. In April 2024, the City Council adopted the Traffic Signal Master Plan, which includes, among other things, upgrading 15 signal pedestrian heads for countdown timing, installing Kimley-Horn Integrated Transportation System (KITS) at 12 intersections, upgrading 148 pedestrian pushbuttons to accessible pedestrian signal systems, piloting up to two intersections for video signal detection, and re-timing signals along upper East San Carlos Avenue.

In an ongoing effort to improve pedestrian safety and implement Safe Routes to Schools Program (“SRTS”) recommendations, improvements at Arroyo Avenue and Chestnut Street are currently underway and anticipated to be completed in 2026. Similarly, intersection and sidewalk improvements to primary school routes to schools are also underway on Tamarack and Belle Avenues, Elm Street and Arroyo Avenue, Belmont Avenue and Cedar Street, and St. Francis Way and Cedar Street. Additional SRTS projects are in the recently approved CIP pipeline.

The City is in the process of pursuing a number of grants to help finance plans for short-, mid-, and long-term bicycle and pedestrian improvements at the U.S. 101/Holly Street interchange, and has begun the process to identify a departmentwide Public Works Department technology solution to streamline project workflows and protect the City’s infrastructure improvements.

Climate Mitigation and Adaptation Plan
The City of San Carlos adopted a Climate Mitigation and Adaptation Plan (CMAP) in September 2021. The CMAP serves as a blueprint for how San Carlos will address climate change by reducing our community’s greenhouse gas emissions and adapting to changing climate conditions.

The CMAP sets the goal of reducing emissions 40% by 2030 and 80% by 2050 and includes 45 strategies to achieve those goals with a planning horizon out to 2050. To this end, the City is in the process of developing a citywide electric vehicle (EV) plan to install 15 EV charging stations by 2030 and 25 by 2050, including issuing a RFP to install charging stations in City-owned parking lots.

After the completion of the San Carlos Youth Center solar array installation in June 2024, the City continued its focus on solar energy for public buildings by signing two similar agreements with PCE for the installation of solar arrays on the Adult Community Center and Library at no cost to the City, which are due to be completed in February 2026 and February 2027, respectively. In addition, the City secured a $457,000 Peninsula Clean Energy grant to install a new rooftop and solar array at the Corporation Yard, expected to be completed in February 2026.

The City continues to coordinate with regional and state agencies and neighboring jurisdictions to study, develop, and implement coordinated approaches to flood protection, sea level rise, and rising groundwater levels due to climate change. In March 2025, the City Council adopted a Management Plan for the Pulgas Creek Watershed which drains approximately 3.5 square miles located in San Carlos, as xv

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well as portions of the City of Belmont and unincorporated San Mateo County. The goals of the Pulgas Creek Watershed Management Plan are to: reduce flood risks; improve water quality; protect open space, wildlife habitat, and creeks; provide access and community connection to creeks; and define creek-adjacent property owners’ responsibilities and opportunities. In addition, staff are coordinating with OneShoreline to integrate its sea level rise mitigation planning into the City’s planning initiatives.

The City has been actively engaging with the community throughout the year in areas such as home electrification, water conservation, composting and sustainability, as well as educating the community on wildfire and emergency preparedness. These efforts will continue through newsletters, webinars and in- person presentations, training, and exercises.

Recreation Services
In its 2023 Strategic Plan, the City Council added a new goal to explore new recreational opportunities by completing an assessment of parks, open space, and other recreation facilities to support the health and well-being for community members of all ages. Following execution of a contract with GATES + Associates in June 2024, there have been multiple rounds of community engagement with the aim to finalize the Parks Master Plan by Spring 2026.

Work is also underway to assess new opportunities in implementing the Trails Connection Plan for public trails including the design and construction of Devonshire Canyon Trail and Trillium Way Trial, the first of which is complete and the second approaching the construction phase.

Construction Updates on Large Developments
Commercial Developments:
501 In
dustrial Road – New Hotel
Status: Approved
The City has approved an application for a new 188 room hotel. The project includes a six-story building with at-grade parking and site landscaping improvements. The project was approved in November 2023 and the building permit is expected to be issued late 2025. Its estimated completion date is Spring 2027.
405 Industrial Road – Life Science Building
Status: Completed
This project included demolition of the existing Public Storage buildings and construction of a new, six-story building for life science research and development (R&D) use with two levels of parking above-grade and one parking level underground. The City Council approved the development agreement on November 28, 2022 and the project was completed in early 2025. The project xvi

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provided $4.2 million in community benefits (received in August 2025), including new landscaping at the northeast corner of Industrial Road and Holly Street on City-owned property, a green boulevard, and replacement of 17 trees along the western side of Industrial Road.
777 Industrial Road – Life Science Research & Development Building Status: Completed
This project included the redevelopment of the former Honda dealership to a life science R&D building and also three levels of office/lab space above at-grade parking. The Planning Commission approved the development application in June 2021. Construction of the building has been completed.
789 Old County Road – Two Life Science Research and Development Buildings
Status: Approved
This project includes demolition of existing buildings and construction of two new buildings: one four-story and one five-story, with a parking structure for life science R&D use. The application was approved by the City Council on October 14, 2025.

The developer obtained a 15-year development agreement and will contribute over $4.2 million in community benefits including constructing off-site improvements such as undergrounding utilities, new sidewalks, street trees, and lighting. 841 Old County Road – Two Life Science Research and Development Buildings
Status: Approved
This project includes demolition of existing, one-, and two-story commercial buildings and construction of two new buildings: one four-story and one five-story, with two levels of underground parking for life science R&D use. The project was approved by the City Council at its October 9, 2023 meeting. The project was approved with a 10-year development agreement. This project includes $7.69 million in community benefits contributions including credits for on-site improvements
888 Bransten Road – Research and Development Building
Status: Under construction
This project includes demolition of existing one- and two-story industrial buildings and construction of a new 105,416 square feet, three-story building for life science R&D use with a shared parking agreement and surface parking. The Planning and Transportation Commission approved the project on March 20, 2023. Demolition permits have been issued. Demolition of the site has been completed. Construction is expected to take 18-24 months. 987 Commercial Street – Alexandria Center for Life Science Project Status: Approved
The project involves construction of an office/R&D campus-style development on the 25.34-acre site bounded by Industrial Road to the east, Commercial Street to the north, Old County Road to the west, and Pulgas Creek to the south. xvii

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The approved campus development includes six life science R&D buildings totaling 1,603,879 square feet of floor area, a centrally located tenant amenity building, two parking garages, and community-accessible open space with amenities, including enhancement of the Pulgas Creek corridor along the project’s southern boundary.

The project will be implemented in three phases over a 15-year period. In addition to construction of the proposed buildings and outdoor improvements, each phase would include demolition of any remaining structures in that phase area and any adjacent roadway and creek-side improvements.

The City Council approved the project at its May 27, 2025 meeting. The project includes over $50 million in community benefits including $43,050,000 in fiscal contribution, improving Pulgas Creek with a new publicly accessible creekside trail, improving Commercial Street and Old County Road with a new traffic signal, on- site art, formation of a Transportation Management Association to provide coordinated transportation solutions for the area, making all on-site open spaces available to the public with on-site parking, and non-profit organization access to amenity space.
1021 Howard Avenue – Life Science Project
Status: Approved
This project includes construction of a new, three-story building, which will provide approximately 190,869 square feet of R&D use, plus two levels of 456 subsurface parking spaces. The Planning and Transportation Commission approved the project on August 1, 2022.
1030 Brittan Avenue – Research and Development Lab & Office Status: Completed
This project included the construction of a new, three-story building with one level of underground parking, a first floor that includes parking and tenant space, and two levels of laboratory and office area. The Planning Commission approved the project on July 19, 2021. The building permit was issued in June 2022 and the project was completed in 2024.
930 Commercial Street – New Auto Repair Facility
Status: Under Planning Review
This project proposes to demolish two existing single-story industrial buildings and construct a new, single-story 42,850-square-foot private automobile repair facility on a 1.69-acre parcel. The proposed structure features a contemporary architectural design, highlighted by a 8-foot-tall central glass pop-up roof and exterior cladding of dark gray metal panels.

The facility will be used to service and maintain a fleet of corporate vehicles and will include indoor storage for up to 30 vehicles. Additionally, the site will provide six parking stalls and two loading spaces in a surface parking lot located along the eastern portion of the project site.
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Residential Developments:
11 El Camino Real – New Apartment Building
Status: Approved
This project proposes to redevelop an underutilized auto-centric site into a vibrant 242-unit development with an underground parking area offering 297 spaces. This proposal is the largest multifamily development ever presented in the City under the updated zoning code and Housing Element. Within this development, 15% of the units will be designated as deed-restricted BMR units, with 24 units designated as affordable to very low-income households, and 12 units designated as affordable to low-income households. The Planning and Transportation Commission approved the project on September 18, 2023. The applicant submitted for a building permit in mid-2025. Construction could begin early 2026, with an expected completion date of end of 2026.
1232-1244 Cherry Street – New Affordable Housing Project Status: Approved
This project proposes to demolish the existing vacant office building at 1232 Cherry Street and the six-unit structure at 1244 Cherry Street. The applicant proposes to construct a new five-story residential building consisting of 33 affordable housing units, including 15 one-bedroom units, 9 two-bedroom units, and 9 three-bedroom units. All residential units will be for rent at rates that are affordable to moderate- and lower-income households. The project was approved by the Planning and Transportation Commission at its June 7, 2023 meeting. The project broke ground in April 2025 and is expected to be completed in late 2026. 1800 El Camino Real – New Affordable Housing Project
Status: Under Review
On June 26, 2023, the City Council approved the purchase of properties located at 1800 El Camino Real and 1131-1133 Eaton Avenue for affordable housing redevelopment purposes. It is estimated that the site has a realistic capacity to produce 77 units of housing, of which 65 could be affordable to very low-, low-, and moderate-income households. It is possible that the site could provide for 99 units or more of housing, depending on the impact of site constraints such as creek setbacks, building design options, and density bonuses that may be granted for achieving certain affordable housing goals. The purchase of the properties was finalized on October 5, 2023. Developers will be invited to provide their proposal via an RFP process for a development program and prospective building design, as well as a prospective pro forma indicating development costs, gap financing, potential sources of funding, and terms of an offer for disposition and development.

The RFP is expected to be released in the next two to five years 150-160 Vista Del Grande – New Multi-family Neighborhood Status: Under Planning review
The City received an application for 89 residential units at 150-160 Vista del Grande. The proposed project lies on a 12.2 acre site. The planning application is currently under review.
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808 Alameda de las Pulgas – New Townhouse Development
Status: Approved
On Ma
y 1, 2023, the Planning and Transportation Commission approved a Conditional Use Permit, final Environmental Impact Report, Tentative Subdivision Map, Design Review, Below Market Rate Housing plan, Transportation Demand Management plan, and Tree Removal, Grading, and Dirt Haul certificate to develop 87 townhouse dwelling units on the vacant 11.4-acre site at 808 Alameda de las Pulgas. The approved plans include 10 below-market-rate housing units, landscape improvements, and a new public roadway connection to the adjacent Vista del Grande site and Coronado Avenue.
240 El Camino Real – New Apartment Building
Status: Under Planning Review
Th
e City has received a SB 330 application for a 157-unit apartment building. This project proposes to replace two aging strip retail buildings and associated parking lots to convert to market rate and affordable rental housing within walking distance to Downtown San Carlos and Caltrain. The project consists of six to seven stories of residential units comprised of studio, one-bedroom, two-bedroom, and three- bedroom units over an internal and partially underground parking garage offering 157 parking spaces. Within this development, 15% of the units will be designated as deed-restricted BMR units.

Financial Awards and Acknowledgements
Gove
rnment Finance Officers Association of the United States and Canada ( “GFOA”) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Annual Comprehensive Financial Report ( “Annual Report”) for the fiscal year ended June 30, 2024. This was the 32 nd year that the City has achieved this prestigious award.

In order to be awarded a Certificate of Achievement, the City must publish an easily readable and efficiently organized Annual Report. This report satisfied both GAAP and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe that our current Annual Report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligib ility for another certificate.

This report represents the culmination of months of work by dedicated staff in the Administrative Services Department-Finance Division. Special thanks go to Financial Services Manager Paul Harris, Senior Accountants Paula Decano and Marco Lao, Accountant Mithun Alexander, Accounting Technicians Daniel Dela Cruz and Grace Lee, Management Analyst Cheryl Hong, Administrative Assistant Madeleine Payumo, City Treasurer Inge Tiegel, and the audit staff at Badawi & Associates. Credit also must be given to City Council for its unfailing support for maintaining the highest standards of professionalism in the management of the City’s finances. xx

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Respectfully submitted,
Jeff D. Maltbie Rebecca Mendenhall
City Manager Administrative Services Director
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Facilities
Maintenance
Wastewater
Stormwater
Street
Maintenance
City Attorney
xxiv

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Human Resources
Manager
(1)
Sr Management
Analyst
(1)
Information Technology
Manager
(1)
Administrative Services Department
Organization Chart
Financial Services
Manager
(1)
Administrative Services
Director
(1)
Management Analyst
(1)
Senior Accountant
(2)
Accountant
(1)
HR Management
Analyst
(1)
Sr Systems Analyst
(1)
Systems Analyst
(2)
Accounting Technician
I/II ‐ AP/AR
(2)
Administrative
Assistant
(1)
xxv

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Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of San Carlos
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2024
Executive Director/CEO
xxvi

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INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and Members of the City Council
of the City of San Carlos
San Carlos, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the gove rnmental activities, the business-type activities, each major fund, the aggregate remaining fund information, and the budgetary comparison schedule for the General Fund of the City of San Carlos (City), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively co mprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements present fairly, in all materia l respects, the respective financial position of the governmental activities, the business-type activities, each major fund, the aggregate remaining fund information, and the budgetary comparison schedule for the General Fund of the City, as of June 30, 2025, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance wi th accounting principles generally accepted in the United States of America.

We did not audit the financial stat ements of Silicon Valley Clean Wate r (SVCW) as of and for the year ended June 30, 2024, which represent 6.9 percent, 7.1 percent, and 6.8 percent, respectively, of the assets, net position, and expenses of the Sewer Fund. Those financ ial statements were audited by other auditors whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Investment in SVCW, is based solely on the report of the other auditors.

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

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To the Honorable Mayor and Members of the City Council
of the City of San Carlos
San Carlos, California

Page 2 ends

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

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

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issu e an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolu te assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may in volve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:
 Exercise professional judgment and maintain professional skepticism throughout the audit.
 Identify an
d assess the risks of material misstat ement of the financial statements, whether due to fraud or error, and design and pe rform audit procedures re sponsive to those risks. Such procedures
include examining, on a test basis, evidence regarding the amounts and disclosures in the fina ncial statements.
 Obtain an understandin
g of internal control relevant to the audit in order to design audit procedures that are app
ropriate in the circ umstances, 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 appropria
teness of accounting polic ies used and the reasonableness of significant accounting estimates made by management, as we ll as evaluate the overall presentation of the financial sta
tements.
 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 tho
se charged with governance regarding, among other matters, the planned scope and timing of the audit, significant au dit findings, and certain internal control–related matters that we identified during the audit.
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To the Honorable Mayor and Members of the City Council
of the City of San Carlos
San Carlos, California

Page 3 ends

Required Supplementary Information
Acco
unting principles generally acce pted in the United States of America require that the management’s discussion and analysis, and the required pensio n and OPEB schedules on pages 5-20 and 108-119 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational , economic, or historical context. We have applied certain limited procedures to the required supplem entary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do no t provide us with sufficien t evidence to express an opinion or provide any assurance.

Supplementary Information
Our audit was conducted for the purpose of forming op inions on the financial statements that collectively comprise the City’s basic financial statements. The combining nonmajor fund statements and the budgetary comparison schedules for the Capital Improvements Fund, Housing Fund, and nonmajor governmental funds are presented for purposes of additional analysis and are not a re quired part of the basic financial statements.

The combining nonmajor fund statements and the budgetary comparison schedules for the Capital Improvements Fund, Housing Fund, and nonmajor governmental funds are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financ ial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in acco rdance with auditing standards generally accepted in the United States of America. In our opinion, the combining nonmaj or fund statements and the budgetary comparison schedules for the Capital Improvements Fund, Housing Fund, and nonmajor governmental funds are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information
Management is responsible for the other information included in th e annual comprehensive financial
report. The other information comprises the informat ion included in the annual comprehensive financial report but does not include the basic financial statements and our auditor's 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 conne ction with our audit of the basic fi nancial statements, our responsibility is to read the other information and consider whethe r a material inconsistency exists between the other 3 8.g
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To the Honorable Mayor and Members of the City Council
of the City of San Carlos
San Carlos, California

Page 4 ends

information and the basic financial statements, or the ot her information otherwise appears to be materially misstated. If, based on the work performed, we conclu de 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 re port dated November 5, 2025 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, cont racts, and grant agreements and other matters. The purpose of that report is solely to describe the sc ope of our testing of internal control over financial reporting and compliance and the results of that testin g, and not to provide an opinion on the effectiveness of internal control over financ ial 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.

Badawi & Associates, CPAs
Emeryville, California
November 5, 2025
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MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)

This section of the City’s Annual Comprehensive Financial Report (ACFR) presents an overview and analysis of the City’s financial activities for the fiscal year ending June 30, 2025. We encourage readers to consider the information presented here in conjunction with the accompanying transmittal letter and basic financial statements.

FINANCIAL HIGHLIGHTS
Citywide:
 Total City assets increased by $21.9 million to $510.3 million, of which $413.2 million represented governmental assets and $97.0 million represented business-type assets.  City deferred outflows related to pension and other post-employment benefits (OPEB) decreased by $4.9 million to $18.8 million, of which $17.3 million represented governmental deferred outflows related to pension and OPEB and $1.5 million represented business-type deferred outflows related to pension and OPEB.
 Total City liabilities increased by $0.1 million to $76.1 million, of which $72.0 million were governmental liabilities and $4.1 million were business-type liabilities.  Total City deferred inflows of resources increased by $3.0 million to $31.7 million, of which $27.8 million were lease related (GASB 87), $3.6 million were governmental deferred inflows related to pension and OPEB, and $0.3 million were business-type deferred inflows related to pension and other post-employment benefits.
 The City’s assets and deferred outflows of resources exceeded the liabilities and deferred inflows by $421.2 million (net position), which increased by $14.0 million. Of this amount, $66.8 million represented unrestricted net position for governmental activities, which may be used to meet the government’s ongoing obligations to residents and creditors. The unrestricted net position for business-type activities was $31.1 million.  Citywide revenues were $107.8 million, of which, excluding interfund transfers, $82.8 million were generated by governmental activities that decreased by $10.2 million and $25.0 million were generated by business-type activities, which decreased by $0.3 million.  Citywide expenses were $96.4 million, of which $76.6 million were incurred by governmental activities and $19.8 million were incurred by business-type activities.

Fund Level:
 Total fund balance for Governmental Funds increased by $3.3 million to $143.5 million. Of this amount, $2.5 million, or 1.7%, was unassigned fund balance and available for spending at the City’s discretion.
 Governmental Fund revenues, excluding transfers, were $81.6 million, a decrease of $10.7 million from the prior year.
 Governmental Fund expenditures were $83.4 million, a decrease of $2.9 million from the prior year.
 Enterprise Fund net position increased by $4.5 million to $94.1 million. Of this amount, $26.6 million, or 28.3%, was restricted for enterprise activities.  Enterprise Fund operating revenues were $22.3 million in fiscal year 2024-25, a decrease of $0.5 million from $22.8 million in the prior year.
 Enterprise Fund operating expenditures were $18.5 million, an increase of $2.5 million from $16.0 million in the prior year.

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OVERVIEW OF THE FINANCIAL STATEMENTS

The annual report consists of six parts: 1) introductory section; 2) management’s discussion and analysis (this section); 3) basic financial statements; 4) required supplementary information; 5) an optional section that presents combining statements for non-major governmental funds and internal service funds; and 6) a statistical section.

The basic financial statements include two kinds of statements that present different views of the City:
 The first two statements are governmentwide financial statements that provide both long-term and short-term information about the City’s overall financial status.  The remaining statements are fund financial statements that focus on individual parts of the City government, and report the City’s operations in more detail than the governmentwide statements.

o The governmental funds statements tell how general government services, like public safety, were financed in the short term and what remains for future spending. o Proprietary fund statements offer short- and long-term financial information about the activities the government operates like businesses, such as the sewer system. o Fiduciary fund statements provide information about fiduciary relationships – like the custodial funds of the City – in which the City acts solely as agent or trustee for the benefit of others to whom the resources belong.

The financial statements also include notes that explain some of the information in these statements and provide more detailed data. The statements are followed by a section of required supplementary information that provides additional financial and budgetary information.

Figure A-1 summarizes the major features of the City’s financial statements, including the portion of the City government they cover and the types of information they contain. The remainder of this overview section of the MD&A explains the structure and contents of each of the statements.

Figure A-1
City of San Carlos Annual Comprehensive Financial Report

Introductory
Section
Governmentwide
Financial Statements
Governmental Funds Proprietary Funds Fiduciary Funds
Balance Sheet
Reconciliation of the
Governmental
Funds Balance Sheet
Statement of Revenues,
Expenditures
and Changes in Fund Balance
Statement of Revenues,
Expenses and Changes
in Fund Net Position
Reconciliation of the Net
Changes in Fund Balances Statement of Cash Flows
Statistical
Section

NOTES TO THE FINANCIAL STATEMENTS

INFORMATION ON INDIVIDUAL NON-MAJOR FUNDS AND OTHER SUPPLEMENTARY INFORMATION Statement of
Fiduciary Net Position
Statement of
Changes in
Fiduciary Net Position

STATISTICAL SECTION
Annual Comprehensive Financial Report (ACFR)
Introductory Sections
Financial
Section
Management's Discussion and Analysis
Fund Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION
Statement of Net
Position
Statement of
Activities
Statement of
Net Postion

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Reporting the City as a Whole
The accompanying governmentwide financial statements include two statements that present financial data for the City as a whole. One of the most important questions asked about the City’s finances is: “Is the City, as a whole, better off or worse off as a result of the year’s activities?” The Statement of Net Position and the Statement of Activities report information about the City as a whole and about its activities in a way that helps answer this question. These statements include all assets and deferred outflows of resources and liabilities and deferred inflows of resources using the accrual 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.

These two statements report on the City’s net position and the changes in it. One can think of the City’s net position – the difference between assets and deferred outflows of resources, and liabilities and deferred inflows of resources – as one way to measure the City’s financial health, or financial position. Over time, increases and decreases in the City’s net position are one indicator of whether its financial health is improving or deteriorating. One will need to consider other non-financial factors, such as changes in the City’s property tax base and the condition of the City’s roads, to assess the overall health of the City.

In the Statement of Net Position and the Statement of Activities, we divide the City’s services into two kinds of activities:
 Governmental activities – Most of the City’s basic services are reported here. Sales taxes, property taxes, state subventions, such as Senate Bill 1 (SB 1) funding for transportation, street, and road rehabilitation, and other revenues finance most of these activities.  Business-type activities – The City charges a fee to customers to help cover all or most of the cost of the services related to the Wastewater Enterprise Fund.

Reporting the City’s Most Significant Funds

The fund financial statements provide detailed information about the City’s most significant funds – not the City as a whole. Some funds are required to be established by state law or by bond covenants. However, the City Council establishes many other funds to help control and manage money for particular purposes, or to show that the City is meeting administrative responsibilities for using certain taxes, grants, or other monies. The City’s two kinds of funds – governmental and proprietary – use different accounting approaches.  Governmental funds – Most of the City’s basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year- end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other current financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City’s general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the City’s programs. The relationship or differences between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds are described in the reconciliation that follows the fund financial statements.

 Proprietary funds – When the City charges customers for the services it provides – whether to outside customers or to other units of the City – these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Position and the Statement of Activities. In fact, the City’s enterprise funds (a component of proprietary funds) are the same as the business-type activities reported in the governmentwide statements, but provide more detail and additional information, such as cash flows, for proprietary funds. Internal service funds (the other component of proprietary funds) are used to report activities that provide supplies and services for the City’s other programs and activities.
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Reporting the City’s Fiduciary Responsibilities

The City is an agent for certain assets held for, and under the control of, other organizations and individuals. All of the City’s fiduciary activities are reported in a separate Statement of Fiduciary Net Position. These activities are excluded from the City’s other financial statements because the City cannot use these assets to finance its operations. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. Custodial funds include the City/County Association of Governments of San Mateo County (C/CAG). Private Purpose Trust Fund is used to report resources held in trust for the Successor Agency of the former Redevelopment Agency (RDA).

Governmentwide Statement Summaries

Net position may over time serve as a useful indicator of a City’s financial position. The City’s assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $421.2 million on June 30, 2025.

Net Position

Table 1 below reflects the City’s net position as of June 30, 2025 and June 30, 2024.

Table 1
City’s Comparative Statement of Net Position
June 30, 2025 and 2024
(Amounts in Millions)

Total
% Change
2025 2024 2025 2024 2025 2024
Current and other assets 194.1 $ 180.4 $ 60.5 $ 58.6 $ 254.6 $ 239.0$ 6.5% Capital assets 219.1 214.6 36.5 34.7 255.6 249.3 2.5% Total Assets 413.2 395.0 97.0 93.3 510.2 488.3 4.5% Deferred outflows - Pension/OPEB 17.3 2 1.9 1.5 1 .7 1 8.8 2 3.6 -20.3% Total deferred outflow 17.3 21.9 1.5 1.7 18.8 23.6 -20.3% Current and other liabilities 19.0 1 5.2 1.2 1 .8 2 0.2 1 7.0 18.8% Non-Current Long-term obligations 53.0 5 5.6 2.9 3 .3 5 5.9 5 8.9 -5.1% Total Liabilities 72.0 70.8 4.1 5.1 76.1 75.9 0.3% Deferred inflow s related to:

Pension/OPEB 3.6 3 .8 0.3 0 .3 3 .9 4 .1 -4.9% Lease 27.8 2 4.6 - - 2 7.8 2 4.6 13.0% Total deferred inflow 31.4 28.4 0.3 0.3 31.7 28.7 10.5% Net Position:

Net investment in capital assets 214.5 $ 209.3 $ 36.5 $ 34.7 $ 251.0 $ 244.0$ 2.9% Restricted 45.8 4 0.6 26.6 1 9.7 7 2.4 6 0.3 20.1% Unrestricted 66.8 6 7.8 31.0 3 5.2 97.8 103.0 -5.0% Total Net Position 327.1$ 317.7 $ 94.1 $ 89.6 $ 421.2$ 407.3$ 3.4% Governmental Business - Type All
Activities Activities Government

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The largest portion of the net position (59.6%) reflects the City’s $251.0 million investment in capital assets, less any capital-related outstanding debt. Capital assets are the aggregated value of land, infrastructure, equipment, buildings, and improvements that are used to provide services. Their value is reported net of related debt because the funds to repay the debt come from other sources. The City’s capital assets cannot be sold and used to liquidate liabilities. This portion of the net position increased by $7.0 million, or 2.9%, over the prior year mainly because of the addition in capital assets associated with construction projects that were completed or underway. These included: the Fire Station 16 Replacement project; the Downtown Renovation Plan Implementation project; the 2
nd Floor Library Remodel project; and Annual Sewer System Rehabilitation Program project.

Another portion of the City’s net position is subject to external restrictions, such as debt covenants, grantor’s stipulations, or enabling legislation, on how it may be used. As of June 30, 2025, the restricted assets were 17.2%, or $72.4 million, of the total net position. Of this amount, $17.4 million was for low- and moderate-income housing, $21.9 million was for capital projects such as street rehabilitation, and $4.7 million was for debt service. The remaining $28.4 million relates to police grants, Park In-Lieu Fees, Measure A funds, Gas Tax, and Stormwater funds.

The unrestricted net position of $97.8 million represents the remaining balance of the net position. The remaining portion of the unrestricted net position may be used to meet the City’s ongoing and unexpected expenses, including facility and infrastructure improvements, pension- related liabilities, property acquisition, and emergency repairs and replacements.

At the end of the current fiscal year, the City can report positive balances in all three categories of net position, both for the government as a whole and for its separate governmental and business-type activities. The City reported positive balances in these categories for the prior fiscal year as well.

Statement of Activities and Changes in Net Position

The City’s net position increased by $11.3 million, amounting to $421.2 million, during the fiscal year ended June 30, 2025, as indicated in the Statement of Activities and Changes in Net Position (see Table 2 on next page).
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Table 2
Statement of Activities and Changes in Net Position
June 30, 2025 and 2024
(Amounts in Millions)

Governmental All
Activities Activities Government % change
2025 2024 2025 2024 2025 2024
Program Revenues:

Charges for Services 13.9$ 14.3 $ 22.3$ 22.7 $ 36.2$ 37.0$ -2.2% Operating Grants & Contributions 5.3 14.1 - - 5.3 14.1 -62.4% Capital Grants & Contributions 0.9 0.7 - - 0.9 0.7 28.6% General Revenues:

Property Taxes 23.0 22.3 - - 23.0 22.3 3.1% Other Taxes 22.9 22.6 - - 22.9 22.6 1.3% Other General Revenues 16.7 19.0 2.7 2.6 19.4 21.6 -10.2% Total Revenues 82.7$ 93.0 $ 25.0$ 25.3 $ 107.7$ 118.3$ -9.0% Program Expenses:

General Government 14.4$ 11.8 $ -$ - $ 14.4$ 11.8$ 22.0% Community Development 9.0 8.9 - - 9.0 8.9 1.1% Public Safety 27.4 25.2 - - 27.4 25.2 8.7% Public Works 19.4 13.4 - - 19.4 13.4 44.8% Parks & Recreation 6.3 6.3 - - 6.3 6.3 0.0% Sewer Operations - - 19.8 15.5 19.8 15.5 27.7% Interest Expenses 0.1 0.1 - - 0.1 0.1 0.0% Total Expenses 76.6 $ 65.7$ 19.8$ 15.5 $ 96.4$ 81.2$ 18.7% Inc/(Dec) in Net Position
before transfers and
extraordinary gain 6.1$ 27.3 $ 5.2$ 9.8 $ 11.3$ 37.1$ -69.5% Transfers 0.7 0.7 (0.7) (0.7) - - 0% Change in Net Position 6.8 $ 28.0$ 4.5$ 9.1 $ 11.3$ 37.1$ -69.5% Beginning Net Position 317.7$ 289.7 $ 89.6$ 80.5 $ 407.3$ 370.2$ 10.0% Restatement of Net Position 2.6 - (0.03) - 2.6 - n/a Ending Net Position 327.1$ 317.7 $ 94.1$ 89.6 $ 421.2$ 407.3$ 3.4% Business-Type

The Statement of Activities presents program revenues and expenses and general revenues in detail. All of these are elements in the Changes in Net Position summarized in Table 2 above.

As of June 30, 2025, the City’s total net position was $421.2 million. This is an increase of $11.3 million, or 2.8%, from the prior year. The changes in net position are explained in the following paragraphs. Total revenue of all governmentwide activities was $107.7 million, a decrease of $10.6 million, or 9.0%, while the total expense of all governmentwide activities increased by $15.2 million, or 18.7%, to $96.4 million.

Governmental Activities

Net position in governmental activities totaled $327.1 million, an increase of $9.4 million, or

3.0%, from the prior year.

Total revenue for the City’s governmental activities before extraordinary gain and transfers decreased by $10.3 million, or 11.1%, to $82.7 million. Total governmental activity expenses increased by $10.9 million, or 16.6%, to $76.6 million. Transfers into governmental activities from the Wastewater Fund were $0.7 million, which was at the same level as the previous fiscal year.

As shown in the Statement of Activities, the amount that taxpayers ultimately financed these activities through City taxes was $45.9 million, while some of the cost was paid by those who directly benefited from the programs ($13.9 million), or by other governments and organizations that subsidized certain programs with grants and contributions ($6.2 million), or by other general revenues ($16.7 million).
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The reasons for significant changes in the revenues and expenses of the City’s governmental activities are as follows:

 Charges for Services decreased by $0.4 million, or 3.1%, to $13.9 million. There was a decrease of $2.0 million compared to the previous year due to the reduced collection of childcare impact fees and traffic impact mitigation fees due to delays in planned development projects related to tariffs and uncertainty in the economy. Childcare impact fee and traffic impact mitigation fee revenues can vary from year to year due to the timing of these large-scale development projects.

The decrease was partially offset by an increase in
Parks & Recreation classes and program fees, in Public Works with plan check fees, and in Community Development with building permit fees.

 Operating Grants and Contributions decreased by $8.8 million to $5.3 million, mainly due to a one-time $4.1 million Commercial Linkage Fee received from the new commercial building development at 405 Industrial Road and $5.1 million American Rescue Plan Act (ARPA) funds being reclassed from unearned revenue to revenue for the Fire Station 16 Replacement project in the prior fiscal year.
 Capital Grants and Contributions slightly increased by $0.2 million, to $0.9 million, mainly due to more grants being received for Public Works and more donations being received for Community Development in fiscal year 2024-25.
 Property Taxes increased by $0.7 million, or 3.2%, to $23.0 million primarily due to the increase in the assessed value of properties from new developments, transfers of ownership, and the sale of properties in calendar year 2024.  Other Taxes include sales taxes, transient occupancy taxes (TOT) and franchise taxes.

Sales taxes decreased by $0.3 million, or 1.9%, to $13.8 million compared to the prior year due to a continued inflationary environment and interest rates staying at a high level which has put pressure on consumers. Consumer behavior has shifted to focus on essential household items over more expensive purchases in the last few years. Rising prices are somewhat offsetting the effect of lower sales volume. TOT increased by $0.4 million to $3.8 million due to continuing recovery in travel activity during the year. Franchise taxes increased slightly by $0.2 million to $5.3 million.
 Other General Revenues decreased by $2.3 million to $16.7 million, from the prior year.

The decrease is mainly due to the receipt of the Wheeler Plaza profit sharing agreement payment ($2.5 million) and PG&E claim settlement payment ($0.85 million) in the prior fiscal year. The decrease was partially offset by higher motor vehicle in-lieu fee revenue than the prior year in which the city received the relatively higher countywide shortfall payment relating to fiscal year 2022-23.
 Governmental Expenses totaled $76.6 million in the fiscal year 2024-25, an increase of $10.9 million from the prior year’s expenses of $65.7 million. The increase is mainly associated with an increase in professional services expenditures to assist with greater activity in the City’s development projects, cost increases in our public safety agreements, increase in general liabilities, and the increase in depreciation. 11 8.g
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Business-Type Activities

Business-type activities’ total net position for fiscal year 2024-25 was $94.1 million, an increase of $4.5 million, or 5.0%, from the prior year as indicated in the Statement of Activities and Changes in Net Position (table 2). The change in Net Position was less in the current fiscal year when compared to the prior year primarily due to higher expenditures on operating overhead and $2.1 million in cash in-lieu of debt payments. In fiscal year 2024-25, there was a net decrease in the investment in Silicon Valley Clean Water (SVCW) in the amount of $1.3 million.

Every year, the City adjusts this investment based on the City’s proportion of financial activity in SVCW. SVCW (formerly the South Bayside System Authority) was formed in 1975 by the cities of San Carlos, Belmont, Redwood City, and the West Bay Sanitation District to operate a wastewater treatment facility. The cost of operating and maintaining the facility is divided in proportion to the volume of sewage generated by each member entity.

Grants &
Entitlements
7%
Other Taxes
11%
Other General
Revenues
20%
Charge for
Services
17%
Sales Taxes
17%
Property Taxes
28%

REVENUES BY SOURCE FOR GOVERNMENTAL

ACTIVITIES
Parks &
Recreation
8% Community
Development
12%
General
Government
19%
Public Works
25%
Public Safety
36%

EXPENSES FOR GOVERNMENTAL ACTIVITIES
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The unrestricted portion of the ending net position includes $6.7 million in investment in the SVCW joint venture. As of June 30, 2025, the City’s direct obligation is approximately $77.9 million. Since the City reports the SVCW joint venture as net investment, this obligation is not directly reported in the City’s financial statements as long-term debt. More information can be found in Note 13b to the Financial Statements.

Financial Analysis of the City’s Funds

As noted earlier, the City uses fund accounting to provide proper financial management of the City’s resources and to demonstrate compliance with finance-related legal requirements.

Governmental Funds

The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the total fund balance in the General Fund was $62.8 million, representing an increase of $3.8 million, or 6.5%, higher than the fiscal year 2023-24 fund balance of $59.0 million. This increase is explained in the following paragraphs.

The General Fund’s total revenues increased by $0.2 million, or 0.4%, to $66.1 million compared to the prior fiscal year amount of $65.9 million. The General Fund expenditures totaled $59.1 million, an increase of $5.3 million, or 9.9%, from prior year expenditures of $53.8 million. The increase in expenditures was primarily caused by an Additional Discretionary Contribution (ADC) payment to CalPERS towards the unfunded pension liability that was $1 million over and above the amount paid in the prior fiscal year ($4 million versus $3 million), increases in the public safety agreements, higher professional services expenses to assist with the increase in the City’s development and public works projects, and increases in salaries and benefits per the negotiated employee agreements.

The following chart shows the Revenues and Expenditures over the past few years:

*General Fund actual expenditures include a $3.0 million payment towards California Public Employees Retirement System (“CalPERS”) Unfunded Pension Liability in fiscal year 2023-24. **General Fund actual expenditures include a $4.0 million payment towards California Public Employees Retirement System (“CalPERS”) Unfunded Pension Liability in fiscal year 2024-25.

49.60 62.30

65.90 66.10

42.60 49.30

53.80 59.10
$32
$36
$40
$44
$48
$52
$56
$60
$64
$68
$72
2022 2023 *2024 **2025
Amounts in Millions
General Fund Revenues & Expenditures
Revenue Expenditure
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Revenues

(Amounts in Millions)
FY 22 FY 23 FY 24 FY25
Total Revenues 49.6 $ 62.3$ 65.9$ 66.1$ Dollar Change N/A 12.7$ 3.6$ 0.2$ Percentage Change N/A 25.6% 5.8% 0.3%
General Fund Actual Revenues

Changes in the Revenues of the City’s General Fund from the prior year are as follows:
 Property Taxes increased by $0.6 million, or 3.2%, primarily due to an increase in the assessed value of properties for new developments, transfers of ownership, and the sale of properties.
 Sales Taxes decreased by $0.3 million, or 2.1%, in comparison with the prior year, due to a continued inflationary environment and high interest rates. Consumer behavior has shifted to focus on essential household items over more expensive purchases in the last few years.

Rising prices are partially offsetting the effect of lower sales volume, which were more prevalent in the categories of autos and transportation, building and construction, food and drugs, fuel and service stations, and general consumer goods. Business and industry had a slight increase related to pre-tariff stockpiling which drove and propelled electrical equipment sales, and restaurants and hotels also experienced an increase due to higher menu prices.
 Charges for Services increased by $0.8 million, or 12.8%. This was mainly due to an increase in Community Development with construction demolition deposits, in Public Works with plan check fees, and in Parks & Recreation classes and program fees.

 Use of Money and Property decreased by $2.2 million, to $8.6 million. The decrease is primarily due to the receipt of $2.5 million profit sharing payment following the sale of the final unit in the Wheeler Plaza development in the prior fiscal year.  Revenues from Licenses and Permits decreased by $0.3 million, or 6.7%, when compared to the previous year due to a slight change in demand for building, electrical, plumbing, encroachment, and mechanical permits. Similar to Charges for Services, this revenue category can vary from year to year due to the timing of development projects.  Business Registration increased by $0.5 million, or 38.3%, to $1.9 million, compared to the prior fiscal year primarily due to registration fee revenue received from previously unlicensed businesses coming into compliance following auditing activity initiated during the fiscal year.
 Transient Occupancy Tax, or TOT, increased by $0.4 million, or 10.7%, compared to the prior year. This increase is due to the continued growth in tourism and travel activity and related hotel room occupancy.
 Vehicle In-Lieu Revenues increased by $1.0 million, or 26.6%, compared to the prior year.

In fiscal year 2004-05, Senate Bill 1096 was enacted, which redirected Motor Vehicle License Fees (VLF) collected by the Department of Motor Vehicles from the cities and counties to the state. To make the cities and counties whole, the legislation specified that revenue lost by the cities would be “backfilled” by the County as a “property tax in-lieu” payment rather than paid directly by the State. The County notified the City that if the “backfilled” amount exceeded a certain limit, there would not be enough money to fully cover the amount owed. For example, in April 2021, San Mateo County notified the City that it was experiencing a countywide shortfall in fiscal year 2020-21 in the amount of $96 million due to a reduction in the number of non-basic aid school districts in the County, which in turn resulted in less available property tax revenues to fund the fiscal year 2020-21 VLF. The $1.0 million increase seen in fiscal year 2024-25 was due to the payment received relating 14 8.g
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to the fiscal year 2022-23 shortfall which was greater than the shortfall payment received in the prior year.
 Other General Revenues decreased by $0.3 million, or 11.4%, compared to the prior year.

The decrease is primarily due to $0.3 million in higher claim payments received in the prior year relating to the storm that occurred during the winter of fiscal year 2022-23, coupled with the cessation of contracted financial services for the Peninsula Traffic Congestion Relief Alliance (Commute.org) at the end of fiscal year 2023-24.

Expenditures

(Amounts in Millions)
FY 22 FY 23 *FY 24 **FY 25
Total Expenditures 42.6 $ 49.3 $ 53.8 $ 59.1 $ Dollar Change N/A 6.7 $ 4.5 $ 5.3 $ Percentage Change N/A 15.7% 9.1% 9.9%
General Fund Actual Expenditures*

*General Fund actual expenditures include a $3.0 million payment of California Public Employees Retirement System (“CalPERS”) Unfunded Pension Liability in fiscal year 2023-24. **General Fund actual expenditures include a $4.0 million payment of California Public Employees Retirement System (“CalPERS”) Unfunded Pension Liability in fiscal year 2024-25.

Changes in the Expenditures of the City’s General Fund from the prior year are as follows:
 General Government Expenditures increased by $1.7 million, or 16.0%, in fiscal year 2024-25 due to a one-time payment of $4.0 million to CalPERS towards the unfunded pension liability which was $1.0 million more than the prior year. This increase was also due to higher information technology equipment maintenance costs, professional costs related to the business registration discovery audit program aimed at bringing previously unregistered businesses into compliance, and legal services costs.  Community Development Expenditures increased by $0.3 million, or 4.6%, mainly associated with an increase in professional services and contractors expenditures to assist with the increase in the City’s development projects.
 Public Safety Expenditures increased by $1.6 million, or 6.7%, in comparison to the previous year. The primary reasons were higher annual pension payments to CalPERS and the contract increases for fire, police, and dispatch services.

 Public Works Expenditures increased by $0.4 million, or 6.1%, mainly due to increases in maintenance costs and the additional costs associated with the new Assistant Public Works Director position.

 Parks and Recreation Expenditures increased by $0.2 million, or 4.7%, mainly due to increases in part-time staff costs as compared to the prior fiscal year to support an increase in offered programs, classes, and special community events, and increases in special events insurance, professional services for the special events, and instructor costs in classes.

Capital Improvement Fund – This fund had a fund balance of $30.4 million at the close of fiscal year 2024-25, which represents a decrease of $4.7 million from the restated prior year ending fund balance mainly due to American Rescue Plan Act (ARPA) funds being reclassed in prior fiscal year 2023-24 from unearned revenue to revenue.
 Transfers in from other funds to help fund various capital improvement projects decreased by $2.3 million to $3.0 million due to a higher beginning fund balance, thereby requiring less funding from other funds.
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development projects than the prior fiscal year. The Traffic Impact Mitigation Fee revenues can vary from year to year due to the timing of large-scale development projects. This decrease was partially offset by a $0.65 million downtown improvement fund received from the developer of the 987 Commercial Street property for the Downtown Renovation Plan Design/Implementation project.
 Other Revenue decreased by $0.9 million due to a one-time claim and settlement from PG&E received in prior fiscal year 2023-24.
 Property Taxes from the Educational Revenue Augmentation Fund (ERAF) refund remained largely flat with a slight increase of $0.1 million to $3.3 million.  Funding From Other Agencies decreased by $4.4 million due to the recognition of ARPA funds as revenue, in the prior fiscal year, related to the Fire Station 16 replacement project.  Use of Money and Property decreased by $0.1 million due to lower investment income in fiscal year 2024-25.
 Capital Project Expenditures increased slightly by $0.2 million to $12.5 million. The large capital projects in fiscal year 2024-25 were: 1) the Fire Station 16 Replacement project; 2) San Carlos Ave Pedestrian Safety Improvements Phase III project; 3) 2nd Floor Library Remodel project; 4) Downtown Renovation Plan Design/Implementation project; and 5) City of San Carlos Centennial Celebration project.

Housing Capital Projects Fund – This fund is used to account for affordable housing-related financial activities. As of June 30, 2025, it had a fund balance of $17.4 million, which is restricted for housing purposes. The fund balance increased by $3.1 million compared to the prior year mainly due to proceeds from the sale of property at 1232-1244 Cherry Street.

Gas Tax Fund – The fund balance increased by $3.4 to $21.1 million in fiscal year 2024-25 mainly due to a $7.8 million transfer in from the General Fund, Capital Improvement Fund, and Nonmajor Governmental Funds for the Street Resurfacing project and the timing of projects.

Other Governmental Funds – The total fund balance for the other Nonmajor Governmental Funds decreased to $11.8 million compared with $14.2 million in the prior fiscal year due to $1.0 million less childcare impact fee revenue received compared to the prior fiscal year, $0.4 million San Carlos Library Tenant Fund revenue recorded in the General Fund, $1.0 million in additional debt service payments related to the payoff of the 2015 General Obligation Bond, and transfers to the Capital Improvement Fund and General Fund in anticipation of closure of the Library Tenant Fund in fiscal year 2025-26.

Major Enterprise Fund – The City’s proprietary fund statements provide the same type of information found in the governmentwide financial statements. The Wastewater Fund is the only enterprise fund reported in the proprietary funds Statement of Revenues, Expenses, and Changes in Net Position.

The Wastewater Fund’s total net position at the end of the fiscal year was $94.1 million, an increase of $4.5 million, or 5.0%, compared to the prior year. The operating expenditures in the Wastewater Fund increased by $2.5 million compared to the previous year. This increase was due to $2.1 million in cash in-lieu of debt payment to SVCW and $0.2 million additional salaries and benefits expenditures related to the negotiated employee agreements.

Also, as stated previously, the City recorded an adjustment in the investment in SVCW during this fiscal year of $1.3 million. More detail on the investment can be found in Note 13b. Included in the $94.1 million ending net position, $21.9 million is restricted for capital projects and $4.7 million is restricted for debt service. The remaining net position is unrestricted and includes $1.7 million for pension and other benefits programs, and $29.4 million for sewer system maintenance.

Internal Service Funds – The City uses internal service funds to account for risk management, including worker’s compensation, general liability, and property insurance. The Longevity Benefits Fund is used to account for OPEB for retired employees. Total net position for these funds was 16 8.g
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negative $0.5 million which was $2.1 million less than the prior year mainly due to $1.8 million higher general liability claim expenses and $0.3 million higher insurance premium costs.

General Fund Budgetary Highlights

The final General Fund expenditure budget differs from the original adopted budget by $4.2 million, mostly because of amendments approved by City Council during the year which added appropriations. The changes were as follows:
 Increase in the General Government expenditure budget by $0.02 million for elected officials’ salary and benefit changes.
 Increase in the General Government expenditure budget by $0.01 million for providing meal services to three wait-listed San Carlos residents.
 Increase in the General Government expenditure budget by $0.1 million for legal services to assist with public records act searches.
 Increase of $4.0 million for an Additional Discretionary Contribution (ADC) towards the CalPERS unfunded accrued liability
 Increase in the Community Development expenditure budget of $0.01 million for the reclassification of a Senior Sustainability Specialist position in the City Manager’s Office to a Senior Management Analyst position in the Community Development department.  Increase in the Public Safety expenditure budget by $0.1 million for flock safety automatic license plate recognition cameras/licenses.

Major deviations between the final budget of the General Fund and its actual operating results for Revenue and Expenditures are discussed below.

Revenue. Total revenues were greater than the final budget by $8.9 million, or 19.0%. The City’s policy is to budget conservatively. Revenues are estimated using accepted standards and estimates provided by the state, other governmental agencies, and outside consultants.  Property Taxes received were lower than the budget by $0.3 million, or 1.6%, due to lower receipts for real property transfer tax and supplemental property tax assessments in a continued relatively high mortgage rates environment with fewer properties sold during the year.
 Sales Taxes were less than budget by $1.1 million, or 8.2%, mainly due to a continued inflationary environment and high interest rates which led to a change in consumer behavior, as previously mentioned, shifting spending on expensive purchases to more essential household items.
 Vehicle In-Lieu was greater than budget by $1.2 million, or 36.0%, due to the payment received in fiscal year 2024-25 relating to the fiscal year 2022-23 shortfall.  Business Registration exceeded budget by $0.5 million, or 40.9%, due to audit activity to bring previously unregistered businesses into compliance.  Transient Occupancy Taxes were lower than budget by $0.7 million, or 15.2%. Although the hotel industry is still recovering from the COVID-19 pandemic, it has not yet fully returned to historical occupancy levels.
 Use of Money and Property revenues were greater than budget by $5.4 million, primarily due to higher-than-expected interest rates in investment accounts and a positive impact from the Government Accounting Standards Board (GASB) 31 required fair value adjustment to the investment account balances.
 Charges for Services were higher than budget by $1.8 million, or 34.9%, primarily due to an increase in Public Works plan check fees, in Community Development with construction demolition deposits and in Parks & Recreation classes and program fees. This revenue category can vary from year to year due to the timing of development projects.  License and Permit revenues exceeded the budget by $1.2 million, or 47.0%, due to the issuance of permits relating to new residential and commercial building projects, and renovations of existing properties. As noted previously, the timing of large development is difficult to predict and can fluctuate greatly from year to year. 17 8.g
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 Revenue from Other Agencies exceeded the budget by $0.1 million mainly due to receipt of a Sequoia Healthcare Grant and more state highway maintenance reimbursements received during the fiscal year.
 Other Revenue exceeded budget by $0.5 million, or 31.7%, mainly due to receipt of reimbursements relating to the fiscal year 2022-23 winter storm, electric vehicle charging station reimbursement, and an increase in special events sponsorships.

Expenditures. Total expenditures were under budget by $4.2 million, or 6.7%.  Salaries and Benefits were under budget by $1.7 million, or 7.0%, due to the salary and benefit savings realized from vacant or under-filled positions during the fiscal year and the savings generated from the prepayment of pension obligations in fiscal years 2017-18 and 2019-20.
 Operating Expenditures were under budget by $2.5 million, or 6.0%, primarily in professional services due to the delays in the start and completion of certain projects such as 987 Commercial Street and 888 Bransten Road.

Other Budgetary Highlights

Capital Outlay for total Governmental Funds was also under budget by $28.7 million primarily due to delays in numerous Capital Improvement Plan projects including: the Downtown Renovation Plan Design/Implementation project; the Brittan Avenue Sidewalk Improvements project; the San Carlos Avenue Pedestrian Safety Improvement Phase IV project; the Storm Channel Sediment Removal projects; Brittan Ave & Alameda de las Pulgas Widening project; and the Intersection Pedestrian Improvements project. The majority of these projects will roll forward to the next fiscal year along with their respective budgets.

Capital Assets and Debt Administration

Capital Assets

The City’s investment in capital assets for government and business-type activities amounts to $255.5 million as of June 30, 2025. The investment in capital assets includes land, buildings, machinery and equipment, park facilities, roads, and streets. As shown in the table below, the total increase in capital assets for fiscal year 2025 is $6.2 million, or 2.5%. The increase relates to the current year capital assets additions including the Fire Station 16 Replacement project; the 2nd Floor City Hall Remodel (Phase II) project; the Downtown Renovation Plan Implementation project; and the Traffic Calming Improvements project. The increase is offset by the greater depreciation and retirement of some capital assets.

%
Change
2025 2024 2025 2024 2025 2024
Land and other assets
not being depreciated 103.0$ 99.4$ 0.6$ 0.3 $ 103.6 $ 99.7$ 3.9% Facilities, infrastructure and
equpment, net of depreciation 116.0 115.2 35.9 34.4 151.9 149.6 1.5% Total 219.0$ 214.6$ 36.5$ 34.7 $ 255.5$ 249.3 $ 2.5% (Amounts in Millions)
Capital Assets
June 30, 2025 and 2024
Activities Activities Government
Governmental Business Type All

For the governmentwide statement of net position presentation, all depreciable capital assets are depreciated from the acquisition date to the end of the current fiscal year.

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Governmental fund financial statements record capital asset purchases as expenditures. Ongoing infrastructure projects are accounted for in construction-in-progress. Additional information about the City’s capital assets can be found in Note 5 to the financial statements.

Long-Term Obligations

At the end of the fiscal year 2025, the City had total outstanding long-term obligations of $4.6 million (shown in the table below), a decrease of 11.5%, due to the payoff of the Library building General Obligation bond. A new billboard was also added to leases payable in fiscal year 2024-25.

%
Change
2025 2024
2015 GO Refunding Bond - $ 1.5$ -100.0% Leases Payable 4.6$ 3.7$ 24.3% Total 4.6$ 5.2$ -11.5%
Outstanding Long-Term Obligations
June 30, 2025 and 2024
(Amounts in Millions)
Activities
Governmental

As of June 30, 2025, the City’s general obligation limit is $637.5 million, 3.75% of total assessed valuation subject to taxation. With outstanding debt of $4.6 million subject to the legal debt limit, the City is not at risk of exceeding its legal debt limit.

Additional information on the City’s long-term debt can be found in Note 7 to the accompanying financial statements.

Economic Factors and Next Year’s Budgets and Rates

The following key economic factors were considered in developing the fiscal year 2025-26 budget:
 Revenue Projections. The overall growth of the General Fund Revenue is projected to be approximately 7.6% greater than the fiscal year 2024-25 revised budget. The fiscal year 2025-26 budget reflects continued economic growth resulting from increases in charges for services, licenses and permits, and use of money and property revenue budget categories, and an expected continued increase in the assessed value of properties which positively impacts property taxes.
 Expenditures. The overall General Fund Expenditure is budgeted to be 7.8% higher than in the fiscal year 2024-25 revised budget. In fiscal year 2024-25, there were a number of staffing changes and program enhancements for the General Fund that have been incorporated into the budget. The changes are necessary to implement the strategic plan objectives, support the increased level of development activity, manage the increase in infrastructure projects, and advance increased communication needs.  Capital Improvement Project Funds. An update to the five-year Capital Improvement Plan was included as part of the fiscal year 2025-26 budget process. Changes to existing projects and the addition of new projects totaling $32.3 million in expenditures were approved for fiscal year 2025-26. The major changes and additions included: 1) continued funding for the Annual Sewer System Rehabilitation Program; 2) continued funding for the Annual On-Call Sewer Contracts; (3) Shoreway Road Sewer Main Relocation Project; 4) Sewer Capacity Improvements Project; 5) Replacement of Combination Sewer Truck Project; 6) continued funding for the Annual Street Resurfacing Project; 7) Storm Drain Improvements Project; 8) Brittan Avenue Sidewalk Improvements (Between Rogers Ave & Sunset Drive) Project; 9) Holly St/US 101 Interchange Modifications Project; 10) Downtown Renovation Plan Design/Implementation Project; and 11) 2nd Floor City Hall Remodel Project. 19 8.g
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 Sewer Rate Adjustments. Per the City Council’s decision during the wastewater rate setting discussions in 2025, there will be a 3.0% sewer rate increase in fiscal year 2025-26. The revenues collected through the sewer fees are used to fund capital improvements and the City’s share of the SVCW’s sewer treatment plant improvements.

Contacting the City’s Financial Management

This financial report is designed to provide our residents, taxpayers, customers, investors, and creditors with a general overview of the City’s finances and to show the City’s accountability for the money it receives. Questions about this report or additional financial information can be obtained by contacting the City at:

City of San Carlos
Administrative Services Department
600 Elm Street
San Carlos, CA 94070
(650) 802-4128
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BASIC

FINANCIAL STATEMENTS
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GOVERNMENT-WIDE

FINANCIAL STATEMENTS
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City of San Carlos
Statement of Net Position
June 30, 2025
Governmental Business-type
Activities Activities Total
ASSETS
Current assets:

Cash and investments 132,120,733 $ 52,877,991 $ 184,998,724 $ Cash and investments with fiscal agents 3,564,342 - 3,564,342 Receivables:

Accounts 5,988,037 1,029,284 7,017,321 Lease receivable 993,612 - 993,612 Prepaid costs 2,536,503 - 2,536,503 Property held for resale 972,829 - 972,829 Total current assets 146,176,056 53,907,275 200,083,331 Noncurrent assets:

Receivables:

Lease receivable 29,485,343 - 29,485,343 Notes and loans 18,127,256 - 18,127,256 Down payment assistance loan program 364,183 - 364,183 Investment in SVCW - 6,668,905 6,668,905 Capital assets:

Nondepreciable 103,026,697 556,233 103,582,930 Depreciable 178,586,131 52,408,274 230,994,405 Less accumulated depreciation (62,552,480) (16,496,950) (79,049,430) Total capital assets 219,060,348 36,467,557 255,527,905 Total noncurrent assets 267,037,130 43,136,462 310,173,592 Total assets 413,213,186 97,043,737 510,256,923

DEFERRED OUTFLOWS OF RESOURCES
Deferred pension related items 16,609,954 1,385,645 17,995,599 Deferred OPEB related items 691,994 85,527 777,521 Total deferred outflows of resources 17,301,948 1,471,172 18,773,120 Primary Government
See accompanying Notes to Basic Financial Statements
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City of San Carlos
Statement of Net Position (Continued)
June 30, 2025
Governmental Business-type
Activities Activities Total

LIABILITIES
Current liabilities:

Accounts payable and accrued liabilities 8,655,398 1,065,254 9,720,652 Accrued benefits 163,966 - 163,966 Deposits payable 5,695,529 - 5,695,529 Unearned revenue 2,773,214 - 2,773,214 Compensated absences - current 1,120,731 109,403 1,230,134 Claims payable - current 356,400 - 356,400 Long-term debt - current portion 195,925 - 195,925 Total current liabilities 18,961,163 1,174,657 20,135,820 Noncurrent liabilities:

Compensated absences 557,052 48,525 605,577 Claims payable 2,680,600 - 2,680,600 Collective net pension liability 44,594,281 2,803,180 47,397,461 Net OPEB liability 808,939 99,982 908,921 Long-term debt 4,382,478 - 4,382,478 Total noncurrent liabilities 53,023,350 2,951,687 55,975,037 Total liabilities 71,984,513 4,126,344 76,110,857

DEFERRED INFLOWS OF RESOURCES
Lease related 27,790,453 - 27,790,453 Deferred pension related items 3,315,175 224,440 3,539,615 Deferred OPEB related items 312,431 38,615 351,046 Total deferred inflows of resources 31,418,059 263,055 31,681,114

NET POSITION
Net investment in capital assets 214,481,945 36,467,557 250,949,502 Restricted for:

General Government 2,931,088 - 2,931,088 Community development 686,520 - 686,520 Public safety 430,588 - 430,588 Parks and recreation 3,214,820
- 3,214,820
Public works 21,140,432 - 21,140,432 Housing 17,436,257 - 17,436,257 Capital projects - 21,892,905 21,892,905 Debt service - 4,692,000 4,692,000 Total restricted 45,839,705 26,584,905 72,424,610 Unrestricted 66,790,912 31,073,048 97,863,960 Total net position 327,112,562$ 94,125,510$ 421,238,072$ Primary Government
See accompanying Notes to Basic Financial Statements.
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City of San Carlos
Statement of Activities
For the year ended June 30, 2025
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Total Governmental activities:

General government 14,406,978$ 2,095,381$ -$ 295,503$ 2,390,884$ Community development 9,007,205 6,686,303 1,114,528 - 7,800,831 Public safety 27,394,130 611,628 195,049 - 806,677 Public works 19,368,760 1,550,463 3,752,971 258,899 5,562,333 Parks and recreation 6,343,368 2,973,639 284,569 325,251 3,583,459 Interest on long-term debt 150,743 - - - - Total governmental activities 76,671,184 13,917,414 5,347,117 879,653 20,144,184 Business-type Activities:

Sewer 19,764,696 22,334,324 - - 22,334,324 Total business-type activities 19,764,696 22,334,324 - - 22,334,324 Total primary government 96,435,880$ 36,251,738$ 5,347,117$ 879,653$ 42,478,508$ General Revenues:

Taxes:

Property taxes, levied for general purpose
Transient occupancy taxes
Sales taxes
Franchise taxes
Total taxes
Motor vehicle in lieu, unrestricted
Use of money and property
Miscellaneous
Transfers
Total general revenues and transfers
Change in net position
Net position - beginning of year
Restatements
Net postion - beginning of year, as restated
Net position - end of year
Program Revenues
See accompanying Notes to Basic Financial Statements.
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Governmental Business-Type
Activities Activities Total
(12,016,094)$ -$ (12,016,094)$
(1,206,374) - (1,206,374) (26,587,453) - (26,587,453) (13,806,427) - (13,806,427) (2,759,909) - (2,759,909) (150,743) - (150,743)
(56,527,000) - (56,527,000) - 2,569,628 2,569,628
- 2,569,628 2,569,628
(56,527,000) 2,569,628 (53,957,372)
22,985,809 - 22,985,809
3,787,802 - 3,787,802
13,848,303 - 13,848,303
5,257,449 - 5,257,449
45,879,363 - 45,879,363
4,632,029 - 4,632,029
10,410,584 2,712,009 13,122,593
1,695,743 - 1,695,743
740,900 (740,900) -
63,358,619 1,971,109 65,329,728
6,831,619 4,540,737 11,372,356
317,666,560 89,619,424 407,285,984
2,614,383 (34,651) 2,579,732
320,280,943 89,584,773 409,865,716
327,112,562$ 94,125,510$ 421,238,072$
and Changes in Net Position
Net (Expense) Revenue
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FUND

FINANCIAL STATEMENTS
Governmental Fund Financial Statements
Proprietary Fund Financial Statements
Fiduciary Fund Financial Statements
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The funds described below were determined to be Major Funds by the City. Individual non-major funds may be found in the Supplementary Information section.

General Fund - The primary fund of the City used to account for all revenue and expenditures not legally restricted as to use. A broad range of municipal activities are provided through this fund including City Manager, City Attorney, Administrative Services, City Clerk, Community Development, Public Safety, Public Works, and Parks and Recreation.

Capital Improvement Capital Projects Fund - This fund is used to account for major capital projects not provided for in one of the other capital projects funds.

Housing Capital Projects Fund - This fund is used to account for development fees that must be used to finance affordable housing for city residents and the housing activities assumed by the City when the former Redevelopment Agency was dissolved.

Gas Tax Fund - Used to account for revenue received from highway users tax and expended under the State of California, Streets and Highways Code Section 2103, 2015, 2107 and 2107.5. Senate Bill (SB) 1, the Road Repair and Accountability Act of 2017 provides funding for local streets and roads over the next 10 years. Measure M approved in 2010 provides funding for local streets and roads for 25 years. These revenues must be expended for maintenance or construction of streets.

MAJOR GOVERNMENTAL FUNDS
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City of San Carlos
Balance Sheet
Governmental Funds
June 30, 2025
Nonmajor Total
Governmental Governmental
Funds Funds
ASSETS
Cash and investments 64,642,092 $ 32,163,284 $ 835,795 $ 21,791,316$ 10,149,994 $ 129,582,481 $ Cash and investments with fiscal agents - - - - 3,564,342 3,564,342 Receivables:

Accounts receivable 4,957,282 715,665 3 246,429 63,928 5,983,307 Notes and loans - - 18,127,256 - - 18,127,256 Down payment assistance loan program - - 364,183 - - 364,183 Lease receivable 30,478,955 - - - - 30,478,955 Prepaid items 2,536,503 - - - - 2,536,503 Property held for resale - - 972,829 - - 972,829 Total assets 102,614,832$ 32,878,949 $ 20,300,066 $ 22,037,745 $ 13,778,264 $ 191,609,856 $

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES AND FUND BALANCES
Liabilities:

Accounts payable and accrued liabilities 5,018,095 2,407,310 123,598 898,056 169,427 8,616,486 Accrued benefits 163,966 - - - - 163,966 Deposits payable 5,694,000 - 1,529 - - 5,695,529 Unearned revenue 896,473 - - 74,862 1,801,879 2,773,214 Total liabilities 11,772,534 2,407,310 125,127 972,918 1,971,306 17,249,195 Deferred Inflows of Resources
Unavailable revenue 241,924 62,176 2,738,682 - - 3,042,782 Lease related 27,790,453 - - - - 27,790,453 Total deferred inflows of resources 28,032,377 62,176 2,738,682 - - 30,833,235 Fund Balances:

Nonspendable:

Prepaid items 2,536,503 - - - - 2,536,503 Restricted for:

General government - 1,183,667 - - 1,747,421 2,931,088 Community development - - - - 686,520 686,520 Public safety - - - - 430,588 430,588 Parks and recreation - 1,791,544 - - 1,423,276 3,214,820 Public works - 192,593 - 19,374,348 1,573,491 21,140,432 Housing - - 17,436,257 - - 17,436,257 Committed to:

General government - - - - 2,680,055 2,680,055 Community development - - - - - - Capital projects - 27,241,659 - 1,690,479 3,265,607 32,197,745 Economic uncertainties reserve 9,846,816 - - - - 9,846,816 Strategic property acquisition 12,191,795 - - - - 12,191,795 Assigned to:

Unfunded liabilities 3,000,000 - - - - 3,000,000 Facility/infrastructure improvements 30,741,500 - - - - 30,741,500 Strategic property acquisition 2,000,000 - - - - 2,000,000 Unassigned 2,493,307 - - - - 2,493,307 Total fund balances 62,809,921 30,409,463 17,436,257 21,064,827 11,806,958 143,527,426 Total liabilities, deferred inflows of
resources and fund balances 102,614,832$ 32,878,949$ 20,300,066$ 22,037,745$ 13,778,264$ 191,609,856$ General Fund
Capital
Improvement Housing Gas Tax
Capital Project Funds
See accompanying Notes to Basic Financial Statements.
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Total Fund Balances - Total Governmental Funds 143,527,426$ Capital assets used in governmental activities were not current financial resources. Therefore, they were not reported in the Governmental Funds Balance Sheet. Except for the internal service funds reported below, the capital assets were adjusted as follows:

Nondepreciable 103,026,697
Depreciable, net 116,033,651
Total capital assets 219,060,348
Internal service funds were used by management to charge the costs of certain activities, such as insurance, to individual funds. The assets and liabilities of the Internal service funds were included in governmental activities in the Government-Wide Statement of Net Position. (532,930)
Unavailable revenues recorded in the fund financial statements resulting from activities in which revenues were earned but were not available are reclassified as revenues in the Government-Wide Financial Statements. 3,042,782 In the Government-Wide Financial Statements, deferred employer contributions for pension and OPEB, certain differences between actuarial estimates and actual results, and other adjustments resulting from changes in assumptions and benefits are deferred in the current year.

Deferred outflows of resources related to pension 16,609,954 Deferred outflows of resources related to OPEB 691,994
Deferred inflows of resources related to pension (3,315,175) Deferred inflows of resources related to OPEB (312,431) Long-term liabilities were not due and payable in the current period. Therefore, they were not reported in the Governmental Funds Balance Sheet.

Compensated absences - due within one year (1,120,731)
Long-term debt - due within one year (195,925)
Compensated absences - due in more than one year (557,052) Net pension liability (44,594,281)
Net OPEB liability (808,939)
Long-term debt - due in more than one year (4,382,478)
Total long-term liabilities (51,659,406)
Net Position of Governmental Activities 327,112,562$
City of San Carlos
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position
June 30, 2025
Amounts reported for governmental activities in the statement of net position are different because:

See accompanying Notes to Basic Financial Statements
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City of San Carlos
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds
For the year ended June 30, 2025
Nonmajor Total
Governmental Governmental
Funds Funds
REVENUES:

Sales taxes 12,232,053$ -$ -$ -$ 1,616,250$ 13,848,303$ Property taxes 19,155,502 3,331,926 - - 793,884 23,281,312 Transient occupancy taxes 3,787,802 - - - - 3,787,802 Franchise taxes 2,432,702 2,824,746 - - - 5,257,448 Vehicle in-lieu 4,632,029 - - - - 4,632,029 Business registration 1,855,681 - - - - 1,855,681 Licenses and permits 3,888,994 737,621 - 4,581 - 4,631,196 From other agencies 92,155 749,336 - 1,771,108 699,441 3,312,040 Charges for services 7,062,218 - - 11,664 - 7,073,882 Fines and forfeitures 135,981 - - - - 135,981 Use of money and property 8,627,473 175,564 194,381 1,116,173 233,061 10,346,652 Other revenue 2,212,976 234,380 554,184 - 465,754 3,467,294 Total revenues 66,115,566 8,053,573 748,565 2,903,526 3,808,390 81,629,620 EXPENDITURES:

Current:

General government 11,974,182 - - - - 11,974,182 Community development 7,276,360 - 813,901 - - 8,090,261 Public safety 25,542,927 - - - 150,000 25,692,927 Public works 7,671,496 - - 1,216,102 891,309 9,778,907 Parks and recreation 5,289,300 - - - - 5,289,300 Capital outlay 1,050,544 12,470,713 10,745 6,077,421 1,146,739 20,756,162 Debt service:

Principal 174,871 - - - 1,460,000 1,634,871 Interest and fiscal charges 118,010 - - - 44,900 162,910 Total expenditures 59,097,690 12,470,713 824,646 7,293,523 3,692,948 83,379,520

REVENUES OVER (UNDER)
EXPENDITURES 7,017,876 (4,417,140) (76,081) (4,389,997) 115,442 (1,749,900) OTHER FINANCING SOURCES (USES):

Transfers in 1,066,462 3,007,478 - 7,767,900 743,266 12,585,106 Transfers out (5,310,000) (3,275,000) -
- (3,259,206) (11,844,206)
Proceeds from sale of property - - 3,259,998 - - 3,259,998 Issuance of leases 1,050,544 - - - - 1,050,544 Total other financing sources (uses) (3,192,994) (267,522) 3,259,998 7,767,900 (2,515,940) 5,051,442 Net change in fund balances 3,824,882 (4,684,662) 3,183,917 3,377,903 (2,400,498) 3,301,542 FUND BALANCES:

Beginning of year 58,985,039 35,094,125 14,252,340 17,686,924 11,347,122 137,365,550 Restatement due to recognition of trust - - - - 2,860,334 2,860,334 Beginning of year, as restated 58,985,039 35,094,125 14,252,340 17,686,924 14,207,456 140,225,884 End of year 62,809,921$ 30,409,463$ 17,436,257$ 21,064,827$ 11,806,958$ 143,527,426$ General Fund
Capital
Improvement Housing Gas Tax
Capital Project Funds
See accompanying Notes to Basic Financial Statements.
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City of San Carlos
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Government-Wide Statement of Activities For the year ended June 30, 2025
Net Change in Fund Balances - Total Governmental Funds 3,301,542$ Governmental funds reported capital outlay as expenditures. However, in the Government-Wide Statement of Activities, the cost of those assets was allocated over their estimated lives as depreciation expense. This was the amount of capital assets recorded in the current period. 12,293,971 Depreciation expense on capital assets was reported in the Government-Wide Statement of Activities, but did not require the use of current financial resources. Therefore, depreciation expense was not reported as expenditures in the governmental funds. (4,971,937)
Disposals of capital assets are recorded as a gain or loss in the Government-Wide Statement of Activities as a result of removal of the underlying asset along with any compensation or fees related to the disposal, but the fund financials record revenue for cash received and expense for fees paid. This reflects the amount that is subtracted from the proceeds on sale of property amount, resulting in a gain of $436,540. (2,823,458) Accrued compensated leave payments were reported as expenditures in the governmental funds, however expense is recognized in the Government-Wide Statement of Activities based on earned leave accruals. (125,605) Repayment of long-term debt was an expenditure in governmental funds, but the repayment reduced long- term liabilities in the Government-Wide Statement of Net Position.

Long-term debt repayments 1,634,871
Issuance of long-term debt (1,050,544)
Change in interest payable 12,167
Amortization of bonds premium (discount), net 43,566
Current year employer pension contributions are recorded as expenditures in the governmental funds, however, these amounts are reported as a deferred outflow of resources in the Government-Wide Statement of Net Position. 8,114,038
Pension expense is reported in the Government-Wide Statement of Activities does not require the use of current financial resources, and therefore is not reported as expenditures in governmental funds. (8,302,373) OPEB expense is reported in the Government-Wide Statement of Activities does not require the use of current financial resources, and therefore is not reported as expenditures in governmental funds. 231,917 Unavailable revenues recorded in the fund financial statements resulting from activities in which revenues were earned but were not available are reclassified as revenues in the Government-Wide Financial Statements. This is the change in unavailable revenues during the fiscal year. 560,344 Internal service funds were used by management to charge the costs of certain activities, such as insurance and fleet management, to individual funds. The net revenue of the internal service funds was reported with governmental activities. (2,086,880)
Change in Net Position of Governmental Activities 6,831,619$ Amounts reported for governmental activities in the Government-Wide Statement of Activities were different because:

See accompanying Notes to Basic Financial Statements
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City of San Carlos
Budgetary Comparison Statement by Department
General Fund
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Sales taxes 13,330,670$ 13,330,670$ 12,232,053$ (1,098,617)$ Property taxes 19,464,800 19,464,800 19,155,502 (309,298) Transient occupancy taxes 4,468,000 4,468,000 3,787,802 (680,198) Franchise taxes 2,121,400 2,121,400 2,432,702 311,302 Vehicle in-lieu 3,407,000 3,407,000 4,632,029 1,225,029 Business registration 1,316,600 1,316,600 1,855,681 539,081 Licenses and permits 2,645,000 2,645,000 3,888,994 1,243,994 From other agencies 11,600 11,600 92,155 80,555 Charges for services 5,233,750 5,233,750 7,062,218 1,828,468 Fines and forfeitures 328,700 328,700 135,981 (192,719) Use of money and property 3,234,700 3,234,700 8,627,473 5,392,773 Other revenue 1,680,870 1,680,870 2,212,976 532,106 Total revenues 57,243,090 57,243,090 66,115,566 8,872,476 EXPENDITURES:

Current:

General government:

City council 321,500 351,370 280,701 70,669 City manager 2,632,080 2,509,030 2,182,231 326,799 City clerk 617,550 742,550 592,261 150,289 Administrative services 4,345,650
4,345,650 4,144,242 201,408
General government 433,600 4,433,600 4,433,499 101 City treasurer 20,600 20,600 9,127 11,473 City attorney 431,750 556,750 625,002 (68,252) Total general government 8,802,730 12,959,550 12,267,063 692,487 Community development:

Administration 1,294,550 1,424,600 1,368,245 56,355 Economic development 725,300 725,300 232,154 493,146 Building 2,832,550 2,832,550 2,551,612 280,938 Planning 2,569,800 2,569,800 2,030,782 539,018 Advance planning 1,228,900 1,228,900 1,093,567 135,333 Total community development 8,651,100 8,781,150 7,276,360 1,504,790 Public safety:

Police 13,628,270 13,711,770 12,821,062 890,708 Fire 12,906,600 12,906,600 12,721,865 184,735 Total public safety 26,534,870 26,618,370 25,542,927 1,075,443 Budgeted Amounts
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City of San Carlos
Budgetary Comparison Statement by Department (Continued) General Fund
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Public works:

Administration 2,516,200 2,516,200 1,919,620 596,580 Garage 93,725 93,725 51,062 42,663 Street maintenance 505,000 505,000 493,550 11,450 Park maintenance 3,201,825 3,201,825 3,107,867 93,958 Traffic control 372,100 372,100 388,853 (16,753) Building maintenance 1,753,175 1,753,175 1,710,544 42,631 Total public works 8,442,025 8,442,025 7,671,496 770,529 Parks and recreation:

Administration 987,750 997,750 960,095 37,655 Recreation 4,446,265 4,446,265 4,329,205 117,060 Total parks and recreation 5,434,015 5,444,015 5,289,300 154,715 Total expenditures 57,864,740 62,245,110 58,047,146 4,197,964

REVENUES OVER (UNDER)
EXPENDITURES (621,650) (5,002,020) 8,068,420 13,070,440 OTHER FINANCING SOURCES (USES):

Transfers in 855,800 855,800 1,066,462 210,662 Transfers out (5,310,000) (5,310,000) (5,310,000) - Total other financing sources (uses) (4,454,200) (4,454,200) (4,243,538) 210,662 Net change in fund balances (5,075,850)$ (9,456,220)$ 3,824,882 13,281,102$ FUND BALANCES:

Beginning of year 58,985,039
End of year 62,809,921$
Budgeted Amounts
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Proprietary funds account for City operations financed and operated in a manner similar to a private business enterprise.

The intent of the City is that the cost of providing goods and services be financed primarily through user charges.

The concept of major funds extends to Proprietary Funds.

Budget versus actual comparisons regarding proprietary funds that are major funds are not presented.

Sewer Enterprise Fund - This fund is used to account for sewage treatment, transmission, major replacements and improvements to the City’s sewer system.

MAJOR PROPRIETARY FUNDS
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City of San Carlos
Statement of Net Position
Proprietary Funds
June 30, 2025
Business-Type Activities
Enterprise Fund Governmental
Activities -
Internal Service
ASSETS Funds
Current Assets:

Cash and investments 52,877,991$ 2,538,252$ Receivables:

Accounts receivable 1,029,284 4,730
Total current assets 53,907,275 2,542,982 Noncurrent:

Investment in SVCW 6,668,905 -
Capital assets:

Nondepreciable capital assets 556,233 - Depreciable capital assets 52,408,274 -
Accumulated depreciation (16,496,950) -
Net capital assets 36,467,557 -
Total noncurrent assets 43,136,462 -
Total assets 97,043,737 2,542,982

DEFERRED OUTFLOWS OF RESOURCES
Deferred pension related items 1,385,645 - Deferred OPEB related items 85,527 - Total deferred outflows of resources 1,471,172 -

LIABILITIES
Current liabilities:

Accounts payable and accrued liabilities 1,065,254 38,912 Compensated absences - current 109,403 - Claims payable - current - 356,400 Total current liabilities 1,174,657 395,312 Noncurrent liabilities:

Compensated absences 48,525 -
Claims payable - 2,680,600 Net pension liability 2,803,180 -
Net OPEB liability 99,982 -
Total noncurrent liabilities 2,951,687 2,680,600 Total liabilities 4,126,344 3,075,912

DEFERRED INFLOWS OF RESOURCES
Deferred pension related items 224,440 - Deferred OPEB related items 38,615 - Total deferred inflows of resources 263,055 -

NET POSITION
Net investment in capital assets 36,467,557 - Restricted for:

Capital projects 21,892,905 -
Debt service 4,692,000 -
Unrestricted 31,073,048 (532,930)
Total net position 94,125,510$ (532,930)$
Sewer
See accompanying Notes to Basic Financial Statements.
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City of San Carlos
Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds
For the year ended June 30, 2025
Business-Type Activities
Enterprise fund Governmental
Activities -
Internal Service
Funds
OPERATING REVENUES:

Charges for services 22,334,324$ 1,154,300$ Cost reimbursements - 1,919,900 Total operating revenues 22,334,324 3,074,200 OPERATING EXPENSES:

Salaries and benefits 2,103,021 -
Sewer operations 9,515,258 -
Insurance premiums - 1,922,894 Claims expense - 3,320,029 Depreciation expense 1,333,868 -
Miscellaneous 5,549,676 53,556
Total operating expenses 18,501,823 5,296,479 Operating income (loss) 3,832,501 (2,222,279) NONOPERATING REVENUES (EXPENSES):

Investment income 2,712,009 130,669 Miscellaneous - 4,730 Increase (decrease) in investment in Sewer Authority (1,262,873) - Total nonoperating revenues (expenses) 1,449,136 135,399 Income before contributions and transfers 5,281,637 (2,086,880) CONTRIBUTIONS AND TRANSFERS:

Transfers out (740,900) -
Total contributions and transfers (740,900) - Change in net position 4,540,737 (2,086,880) NET POSITION:

Beginning of year 89,619,424 1,553,950 Restatement due to implementation of GASB 101 (34,651) - Beginning of year, as restated 89,584,773 1,553,950 End of year 94,125,510$ (532,930)$
Sewer
See accompanying Notes to Basic Financial Statements.
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City of San Carlos
Combining Statement of Cash Flows
Proprietary Funds
For the year ended June 30, 2025
Enterprise Funds Governmental
Activities -
Internal Service
Funds
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers and users 22,300,869 $ -$ Cash received from/(paid to) interfund services - 3,074,200 Cash paid to suppliers for goods and services (15,732,958) (113,656) Cash paid to employees for services (2,237,905) - Claims paid - (3,320,029) Net cash provided by (used in) operating activities 4,330,006 (359,485) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Cash transfers out (740,900) -
Net cash provided by (used in)
noncapital financing activities (740,900) - CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Acquisition and construction of capital assets (3,122,117) - Net cash provided by (used in)
capital and related financing activities (3,122,117) - CASH FLOWS FROM INVESTING ACTIVITIES:

Interest received 2,712,009 130,669 Miscellaneous - -
Net cash provided by (used in) investing activities 2,712,009 130,669 Net cash flows 3,178,998 (228,816)
CASH AND INVESTMENTS - Beginning of year 49,698,993 2,767,068 CASH AND INVESTMENTS - End of year 52,877,991$ 2,538,252 $

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

Operating income (loss) 3,832,501$ (2,222,279) $ Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:

Depreciation 1,333,868 -
Changes in assets and liabilities:

Receivables, net (33,455) -
Accounts payable (668,024) (32,206) Compensated absences 51,976 -
Claims payable - 1,895,000 Net pension liability and deferred outflows/inflows of resources (158,196) - Net OPEB liability and deferred outflows/inflows of resources (28,664) -

Net cash provided by (used in) operating activities 4,330,006$ (359,485)$ NONCASH TRANSACTIONS:

Investment in joint venture (1,262,873)$ -$ Business-Type Activities
Sewer
See accompanying Notes to Basic Financial Statements.
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Fiduciary Funds are presented separately from the Government-wide and Fund Financial Statements. These include the following:

Successor Agency of the Former RDA Private Purpose Trust Fund - This fund is used to account for the activities related to the dissolution of the former San Carlos Redevelopment Agency.

Custodial Funds - Custodial Funds are used to account for fiduciary activities that are not required to be reported in pension (and other employee benefit) trust funds, investment trust funds, or private-purpose trust funds .

FIDUCIARY FUNDS
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City of San Carlos
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2025
Private Purpose
Trust Fund
Successor
Agency of the
Former RDA Custodial Funds
ASSETS
Cash and investments 1,143,342$ 32,089,788$ Receivables:

Accounts receivable - 5,977,946 Notes and loans - 2,741,801 Total assets 1,143,342 40,809,535

LIABILITIES
Accounts payable and accrued liabilities 79,218 8,602,565 Unearned revenue - 755,840 Long-term liabilities:

Long-term debt - due within one year 865,258 - Long-term debt - due in more than one year 8,573,964 - Total liabilities 9,518,440 9,358,405

FIDUCIARY NET POSITION
Restricted for:

Individuals, organizations, and other governments - 31,451,130 Held in trust for private purposes (8,375,098) - Total Fiduciary Net Position (8,375,098)$ 31,451,130$ See accompanying Notes to Basic Financial Statements.
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City of San Carlos
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the year ended June 30, 2025
Private Purpose
Trust Fund
Successor Custodial Funds
Agency of the (see Supplementary
Former RDA Information for breakdown)
ADDITIONS:

Taxes 1,272,640$ -$
Members contributions - 2,706,782 Intergovernmental - 14,404,292 Fees and assessments - 2,683,460 Miscellaneous 4,239 1,820,568 Total additions 1,276,879 21,615,102 DEDUCTIONS:

Administrative expenses 10,250 803,837 Distribution - 11,294,396 Professional services - 9,582,616 Interest expense 410,170 107,584 Transfer of operations - 1,285,610 Total deductions 420,420 23,074,043 Change in fiduciary net position 856,459 (1,458,941) FIDUCIARY NET POSITION:

Beginning of year (9,231,557) 32,910,071 End of year (8,375,098)$ 31,451,130$ See accompanying Notes to Basic Financial Statements.
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NOTES TO BASIC

FINANCIAL STATEMENTS

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity

The City of San Carlos (“City”) is a general-law city that operates under the Council-Manager form of government, with five elected Council members served by a full-time City Manager and staff. Services provided by the City include public safety, streets and roads, parks and recreation, planning and community development, and others. The accounting policies of the City conform to Generally Accepted Accounting Principles (“GAAP”) as applicable to governments. These financial statements include the City and its component units – entities for which the City is financially accountable. Blended component units, although legally separate entities, are in substance part of the City's operations, therefore data from these units are combined with City data. Their financial activities have been aggregated and merged (termed “blending”) with those of the City in the accompanying financial statements.

The San Carlos Housing Authority (“Housing Authority”) is a separate government entity whose purpose is to provide housing to low- and moderate-income families within certain areas of the city. The Housing Authority is both controlled by and financially dependent on the City. The City Council members serve as the Authority’s Commissioners. The bond issuance authorizations are approved by the City’s Council and the City is legally obligated to provide resources in case there are deficiencies in debt service payments and resources are not available from any other remedies. As such, the financial activities of the Housing Authority have been included as a blended component unit in these financial statements, and no separate statements for the Housing Authority were prepared.

B. Basis of Presentation

The City's Basic Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America. The Government Accounting Standards Board is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States of America.

Government-wide Statements : The Statement of Net Position and the Statement of Activities display information about the primary government (City) and its component units. These statements include the financial activities of the overall City government, except for fiduciary activities. All fiduciary activities are reported only in the fund financial statements. Eliminations have been made to minimize the double counting of internal activities; however, inter-fund services provided and used are not eliminated in the process of consolidation. These statements distinguish between the governmental and business-type activities of the City. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non-exchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties.

The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the City and for each function of the City's governmental activities. Direct expenses are those that are specif ically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include: (a) charges paid by the recipients of goods or services offered by the programs; (b) grants and contributions that are restricted to meeting the operational needs of a particular progr am; and (c) fees, grants, and contributions that are restricted to financing the acquisition or construction of capital assets. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

B. Basis of Presentation, continued

Fund Financial Statements : Fund financial statements provide information about the City's funds, including fiduciary funds and blended component units. Separate statements for each fund category, governmental, proprietary and fiduciary, are presented. The emphasis of fund financial statements is on major individual governmental and enterprise funds, each of which is displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as non-major funds.

Proprietary fund operating revenues and expenses, such as charges for services and salaries and benefits, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non-operating revenues and expenses, such as investment earnings and interest expense, result from non-exchange transactions or ancillary activities.

C. Major Funds

The City's major governmental and business-type funds are identified and presented separately in the fund financial statements. All other funds, called non-major funds, are combined and reported in a single column.

Major funds are defined as funds that have either assets, deferred outflows of resources, liabilities, deferred inflows of resources, revenues or expenditures/expenses equal to ten percent of their fund-type total and five percent of the grand total. The General Fund is always a major fund. The City may also select other funds it believes should be presented as major funds.

The following major governmental funds are reported in the accompanying financial statements:

General Fund: The primary fund of the City that is used to account for all revenues and expenditures of the City not legally restricted as to use. A broad range of municipal activities are provided through this fund including City Council, City Manager, City Attorney, Administrative Services, City Clerk, Community Development, Public Safety, Public Works, and Parks and Recreation.

Capital Improvement Capital Projects Fund: Used to account for major capital projects not provided for in one of the other capital project funds.

Housing Capital Projects Fund : Used to account for development fees that must be used to finance affordable housing for city residents and the housing activities assumed by the City when the former Redevelopment Agency was dissolved.

Gas Tax Fund: Used to account for revenue received from highway users’ tax and expended under the State of California, Streets and Highways Code Section 2103, 2015, 2107 and 2107.5. Senate Bill (SB) 1, the Road Repair and Accountability Act of 2017 provides funding for local streets and roads over the next 10 years. Measure M approved in 2010 provides funding for local streets and roads for 25 years.

These revenues must be expended for maintenance or construction of streets.

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

C. Major Funds, continued

The City reports the following major enterprise fund in the accompanying financial statements:

Wastewater (Sewer) Enterprise Fund : Used to account for sewage treatment, transmission, major replacements and improvements to the City's sewer system.

The City also reports the following fund types:

Internal Service Fund: These funds account for workers’ compensation, general liability and other post- employment benefits; all of which are provided to other departments on a cost-reimbursement basis.

Fiduciary Funds: Custodial funds are used to account for assets held by the City as an agent for the City/County Association of Governments of San Mateo County (C/CAG). Private-purpose trust funds are used to account for the assets and liabilities of the former Redevelopment Agency and the allocated revenue to pay estimated installment payments of enforceable obligations until the obligations of the former Redevelopment Agency are paid in full and assets have been liquidated. All fiduciary funds use the accrual, rather than the modified accrual, basis of accounting. On July 1, 2024, the Peninsula Traffic Congestion Relief Alliance (Commute.org)’s accounting records and fiduciary responsibility transferred to the City of Millbrae.

The financial activities of these funds are excluded from the Government-wide financial statements but are presented in separate Fiduciary Fund financial statements.

D. Basis of Accounting

The Government-wide, proprietary funds and fiduciar y funds financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.

Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The City considers revenues reported in the governmental funds to be available if the revenues are collected generally within 60 days after year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and intere st on general long-term debt, including lease liabilities, as well as claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. Governmental capital asset acquisitions, including entering into contracts giving the City the right to use leased assets are reported as expenditures in governmental funds.

Proceeds of governmental long-term debt and financing through leases are reported as other financing sources.

Those revenues susceptible to accrual are property, sales and use, transient occupancy, franchise and gas taxes, intergovernmental revenues, grants, and interest revenue. Fines, licenses and permits, and charges for services are not susceptible to accrual because they are not measurable until collected.

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

D. Basis of Accounting, continued

Non-exchange transactions are those in which the City gives or receives value without directly receiving or giving equal value in exchange, and includes taxes, grants, entitlements and donations. On the accrual basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or assessed.

Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.

The City may fund programs with a combination of cost-reimbursement grants, categorical block grants, and general revenues. Thus, both restricted and unrestricted net position may be available to finance program expenditures. The City's policy is to first apply restricted grant resources to such programs, followed by general revenues if necessary.

Certain indirect costs are included in program expenses reported for individual functions and activities.

E. Property Taxes and Sewer Charges

Revenue is recognized in the period for which the tax and assessment is levied. The County of San Mateo (“County”) levies, bills, and collects property taxes and sewer charges for the City. The County remits the entire amount levied and handles all delinquencies, retaining interest and penalties. Secured and unsecured property taxes are levied on January 1.

Secured property tax is billed in two equal installments – on November 1 and February 1 – due by December 10 and April 10 (of the following year), respectively. Taxes are considered delinquent if paid after the due dates. Unsecured property tax is due on July 1 and becomes delinquent on August 31.

The term "unsecured" refers to taxes on personal property other than real estate, land and buildings.

These taxes are secured by liens on the property being taxed. Property tax revenues are recognized by the City in the fiscal year they are assessed, provided they become available as defined above; generally within 60 days.

F. Assets, Deferred Inflows/Outflows, Liabilities and Fund Balance Net Position Investments

For financial reporting purposes, investments are adjusted to their fair value. Changes in fair value that occur during a fiscal year are recognized as investment income reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation or sale of investments. Some investments are valued on an unamortized cost basis. For these investments, there is no material difference from fair value.

The City pools cash and investments of all funds, ex cept for assets held by fiscal agents. Each fund’s share in this pool is displayed in the accompany ing financial statements as cash and investments.

Investment income earned by the pooled investments is allocated to the various funds based on each fund’s average cash and investment balance.

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

F. Assets, Deferred Inflows/Outflows, Liabilities and Fund Balance Net Position Investments, continued

Cash and Cash Equivalents

For purposes of the statement of cash flows, cash equivalents are defined as short-term, highly liquid investments that are both readily convertible to known amounts of cash or so near their maturity that they present insignificant risk of change in value because of changes in interest rates. Cash equivalents also represent the proprietary fund’s share in the cash and investment pool of the City. Cash equivalents have an original maturity date of three months or less from the date of purchase. For purposes of the statement of cash flows, the entire balance of cash and investments on the combined balance sheet for the proprietary funds is considered cash and cash equivalents.

Prepaid Items

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both Government-wide and fund financial statements. The cost of prepaid items is recorded as expenditures/expenses when consumed rather than when purchased.

Capital Assets

All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available, except for the intangible right-to-use lease assets, the measurement of which is discussed in Note 7 below. Capital assets received in a service concession arrangement should be reported at acquisition value rather than fair value. The City's policy is to capitalize all assets with costs exceeding the $5,000 threshold and a useful life of more than one year. Donated capital assets, donated works of art and similar items, are reported at acquisition value rather than fair value.

All capital assets with limited useful lives and the right-to-use leased assets are depreciated over their estimated useful lives. The purpose of depreciation is to spread the cost of capital assets equitably among all users over the life of these assets. The amount charged to depreciation expense each year represents that year's pro rata share of the cost of capital assets.

Depreciation is provided using the straight-line method, which means the cost of the asset is divided by its expected useful life in years and the result is charged to expense each year until the asset is fully depreciated. The City has assigned the useful lives listed below to capital assets:

Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of the business-type activities is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period.

Building and Improvements 10 - 50 years
Equipment 5 - 10 years
Infrastructure and Sewer System Network 75 - 100 years
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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

F. Assets, Deferred Inflows/Outflows, Liabilities and Fund Balance Net Position Investments, continued

Deferred Outflows/Inflows of Resources

In addition to assets, the statements of net position and the governmental fund balance sheet report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period(s) and will not be recognized as an outflow of resources (expense/expenditure) until then. The City only has two items that qualify for reporting in this category, which is deferred outflows relating to the net pension and other post-employment benefit liabilities reported in the statements of net position. These outflows are the result of contributions made after the measurement period, which are expensed in the following year, and of adjustments due to the differences between actuarial estimates and actual results, along with changes in the City’s proportionate share in the pension cost-sharing plan.

In addition to liabilities, the statements of net position and the governmental balance sheet report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. The City has three items that qualify for reporting in this category. 1) Deferred inflows relating to the net pension and other post-employment benefits liabilities reported in the Government-wide statement of net position. These inflows are the result of the net difference between actuarial estimates and actual results, along with changes in the City’s proportionate share in the pension cost-sharing plan. 2) Governmental funds report unavailable revenues from the following sources: cost reimbursements; charges for services; and revenues from housing loans.

These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. 3) Deferred inflows relating to the leases receivable for the City as a lessor.

Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term.

Compensated Absences

Compensated absences comprise unpaid vacation, comp ensatory time, administrative leave time, and float holidays that is accrued as earned (vacation and compensatory time), or in one lump amount (administrative leave time and float holidays) every January 1. All employees who hold full-time regular positions are entitled to 12 working days of vacation pay upon successful completion of their first year of continuous service. Management employees may be entitled to a higher accrual rate based on prior work at a reciprocal agency or a CalPERS agency per the Salaries and Benefits resolution. The accrual rate increases after length of service exceeds four years. Maximum accumulation of vacation is two years of vacation accrual. Upon termination or retirement, full-time employees are entitled to receive compensation at their current base salary for all unused vacation and compensatory leave. Unused administrative leave and float holidays are lost on December 31.

The City's liability for compensated absences is recorded in the statements of net position. Liabilities for leave are assumed to be accrued using the last in, first out method, meaning the most recently earned leave is used first. The City has recorded a liability only when it is more likely than not that the leave will be taken or paid for. The compensated absences are reported in governmental funds only if they are matured. The liability for compensated absences is determined annually. For governmental funds, the portion expected to be permanently liquidated is recorded as fund liabilities. Compensated absences are liquidated by the fund that has recorded the liability – primarily the General Fund.

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

F. Assets, Deferred Inflows/Outflows, Liabilities and Fund Balance Net Position Investments, continued

Pensions

In Government-wide financial statements, retirement plans (pensions) are required to be recognized and disclosed using the accrual basis of accounting (see Note 10) and the required supplementary information (“RSI”) section immediately following the Notes to Financial Statements, regardless of the amount recognized as pension expenditures on the governmental fund statements, which use the modified accrual basis of accounting.

In general, the City recognizes a net pension liability, which represents the City’s proportionate share of the excess of the total pension liability over the fiduciary net position of the pension reflected in the actuarial report provided by the California Public Employees’ Retirement System (“CalPERS”). The net pension liability is measured as of the City’s prior fiscal year end. Changes in the net pension liability are recorded in the period incurred as pension expenses or as deferred inflows of resources or deferred outflows of resources depending on the nature of the change. The changes in net pension liability that are recorded as deferred inflows of resources or deferred outflows of resources (that arise from changes in actuarial assumptions or other inputs and differences between expected or actual experience) are amortized over the weighted average remaining servic e life of all participants in the respective pension plan and are recorded as a component of pension expense beginning with the period in which they are incurred.

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

Investments are reported at fair value.

Projected earnings on pension investments are recognized as a component of pension expense.

Differences between projected and actual investment earnings are reported as deferred inflows of resources or deferred outflows of resources and amortized as a component of pension expense on a closed basis over a five-year period beginning with the period in which the difference occurred. Each subsequent year will incorporate an additional closed basis five-year period of recognition.

Fund Balance

In the fund financial statements, governmental funds report the following fund balance classifications:

Nonspendable: Amounts that cannot be spent because they are either (a) not in spendable form, or (b) legally or contractually required to be maintained intact.

Restricted: Amounts that are constrained on the use of resources by either (a) external creditors, grantors, contributors, or laws or regulations of other governments, or (b) by law through constitutional provisions or enabling legislation.

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

F. Assets, Deferred Inflows/Outflows, Liabilities and Fund Balance Net Position Investments, continued

Fund Balance, continued

Committed: Amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest authority – the City Council. The formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a City Council resolution.

Assigned: Amounts that are constrained by the government’s intent to be used for specific purposes but are neither restricted nor committed. The City Manager is authorized to assign amounts to a specific purpose, which is established by City Council resolution.

Unassigned: The residual amounts that have not been restricted, committed, or assigned to specific purposes. The general fund is the only fund that reports an unassigned fund balance amount. In other governmental funds it is not appropriate to report an unassigned fund balance amount. However, in governmental funds other than the general fund, if expenditures incurred for specific purposes exceed the amounts that are restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that fund.

The City Council adopts and amends committed fund balance amounts through resolution. The City Council authorizes assigned amounts for specific purposes pursuant to the policy-making powers granted through resolution.

Fund Balance Flow Assumption

Sometimes the City will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). To calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the City’s policy to use assigned fund balance for the purpose for which it was assigned.

The hierarchy followed to deplete the reserves is as follows: first unassigned fund balance will be depleted; second assigned fund balances will be depleted at discretion of the City Manager; and lastly committed fund balances will be depleted in accordance with approved commitments and formal action of the City Council.

Net Position

Net position is the excess of all the City's assets and deferred outflows over all its liabilities and deferred inflows, regardless of fund. Net position is divided into three captions. These captions apply only to net position, which is determined only at the Government-wide level, and are described below:

Net investment in capital assets describes the portion of net position that is represented by the current net book value of the City's capital assets, less the outstanding balance of any debt issued to finance these assets.

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

F. Assets, Deferred Inflows/Outflows, Liabilities and Fund Balance Net Position Investments, continued

Net Position, continued

Restricted describes the portion of net position that is restricted as to use by the terms and conditions of agreements with outside parties, governmental regulations, laws, or other restrictions that the City cannot unilaterally alter. These principally include developer fees received for use on capital projects, debt service requirements, and funds restricted to low- and moderate-income purposes.

Unrestricted describes the portion of net position that is not restricted to use.

Net Position Flow Assumption

Sometimes the City will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. To calculate the amounts to report as restricted net position and unrestricted net position in the Government-wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the City’s policy to consider restricted net position to have been depleted before unrestricted net position is applied.

G. Budgets and Budgetary Accounting Policies

The City typically adopts a biennial operating budget on or before June 30 to ensure that two fiscal years for the General Fund, all Special Revenue Funds, and all Debt Service Funds are budgeted. Expenditures for the Capital Projects Funds are budgeted and managed on a project length basis. The City follows a budgeting process in which the City’s plans and objectives are outlined and budgeted. This work program is reviewed with the City Council to determine the priority and timing of plans and objectives. Revisions are made to the work program, which in its final fo rm is adopted by the City Council as an operating budget, effective July 1 for the ensuing fiscal year. From the effective date of the budget, the amounts stated therein as proposed expenditures become appropriations to the various funds.

City Council may amend the budget by resolution during the fiscal year. The City Manager may transfer appropriations from one program, activity, or object to another within the same department or between departments. However, transfers of appropriations that change total fund appropriations must be approved by the City Council. Expenditures that exceed appropriations at the fund level must be approved by the City Council. Budgets are adopted on a basis consistent with GAAP. Department heads may make transfers of appropriations within a department. Transfers of appropriations between departments, but within the same fund, can be approved administratively (by the Administrative Services Director or City Manager).

H. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The City categorizes its fair value measurements within the fair value hierarchy established by GAAP. The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

H. Fair Value Measurements, continued

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are inputs, other than quoted prices included within Level 1, which are observable for an asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for an asset or liability.

If the fair value of an asset or liability is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement.

I. Estimates and Assumptions

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting period. Actual results could differ from those estimates.

J. New Accounting Pronouncements

GASB Statement No. 101, Compensated Absences - The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. The City added accruals for floating holiday time, compensatory time, and administrative leave as a result of this statement. Beginning net position and June 30, 2024 balances of compensated absences were adjusted in the implementation of this statement. Please see notes 7 and 16 for more details.

GASB Statement No. 102, Certain Risk Disclosures - The objective of this Statement is to provide users of government financial statements with essential in formation about risks related to a government’s vulnerabilities due to certain concentrations or constraints. The City had no adjustments or new disclosures as a result of this Statement.

NOTE 2 - CASH AND INVESTMENTS

The City pools cash from all sources and all funds except cash and investments held by trustees so that it can be invested at the maximum yield consistent with safety and liquidity, while individual funds can make expenditures at any time.

A. Policies

California Law requires banks and savings and loan inst itutions to pledge government securities with a market value of 110% of the City's cash on deposit, or first trust deed mortgage notes with a market value of 150% of the deposit, as collateral for these deposits. This collateral is held in a separate investment pool by another institution in the City's name and places the City ahead of general creditors of the institution.

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 2 - CASH AND INVESTMENTS, CONTINUED

A. Policies, continued

The City invests in investment pools. While individual investments are allowed under the City’s Investment Policy and are defined as specific identifiable securities instruments, or an electronic entry registering the owner in the records of the institution issuing the security, called the book entry system, the City primarily invests in investment pools. To increase security, the City employs the trust department of a bank as the custodian of certain City managed investments, regardless of their form.

The City's investments are carried at fair value, as required by GAAP. The City adjusts the carrying value of its investments to reflect their fair value at each fiscal year end, including the effects of these adjustments in income for that fiscal year.

B. Classification

Cash and investments as of June 30, 2025 are classified in the following financial statements as follows:

Cash and investments as of June 30, 2025 consist of the following:

C. Investments Authorized by the California Government Code and the City's Investment Policy

The following table 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 (or the City’s Investment Policy, where more restrictive) that address interest rate risk, credit 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 bond indentures of the City, rather than the general provisions of the California Government Code or the City’s Investment Policy.

Statement of Net Position:

Cash and investments 184,998,724$
Cash and investments with fiscal agent 3,564,342
Subtotal 188,563,066$
Fiduciary Funds:

Cash and investments 33,233,130
Subtotal 33,233,130
Total cash and investments 221,796,196$
Cash on hand 5,950$
Deposits with financial institutions 5,028,422
Investments 216,761,824
Total cash and investments 221,796,196$
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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 2 - CASH AND INVESTMENTS, CONTINUED

C. Investments Authorized by the California Government Code and the City's Investment Policy, Continued

Authorized Investment Type
Maximum
Maturity
Minimum
Credit Quality
Maximum in
Portfolio
Maximum
Investment in
One Issuer
State California Local Agency
Investment Fund Upon Demand N/A
As permitted by
LAIF
(currently $75
million per
account) N/A
San Mateo County Investment Pool Upon Demand N/A
As permitted by
County
Treasurer
(currently no
limit) N/A
U.S. Treasury Bonds, Notes and Bills 5 years N/A 100% 10% U.S. Government Agency and Federal
Agency 5 years N/A 100% N/A
Mortgage Securities or Mortgage-
Backed Securities 5 years (B) 20% N/A
Bankers Acceptances 180 days N/A 40% (A)
Commercial Paper 270 days
Highest letter
and number
rating by an
NRSRO 25% (C)
Negotiable Certificates of Deposit 5 years N/A 30% 5%
Placement Service Deposits –
Deposits or Certificates of Deposits 5 years N/A 50% N/A Medium Term Corporate Notes 5 years A 30% 5%
(C) No more than 10% of outstanding paper of issuing corportion (B) Securities eligible for inv estment under this subdiv ision shall be rated in a rating category of "AA" or its equivalent or better by an NRSRO.
(A) No more than 30% of the agency's money may be in banker's acceptances of any one commercial bank.
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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 2 - CASH AND INVESTMENTS, CONTINUED

D. Investments Authorized by Debt Agreements

The City must maintain required amounts of cash and investments with trustees or fiscal agents under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged reserves to be used if the City fails to meet its obligations under these debt issues. The California Government Code requires these funds to be invested in accordance with City resolutions, bond indentures or State statutes.

The table below identifies the investment types that are authorized for investments held by fiscal agents.

The table also identifies certain provisions of these debt agreements.

E. Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Normally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The City’s investment policy is to hold investments to maturity to mitigate the interest rate risk. Information about the sensitivity of the fair values of the City's investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity or earliest call date.

Authorized Investment Type
Minimum
Credit
Quality
Securities of the U.S. Government or its agencies None
Time certificates of deposit None
Bankers acceptances None
Commercial paper A1
California Local Agency Investment Fund None
Repurchase agreements None
Small Business Administration loans None
Money market funds AAA-m (1)
Negotiable certificates of deposit None
Investment agreement None
Tax-exempt obligations AAA
(1) San Carlos RDA 2018 TAB
Investment Type
12 Months
or less Total
San Mateo County Investment Pool 125,925,402$ 125,925,402 $ California Local Agency Investment Fund 90,836,422 90,836,422 Total Inv estments 216,761,824 216,761,824
Cash In bank and cash on hand 5,034,372
Total Cash and Investments 221,796,196 $
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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 2 - CASH AND INVESTMENTS, CONTINUED

F. Credit Risk

Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy, or debt agreements, and the actual rating, by Standard and Poor’s, as of June 30, 2025 for each investment type.

G. Fair Value Hierarchy

The City categorizes its fair value measurements within the fair value hierarchy established by GAAP.

The hierarchy is based on the valuation inputs used to measure fair value of the assets: 1) Level 1 inputs are quoted prices in an active market for identical assets; 2) Level 2 inputs are significant other observable inputs; and 3) Level 3 inputs are significant unobservable inputs.

Money markets, and external investment pools such as the California Local Agency Investment Fund and the San Mateo County Investment Pool, are exempt from the fair value hierarchy under GASB No. 72, Fair Value Measurement and Application.

H. Local Agency Investment Fund

The City is a participant in the Local Agency Investment Fund (“LAIF”) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City reports its investment in LAIF at the fair value amount provided by LAIF, using a fair value factor of

1.00119831 as of June 30, 2025. The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Included in LAIF's investment portfolio are collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, loans to certain State funds, and floating rate securities issued by federal agencies, government-sponsored enterprises, United States Treasury Notes and Bills, and corporations. On June 30, 2025, LAIF’s investments in structured notes and asset-backed securities were 3.81% of the total LAIF balance as compared to 3.00% in the prior year.

Investment Type Total
Not rated:

California Local Agency Investment Fund 90,836,422$
San Mateo County Investment Pool 125,925,402
Total Inv estments 216,761,824
Cash in bank and cash on hand 5,034,372
Total Cash and Investments 221,796,196$
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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 2 - CASH AND INVESTMENTS, CONTINUED

I. San Mateo County Investment Fund

The City is a voluntary participant in the San Mateo County Investment Fund (“SMCIF”) that is regulated by California Government Code Section 53684 under the oversight of the Treasurer of the County of San Mateo. The balance available for withdrawal is based on the accounting records maintained by SMCIF, which are recorded on an amortized cost basis. In cluded in SMCIF's investment portfolio are U.S.

Treasury Notes, obligations issued by agencies of the U.S. Government, corporate botes, commercial paper, asset-backed securities and floating rate securities issued by federal agencies, government- sponsored enterprises, and corporations. The City reports its investments in SMCIF at the fair value amounts provided by SMCIF, using a fair value factor of 1.01103 as of June 30, 2025.

K. Custodial Credit Risk

Custodial credit risk for deposits is the risk that the City will not be able to recover its deposits or will not be able to recover collateral securities in the possession of an outside party if a depository institution fails.

The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit exposure to custodial credit risk for deposits or investments, other than the following provision applicable to deposits.

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

The fair value of pledged securities must equal at least 110% of the City’s cash deposits. State law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash deposits, which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation. The City, however, has not waived the collateralization requirements.

NOTE 3 - LOANS RECEIVABLE

The City’s loans receivable balances as of June 30, 2025 is summarized below:

Loan Program/Description Total
Down Payment Assistance - original program 67,479$
Down Payment Assistance - rev ised program 296,704
Total Down Payment Assistance Loan Program Receivable 364,183$ 817 Walnut Street 8,525,447$
1232 Cherry Street 7,701,670
Human Investment Project Inc. 293,962
Laureola Oaks 1,606,177
Total Notes and Loans Receivable 18,127,256$
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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 3 - LOANS RECEIVABLE, CONTINUED

A. Down Payment Assistance Loan (“DAL” Program)

The City’s former Redevelopment Agency previously offered first-time home buyers, who qualified as having low and moderate income, loans for use as a down payment on the purchase of a home. The loans bore an interest rate of 3% and were secured by second deeds of trust on the underlying property. No payments were due until five years after the date of purchase, at which time the buyer had the option of converting the loan into shared equity in the property or extending the loan for an additional 10 years with monthly payments and a balloon payment for the unpaid balance at the end of the 10-year term. On February 1, 2012, this receivable was transferred to the City when it took over the housing function of the Redevelopment Agency upon dissolution. On June 30, 2025, the City has recorded a receivable totaling $67,479 for loans given out to two buyers.

On April 27, 2009, the City Council approved revisions to the terms of the program DAL for the first-time home buyer program. Payments are deferred for the term of the loan. Homeowners of units other than a Below Market Rate unit and/or any unit subject to a resale restriction agreement are required to pay shared appreciation in addition to the repayment of principal and accrued interest at the time the DAL Program loan repayment is due. Interest rates and loan terms remained unchanged. On June 30, 2025, the City had recorded a receivable totaling $296,704 for loans given out to four buyers, consisting of $192,000 in principal and $104,704 in accrued interest. The DAL program was discontinued after the dissolution of RDA in 2012.

B. Disposition, Development and Loan Agreement (817 Walnut Street)

On June 19, 2020, the City and Walnut Street, L.P. entered a Disposition, Development and Loan Agreement (“DDLA”). The purpose of the DDLA is to effectuate the Redevelopment Plan for the San Carlos Redevelopment Project by developing housing affordable to extremely low-income households.

Although Assembly Bill x1 26 dissolved the San Carlos Redevelopment Agency (“Former Agency”) effective February 1, 2012, the City elected to retain the authority to perform housing functions previously performed by the Former Agency as permitted by Section 34176.

The development includes 24 units of multi-family rental housing (the "improvement"), of which 6 units are restricted to 30% of the Area Median Income (AMI), 6 units are restricted to 40% of AMI, 6 units are restricted to 50% of AMI, and 5 units are restricted to 60% of AMI for a 75-year term. The City shall convey the leasehold interest in the Property under the terms of the Lease to the Tenant for one dollar ($1) per annum for a 75-year period. In addition, the land will remain with the City at the end of the lease term. The improvements were financed through a City loan in the approximate amount of $7.3 million and other public financing and private lender construction and permanent financing. The City loan accrues interest at 4% annually, and is to be repaid annually from residual receipts, if any. The loan will be payable in full at the end of the 55-year loan term. At June 30, 2025, the total outstanding principal and interest was $8,525,447.

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 3 - LOANS RECEIVABLE, CONTINUED

C. Loan Agreement (1232 Cherry Street)

On August 2, 2021, the City and Cherry Street Commons, L.P. (“Borrower”) entered a Predevelopment Loan Agreement for an amount not to exceed $1,000,000. The City is the owner of the real property located at 1232 Cherry Street in San Carlos. The City selected the Borrower to construct a residential project on the Property that consists of at least 25 dwelling units together with parking and related improvements. On June 26, 2023, the City agreed to provide a project loan to Borrower with a total principal amount not to exceed $12,860,000 inclusive of the Predevelopment Loan amount. The unpaid principal balance accrues simple interest at the rate of 3% per annum. Principal and interest shall be due and payable following termination of the agreement unless forgiven in accordance with Section 1.3.3 or rolled over and assumed in accordance with Section 1.5 of the agreement. At June 30, 2025, the total outstanding principal and interest was $7,701,670.

D. Housing Association for the Needy and Dispossessed Loan (1244 Cherry Street)

On May 31, 1995, the City and Cherry Street Commons, L.P. (“Borrower”) entered a Housing Association for the Needy and Dispossessed Loan Agreement with a deed of trust to a trustee, Old Republic Title Company. The term is 40 years from the date of execution of this note. The City provided the Borrower a promissory note of $100,000. The outstanding principal shall not be required to be paid for the first 30 years of the term of this loan and will commence payments on June 1, 2025 with no interest. The note is due and payable in full on or before June 1, 2035. In fiscal year 2024-25, the City forgave the entirety of the loan.

E. Human Investment Project Inc. Agreement

On June 28, 1994, the City and the County of San Mateo (“Borrower”) entered a Human Investment Project Agreement. The City is the owner of the real property located at 717 Cedar Street in San Carlos, The City selected the Borrower to construct a residential project on the property that provides for disposition and development of a shared housing facility for low income families. The City agreed to provide a loan to the Borrower with a total principal amount of $300,000. The total cost of the project was $541,010. The Project was financed by the Agency, (55.45%, $300,000) County, (24.42%, $132,110) and HIP. (20.13%, $108,900) At June 30, 2025, the total outstanding principal was $293,962.

F. Laureola Oaks Purchase and Sale Agreement

On November 30, 1992, the City (“Seller”) and the Laureola Oaks Associates (“Buyer”) entered a Purchase and Sale Agreement for 608 East San Carlos Avenue. The purchase price for the real property was $200,000 dollars and paid through Escrow. The Seller provided the Buyer a loan of $175,000 (unpaid principal). The unpaid principal bears interest which is compounded annually with a 7% rate. The principal and interest will be due and payable in full on March 9, 2049. At June 30, 2025, the total outstanding principal and interest was $1,606,177.

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 4 - INTERFUND TRANSACTIONS

A. Transfers Between Funds

The purpose of most transfers is to move resources from one fund to another. Less often, a transfer may be made to open or close a fund. Transfers between funds during the fiscal year ended June 30, 2025 were as follows:

NOTE 5 - CAPITAL ASSETS

A. Governmental Activities

At June 30, 2025 capital assets of Governmental Activities as of June 30, 2025 consisted of the following:

Capital Non-Major
General Improvement Governmental Sewer
Transfers In: Fund Fund Funds Fund Total
General Fund - $ - $ 325,562$ 740,900 $ 1,066,462 $ (A) Capital Improvement Fund 2,000,000 - 1,007,478 - 3,007,478 (B) Gas Tax Fund 2,850,000 3,275,000 1,642,900 - 7,767,900 (B) Non-Major Governmental Funds 460,000 - 283,266 - 743,266 (B) Total Interfund Transfers 5,310,000$ 3,275,000 $ 3,259,206 $ 740,900 $ 12,585,106$ (A) Sewer right-of-way, excess library bond funds, and library-related expenditures (B) Capital projects, equipment and technology replacements Transfers Out:

Governmental Activities
Balance at
June 30, 2024 Additions Retirements Transfers
Balance at
June 30, 2025
Capital assets not being depreciated:

Land 63,533,769$ -$ (1,189,215)$ 10,475,892$ 72,820,446$ Rights of way 2,413,714 - - - 2,413,714 Construction in progress 33,418,406 8,167,096 - (13,792,965) 27,792,537 Total non-depreciable assets 99,365,889 8,167,096 (1,189,215) (3,317,073) 103,026,697 Capital assets being depreciated:

Buildings and improvements 71,581,836 51,770 (1,885,785) 3,072,702 72,820,523 Equipment 8,135,081 225,661 (641,203) - 7,719,539 Right-to-use leased equipment 4,089,621 1,050,544 - - 5,140,165 Infrastructure 89,862,633 2,798,900 - 244,371 92,905,904 Total capital assets being depreciated 173,669,171 4,126,875 (2,526,988) 3,317,073 178,586,131 Less accumulated depreciation for:

Buildings (26,399,081) (2,920,433) 282,868 - (29,036,646) Equipment (4,917,716) (554,373) 609,877 - (4,862,212) Right-to-use leased equipment (659,916) (245,247) - - (905,163) Infrastructure (26,496,575) (1,251,884) - - (27,748,459) Total accumulated depreciation (58,473,288) (4,971,937) 892,745 - (62,552,480) Net capital assets being depreciated 115,195,883 (845,062) (1,634,243) 3,317,073 116,033,651 Capital assets, net 214,561,772$ 7,322,034$ (2,823,458)$ -$ 219, 060,348$ 68 8.g
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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 5 - CAPITAL ASSETS, CONTINUED

B. Depreciation

Depreciation expense was charged to governmental functions based on the use of the related assets.

The amounts allocated to each function or program are as follows:

The intangible right-to-use lease asset’s related leases payable is further discussed in Note 7 - Long-Term Liabilities.

C. Business Activities

Depreciation expense of $1,333,868 was charged to the Sewer Enterprise Fund in the year ended June 30, 2025.

Governmental Activities:

General Government 655,074$
Public Safety 232,940
Public Works 1,518,365
Parks and Recreation 1,240,928
Community Development 1,324,630
Total Governmental Activities 4,971,937$
Business-type Activ ities
Balance at
June 30, 2024 Additions Retirements
Balance at
June 30, 2025
Capital assets not being depreciated:

Land 153,734 $ - $ - $ 153,734$ Construction in progress 121,259 281,240 - 402,499 Total non-depreciable assets 274,993 281,240 - 556,233 Capital assets being depreciated
Equipment 2,165,485 177,467 (55,654) 2,287,298 Sewer network system 47,457,566 2,663,410 - 50,120,976 Total capital assets being depreciated 49,623,051 2,840,877 (55,654) 52,408,274 Less accumulated depreciation for
Equipment (1,864,165) (65,823) 55,654 (1,874,334) Sewer network system (13,354,571) (1,268,045) (14,622,616) Total accumulated depreciation (15,218,736) (1,333,868) 55,654 (16,496,950) Net capital assets being depreciated 34,404,315 1,507,009 - 35,911,324 Capital assets, net 34,679,308$ 1,788,249$ -$ 36,467,557$ 69 8.g
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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 5 - CAPITAL ASSETS, CONTINUED

D. Net Investment in Capital Assets

The balances related to Net Investment in Capital Assets were comprised of the following as of June 30, 2025:

NOTE 6 - PROPERTY HELD FOR RESALE

Property held for resale is stated at the lower of historical cost or net realizable value (equal to agreed- upon sales price if a disposition and development agreement has been reached with a developer).

The City has three properties held for resale. The properties are reported in governmental activities in the Statement of Net Position as Property Held for Resale. The carrying value at June 30, 2025 is shown in the table below.

Governmental
Activ ities
Business-
Type
Activ ities Total
Capital Assets, Net of Accumulated Depreciation 219,060,348$ 36,467,557$ 255,527,905$ Less Capital Debt (4,578,403) - (4,578,403) 214,481,945$ 36,467,557$ 250,949,502$
Date of Purchase Property Name Property Address Amount
2/12/2012 Low Income Housing Unit 633 Elm St #305, San Carlos 354,999$ 2/8/2017 Low & Moderate Income Housing Unit 633 Elm St #405, San Carlos 377,987 10/17/2017 Low & Moderate Income Housing Unit 1001 Laurel St #207, San Carlos 239,843 972,829$
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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 7 - LONG TERM LIABILITIES

The City's debt issues and transactions are summarized below and discussed in detail thereafter.

A. 2015 Refunding General Obligation Bonds

The 2015 Refunding Bonds were issued under a resolution adopted by the City Council on February 9, 2015 to refinance the outstanding City of San Carlos 2005 General Obligation Refunding Bonds, which were issued on December 20, 2005 in the aggregate principal amount of $8,115,000. The 2005 General Obligation Bonds were refunded with the issuance of the 2015 General Obligation (“GO”) Bonds. The original proceeds from the bonds were used for the construction of the City’s public library.

Gov ernmental Activ ities
Balance
June 30,
2024, as
restated Additions Retirements
Balance
June 30, 2025
Due Within
One Year
Compensated absences, as restated 1,552,178$ 1,178,618$ (1,053,013)$ 1,677,783$ 1,120,731$ Claims liability 1,142,000 2,358,655 (463,655) 3,037,000 356,400 Leases payable 3,702,730 $1,050,544 (174,871) 4,578,403 195,925 2015 Refunding General Obligation Bonds 1,460,000 - (1,460,000) - - Bond Premiums 43,566 - (43,566) - - Total Governmental Activities 7,900,474$ 4,587,817$ (3,195,105)$ 9,293,186$ 1,673,056$ Business-Type Activ ities
Balance
June 30,
2024, as
restated Additions Retirements
Balance
June 30, 2025
Due Within
One Year
Compensated absences, as restated 105,952$ 114,802$ (62,826)$ 157,928$ 109,403$ Total Gov ernmental Activ ities 105,952$ 114,802$ (62,826)$ 157,928$ 109,403$ 71 8.g
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Packet Pg. 144

City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 7 - LONG TERM LIABILITIES, CONTINUED

A. 2015 Refunding General Obligation Bonds, continued

Interest on Refunding GO Bonds accrues from the date of delivery and is payable semi-annually on February 1 and August 1, commencing August 1, 2015, and ranging from 2% to 3%. Principal payments are due annually on August 1.

The bond covenants contain events of default that require the revenue of the City to be applied by the Trustee as specified in the terms of the agreement if any of the following conditions occur: default on debt service payments; the failure of the City to observe or perform the conditions, covenants, or agreement terms of the debt; bankruptcy filing by the City; or if any court of competent jurisdiction shall assume custody or control of the City. No such events occurred during the fiscal year ending June 30, 2025.

The 2015 Refunding Bonds are general obligations of the City payable solely from ad valorem property taxes levied by the City and collected by the County. Principal and interest paid for the current fiscal year and total ad valorem property tax revenues were $1,504,900 and $498,381 respectively. The bond was fully defeased during the fiscal year ended June 30, 2025 as part of the City's centennial celebration.

No excess fund balance was applied to the tax levy rate for fiscal year 2024-25. The residential homeowner paid on average approximately $25.75 per residential property in fiscal year 2024-25.

B. Leases Payable

The City entered into a lease agreement with K & E Investments, LLC dated 9/10/2018 for Billboard 2 located on 815 American Street, San Carlos from 1/1/2019 through 12/31/2038. An initial lease liability was recorded in the amount of $1,616,987 as of July 1, 2021. As of June 30, 2025, the value of the lease liability was $1,390,448. The City is required to make monthly payments in amounts of $8,333 that shall be increased by 12.5% at the end of every 5-year period. The lease has an interest rate of 3.25%. The intangible right-to-use lease asset is amortized over the life of the lease. As of June 30, 2025, the net value of the right-to-use lease asset and accumulated amortization was $1,257,655 and $359,332, respectively.

The City entered into a lease agreement with Brittan Corners Shopping Center, LLC dated 10/15/2018 for Billboard 3 located on 1119 Industrial Road, San Carlos from 9/1/2019 through 8/31/2039. An initial lease liability was recorded in the amount of $2,472,634 as of July 1, 2021. As of June 30, 2025, the value of the lease liability was $2,152,167. The City is required to make monthly payments in amounts of $12,500 that shall be increased by 12.5% at the end of every 5-year period. The lease has an interest rate of

3.25%. The intangible right-to-use lease asset is amortized over the life of the lease. As of June 30, 2025, the net value of the right-to-use lease asset and accumulated amortization was $1,952,078 and $520,556, respectively.

The City entered into a lease agreement with R & M Dean Associates, LLC dated October 4, 2022 for Billboard 4 located at 611 Industrial Road, San Carlos. The lease commenced 1/8/2025 and rent is due monthly through January 2045. An initial lease liability was recorded in the amount of $1,050,544. As of June 30, 2025, the value of the lease liability was $1,035,788. Monthly payments start at $5,000 and increase 2% annually. The lease has an interest rate of 3.25%. The intangible right-to-use lease asset is amortized over the life of the lease. As of June 30, 2025, the net value of the right-to-use lease asset and accumulated amortization was $1,025,269 and $25,275, respectively.

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 7 - LONG TERM LIABILITIES, CONTINUED

B. Leases Payable, continued

The terms of the leases are summarized below:

The transactions details for the leases are summarized below:

Lessor Property Address
Original
Lease Date
Lease
Ending
Date
Term
Duration
(Years)
Remaining
Lease Term
(Years)
Extension
Years
K & E Investments, LLC 815 American Street 1/1/2019 12/31/2038 20 14 10 Brittan Corners Shopping Center, LLC 1119 Industrial Road 9/1/2019 8/31/2039 20 14 10 R & M Dean Associates, LLC 611 Industrial Road 1/8/2025 1/7/2045 20 19 10 (Continued below)
Lessor
Expiration Date
Including Options Interest Exp
Principal
Expenditure
Monthly
Payment
Lease Asset
(Net)
Lease
Liability
K & E Investments, LLC 12/31/2048 46,360 $ 66,140$ 9,375 $ 1,257,655$ 1,390,449$ Brittan Corners Shopping Center, LLC 8/31/2049 71,650 93,975 14,063 1,952,078 2,152,166 R & M Dean Associates, LLC 1/7/2055 14,115 14,756 5,000 1,025,269 1,035,788 132,125$ 174,871 $ 28,438 $ 4,235,002$ 4,578,403$ Leases
Balance
June 30, 2024 Additions Retirements
Balance
June 30, 2025
Current
Portion
K & E Investments, LLC 1,456,589 $ - $ (66,140)$ 1,390,449 $ 68,322 $ Brittan Corners Shopping Center, LLC 2,246,141 - (93,975) 2,152,166 100,290 R & M Dean Associates, LLC - 1,050,544 (14,756) 1,035,788 27,313 3,702,730$ 1,050,544 $ (174,871) $ 4,578,403 $ 195,925 $ 73 8.g
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Packet Pg. 146

City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 7 - LONG TERM LIABILITIES, CONTINUED

B. Leases Payable, continued

The future principal and interest lease payments as of June 30 were as follows:

For the Year
Ended June 30, Principal Interest Total
2026 195,925$ 145,902 $ 341,827 $
2027 203,618 139,420 343,038
2028 211,589 132,685 344,274
2029 226,928 125,638 352,566
2030 260,704 117,753 378,457
2031-2035 1,523,375 450,194 1,973,569
2036-2040 1,602,404 170,102 1,772,506
2041-2045 353,860 27,512 381,372
4,578,403$ 1,309,206 $ 5,887,609 $
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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 8 – FUND BALANCES

A. Fund Balances

Detailed classifications of the City’s fund balances as of June 30, 2025 are below.

Fund Balances Classifications
General
Fund
Capital
Improvement Housing Gas Tax
Other
Governmental
Funds Total
Nonspendable:

Prepaids 2,536,503 $ - $ - $ - $ - $ 2,536,503$ Total Nonspendable Fund Balance 2,536,503 - - - - 2,536,503 Restricted for:

General government - 217,966 - - - 217,966 General plan update - 546,572 - - - 546,572 PEG funding - 419,129 - - - 419,129 Child care - - - - 665,362 665,362 Parking lot improvements - - - - 21,158 21,158 Police grants - - - - 430,588 430,588 City parks - 1,791,544 - - 1,423,276 3,214,820 Library - - - - 1,747,421 1,747,421 Traffic management - - - - 702,780 702,780 National Pollutant Discharge
Elimination System - - - - 870,711 870,711 Street maintenance - 192,593 - 19,374,348 - 19,566,941 Housing - - 17,436,257 - - 17,436,257 Total Restricted Fund Balances -
3,167,804 17,436,257 19,374,348 5,861,296 45,839,705 Committed to:

Library tenant activities - - - - 2,680,055 2,680,055 Equipment replacement - - - - 3,265,607 3,265,607 Capital projects - 27,241,659 - - - 27,241,659 Street maintenance - - - 1,690,479 - 1,690,479 Economic uncertainties reserve 9,846,816 - - - - 9,846,816 Strategic property acquisition 12,191,795 - - - - 12,191,795 Total Committed Fund Balances 22,038,611 27,241,659 - 1,690,479 5,945,662 56,916,411 Assigned to:

General Fund 2,493,307 - - - - 2,493,307 Total Unassigned Fund Balances 2,493,307 - - - - 2,493,307 Total Fund Balances 62,809,921$ 30 , 409,463$ 17,436,257 $ 21,064,827 $ 11,806,958 $ 143,527,426 $ Capital Project Funds
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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 8 – FUND BALANCES, CONTINUED

B. Fund Balance Commitments

The City has the following committed fund balances shown on the governmental balance sheet:

Library tenant activities : These committed amounts are approved by the City Council for library renovations and other library-related expenditures.

Equipment replacement: Committed balances for equipment replacement represent City Council designations for anticipated general equipment needs.

Capital Projects: Committed balances in the capital projects funds represent budgeted and contracted amounts the City Council has approved for capital projects.

Street maintenance: This committed balance is specifically for street-related capital projects

Strategic Property Acquisitions: General Fund committed fund balance for Strategic Property Acquisitions accumulates funds from the proceeds of sales of City properties, as directed by the City Manager or City Council.

Once established, appropriations from the Strategic Property Acquisitions Reserve fund balance commitment can only be made by formal action of the City Council. Appropriations and access to these funds are reserved for funding strategic property acquisitions by the City. The balance as of June 30, 2025 was $12,191,795.

Economic uncertainties reserve: See General Fund Policies below.

C. General Fund Policies

Economic Uncertainties: The General Fund tracks a fund balance reserve for Economic Uncertainties equal to a minimum of 12.5% of the General Fund expenditures with a target of increasing to 20% of General Fund expenditures.

Appropriations from the Economic Uncertainties fund balance can only be made by formal action of the City Council. Generally, appropriations and access to these funds will be reserved for emergency situations and not to be used for ongoing expenditures. Emergency situations are further defined as catastrophic disasters as declared locally or by the state or federal government or budgeted revenue taken by another government entity. The balance as of June 30, 2025 was $9,846,816, or 17% of total General Fund operating expenditures.

NOTE 9 – LEASES

A. Policies

A lease is defined as a contract that conveys control of the right to use another entity’s nonfinancial asset (the underlying asset) as specified in the contract for a period of time in an exchange or exchange-like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. The City recognizes lease receivable or liabilities with an initial, individual value of $500,000 or more, based on the future lease payments remaining at the start of the lease. 76 8.g
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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 9 - LEASES, CONTINUED

A. Policies, continued

Lessor

The City is a lessor for noncancellable leases of buildings and facilities. The City recognizes a lease receivable and a deferred inflow of resources in the government-wide and fund financial statements.

At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is 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 inflow of resources is recognized as revenue over the life of the lease term.

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 as follows:

 The City uses bond interest rate as the discount rate for leases.  The lease term includes the noncancellable period of the lease.  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 w ould 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.

Lessee

The City is a lessee for three billboards located on 815 American Street, 1119 Industrial Road, and 611 Industrial Road, San Carlos. City recognizes a lease liability and an intangible right-to-use lease asset in the government-wide financial statements.

At the commencement of a lease, City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight-line basis over its useful life.

Key estimates and judgments related to leases include how City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments as follows:

 The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, City generally uses bond interest rate as the discount rate for leases.
 The lease term includes the noncancellable period of the lease.  Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that City is reasonably certain to exercise.

77 8.g
November 24, 2025

Packet Pg. 150

City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 9 - LEASES, CONTINUED

A. Policies, continued

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

Lease assets are reported with other capital assets and lease liabilities are reported with long-term debt on the Statement of Net Position.

B. Leases Receivable (City as Lessor)

The terms and balances related to leases receivable and deferred inflows of resources recorded in the General Fund as of June 30, 2025 were:

Lessee Property Address
Original Lease
Date
Lease Ending
Date
Term
Duration
(years)
Remaining
Lease
Term
(years)
Extension
Years
Expiration
Date Including
Options
Duvall Properties 525 Skyway Road 11/1/2003 10/31/2042 39 17 - 10/31/2042 San Carlos Properties, LLC 505 Skyway Road 11/1/1997 10/31/2042 45 17 - 10/31/2042 Brittan Corners LLC 1101 Industrial Road 3/1/2000 12/1/2039 40 14 10 12/1/2049 GRM FISC, LLC 555 Skyway Road 2/12/1996 2/12/2041 45 16 25 2/12/2066 San Carlos Group I, LLC 800 Brittan Avenue 9/1/2005 8/31/2050 45 25 10 8/31/2060 Clear Channel Outdoor 800 Bransten Road 11/1/2014 10/31/2039 25 14 - 10/31/2039 Clear Channel Outdoor 815 American Street 1/1/2019 12/31/2038 20 14 10 12/31/2048 Outfront Media 1119 Industrial Road 9/1/2019 8/31/2039 20 14 10 8/31/2049 Orion Outdoor Media 611 Industrial Roat 1/8/2025 1/7/2045 20 20 10 1/7/2055 Lessee
Interest
Revenue
Lease
Revenue (A)
Monthly
Lease
Receipts as
of June 30,
2025
Lease
Receivable
Balance at
June 30, 2025
Deferred Inflow
of Resources
at June 30,
2025
Duvall Properties 40,106$ 61,543$ 6,543$ 1,213,118$ 1,107,767$ San Carlos Properties, LLC 21,595 33,137 3,523 653,215 596,471 Brittan Corners LLC 56,216 102,660 10,618 1,691,129 1,539,907 GRM FISC, LLC 62,706 257,137 11,612 1,890,877 1,715,784 San Carlos Group I, LLC 229,573 240,658 23,874 7,032,531 6,257,119 Clear Channel Outdoor 138,615 245,138 22,762 4,190,358 3,677,061 Clear Channel Outdoor 139,413 269,274 28,125 4,168,629 3,769,835 Outfront Media 167,185 411,677 32,813 5,021,744 4,554,866 Orion Outdoor Media 62,930 262,701 22,500 4,617,354 4,571,643 918,339$ 1,883,925$ 162,370$ 30,478,955$ 27,790,453$ Notes:
(A) Lease Revenue includes payments for excess gross reciepts and signing bonuses per the agreements with the lessees.
78 8.g
November 24, 2025

Packet Pg. 151

City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 9 - LEASES, CONTINUED

B. Leases Receivable (City as Lessor), continued

The future principal and interest lease receivables as of June 30, were as follows:

C. Leases Payable and Right-to-use Leased Equipment

See more details for Leases payable in Note 7 and Right-to-use Leased Equipment in Note 5.

NOTE 10 - NET PENSION LIABILITY

Summary of Pension Balances

Below is a summary of the deferred outflows of resources, net pension liabilities, and deferred inflows of resources for the pension plans at the City as of June 30, 2025:

For the year ended June 30, 2025, the total pension expense for all plans amounted to $8,934,683.

For the Year
Ended June 30, Principal Interest Total
2026 993,612$ 976,338$ 1,969,950$
2027 1,050,777 943,182 1,993,959
2028 1,118,765 908,049 2,026,814
2029 1,207,064 870,490 2,077,554
2030 1,354,257 829,153 2,183,410
2031 - 2035 8,272,931 3,400,879 11,673,810
2036 - 2040 9,867,821 1,834,246 11,702,067
2041 - 2045 3,930,949 736,197 4,667,146
2046 - 2050 2,582,925 240,857 2,823,782
2051 99,854 406 100,260
30,478,955$ 10,739,797$ 41,218,752 $
Deferred
Outflows
of Resources
Net Pension
Liability
Deferred
Inflows
of Resources
CalPERS Plan:

Safety Pool 5,398,837$ 21,914,000$ 1,499,243$
Miscellaneous Pool 11,544,344 14,945,492 2,040,372 PARS Longevity Plan 1,052,418 10,537,969 -
Total 17,995,599$ 47,397,461$ 3,539,615$
79 8.g
November 24, 2025

Packet Pg. 152

City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 10 - NET PENSION LIABILITY, CONTINUED

A. California Public Employees’ Retirement System (“CalPERS”) Plan

Description of Plan

All qualified permanent and probationary employees are eligible to participate in the Public Agency Cost- Sharing Multiple-Employer Defined Benefit Pension Plan (Plan) administered by the California Public Employees’ Retirement System (CalPERS). The Plan consists of individual rate plans (benefit tiers) within a safety risk pool (police and fire) and a miscellaneous risk pool (all other). Plan assets may be used to pay benefits for any employer rate plan of the safety and miscellaneous risk pools. Accordingly, rate plans within the safety or miscellaneous pools are not separate plans under GASB Statement No. 68. Individual employers may sponsor more than one rate plan in the miscellaneous or safety risk pools. The City sponsors 6 rate plans (4 miscellaneous and 2 safety). Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions, and membership information that can be found on the CalPERS website: www.calpers.ca.gov.

Benefits Provided

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

PEPRA requires new benefits and member contributions for new members as defined by PEPRA that are hired after January 1, 2013. These PEPRA members in pooled plans are reflected in the new Miscellaneous and Safety risk pools created by the CalPERS Board in response to the passage of PEPRA, beginning with the June 30, 2013 risk-pool valuations. Therefore, pursuant to PEPRA, the Miscellaneous “Classic” plan is closed to new entrants as of January 1, 2013.

80 8.g
November 24, 2025

Packet Pg. 153

City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 10 - NET PENSION LIABILITY, CONTINUED

A. California Public Employees’ Retirement System (“CalPERS”) Plan, continued

Benefits Provided, continued

The provisions and benefits of each plan in effect at June 30, 2025 are summarized as follows:

Beginning in fiscal year 2016, CalPERS collects employer contributions for the Plan as a percentage of payroll for the normal cost portion as noted in the rates above and as a dollar amount for contributions toward the unfunded accrued liability (“UAL”). The UAL payments for the fiscal year ended June 30, 2025 are shown in the table above.

Tier 1 Tier 2 Tier 3 PEPRA
Hire date
Prior to
March 16, 2009
Prior to
April 23, 2012
On or after
April 23, 2012
On or after
January 1,
2013
Benefit formula 2.7% @ 55 2.5% @ 55 2% @ 55 2% @ 62
Benefit v esting schedule 5 years serv ice 5 years serv ice 5 years serv ice 5 years serv ice Benefit payments Monthly for life Monthly for life Monthly for life Monthly for life Benefit amount calculated Single highest year Single highest year 3 year average 3 year average Retirement age 50 and up 50 and up 50 and up 52 and up
Monthly benefits, as a % of
eligible compensation 2.0% to 2.7% 2.0% to 2.5% 1.426% to 2.418% 1.0% to 2.5% Required employee contribution rates 8% 8% 7% 8%
Required employer contribution rates 16.31% 14.41% 12.17% 7.94% Required UAL Payment 884,626 $ 7,100 $ 15,487 $ 15,398 $ Miscellaneous
Tier 1 PEPRA
Hire date
On or after
October 23,
2011
On or after
January 1,
2013
Benefit formula 2% @50 2.7% at 57
Benefit vesting schedule 5 years service 5 years service Benefit payments Monthly for life Monthly for life
Benefit amount calculated 3 years average 3 years average Retirement age 50 and up 50 and up
Monthly benefits, as a % of
eligible compensation 2.0% to 2.7% 2.0% to 2.7%
Required employee contribution rates 9% n/a
Required employer contribution rates 20.09% n/a
Required UAL Payment 1,697,469 $ - $
Safety
81 8.g
November 24, 2025

Packet Pg. 154

City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 10 - NET PENSION LIABILITY, CONTINUED

A. California Public Employees’ Retirement System (“CalPERS”) Plan, continued

Contributions

Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for all Miscellaneous Plans and Safety Plans are determined annually on an ac tuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the cost 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.

The City’s contributions to the Plan for the measurement period ended June 30, 2024 were:

Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions

As of June 30, 2025, the City reported net pension liabilities for its proportionate share of the net pension liability of the Plan as follows:

The City’s net pension liability for the Plan is measured as the proportionate share of the total net pension liability of the Plan. The net pension liability of th e Plan is measured as of June 30, 2024, and the total pension liability for the Plan used to calculate the net pension liability was determined by actuarial valuations as of June 30, 2023 rolled forward to June 30, 2024 using standard update procedures. The City’s proportion of the net pension liability was based on the City’s plan liability and asset-related information where available, and proportional allocati ons of individual plan amounts as of the valuation date where not available.

The City’s proportionate share of the net pension liability for the Plan as of June 30, 2023 and 2024 was as follows:

Safety Miscellanous Total
Contributions - employer 1,468,828$ 5,214,283$ 6,683,111$ Proportionate Share
of Net Pension Liability
Safety 21,914,000 $
Miscellaneous 14,945,492
Total Net Pension Liability 36,859,492$
Proportion - June 30, 2023 0.33029%
Proportion - June 30, 2024 0.30394%
Change - Increase/(Decrease) -0.02636%
82 8.g
November 24, 2025

Packet Pg. 155

City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 10 - NET PENSION LIABILITY, CONTINUED

A. California Public Employees’ Retirement System (“CalPERS”), continued

Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions, continued

For the year ended June 30, 2025, the City recognized a pension expense of $7,668,255 for the Plan. At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

In the table above, the $8,011,042 reported as deferred outflows of resources related to contributions subsequent to the measurement date of June 30, 2024 but before the end of the City’s reporting period ended June 30, 2025, will be recognized as a reduction of the net pension liabilities in the subsequent fiscal year 2026 rather than in the current fiscal year 2025. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Contributions subsequent to
measurement date 1,718,140 $ - $ 6,292,902$ - $ 8,011,042$ - $ Differences between actual and expected
experience 1,788,377 (58,148) 1,292,175 (50,420) 3,080,552 (108,568) Changes in assumptions 539,916 - 384,130 - 924,046 - Net differences between projected and
actual earnings on plan investments 1,059,223 860,394 - 1,919,617 - Changes in employer's proportion - (1,284,508) 1,161,829 (1,167,728) 1,161,829 (2,452,236) Differences between the employer's
contribution and the employer's
proportionate share of contributions 293,181 (156,587) 1,552,914 (822,224) 1,846,095 (978,811) 5,398,837$ (1,499,243) $ 11,544,344 $ (2,040,372) $ 16,943,181 $ (3,539,615) $ Safety Miscellaneous TotalYear Ended
June 30,
Safety
Annual
Amortization
Miscellaneous
Annual
Amortization Total
2026 663,368$ 1,441,528$ 2,104,896$
2027 2,127,527 1,935,032 4,062,559
2028 (247,023) 129,355 (117,668)
2029 (362,418) (294,845) (657,263)
83 8.g
November 24, 2025

Packet Pg. 156

City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 10 - NET PENSION LIABILITY, CONTINUED

A. California Public Employees’ Retirement System (“CalPERS”), continued

Actuarial Assumptions

The total pension liabilities in the actuarial valuations were determined using the following actuarial assumptions:

Discount Rate

The discount rate used to measure the total pension liability as of the measurement date of June 30, 2024 for the Plan was 6.90%. 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 statutor ily 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. A detailed report testing these projections can be obtained from the CalPERS website.

In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated and, combined with risk estimates, are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return.

Valuation Date June 30, 2023
Measurement Date June 30, 2024
Actuarial Cost Method Entry-Age Normal Cost Method
Discount Rate 6.90%
Inflation Rate 2.30%
Salary Increases Varies by entry age and service
Inv estment Rate of Return 6.90%
Mortality Rate Table Derived using CalPERS' membership data for all Funds (1) Post Retirement Benefit Increase
Contract COLA up to 2.30% until Purchasing Power Protection Allowance Floor on Purchasing Power Applies
(1) The mortality table used was developed based on CalPERS' specific data. The rates incorporate generational mortality to capure ongoing mortality improvement using 80% of Scale MP 2020 published by the Society of Actuaries. For more details, please refer to the 2021 experience study report that can be found on the CalPERS website.
84 8.g
November 24, 2025

Packet Pg. 157

City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 10 - NET PENSION LIABILITY, CONTINUED

A. California Public Employees’ Retirement System (“CalPERS”), continued

Discount Rate, continued

The expected real rates of return by asset class are as follows:

Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate

The following presents the City’s proportionate share of the net pension liability for the Plan, calculated using the discount rate for the Plan, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a disc ount rate that is 1 percentage point lower (5.90%) or 1 percentage point higher (7.90%) than the current rate:

Payable to the Pension Plan

At June 30, 2025 the City reported a payable of $100,171 for outstanding amount of contributions to the pension plan required for the year ended June 30, 2025.

Asset Class (a)
Assumed
Asset
Allocation
Real Return
(a,b)
Global equity - cap-weighted 30% 4.54%
Global equity - non-cap-weighted 12% 3.84%
Private equity 13% 7.28%
Treasury 5% 0.27%
Mortgage-backed securities 5% 0.50%
Investment grade corporates 10% 1.56%
High Yield 5% 2.27%
Emerging market debt 5% 2.48%
Private debt 5% 3.57%
Real Assets 15% 3.21%
Leverage -5% -0.59%
100%
(a) An expected inflation of 2.3% used for this period
(b) Figures are based on the 2021-22 asset liability management study 1% Decrease

5.90%
Current

6.90%
1% Increase

7.90%
Safety 30,578,861$ 21,914,000$ 14,827,362$
Miscellaneous 27,945,383 14,945,492 4,244,670
Total 58,524,244$ 36,859,492$ 19,072,032$
Net Pension Liability (Asset)
85 8.g
November 24, 2025

Packet Pg. 158

City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 10 - NET PENSION LIABILITY, CONTINUED

B. Public Agency Retirement Services (“PARS”) Longevity Recognition Plan

Plan Description and Benefits

The City sponsors an agent multiple-employer Longevity Recognition Defined Benefit Plan (Longevity Plan) for its retirees. All full-time employees hi red before January 1, 2009 are eligible for a longevity recognition benefit if they retire from the City with a CalPERS pension and with at least 10 years of City service. All AFSCME (formerly known as Clerical and Mid-Management) and Teamsters employees hired on or after January 1, 2009 and before the following exclusion dates depending on bargaining group are eligible for a longevity recognition benefit if they retire from the City with a CalPERS pension and with at least 15 years of City service.

Employees hired by the City before January 1, 2009 receive a monthly payment equal to the Internal Revenue Code (IRC) Section 125 Plan benefit for active Miscellaneous employees and the former fire service employees with single coverage ($1,175.15 per month for 2025) subject to future annual increases. The cap for retirees from the former Police Department has been $718.11 since 2011 and is not expected to be increased.

Eligible employees hired by the City after January 1, 2009 and before the exclusion date for their respective bargaining groups will receive a monthly payment of $350 per month with no future increases upon retirement.

The longevity recognition benefit is payable for the retiree’s lifetime. No continuation of longevity benefits are payable to surviving spouses or dependents. No employees hired after the above exclusion dates are eligible for longevity benefits.

Participants Covered

As of the valuation date, June 30, 2023, the number of participants was as follows: 22 active and 51 retirees.

Contributions

During the measurement period ended June 30, 2024, employer contributions to the plan totaled $888,300.

Net Pension Liability

The net pension liability for the Longevity Plan is measured as the total pension liability less the Longevity Plan’s fiduciary net position. A summary of the actuarial assumptions and methods used to determine the net pension liability is shown below.

Bargaining Group Exclusion Date
AFSCME (formerly known as Mid-Management) December 13, 2010 AFSCME (formerly known as Clerical) February 28, 2011
Teamsters March 28, 2011
86 8.g
November 24, 2025

Packet Pg. 159

City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 10 - NET PENSION LIABILITY, CONTINUED

B. Public Agency Retirement Services (“PARS”) Longevity Recognition Plan, continued

Actuarial Assumptions and Discount Rate

Changes in the Net Pension Liability

The changes in the measurement period ended June 30, 2024 were as follows:

Valuation Date June 30, 2023
Measurement Date June 30, 2024
Funding Method Entry-Age normal cost, level percent of pay Asset Valuation Method Market value of assets
Discount Rate 6.3%
Inflation Rate 2.50% per year
Salary Increase 3.0% per year, used only to allocate the cost of benefits between service years
Inv estment Rate of Return 6.3%
Demographic Assumptions Rates of retirement, disability and other terminations are based on the CalPERS 2021 experience study using data from 1997 to 2019, except for a different basis used to project future mortality improvements
Mortality Improvements MacLeod Watts Scale 2022 applied generationally from 2017 Actuarial Methods and Assumptions
Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability/(Asset)
Balance at measurement date June 30, 2023 15,194,229$ 4,447,557$ 10,746,672$ Changes in the year:

Service cost 119,995 - 119,995 Interest on the total pension liability 943,693 - 943,693 Contribution - employer - 888,300 (888,300) Net inv estment income - 384,905 (384,905) Administration expenses - (814) 814 Differences due to plan experience - - - Change of assumptions - - - Benefit payments (669,925) (669,925) -
Net changes 393,763 602,466 (208,703) Balance at measurement date June 30, 2024 15,587,992$ 5,050,023$ 10,537,969$ Increase (Decrease)
87 8.g
November 24, 2025

Packet Pg. 160

City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 10 - NET PENSION LIABILITY, CONTINUED

B. Public Agency Retirement Services (“PARS”) Longevity Recognition Plan, continued

Sensitivity of the Net Pension Liability to changes in the Discount Rate

The following presents the City’s proportionate share of the net pension liability for the Longevity Plan, calculated using the discount rate for the Longevity Plan, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (5.3%) or 1 percentage point higher (7.3%) than the current rate:

Pension Plan Fiduciary Net Position

Detailed information about the pension plan’s fiduciary net position is available in the separately issued PARS financial reports.

Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pension

For the year ended June 30, 2025, the City recognized pension expense of $1,266,428 for the Longevity Plan. At June 30, 2025, the City reported the following deferred inflows and outflows of resources related to the Longevity Plan:

The $893,500 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2026. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

1% Decrease

5.3%
Current

6.3%
1% Increase

7.3%
Longevity Plan 12,593,700$ 10,537,969 $ 8,836,734 $ Net Pension Liability (Asset)
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Contributions subsequent to measurement date 893,500$ -$ Differences between actual and expected experience - - Changes in assumptions - -
Net differences between projected and actual earnings on plan investments 158,918 -
Total 1,052,418$ -$
Year Ended
June 30, Expense (income)
2026 49,010
2027 140,468
2028 (10,988)
2029 (19,572)
88 8.g
November 24, 2025

Packet Pg. 161

City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 11 - OTHER POST-EMPLOYMENT BENEFITS

A. Provisions and Benefits

OPEB Healthcare: During fiscal year 2009, the City joined the California Employers' Retiree Benefit Trust (“CERBT”), an agent multiple-employer plan administered by CalPERS, consisting of an aggregation of single-employer plans. City Council authorized a deposit of $1,575,000 with CERBT on October 10, 2008 to begin funding its Other Post-Employment Benefits (“OPEB”) liability.

By Council resolution and through agreements with its labor units, the City provides certain health care benefits for retired employees (spouse and dependents are not included) under Public Employees’ Medical Healthcare Act (“PEMHCA”). A summary of eligibility and retiree contribution requirements are described below.

Employees are eligible for retiree health benefits if they retire from the City with a CalPERS pension.

For retirees who retired on or before December 31, 2008, the City will reimburse the retiree only premium, up to the active employee single cap. The cap amount for miscellaneous is $1,175.15 per month for 2025.

The cap amount for retirees from the former Police Department is $718.11 and is not expected to be increased.

The City will continue to pay the CalPERS minimum contribution for surviving spouses of retirees as long as they remain enrolled in a health plan sponsored by CalPERS (PEMHCA).

For employees retiring on or after January 1, 2009 from the City of San Carlos who choose to enroll in a CalPERS retiree health plan, the City contributes the minimum monthly premium amount specified by CalPERS towards the cost of CalPERS (PEMHCA) medical premiums. The minimum is $158 per month for calendar year 2025.

B. Employees Covered

Membership in the plan consisted of the following at the June 30, 2023 valuation date:

Active employees 100
Inactive employees, spouses or beneficiaries
currently receiving benefit payments 71
Inactiv e employees entitled to but to yet
receiving benefit payments 38
209
89 8.g
November 24, 2025

Packet Pg. 162

City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 11 - OTHER POST-EMPLOYMENT BENEFITS, CONTINUED

C. Net OPEB Liability

Actuarial Methods and Assumptions: The City’s net OPEB liability was measured as of June 30, 2024 and the total OPEB liability used to calculate the net O PEB liability was determined by an actuarial valuation dated June 30, 2023 that was rolled forward to determine the total OPEB liability, based on the following actuarial methods and assumptions:

Discount Rate: The discount rate used to measure the Total OPEB Liability was 6.5%.

Changes in Net OPEB Liability: The changes in the Net OPEB Liability are as follows:

Valuation Date June 30, 2023
Measurement Date June 30, 2024
Funding Method Entry age normal cost, level dollar
Asset Valuation Method Market value of assets
Long Term Return on Assets 6.50%
Salary Increase 3.0% per year, used only to allocate the cost of benefits between service years
Inflation Rate 2.5% per year
Healthcare Cost Trend Rates 6.5% in 2025, decreasing until ultimate rate of 3.9% in 2075 Mortality Improvement Macleod Watts Scale 2022 applied generationally from 2017 Actuarial Methods & Assumptions
Total OPEB
Liability
(a)
Plan Fiduciary
Net
Position
(b)
Net OPEB
Liability/(Asset)
(c) = (a) - (b)
Balance at measurement date 6/30/2022 (FY2024): 5,011,890$ 3,789,224$ 1,222,666$ Changes recognized for the measurement period:

Service cost 132,484 - 132,484 Interest on the total OPEB liability 301,645 - 301,645 Investment income - 407,006 (407,006) Employer contributions - 306,194 (306,194) Administrative expenses - (1,217) 1,217 Other expenses - - - Difference between expected and actual experience 174,903 - 174,903 Changes of assumptions (210,794) - (210,794) Benefit payments (317,009) (317,009) -
Net changes 81,229 394,974 (313,745) Balance at measurement date 6/30/2023 (FY2025): 5,093,119$ 4,184,198$ 908,921$ 90 8.g
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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 11 - OTHER POST-EMPLOYMENT BENEFITS, CONTINUED

D. Sensitivity of the Net OPEB Liability

The following presents the Net OPEB Liability, as well as what the Net OPEB Liability would be if it were calculated using a discount rate that is 1 percentage point lower (5.5%) or 1 percentage point higher (7.5%) than the current discount rate:

The following presents the Net OPEB Liability, as well as what the Net OPEB Liability would be if it were calculated using a healthcare cost trend rate that is 1 percentage point lower or 1 percentage point higher than the current healthcare cost trend rate:

E. OPEB Expenses and Deferred Outflows/Inflows of Resources Related to OPEB

For the year ended June 30, 2025, the City recogniz ed OPEB expense of $84,279. As of the fiscal year ended June 30, 2025, the City reported deferred outflows and inflows of resources related to OPEB from the following sources:

Discount Rate - 1%

5.5%
Discount Rate

6.5%
Discount Rate +1%

7.5%
1,398,573$ 908,921$ 490,420$
Net OPEB Liability(Asset)
1% Decrease
Current Trend
Healthcare Cost
Trend Rates
Current Trend
1% Increase
Current Trend
482,968$ 908,921$ 1,404,503$
Net OPEB Liability(Asset)
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Employer contributions made subsequent to the measurement date 344,860$ - $ Net difference between projected and actual earnings on investments 35,584 - Differences between actual and expected experience 269,990 (159,303) Changes of assumptions 127,087 (191,743)
Total 777,521$ (351,046) $
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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 11 - OTHER POST-EMPLOYMENT BENEFITS, CONTINUED

E. OPEB Expenses and Deferred Outflows/Inflows of Resources Related to OPEB, continued

$344,860 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the OPEB liability in the year ended June 30, 2026. Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as future OPEB expense as follows:

The governmental activities net OPEB liability is liquidated primarily by the General Fund.

NOTE 12 - LIABILITY COVERAGE

A. Liability Coverage

The City participates in the Pooled Liability Assuranc e Network Joint Powers Authority (“PLAN JPA”), which consists of 28 member cities in the San Francisco bay area. Members of the PLAN JPA collectively share the risk of self-insured losses and purchase a broad range of risk management services including, but not limited to, program administration, accounting and finance, claims administration, risk control, loss prevention, actuarial services, training and education, and legal services to support the shared risk programs. PLAN JPA provides General Liability, Au to Liability, and Errors and Omissions coverage in excess of the City’s retained limit, or self-insured retention (“SIR”). PLAN JPA self-insures up to $1,000,000 of general and automobile liability coverage per occurrence (minus the City’s $100,000 self- insured retention) and $34,000,000 in excess liability coverage per occurrence through an additional self- insurance joint powers authority (California Affiliated Risk Management Authority, “CARMA”) and through the purchase of commercial excess insurance, for a total of $35,000,000 per occurrence. Financial statements may be obtained from PLAN JPA, 1750 Creekside Oaks Drive, Suite 200, Sacramento, CA 95833.

B. Workers' Compensation Coverage

Workers’ Compensation is provided to the City’s employees from a self-insurance pool arranged under a Joint Powers Agreement. Cities Group acts as administrator and claim adjuster. The pool consists of six (6) members, and each member of the Cities Group pay s a premium. Cities Group covers the first dollar through the limit of reinsurance of about $11.5 million. Workers’ Compensation claims in excess of $1,000,000 per claim for miscellaneous employees and for safety employees $1,500,000 are insured by Safety National Casualty Corporation under a reinsurance policy owned by the Group. Financial statements may be obtained from The Cities Group, P.O. Box 111, Burlingame, CA 94011-0111.

Year Ended
June 30,
Annual
Amortization
2026 (50,176)$
2027 140,143
2028 (12,533)
2029 (10,287)
2030 18,595
Thereafter (4,127)
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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 12 - LIABILITY COVERAGE, CONTINUED

C. Liability for Uninsured Claims

The City's liability for uninsured claims at June 30, 2025 was estimated by management based on the PLAN JPA’s claims experience and recorded in the Liability Insurance Internal Service Fund. For the years ended June 30, 2025 and 2024, the amount of settlements did not exceed insurance coverage.

The City's liability for uninsured claims is limited to workers' compensation and general liability claims, as discussed above, and was estimated by management based on prior years’ claims experience as follows for the years ended:

NOTE 13 - JOINT VENTURES

Joint Power Authorities

The City participates in joint ventures through formally organized and separate entities established under the Joint Exercise of Powers Act of the State of California. As separate legal entities, these Joint Power Authorities (“JPAs”) exercise full powers and authorities within the scope of the related JPA agreements, including the preparation of annual budgets, accountability for all funds, the power to make and execute contracts, and the right to sue and be sued. Each JPA is governed by a board consisting of representatives from member municipalities. Each board controls the operations of the respective joint venture, including selection of management and approval of operating budgets, independent of any influence by member municipalities beyond their representation on that board. Obligations and liabilities of these joint ventures are not the City's responsibility, and the City does not have an equity interest in the assets of each joint venture except upon dissolution of the joint venture.

A. Belmont-San Carlos Fire Department

The South County Fire Authority JPA was formed in 1979 between the Cities of San Carlos and Belmont on an equal basis to provide more efficient fire protection services for the two cities. Any assets used by the Fire Authority but owned by the member agencies prior to the creation of the Fire Authority remain the property of the members. Each member contributes its pro rata share of operating costs to the Fire Authority.

2024 2025
Beginning balance 1,115,000 $ 1,142,000 $
Net change in liability for claims
and claims paid but not reported 616,918 2,358,655 Claims paid (589,918) (463,655)
Balance at June 30 1,142,000 3,037,000
Current Portion 457,400 356,400
Long-term Portion 684,600 $ 2,680,600 $
June 30,
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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 13 - JOINT VENTURES, CONTINUED

A. Belmont-San Carlos Fire Department, continued

On April 12, 2010, the City Council adopted a resolution authorizing the City Manager to send notice to the Belmont Fire Protection District of the City's intent to dissolve the JPA establishing the Belmont-San Carlos Fire Department. The service termination of t he Belmont-San Carlos Fire Department took effect on October 1, 2011.

As a result of the termination of service with the Belmont-San Carlos Fire Department, the City is required to make an annual contribution for: other post-employment benefits for retirees who have earned lifetime medical coverage; unfunded liabilities of the safety and miscellaneous retirement plans with CalPERS; outstanding workers’ compensation claims from past employees; and liability claims or other obligations of the former Fire Department. The City’s contribution during the year ended June 30, 2025 was $2,096,897. It is anticipated that the outstanding pension obligations with CalPERS will be paid off on 6/30/2033.

B. Silicon Valley Clean Water (“SVCW”)

The Silicon Valley Clean Water (formerly the South Bayside System Authority) JPA was formed in 1975 between the cities of San Carlos, Belmont, Redwood City, and the West Bay Sanitation District to operate a wastewater treatment facility. The cost of operating and maintaining the facility is divided in proportion to the volume of sewage entering from each member entity. During the year ended June 30, 2025, the City contributed $3,886,459 toward the cost of operating and maintaining the facility and paid debt principal and interest of $6,263,917 that included: the State revolving fund loan, the financing agreements to finance the construction and rehabilitation of SVCW’s wastewater system, and a cash-in-lieu-of-debt payment toward SVCW’s CIP program. The City recorded an investment in joint venture of $6,668,905 for the fiscal year ended June 30, 2025 using the financial statements of SVCW for the period ended June 30, 2024.

The condensed unaudited financial information of the JPA as of June 30, 2024 is as follows:

Total Assets 955,108,378$
Total Deferred Outflows 28,305,446
Total Liability (859,864,108)
Total Deferred Inflows (1,499,120)
Total Net Position 122,050,596$
Total Operating Revenues 58,323,969$
Total Operating Expenses (58,467,756)
Total Operating Income (Loss) (143,787)
Other Income (Loss) (6,038,656)
Net Income (6,182,443)$
Cumulativ e Agency Balances:

Belmont 45,182,632$
San Carlos 6,668,905
Redwood City 42,546,779
West Bay Sanitary District 27,652,280
Total Net Position 122,050,596$
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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 13 - JOINT VENTURES, CONTINUED

B. Silicon Valley Clean Water (“SVCW”), continued

The City’s investment in SVCW was adjusted to reflect a net decrease in the investment of $1,262,873.

Every year, the City adjusts the investment based on the City’s proportion of financial activity at SVCW.

SVCW has issued bonds and entered into other loan agreements to fund the capital projects to replace the aged wastewater treatment plan and conveyance upgrade system. Each member has entered into financing agreements and is obligated to pay its allocated share of debts. SVCW financing agreements with the City for debts issued by SVCW are summarized in the table below:

Financial statements may be obtained by mailing a request to Silicon Valley Clean Water, 1400 Radio Road, Redwood City, CA 94065.

C. City/County Association of Governments of San Mateo County (“C/CAG”)

The City/County Association of Governments of San Mateo County JPA was formed in 1990 between the various cities in San Mateo County to prepare, adopt, monitor, and enforce State mandated plans for the management of traffic congestion, integrated solid waste, airport land use, and hazardous waste. The City's contribution to C/CAG was $115,267 for the year ended June 30, 2025. The City provided financial services to C/CAG and received $108,500 for the services during the fiscal year.

Financial statements may be obtained by mailing a request to the City of San Carlos, 600 Elm Street, San Carlos, CA 94070.

Silicon Valley Clean
Water Financing
Agreement
Maturity
Date
Balance at
June 30,
2024 Decreas es
Balance at
June 30,
2025
Due within 1
year
Due in more
than 1 year
SVCW 2018 Wastewater
Revenue Bonds 8/1/2048 22,925,000 $ (525,000) $ 22,400,000$ 550,000 $ 21,850,000$ Water Infrastructure and
Innovation Act (WIFIA) 3/1/2058 36,611,146 - 36,611,146 - 36,611,146 SVCW Wastewater Revenue
Bonds, Series 2021A 8/1/2045 20,655,000 (1,005,000) 19,650,000 1,000,000 18,650,000 SVCW Wastewater Revenue
Bonds, Series 2021B 8/1/2032 915,000 (85,000) 830,000 90,000 740,000 SVCW Wastewater Revenue
Notes, Series 2021B* 3/1/2026 11,842,550 - 11,842,550 - 11,842,550 Total $ 92,948,696 $ (1,615,000) $ 91,333,696 $ 1,640,000 $ 89,693,696 * SVCW will draw funds from the WIFIA loan to repay 100% of the 2021A/B Notes' principal. 95 8.g
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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 13 - JOINT VENTURES, CONTINUED

D. South Bayside Waste Management Authority (“SBWMA”)

The South Bayside Waste Management Authority (‘the Authority’) JPA was formed on October 13, 1999.

Members of the Authority currently include the cities of Atherton, Belmont, Burlingame, East Palo Alto, Foster City, Hillsborough, Menlo Park, Redwood City, San Carlos, San Mateo, as well as the West Bay Sanitary District and the County of San Mateo. The members are required by Assembly Bill (AB) 939 to reduce, recycle, and reuse solid waste generated within their respective jurisdictions and to provide source reduction, recycling, and composting activities. The Authority's purpose is to assist its members in meeting these requirements.

Financial statements may be obtained by mailing a request to SBWMA, 610 Elm St. #202, San Carlos, CA 94070

E. Peninsula Traffic Congestion Relief Alliance (“Commute.org”)

The Peninsula Traffic Congestion Relief Alliance is a joint exercise of powers between the cities of Belmont, Brisbane, Burlingame, Colma, Daly City, East Palo Alto, Foster City, Half Moon Bay, Millbrae, Pacifica, Redwood City, San Bruno, San Carlos, San Mateo, South San Francisco, the County of San Mateo, Town of Atherton, and Town of Hillsborough. It was formed to perform transit systems management efforts to mitigate traffic congestion in the member communities. Commute.org began operations on July 1, 2000.

Financial statements may be obtained by mailing a request to the City of Millbrae, 621 Magnolia Avenue, Millbrae, CA 94030.

F. California Municipal Finance Authority (“CMFA”)

The CMFA was created on January 1, 2004 pursuant to a joint exercise of powers agreement to promote economic, cultural, and community development th rough the financing of economic development and charitable activities throughout California. The CMFA also assists local governments, non-profit organizations, and businesses with the issuance of taxable and tax-exempt bonds aimed at improving the standard of living in California. Over 300 municipalities have become members of the CMFA.

On September 9, 2019, the City Council adopted Resolution 2019-071 authorizing the execution of a Joint Exercise of Powers Agreement and approving the issuance of tax-exempt bonds by the CMFA for the benefit of Charities Housing Development Corporation of Santa Clara County (the “Sponsor”), on behalf of Walnut Street, L. P., or a subsidiary or affiliate thereof (the “Borrower”), to provide for the financing of new construction of a 24-unit affordable rental housing facility for the benefit of the 817 Walnut Street project.

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 13 - JOINT VENTURES, CONTINUED

G. San Mateo County Libraries

The San Mateo County Library JPA was established in 1999 to provide library services to community members. The Library JPA is comprised of the cities of Atherton, Belmont, Brisbane, East Palo Alto, Foster City, Half Moon Bay, Millbrae, North Fair Oaks, Pacifica, Portola Valley, San Carlos, Woodside, and the unincorporated areas of the county. The Library JPA is a separate independent entity with its own Governing Board, consisting of elected officials fr om each member entity. Its operations Committee is composed of City and County representative from each member entity.

In accordance with the Library JPA Agreement, and as approved by the JPA Governing Board, at the end of each fiscal year, funds in excess of the amount required to operate a community library are distributed and held by the Library JPA in separate trust funds. The excess dedicated library tax funds held on behalf of the City at June 30, 2025 was $3,564,342. These funds can be used by the City to cover the repairs, maintenance, and capital project costs for the library.

H. San Mateo Operational Area Emergency Services Organization (“OES”)

San Mateo County Operational Area (“OA”) JPA is comprised of all local governments within the geographic area of San Mateo County. The Emergency Services Council (“EMC”), which consists of representatives of the jurisdictions in the San Mateo County OA, is the governing and oversight body for the Emergency Services Organization Authority (“Or ganization”). The purpose of the organization is to operate pursuant to California’s Standard Emergency Management System (“SEMS”) and local adopted Emergency Operations Plans. The goal is to provide coordinated plans for the protection of persons and property based on the phases of emergency management.

I. Peninsula Clean Energy Authority of San Mateo County

Under the Community Choice Aggregation (“CCA”) program, San Mateo County and all 21 of its cities and towns formed Peninsula Clean Energy (“PCE”), a community-controlled, not-for-profit, joint powers agency in 2016. As a CCA, PCE offers many environmental and economic benefits to its residential and business customers. The purposes of the JPA is to reduce greenhouse gas emissions, provide electric power and other forms of energy to customers at a competitive cost, and reduce energy consumption.

The Board of Directors consists of elected officials from each of the 21 cities within the County of San Mateo and the unincorporated areas of the county.

J. Service Agreements

Fire and Emergency Services Agreement with the City of Redwood City

In July 2011, the City of San Carlos and the City of Redwood City entered into an agreement for fire and emergency services. This original agreement allowed the City of San Carlos to maintain a fire department, including personnel and infrastructure, at its sole cost sufficient to provide certain emergency and non-emergency services. The City of Redwood City provided certain fire and emergency services, including fire administration and support; fire prevention; investigation; and training. The City of San Carlos pays the City of Redwood City a fee for the services provided that is reviewed in January of each year and amended to reflect actual increases or decreases in cost.

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 13 – JOINT VENTURES, CONTINUED

J. Service Agreements, continued

Fire and Emergency Services Agreement with the City of Redwood City, continued

On June 24, 2013, the City Council adopted a resolution for the execution of the amended and restated agreement between the Cities of Redwood City and San Carlos for a full-service model for fire and emergency services. The restated agreement also included the transfer of fire services personnel from the City of San Carlos to the City of Redwood City on July 1, 2013.

In April 2018, the Cities of Redwood City and San Carlos negotiated a restated agreement, commencing on July 1, 2024 and expiring on June 30, 2027. Cost of services are be reviewed annually and brought forward for Council approval each year. The total charges for fiscal year 2025 were $10,100,931.

Law Enforcement Services Agreement with the County of San Mateo

In September 2010, the City Council approved a five-year Police Services Agreement contract with the County of San Mateo Sheriff’s Office to provide law enforcement to the City. The contract with the Sheriff’s Office includes police management, patrol, investigation, traffic enforcement, community and school services, and support service components. The contract maintains minimum staffing levels for patrol, provides for the same quick response times, and restores many of the key community programs that the San Carlos Police Department had provided during better economic times. The consolidation of police services with the Sheriff’s Office results in estimated annual savings of approximately $2 million. Annual cost increases are limited to those increases required under California Government Code Section 51350.

In June 2020, the Council approved a 5-year agreement with the San Mateo County Sheriff’s Office for July 2020 through June 2025. The total charges for fiscal year 2025 were $10,535,560. In June 2025, the Council approved a new 5-year agreement with the Sheriff's Office for July 2025 through June 2030.

Public Safety Communications Services Agreement with County of San Mateo

On November 13, 2012, the City Council approved an agreement with the County of San Mateo for police dispatch services, and the third amendment to the agreement was approved on May 24, 2021 for five years through June 30, 2026. The Sheriff’s Office is a County department and uses only one dispatch provider. The dispatch service provider for the Sheriff’s Office is a separate County department named “Public Safety Communications”.

San Mateo County’s Public Safety Communications Center is responsible for answering both emergency and non-emergency calls for service. The Communications Center is the primary answering point for 9-1-1 calls within the unincorporated areas of San Mateo County and the Cities of Half Moon Bay, Millbrae, East Palo Alto, Portola Valley, San Carlos, Woodside, and Broadmoor.

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 14 - COMMITMENTS AND CONTIGENT LIABILITIES

The City is subject to litigation arising during the normal course of business. In the opinion of the City Attorney, there is no pending litigation that is likely to have a material adverse effect on the financial position of the City.

The City participates in Federal, State, and local grant programs. These programs are subject to examination by the grantors, and the amount, if any, of expenditures that may be disallowed by the granting agencies cannot be determined at this time. The City expects such amounts, if any, to be immaterial.

A. Palo Alto Medical Foundation Development Agreement

On October 8, 2007, after an extensive 3 1/2 year process, the City Council approved a proposal by the Palo Alto Medical Foundation (“PAMF”) to develop a regional Medical Clinic, Medical Office Building, and Hospital on an 18 acre site at 301 Industrial Road in San Carlos that formerly housed the Varian - CPI Eimac plant. In 2011, Sutter Health, PAMF’s parent organization approved funding for the first phase of construction of the medical facility. This included construction of the Medical Office Building and Clinic, the parking garage to serve full facility build-out, and site improvements including utilities, loop access road, and landscaping. In May 2012, PAMF received construction permits from the City and began work including grading and pile installation on the site. The Medical Office Building and Clinic opened to patients in November 2014. A second phase of the project, to construct the Hospital on this site, remains unfunded.

The purchase and transfer of the 18-acre site at 301 Industrial Road took a major parcel in San Carlos off of the property tax rolls of the City. This occurred when the title to the site passed from 301 Industrial LLC (the entity performing the site clearance and remediation activities) to PAMF, which is a tax-exempt entity.

In addition, the PAMF San Carlos Center would generate very little in sales tax revenue to the City. To offset this fiscal impact, a Development Agreement with PAMF was entered into to ensure that the City would be in substantially the same position financially as the City would likely have been with use of the Project Site for an economically productive purpose.

The key components of the Development Agreement are described in the table below. The Development Agreement guarantees the City nearly $91,000,000 in revenue over a 50-year period. When factoring in costs for City services, the Development Agreement would net the City $43,939,000 over 50 years, resulting in a positive net present value of $11,642,000. The net amount does not include one-time payments of $1 million to the City for athletic fields and $1.5 million to the San Carlos Education Foundation for educational purposes. This amount also does not include the City's share of any excess returns of the $9 million principal amount to be funded by PAMF under the agreement, which could be substantial depending on the investment returns received on the fund.

The financial impacts of these developments are beneficial to the City. The Guaranteed Minimum Payments (item “C” in the table below) began in 2010-11 with a payment of $630,000 in April 2011 after receipt of $250,000 per year payments in the two years prior as described in the Development Agreement.

The Guaranteed Minimum Payment received in the fiscal year ended June 30, 2025 was $890,174.

In addition to receiving the Year 3 Guaranteed Minimum Payments of $630,000 in April 2011 as specified in the development agreement, the start of construction triggered two more events.

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 14 - COMMITMENTS AND CONTIGENT LIABILITIES, CONTINUED

A. Palo Alto Medical Foundation Development Agreement, continued

First, the City received the "construction period revenue" for Phase 1 of the PAMF development (see item "D" in the table below). Since the second phase of the project is unfunded, the City and PAMF agreed to allocate $252,700 of the total construction period revenue to Phase 1, which the City has received.

Second, the start of construction triggered payment to the City of the "guaranteed minimum annual operational use tax revenue" one year after construction is completed (see item "E" in the table below).

B. Ordinance 1538 - Amending Development Agreement to the Palo Alto Medical Foundation

On November 13, 2018 Council approved amending the Development Agreement between the City and the Palo Alto Medical Foundation for health care, research, and education relating to the development of property at 301 Industrial Road to extend the vesting period for 10 years. Ordinance 1538 was adopted by the Council on November 26, 2018. PAMF agreed to pay the City a portion of the Commercial Linkage Fee in the amount of $2 million within 14 days after the amendment was final with the remaining fee due at the time building permits were issued. PAMF was also required to make a contribution of $500,000 towards the US 101/Holly Pedestrian Bridge Project.

100

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 14 - COMMITMENTS AND CONTIGENT LIABILITIES, CONTINUED

B. Ordinance 1538 - Amending Development Agreement to the Palo Alto Medical Foundation, continued

The initial contribution from PAMF to the City for the execution of the First Amendment to the Development Agreement was $2.5 million. The revenue sources contained in the Development Agreement are summarized in the following table:

Funding Source Summary Description Current Status
A $9 million endowment
fund (called the
Designated Fund)
At the end of 50 years, the Designated Fund
becomes the City's to administer
No change
B 50% of excess
returns on the
Designated Fund at
the end of the
payment term
In addition to receiving the $9 million
Designated Fund at the end of the term of
the agreement, the City will then receive
50% of the amount of the Designated
Fund that exceeds $9 million
No change
C Guaranteed minimum
payments from the
revenue on the
Designated Fund
$250,000 in each of Years 1 and 2
$630,000 in Year 3
$630,000 inflated by 2.5% per year for
the next 49 years
The City has received a total of $11,797,115 from years 1 through 17.

D Guaranteed minimum
construction-related
use tax revenue
$722,000 for the principal construction period With the start of construction in May 2012, construction period revenue (use tax assigned to the project by the
contractors) began to flow to the City's sales tax account.

At completion of Phase I construction, the City had
received total of $252,700 construction user tax.

E Guaranteed minimum
annual operational
use tax revenue
$152,000/year inflated by 3% per year for 50
years
Deferred — $152,000 per year is guaranteed for 50 years starting one year after construction of both the Medical Clinic and Hospital facilities are completed.

F $1.5 million One-time payment to the San Carlos
Education Foundation for health-related
school programs
Received — by San Carlos Education Foundation on Feb
5, 2008.

G $1 million One-time payment to the City to improve
athletic facilities and fields
Received — by City of San Carlos on Feb 5, 2008. The
funds were used to install a synthetic turf field at Lower Highlands Park Field.

H $2.5 million One-time payment to the City for
amending development agreement
Received — by City of San Carlos on March 6, 2019. $2
million paid for the commercial linkage fee and $0.5
million was used for US101/Holly Pedestrian Bridge
Project.

Total: $93,304,000 (minimum) over 50 years
101

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 14 - COMMITMENTS AND CONTIGENT LIABILITIES, CONTINUED

C. Construction Commitments

Construction commitments as of June 30, 2025 consisted of the following projects:

NOTE 15 - SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER REDEVELOPMENT AGENCY

On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 (“the Bill”) that provided for the dissolution of all Redevelopment Agencies in the State of California. This action impacted the reporting entity of the City of San Carlos that previously had reported a Redevelopment Agency within the reporting entity of the City as a blended component unit.

The Bill provided that upon dissolution of a Redevelopment Agency, either the City or another unit of local government will agree to serve as the “successor agency” to hold the assets until they are distributed to other units of State and local government. On January 9, 2012, the City Council elected to become the Successor Agency for the former Redevelopment Agency in accordance with the Bill.

After enactment of the Bill, which occurred on June 28, 2011, Redevelopment Agencies in California cannot enter into new projects, obligations or commitments. Subject to the control of a newly established oversight board, remaining assets can only be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments).

In future fiscal years, Successor Agencies will only be allocated revenue in the amount that is necessary to pay the estimated annual installment payments on enforceable obligations of the former Redevelopment Agency until all enforceable obligations of the prior Redevelopment Agency have been paid in full and all assets have been liquidated.

The last and final Recognized Obligations Payment Schedule (“ROP”) and administrative costs budget for the period July 1, 2020 to June 30, 2035 was approved by the Department of Finance on November 18, 2019. The Successor Agency will no longer have to prepare and submit the ROPS on an annual basis.

The last and final ROPS provides a permanent guarantee that all of the Successor Agency’s existing obligations will be repaid by 2035 without the annual review of the same debt items by the DOF under the current process.

Project Name
Contract
Amount
Expenditures
to date as of
June 30, 2025
Remaining
Commitments
Citywide Way-fiinding Program 401,968 $ 123,930$ 278,038$ Fire Station Replacement 9,249,837 8,058,068 1,191,769 Pavement Rehabilitation 9,241,258 8,405,012 836,246 Repave Asphalt Walking Path at Highlands Park 665,300 381,693 283,607 San Carlos Ave Pedestrian Safety Improvements
Phase III 2,275,751 1,898,009 377,742
Sewer Rehabilitiation 8,071,865 7,175,479 896,386 Storm Drain Improvements 2,304,251 2,189,038 115,213 Total 32,210,230$ 28,231,229$ 3,979,001$
102

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 15 - SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER REDEVELOPMENT

AGENCY, CONTINUED

A. Cash and Investments

Cash and investments reported by the Successor Agency in the accompanying financial statements consisted of the following:

B. Long-term Debt

The Successor Agency long-term debt issues and transactions are summarized below and discussed in detail thereafter.

C. Installment Purchase Agreement

On October 1, 1994, the Redevelopment Agency purch ased real property and provided the bulk of the financing required to construct and equip an 85-unit residential care facility for elderly low-income persons.

As part of the transaction, the San Carlos Development Corporation (“SCDC”) agreed to purchase and operate the facility as the San Carlos Elms. The Redevelopment Agency signed a direct borrowing Installment Purchase Agreement in the amount of $2,800,000 to finance its purchase of the land.

Payments are made out of receipts from SCDC. Interest payments on the Installment Purchase Agreement are due monthly and principal payments began on May 1, 2012 and continue through June 1, 2035, bearing interest of 10.9%. As of June 30, 2025, the total principal and interest remaining on the debt is $3,044,683.

D. Tax Allocation Refunding Bonds

In April 2018, the Successor Agency issued $11,840,684 of 2018 Tax Allocation Refunding Direct Placement Bonds to refinance the 2007 Series A Tax Allocation Revenue Bonds. The refunding resulted in an overall debt service decrease of $1,833,697. The net present value of the savings resulted in an economic gain of $1,466,261. This equates to $1.5 million in cumulative cash flow savings through 2033, or about $100,000 annually, which is divided amongst the taxing entities. The 2007 Series A Tax Allocation Revenue Bonds were subsequently retired in May 2018.

Cash and investments 1,143,342$
Total Cash and Inv estments 1,143,342$
Balance
June 30, 2024 Retirements
Balance
June 30, 2025
Due Within
One Year
Notes Payable:

Installment Purchase Agreement (a) 2,052,726$ (110,093) $ 1,942,633 $ 121,320 $ 2018 Tax Allocation Refunding Bonds (b) 8,220,496 (723,907) 7,496,589 743,938 Total 10,273,222 $ (834,000) $ 9,439,222 $ 865,258 $ (a) The Installment Purchase Agreement is a direct borrowing debt issue. (b) The 2018 Tax Allocation Refunding Bonds are a direct placement debt issue. 103

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 15 - SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER REDEVELOPMENT

AGENCY, CONTINUED

D. Tax Allocation Refunding Bonds, continued

The 2018 Bonds are special obligations of the Successor Agency payable solely from and secured by a pledge of Redevelopment Property Tax Trust Fund Revenues. Principal payments are payable annually on September 1 and the last principal payment is scheduled to occur in 2033. Interest payments are due semi-annually on September 1 and March 1 and bear interest of 2.85%.

The Redevelopment Agency pledged, as security for bonds issued, either directly or through the Financing Authority, a portion of tax increment revenue that it receives. The bonds were issued to provide financing for various capital projects. Assembly Bill 1X 26 provided that upon dissolution of the Redevelopment Agency, property taxes allocated to redevelopment agencies no longer are deemed tax increment but rather property tax revenues and will be allocated first to successor agencies to make payments on the indebtedness incurred by the dissolved redevelopment agency. Total principal and interest remaining on the debt as of June 30, 2025 is $8,497,543 with annual debt service requirements as included below. For the current year, the total property tax revenue recognized by the Successor Agency for the payment of indebtedness incurred by the dissolved Redevelopment Agency was $1,272,640 and the debt service obligation on the bonds was $947,876.

E. Debt Service Requirements

The following schedule illustrates the debt service requirements to maturity for the debt outstanding as of June 30, 2025:

Principal Interest Total Principal Interest Total
2026 743,938$ 203,051$ 946,989$ 121,320$ 184,080$ 305,400 $ 2027 763,191 181,575 944,766 133,690 171,710 305,400 2028 786,641 159,490 946,131 147,325 158,075 305,400 2029 809,186 136,749 945,935 162,349 143,051 305,400 2030 830,798 113,380 944,178 178,905 126,495 305,400 2031-2035 3,562,835 206,709 3,769,544 1,199,044 318,639 1,517,683 Total 7,496,589$ 1,000,954$ 8,497,543$ 1,942,633$ 1,102,050 $ 3,044,683 $ Direct Borrowing
Installment Purchase Agreement
Direct Placement
Tax Allocation Refunding BondsFor the Year
Ending June
30,
104

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City of San Carlos
Notes to Basic Financial Statements
For the Year Ended June 30, 2025

NOTE 16 – ACCOUNTING CHANGES AND ERROR CORRECTIONS

In fiscal year 2025, the City recognized two prior period adjustments. The first was due to the implementation of GASB 101 – Compensated Absences. Th is resulted in a restatement of the prior year’s compensated absences liability balance in order to include additional types of time off that were previously not included in the liability. Additionally, the City recognized cash held on their behalf for the City’s library. Prior years did not include this cash. Please see below the results of these adjustments on fund balance and net position.

Sewer
Nonmajor
Governmental
Governmental
Activ ities
Business-Type
Activ ities
June 30, 2024, as previously reported 89,619,424$ 11,347,122 $ 317,666,560 $ 89,619,424 $ Implementation of GASB 101 (34,651) - (245,951) (34,651) Addition of cash held by fiscal agent - 2,629,221 2,629,221 - Recognition of prior year library revenues - 231,113 231,113 - June 30, 2024, as restated 89,584,773 $ 14,207,456 $ 320,280,943 $ 89,584,773 $ Fund Statements Government-Wide
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REQUIRED

SUPPLEMENTARY INFORMATION
107

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City of San Carlos
Required Supplementary Information
For the year ended June 30, 2025
CalPERS Cost Sharing Plan
Schedule of the Proportionate Share of the Net Pension Liability - Last Ten Fiscal Years Miscellaneous
Measurement Date 6/30/2015 6/30/2016 6/30/2017
City's proportion of the net pension liability 0.25% 0.23% 0.23% City's proportionate share of
the net pension liability 16,833,679$ 20,234,806 $ 22,834,231 $ Covered payroll 6,254,350$ 6,577,443$ 7,079,214$
City's proportionate share of
the net pension liability as percentage
of its covered payroll 269% 308% 323%
City's fiduciary net position as a percentage of the
City's proportion of the total pension liability 72.85% 68.77% 68.08% Safety
Measurement Date 6/30/2015 6/30/2016 6/30/2017
City's proportion of the net pension liability 0.23% 0.21% 0.20% City's proportionate share of
the net pension liability 15,579,631$ 17,790,912 $ 19,520,586 $ Covered payroll 109,603$ 114,534$ 119,583$
City's proportionate share of
the net pension liability as a percentage
of its covered payroll 14215% 15533% 16324%
City's fiduciary net position as a percentage of the
City's proportion of the total pension liability 69.92% 66.12% 64.49% Notes to the schedule:

Benefit Changes:

There were no changes to benefit terms that applied to all members of the Public Agency Pool. However, individual employers in the Plan may have provided a benefit improvement to their employees by granting Two Years Additional Service Credit to members retiring during a specified time period (a.k.a. Golden Handshakes).

Changes in Assumptions:

In FY2023, the discount rate decreased from 7.15% to 6.9% 108

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6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 6/30/2024

0.18% 0.18% 0.12% 0.15% 0.35% 0.37% 0.31%
17,011,933$ 18,386,126 $ 12,569,004 $ 2,800,549 $ 16,367,826 $ 18,295,016 $ 14,945,493 $ 7,389,579$ 7,885,229$ 8,586,940$ 8,595,270$ 9,105,629$ 10,363,808$ 12,563,970 $ 230% 233% 146% 33% 180% 177% 119%

76.94% 76.26% 84.31% 96.63% 81.39% 80.24% 84.49%
6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 6/30/2024

0.20% 0.20% 0.19% 0.43% 0.33% 0.31% 0.30%
19,398,821$ 20,128,984 $ 20,988,636 $ 15,082,867 $ 22,401,494 $ 22,910,095 $ 21,914,000 $ 53,322$ 103,575$ 125,858$ 141,154$ 150,121$ 57,357$ 126,493$ 36381% 19434% 16676% 10685% 14922% 39943% 17324%

65.22% 65.05% 64.37% 74.51% 63.59% 63.50% 65.45%
109

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Packet Pg. 182

City of San Carlos
Required Supplementary Information
For the year ended June 30, 2025
CalPERS Cost Sharing Plan
Schedule of Pension Plan Contributions - Last 10 Fiscal Years Miscellaneous
Fiscal Year Ended 2016 2017 2018 2019
Actuarially determined contribution 1,102,597$ 670,838$ 6,926,132$ 1,799,956$ Contributions in relation to actuarially
determined contributions (1,102,597) (670,838) (6,926,132) (1,799,956) Contribution deficiency (excess) -$ -$ -$ -$ Covered payroll 6,577,443$ 7,079,214$ 7,389,579$ 7,885,229$ Contributions as a percentage of
covered payroll 16.76% 9.48% 93.73% 22.83%
Safety
Fiscal Year Ended 2016 2017 2018 2019
Actuarially determined contribution 1,169,706$ 1,112,696$ 1,255,290$ 1,456,904$ Contributions in relation to actuarially
deemed contributions (1,169,706) (1,112,696) (1,255,290) (1,456,904) Contribution deficiency (excess) -$ -$ -$ -$ Covered payroll 114,534$ 119,583$ 53,322$ 103,575$ Contributions as a percentage of
covered payroll 1021% 930% 2354% 1407%
Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry age
Amortization method Level percentage of payroll, closed Remaining amortization period 8 years as of the Valuation Date Asset valuation method Market Value of Assets
Discount Rate 6.90%
Inflation 2.30%
Salary increases Annual increase vary by category, entry age and duration of service Retirement age 50 and up
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2020 2021 2022 2023 2024 2025
9,110,376$ 3,418,397$ 1,820,816$ 2,107,821$ 2,214,283$ 2,292,902$ (9,110,376) (3,418,397) (1,820,816) (2,107,821) (5,214,283) (6,292,902) -$ -$ -$ -$ (3,000,000)$ (4,000,000)$ 8,586,940$ 8,595,270$ 9,105,629$ 10,363,808$ 12,563,970$ 13,077,920$ 106.10% 39.77% 20.00% 20.34% 41.50% 48.12%
2020 2021 2022 2023 2024 2025
1,676,149$ 1,830,722$ 2,034,117$ 2,207,219$ 1,468,828$ 1,718,140$ (1,676,149) (1,830,722) (2,034,117) (2,207,219) (1,468,828) (1,718,140) -$ -$ -$ -$ -$ -$ 125,858$ 141,154$ 150,121$ 57,357$ 126,493$ 150,227$ 1332% 1297% 1355% 3848% 1161% 1144%
111

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Packet Pg. 184

City of San Carlos
Required Supplementary Information
For the year ended June 30, 2025
PARS Agent Multiple-Employer Longevity Recognition Plan Schedule of Changes in the Net Pension Liability and Related Ratios - Last 10 Fiscal Years Measurement Date 6/30/2015 6/30/2016 6/30/2017 6/30/2018

TOTAL PENSION LIABILITY
Service cost 239,822$ 225,433$ 229,629$ 168,032$ Interest 455,847 470,045 478,414 585,709 Changes in assumptions - 802,583 (2,369,059) - Differences due to plan experience - - 1,055,691 - Benefit payments (261,805) (299,652) (333,528) (359,186) Net change in the total pension liability 433,864 1,198,409 (938,853) 394,555 Total pension liability - beginning 9,079,950 9,513,814 10,712,223 9,773,370 Total pension liability - ending (a) 9,513,814$ 10,712,223$ 9,773,370 $ 10,167,925$

PLAN FIDUCIARY NET POSITION
Contributions - employer 328,200$ 350,000$ 452,000$ 1,520,000$ Net investment income 29,190 15,848 128,999 116,751 Administrative expense (373) (394) (455) (2,367) Benefit payments (261,805) (299,652) (333,528) (359,186) Net change in plan fiduciary net position 95,212 65,802 247,016 1,275,198 Plan fiduciary net position - beginning 1,567,930 1,663,142 1,728,944 1,975,960 Plan fiduciary net position - ending (b) 1,663,142$ 1,728,944$ 1,975,960$ 3,251,158$ Net pension liability - ending (a) - (b) 7,850,672$ 8,983,279$ 7,797,410$ 6,916,767$ Plan fiduciary net position as a percentage of the
total pension liability 17.48% 16.14% 20.22% 31.97%
Covered em
ployee payroll1 3,794,000$ 3,848,632$ 3,726,133$ 3,451,329$ Net pension liability as a percentage of covered
payroll 206.92% 233.41% 209.26% 200.41%
Notes to the Schedule:
1Covered employee payroll as of June 30, 2015 only reflects 36 of 43 active. 112

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6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 6/30/2024 173,493$ 123,724 $ 127,436 $ 151,066 $ 155,598 $ 119,995 $ 608,083 623,837 639,803 797,046 819,424 943,693 (36,873) - 1,613,526 - 711,448 - (2,151) - 758,229 - 305,717 - (413,387) (447,071) (523,269) (560,537) (598,838) (669,925) 329,165 300,490 2,615,725 387,575 1,393,349 393,763 10,167,925 10,497,090 10,797,580 13,413,305 13,800,880 15,194,229 10,497,090$ 10,797,580 $ 13,413,305 $ 13,800,880 $ 15,194,229 $ 15,587,992 $ 459,000$ 630,300$ 638,000$ 620,000$ 668,000$ 888,300$ 183,313 126,101 688,031 (480,064) 209,317 384,905 (549) (11) (756) (776) (405) (814) (413,387) (447,071) (523,269) (560,537) (598,838) (669,925) 228,377 309,319 802,006 (421,377) 278,074 602,466 3,251,158 3,479,535 3,788,854 4,590,860 4,169,483 4,447,557 3,479,535$ 3,788,854$ 4,590,860$ 4,169,483$ 4,447,557$ 5,050,023$ 7,017,555$ 7,008,726$ 8,822,445$ 9,631,397$ 10,746,672$ 10,537,969 $

33.15%

35.09% 34.23% 30.21% 29.27% 32.40%
3,492,842$ 3,274,152$ 3,118,362$ 3,001,909$ 3,419,268$ 2,926,533$ 200.91% 214.06% 282.92% 320.84% 314.30% 360.08%
113

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Packet Pg. 186

City of San Carlos
Required Supplementary Information
For the year ended June 30, 2025
PARS Agent Multiple-Employer Longevity Recognition Plan Schedule of Pension Plan Contributions - Last 10 Fiscal Years Fiscal Year Ended 2016 2017 2018 2019
Actuarially determined contribution 765,384 $ 834,000 $ 857,928 $ 795,117 $ Contributions in relation to actuarially
determined contributions (350,000) (452,000) (1,520,000) (459,000) Contribution deficiency (excess) 415,384$ 382,000$ (662,072)$ 336,117$ Covered employee payroll 3,794,000$ 3,848,632$ 3,726,133$ 3,492,842$ Contributions as a percentage of
covered employee payroll 9.23% 11.74% 40.79% 13.14%
Notes to Schedule
Valuation date
Actuarial cost method
Amortization method
Amortization period 24 years 23 years 20 years 19 years Discount Rate
Inflation
Annual salary increases
Investment rate of return
Mortality
Mortality improvement

6.00%

2.50%
June 30, 2015
Entry-Age Normal
Level % of Pay

6.00%

2.75%
June 30, 2017
Entry-Age Normal
Level dollar

2.50%

6.00%
CalPERS 2014 Experience Stud
y
Scale BB projected to 2028

3.25%

6.00%
CalPERS 2014 Experience Stud
y
MacLeod Watts Scale 2017
114

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Packet Pg. 187

2020 2021 2022 2023 2024 2025
640,965$ 624,585$ 619,847$ 883,364$ 833,153$ 976,280$ (630,300) (638,000) (620,000) (668,000) (888,300) (893,500) 10,665$ (13,415)$ (153)$ 215,364$ (55,147)$ 82,780$ 3,274,152$ 3,118,362$ 3,001,909$ 3,419,268$ 2,926,533$ 3,558,584$

19.25% 20.46% 20.65% 19.54% 30.35% 25.11%
June 30, 2023
Entry-Age
Normal
Level dollar
30 years 30 years 29 years 28 years 27 years 26 years

6.30%

2.50%

3.00%

6.30%
CalPERS 2021
Experience
Study
MacLeod
Watts Scale
2022

3.00%

6.00%
CalPERS 2017 Experience Stud
y
MacLeod Watts Scale 2022
June 30, 2021
Entry-Age Normal
Level dollar

6.00%

2.50%
June 30, 2019
Entry-Age Normal
Level dollar

6.00%

2.50%

3.00%

6.00%
CalPERS 2017 Experience Study
MacLeod Watts Scale 2020
115

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Packet Pg. 188

City of San Carlos
Required Supplementary Information
For the year ended June 30, 2025
Schedule of Changes in the Net OPEB Liability and Related Ratios - Last 10 Fiscal Years* Measurement Date 6/30/2017 6/30/2018 6/30/2019 6/30/2020 Total OPEB Liability
Service cost 99,800$ 103,043$ 112,103$ 95,744$ Interest 372,359 378,808 377,356 316,059 Differences between expected and actual
experience - - (791,845) - Benefit payments (350,018) (416,540) (430,477) (446,408) Changes of assumptions - 153,245 (192,646) - Net change in the total OPEB liability 122,141 218,556 (925,509) (34,605) Total OPEB liability - beginning 5,394,624 5,516,765 5,735,321 4,809,812 Total OPEB liabilty - ending (a) 5,516,765 5,735,321 4,809,812 4,775,207 Plan Fiduciary Net Position
Contribution - employer 470,037 1,502,744 575,870 476,115 Net investment income 127,483 117,747 162,210 103,926 Administrative expense (656) (904) (578) (1,446) Other expenses - (2,011) - - Benefit payments (350,018) (416,540) (430,477) (446,408) Net change in plan fiduciary net position 246,846 1,201,036 307,025 132,187 Plan fiduciary net position - beginning 1,273,705 1,520,551 2,721,587 3,028,612 Plan fiduciary net position - ending (b) 1,520,551 2,721,587 3,028,612 3,160,799 Net OPEB liability/(asset) - ending (a) - (b) 3,996,214$ 3,013,734$ 1,781,200$ 1,614,408$ Covered-employee payroll 7,198,797$ 7,720,689$ 8,235,888$ 8,951,213$ Net OPEB liability as a percentage of covered-
employee payroll 55.51%

39.03% 21.63% 18.04%
* Fiscal year 2018 was the 1st year of implementation.
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6/30/2021 6/30/2022 6/30/2023 6/30/2024
98,616$ 103,834 $ 106,950 $ 132,484 $ 315,162 282,490 284,001 301,645 (314,122) - 171,464 174,903 (409,504) (380,832) (348,077) (317,009) 290,478 - 36,223 (210,794) (19,370) 5,492 250,561 81,229 4,775,207 4,755,837 4,761,329 5,011,890
4,755,837 4,761,329 5,011,890 5,093,119
432,960 400,799 390,000 306,194 858,046 (534,670) 222,899 407,006 (1,173) (1,011) (1,012) (1,217) - - - - (409,504) (380,832) (348,077) (317,009) 880,329 (515,714) 263,810 394,974 3,160,799 4,041,128 3,525,414 3,789,224
4,041,128 3,525,414 3,789,224 4,184,198
714,709$ 1,235,915$ 1,222,666$ 908,921$
8,822,720$ 9,348,265$ 10,871,968$ 12,131,476$

8.10% 13.22% 11.25% 7.49%
117

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Packet Pg. 190

City of San Carlos
Required Supplementary Information
For the year ended June 30, 2025
Schedule of OPEB Contributions - Last 10 Fiscal Years*
Fiscal Year Ended June 30, 2018 2019 2020 2021
Actuarially determined contribution 471,538$ 373,834$ 289,800$ 274,899$ Contributions in relation to the actuarially
determined contribution (1,502,744) (575,870) (476,115) (432,960) Contribution deficiency (excess) (1,031,206)$ (202,036)$ (186,315)$ (158,061)$ Covered employee payroll 7,198,797$ 8,235,888$ 8,951,213$ 8,822,720$ Contributions as a percentage of
covered employee payroll 20.87% 6.99% 5.32% 4.91%
*Fiscal year 2018 was the 1st year of implementation.

Notes to Schedule
Valuation date
Actuarial cost method
Amortization method
Amortization period
Closed 22 years Closed 21 years Closed 20 years Closed 19 years Asset valuation method
Inflation
Healthcare Trend Rates
Salary increases
Investment rate of return
Retirement age
Mortality
Mortality improvement MacLeod Watts Scale 2020

5.4% in 2021, fluctuates until
ultimate rate of 4% in 2076

3.00%

6.25%
Ages 50 to 75
CalPERS 2017 Experience Study
Entry-Age Normal
Level dollar
Market value

2.75%

7.5% to 5% in 0.5% steps

3.25%

7.00%
Ages 50 to 75
CalPERS 2014 Experience Study
MacLeod Watts Scale 2017
Entry-Age Normal
Level dollar
Market value

2.50%
June 30, 2017 June 30, 2019
118

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Packet Pg. 191

2022 2023 2024 2025
262,208$ 231,807$ 161,582$ 271,863$ (400,799) (390,000) (306,194) (344,860) (138,591)$ (158,193)$ (144,612)$ (72,997)$ 9,348,265$ 10,871,968$ 12,131,476$ 14,987,604$

4.29% 3.59% 2.52% 2.30%
June 30, 2019 June 30, 2023
Entry-Age Normal Entry-Age Normal
Level dollar Level dollar
Closed 18 years Closed 17 years Closed 16 years Closed 15 years Market value Market value

2.50% 2.50%

5.4% in 2021,
fluctuates until
ultimate rate of
4% in 2076

6.5% in 2025,
fluctuates until
ultimate rate of

3.9% in 2075

3.00% 3.00%

6.25% 6.05%
Ages 50 to 75 Ages 50 to 75
CalPERS 2017
Experience Study
CalPERS 2021
Experience Study
MacLeod Watts
Scale 2020
MacLeod Watts
Scale 2022
Ages 50 to 75
CalPERS 2017 Experience Study
MacLeod Watts Scale 2022
Entry-Age Normal
Level dollar
Market value

2.50%

5.8% in 2023, fluctuates until
ultimate rate of 3.9% in 2076
June 30, 2021

3.00%

6.05%
119

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SUPPLEMENTARY INFORMATION
121

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Packet Pg. 194

City of San Carlos
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Capital Improvement
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Property taxes 3,000,000$ 3,000,000$ 3,331,926$ 331,926$ Franchise taxes 2,600,000 2,600,000 2,824,746 224,746 Licenses and permits 1,195,500 1,195,500 737,621 (457,879) From other agencies 550,000 550,000 749,336 199,336 Use of money and property 124,900 124,900 175,564 50,664 Other revenue 3,768,157 3,768,157 234,380 (3,533,777) Total revenues 11,238,557 11,238,557 8,053,573 (3,184,984) EXPENDITURES:

Current:

Capital outlay 39,248,024 41,153,339 12,470,713 28,682,626 Total expenditures 39,248,024 41,153,339 12,470,713 28,682,626

REVENUES OVER (UNDER)
EXPENDITURES (28,009,467) (29,914,782) (4,417,140) 25,497,642 OTHER FINANCING SOURCES (USES):

Transfers in 3,007,470 3,007,470 3,007,478 8 Transfers out (3,275,000) (3,275,000) (3,275,000) - Total other financing sources (uses) (267,530) (267,530) (267,522) 8 Net change in fund balances (28,276,997)$ (30,182,312)$ (4,684,662)$ 25,497,650$ FUND BALANCES:

Beginning of year 35,094,125
End of year 30,409,463$
Budgeted Amounts
122

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Packet Pg. 195

City of San Carlos
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Housing Capital Projects Fund
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Use of money and property 263,100$ 263,100$ 194,381$ (68,719)$ Other revenue 7,390,800 7,390,800 554,184 (6,836,616) Total revenues 7,653,900 7,653,900 748,565 (6,905,335) EXPENDITURES:

Current:

Community development 1,149,500 1,149,500 813,901 335,599 Capital outlay 20,269,229 20,269,229 10,745 20,258,484 Total expenditures 21,418,729 21,418,729 824,646 20,594,083

REVENUES OVER (UNDER)
OTHER FINANCING SOURCES (USES):

Proceeds from sale of property - - 3,259,998 3,259,998 Total other financing sources (uses) - - 3,259,998 - Net change in fund balances (13,764,829)$ (13,764,829)$ 3,183,917 16,948,746$ FUND BALANCES:

Beginning of year 14,252,340
End of year 17,436,257$
Budgeted Amounts
123

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Packet Pg. 196

City of San Carlos
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Gas Tax
For the year ended June 30, 2025
Variance with
Final Budget
Budgeted Amounts Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES:

Licenses and permits 23,700$ 23,700$ 4,581$ (19,119)$ From other agencies 1,911,600 1,911,600 1,771,108 (140,492) Charges for services 3,100 3,100 11,664 8,564 Use of money and property 140,100 140,100 1,116,173 976,073 Total revenues 2,078,500 2,078,500 2,903,526 825,026 EXPENDITURES:

Current:

Public works 1,216,100 1,216,100 1,216,102 (2) Capital outlay 9,460,000 9,460,000 6,077,421 3,382,579 Total expenditures 10,676,100 10,676,100 7,293,523 3,382,577

REVENUES OVER (UNDER)
EXPENDITURES (8,597,600) (8,597,600) (4,389,997) 4,207,603 OTHER FINANCING SOURCES (USES):

Transfers in 7,767,900 7,767,900 7,767,900 - Total other financing sources (uses) 7,767,900 7,767,900 7,767,900 - Net change in fund balances (829,700)$ (829,700)$ 3,377,903 4,207,603$ FUND BALANCES:

Beginning of year 17,686,924
End of year 21,064,827$
124

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Packet Pg. 197

City of San Carlos
Nonmajor Governmental Funds
Year Ended June 30, 2025
Special Revenue Funds:

NPDES Funds: Used to account for revenues rece ived from assessments levied by the County on propert y and disburses funds in compliance with the provisions of the National Pollutant Discharge Elimination System.

Police Grants Fund: Used to account for grant activities and services paid for and reimbursed by grant funding. This fund includes grants from the following funding sources:
• Supplemental Law Enforcement Services Funds (SLESF): Under the SLESF program, cities and counties receive State funds to augment public safety expenditures.

San Carlos Library Tenant Fund: Used to account for the San Carlos Library tenant activities.

Capital Projects Funds:

Equipment Replacement Fund: Used to account for the anticipated replacement of general equipment needs.

Measure A Fund: Used to account for t he City'ss hare o f a one- half cent sa les tax restr icted for transportat ion purposes. The revenue received is used to augment capital projects in the Gas Tax Fund.

Measure W Fund: Used to account for the City's share o f one-half cent sales tax. The Measure W wen t into effect in July of 2019 for 30 years. The funding is used to improve transit, relieve congestion, repair potholes, maintain streets and improve pedestrian safety.

Park Fee Fund: Used to account for development fees collected and used to finance the acquisition and construction of City parks.

Parking In-lieu Fund: Used to account for fees charged to business in lieu of required parking. These revenues are used to pay for parking lot improvements and repairs.

Debt Service Fund:

San Carlos Library Bonds Debt Services Fund: Used to accumulate the annual tax levies earmarked for payment of principal and interest on the General Obligation Bonds. 125

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Packet Pg. 198

City of San Carlos
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2025
ASSETS
Cash and investments 852,616 $ 430,588 $ 2,680,055 $ 3,265,607 $ 335,086 $ Cash and investments with fiscal agents - - 3,564,342 - - Receivables:

Accounts receivable 19,495 - - - - Total assets 872,111$ 430,588 $ 6,244,397 $ 3,265,607 $ 335,086 $

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES AND FUND BALANCES
Liabilities:

Accounts payable and accrued liabilities 1,400 - 15,402 - - Unearned revenue - - 1,801,519 - - Total liabilities 1,400 - 1,816,921 - - Fund Balances:

Restricted for:

General government - - 1,747,421 - - Community development - - - - - Public safety - 430,588 - - - Parks and recreation - - - - - Public works 870,711 - - - 335,086 Committed to:

General government - - 2,680,055 - - Capital projects - - - 3,265,607 - Total fund balances 870,711 430,588 4,427,476 3,265,607 335,086 Total liabilities, deferred inflows of
resources and fund balances 872,111$ 430,588$ 6,244,397$ 3,265,607$ 335,086$
Special Revenue Funds
NPDES Police Grants
San Carlos
Library Tenant
Equipment
Replacement
Capital Projects Funds
Measure A
126

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Packet Pg. 199

Debt Service
Fund
Total Nonmajor
Governmental
Funds
323,621$ 1,473,326 $ 21,158 $ 767,937 $ - $ 10,149,994$ - - - - - 3,564,342 44,073 - 360 - - 63,928 367,694$ 1,473,326$ 21,518$ 767,937$ -$ 13,778,264$ - 50,050 - 102,575 - 169,427 - - 360 - - 1,801,879 - 50,050 360 102,575 - 1,971,306 - - - - - 1,747,421 - - 21,158 665,362 - 686,520 - - - - - 430,588 - 1,423,276 - - - 1,423,276 367,694 - - - - 1,573,491 - - - - - 2,680,055 - - - - - 3,265,607 367,694
1,423,276 21,158 665,362 - 11,806,958 367,694$ 1,473,326$ 21,518$ 767,937$ -$ 13,778,264$ Child Care
Development
Capital Projects Funds
San Carlos
Library BondsMeasure W Park In-Lieu Parking In-Lieu
127

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Packet Pg. 200

City of San Carlos
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds
For the year ended June 30, 2025
REVENUES:

Sales taxes - $ - $ - $ - $ 1,118,272$ Property taxes - - 295,503 - - From other agencies 504,778 194,663 - - - Use of money and property 43,742 22,164 - - 17,275 Other revenue 223,791 - - - - Total revenues 772,311 216,827 295,503 - 1,135,547 EXPENDITURES:

Current:

Public safety - 150,000 - - - Public works 746,603 - 60,000 - 84,706 Capital outlay - - 45,885 40,009 - Debt service:

Principal - - - - - Interest and fiscal charges - - - - - Total expenditures 746,603 150,000 105,885 40,009 84,706

REVENUES OVER (UNDER)
EXPENDITURES 25,708 66,827 189,618 (40,009) 1,050,841 OTHER FINANCING SOURCES (USES):

Transfers in - - - 460,000 - Transfers out -
- (1,331,981) - (1,236,000) Total other financing sources (uses) - - (1,331,981) 460,000 (1,236,000) Net change in fund balances 25,708 66,827 (1,142,363) 419,991 (185,159) FUND BALANCES:

Beginning of year 845,003 363,761 2,709,505 2,845,616 520,245 Restatement for fiscal agent cash addition - - 2,860,334 - - Beginning of year, as restated 845,003 363,761 5,569,839 2,845,616 520,245 End of year 870,711$ 430,588$ 4,427,476$ 3,265,607$ 335,086$ Capital Projects Funds
Measure A
Special Revenue Funds
NPDES Police Grants
San Carlos
Library Tenant
Equipment
Replacement
128

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Packet Pg. 201

Debt Service
Fund
Total Nonmajor
Governmental
Funds
497,978$ - $ - $ - $ - $ 1,616,250$ - - - - 498,381 793,884 - - - - - 699,441 16,559 75,821 1,828 39,689 15,983 233,061 - 241,963 - - - 465,754 514,537 317,784 1,828 39,689 514,364 3,808,390 - - - - - 150,000 - - - - - 891,309 - 556,584 39,432 464,829 - 1,146,739 - - - - 1,460,000 1,460,000 - - - - 44,900 44,900 - 556,584 39,432 464,829 1,504,900 3,692,948 514,537 (238,800) (37,604) (425,140) (990,536) 115,442 - - - - 283,266 743,266 (406,900)
- (73,663) - (210,662) (3,259,206) (406,900) - (73,663) - 72,604 (2,515,940) 107,637 (238,800) (111,267) (425,140) (917,932) (2,400,498) 260,057 1,662,076 132,425 1,090,502 917,932 11,347,122 - - - - - 2,860,334 260,057 1,662,076 132,425 1,090,502 917,932 14,207,456 367,694$ 1,423,276$ 21,158$ 665,362$ -$ 11,806,958$ Measure W Park In-Lieu Parking In-Lieu
San Carlos
Library Bonds
Child Care
Development
Capital Projects Funds
129

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Packet Pg. 202

City of San Carlos
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual NPDES
For the year ended June 30, 2025
Variance with
Final Budget
Actual Positive
Final Amounts (Negative)
REVENUES:

From other agencies 523,000 $ 504,778 $ (18,222) $ Use of money and property 13,400 43,742 30,342 Other revenue 183,300 223,791 40,491 Total revenues 719,700 772,311 52,611 EXPENDITURES:

Current:

Public works 787,100 746,603 40,497 Total expenditures 787,100 746,603 40,497

REVENUES OVER (UNDER)
EXPENDITURES (67,400) 25,708 93,108 Net change in fund balances (67,400)$ 25,708 93,108 $ FUND BALANCES:

Beginning of year 845,003
End of year 870,711
$
Budgeted Amounts
130

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Packet Pg. 203

City of San Carlos
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Police Grants
For the year ended June 30, 2025
Variance with
Final Budget
Budgeted Amounts Actual Positive
Final Amounts (Negative)
REVENUES:

From other agencies 180,000 $ 194,663 $ 14,663 $ Use of money and property 7,100 22,164 15,064 Total revenues 187,100 216,827 29,727 EXPENDITURES:

Current:

Public safety 168,800 150,000 18,800 Total expenditures 168,800 150,000 18,800

REVENUES OVER (UNDER)
EXPENDITURES 18,300 66,827 48,527 Net change in fund balances 18,300$ 66,827 48,527 $ FUND BALANCES:

Beginning of year 363,761
End of year 430,588$
131

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Packet Pg. 204

City of San Carlos
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual San Carlos Library Tenant
For the year ended June 30, 2025
Variance with
Final Budget
Budgeted Amounts Actual Positive
Final Amounts (Negative)
REVENUES:

Property taxes 1,377,300$ 295,503 $ (1,081,797)$ Total revenues 1,377,300 295,503 (1,081,797) EXPENDITURES:

Current:

Public works 1,222,859 60,000 1,162,859 Capital outlay 800,000 45,885 754,115 Total expenditures 2,022,859 105,885 1,916,974

REVENUES OVER (UNDER)
EXPENDITURES (645,559) 189,618 835,177 OTHER FINANCING SOURCES (USES):

Transfers out (1,331,981) (1,331,981) - Total other financing sources (uses) (1,331,981) (1,331,981) - Net change in fund balances (1,977,540)$ (1,142,363) 835,177 $ FUND BALANCES:

Beginning of year 2,709,505
Restatement 2,860,334
Beginning of year, as restated 5,569,839
End of year 4,427,476$
132

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Packet Pg. 205

City of San Carlos
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Equipment Replacement
For the year ended June 30, 2025
Variance with
Final Budget
Budgeted Amounts Actual Positive
Final Amounts (Negative)
EXPENDITURES:

Current:

Capital outlay 538,600$ 40,009$ 498,591$ Total expenditures 538,600 40,009 498,591 OTHER FINANCING SOURCES (USES):

Transfers in 460,000 460,000 - Total other financing sources (uses) 460,000 460,000 - Net change in fund balances (78,600)$ 419,991 498,591$ FUND BALANCES:

Beginning of year 2,845,616
End of year 3,265,607
$
133

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Packet Pg. 206

City of San Carlos
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Measure A
For the year ended June 30, 2025
Variance with
Final Budget
Budgeted Amounts Actual Positive
Final Amounts (Negative)
REVENUES:

Sales taxes 1,246,100 $ 1,118,272 $ (127,828) $ Use of money and property 10,900 17,275 6,375 Total revenues 1,257,000 1,135,547 (121,453) EXPENDITURES:

Current:

Public works 95,900 84,706 11,194 Total expenditures 95,900 84,706 11,194

REVENUES OVER (UNDER)
EXPENDITURES 1,161,100 1,050,841 (110,259) OTHER FINANCING SOURCES (USES):

Transfers out (1,236,000) (1,236,000) - Total other financing sources (uses) (1,236,000) (1,236,000) - Net change in fund balances (74,900)$ (185,159) (110,259) $ FUND BALANCES:

Beginning of year 520,245
End of year 335,086$
134

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Packet Pg. 207

City of San Carlos
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Measure W
For the year ended June 30, 2025
Variance with
Final Budget
Budgeted Amounts Actual Positive
Final Amounts (Negative)
REVENUES:

Sales taxes 406,900 $ 497,978 $ 91,078 $ Use of money and property 600 16,559 15,959 Total revenues 407,500 514,537 107,037 OTHER FINANCING SOURCES (USES):

Transfers out (406,900) (406,900) - Total other financing sources (uses) (406,900) (406,900) - Net change in fund balances 600$ 107,637 107,037 $ FUND BALANCES:

Beginning of year 260,057
End of year 367,694$
135

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Packet Pg. 208

City of San Carlos
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Park In-Lieu
For the year ended June 30, 2025
Variance with
Final Budget
Budgeted Amounts Actual Positive
Final Amounts (Negative)
REVENUES:

Use of money and property 22,800$ 75,821 $ 53,021 $ Other revenue 1,221,100 241,963 (979,137) Total revenues 1,243,900 317,784 (926,116) EXPENDITURES:

Current:

Capital outlay 2,572,604 556,584 2,016,020 Total expenditures 2,572,604 556,584 2,016,020 EXPENDITURES (1,328,704) (238,800) 1,089,904 Net change in fund balances (1,328,704)$ (238,800) 1,089,904 $ FUND BALANCES:

Beginning of year 1,662,076
End of year 1,423,276$
136

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Packet Pg. 209

City of San Carlos
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Parking In-Lieu
For the year ended June 30, 2025
Variance with
Final Budget
Budgeted Amounts Actual Positive
Final Amounts (Negative)
REVENUES:

Use of money and property -$ 1,828$ 1,828 $ Total revenues - 1,828 1,828 EXPENDITURES:

Current:

Capital outlay 51,496 39,432 12,064 Total expenditures 51,496 39,432 12,064 EXPENDITURES (51,496) (37,604) 13,892 OTHER FINANCING SOURCES (USES):

Transfers out (73,655) (73,663) (8) Total other financing sources (uses) (73,655) (73,663) (8) Net change in fund balances (125,151)$ (111,267) 13,884 $ FUND BALANCES:

Beginning of year 132,425
End of year 21,158$
137

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Packet Pg. 210

City of San Carlos
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Child Care Development
For the year ended June 30, 2025
Variance with
Final Budget
Budgeted Amounts Actual Positive
Final Amounts (Negative)
REVENUES:

Licenses and permits 4,000,000 $ -$ (4,000,000)$ Use of money and property 78,400 39,689 (38,711) Total revenues 4,078,400 39,689 (4,038,711) EXPENDITURES:

Current:

Capital outlay 1,500,000 464,829 1,035,171 Total expenditures 1,500,000 464,829 1,035,171

REVENUES OVER (UNDER)
EXPENDITURES 2,578,400 (425,140) (3,003,540) Net change in fund balances 2,578,400$ (425,140) (3,003,540)$ FUND BALANCES:

Beginning of year 1,090,502
End of year 665,362$
138

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Packet Pg. 211

City of San Carlos
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual San Carlos Library Bonds
For the year ended June 30, 2025
Variance with
Final Budget
Budgeted Amounts Actual Positive
Final Amounts (Negative)
REVENUES:

Property taxes 412,000 $ 498,381 $ 86,381 $ Total revenues 412,000 514,364 102,364 EXPENDITURES:

Current:

Debt service:

Principal 1,460,000 1,460,000 - Interest and fiscal charges 44,900 44,900 - Total expenditures 1,504,900 1,504,900 -

REVENUES OVER (UNDER)
EXPENDITURES (1,092,900) (990,536) 102,364 OTHER FINANCING SOURCES (USES):

Transfers in 283,266 283,266 - Transfers out - (210,662) (210,662) Total other financing sources (uses) 283,266 72,604 (210,662) Net change in fund balances (809,634)$ (917,932) (108,298) $ FUND BALANCES:

Beginning of year 917,932
End of year -$
139

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Packet Pg. 212

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136
140

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Packet Pg. 213

City of San Carlos
Internal Service Funds
Year Ended June 30, 2025
Internal Service Funds are used to finance and account for special activities and services performed by a designated department for other departments in the City on a cost reimbursement basis. The concept of major funds does not extend to internal service funds because they do not do business with outside parties. The Statement of Activities, the net revenues or expenses of each internal service fund, is eliminated by netting them against the operations of the other City departments, which generated them. The remaining balance sheet items are consolidated with these same funds in the Statement of Net Position. However, internal service funds are still presented separately in the Fund Financial Statements, including the funds below:

Worker's Compensation Fund: Used to account for act ivities re lating to Workers’ Compensation c laims an d the premiums for coverage.

Liability Insurance Fund: Used to account for act ivities re lating to genera l liability claims aga inst the City and premiums for coverage above the City’s risk retention level.

Longevity Benefits Fund: Used to account for activities relating to health care benefits for retired employees. 141

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Packet Pg. 214

City of San Carlos
Combining Statement of Net Position
Internal Service Funds
June 30, 2025
Totals
ASSETS
Current Assets:

Cash and investments 341,329 $ 1,973,152 $ 223,771 $ 2,538,252 $ Receivables:

Accounts receivable - 4,730 - 4,730 Total current assets 341,329 1,977,882 223,771 2,542,982 Total assets 341,329 1,977,882 223,771 2,542,982

LIABILITIES
Current liabilities:

Accounts payable and accrued liabilities 1,253 37,659 - 38,912 Claims payable - current 92,000 264,400 - 356,400 Total current liabilities 93,253 302,059 - 395,312 Noncurrent liabilities:

Claims payable - 2,680,600 - 2,680,600 Total noncurrent liabilities - 2,680,600 - 2,680,600 Total liabilities 93,253 2,982,659 - 3,075,912

NET POSITION
Unrestricted 248,076 (1,004,777) 223,771 (532,930) Total net position 248,076$ (1,004,777)$ 223,771 $ (532,930) $ Workers'
Compensation Longevity BenefitsLiability Insurance
142

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Packet Pg. 215

City of San Carlos
Combining Statement of Revenues, Expenses and Changes in Net Position Internal Service Funds
For the year ended June 30, 2025
Totals
OPERATING REVENUES:

Charges for services -$ - $ 1,154,300$ 1,154,300 $ Cost reimbursements 283,700 1,636,200 - 1,919,900 Total operating revenues 283,700 1,636,200 1,154,300 3,074,200 OPERATING EXPENSES:

Insurance premiums 316,545 1,606,349 - 1,922,894 Claims expense 13,000 2,174,529 1,132,500 3,320,029 Miscellaneous 36,479 17,077 - 53,556 Total operating expenses 366,024 3,797,955 1,132,500 5,296,479 Operating income (loss) (82,324) (2,161,755) 21,800 (2,222,279) NONOPERATING REVENUES (EXPENSES):

Investment income 17,563 100,660 12,446 130,669 Miscellaneous - 4,730 - 4,730 Total nonoperating revenues (expenses) 17,563 105,390 12,446 135,399 Income before contributions and transfers (64,761) (2,056,365) 34,246 (2,086,880) Change in net position (64,761) (2,056,365) 34,246 (2,086,880) NET POSITION:

Beginning of year 312,837 1,051,588 189,525 1,553,950 End of year 248,076$ (1,004,777)$ 223,771 $ (532,930) $ Workers'
Compensation Liability Insurance Longevity Benefits
143

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Packet Pg. 216

City of San Carlos
Combining Statement of Cash Flows
Internal Service Funds
For the year ended June 30, 2025
Totals
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from/(paid to) interfund services 283,700$ 1,636,200 $ 1,154,300 $ 3,074,200 $ Cash paid to suppliers for goods and services (347,540) 233,884 - (113,656) Claims paid (13,000) (2,174,529) (1,132,500) (3,320,029) Net cash provided by (used in) operating activities (76,840) (304,445) 21,800 (359,485) CASH FLOWS FROM INVESTING ACTIVITIES:

Interest received 17,563 100,660 12,446 130,669 Net cash provided by (used in) investing activities 17,563 100,660 12,446 130,669 Net cash flows (59,277) (203,785) 34,246 (228,816) CASH AND INVESTMENTS - Beginning of year 400,606 2,176,937 189,525 2,767,068 CASH AND INVESTMENTS - End of year 341,329$ 1,973,152 $ 223,771 $ 2,538,252 $

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

O
perating income (loss) (82,324)$ (2,161,755)$ 21,800$ (2,222,279)$ Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:

Changes in assets and liabilities
Accounts payable (7,516) (24,690) - (32,206) Claims payable 13,000 1,882,000 - 1,895,000 Net cash provided by (used in) operating activities (76,840)$ (304,445)$ 21,800$ (359,485)$ Longevity BenefitsLiability Insurance
Workers'
Compensation
144

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Packet Pg. 217

City of San Carlos
Custodial Funds
Year Ended June 30, 2025
Custodial Funds are used to account for fiduciary activities that are not requ ired to be reported in pension (and other employee benefit) trust funds, investment trust funds, or private-purpose trust funds.

City/County Association of Governments of San Mateo County: Used to account for activities relating to C/CAG.

The City acts as a fiscal agent for this entity.

Peninsula Traffic Congestion Relief Alliance: Used to account for act ivities re lating to PTCRA,a lso known as Commute.org. The City acts as a fiscal agent for this entity. 145

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Packet Pg. 218

City of San Carlos
Combining Statement of Fiduciary Net Position
Custodial Funds
June 30, 2025
City/County Association of
Governments of
San Mateo County Totals
ASSETS
Cash and investments 32,089,788$ 32,089,788 $ Receivables:

Accounts receivable 5,977,946 5,977,946 Notes and loans 2,741,801 2,741,801 Total assets 40,809,535 40,809,535

LIABILITIES
Current liabilities:

Accounts payable and accrued liabilities 8,602,565 8,602,565 Unearned revenue 755,840 755,840 Total liabilities 9,358,405 9,358,405

NET POSITION
Restricted for:

Other governments 31,451,130 31,451,130 Total net position 31,451,130$ 31,451,130$ 146

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Packet Pg. 219

City of San Carlos
Combining Statement of Changes in Fiduciary Net Position Custodial Funds
For the year ended June 30, 2025
City/County Association of Peninsula
Governments of Traffic Congestion
San Mateo County Relief Alliance Totals
ADDITIONS:

Members contributions 2,706,782$ -$ 2,706,782$ Intergovernmental 14,404,292 - 14,404,292 Fees and assessments 2,683,460 - 2,683,460 Miscellaneous 1,820,568 - 1,820,568 Total additions 21,615,102 - 21,615,102 DEDUCTIONS:

Administrative expenses 803,837 - 803,837 Distribution 11,294,396 - 11,294,396 Professional services 9,582,616 - 9,582,616 Interest expense 107,584 - 107,584 Transfer of operations - 1,285,610 1,285,610 Total deductions 21,788,433 1,285,610 23,074,043 Change in net position (173,331) (1,285,610) (1,458,941) NET POSITION:

Beginning of year 31,624,461 1,285,610 32,910,071 End of year 31,451,130$ -$ 31,451,130$ 147

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Packet Pg. 220

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148

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Packet Pg. 221

STATISTICAL SECTION
149

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150

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Packet Pg. 223

2016 2017 2018 2019 2020 2021 2022 2023 202 4 2025
Governmental activities
Net investment in capital assets 140,578,71 8$ 139,749,356$ 143,590,862$ 144,862,733$ 151,378,234$ 174,874,347$ 178,194,511$ 187,070,728$ 209,355,476$ 214,481,945$ Restricted 13,634,14 8 14,913,451 17,552,239 21,956,488 20,162,108 29,895,196 37,564,261 41,151,273 40,517,835 45,839,705 Unrestricted 14,261,60 4 19,429,741 26,566,944 37,335,673 39,591,734 43,510,702 57,901,459 61,443,931 67,793,249 66,790,912 168,474,470$ 174,092,548 $ 187,710,045 $ 204,154,894 $ 211,132,076 $ 248,280,245 $ 273,660,231 $ 289,665,932 $ 317,666,560 $ 327,112,562 $ Business-type activities
Net investment in capital assets 21,838,35 1$ 27,740,303$ 31,170,136$ 31,475,466$ 32,069,977$ 33,829,658$ 32,740,661$ 31,849,273$ 34,679,308$ 36,467,557$ Restricted 21,920,835$ 29,481,877$ 35,287,006$ 42,484,597$ 19,149,996$ 19,745,878$ 26,584,905$ Unrestricted 13,613,83 9 14,360,124 17,040,516 - - - - 29,474,04 2 35,194,238 31,072,048 35,452,190$ 42,100,427 $ 48,210,652 $ 53,396,301 $ 61,551,854 $ 69,116,664 $ 75,225,258 $ 80,473,311 $ 89,619,424 $ 94,124,510 $ Primary government
Net investment in capital assets 162,417,06 9$ 167,489,659$ 174,760,998$ 176,338,199$ 183,448,211$ 208,704,005$ 210,935,172$ 218,920,001$ 244,034,784$ 250,949,502$ Restricted 13,634,14 8 14,913,451 17,552,239 43,877,323 49,643,985 65,182,202 80,048,858 60,301,269 60,263,713 72,424,610 Unrestricted 27,875,44 3 33,789,865 43,607,460 37,335,673 39,591,734 43,510,702 57,901,459 90,917,973 102,987,487 97,862,960 203,926,660$ 216,192,975$ 235,920,697$ 257,551,195$ 272,683,930$ 317,396,909$ 348,885,489$ 370,139,243$ 407,285,984$ 421,237,072$ Total primary government net position
Total business-type activities net
position
Total governmental activities net
position

CITY OF SAN CARLOS, CALIFORNIA
Net Position by Component
Last Ten Fiscal Years
$-
$50
$100
$150
$200
$250
$300
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$ Millions
Total Primary Government Net Position
Net investment in capital assets
Restricted
Unrestricted
151

8.g
November 24, 2025

Packet Pg. 224

2016 2017 2018 2019
Expenses
Governmental Activities:

General Government 6,017,538$ 6,329,346$ 10,536,582$ 6,380,239$ Public Safety 17,430,558 18,375,585 19,030,927 20,312,716 Public Works 8,266,278 7,978,435 9,153,462 9,228,138 Community Development 4,096,699 4,700,675 3,916,838 4,573,922 Parks and Recreation 2,367,444 3,858,835 3,127,329 3,887,509 Interest on Long Term Debt 268,810 81,837 73,925 65,287 Total Governmental Activities Expenses 38,447,327 41,324,713 45,839,063 44,447,811 Business-Type Activities:

Sewer 14,067,910 9,663,209 10,604,504 12,864,967 14,067,910 9,663,209 10,604,504 12,864,967 Total Primary Government Expenses 52,515,237$ 50,987,922$ 56,443,567$ 57,312,778$ Program Revenues
Governmental Activities:

Charges for Services:

General Government 1,258,805$ 1,297,282$ 1,323,703$ 1,373,465$ Public Safety 518,876 618,102 522,690 671,586 Public Works 2,222,932 1,502,215 3,419,090 1,944,495 Community Development 4,359,416 3,618,051 4,075,435 3,479,906 Parks and Recreation 1,499,342 1,630,102 1,576,562 1,555,971 Operating Grants and Contributions 1,717,004 2,093,580 4,864,283 4,625,477 Capital Grants and Contributions 4,295,854 2,416,816 973,726 1,495,483 Total Government Activities Program Revenues 15,872,229 13,176,148 16,755,489 15,146,383 Business-Type Activities:

Charges for Services:

Sewer 16,798,299 16,793,613 17,487,381 18,294,560 Total Business-Type Activities Program Revenue 16,798,299 16,793,613 17,487,381 18,294,560
Total Primary Government Program Revenues 32,670,528$ 29,969,761$ 34,242,870$ 33,440,943$ Net (Expense)/Revenue
Governmental Activities (22,575,098)$ (28,148,565)$ (29,083,574)$ (29,301,428)$ Business-Type Activities 2,730,389 7,130,404 6,882,877 5,429,593 Total Primary Government Net Expense (19,844,709)$ (21,018,161)$ (22,200,697)$ (23,871,835)$ Total Business-Type Activities Expenses

CITY OF SAN CARLOS, CALIFORNIA
Changes in Net Position
Last Ten Fiscal Years
152

8.g
November 24, 2025

Packet Pg. 225

2016 2017 2018 2019
General Revenues and Other Changes in Net Position
Governmental Activities:

Taxes:

Property Taxes 12,117,407$ 12,867,544$ 13,777,611$ 16,025,098$ Sales Taxes 10,708,021 11,574,662 12,716,614 12,931,123 Motor Vehicle In-Lieu 2,744,676 2,933,877 3,202,810 3,563,988 Transient Occupancy Tax 1,578,740 1,570,815 1,655,658 3,123,042 Nonregulatory Franchise and Business 3,552,639 3,792,976 3,962,800 4,121,311 Use of money and property 3,147,860 2,271,719 2,782,096 4,507,003 Loss on sale of capital assets - (2,686,318) - - Other 1,284,689 867,468 1,307,380 877,612 Transfers 562,600 573,900 457,400 597,100 Special item - - 6,000,000 - - - - - Total Government Activities 35,696,632 33,766,643 45,862,369 45,746,277 Business-Type Activities:

Use of money and property 109,244 91,733 199,087 353,156 Miscellaneous Revenues - - - - Transfers (562,600) (573,900) (457,400) (597,100) Total Business-Type Activities (453,356) (482,167) (258,313) (243,944) Total Primary Government 35,243,276$ 33,284,476$ 45,604,056$ 45,502,333$ Change in Net Position
Governmental Activities 13,121,534$ 5,618,078$ 16,778,795$ 16,444,849$ Business-Type Activities 2,277,033 6,648,237 6,624,564 5,185,649 Total Primary Government 15,398,567$ 12,266,315$ 23,403,359$ 21,630,498$

Extraordinary gain/(loss) on dissolution of
RDA

CITY OF SAN CARLOS, CALIFORNIA
Changes in Net Position, Continued
Last Ten Fiscal Years
153

8.g
November 24, 2025

Packet Pg. 226

2020 2021 2022 2023 2024 2025
14,340,628$ 6,858,609$ 4,493,858$ 10,446,877$ 11,813,891$ 14,406,978$ 21,394,936 21,027,010 24,199,562 17,769,354 25,152,834 27,394,130 12,497,686 10,685,934 10,159,609 12,614,810 13,370,534 19,368,760 6,972,347 4,246,931 6,581,083 11,251,181 8,944,176 9,007,205 3,028,761 2,792,235 4,040,188 6,038,409 6,289,256 6,343,368 55,762 44,819 153,069 151,336 138,845 150,743 58,290,120 45,655,538 49,627,369 58,271,967 65,709,536 76,671,184 11,835,352 12,997,274 14,605,088 16,854,061 15,490,221 19,764,696 11,835,352 12,997,274 14,605,088 16,854,061 15,490,221 19,764,696 70,125,472$ 58,652,812$ 64,232,457$ 75,126,028$ 81,199,757$ 96,435,880$ 1,325,656$ 1,421,092$ 1,469,529$ 1,752,358$ 1,673,312$ 2,095,381$ 600,031 541,764 693,247 616,154 780,273 611,628 1,769,924 2,486,563 2,184,256 1,796,250 2,339,750 1,550,463 3,747,032 6,862,012 6,017,022 8,616,137 7,026,446 6,686,303 1,248,126 626,332 1,746,721 2,271,107 2,540,873 2,973,639 6,190,174 4,761,192 6,680,012 5,143,377 14,080,420 5,347,117 3,793,984 20,833,501 10,648,635 799,268 703,084 879,653 18,674,927 37,532,456 29,439,422 20,994,651 29,144,158 20,144,184 19,955,871 21,188,241 22,049,838 21,998,455 22,750,509 22,334,324 19,955,871 21,188,241 22,049,838 21,998,455 22,750,509 22,334,324 38,630,798$ 58,720,697$ 51,489,260$ 42,993,106$ 51,894,667$ 42,478,508$ (39,615,193)$ (8,123,082)$ (20,187,947)$ (37,277,316)$ (36,565,378)$ (56,527,000)$ 8,120,519 8,190,967 7,444,750 5,144,394 7,260,288 2,569,628 (31,494,674)$ 67,885$ (12,743,197)$ (32,132,922)$ (29,305,090)$ (53,957,372)$ 154

8.g
November 24, 2025

Packet Pg. 227

2020 2021 2022 2023 2024 2025
16,865,800$ 17,311,790$ 18,624,289$ 20,850,666$ 22,281,079$ 22,985,809$ 12,638,700 12,533,764 14,537,028 14,550,326 14,117,775 13,848,303 3,602,983 2,314,833 3,504,285 5,776,971 3,659,037 4,632,029 2,461,423 1,200,905 2,136,750 2,744,571 3,422,950 3,787,802 4,180,156 4,112,616 4,354,709 4,764,139 5,058,846 5,257,449 5,331,720 2,348,979 841,322 5,878,004 13,153,260 10,410,584 - - - - - - 902,593 814,964 910,850 854,310 2,160,659 1,695,743 609,000 633,400 658,700 685,000 712,400 740,900 - - - - - - - - - - - - 46,592,375 41,271,251 45,567,933 56,103,987 64,566,006 63,358,619 644,034 5,685 (686,201) 784,041 2,595,334 2,712,009 - 1,558 8,745 4,618 2,891 - (609,000) (633,400) (658,700) (685,000) (712,400) (740,900) 35,034 (626,157) (1,336,156) 103,659 1,885,825 1,971,109 46,627,409$ 40,645,094$ 44,231,777$ 56,207,646$ 66,451,831$ 65,329,728$ 6,977,182$ 33,148,169$ 25,379,986$ 18,826,671$ 28,000,628$ 6,831,619$ 8,155,553 7,564,810 6,108,594 5,248,053 9,146,113 4,540,737 15,132,735$ 40,712,979$ 31,488,580$ 24,074,724$ 37,146,741$ 11,372,356$ 155

8.g
November 24, 2025

Packet Pg. 228

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
General Fund
Nonspendable 348,263 $ 380,712 $ 607,633 $ 398,241 $ 203,543 $ 309,293 $ 1,143,006 $ 1,835,629 $ 2,231,946 $ 2,536,503 $ Restricted - -
Committed 11,291,795 12,131,795 15,924,352 15,810,239 16,509,727 14,509,727 15,497,178 7,191,795 10,191,795 22,038,611 Assigned 14,000,000 16,841,500 9,841,500 19,341,500 16,841,500 19,341,500 24,341,500 42,566,107 43,831,582 35,741,500 Unassigned 3,971,159 2,698,673 3,177,129 2,888,220 2,890,529 3,542,557 3,128,480 2,878,734 2,729,716 2,493,307 Total General Fund 29,611,217$ 32,052,680 $ 29,550,614 $ 38,438,200 $ 36,445,299 $ 37,703,077 $ 44,110,164 $ 54,472,265 $ 58,985,039 $ 62,809,921 $ Other Governmental Funds
Nonspendable - - - - - - - - - - Restricted 13,634,148 14,913,451 17,552,239 21,956,488 20,162,108 29,895,196 37,564,261 41,151,273 40,517,835 45,839,705 Committed 16,433,787 21,406,130 30,751,795 34,128,375 33,745,063 37,045,447 42,324,165 34,966,490 37,862,676 34,877,800 Assigned - - - - - - - - - U
nassigned - - - - - - - - - 30,067,935$ 36,319,581$ 48,304,034$ 56,084,863$ 53,907,171$ 66,940,643$ 79,888,426$ 76,117,763$ 78,380,511$ 80,717,505$ 59,679,152$ 68,372,261$ 77,854,648$ 94,523,063$ 90,352,470$ 104,643,720$ 123,998,590$ 130,590,028$ 137,365,550$ 143,527,426$ -6.3% 14.6% 13.9% 21.4% -4.4% 15.8% 18.5% 5.3% 5.2% 4.5% Total Governmental Fund
Balance
% Change from Prior Year
Total other governmental
Fund

CITY OF SAN CARLOS, CALIFORNIA
Fund Balances - Governmental Funds
Last Ten Fiscal Years
-10.0%
-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%
$0
$20
$40
$60
$80
$100
$120
$140
$160
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$ Millions
Total Governmental Fund Balance
Total other governmental Fund % Change from Prior Year
156

8.g
November 24, 2025

Packet Pg. 229

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Revenues
Taxes 30,701,483 $ 32,739,874 $ 35,315,493 $ 39,764,562 $ 39,749,062 $ 37,473,908 $ 43,157,061 $ 48,686,673 $ 48,539,687 $ 50,806,894 $ Licenses, permits and fees 4,534,737 3,511,276 5,671,196 3,759,871 3,574,107 6,211,124 5,606,760 5,066,703 7,674,060 6,486,877 Fines and forfeitures 234,697 255,632 202,126 283,864 266,630 159,652 218,320 201,583 159,740 135,981 Use of money and property 3,143,760 2,195,096 2,680,870 4,393,214 5,206,157 2,277,391 643,279 6,039,524 13,085,907 10,346,652 From other agencies 4,360,957 2,753,794 1,602,792 1,974,384 3,090,322 4,241,884 5,929,398 4,486,383 8,055,276 3,312,040 Charges for services 4,253,198 3,952,620 4,231,562 4,130,312 3,855,545 4,576,734 5,475,185 8,736,888 6,262,911 7,073,882 Other 4,236,064 3,613,927 6,373,700 5,920,652 6,592,001 6,511,943 7,235,156 3,367,670 8,558,988 3,467,294 Total Revenues 51,464,896 49,022,219 56,077,739 60,226,859 62,333,824 61,452,636 68,265,159 76,585,424 92,336,569 81,629,620 Expenditures
Current:

General government 4,988,340 4,840,215 12,350,097 5,695,234 16,144,942 6,091,767 6,299,799 8,697,351 10,650,554 11,974,182 Public s
afety 17,340,123 17,827,665 18,568,952 19,567,510 20,351,411 20,681,262 21,178,999 22,807,499 24,094,045 25,692,927 Public works 4,612,132 8,930,843 11,417,750 9,223,438 6,166,679 6,123,584 7,251,780 8,421,707 9,470,558 9,778,907 Community development 4,134,764 4,250,662 4,668,424 4,400,138 8,099,919 5,989,739 7,230,955 8,456,924 7,601,927 8,090,261 Parks and recreation 2,775,229 2,816,465 2,919,349 2,997,533 2,945,962 2,024,703 3,642,195 4,473,637 5,050,902 5,289,300 Capital outlay 12,271,896 1,887,675 2,771,420 1,898,256 15,148,607 10,454,826 3,272,541 14,293,348 28,680,063 20,756,162 Debt service:

Principal repayment 9,210,000 250,000 265,000 290,000 320,000 365,000 520,253 538,141 568,497 1,634,871 Interest and fiscal charges 300,908 99,485 91,760 83,435 74,285 63,905 172,467 169,409 156,901 162,910 Total Expenditures 55,633,392 40,903,010 53,052,752 44,155,544 69,251,805 51,794,786 49,568,989 67,858,016 86,273,447 83,379,520 (4,168,496) 8,119,209 3,024,987 16,071,315 (6,917,981) 9,657,850 18,696,170 8,727,408 6,063,122 (1,749,900) Othe
r Financing Sources (Uses)
Transfers in 4,815,399 5,846,109 9,469,241 3,832,100 4,759,300 8,507,150 6,184,600 10,293,000 14,242,400 12,585,106 Transfers (out) (4,252,799) (5,272,209) (9,011,841) (3,235,000) (4,150,300) (7,873,750) (5,525,900) (9,608,000) (13,530,000) (11,844,206) Proceeds from sale of property (380,523) - - - - - - - - 3,259,998 Proceeds from leases - - - - - - - - - 1,050,544 Capital contribution - - - - - - - - - - Total other financing sources (uses) 182,077 573,900 457,400 597,100 609,000 633,400 658,700 685,000 712,400 5,051,442 Special item - - 6,000,000 - 2,138,388 - - - - - Extraordinary gain/(loss) on dissolution of RDA - - - - - - - - - - Net Change in fund balances (3,986,419)$ 8,693,109$ 9,482,387$ 16,668,415$ (4,170,593)$ 10,291,250$ 19,354,870$ 9,412,408$ 6,775,522$ 3,301,542$

20.7% 1.0% 0.8% 1.0% 0.9% 1.1% 1.5% 1.3% 1.2% 2.3%Debt service as a percentage of noncapital expenditures
Excess (deficiency) of revenues over (under)
expenditures

CITY OF SAN CARLOS, CALIFORNIA
Changes in Fund Balances - Governmental Funds
Last Ten Fiscal Years
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$ Millions
Total Governmental Revenues and Expenditures
Total Revenues Total Expenditures
157

8.g
November 24, 2025

Packet Pg. 230

Real Property
Fiscal
Year
Residential
Property
Commercial
Property
Industrial
Property Others
Total Real
Property
Unsecured
Property Total Assessed
% Change
from Prior
Year
Total Direct
Tax Rate
2016 6,979,211,977 665,733,132 598,644,941 63,226,293 8,306,816,343 370,528,439 8,677,344,782 8.94% 0.11424 2017 7,420,946,280 770,190,805 636,526,534 67,885,633 8,895,551,269 381,768,262 9,277,319,531 8.94% 0.11379 2018 7,974,893,577 932,202,492 719,752,790 93,148,004 9,719,996,863 399,049,241 10,119,046,104 9.07% 0.11346 2019 8,556,401,938 1,038,848,823 920,844,274 89,053,163 10,605,148,198 590,331,671 11,195,479,869 10.64% 0.11460 2020 9,274,656,525 1,134,157,010 908,575,428 84,410,613 11,401,799,576 465,645,550 11,867,445,126 6.00% 0.11317 2021 10,058,881,929 1,207,502,590 1,101,271,014 97,747,547 12,465,403,080 388,462,296 12,853,865,376 8.31% 0.11219 2022 10,631,737,121 1,336,437,032 1,279,668,947 133,084,452 13,380,927,552 423,846,897 13,804,774,449 7.40% 0.11207 2023 11,567,728,737 1,464,899,784 1,908,269,890 93,708,394 15,034,606,805 508,848,926 15,543,455,731 12.59% 0.11221 2024 12,223,099,549 1,636,516,297 2,110,699,507 101,592,516 16,071,907,869 584,712,269 16,656,620,138 7.16% 0.11273 2025 12,806,139,453 1,762,797,376 2,294,159,141 137,741,675 17,000,837,645 593,127,569 17,593,965,214 5.63% 0.11288 Source:

San Mateo County Assessor 2014/15 - 2023/24 Combined Tax Rolls Assessed Valuation, Tax Rates and Tax Levies

LAST TEN FISCAL YEARS
In 1978, the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2%). Property is only re-assessed at the time it is sold to a new owner. At that point, the new assessed value is re-assessed at the purchase price of the property sold . The assessed valuation data shown above represents the only data current available with respect to the actual market value of taxable property and is subject to the limitations described above.

CITY OF SAN CARLOS, CALIFORNIA
0 2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$ Millions

CITY'S TAXABLE ASSESSED VALUATION
158

8.g
November 24, 2025

Packet Pg. 231

Fiscal
Year
Basic
Levy
¹City's
Share of
1% Levy
Per Prop 13
City Debt
Rate
San Mateo
Junior
College
San Carlos
Elementary
Sequoia
Union High
Belmont
Redwood
City
Redwood
Shore
Elementary
Mid-
Peninsula
Regional
Open Space
San Mateo
Community
College
Total Direct
Overlapping
Tax Rate
Total
Direct
Rate*
2016 1.0000 0.10803 0.0042 0.0250 0.0725 0.0434 0.1005 0.0008 - 1.2456 0.11424 2017 1.0000 0.10802 0.0040 0.0247 0.0646 0.0391 0.1198 0.0006 - 1.2528 0.11379 2018 1.0000 0.10800 0.0038 0.0235 0.0643 0.0383 0.1194 0.0009 - 1.2502 0.11346 2019 1.0000 0.10800 0.0037 0.0175 0.0600 0.0365 0.1125 0.0018 - 1.2320 0.11460 2020 1.0000 0.10798 0.0032 0.0231 0.0604 0.0340 0.1071 0.0016 0.0035 1.2294 0.11317 2021 1.0000 0.10800 0.0023 0.0176 0.0559 0.0315 0.0949 0.0015 0.0037 1.2074 0.11219 2022 1.0000 0.10798 0.0023 0.0227 0.0542 0.0290 0.1010 0.0015 - 1.2107 0.11207 2023 1.0000 0.10811 0.0023 0.0193 0.0487 0.0286 0.0838 0.0013 - 1.1840 0.11221 2024 1.0000 0.10811 0.0023 0.0190 0.0455 0.0391 0.1136 0.0012 - 1.2207 0.11273 2025 1.0000 0.10819 0.0022 0.0178 0.0696 0.0388 0.1060 0.0013 - 1.2357 0.11288 Source:

San Mateo County Assessor 2014/15 - 2023/24 Tax Rate Table ₁City's share of 1% Levy is based on the City's share of the general fund tax rate area with the largest net taxable value within the city.

The ERAF portion of the City's Levy has been subtracted where known. *Total Direct Rate is the weighted average of all individual direct rates applied by the government preparing the statistical section information Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
(Rate per $100 of Taxable Value)

CITY OF SAN CARLOS, CALIFORNIA

1.14 1.16

1.18 1.20

1.22 1.24

1.26 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Total Direct and Overlapping Rates
159

8.g
November 24, 2025

Packet Pg. 232

2015-2016
Taxpayer Assessed Value Rank
Percentage
of Total City
Assessed
Value Taxpayer Assessed Value Rank
Percentage
of Total City
Assessed
Value
Are-San Francisco No. 63 LLC 880,494,067 1 5.18% GC Net Lease San Carlos Investors LLC 83,463,942 1 0.96% BGOGC 150 Industrial Owner LLC 257,476,00 0 2 1.51% Hudson Skyway Landing LLV 75,135,794 2 0.87% SC Transit Village LLC Lessee 166,145,625 3 0.98% Novartis Pharmaceuticals 66,833,574 3 0.77% Brittan West Owner LLC 145,762,548 4 0.86% Black Mountain Holdings LLC 50,553,576 4 0.58% BMR-201 Industrial Rd LLC 135,710,123 5 0.80% BMR-201 Industrial RD LLC 39,447,033 5 0.45% San Carlos Partners LLC 121,105,218 6 0.71% SB US LLC 37,707,313 6 0.43% 777 Industrial Owner LLC 116,632,143 7 0.69% L-3 Communications Corp 35,210,635 7 0.41% Equity One San Carlos LLC 104,879,143 8 0.62% Netera Inc 31,511,816 8 0.36% BP3-SF9 Skyway Road LLC 104,040,000 9 0.61% Brittan Corners Shopping Center LLC 24,835,355 9 0.29% Galaxy Properties 1 LP 100,107,900 10 0.59% Vica Capital LLC 22,992,261 10 0.26% Total Top 10 Taxpayers' Totals 2,132,352,767$ 12.54% 467,691,299$ 5.39% City's Total Assessed Valuation 17,000,837,645$ 100% 8,677,344,782$ 100% Source:

San Mateo County Assessor 2023/24 Combined Tax Rolls and the SBE Non Unitary Tax Roll Top Property Tax Payers Based on Net Values
2024-2025
Principal Property Tax Payers
Current Fiscal Year and Ten Years Prior

CITY OF SAN CARLOS, CALIFORNIA

5.18%

1.51%

0.98%

0.86%

0.80%

0.71%

0.69%

0.62%

0.61%

0.59%
Are-San Francisco No. 63 LLC
BGOGC 150 Industrial Owner LLC
SC Transit Village LLC Lessee
Brittan West Owner LLC
BMR-201 Industrial Rd LLC
San Carlos Partners LLC
777 Industrial Owner LLC
Equity One San Carlos LLC
BP3-SF9 Skyway Road LLC
Galaxy Properties 1 LP
City's Top 10 Property Tax Payers 2024-25
Percentage of Total City Assessed Value

0.96%

0.87%

0.77%

0.58%

0.45%

0.43%

0.41%

0.36%

0.29%

0.26%
GC Net Lease San Carlos Investors LLC
Hudson Skyway Landing LLV
Novartis Pharmaceuticals
Black Mountain Holdings LLC
BMR-201 Industrial RD LLC

SB US LLC
L-3 Communications Corp
Netera Inc
Brittan Corners Shopping Center LLC
Vica Capital LLC
City's Top 10 Property Tax Payers 2015-16
Percentage of Total City Assessed Value
160

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Fiscal Year Total Tax Levy
Current Tax
Collections
Percent of
Levy
Collected
Delinquent
Tax
Collection
Total Tax
Collections
Percent of
Total Tax
Collections to
Tax Levy
2016 9,744,532 9,693,047 99.47% - 9,693,047 99.47% 2017 10,273,217 10,231,703 99.60% - 10,231,703 99.60% 2018 9,804,156 9,807,155 100.00% - 9,807,155 100.00% 2019 10,934,085 10,913,557 99.81% - 10,913,557 99.81% 2020 11,428,769 11,413,296 99.86% - 11,413,296 99.86% 2021 12,254,878 12,245,969 99.93% - 12,245,969 99.93% 2022 13,029,897 12,992,668 99.71% - 12,992,668 99.71% 2023 14,695,947 14,712,607 100.11% - 14,712,607 100.11% 2024 15,730,685 15,711,611 99.88% - 15,711,611 99.88% 2025 16,513,888 16,499,328 99.91% - 16,499,328 99.91% Source
San Mateo County Assessor 2015/16 - 2024/25 Combined Tax Rolls 2024-25 County of San Mateo Estimated Property Tax Revenue

1. CITY OF SAN CARLOS, CALIFORNIA
Last Ten Fiscal Years
Property Tax Levies and Collections
In 1995 the County entered a "Teeter Plan" agreement with the City which allows the City to keep 100% of the secured taxes, and the County to keep all interest and delinquency charges collected. $0
$2
$4
$6
$8
$10
$12
$14
$16
$18
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$ Millions
Property Tax Collections
Total Tax Levy Total Tax Collections
161

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Calendar
Year
Apparel
Stores Food Stores
Eating and
Drinking
Places
Building
Materials
Auto Dealers
and Supplies
Service
Stations
Other Retail
Stores
All Other
Outlets Total
2015 39,734 14,234 97,633 204,361 28,425 28,635 211,316 360,231 984,570 2016 41,589 14,411 101,801 216,796 22,208 27,227 216,757 420,826 1,061,615 2017 40,818 15,220 103,949 232,152 22,084 31,269 237,269 459,643 1,142,405 2018 41,328 15,382 110,051 250,050 45,220 34,051 235,914 462,522 1,194,517 2019 42,033 15,749 113,877 250,847 58,949 31,594 218,286 551,640 1,282,976 2020 29,560 14,842 83,389 231,779 45,896 21,052 165,132 499,293 1,090,943 2021 43,989 13,863 108,809 255,925 50,018 35,525 193,909 562,033 1,264,071 2022 44,422 14,517 117,005 277,345 51,096 40,737 221,772 584,276 1,351,169 2023 45,583 15,218 121,888 275,418 49,123 39,721 180,093 566,613 1,293,658 2024 45,242 15,390 123,903 259,573 40,601 38,968 180,991 536,554 1,241,220 Source:

State Board of Equalization, California Department of Taxes and Fees Administration, State Controller's Office, The HdL Companies

CITY OF SAN CARLOS, CALIFORNIA
Taxable Sales by Category
Last Ten Calendar Years
(in thousand of dollars)
0 200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Taxable Sales by Category
All Other Outlets
Other Retail Stores
Service Stations
Auto Dealers and
Supplies
Building Materials
Eating and Drinking
Places
162

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Fiscal Year
General Obligation
Bonds Public Library
ABAG Lease
Agreement
2015 Refunding
General Obligation
Bonds Lease Obligations
Total Primary
Government Debt
% of Personal
Income (a)
Outstanding Debt
Per Capita
2016 - - 4,190,000 - 4,190,000 0.21% 144 2017 - - 3,940,000 - 3,940,000 0.19% 134 2018 - - 3,805,704 - 3,805,704 0.16% 127 2019 - - 3,501,181 - 3,501,181 0.14% 117 2020 - - 3,166,658 - 3,166,658 0.12% 105 2021 - - 2,787,135 - 2,787,135 0.10% 93 2022 - - 2,382,612 3,959,368 6,341,980 0.20% 213 2023 - - 1,953,089 3,836,227 5,789,316 0.17% 196 2024 - - 1,503,566 3,702,729 5,206,295 0.14% 177 2025 - - - 4,578,402 4,578,402 (a) 155 Sources:

City of San Carlos Debt Schedule
State of California, Department of Finance (population) U.S. Department of Commerce, Bureau of the Census (income) Debt amounts exclude any premiums, discounts, or other amortization amounts. (a) See Schedule (Demographic Statistics) for personal income and population data. Data for 2024 is not available.

CITY OF SAN CARLOS, CALIFORNIA
Ratio of Outstanding Debt by Type
Last Ten Fiscal Years
Governmental Activities
$0
$50
$100
$150
$200
$250
$0
$1
$2
$3
$4
$5
$6
$7
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$ Millions
City's Debt
Total Primary Government Debt Outstanding Debt Per Capita 163

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Fiscal Year
2005 General
Obligation Debt
(1)
2015 Refunding
General Obligation
Bond *
Less: Amounts
Available in Debt
Service Fund (2) Total (5)
Percentrage of
Assessed Value (3) Per Capita (4)
2016 - 4,349,750 661,476 3,688,274 0.04% 127.15 2017 - 4,085,227 739,933 3,345,294 0.04% 114.13 2018 - 3,805,704 837,295 2,968,409 0.03% 99.29 2019 - 3,501,181 956,071 2,545,110 0.02% 85.22 2020 - 3,166,658 1,020,951 2,145,707 0.02% 71.18 2021 2,787,135 936,862 1,850,273 0.01% 62.06 2022 2,382,612 849,879 1,532,733 0.01% 51.37 2023 1,953,089 851,383 1,101,706 0.01% 34.40 2024 1,503,566 917,932 585,634 0.003% 19.91 2025 - - - n/a 0.00

1. This is the general bonded debt of governmental activities, net of original issuance discounts and premiums

2. This is the amount restricted for debt service principal payments

3. Assessed value has been used because the actual value of taxable property is not readily available in the State of California

4. Population data can be found in the Schedule of Demographic and Economic Statistics

5. Bond was paid off in June 2025
*Updated to include bond premium
General Bonded Debt Outstanding
Ratio of General Bonded Debt Outstanding
Last Ten Fiscal Years

CITY OF SAN CARLOS, CALIFORNIA
$-
$20
$40
$60
$80
$100
$120
$140
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

GO BOND OUTSTADNING DEBT PER CAPITAL
164

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Fiscal Year
Net Revenue
Available for
Debt Service 2008 2009 2014 2015 2018 2020
Total Debt
Payment Coverage
2016 6,758,316 110,850 754,175 646,163 60,448 - - 1,571,636 4.30 2017 7,509,125 - 750,113 645,494 463,400 - - 1,859,007 4.04 2018 9,611,211 - 749,907 645,410 465,550 - - 1,860,867 5.16 2019 9,802,430 - 743,691 645,745 471,000 1,419,459 - 3,279,895 2.99 2020 10,988,237 - 473,934 645,811 584,198 1,424,138 - 3,128,081 3.51 2021 10,596,556 - - 646,146 924,750 1,423,138 - 2,994,034 3.54 2022 10,487,651 - - - - 1,420,220 1,542,917 2,963,137 3.54 2023 11,894,221 - - - - 1,422,750 1,559,760 2,982,510 3.99 2024 18,194,951 1,422,351 1,559,760 2,982,111 6.10 2025 15,332,756 1,421,343 1,564,164 2,985,507 5.14 Source
City of San Carlos Annual Financial Statements
San Carlos Sewer Fund - SVCW 2008, 2009, 2014, 2015, 2018, 2020 Financing Agreements Pledged Revenue Coverage
Last Ten Fiscal Years
Financing Agreement

CITY OF SAN CARLOS, CALIFORNIA
$6.76 $7.51
$9.61 $9.80
$10.99 $10.60 $10.49
$11.89
$18.19
$15.33
$1.57 $1.86 $1.86
$3.28 $3.13 $2.99 $2.96 $2.98 $2.98 $2.99
-
2 4
6 8
10 12
14 16
18 20
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$ Millions
Net Revenue Available for Debt Service Total Debt Payment 165

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2024-25 Assessed Valuation $17,435,984,617 Redevelopment Successor Agency Incremental Valuation $2,389,603,439

DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
Total Debt
6/30/2025
Percentage
Applicable (1)
City's Share of
Debt 6/30/2025
San Mateo Community College District 655,171,697$ 5.355% 35,084,444$ Sequoia Union High School District 449,512,000 12.504% 56,206,980 Belmont-Redwood Shores School District 124,104,335 5.533% 6,866,693 Belmond-Redwood Shores School Facilities Improvement District 38,785,685 8.755% 3,395,687 Redwood Shores School Facilities Improvement District 14,630,000 1.157% 169,269 Redwood City School District 241,985,000 2.682% 6,490,038 San Carlos School District 140,271,219 96.757% 135,722,223 City of San Carlos 1,000,000 100% 1,000,000
Midpeninsula Regional Open Space District 114,920,000 4.040% 4,642,768 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT 1,780,379,936 $ 249,578,104 $ OVERLAPPING GENERAL FUND OBLIGATION DEBT:

San Mateo County General Fund Obligations 530,970,772$ 5.355% 28,433,485$ San Mateo County Board of Education Certificates of Participation 5,330,000 5.355% 285,422 Belmont-Redwood Shores School District General Fund Obligations 4,494,140 5.533% 248,661 Midpeninsula Regional Park District General Fund Obligations 74,065,600 4.040% 2,992,250 San Mateo County Mosquito & Vector Control District General Fund Obligations 3,185,295 5.355% 170,573 TOTAL OVERLAPPING GENERAL FUND DEBT 618,045,807$ 32,130,391$ OVERLAPPING TAX INCREMENT DEBT (SUCCESSOR AGENCY) 7,496,589$ 100% 7,496,589$ CiTY OF SAN CARLOS (LEASE OBLIGATIONS) 4,578,402$ 100% 4,578,402$ TOTAL DIRECT DEBT 5,578,402
TOTAL OVERLAPPING DEBT 283,626,681
COMBINED TOTAL DEBT 289,205,083$
RATIOS TO 2024-25 ASSESSED VALUATION:

Direct Debt (5,731,227) 5,578,402
Total Direct and Overlapping Tax and Assessment Debt 1.43% Combined Total Debt 1.66%
RATIOS TO REDEVELOPMENT SUCCESSOR AGENCY INCREMENTAL VALUATION ($2,389,603,439):

Total Overlapping Tax Increment Debt 0.31%
Source
California Municipal Statistics, Inc.

1. 2.

CITY OF SAN CARLOS, CALIFORNIA
Direct And Overlapping Debt
June 30, 2025
Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds, and non-bonded capital lease obligations.

The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value.
166

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2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Secured property assessed
value, net of exempt real
property
8,677,644$ $ 8,895,382 $ 9,719,830 10,604,982$ 11,401,615$ 12,465,321$ 13,380,845$ 15,034,525$ 16,071,826$ 17,000,750$ Legal Debt Limit
Debit service limit (3.75% of
property assessed value ) (a)
325,412 333,577 364,494 397,687 427,561 467,450 501,782 563,795 602,693 637,528 Less: General Obligation
Bond 4,600 4,190 3,940 3,675 3,385 3,065 2,700 2,310 1,895 1,460.00 Legal debt margin $ 320,812 $ 329,387 $ 360,554 394,012$ 424,176$ 464,385$ 499,082$ 561,485$ 600,798$ 636,068$ Total net debt applicable to
the limit as a percentage of
debt limit

1.43% 1.27% 1.09% 0.93% 0.80% 0.66% 0.54% 0.41% 0.32% 0.23% Source
County of San Mateo, Assessed Valuation Reports

1. CITY OF SAN CARLOS, CALIFORNIA
Computation of Legal Bonded Debt Margin
California Government Code Section 43605 sets the debt limit at 15%. The code section was enacted prior to the change in basing assessed value to full market value when it was previously 25% of market value. Thus, the limit shown as 3.75% is one-fourth the limit to account for the adjustment of showing assessed valuation at full cash value.

Last Ten Fiscal Years
Fiscal year (in Thousands)
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Legal Debt Service Limit
Legal Debt Margin Debt Service Limit
167

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Fiscal
Year
City
Population
Total Personal
Income (In
Thousands)
Personal
Income Per
Capita
Unemployment
Rate
San Mateo
Population
City
Population
% of County
2016 29,008 1,963,141 66,976 3.3% 766,041 3.79% 2017 29,311 2,063,967 69,035 2.9% 770,763 3.80% 2018 29,897 2,311,883 77,413 2.2% 774,155 3.86% 2019 29,864 2,525,541 83,779 2.3% 774,351 3.86% 2020 30,145 2,721,759 91,291 7.4% 773,244 3.90% 2021 29,814 2,822,721 94,604 4.0% 765,245 3.90% 2022 29,837 3,224,656 109,325 1.8% 744,662 4.01% 2023 29,496 3,464,204 117,749 3.1% 737,644 4.00% 2024 29,420 3,766,009 127510 3.3% 747,777 3.93% 2025 29,535 (a) (b) 3.7% 748,337 3.95%
Source
Population: California State Department of Finance
Unemployment Data: California Employment Development Department Income Data : ESRI - Demographic estimates are based on the last available census Demographic data is totaled from census Block Groups that overlap the City's boundarie s

(a) & (b) Information is not available
Demographic And Economic Statistics
Last Ten Fiscal Years

CITY OF SAN CARLOS, CALIFORNIA

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
City's Personal Income Per Capita
and Unemployment Rate
Personal Income Per Capita Unemployment Rate
168

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Employer
Number of
Employees Rank
Percent of
Total City
Employment
Number of
Employees Rank
Percent of
Total City
Employment
NATERA INC 927 1 7.22% NATERA INC 405 1 3.43%
PACIFIC GAS & ELECTRIC CO 474 2 3.69% L-3 COMMUNICATIONS CORP 389 2 3.30% VAXCYTE, INC. 340 3 2.65% PACIFIC GAS & ELECTRIC CO 331 3 2.81% DELTA STAR INC 300 4 2.33% RECOLOGY SAN MATEO COUNT Y 240 4 2.03% RECOLOGY SAN MATEO COUNTY 240 5 1.87% NOVARTIS PHARMACEUTICALS 231 5 1.96% THE HOME DEPOT #0628 232 6 1.81% THE HOME DEPOT #062 8 216 6 1.83% CARGO THERAPEUTICS INC. 169 7 1.32% CHECK POINT SOFTWARE TECH INC 208 7 1.76% NOAH MEDICAL CORPORATION 166 8 1.29% AURIS HEALTH, INC 175 8 1.48% BIOMEA FUSION, INC. 120 9 0.93% GEORGE P JOHNSON COMPAN Y 150 9 1.27%
CELLINK CORPORATION 118 10 0.92% MARKLOGIC CORPORATION 138 10 1.17% Top 10 Employers 3086 24.02% 2483 21.04%
Total Employment of the City's Labor Force 12,848 11,800 Source
Data from City of San Carlos business license database

CITY OF SAN CARLOS, CALIFORNIA
Current Year and Seven Years Ago
2025 2018
Principal Employers
169

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2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Community Development 13 13 14 15 16 15 17 23 23 24
General Government 22 22 22 23 23 23 22 24 26 25
Parks & Recreation 9 9 10 10 10 8 11 13 13 13
Public Safety 111111111 1
Public Works 27 27 27 28 31 30 31 37 38 40
Total Full Time Equivalent Personnel 72 72 74 77 81 77 82 98 101 103 Source
City budget document

1. Starting on October 31, 2010, County of San Mateo Sheriff's Office began providing police services to the City

2. The Belmont-San Carlos Fire Department was dissolved on October 12, 2011 .

3. CITY OF SAN CARLOS, CALIFORNIA
Adopted Budget Authorized Personnel For Fiscal Year Ended June 30 The City of Redwood City began providing full fire and emergency services including the transfer of the fire service personnel from the City of San Carlos to the City of Redwood City on July 1, 2013.

Full Time Equivalent City Personnel By Function
Last Ten Fiscal Years
0 5
10 15
20 25
30 35
40 45
Community
Development
General Government Parks & Recreation Public Safety Public Works City Personnel by Function
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
170

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2016 2017 2018 2019 2020 2021 2022 2023 202 4 2025
Function/Program
Public safety:

Fire
Fire calls for service 2,365 2,232 2,415 2,312 2,405 2,497 3,292 3,537 3,18 4 3,020
Primary fire inspections conducted 700 450 659 984 737 734 465 533 565 665 Police:

Communication Center calls answered
Police calls for Service 17,985 12,47
4 13,094 13,013 13,575 13,621 12,027 12,312 16,565 11706 Law violations:

Group A and Group B Offenses 1,54
4 1,387 1,469 1,572 1,427 1,49 0 1,387 1,301 1,307 1354 Physical arrests (adult and juvenile) 713 803 790 878 611 667 661 647 548 456 Traffic violations 2,599 1,843 2,347 5,389 3,765 3,487 3,771 4,296 2,992 3440 Parking violations 4,79
4 8,014 4,706 11,02 0 5,734 3,947 4,19 4 5,601 3,16 4 3000 Street
60 63 63 61 60 57 56 57 57 57
Sewer
Sewer service connections 11,017 11,017 11,033 11,01 0 11,010 11,061 10,905 10,94 6 10,966 11232 Average daily flow (millions of gallons) 1.80 2.69 1.66 2.21 1.67 1.53 1.69 1.69 2.56 2.02 Maximum Allocated Treatment Capacity,
Average Dry Weather Flow (Millions of
Gallons) 5.18 4.90 4.39 4.39 4.39 4.39 4.39 4.39 4.39 4.39 Maximum Allocated Treatment Capacity,
Peak Wet Weather Flow (Millions of
Gallons) 25.00 14.30 14.30 14.3 14.3 14.3 15.9 15.9 15.96 15.96 Culture and recreation:

Community Services:

Adult Registrations 2,949 4,12
0 5,789 5,688 1,679 1,91 0 2,717 2,251 2,47 4 4107
Tot/Youth Registrations 6,433 5,595 4,426 4,919 2,982 3,058 4,607 6,476 6,912 7788 Facility Rentals 79 129 106 104 144 - 96 144 51 48 Picnic Rentals 235 236 223 284 141 83 335 518 584 596
Organized Play Participants 7,90
0 7,985 7,856 7,922 5,925 4,618 8,003 8,12 0 8,220 8651 Organized Play Hours Permitted 18,44 0 18,560 18,470 18,505 12,40 0 10,500 19,202 19,32 0 19,440 19644 Source:

Various city department records
Pavement Condition Index
Operating Indicators by Function/Program
Last Ten Years

CITY OF SAN CARLOS, CALIFORNIA
171

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2016 2017 2018 2019 2020 2021 2022 2023 202 4 2025
Function/Program
Public safety:

Fire stations 2222 222222
Police stations 1111 111111
Streets
Total Length (Miles) 87 87 87 87 87 87 87 87 87 87
Street lights 1,942 1,942 1,942 1,942 1,942 1,942 1,861 1,879 1,879 1,879 Intersections with Traffic Signals 21 21 22 22 22 22 24 24 24 24 Parking Lots
Number of City Parking Lots 4444 444444
Number of Public Parking Spaces 356 356 386 386 605 605 605 605 605 605 Number of Business Permits issued 91 91 13 68 122 120 189 205 151 134 Wastewater
Total Sewer Main Length (Miles) 105 105 105 105 105 105 105 105 105 105 Sewer Pump Stations 6666 665555
Manholes 2,677 2,677 2,677 2,677 2,677 2,677 2,677 2,949 2,949 3,153 Storm water
Catch basins/inlets 1,326 1,326 1,326 1,326 1,326 1,326 1,472 1,75 4 1,754 1,754
Stormwater Pump Stations 3333 333355
Manholes 579 579 579 579 579 579 579 579 579 579
Levees (Feet) - - - - - - - 550 550 550 General government:

City Hall 1111 111111
City Museum 1111 111111
Parks and recreation:

Parks (and associated buildings) 13 13 13 13 13 13 13 13 13 13 Community centers 2222 222222
Source
Various city department records

CITY OF SAN CARLOS, CALIFORNIA
Capital Asset Statistics By Function/Program
Last Ten Years
172

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REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND

OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Independent Auditor’s Report
To the Honorable Mayor and Members of the City Council
of the City of San Carlos
San Carlos, California
We have audited, in accordance with the auditing st andards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fu nd, and the aggregate remaining fund information of the City of San Carlos, California (City), as of and for the year ende d June 30, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements and have issued our report thereon dated November 5, 2025.

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

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

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

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To the Honorable Mayor and Members of the City Council
of the City of San Carlos
San Carlos, California

Page 2 ends

San Carlos City CouncilNovember 24, 2025

San Carlos City Council
November 24, 2025