Sebastopol City Council
March 5, 2024

CITY OF SEBASTOPOL CITY COUNCIL
AGENDA ITEM REPORT FOR MEETING OF: March 5, 2024
=========================================================================================== To: Honorable Mayor and City Councilmembers
From: Ana Kwong – Administrative Services Director
Subject: Receive and File of the City’s annual audit for year ended June 30, 2023 =========================================================================================== RECOMMENDATIONS:

The item is recommending the City Council receive the financial reports by a Certified Public Accountant for the City’s annual audit for the year ended June 30, 2023.

EXECUTIVE SUMMARY:

The audit was conducted by Badawi & Associates, a certified public accountant firm, and resulted in an unmodified (clean) opinion on the City's financial statements and compliance. The audit report consists of the Annual Comprehensive Financial Report (ACFR), which provides summary financial information for the City and its operations, as well as supplementary information and statistical data. The ACFR follows the generally accepted accounting principles(GAAP) and the reporting standards of the Governmental Accounting Standards Board (GASB), and is submitted to the Government Finance Officers Association (GFOA) for recognition.

BACKGROUND AND DISCUSSION:

The purpose and scope of the report: The report is a summary of the City of Sebastopol's financial statements for the fiscal year 2022-23, audited by an independent firm and submitted to a national association for recognition.

The main findings and recommendations of the audit: The audit found that the City's financial statements are free of material misstatements and comply with the generally accepted accounting principles and standards. The audit also issued an unmodified (clean) opinion.

The auditor has also identified the following significant risks:
• Risk of management override of internal controls – A risk of management override of internal controls exists at any entity where management can change or decide not to perform that entity’s internal controls.

City management has been made aware of a significant risk - management override of internal controls. This risk is prevalent in many small-sized entities, and our organization is not exempt from it. We take this finding with utmost seriousness and have been taking steps to address and mitigate any potential impact it may have on the City.

However, due to our limited staffing, the segregation of duties has proven to be a challenge. Nevertheless, we are dedicated to doing everything within our capabilities to ensure the continued integrity of our internal controls. • Revenue recognition risk – Errorsin revenue recognition can affect bond covenant ratios and the net position of the City.

This is a default risk in all financial audits, meaning that they represent something that could possibly happen. As such, it is necessary for the city to be aware, plan and implement audit procedures to determine if these risks have materialized during the year.

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The structure and content of the report: The report consists of three sections: introductory, financial, and statistical.

The introductory section provides a letter of transmittal and an overview of the City's financial status and results.

The financial section contains the independent auditor's report, the management's discussion and analysis, the basic financial statements, and the notes to the financial statements. The statistical section provides historical and comparative data on the City's financial trends, revenue capacity, debt capacity, demographic and economic information, and operating information.

The difference between government-wide and fund statements: The report presents two types of financial statements: government-wide and fund statements. The government-wide statementsreport financial information based on when expenses occur and revenue are earned, similar to a private business. The fund statements report financial information based on when cash transactions occur, similar to a budgetary basis. The report reconciles the differences between the two types of statements.

STAFF ANALYSIS:

The ACFR is a detailed document with a lot of information. To make it easier to understand, this summary explains some of the accounting and finance terms used in the report.

While the audit includes extensive financial information, the auditor’s purpose is not to offer opinions on the fianncial condition of the City. Staff plan to present a report with a long term view of the general fund on March 19, 2024. We anticipate that information on a status of the enterprise funds will be included in the forthcoming proposal to increase water and sewer rates.

Brief Summary of Terms
Annual Comprehensive Financial Report (ACFR): is a set of comprehensive financial statements on the financial state of the City as of the fiscal year end.

Audit: an annual examination performed by an independent accountant firm of the City’s internal controls and finances.

Enterprise Funds: a part of government that accounts for the goods and services provided to the public for a fee and is self-supporting, similar to a private business. Example includes Water and Sewer operations.

Fiscal Year (FY): a twelve month period July 1 through June 30 to which the annual budget applies, and financial transactions are recorded and subsequently audited.

Fund: a grouping of accounts used to record all the special purpose financial transactions for which the fund was created.

Fund Balance: the difference between assets and liabilities – in essence, what would be left over if the assets were used to pay the liabilities.

Fund Statements: detailed information on the primary governments funds whereby fund assets are exepected to be used within a year and current year liabilities are typically expected to be repaid or satisfied with current resources.

General Accepted Accounting Principles (GAAP): uniform minimum stardards for financial accounting and recording, encompassing the conventions, rules, and procedures that define accepted accounting principles.

Government Finance Officers Association (GFOA): a professional association of state, provincial, and local finance officers in the United States and Canada.

Government-wide Statements: report financial information based on when expenses occur and revenue are earned rather than when cash transactions occur, similar to that of a private business.

Net position: the calculation of all the City’s assets minusthe current and future liabilities and net pension deferrals.

Restricted Fund Balance: this represents funding that can only be spent for very specific purposes, generallly due to laws.

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The City’s financial statements provide information about the finances of the City in its entirety, as well as information about individual funds. The ACFR is organized into the three sections summarized below.

Introductory Section
• Letter of Transmittal - which is designed to complement Management’s Discussion and Analysis (the MD&A), is prepared by management and used to communicate information on areas that may have an impact on the City’s finances now and in the future. This includes economic factors as well as budget and management factors. Both should be read together to understand the City’s financial position.

Financial Section (the main body of the ACFR for current year information) • Independent Auditors’ Report – the City’s report card on the content of the ACFR • Management’s Discussion and Analysis (MD&A) – provides an analytical overview of the City’s financial status and results for the year
• Basic Financial Statements – reports finances at a point in time (assets - liabilities) and throughout the year (revenues - expenditures), and cash flows
o City-Wide Statements – overview of financial information including all of the City’s operations by financial activity
o Fund Financial Statements – a detailed look at funds, reporting the Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balance
o Notes to the Financial Statements (Notes) – a narrative explanation that accompanies the Basic Financial Statements
Required Supplementary Information
• Budget to Actual Comparisons – for all governmental funds with a legally adopted budget • Pension Information – schedule of changes in the pension liability and related ratios; schedule of contributions by plan
• OPEB Information – schedule showing three years of Other Post-Employment Benefits Other Than Pensions

Statistical Section (current and historical information – up to 10 years) The last section of the ACFR, which is unaudited, contains schedules of statistical data about the City of Sebastopol in five major categories:
• Financial Trends
• Revenue Capacity
• Debt Capacity
• Demographic and Economic Information
• Operating Information
These schedules, generally covering a ten-year period, provide operating context for the financial data presented in the financial section of the ACFR.

The City prepares two types of financial statements that measure its finances differently; Government-wide (page 25) and Fund Statements (page 29). The Government-wide statements are designed to provide readers with broader overview of full City operations in a similar manner to those of a private business; whereas Fund Statements provide detailed financials in a short term annual budgetary basis on specific funds.

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The Statement of Net Position and Governmental Fund Financial Statements measure different activity. The net change in fund balance of the governmental funds are reconciled to statement of net position on page 35. The Management’s Discussion and Analysis and notes to financial statements explain the differences between fund balance and net position. In short governmental fund statements differ from government-wide net position and includes additional items, like pension liabilities.

The ACFR will be available on the City’s website after tonight’s meeting, and attached to this staff report. Copies are also available for review in the Administrative Services Department.

COMMUNITY OUTREACH:

This item has been noticed in accordance with the Ralph M. Brown Act and was available for public viewing and review at least 72 hours prior to schedule meeting date.

FISCAL IMPACT:

No impact for accepting this report.

OPTIONS:

Not Applicable

ATTACHMENTS:

Audited Annual Comprehensive Financial Report (ACFR) as of June 30, 2023 – City of Sebastopol Auditors’ Communication With Those Charged with Governance Power Point Document
APPROVALS:

Department Head Approval: Approval Date: 2/26/24
CEQA Determination (Planning): Approval Date: 2/27/24
The proposed action is not a project under the California Environmental Quality Act (CEQA) Administrative Services (Financial) Approval Date: 2/27/24 Costs authorized in City Approved Budget: ☐ Yes ☐ No  N/A Account Code (f applicable) ___________________________ City Attorney Approval: Approval Date: 1/24/24
City Manager Approval: Approval Date: 2/27/24
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Annual Comprehensive Financial Report
Fiscal Year 2022 - 2023
“sebastopol: A World of Good” Mural Courtesy of learn more about the mural at artstart.us

CITY OF SEBASTOPOL
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City of
Sebastopol
Sebastopol, California
Annual Comprehensive Financial Report
For the year ended June 30, 2023
Prepared by:

Administrative Services Department
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City of Sebastopol
Annual Comprehensive Financial Report
For the year ended June 30, 2023
Table of Contents
Page
INTRODUCTORY SECTION:

Table of Contents .......................................................................................................................................................i Letter of Transmittal..................................................................................................................................................v Directory of City Officials........................................................................................................................................ix Organization Chart....................................................................................................................................................x GFOA Certificate of Achievement for Excellence in Financial Reporting........................................................ xi

FINANCIAL SECTION
Independent Auditors’ Report ...............................................................................................................................1 Management’s Discussion and Analysis..............................................................................................................5 Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position ..........................................................................................................................25 Statement of Activities ...............................................................................................................................26 Fund Financial Statements:

Governmental Funds Financial Statements:

Balance Sheet.........................................................................................................................................32 Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position ................................................................33 Statement of Revenues, Expenditures and Changes in Fund Balances........................................34 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities ..................................................................................................................35 Proprietary Funds Financial Statements:

Statement of Net Position....................................................................................................................38 Statement of Revenues, Expenses and Changes in Net Position...................................................39 Statement of Cash Flows .....................................................................................................................40 Notes to Basic Financial Statements ................................................................................................................41 Required Supplementary Information (Unaudited):

Budgets and Budgetary Accounting:

Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual: General Fund .....................................................................................................81 i
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City of Sebastopol
Annual Comprehensive Financial Report
For the year ended June 30, 2023
Table of Contents
Page
FINANCIAL SECTION, Continued:

Required Supplementary Information (Unaudited), Continued:

Defined Benefit Pension Plan:

Schedule of Proportionate Share of the Net Pension Liability ............................................................84 Schedule of Contributions ........................................................................................................................86 Other Postemployment Benefits Plan:

Schedule of Changes in the Total OPEB Liability and Related Ratios ................................................88 Supplementary Information:

General Capital Project Fund Budgetary Comparison Schedule.........................................................95 Combining Balance Sheet ..........................................................................................................................98 Combining Statement of Revenues, Expenditures and Changes in Fund Balances........................104 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual:

Police Grant Special Revenue Fund.................................................................................................109 Gas Tax Special Revenue Fund ........................................................................................................110 Park in Lieu Special Revenue Fund.................................................................................................111 Traffic Impact Special Revenue Fund..............................................................................................112 Street Lighting Assessment Special Revenue Fund.......................................................................113 Asset Forfeiture Special Revenue Fund ..........................................................................................114 Downtown Association Special Revenue Fund.............................................................................115 Art in Lieu Special Revenue Fund ...................................................................................................116 Measure M Special Revenue Fund...................................................................................................117 Housing General Plan Special Revenue Fund................................................................................118 Street Reserve Special Revenue Fund..............................................................................................119 Vehicle Abatement Special Revenue Fund.....................................................................................120 Inclusionary and Linkage Housing Special Revenue Fund .........................................................121 Building Permit Incremental Special Revenue Fund ....................................................................122 Community Development Block Grant Special Revenue Fund ..................................................123 SB1 Road and Maintenance Special Revenue Fund ......................................................................124 General Government Facilities Fees Special Revenue Fund........................................................125 Fire Facilities Fees Special Revenue Fund.......................................................................................126 Stormwater Facilities Fees Special Revenue Fund.........................................................................127 Supplemental Planning Grant (SB2 and LEAP) Special Revenue Fund.....................................128 Undergrounding Capital Project Fund ...........................................................................................129 Woodstone Assessment District Debt Service Fund .....................................................................130 Clean Renewable Energy Debt Service Fund.................................................................................131 ii Agenda Item Number 5
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City of Sebastopol
Annual Comprehensive Financial Report
For the year ended June 30, 2023
Table of Contents
Page
STATISTICAL SECTION (Unaudited):

Financial Trends:

Net Position by Component.................................................................................................................................134 Changes in Net Position........................................................................................................................................136 Fund Balances of Governmental Funds..............................................................................................................140 Changes in Fund Balances of Governmental Funds .........................................................................................142 Revenue Capacity Information:

Assessed Value and Estimated Actual Value of Taxable Property.................................................................144 Direct and Overlapping Property Tax Rates......................................................................................................146 Principal Property Taxpayers...............................................................................................................................147 Property Tax Levies and Collections...................................................................................................................148 Taxable Sales by Category ....................................................................................................................................149 Debt Capacity Information:

Ratios of Outstanding Debt by Type...................................................................................................................150 Ratios of General Bonded Debt Outstanding.....................................................................................................152 Direct and Overlapping Governmental Activities Debt...................................................................................153 Legal Debt Margin Information...........................................................................................................................154 Pledged-Revenue Coverage .................................................................................................................................155 Demographic and Economic Information:

Demographic and Economic Statistics................................................................................................................158 Principal Employers for City of Sebastopol .......................................................................................................159 Operating Information:

Full-Time Equivalent City Government Employees by Function...................................................................160 Operating Indicators by Function........................................................................................................................161 Capital Asset Statistics by Function ....................................................................................................................162 iii Agenda Item Number 5
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City Council
Mayor Diana Rich
Vice Mayor Stephen Zollman
Councilmember Neysa Hinton
Councilmember Sandra Maurer
Councilmember Jill McLewis
City Manager
Larry McLaughlin
[email protected]
Assistant City Manager/City Clerk, MMC
Mary Gourley
[email protected]
February 20, 2024
Honorable Mayor, Members of the Council and Citizens of the City of Sebastopol:

City staff is pleased to present the annual comprehensive financial report for the City of Sebastopol for the fiscal year ended June 30, 2023. This report was prepared by the Administrative Service (Finance) Department, which is responsible for both the accuracy of the data presented, and the completeness of the presentation.

The annual comprehensive financial report includes a complete set of audited financial statements and related explanatory notes to the financial statements that provide additional context for reading the statements, such as accounting policies, as well as detail about summary information presented in the statements. Also, the annual comprehensive financial report includes supplemental information and statistical information to enhance readers’ understanding of the City’s financial and economic information. The City issues the annual comprehensive financial report within approximately six months after the close of each fiscal year with the intent to meet the goals of fiscal transparency and demonstrate compliance with various sources of external financing, such as state and federal regulations and bond covenants.

City management assumes full responsibility for the completeness and reliability of all of the information contained in this report; and has established a comprehensive framework of internal control to ensure that information is accurate and produced in accordance with generally accepted accounting principles. Because the cost of internal controls should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements.

The City’s independent auditor, Badawi & Associates, has issued an unmodified (“clean”) opinion on the City of Sebastopol financial statements for the fiscal year ended June 30, 2023. The independent auditor’s report is presented at the front of the financial section of this report.

Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements and should be read in conjunction with this letter and the financial statements and notes.

Profile of the City of Sebastopol
The City of Sebastopol has a population of approximately 7,348 residents; and is located in Sonoma County, California. Sebastopol was incorporated 1902, and operates under a council-manager form of government.

Policymaking and legislative authority are vested in the City Council consisting of the Mayor and four other elected Council members. The Council is elected on a non-partisan basis. Council members serve four year staggered terms, with two members elected every two years. The Mayor is selected by the five-member Council and serves in that capacity for one year.

The Council is responsible for, among other matters, approving and modifying ordinances, adopting the City budget, appointing committee and commission members, and hiring the City Manager and City Attorney. The City Manager is responsible for assuring compliance with the ordinances, implementing the policies and direction of the City Council, appointing department heads, hiring employees, and managing daily operations of the City.

Sebastopol is a full-service city that provides a wide variety of municipal services to its residents and visitors, including municipal utilities (Water and Wastewater); fire and police protection; construction and maintenance of City streets, storm drains, bridges, and similar infrastructure type assets; park maintenance; community recreation activities; building inspections; licenses and permits; and facilities. The city also serves as a transportation and economic hub for West Sonoma County.
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Sebastopol is a City that Cares:

Sebastopol is a caring community that celebrates inclusion, diversity and sustainable environmental practices; as well as the health and success of its citizens and businesses. Many visitors, from “locals” traveling from the San Francisco Bay Area to interested visitors from around the world, come to Sebastopol to enjoy the natural environment, fine dining, welcoming lodging, and a wide array of recreational and educational activities.

The City is well-known for its leadership efforts in environmental sustainability, and strives to conserve natural resources, notably energy and water. Sebastopol hosts many local events that celebrate the arts and artists, with a robust Community Center that provides an easily accessible space for many local artisans, actors and communicators. A “makers’ space” is located within the city, and a local technology company has hosted many “makers fairs.” Sebastopol seeks an environment where its citizens and visitors can learn and grow together in a caring, supportive environment.

Budget Process:

The City’s annual budget serves as the foundation for the City of Sebastopol’s financial planning and expenditure control system. All departments of the City submit requests for appropriations to the City Budget Subcommittee each year; these requests serve as a starting point for developing a proposed budget. The City Budget Subcommittee presents a proposed operating and capital budget to the City Council each year. The Council holds public hearings, generally starting in June, to review and receive input on the proposed budget before formal adoption. The budget is adopted by fund, department and account classification. During the year, the City Manager may authorize budget transfers within departments and funds, but only the City Council can approve additional appropriations. Staff provides monthly financial reports to the Council during the year and may prepare a comprehensive budget review at mid-year. Council approves adjustments to the original budget during the year to reflect changing conditions that impact revenues or expenditures.

Meaningful public involvement is needed to balance goals of continuous service improvement and fiscal sustainability. Increased nonprofit grants and local marketing initiatives helped the City maintain services while meeting budgetary reserves goals during the Covid-19 pandemic.

Budget to actual comparisons are provided in this report for each governmental fund for which an appropriated annual budget has been adopted.

Local Economy
The City is located in beautiful Sonoma County, approximately sixty miles north of San Francisco. The area attracts many visitors each year, and Sebastopol receives substantial funding from sales taxes and transient occupancy taxes. Attractive recreational opportunities, great food and wine, and specialty retail shops that offer locally made goods bring in many visitors. Warm welcomes and friendly service brings them back! Local employment continues to exceed the national- and state-level indicators for labor force participation rate. This is partially due to Sonoma County’s workforce having a larger share of mature workers. However, younger workers are choosing to begin their careers in more affordable and family-friendly areas. As Sonoma County’s median age continues to rise, demand for healthcare has spiked and healthcare occupations continue to be the fastest growing occupations in the region, followed by government and manufacturing occupations prospects.

The FY 23-24 budget includes a reduction projections for sales tax and a relatively small increased to transient occupancy taxes. Property tax growth during FY22-23, with year-over-year gains attributed to above-normal real estate transactions activity which will at some point, see a decline due to high interest rates.

Sales taxes have a stronger correlation with the local economy than property taxes; and have become a larger share of total revenues. For FY 23-24 sales taxes were 44.5% of the adopted budget’s total revenues; while property taxes represented 30.6% of the total. A more conservative approach is warranted in response to changes in the revenue mix.
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A detailed description of the City’s budget policy goals and strategies, as well as historical and current budget amounts is included in the FY 23-24 adopted budget that is accessible on the Administrative Services Department’s website.

Future Challenges:

The Fiscal Year 2023-24, the City faces sobering budget challenges and pressures. This year, the City contracted with NHA Advisors, a consulting firm with expertise in municipal finance, who prepared a fiscal sustainability report based on current and projected changes in the city’s economic environment. NHA presented a draft report to the Budget Committee on April 5, 2023 and then a final report to the City Council and public on May 16, 2023. Based on current and expected revenue conditions and predicted increases in committed expenditures, funding requests far exceed available resources. The report indicates that the City will be challenged to adhere to Council-adopted fiscal sustainability policies that require maintaining minimum levels of fund balance reserves. As presented in the report, the City faces a structural deficit that will result in a complete depletion of all reserves by FY 2025-26, unless there are substantial changes that bring additional revenue into the City.

Long-Term Financial Planning
The City annually updates a five-year financial forecast, incorporating both projected revenues and expenditures for the general fund. The City balanced the FY 23-24 budget the use of $1,678,000 in reserves while dip below the budget reserve goal of 15% unassigned fund balance as a percentage of expenditures. The unassigned balance at the time the budget was adopted projected to be 14.8% of expenditures at the end of FY 23-24. However, as of the writing of this transmittal letter, based on audited number updated for the amounts in the audited financial statements for fiscal year 2023, the projected unassigned fund balance was 32.9%.

Subsequent to the end of the fiscal year, on November 21, 2023, in light of the ongoing financial challenges facing the City, the City Council declared a fiscal emergency.

The fiscal sustainability goals and priorities that had financially-significant impacts on budget development follow:

I. Maintain core services to the public as a top priority:
a. Provide for “baseline” funding including City core services such as public safety (police or fire), water, and sewer services.
b. Limit funding that exceeds a baseline budget (prior years’ minimum operating requirements, contractual obligations (plus an inflation factor)) only if the services are clearly justified by the cost, given the current strict budgetary constraints.
c. Create and charge fair prices for services that are provided on an “as requested” basis, such as planning and development services which are regulated through the user fee schedule. i. For FY 2023-24 the City will conduct a water rate study to analyze the cost of service for the enterprise utilities to ensure an equitable distribution of utility costs across customer types. ii. The City’s cost allocation plan (CAP) has not been updated since 2000. The FY 2023-24 adopted budget includes funding for a cost allocation plan revision in order to ensure accurate distribution of costs. The CAP guides the distribution of costs between general and end-user services and provides detail on the allocation of costs between the General Fund and enterprise funds that use general government services.

II. Debt financing is limited to achieving operating efficiencies:
a. Consistent with the City Council’s goal to provide stability for ongoing core service programs, this adopted FY 2023-24 budget limits debt financing to fund operating and/or program budgets. b. This budget provides very limited additional debt financing to lease public safety equipment, with debt service costs increasing by $4,000.
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c. Core programs that require significant infrastructure, like Water and Wastewater, may use debt financing for significant capital costs due to the long-term nature of the assets and financing plans.

Awards
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Sebastopol for its annual comprehensive financial report for the fiscal year ended June 30, 2022. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local financial reports.

In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized annual comprehensive financial report, with contents that conform to program standards. The annual comprehensive financial report must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. The City of Sebastopol has received the Certificate of Achievement for six consecutive years (fiscal years ended 2017 through 2022).

We believe our current report continues to meet the Certificate of Achievement Program’s requirements and we will be submitting it to GFOA to determine its eligibility for another certificate. Staff Contributions Acknowledgment
The preparation of this report would not have been possible without the teamwork and dedication within the City’s Administrative Services (Finance) Department staff, and through the cooperation of the entire City staff. City staff members have my sincere appreciation for their contributions.

Respectfully Submitted,
Ana Kwong – Administrative Services Director
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CITY OFFICIALS
(as of the date of the Financial Statements)
City Council:

Neysa Hinton, Mayor
Diana Rich, Vice Mayor
Sandra Maurer
Jill McLewis
Stephen Zollman
City Staff:

City Manager | City Attorney………………………………………Lawrence McLaughlin Assistant City Manager | City Clerk ......................................... Mary Gourley Administrative Services Director .................……………………. Ana Kwong Building Official ............…………………………………………… Vacant (Lead - Steve Brown) Engineering Manager……………………………………………… Vacant (Lead - Toni Bertolero) Fire Chief ...............................................…………………….......Jack Piccinini (Interim) Planning Director ..........................……………………………… Kari Svanstrom Police Chief ..........................................………………………… Ronald Nelson Public Works Superintendent .................................................. Dante Del Prete Advisory Commissions or Committees:

Planning Commission
Design Review Board
Public Arts Committee
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Citizens of
Sebastopol
City Organization
City Wide Organization Chart by Function
Council
Meeting
Municipal Code
Public Record
City Council
Larry McLaughlin
City Manager
Larry McLaughlin
City Attorney
Mary Gourley
Assistant City Mgr
City Clerk
Election
Information
Building Official
Steve Brown
Kari Svanstrom
Planning Director
Ana Kwong
Administrative
Services Director
Dante Del Prete
Public Works
Superintendent
Jack Piccinini
Interim Fire Chief
Ronald Nelson
Police Chief
Planning
Advance
Planning
Development
Review
Building/Code
Enforcement
Contractor’s
License
Disability
Access
Information
Technology
(Consultant)
Budget
Payroll &
Accounting
Utility
Billing
Human
Resources
(Consultant)
Business
License
Parks Planning
& Development
Consultants
Programs
Consultant
Water
Treatment
Project
Inspection
Services
Wastewater
Collection &
Pumping
Stormwater
Maintenance
Street
Maintenance &
Sidewalk
Engineering
Capital Projects
(Consultants)
Facilities (Park
& Pool)
Maintenance
Fire Protection
Prevention
Investigations
Emergency
Preparedness
EOC
Fire Marshal
Volunteer FF
Recruitment
Retention
Fire Code
Enforcement/
Inspections
Public
Education
Presentations
Crime
Preventions
Investigations
Patrol
Unit
Dispatcher &
Records
Animal
Control
Permit &
Insurance
Processing
Public
Information
Officer
City Engineer
Mario Landeros
GHD | Toni Bertolero
Public
Art
Climate
Action
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Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Sebastopol
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2022
Executive Director/CEO
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INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and Members of the City Council
Of the City of Sebastopol
Sebastopol, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Sebastopol (City), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2023, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

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

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

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

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To the Honorable Mayor and Members of the City Council
Of the City of Sebastopol
Sebastopol, California

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 issue an auditor’s report that includes our opinions.

Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

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

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

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 5–20 and 81–89 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
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To the Honorable Mayor and Members of the City Council
Of the City of Sebastopol
Sebastopol, California

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying general capital projects fund budgetary comparison schedule, combining and individual nonmajor fund financial statements, and budgetary comparison information, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, general capital projects fund budgetary comparison schedule, combining and individual nonmajor fund financial statements, and budgetary comparison information, 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 the annual report. The other information comprises the introductory and statistical sections 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 connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 29, 2023, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City’s internal control over financial reporting and compliance.

Badawi & Associates, CPAs
Berkeley, California
December 29, 2023
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CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2023
(Rounded to the nearest $1,000)
As management of the City of Sebastopol, California (City) we offer readers of the City’s financial statements this overview and analysis of the City’s financial activities for the fiscal year that began on July 1, 2022 and ended June 30, 2023 (FY22-23). We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal and the City’s financial statements, with related notes, which follow this section.

FINANCIAL HIGHLIGHTS
 The assets and deferred outflows of the City exceeded the liabilities and deferred inflows by $19,374,000 (net position) at June 30, 2023: Governmental activities’ net position was $13,160,000; and business-type activities’ net position was $6,214,000.  Total government-wide net position is categorized as follows:
o $15,775,000 is the net investment in capital assets;
o $2,696,000 is restricted for specific purposes (restricted net position); and, o 903,000 is the unrestricted net position, the residual of total net position less the other categories of net position. Unrestricted net position, when positive, is used by the city to meet its ongoing obligations to citizens and creditors.  For the fiscal year, the net position of governmental and business-type activities increased by and decreased by $5,349,000 and ($828,000) respectively; accounting for a government-wide increase in net position of $4,521,000.
 At June 30, 2023, the city’s governmental funds reported a combined ending fund balance of $13,984,000. Governmental funds’ balances increased by $1,570,000 for the year reported.  The general fund reports fund balance of $11,971,000 at June 30, 2023; and it is distributed in these categories:
1) $188,000 is categorized as non-spendable, and is comprised of prepaid items. 2) $1,235,000 is reported as restricted; with $1,039,000 restricted for flood recovery; and $196,000 restricted for capital projects.
3) $4,601,000 is reported as assigned fund balance, indicating the city’s intention to use the financial resource for a particular purpose in the future, as follows:
 Buildings, equipment and infrastructure, $903,000;
 Equipment, vehicle and technology replacement, $917,000; and,  Pension and other post-employment liabilities rate stabilization, $2,781,000. 4) $5,947,000 is unassigned fund balance, which represents the residual of total fund balance less other categories. It is available for consideration in the budget process.  Proprietary funds: Within the proprietary fund type, the city reports two enterprise funds, water and wastewater. Proprietary funds report a combined net position of $6,214,000 at June 30, 2023; with $3,961,000 reported in the water fund; and $2,253,000 reported in the wastewater fund. The city also reports an internal service fund for insurance benefits, and that fund has a balance of one thousand dollars.
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CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2023
(Rounded to the nearest $1,000)

OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of four parts – a management’s discussion and analysis (this section); the basic financial statements, with related notes to the financial statements; required supplementary information; and a supplementary information section that presents combining statements for non-major governmental funds. The basic financial statements include two kinds of statements that present different views of the City:
 The first two statements are government-wide financial statements that provide both longterm 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, reporting the City's operations in more detail than the government-wide statements.

The governmental fund’s statements tell how general government services like public safety were financed in the short term as well as what remains for future spending.

Proprietary funds’ statements offer short-term and long-term financial information about the activities the government operates like businesses, such as the water and wastewater system.

The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by required supplementary information that further explains and supports the information in the financial statements. In addition to these required elements, we have included a section with combining statements that provide details about our non-major funds, each of which are added together and presented in a single column in the basic financial statements.
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CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2023
(Rounded to the nearest $1,000)
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 explains the structure and content of each of the statements.

Government-Wide
Statements Governmental Funds Proprietary Funds
Entire City government
The activities of the City that are not
proprietary or fiduciary, such as police,
fire, and parks.

Activities the City operates similar
to private businesses: the water
and wastewater systems.

Statement of net position ·Balance sheet ·Statement of net position Statement of activities
·Statement of revenues, expenditures,
and changes in fund balances
·Statement of revenues expenses,
and changes in net position
· Statement of cash flows
Accrual accounting and
economic resources focus
Modified accrual accounting and
current financial resources focus
Accrual accounting and economic
resources focus
All assets and liabilities,
both financial and capital,
and short-term and longterm
Only assets expected to be used up
and liabilities that come due during
the year or soon thereafter; no capital
assets included
All assets and liabilities, both
financial and capital, and shortterm and long-term
All revenues and expenses
during year, regardless of
when cash is received or
paid
Revenues for which cash is received
during or soon after the end of the
year; expenditures when goods or
services have been received and
payment is due during the year or
soon thereafter
All revenues and expenses during
year, regardless of when cash is
received or paid
Required financial statements
Type of inflow/outflow information
Figure A-1
Type of asset/liability information
Accounting basis and
measurement focus
Scope
Major Features of City of Sebastopol’s Government-Wide and Fund Financial Statements Fund Statements
Government-wide Financial Statements are designed to provide readers with a broad overview of City finances, in a manner similar to a private-sector business. These financial statements provide both longterm and short-term information about the City’s overall financial status.

The statement of net position presents information on the City’s assets and deferred outflows; liabilities and deferred outflows; and the residual difference of those elements which is reported as net position.

Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods, such 7 Agenda Item Number 5
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CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2023
(Rounded to the nearest $1,000)
as revenues pertaining to uncollected taxes and expenses pertaining to earned but unused vacation and sick leave.

The government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or in part a portion of their costs through user fees and charges (business-type activities). A description of the functions follows:
 Governmental activities – Most of the City's basic services are included here, such as the police, fire, public works, parks and community development departments and general administration. Property taxes, sales taxes, transient occupancy taxes, utility user taxes, and state and federal grants finance most of these activities.
 Business-type activities – The City charges fees to customers to help it cover the costs of certain services it provides. The City's water and wastewater system are included here.

Fund Financial Statements financial information for funds, which are groupings of related accounts used to maintain control over resources that have been segregated for specific activities or objectives.

The City, like other state and local governments, uses fund accounting to ensure and demonstrate finance-related legal compliance. All of the funds of the City can be divided into two categories:
governmental funds and proprietary funds.

Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental funds’ financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in determining what financial resources are available in the near future to finance the City’s programs.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental funds’ balance sheet and the governmental funds’ statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The City maintains individual governmental funds organized according to their type (the general fund and special revenue, capital projects and debt service funds). Information is presented separately in the governmental funds’ balance sheet and in the governmental funds’ statement of revenues, expenditures and changes in fund balances for the General Fund, which is considered to be a major fund. Data for the remaining governmental funds are combined into a single, aggregated presentation entitled “non-major governmental funds”. The individual and combining fund data for each of these non-major governmental funds is provided as supplementary information in this report. 8 Agenda Item Number 5
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CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2023
(Rounded to the nearest $1,000)
Proprietary funds, like the government-wide statements, provide both long-and short-term financial information.

The City reports three funds within the proprietary funds category: Two enterprise funds account for water and wastewater business-like activities; and one internal service fund accounts for some insurance services. Both enterprise funds are considered to be major funds, and as such are reported in separate columns within the proprietary funds’ financial statements.

Fiduciary funds are used to account for resources held for the benefit of parties outside the government.

Fiduciary funds are not reflected in the government-wide financial statements because the resources of the funds are not available to support the government’s own programs. The City does not report fiduciary funds for the year ended June 30, 2023.
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CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2023
(Rounded to the nearest $1,000)

GOVERNMENT-WIDE FINANCIAL ANALYSIS
Net Position: The City's combined net position, including both governmental activities and businesstype activities is reflected in Table A-1 2023 2022 2023 2022 2023 2022
Current and other assets $ 16,511,000 $ 14,622,000 $ 4,098,000 $ 7,220,000 $ 20,609,000 $ 21,842,000 Capital assets 12,032,000 10,951,000 9,207,000 7,860,000 21,239,000 18,811,000 Total assets 28,543,000 25,573,000 13,305,000 15,080,000 41,848,000 40,653,000 Deferred outflows of Resources
Deferred Outflows Pension and OPEB 5,500,000 2,872,000 1,155,000 502,000 6,655,000 3,374,000 Total deferred outflows of resources 5,500,000 2,872,000 1,155,000 502,000 6,655,000 3,374,000 Current Liabilities 3,000,000 2,739,000 784,000 1,025,000 3,784,000 3,764,000 Long-term Liabilities 16,099,000 11,506,000 7,245,000 6,242,000 23,344,000 17,748,000 Total liabilities 19,099,000 14,245,000 8,029,000 7,267,000 27,128,000 21,512,000 Deferred inflows of Resources
Deferred inflows - Pension and OPEB 1,784,000 6,389,000 217,000 1,273,000 2,001,000 7,662,000 Total deferred inflows of resources 1,784,000 6,389,000 217,000 1,273,000 2,001,000 7,662,000 Net Position
Invested in capital assets 10,408,000 9,702,000 5,367,000 5,259,000 15,775,000 14,961,000 Restricted 2,696,000 3,599,000 - - 2,696,000 3,599,000
Unrestricted 56,000 (5,490,000) 847,000 1,783,000 903,000 (3,707,000) Total net position $ 13,160,000 $ 7,811,000 $ 6,214,000 $ 7,042,000 $ 19,374,000 $ 14,853,000 Table A-1
City of Sebastopol’s Net Position
(rounded , nearest thousand dollars)
Governmental Activities Business-Type Activities Total
Total net position, (assets and deferred outflows, less liabilities and deferred inflows), was $19,374,000 at June 30, 2023. Governmental activities net position was $13,160,000; and business-type activities’ net position was $6,214,000.

The largest component of the City’s net position is invested in capital assets; and is reported at $15,775,000. This component represents 81% of total net position as of June 30, 2023. The City uses these capital assets to provide a variety of services to its citizens. Accordingly, these assets are not available for future spending. Although the City’s investment in capital assets is reported net of related debt, it should be noted that the resources used to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 10 Agenda Item Number 5
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CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2023
(Rounded to the nearest $1,000)
An additional portion of the City’s net position represents resources that are subject to external restrictions on how they may be used, with $2,696,000 reported as restricted at June 30, 2023.

Changes in Net Position: Table A-2 reflects comparative changes in net position, for both government and business-type activities for fiscal years ended June 30, 2023 and June 30, 2022. 2023 2022 2023 2022 2023 2022
Revenues
Program revenues:

Charges for services $ 1,178,000 $ 740,000 $ 5,359,000 $ 5,574,000 $ 6,537,000 $ 6,314,000 Grants and contributions 2,527,000 549,000 2,527,000 549,000 Capital grants and contributions 575,000 715,000 575,000 715,000 General revenues:

Property taxes 3,469,000 3,334,000 3,469,000 3,334,000
Sales Tax 4,609,000 4,705,000 4,609,000 4,705,000
Transient Occupancy Taxes 544,000 504,000 544,000 504,000 Other Taxes 1,320,000 1,259,000 1,320,000 1,259,000
Other income 877,000 630,000 115,000 (123,000) 992,000 507,000 Total revenues 15,099,000 12,436,000 5,474,000 5,451,000 20,573,000 17,887,000 Expenses
General government 2,702,000 2,966,000 2,702,000 2,966,000 Public safety 5,109,000 6,742,000 5,109,000 6,742,000
Parks and recreation 1,011,000 1,031,000 1,011,000 1,031,000 Public works 929,000 2,103,000 929,000 2,103,000
Interest 30,000 19,000 30,000 19,000
Water 2,506,000 2,572,000 2,506,000 2,572,000
Wastewater 3,765,000 3,846,000 3,765,000 3,846,000
Total expenses 9,781,000 12,861,000 6,271,000 6,418,000 16,052,000 19,279,000 Increase in net position before
transfers and special item 5,318,000 (425,000) (797,000) (967,000) 4,521,000 (1,392,000) Transfers 31,000 31,000 (31,000) (31,000) - -
Increase (decrease) in net position 5,349,000 (394,000) (828,000) (998,000) 4,521,000 (1,392,000) Change in Net Position 5,349,000 (394,000) (828,000) (998,000) 4,521,000 (1,392,000) Net position beginning 7,811,000 8,205,000 7,042,000 8,040,000 14,853,000 16,245,000 Net position, ending $ 13,160,000 $ 7,811,000 $6,214,000 $7,042,000 $19,374,000 $14,853,000 Governmental Activities Business Type Activities Total
Table A-2
Changes in City of Sebastopol’s Net Position
(rounded to nearest thousand dollars)
Governmental Activities:
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CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2023
(Rounded to the nearest $1,000)
Government-wide net position increased by $4,521,000; with an increase of $5,439,000 for governmental activities; and a decrease of ($828,000) for business-type activities. Reduced retirement benefits expense and the recognition of grant revenue received but not earned in the prior year are the primary causes of increased net position. (See note 11 for more detail about pension expense). Reduced rate revenue and increased wastewater treatment expense charged by a regional system operator caused the net position decrease in business-type activities.

Governmental Activities Revenue:

Governmental activities’ services were financed as follows:
 Those who directly benefited from the programs paid charges for service of $1,178,000;  Other governments and organizations that subsidized certain programs with operating grants of $2,527,000 and capital grants of $575,000; and,
 Tax revenues totaling $10,059,000 collected from property owners, and for retail sales, utility use, and hotel occupancy.
 Interest earnings, miscellaneous revenues and transfers from other funds totaled $791,000.  Tax revenue is the primary funding source for governmental activities. Sales taxes comprise approximately 30% of governmental activities revenue, and transient occupancy taxes make up 4%. Those sources are considered to be more sensitive to short-term economic changes than property taxes, 23% of total revenue; and franchise fees and utility taxes, 9% of total revenue.  Grants and contributions; charges for services; and other income account for the remaining 34% of governmental activities’ revenue, as reflected in the following chart:

A graphical representation of the relative weights of governmental activities revenues follow 12 Agenda Item Number 5
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CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2023
(Rounded to the nearest $1,000)
Total FY 2022-23 governmental activities’ revenues of $15,099,000 are reported within two categories:

Program revenues $4,280,000, (34%); and general revenues $10,819,000, (66%). Total governmental activities revenues increased by $2,663,000, or 15%, over the prior year: General revenues, primarily taxes, increased by $387,000; and program revenues increased by $2,276,000.

Tax revenues: Tax revenue category experienced modest growth overall, with a 1.5% year-over-year increase of $140,000.

Property taxes of $3,469,000 reflect a increase of $135,000, or 4.0%, compared to the prior year. The California constitution limits the baseline growth in assessed values used to calculate property taxes to 2%; but provides for assessed value increases upon transfers in ownership, and other specific conditions.

Growth in the 2% to 4% range in the norm.

Sales taxes of $4,609,000 reflect a ($96,000) decrease, (2%), over the prior year. The year-over-year change is attributed to lowered customer demand in comparison with the prior year spike in activity that followed the lifting of restrictions on gathering that had been put in place in response to Covid-19 safety concerns. Also, in the prior year, the City made one-time investments in marketing programs that were not repeated in the current year.

Transient Occupancy Taxes of $544,000 increased by $40,000, or 7.9%, over the prior year; with the increase attributed to successful marketing efforts, and increased entertainment events.

Other taxes of $1,320,000 increased by $61,000, or 4.9%, over the prior year; and include user taxes on telecommunications bills and franchise fees. Revenue changes reflect normal growth in customer demand for services.

Program revenues of $4,280,000 increased by $2,276,000, or 114%, compared to the prior year due to federal and state grants. Federal economic recovery grant funds that were received in prior years was recognized in the current year when related expenditure requirements were met.

Charges for services revenue increased, and reflects services related to the construction of a new hotel.

Governmental Activities Expenses:

Table A-3 presents expenses for each of the City's functional areas, as well as the changes compared to the prior year:
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CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2023
(Rounded to the nearest $1,000)
Percentage
Change
2023 2022 2022-2023
General Government 2,702,000 2,966,000 -8.90%
Public Safety 5,109,000 6,742,000 -24.22%
Parks and recreation 1,011,000 1,031,000 -1.94%
Public Works 929,000 2,103,000 -55.83%
Interest on Long term Debt 30,000 19,000 57.89%
Total 9,781,000 12,861,000 -23.95%
Expenses by Function
Table A-3
Cost of City Sebastopol’s Governmental Activities
(in rounded nearest one thousand dollars)
The changes in functional areas' shares of total expenses is related to a significant decrease in pension expense. Because pension expenses are allocated based on salary and wages, labor intensive functions received a larger decrease.

Pension expense for a given fiscal year is based based upon changes in actuarial estimates of the net pension liability and related deferred inflows and outflows of economic resources that will be recognized in future periods. (See the financial statement note 11 for more information about the measurement and recognition of pension liabilities and expenses.) For FY 2022-23 the City reports pension “income” of $270,000 for governmental activities; and for FY 21-22 the City reported pension “expense” of $2,2274,000. The overall change in pension expense was a decrease of 2021-22 pension (expense) was ($2,544,000).

Notably, cash payments to CalPERS for pensions had very little year-to-year change:

Contributions to the CalPERS plan for the fiscal year ended June 30, 2023 were $1,763,271; and, Contributions to the CalPERS plan for the fiscal year ended June 30, 2022 were $1,827,570.

Increases in interest on long-term debt reflect are attributable to governmental capital asset additions that were funded by the finance purchase agreement for energy conservation measures.

As noted in our description of the differences between government-wide and fund financial statements, more detail of governmental activities is provided in the fund financial statements that focus on changes in financial resources.
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CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2023
(Rounded to the nearest $1,000)
Business-Type Activities:

The City’s business-type activity is comprised of transactions that occur in the water and wastewater enterprise funds.

Net position of the water enterprise fund was $3,961,000 and the net position of the wastewater fund was $2,253,000, for a combined net position of $6,214,000 for all business-type activity at June 30, 2023. The enterprise funds report net position in two components – Investment in capital assets is reported at $3,130,000 and $2,237,000 for the water and wastewater funds, respectively.

For FY22-23 the net position of business-type activities decreased by ($828,000). The water fund's net position decreased by ($115,000); and the wastewater fund's net position decreased by ($713,000). The change in net position represents 11.8% of the combined funds’ beginning net position.

Revenue shortfalls are the primary cause of the decreases in net position, and are attributed to lower consumption of utilities in response to conservation initiatives put in place due to drought conditions.

The City's latest approved rate schedule was developed in 2019, and it does not include the authority to implement increased “drought” rates when consumption drops significantly. The City is currently engaged in a utility rate study.

Investment in capital assets is the largest category of the business-type activities’ net position, with $5,367,000 and 86.4% of total net position. Unrestricted net position, total net position less net position invested in capital assets is $847,000 and 13.6% of the total.

FINANCIAL ANALYSIS OF THE CITY'S FUNDS
Governmental Funds: The focus of the City’s governmental funds is to provide information on nearterm inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s short-term financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for discretionary use as they represent the portion of fund balance which has not yet been limited to use for a particular purpose by either an external party or the City itself.

The City’s governmental funds include the general fund, general capital projects fund, and all nonmajor funds which are reported in the aggregate in the financial statements. Detail for the individual non-major funds’ information is provided in the supplementary information section of this report.

At June 30, 2023, the City’s governmental funds reported total fund balances of $13,984,000 an increase of $1,571,000 in comparison with the prior year. The total fund balance is reported within these categories:
 $188,000 is “non-spendable” because the financial resources have been used to prepay expenditures.
 $2,892,000 is “restricted,” and is only available to spend as specified by external funding sources.
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City Council Meeting Packet of March 5, 2024

CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2023
(Rounded to the nearest $1,000)
 $539,000 is “committed,” and is considered available only for particular purposes already approved by the City Council. Only the City Council can change the purposes for which fund balance was committed, by taking action similar to what is needed to approve budgets.  $4,601,000 is “assigned” for a particular future use.  $5,764,000 is “unassigned,” and as such is considered available to finance future years’ budgetary needs at the discretion of the City Council.

The June 30, 2023 total governmental funds balance is comprised of the general fund’s fund balance $11,971,000, general capital project fund’s fund balance of ($5,000), and the non-major funds’ combined fund balances of $2,018,000.

General Fund:

The general fund is the chief operating fund of the City. During FY 22-23, the general fund balance increased by $1,629,000; and is $11,971,000 as of June 30, 2023. Fund balance is distributed in the following categories:
 $188,000 is “non-spendable” because the financial resources were used for prepaid items.  $1,235,000 is restricted for uses specified by external funding sources or law.  $4,601,000 is “assigned” for these stated uses:
o $903,000 for buildings and infrastructure;
o $917,000 for equipment, technology and vehicle replacement; and, o $2,781,000 for pension and post-employment medical benefits.  $5,947,000 is “unassigned,” and as such is considered available to finance future years’ budgetary needs at the discretion of the City Council.

As a measure of the City Council’s general fund budgetary discretion, it may be useful to calculate unassigned fund balance as a percentage of annual expenditures: Unassigned general fund balance of $5,947,000 at June 30, 2023 represents 52% of FY 22-23 general fund expenditures of $11,349,000.

The general fund's total fund balance increased $1,629,000 during FY 2022-23. The change in attributed to intergovernmental revenue s during the
Intergovernmental revenues increased by $1,690,000, caused, primarily, by the current year's recognition of federal grant revenue that was received reported as unearned in the prior year.

FY 22-23 general fund expenditures of $11,349,000 reflect an increase of $263,000, or 2.4%, over the prior year’s expenditures. The expenditure increase is in line with inflation in the baseline budget.

The general government function's expenditures for contract services increased by $303,000, in part at least by increased contract services expenditures related to capital assets planning and personnel projects to study workforce requirements and fill vacancies.

The general fund also reported capital outlay expenditures of $215,000 for FY 22-23, which is a decrease of $302,000 over the prior year. Note 6B provides details for capital asset activity. 16 Agenda Item Number 5
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City Council Meeting Packet of March 5, 2024

CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2023
(Rounded to the nearest $1,000)
General Fund Budgetary Highlights
The FY 22-23 general fund’s original budget anticipated a decrease in fund balance of ($1,460,000) and that budget was amended during the year to anticipate a decrease in fund balance of ($1,254,000).

The FY 22-23 general fund’s budgetary financing sources anticipated during the Council’s approval of the original budget were increased by $801,000. Significant revenue budget amendments include an increase in the donations account upon receipt to contribution targeted to benefit public safety programs; and $300,000 increase in permit fees related to three new development projects.

Appropriations for expenditures approved in the original FY 23-23 general fund budget were increased by $595,000 by Council amendment. The added appropriations funded an economic development initiative and increased funding to support capital needs for nonprofit agencies.

Other financing sources (uses) reported in the general fund budgetary comparison schedule include the transfers in, and transfers out. The FY 23-23 budgeted amounts for these accounts were not amended.

The FY 22-23 general fund’s actual change in fund balance exceeded the final budget estimate $2,883,000. Revenues exceeded final estimates by $1,749,000; expenditures were $1,929,000 less than the final budget’s appropriations; and other financial sources (uses) report an unfavorable variance of $795,000 attributed to budgeting debt service payments within the debt authorization agreement rather than the debt service fund. Favorable tax collections and the recognition of prior year's deferred revenue were the primary reasons the overall revenue variance was positive. Salary savings within the public safety function were a primary contributor to favorable expenditures variances.

A budgetary comparison schedule within the required supplementary information section of this report provides more detail on the original budget, final budget and actual results. The information includes a comparison between the final budget and actual results for each significant general fund revenue account and for each general fund functional area and operating department.

General Capital Project Fund:

The general capital projects fund reports June 30, 2023 fund balance of ($5,700), a decrease of $2,000 for FY 22-23. The negative balance is caused by current year expenditures that will be reimbursed form the following year's resources outside of the 60 day time period for revenue recognition.

Non-major Governmental Funds:

Non-major governmental funds, in the aggregate reported June 30, 2023 fund balances of $2,079,000.

Aggregated information of the non-major funds is displayed in the financial statements that also include the major governmental funds. The individual fund information for non-major governmental funds is reported in the combining statements that are found in the supplemental information section of this report.

Overall, non-major funds’ aggregated fund balances decreased by ($60,000) during FY 22-23. The decrease is attributed to the appropriate use of financial resources accumulated in prior years to fulfill the purposes for which those accumulated resources were intended. 17 Agenda Item Number 5
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City Council Meeting Packet of March 5, 2024

CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2023
(Rounded to the nearest $1,000)
Proprietary Funds – Water and Sewer Enterprise Funds:

Proprietary fund-type activity is comprised of the water and wastewater enterprise funds, and one internal service fund used to allocate insurance costs. The combined net position at of enterprise funds at June 30, 2023 is $6,214,000; with $5,367,000 representing the net investment in capital assets and $847,000 reported as unrestricted net position.

The changes in these enterprise funds’ activities are described in the business-type activities’ section of this management discussion and analysis.

Internal Service Fund:

The city also reports the insurance and benefits internal service fund within the proprietary category. The fund takes in revenues in the form of charges paid to other funds of the City and spends those revenues to deliver insurance and other benefits. Ending fund balance was $1,000 at June 30, 2023, and was unchanged by FY 22-23 activities.

CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
At the end of 2023 the City had invested $21,239,000, (net of accumulated depreciation), in a broad range of capital assets, including equipment, vehicles, streets, buildings, park facilities, and water and wastewater systems. This amount represents a net increase of $2,428,000 for FY 22-23.

Governmental activities capital assets, net of accumulated depreciation increased by $1,081,000 during FY 22-23, due to additions in depreciable assets, $520,000; an increase in construction in progress, $1,554,000; and depreciation charges, ($993,000). The asset activity primarily consisted of routine vehicle and equipment replacement and construction in progress related to energy conservation assets, and normal depreciation.

Business-type activities capital assets, net of accumulated depreciation, increased by $1,347,000 during FY 22-23, due to additions in depreciable assets, $438,000; an increase in construction in progress, $1,620,000; less depreciation charges, ($711,000). The capital asset activity was related to normal replacement projects for the water and wastewater systems, and normal depreciation.

Table A-4 provides a recap of capital asset activity.

See the notes to the financial statements for detail on the changes of capital assets, (Note 6 – A). 18 Agenda Item Number 5
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City Council Meeting Packet of March 5, 2024

CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2023
(Rounded to the nearest $1,000)
2023 2022 2023 2022 2023 2022
Land and CIP 4.84 3.28 3.41 1.78 8.25 5.06
Buildings & structures 7.95 7.85 7.95 7.85
Machinery and equipment 2.83 2.75 0.24 0.24 3.07 2.99
Reservoirs 4.29 3.92 4.29 3.92
Pipelines & water system 4.24 4.24 4.24 4.24
Pipelines & wastewater system 8.37 8.37 8.37 8.37
Vehicles 2.75 2.72 1.02 0.96 3.77 3.68
Infrastructure 9.16 8.86 9.16 8.86
Accumulated depreciation (15.50) (14.51) (12.37) (11.66) (27.87) (26.17) Total 12.03 10.95 9.20 7.85 21.23 18.80
Governmental Activities Business-type Activities Total
Table A-4
City of Sebastopol’s Capital Assets
(in millions of dollars)
Changes in Long-term Liabilities – Debt:

For the year reported, general activities’ long-term debt obligations decreased by $340,000, and total $1,761,000 as of June 30, 2023. Significant transactions included $340,000 reductions in long-term obligations due to scheduled payments. Detailed information for long-term debt obligations is provided in note 7.A.

For FY 22-23 business-type long term debt obligations decreased by $440,000, and total $4,816,000 as of June 30, 2023. Significant transactions consist of normal reductions in debt obligation principal due to scheduled payments, $440,000.

Detailed information about the City's long-term obligations can be found in the “Notes to the Basic Financial Statements” under section 7.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES:

The general fund tax revenues available to support operating budgets for core public safety and recreation functions appear to have stabilized. Projections for reliable, predictable revenue growth are limited. The City is concerned that the current baseline budget is unable to fund the workforce additions necessary to increase service levels in public safety programs. 19 Agenda Item Number 5
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City Council Meeting Packet of March 5, 2024

CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2023
(Rounded to the nearest $1,000)
The City continues to prepare conservative budgets in order to protect the resources needed for financial stability and remain responsive to changing needs as revenues fluctuate. The City regularly reviews its revenues and expenditures to keep a pulse on its current fiscal health and ensure the adequate protection of the City’s financial resources.

For the 2024 fiscal year, (starts July 1, 2023 and ends June 30, 2024) the following budgetary highlights are noted:
 The FY 2023-24 general fund adopted budget anticipated a fund balance decrease of ($1,678,000); based upon estimated revenues and transfers in of $10,860,000, less expenditures and transfers out of $12,538,000. The end-of-year fund balance projections slightly below the city council’s minimum budgetary reserve policy that requires maintaining general fund unassigned balance equal to 15% of expenditures.
 The FY 2023-24 adopted enterprise fund operating expenses and transfers out total $3,868,000 for the water fund, and $4,876,000 for the wastewater fund. The FY 2023-24 estimated change in net position is a (deficit) of ($1,454,000) for the water fund and deficit of ($1,767,000) for the wastewater fund. The City is currently conducting a utility rate study to identify necessary revenues, costs of services by customer classification, and recommended rates that achieve a sustainable service level and re-establish the required unrestricted net position consistent with the City Council's minimum balance goals.
 The City of Sebastopol invites interested readers to review the detailed operating budget by visiting the website:
https://www.cityofsebastopol.gov/wp-content/uploads/2023/08/FY23-24-City-of-SebastopolAdopted-Budget_6.27.23_Published.pdf CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City's finances and to demonstrate the City's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the City Treasurer/Administrative Services Director at the City of Sebastopol, 7120 Bodega Avenue, Sebastopol, CA 95472, (707) 823-7863.
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BASIC

FINANCIAL STATEMENTS
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GOVERNMENT-WIDE

FINANCIAL STATEMENTS
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City of Sebastopol
Statement of Net Position
June 30, 2023
Governmental Business-Type
Activities Activities Total
ASSETS
Current assets:

Cash and investments $ 13,566,537 $ 1,618,523 $ 15,185,060 Restricted cash and investments with fiscal agents 195,758 1,139,713 1,335,471 Receivables (net of allowances for uncollectible amount):

Accounts receivable 341,267 1,043,032 1,384,299
Taxes receivable 1,129,469 - 1,129,469
Interest receivable 50,037 8,264 58,301
Lease receivable 35,897 - 35,897
Prepaid items 737,239 288,480 1,025,719
Total current assets 16,056,204 4,098,012 20,154,216
Noncurrent assets:

Notes receivable 188,573 - 188,573
Leases receivable 266,457 - 266,457
Capital assets:

Non-depreciable 4,838,832 3,407,856 8,246,688
Depreciable, net 7,193,251 5,798,954 12,992,205
Total capital assets 12,032,083 9,206,810 21,238,893
Total noncurrent assets 12,487,113 9,206,810 21,693,923 Total assets 28,543,317 13,304,822 41,848,139

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows of resources - pension 5,327,146 1,154,593 6,481,739 Deferred outflows of resources - OPEB 173,417 - 173,417 Total deferred outflows of resources 5,500,563 1,154,593 6,655,156

LIABILITIES
Current liabilities:

Accounts payable 1,080,135 302,740 1,382,875
Accrued interest payable 9,145 5,444 14,589
Accrued liabilities 256,810 - 256,810
Deposits payable 483,754 8,490 492,244
Unearned revenues 28,083 50,165 78,248
Total OPEB liability - due within one year 90,823 - 90,823 Compensated absences - due within one year 750,000 4,000 754,000 Long term debt - due within one year 301,705 412,805 714,510 Total current liabilities 3,000,455 783,644 3,784,099
Noncurrent liabilities:

Compensated absences - due in more than one year 284,502 50,448 334,950 Long term debt - due in more than one year 1,459,171 4,403,088 5,862,259 Total OPEB liability - due in more than one year 1,620,739 - 1,620,739 Net pension liability 12,734,942 2,791,171 15,526,113
Total noncurrent liabilities 16,099,354 7,244,707 23,344,061 Total liabilities 19,099,809 8,028,351 27,128,160

DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources - pension 725,505 217,102 942,607 Deferred inflows of resources - OPEB 760,751 - 760,751
Deferred inflows of resources - leases 297,629 - 297,629 Total deferred inflows of resources 1,783,885 217,102 2,000,987

NET POSITION
Net investment in capital assets 10,407,888 5,366,755 15,774,643 Restricted for:

Flood recovery 1,039,142 - 1,039,142
Housing 239,048 - 239,048
Streets 1,100,895 - 1,100,895
Other purposes 316,947 - 316,947
Total restricted 2,696,032 - 2,696,032
Unrestricted 56,266 847,207 903,473
$ 13,160,186 $ 6,213,962 $ 19,374,148
Primary Government
Total net position
See accompanying Notes to Basic Financial Statements.
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City of Sebastopol
Statement of Activities
For the year ended June 30, 2023
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Total Primary Government:

Governmental activities:

General government $ 2,702,550 $ 218,820 $ 2,236,883 $ - $ 2,455,703 Public safety 5,108,708 134,997 190,597 - 325,594
Public works 928,845 817,936 - 574,589 1,392,525
Parks and recreation 1,010,731 6,675 100,000 - 106,675
Interest on long-term debt 30,692 - - - -
Total governmental activities 9,781,526 1,178,428 2,527,480 574,589 4,280,497 Business-type activities:

Water services 2,505,812 2,353,715 - - 2,353,715
Wastewater services 3,765,130 3,005,604 - - 3,005,604
Total business-type activities 6,270,942 5,359,319 - - 5,359,319 Total primary government $ 16,052,468 $ 6,537,747 $ 2,527,480 $ 574,589 $ 9,639,816 General Revenues and Transfers:

Taxes:

Property taxes
Sales taxes
Transient occupancy taxes
Utility user taxes
Franchise taxes
Other taxes
Total taxes
Investment earnings
Miscellaneous
Transfers
Total general revenues and transfers
Change in net position
Net position - beginning of year
Net position - end of year
Program Revenues
See accompanying Notes to Basic Financial Statements.
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Governmental Business-Type
Activities Activities Total
$ (246,847) $ - $ (246,847)
(4,783,114) - (4,783,114)
463,680 - 463,680
(904,056) - (904,056)
(30,692) - (30,692)
(5,501,029) - (5,501,029)
- (152,097) (152,097)
- (759,526) (759,526)
- (911,623) (911,623)
(5,501,029) (911,623) (6,412,652)
3,469,046 - 3,469,046
4,608,918 - 4,608,918
544,128 - 544,128
850,624 - 850,624
468,871 - 468,871
117,110 - 117,110
10,058,697 - 10,058,697
(36,045) 114,512 78,467
796,267 - 796,267
31,024 (31,024) -
10,849,943 83,488 10,933,431
5,348,914 (828,135) 4,520,779
$ 7,811,272 $ 7,042,097 $ 14,853,369
$ 13,160,186 $ 6,213,962 $ 19,374,148
and Changes in Net Position
Net (Expense) Revenue
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FUND

FINANCIAL STATEMENTS
Governmental Fund Financial Statements
Proprietary Fund Financial Statements
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GOVERNMENTAL FUND FINANCIAL STATEMENTS
General Fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.

General Capital Projects Fund accounts for financial resources to be used for the acquisition or construction of major capital facilities.
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City of Sebastopol
Balance Sheet
Governmental Funds
June 30, 2023
Non-Major Total
General Capital Governmental Governmental
General Fund Project Fund Funds Funds
ASSETS
Cash and investments $ 10,803,380 $ 686,526 $ 2,076,635 $ 13,566,541 Restricted cash and investments 195,758 - - 195,758
Accounts receivable 150,976 - 189,826 340,802
Taxes receivable 1,037,270 - 92,198 1,129,468
Accrued interest receivable 40,830 - 9,206 50,036
Notes receivable - - 188,573 188,573
Leases receivable 302,354 - - 302,354
Due from other funds 478,846 - 25,000 503,846
Prepaid items 187,748 - - 187,748
Total assets $ 13,197,162 $ 686,526 $ 2,581,438 $ 16,465,126

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable $ 421,765 $ 653,411 $ 47 $ 1,075,223
Due to other funds - 38,802 177,678 216,480
Unearned revenues 19,800 - 8,283 28,083
Deposits 483,754 - - 483,754
Total liabilities 925,504 692,213 186,008 1,803,725
Deferred inflows of resources:

Unavailable revenues 2,891 - 377,085 379,976
Deferred inflow of resources - leases 297,629 - - 297,629 Total deferred inflow of resources 300,520 - 377,085 677,605 Fund Balances:

Nonspendable 187,748 - - 187,748
Restricted:

Flood recovery 1,039,142 - - 1,039,142
Highways and streets - - 1,100,895 1,100,895
Affordable housing - - 239,048 239,048
Capital projects 195,758 - - 195,758
Other - - 316,947 316,947
Total restricted 1,234,900 - 1,656,890 2,891,790
Committed:

Street projects - - 539,118 539,118
Total committed - - 539,118 539,118
Assigned:

Buildings, facilities, and infrastructure 903,420 - - 903,420 Equipment, technology, and vehicle replacement 916,936 - - 916,936 Pension and OPEB 2,780,769 - - 2,780,769
Total assigned 4,601,125 - - 4,601,125
Unassigned 5,947,365 (5,687) (177,663) 5,764,015
Total fund balances 11,971,138 (5,687) 2,018,345 13,983,796 Total liabilities, deferred inflows of
resources, and fund balances $ 13,197,162 $ 686,526 $ 2,581,438 $ 16,465,126 Major Funds
See accompanying Notes to Basic Financial Statements.
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Total Fund Balances - Total Governmental Funds $ 13,983,796

Non-depreciable $ 4,838,832
Depreciable, net 7,193,251
Total capital assets 12,032,083

Unavailable revenue recorded in the fund financial statements resulting from activities in which revenues were earned but funds were not available are reclassified as revenues in the GovernmentWide Financial Statements. 379,976

Interest payable on long-term debt did not require current financial resources. Therefore, interest payable was not reported as a liability in the Governmental Funds Balance Sheet. (9,145)

Internal service funds were used by management to charge the costs of certain activities, such as employee benefits, 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. 1,051

In the Government-Wide Financial Statements, employer contributions made for pension and OPEB subsequent to the measurement date, certain differences between actuarial amounts and actual results for pension are deferred and are applied to the net pension and OPEB liabilities or amortized in future periods, however these items do not impact the Governmental Funds Balance Sheet:

Deferred outflows of resources - pension 5,327,146
Deferred outflows of resources - OPEB 173,417
Deferred inflows of resources - pension (725,505)
Deferred inflows of resources - OPEB (760,751)
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 (750,000)
Long term debt - due within one year (301,705)
Compensated absences - due in more than one year (284,502) Long term debt - due in more than one year (1,459,171)
Total OPEB liability - due within one year (90,823)
Total OPEB liability - due in more than one year (1,620,739) Net pension liability (12,734,942)
Total long-term liabilities (17,241,882)

Net Position of Governmental Activities $ 13,160,186
Capital assets used in governmental activities were not current financial resources. Therefore, they were not reported in the Governmental Funds Balance Sheet. The capital assets were adjusted as follows:

Amounts reported for governmental activities in the Statement of Net Position are different because:

City of Sebastopol
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position
June 30, 2023
See accompanying Notes to Basic Financial Statements.
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Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Total
General Capital Governmental Governmental
General Fund Project Fund Funds Funds
REVENUES:

Property taxes $ 3,342,877 $ - $ 126,170 $ 3,469,047
Sales and use taxes 5,568,941 - 197,844 5,766,785
Transient occupancy tax 544,128 - - 544,128
Franchise fees 468,871 - - 468,871
Licenses and permits 728,114 - 8,138 736,252
Fines and forfeitures 28,766 - - 28,766
Intergovernmental 2,119,229 - 630,274 2,749,503
Interest and rents 2,794 - 7,215 10,009
Charges for services 238,442 - 145,925 384,367
Miscellaneous 788,852 6,453 785 796,090
Total revenues 13,831,014 6,453 1,116,351 14,953,818
EXPENDITURES:

Current:

General government 2,853,885 - 218,333 3,072,218
Public safety 6,202,781 - - 6,202,781
Parks and recreation 928,296 - - 928,296
Public works 895,540 - 275,780 1,171,320
Capital outlay 214,698 1,454,794 - 1,669,492
Debt service:

Principal 226,848 - 112,716 339,564
Interest 27,292 - 3,401 30,693
Total expenditures 11,349,340 1,454,794 610,230 13,414,364 REVENUES OVER (UNDER) EXPENDITURES 2,481,674 (1,448,341) 506,121 1,539,454 OTHER FINANCING SOURCES (USES):

Transfers in 202,500 1,450,430 105,921 1,758,851
Transfers out (1,055,397) - (672,430) (1,727,827)
Total other financing sources (uses) (852,897) 1,450,430 (566,509) 31,024 Net change in fund balances 1,628,777 2,089 (60,388) 1,570,478 FUND BALANCES:

Beginning of year $ 10,342,361 $ (7,776) $ 2,078,733 $ 12,413,318 End of year $ 11,971,138 $ (5,687) $ 2,018,345 $ 13,983,796 City of Sebastopol
Governmental Funds
For the year ended June 30, 2023
Major Funds
See accompanying Notes to Basic Financial Statements.
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Net Change in Fund Balances - Total Governmental Funds $ 1,570,478 Governmental funds reported capital outlay as expenditures. However, in the GovernmentWide Statement of Activities, the cost of those assets was allocated over their estimated useful lives as depreciation expense. This was the amount of capital assets recorded in the current period. 2,073,556
Depreciation expense on capital assets was reported in the Government-Wide Statement of Activities, but they did not require the use of current financial resources. Therefore, depreciation expense was not reported as expenditures in the governmental funds. (992,590) Employer contributions for pension paid after the measurement date were recorded as expenditures in the governmental funds. However, in the Government-Wide Financial Statements these contributions are deferred. 1,468,123
Employer contributions for OPEB paid after the measurement date were recorded as expenditures in the governmental funds. However, in the Government-Wide Financial Statements these contributions are deferred. 90,823
OPEB expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds. 377,287 Long-term debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. Repayment of principal is an expenditure in the governmental funds, but the repayment reduced long-term liabilities in the statement of net position.
- Principal repayments on long-term liabilities 339,564 Accruals of compensated absences are not recognized as expenditures in the governmental funds, as they do not require the use of current financial resources. Instead, governmental funds report the usage of accumulated compensated absences as expenditures. This amount represents the change in compensated absence leave balances during the year. (13,890) Revenues that are not considered to be available are reported as unavailable revenues in the governmental funds, however, these amounts are recognized in the Government-Wide Statement of Activities. This amount represents the change in unavailable revenues. 165,759 Pension (expense) income is recorded as incurred in the Government-Wide Statement of Activities, however pension expense does not required the use of current financial resources, and is not recognized in the governmental funds. 269,804

Change in Net Position of Governmental Activities $ 5,348,914 Amounts reported for governmental activities in the Statement of Activities are different because:

City of Sebastopol
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities For the year ended June 30, 2023
See accompanying Notes to Basic Financial Statements.
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PROPRIETARY FUND FINANCIAL STATEMENTS
Water Service Fund accounts for the activities associated with providing water services.

Wastewater Fund accounts for the wastewater treatment plant and wastewater pumping stations and collection systems.
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City of Sebastopol
Statement of Net Position
Proprietary Funds
June 30, 2023
Insurance
and Benefits
Internal
Water Wastewater Total Service Fund
ASSETS
Current assets:

Cash and investments $ 1,225,855 $ 392,668 $ 1,618,523 $ - Restricted cash and investments 679,132 460,581 1,139,713 - Accounts receivable 468,578 574,454 1,043,032 465
Interest receivable 5,695 2,569 8,264 -
Prepaids 168,592 119,888 288,480 549,491
Total current assets 2,547,852 1,550,160 4,098,012 549,956 Noncurrent assets:

Capital assets:

Non-depreciable 1,984,928 1,422,928 3,407,856 -
Depreciable, net 3,754,705 2,044,249 5,798,954 -
Total capital assets 5,739,633 3,467,177 9,206,810 -
Total noncurrent assets 5,739,633 3,467,177 9,206,810 - Total assets 8,287,485 5,017,337 13,304,822 549,956

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows of resources - pension 592,099 562,494 1,154,593 - Total deferred outflows of resources 592,099 562,494 1,154,593 -

LIABILITIES
Current liabilities:

Accounts payable 155,965 146,775 302,740 261,539
Accrued interest payable 2,879 2,565 5,444 -
Deposits payable 8,490 - 8,490 -
Due to other funds - - - 287,366
Unearned revenues 165 50,000 50,165 -
Compensated absences, due within one year 2,000 2,000 4,000 - Long term debt, due within one year 263,392 149,413 412,805 - Total current liabilities 432,891 350,753 783,644 548,905 Noncurrent liabilities:

Compensated absences, due in more than one year 19,779 30,669 50,448 - Long term debt, due in more than one year 2,923,732 1,479,356 4,403,088 - Net pension liability 1,431,370 1,359,801 2,791,171 -
Total noncurrent liabilities 4,374,881 2,869,826 7,244,707 - Total liabilities 4,807,772 3,220,579 8,028,351 548,905

DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources - pension 111,334 105,768 217,102 - Total deferred inflows of resources 111,334 105,768 217,102 -

NET POSITION
Net investment in capital assets 3,129,547 2,237,208 5,366,755 - Unrestricted 830,931 16,276 847,207 1,051
Total net position $ 3,960,478 $ 2,253,484 $ 6,213,962 $ 1,051 Enterprise Funds
See accompanying Notes to Basic Financial Statements.
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City of Sebastopol
Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds
For the year ended June 30, 2023
Insurance and
Benefits Internal
Water Wastewater Total Service Fund
OPERATING REVENUES:

Charges for services $ 2,250,166 $ 2,957,569 $ 5,207,735 $ 1,076,016 Other revenues 103,549 48,035 151,584 -
Total operating revenues 2,353,715 3,005,604 5,359,319 1,076,016 OPERATING EXPENSES:

Personnel services 279,697 242,407 522,104 -
Interfund charges for services 1,199,387 990,306 2,189,693 - Contractual and other services 269,385 113,513 382,898 - Intergovernmental treatment costs - 1,737,404 1,737,404 - Utilities 202,114 60,678 262,792 -
Supplies 179,051 70,780 249,831 -
Insurance, claims, and expenses 82,414 61,761 144,175 1,076,016 Depreciation 251,189 459,644 710,833 -
Total operating expenses 2,463,237 3,736,493 6,199,730 1,076,016 OPERATING INCOME (109,522) (730,889) (840,411) -
NONOPERATING REVENUES (EXPENSES):

Interest expense (42,575) (28,637) (71,212) -
Interest and investment revenue 67,805 46,707 114,512 - Total nonoperating revenues (expenses) 25,230 18,070 43,300 - INCOME (LOSS) BEFORE TRANSFERS (84,292) (712,819) (797,111) - Transfers out (31,024) - (31,024) -
Total transfers (31,024) - (31,024) -
Change in net position (115,316) (712,819) (828,135) -

NET POSITION
Beginning of year $ 4,075,794 $ 2,966,303 $ 7,042,097 $ 1,051 End of year $ 3,960,478 $ 2,253,484 $ 6,213,962 $ 1,051 Enterprise Funds
See accompanying Notes to Basic Financial Statements.
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City of Sebastopol
Statement of Cash Flows
Proprietary Funds
For the year ended June 30, 2023
Insurance and
Benefit Internal
Water Wastewater Total Service Fund
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers $ 2,210,720 $ 3,023,647 $ 5,234,367 $ - Cash payments from other funds - - - 1,075,551
Cash received from others 103,549 48,035 151,584 -
Cash payments to suppliers for goods and services (843,048) (2,101,606) (2,944,654) (1,332,132) Cash payments to other funds for services (1,199,387) (990,306) (2,189,693) - Cash paid to employees (429,897) (384,936) (814,833) -
Net cash (used in) operating activities (158,063) (405,166) (563,229) (256,581) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Temporary loans from other funds - - - 256,581
Transfers out (31,024) - (31,024) -
Net cash provided by (used in) noncapital financing activities (31,024) - (31,024) 256,581 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Acquisition of capital assets (1,321,590) (735,930) (2,057,520) - Long-term debt repayment (277,668) (162,128) (439,796) - Interest paid and fiscal charges (42,579) (28,637) (71,216) - Net cash (used in) capital and related financing activities (1,641,837) (926,695) (2,568,532) - CASH FLOWS FROM INVESTING ACTIVITIES:

Investment income received 67,476 47,418 114,894 -
Net cash provided by investing activities 67,476 47,418 114,894 - NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,763,448) (1,284,443) (3,047,891) - CASH AND CASH EQUIVALENTS - Beginning of year 3,668,435 2,137,692 5,806,127 - CASH AND CASH EQUIVALENTS - End of year $ 1,904,987 $ 853,249 $ 2,758,236 $ - FINANCIAL STATEMENT PRESENTATION:

Cash and investments $ 1,225,855 $ 392,668 1,618,523 $ - Restricted cash and investments 679,132 460,581 1,139,713 - Total $ 1,904,987 $ 853,249 $ 2,758,236 $ -

RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:

Operating income $ (109,522) $ (730,889) $ (840,411) $ - Adjustments to reconcile operating income
to net cash provided by operating activities:

Depreciation 251,189 459,644 710,833 -
Changes in assets and liabilities:

Accounts receivable 8,129 66,078 74,207 (465)
Prepaids 750 - 750 (189,306)
Deferred outflows - pension (334,836) (318,095) (652,931) - Accounts payable (110,834) (57,470) (168,304) (66,810)
Unearned revenues 165 - 165 -
Deposits payable (47,740) - (47,740) -
Compensated absences 293 439 732 -
Net pension liability 726,072 689,768 1,415,840 -
Deferred inflows - pension (541,729) (514,641) (1,056,370) - Total adjustments (48,541) 325,723 277,182 (256,581)
Net cash provided by operating activities $ (158,063) $ (405,166) $ (563,229) $ (256,581) Enterprise Funds
See accompanying Notes to Basic Financial Statements.
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NOTES TO BASIC

FINANCIAL STATEMENTS
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of Sebastopol, California, (City) have been prepared in conformity with Generally Accepted Accounting Principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below.

A. Financial Reporting Entity
The City of Sebastopol is a municipal corporation governed by an elected five member City Council.

The accompanying financial statements present the government and its component units, entities for which the government is considered to be financially accountable. The City of Sebastopol has no component units.

B. Basis of Accounting and Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity with its own self-balancing set of accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity, revenues and expenditures or expenses. These funds are established for the purpose of carrying out specific activities or certain objectives in accordance with specific regulations, restrictions or limitations. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

Government-Wide Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the City. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely, to a significant extent on fees and charges for support.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. 43 Agenda Item Number 5
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued C. Measurement Focus, Basis of Accounting and Financial Statement Presentation The Government-Wide Financial Statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the Proprietary Fund Financial Statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

Governmental Fund Financial Statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period.

For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

Property taxes, sales taxes, other taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. The City reports the following major governmental funds:

The City reports the following major governmental funds:

The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government.

The General Capital Projects Fund accounts for financial resources to be used for the acquisition or construction of major capital facilities.

The City reports the following proprietary funds as major:

The Water Fund accounts for the operations of the City’s water treatment and distribution system.

The Wastewater Fund accounts for the operations of the City’s wastewater treatment and distribution system.

As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other charges between the City's water and wastewater function and other functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Amounts reported as program revenues include (1) charges to customers for services, (2) operating grants and contributions, and (3) capital grants and contributions, including special assessments.

Internally dedicated resources are reported as general revenues rather than as program revenues.

Likewise, general revenues include all taxes.
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued C. Measurement Focus, Basis of Accounting and Financial Statement Presentation, Continued Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the proprietary and internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

D. Cash, Cash Equivalents, and Investments
The City is authorized to invest in the State of California Local Agency Investment Fund, the Sonoma County Treasurer's Pool, U.S. Treasury bonds, bills, and notes, obligations issued by US Government agencies, bankers acceptances, repurchase agreements, certain money market and mutual funds, time deposits and savings and demand accounts. The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition.

Fair Value Measurements - The City categorizes its fair value measurements within the hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted market prices in active markets for identical assets; Level 2 inputs are significant other observable inputs, and level 3 inputs are significant unobservable inputs. The City has no significant separately held investments and its funds are invested primarily in the Sonoma County Treasurer's Investment Pool.

For the purpose of the statement of cash flows, the City considers all pooled cash and investments (consisting of cash and investments and restricted cash and investments) held by the City as cash and cash equivalents because the pool is used essentially as a demand deposit account from the standpoint of the funds. The City also considers all non-pooled cash and investments (consisting of cash with fiscal agent and restricted cash and investments held by fiscal agent) as cash and cash equivalents because investments meet the criteria for cash equivalents defined above.

E. Receivables and Payables
All trade and property tax receivables are not shown net of an allowance for uncollectable.

Property taxes are levied as of March 1 on property values assessed as of the same date. State statutes provide that the property tax rate be limited generally to one percent of fair value, be levied by only the County, and be shared by applicable jurisdictions. The County of Sonoma collects the taxes and distributes them to taxing jurisdictions on the basis of assessed valuations subject to voter -approved debt. Property taxes are due on November 1 and March 1, and become delinquent on December 10 and April 10. The City receives property taxes pursuant to an arrangement with the County known as the "Teeter Plan". Under the plan, the County assumes responsibility for the collection of delinquent taxes and pays the full allocation to the City. The City recognizes property tax revenues in the fiscal year in which they are due to the City.
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued F. Interfund Balances/Internal Balances
Advances to and advances from other funds represent interfund loans in the fund financial statements.

Advances between funds are offset by a non-spendable fund balance classification in the applicable governmental funds to indicate that they are not available financial resources.

All other outstanding balances between funds are reported as due to and due from other funds. These are generally repaid within the following fiscal year.

Any residual balances outstanding between the governmental activities and business-type activities are reported in the Government-Wide Financial Statements as “internal balances.” G. Inventories and Prepaid Items
All inventories are valued at cost using the first-in/first-out (FIFO) method. Inventories of governmental funds are recorded as expenditures when used or consumed. 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 City uses the consumption method of accounting for prepaid items.

H. Leases - Lessor
The City is a lessor for a noncancellable lease of land. The City recognizes a lease receivable and a deferred inflow of resources in the government-wide and governmental 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.  The City uses its estimated incremental borrowing 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 would require a remeasurement of its lease, and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable. 46 Agenda Item Number 5
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued I. Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental-type or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $ 1,000 ($50,000 for infrastructure type assets) and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed.

Donated capital assets are recorded at acquisition value at the date of donation. Under the GASB 34 Implementation Rules, the City is a Phase 3 entity and was not required to record infrastructure assets existing or acquired prior to July 1, 2003 at the date these new financial reporting standards were implemented; and the City has not recorded such assets. The costs of normal maintenance and repairs that do not add to the value of asset or materially extend assets lives are not capitalized.

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 included as part of the capitalized value of the assets constructed.

Depreciation has been provided on a straight-line basis over the following useful lives:

Years
Public domain infrastructure 50
Buildings and structures 40
System infrastructure 15-40
Vehicles and equipment 5-15
J. Deferred Outflows/Inflows of Resources
In addition to assets, the Statement of Net Position will 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 future periods and so will not be recognized as an outflow of resources until then.

In addition to liabilities, the Statement of Net Position will 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 future periods and so will not be recognized as an inflow of resources (revenue) until that time.
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued K. Compensated Absences
It is the government policy to permit employees to accumulate earned but unused vacation and sick pay benefits. There is a liability for a portion of unpaid accumulated sick leave since the City does have a policy to pay certain amounts when employees separate from service with the City. All vacation pay and applicable sick leave is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in the governmental funds only if they have matured, for example, as a result of employee resignations and retirements. The General Fund has typically been used to liquidate the liability for compensated absences.

L. Unearned Revenue
In the Government-Wide Financial Statements, unearned revenue is recorded for transactions for which revenues have not been earned. In the Fund Financial Statements, unearned revenue is recorded when transactions have not yet met the revenue recognition criteria based on the modified accrual basis of accounting.

M. Long-Term Liabilities
In the Government-Wide Financial Statements and Proprietary Fund Financial Statements, long-term debt and other financed obligations are reported as liabilities in the appropriate activities. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable premium or discount.

In the Fund Financial Statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of the debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs are reported as expenditures.

N. Net Position and Fund Equity
Government-Wide Financial Statements
In the Government-Wide Financial Statements, net position is classified in the following categories:

Net Investment in Capital Assets – This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that is attributed to the acquisition, construction, or improvement of the assets.

Restricted Net Position – This amount is restricted by external creditors, grantors, contributors, or laws or regulations of other governments.

Unrestricted Net Position – This amount is all net position that does not meet the definition of “net investment in capital assets” or “restricted net position.” 48 Agenda Item Number 5
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued N. Net Position and Fund Equity, Continued
Fund Financial Statements
In the Fund Financial Statements, the following classifications describe the relative strength of the spending constraints placed on the purposes for which resources can be used:

Nonspendable fund balance – This includes amounts that cannot be spent because they are either not spendable in form or legally or contractually required to remain intact.

Restricted fund balance – This includes amounts with constraints placed on their use by those external to the City, including creditors, grantors, contributors or laws and regulations of other governments.

It also includes constraints imposed by law through constitutional provisions or enabling legislation.

Committed fund balance – This includes amounts that can only be used for specific purposes determined by formal action of the City Council and that remain binding unless removed in the same manner. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period.

Assigned fund balance – This includes amounts that are constrained by the City’s intent to be used for specific purposes. The intent can be established at either the highest level of decision making or by a body or an official designated for that purpose.

Unassigned fund balance – This is the residual classification that includes amounts not contained in the other classifications. The General Fund is the only fund that reports a positive unassigned fund balance. In other governmental funds other than the General Fund, if expenditures are incurred for specific purposes exceed the amounts that are restricted, committed, or assigned for those purposes, it may be necessary to report a negative unassigned fund balance in that fund.

The City Council establishes, modifies or rescinds fund balance commitments and assignments by action, which includes passage of a resolution adopting the budget and appropriating revenue for the fiscal year.

O. Net Position and Fund Equity Flow Assumptions
Government-Wide Financial Statements
When an expense is incurred for purposes for which both restricted and unrestricted net position is available, the City’s policy is to apply restricted net position first.

Fund Financial Statements
When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, the City’s policy is to apply restricted funds first. Committed, assigned, and unassigned fund balances are considered unrestricted. When an expenditure is incurred, if committed, assigned, or unassigned fund balances are available, the City considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed. 49 Agenda Item Number 5
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued P. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates and assumptions.

Q. Pension
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s California Public Employees’ Retirement System (CalPERS) plan (Plan) 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 terms. Investments are reported at fair value.

R. Other Post Employment Health Care Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s plan (OPEB Plan) and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms.

Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date June 30, 2021
Measurement Date June 30, 2022
Measurement Period July 1, 2021 to June 30, 2022
S. New Accounting Pronouncements
In 2023, the City adopted the new accounting standards to conform to the following Governmental Accounting Standards Board Statements:

GASB Statement No. 91, Conduit Debt Obligations – The primary objectives of this Statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. The requirements of this statement did not apply to the City for the current fiscal year.
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued S. New Accounting Pronouncements, Continued
GASB Statement 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements – The primary objective of this Statement is to improve financial reporting by addressing issues related to public-private and public-public partnership arrangements (PPPs). As used in this Statement, a PPP in an arrangement in which a government (the transferor) contracts with an operator (a governmental or nongovernmental entity) to provide public services by conveying control of the right to operate or use a nonfinancial asset, such as infrastructure or other capital asset (the underlying PPP asset), for a period of time in an exchange or exchange-like transaction. The requirements of this statement did not apply to the City for the current fiscal year.

GASB Statement No. 96, Subscription-based Information Technology Arrangements – This Statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset – an intangible asset – and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. The requirements of this Statement did not apply to the City for the current fiscal year.

2. CASH AND INVESTMENTS
Cash and investments are reported in the accompanying financial statements as follows:

Governmental Business-Type
Activities Activities Total
Cash and investments $ 13,566,537 $ 1,618,523 $ 15,185,060 Restricted cash and investments 195,758 1,139,713 1,335,471 Total cash and investments $ 13,762,295 $ 2,758,236 $ 16,520,531 Government-Wide Statement of Net Position
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

2. CASH AND INVESTMENTS, Continued
A. Summary of Cash and Investments
Cash and investments as of June 30, 2023 consist of the following:

B. Cash Deposits
At June 30, 2023, the carrying amount of the City’s cash and cash equivalents were comprised of the general checking account, which had a book balance of $3,172,113 and petty cash of $1,075. The bank balance in the City’s general checking was $3,372,951, fully insured and collateralized with securities held by the pledging financial institutions in the City’s name as discussed below. The difference between the bank balance and the carrying amount represents outstanding checks and deposits in transit.

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. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits. The City’s cash deposit was fully insured up to $250,000 by the Federal Deposit Insurance Corporation. The remaining amount was collateralized with securities held by the pledging financial institutions in the City’s name.

Deposits:

Cash on hand $ 1,075
Deposits with financial institution 3,172,113
Total cash on hand and deposits 3,173,188
Investments
County of Sonoma investment pool 96,101
Local Agency Investment Pool (LAIF) 5,016,336
Certificates of deposit 3,782,973
Money market 38,157
U.S. Treasury securities 1,872,197
U.S. government bonds 1,206,108
Total investments 12,011,872
Total City Treasury 15,185,060
Restricted cash and investments:

Cash with fiscal agent 1,335,471
Total restricted cash and investments 1,335,471
Total cash and investments $ 16,520,531
52 Agenda Item Number 5
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City Council Meeting Packet of March 5, 2024

City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

2. CASH AND INVESTMENTS, Continued
C. Investments
The City is authorized by State statutes to invest in the following:
* U.S. Treasury and U.S. Agency Issues
* Certificates of Deposit
* California Local Agency Investment Fund (LAIF)
* Government Bonds and Notes
* Passbook Savings
* Bankers Acceptances
* Commercial Paper (Corporations)
* Medium-Term Corporate Notes
* Repurchase Agreements
* Mutual Funds
D. Risk Disclosures
Interest Rate Risk: Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, an investment with a longer maturity date has a greater sensitivity of its fair value to be subject to changes in market interest rates. In accordance with the City’s investment policy, exposure to interest rate risk is mitigated by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

Cash and investments, including cash with fiscal agents, held in the City by maturity date at June 30, 2023 are shown below:

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.

Investment Type Fair Value
Less than 1
year
More than 1
year less than 5
years
Investments:

County of Sonoma investment pool $ 96,101 $ 96,101 $ -
Local Agency Investment Pool (LAIF) 5,016,336 5,016,336 - Certificates of deposit 3,782,973 - 3,782,973
Money market 38,157 38,157 -
U.S. Treasury securities 1,872,197 488,615 1,383,582
U.S. government bonds 1,206,108 - 1,206,108
Total $ 12,011,872 $ 5,639,209 $ 6,372,663
Investment Maturities (in years)
53 Agenda Item Number 5
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City Council Meeting Packet of March 5, 2024

City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

2. CASH AND INVESTMENTS, Continued
D. Risk Disclosures, Continued
Presented below is the June 30, 2023 rating which meets the minimum rating required by (where applicable) the California Government Code, the City’s Investment Policy, or debt agreements:

Concentration of Credit Risk: The investment policy of the City of Sebastopol contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. At June 30, 2023 the City did not have investments (other than in external investment pools) that represented 5% or more of the City’s total investments.

Custodial Credit Risk: Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of failure of the counter party (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City’s Investment Policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the City). The fair value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits
E. Fair Value of Investments
GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, requires that the City’s investments be carried at fair value instead of cost. If material, the City adjusts the carrying value of its investments to reflect their fair value at each fiscal year-end and the effects of these adjustments are included in income for that fiscal year.

Investment Type Fair Value Aaa
Investments:

U.S. Treasury securities $ 1,872,197 $ 1,872,197
U.S. government bonds 1,206,108 1,206,108
Total Investment subject to ratings 3,078,305 $ 3,078,305 Assets not subject to credit ratings:

County of Sonoma investment pool 96,101
Local Agency Investment Pool (LAIF) 5,016,336
Certificates of deposit 3,782,973
Money market 38,157
Total investments $ 12,011,872
54 Agenda Item Number 5
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City Council Meeting Packet of March 5, 2024

City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

2. CASH AND INVESTMENTS, Continued
E. Fair Value of Investments, Continued
Investments (except for money market accounts, time deposits, and commercial paper) are measured at fair value on a recurring basis. Recurring fair value measurements, are those that Governmental Accounting Standards Board (GASB) Statements require or permit in the statement of net position at the end of each reporting period. Fair value measurements are categorized based on the valuation inputs used to measure an asset’s fair value. Inputs are assumptions that market participants use when pricing an asset or liability. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs, such as bond valued by a pricing service that uses matrix pricing, three-year option on exchange-traded shares, or valuation multiple; Level 3 inputs are significant unobservable inputs. The City’s investment in Sonoma County’s investment pool and money market were not subject to the levelling disclosure.

Investment fair value measurements at June 30, 2023 are described below:

F. Cash and Investments with Fiscal Agents
Funds deposited with fiscal agents can be held in cash or invested in various securities. The fiscal agents can invest in securities as outlined in trust agreements, provided the investments are within the limits imposed by state statutes. These investments include federal securities, investment agreements, interest-bearing demand or time deposits, commercial paper rated “AA-” or better by Moody’s, and money market mutual funds which are rated in the highest category by Moody’s. At June 30, 2023, cash and investments with fiscal agents totaled $1,335,471.

G. County of Sonoma Investment Pool
The City is a voluntary participant in the County of Sonoma Investment Pool (County Pool) regulated by the County’s Investment Policy under the oversight of the Treasury of the County. The County does provide the City with a fair value factor, and the City’s fair value of its position in the pool is the same as the value of the pool shares.

Investment Type Fair Value Level 1 Level 2 Level 3
Certificates of deposit $ 3,782,973 $ - $ 3,782,973 $ - U.S. Treasury securities 1,872,197 - 1,872,197 -
U.S. government bonds 1,206,108 - 1,206,108 -
Total investments subject to levelling 6,861,278 $ - $ 6,861,278 $ -

Assets not subject to fair value levelling:

Money market 38,157
County of Sonoma investment pool 96,101
Local Agency Investment Pool (LAIF) 5,016,336
Total investments $ 12,011,872
Fair Value Measurement Using
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City Council Meeting Packet of March 5, 2024

City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

2. CASH AND INVESTMENTS, Continued
H. Investment in State Investment Pool
The City is a voluntary 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 balance is available for withdrawal on demand. The City’s investment with LAIF at June 30, 2023 includes a portion of the pool funds invested in Structured Notes and Asset-Backed Securities. These investments include the following:

Structured Notes are debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or have embedded forwards or options.

Asset-Backed Securities, the bulk of which are mortgage-backed securities, entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (such as collateralized mortgage obligations) or credit card receivables.

As of June 30, 2023, the City had $5,016,336 invested in LAIF, which had invested 2.78% of the pool investment funds in Structured Notes and Asset-Backed Securities as compared to 1.88% in the previous year.

3. LOANS AND NOTES RECEIVABLE
At June 30, 2023, the City had the following loans and notes receivable:

The $188,573 solar equipment installation loans are repayable in equal bi-monthly installments over a period of about 32 years by the homeowners, and repayments are made through the City's enterprise utility billing and collection system.

4. LEASE RECEIVABLE
The City reports lease receivables and deferred inflows of resources for the leasing of attachment space for cellular communications. In fiscal year ended June 30, 2023, the City recognized $37,102 in revenues for applicable leases.

City Cell Tower – The City entered into an agreement with a telecommunications company in 2001 to lease space on a tower. The lease term is 30 years, made up of an initial 15-year term plus three 5-year options.

The City considers each optional term to likely be exercised by the lessee. The monthly payments are $3,413.

The City used an annual incremental borrowing rate of 1.77%. The lease receivable as of June 30, 2023 was $302,354, and related deferred inflow of resources as of June 30, 2023 was $297,629.

Party to Loan Purpose of Loan Amount
Governmental Activities:

Individual property owners Solar power equipment installation loans 188,573$ 56 Agenda Item Number 5
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City Council Meeting Packet of March 5, 2024

City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

4. LEASES RECEIVABLE, Continued
Future minimum rental payments are as follows:

5. INTERFUND TRANSACTIONS
A. Due To and Due From
At June 30, 2023, the City had the following short-term interfund receivables and payables:

Amounts shown as due to and from other funds represent interfund balances that arise in the normal course of operation and are expected to be repaid shortly after the end of the fiscal year.

Year Ending
June 30, Principal Interest Total
2024 $ 35,897 $ 5,062 $ 40,959
2025 36,538 4,421 40,959
2026 37,190 3,769 40,959
2027 37,853 3,106 40,959
2028 38,529 2,430 40,959
2029-2031 116,347 3,115 119,462
Total $ 302,354 $ 21,903 $324,257
Current $ 35,897 $ 5,062 $ 40,959
Noncurrent 266,457 16,841 283,298
Total $ 302,354 $ 21,903 $ 324,257
Due From
Due to General Fund Other Funds
General capital projects $ 38,802
Non-major funds 177,678
Internal service funds 287,366
Total $ 503,846
57 Agenda Item Number 5
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City Council Meeting Packet of March 5, 2024

City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

5. INTERFUND TRANSACTIONS, Continued
B. Interfund Transfers
The composition of interfund transfers for the year ended June 30, 2023 is as follows:

Transfers represent funding of various City operations, funding for capital projects, lease payments or debt service.

General
General Capital
Projects Fund
Non-Major Govt
Funds Total
Transfer Out
General Fund $ - $ 1,037,286 $ 18,111 $ 1,055,397
Non-Major Govt'l Funds 202,500 413,144 56,786 672,430
Total Governmental 202,500 1,450,430 74,897 1,727,827
Water - - 31,024 31,024
Total Enterprise - - 31,024 31,024
Total Transfers out $ 202,500 $ 1,450,430 $ 105,921 $ 1,758,851 Transfer In
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City Council Meeting Packet of March 5, 2024

City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

6. CAPITAL ASSETS
A. Government-Wide Financial Statements
At June 30, 2023, the City’s capital assets consisted of the following:

Governmental Business-Type
Activities Activities Total
Non-depreciable assets:

Land and improvements $ 2,151,948 $ 86,440 $ 2,238,388
Construction in progress 2,686,884 3,321,416 6,008,300
Total non-depreciable assets 4,838,832 3,407,856 8,246,688 Depreciable assets:

Buildings and structures 7,954,166 - 7,954,166
Machinery and equipment 2,831,311 240,178 3,071,489
Reservoirs - 4,290,965 4,290,965
Pipelines and water distribution system - 4,241,289 4,241,289 Pipelines and wastewater colletion system - 8,374,315 8,374,315 Vehicles 2,750,436 1,025,747 3,776,183
Infrastructure 9,161,554 - 9,161,554
Total depreciable assets 22,697,467 18,172,494 40,869,961 Total accumulated Depreciation (15,504,216) (12,373,540) (27,877,756) Total depreciable assets, net 7,193,251 5,798,954 12,992,205 Total $ 12,032,083 $ 9,206,810 $ 21,238,893
59 Agenda Item Number 5
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City Council Meeting Packet of March 5, 2024

City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

6. CAPITAL ASSETS, Continued
B. Governmental Activities
The following is a summary of changes in governmental activity capital assets for the year ended June 30, 2023:

Governmental activities depreciation expense for capital assets for the year ended June 30, 2023 was as follows:

Balance Adjustment/ Balance
July 1, 2022 Additions Deletions Reclassification June 30, 2023 Non-depreciable assets:

Land and improvements $ 2,151,948 $ - $ - $ - $ 2,151,948 Construction in progress 1,132,790 1,858,858 - (304,764) 2,686,884 Total non-depreciable assets 3,284,738 1,858,858 - (304,764) 4,838,832 Depreciable assets:

Buildings and structures 7,851,895 102,271 - - 7,954,166 Machinery and equipment 2,751,741 79,570 - - 2,831,311
Vehicles 2,717,579 32,857 - - 2,750,436
Infrastructure 8,856,790 - - 304,764 9,161,554
Total depreciable assets 22,178,005 214,698 - 304,764 22,697,467 Less accumulated depreciation:

Buildings and structures (5,913,735) (212,812) - - (6,126,547) Machinery and equipment (2,451,757) (111,050) - - (2,562,807) Vehicles (1,720,543) (212,941) - - (1,933,484)
Infrastructure (4,425,591) (455,787) - - (4,881,378)
Total accumulated depreciation (14,511,626) (992,590) - - (15,504,216) Total depreciable assets, net 7,666,379 (777,892) - 304,764 7,193,251 Total governmental activities, net $ 10,951,117 $ 1,080,966 $ - $ - $ 12,032,083 General government $ 133,459
Public safety 229,202
Public works 486,092
Parks and recreation 143,837
Total depreciation expense $ 992,590
60 Agenda Item Number 5
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City Council Meeting Packet of March 5, 2024

City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

6. CAPITAL ASSETS, Continued
C. Business-Type Activities
The following is a summary of changes in business-type activity capital assets for the year ended June 30, 2023:

Business-type activities depreciation expense for capital assets for the year ended June 30, 2023 was as follows:

Balance Adjustment/ Balance
July 1, 2022 Additions Retirements Reclassification June 30, 2023 Non-depreciable assets:

Land $ 86,440 $ - $ - $ - $ 86,440
Construction in progress 1,701,643 1,993,554 - (373,781) 3,321,416 Total non-depreciable assets 1,788,083 1,993,554 - (373,781) 3,407,856 Depreciable assets:

Reservoirs 3,917,184 - - 373,781 4,290,965
Pipelines and water distribution system 4,241,289 - - - 4,241,289 Pipelines and wastewater collection system 8,374,315 - - - 8,374,315 Machinery and equipment 240,178 - - - 240,178
Vehicles 961,781 63,966 - - 1,025,747
Total depreciable assets 17,734,747 63,966 - 373,781 18,172,494 Less accumulated depreciation:

Reservoirs (1,603,972) (139,293) - - (1,743,265)
Pipelines and water distribution system (3,308,588) (72,407) - - (3,380,995) Pipelines and wastewater collection system (6,179,779) (417,597) - - (6,597,376) Machinery and equipment (28,060) (17,255) - - (45,315)
Vehicles (542,308) (64,281) - - (606,589)
Total accumulated depreciation (11,662,707) (710,833) - - (12,373,540) Total depreciable assets, net 6,072,040 (646,867) - 373,781 5,798,954 Total capital assets $ 7,860,123 $ 1,346,687 $ - $ - $ 9,206,810 Water $ 251,189
Wastewater 459,644
Total depreciation expense $ 710,833
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City Council Meeting Packet of March 5, 2024

City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

7. LONG-TERM DEBT
A. Governmental Activities
The following is a summary of governmental activity long-term debt transactions during the year ended June 30, 2023:

Lease-leaseback Agreement - Refunding Lease 2021 – Truist Bank In the 2006 fiscal year, the city entered into a financing arrangement to obtain $2,880,000 in funds for future capital projects. The general fund is responsible for paying debt service on the governmental activities portion of the lease obligation, which is about 41 percent of the total obligation. The water and wastewater enterprises are responsible for paying the other 59 percent of the obligation. In fiscal year 2021, the City entered into a lease agreement with Truist Bank to refund the 2006 lease obligation. The agreement was for $1,139,952, bears interest at 1.10 percent on the basis of a 360-day year, is repayable in annual installments of $211,550, and matures in 2026. The City has pledged the Fire Station as collateral for the refunding lease agreement.

The annual debt service requirements for governmental activities (41%) are as follows:

Due in
Balance Balance Due Within More than
July 1, 2022 Additions Retirements June 30, 2023 One Year One Year Special assessment bonds $ 35,000 $ - $ (35,000) $ - $ - $ - Lease-leaseback agreements
Refunding lease 2021 - Truist 338,264 - (81,211) 257,053 84,746 172,307 Renewable energy 292,767 - (97,589) 195,178 97,589 97,589 Mobile home park 308,102 - (50,094) 258,008 52,580 205,428 Finance purchase agreements
Energy conservation measures 1,126,307 - (75,670) 1,050,637 66,790 983,847 Total $ 2,100,440 $ - $ (339,564) $ 1,760,876 $ 301,705 $ 1,459,171 Year Ending
June 30, Principal Interest Total
2024 $ 84,746 $ 2,595 $ 87,341
2025 85,681 1,660 87,341
2026 86,626 715 87,341
Total $ 257,053 $ 4,970 $262,023
62 Agenda Item Number 5
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City Council Meeting Packet of March 5, 2024

City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

7. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Lease-leaseback Agreements – Clean Renewable Energy
The City entered into a lease purchase arrangement with Municipal Finance Corporation pursuant to approval from the Internal Revenue Service for the issuance of Clean Renewable Energy Bonds in the principal amount of $2,074,000 for the purpose of obtaining zero interest financing for renewable energy projects of the City. The arrangement provides for the lease of the projects to Municipal Finance Corporation by the City and the sublease of the projects back to the City by Municipal Finance Corporation in exchange for the rental payments by the City. The City's lease payments to Municipal Finance Corporation are payable from any source of legally available funds.

The annual debt service requirements are as follows
Lease-leaseback Agreements – Mobile Home Park
The City entered into a similar lease financing arrangement with the Municipal Finance Corporation for the purpose of obtaining partial financing for the purchase of an existing mobile home park as part of an open space program of the City. The lease was for $817,500 and it also is payable from any source of legally available funds.

The annual debt service requirements are as follows
Year Ending
June 30, Principal Interest Total
2024 $ 97,589 $ - $ 97,589
2025 97,589 - 97,589
Total $ 195,178 $ - $ 195,178
Year Ending
June 30, Principal Interest Total
2024 $ 52,580 $ 12,004 $ 64,584
2025 55,186 9,698 64,884
2026 57,925 6,659 64,584
2027 60,797 3,787 64,584
2028 31,520 772 32,292
Total $ 258,008 $ 32,920 $290,928
63 Agenda Item Number 5
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City Council Meeting Packet of March 5, 2024

City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

7. LONG-TERM DEBT, Continued
A. Governmental Activities, Continued
Finance Purchase Agreement – Energy Conservation Measures In fiscal year 2022, the City entered into an equipment purchase agreement with Signature Public Funding Group to acquire various equipment and improvements, consisting of primarily energy efficiency and conservation project, which includes equipment, design, build and installation work and various implementation measurement and verification services related to guaranteed energy savings.

The total equipment cost and proceeds received from Signature Public Funding Corp totaled $4,938,891.

Annual debt service requirements of $374,650 is due July 1st each year, commencing on July 1st, ,2022 and final payment due on July 1st, 2036. Annual interest charged on the financing agreement is 1.770%.

The annual debt service requirements for governmental activities (22.8%) are as follows:

B. Business-type Activities
The following is a summary of business-type activity long-term debt transactions during the year ended June 30, 2023:

Year Ending
June 30, Principal Interest Total
2024 $ 66,790 $ 18,596 $ 85,386
2025 67,972 17,414 85,386
2026 69,175 16,211 85,386
2027 70,400 14,987 85,387
2028 71,646 13,741 85,387
2029-2033 377,704 49,225 426,929
2034-2037 326,950 14,594 341,544
Total $ 1,050,637 $ 144,768 $1,195,405
Due in
Balance Balance Due Within More than
July 1, 2022 Additions Retirements June 30, 2023 One Year One Year Refunding loan 2021 - Truist $ 955,734 $ - $ (64,655) $ 891,079 $ 66,021 825,058$ Lease-leaseback agreements
Refunding lease 2021 - Truist 487,375 - (121,815) 365,560 120,519 245,041 Finance purchase agreements
Energy conservation measures 3,812,582 - (253,328) 3,559,254 226,265 3,332,989 Total $ 5,255,691 $ - $ (439,798) $ 4,815,893 $ 412,805 $ 4,403,088 64 Agenda Item Number 5
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City Council Meeting Packet of March 5, 2024

City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

7. LONG-TERM DEBT, Continued
B. Business-type Activities, Continued
Refunding Loan 2021 – Truist Bank
The City in fiscal 2015 entered into an installment sale agreement with Municipal Finance Corporation for obtaining financing to assist in the removal of arsenic from water well seven and its treatment system. The agreement was for $1,200,000, bears interest at 4.10 percent on the basis of a 360 day year, is repayable in annual installments of $89,082, and matures in 20 years. The installment agreement was a special obligation of the City repayable solely from the net revenues of its water system; and the City pledged its water system net revenues for this purpose and for any other parity obligations.

In fiscal year 2021, the City entered into a loan agreement with Truist Bank to refund the installment sale agreement. The agreement was for $1,019,462, bears interest at 2.09 percent on the basis of a 360-day year, is repayable in annual installments of $83,955, and matures in 2035. The loan agreement is a special obligation of the City repayable solely from the net revenues of its water system, and the City pledged its water system net revenues for this purpose and for any other parity obligations. The difference in debt service requirements between the installment sale agreement and the loan agreement was $71,782 and resulted in an economic gain of $67,445.

The loan agreement includes the following financial debt covenants:

Covenant Regarding Gross Revenues: The City shall collect rates, fees, and charges for services furnished by the Water Fund during each fiscal year to pay all maintenance and operation costs, loan repayments, and all principal and interest on any parity obligations, which are payable from net revenues, and all payments required to meet any other obligations of the City.

Covenant Regarding Net Revenues: The City shall collect rates, fees, and charges for services furnished by the Water Fund during each fiscal year, which are sufficient to yield net revenues equal to 120% of the loan repayments and any parity obligations which are payable from the net revenues.

Gross revenues, net revenues, and total debt service for the Water Fund were $2,353,715, $141,667, and $320,246 respectively for fiscal year 2023. Net revenues were equal 44% of total debt service for the Water Fund for fiscal year 2023 that was below the required 120%. The City is in the process of undergoing a rate study to ensure compliance with the net revenues covenant in future years. 65 Agenda Item Number 5
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City Council Meeting Packet of March 5, 2024

City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

7. LONG-TERM DEBT, Continued
B. Business-type Activities, Continued
Refunding Loan 2021 – Truist Bank, Continued
The annual debt service requirements for the installment sale agreement are as follows:

Refunding Lease 2021 – Truist Bank
In the 2006 fiscal year, the city entered into a financing arrangement to obtain $2,880,000 in funds for future capital projects. The general fund was responsible for paying debt service on the governmental activities portion of the lease obligation, which is about 41 percent of the total obligation. The water and wastewater enterprises was responsible for paying the other 59 percent of the obligation.

In fiscal year 2021, the City entered into a lease agreement with Truist Bank to refund the 2006 lease obligation. The agreement was for $1,139,952, bears interest at 1.10 percent on the basis of a 360-day year, is repayable in annual installments of $211,550, and matures in 2026. The difference in debt service requirements between the 2006 lease obligation agreement and the refunding lease agreement was $75,092 and resulted in an economic gain of $71,126. The City has pledged the Fire Station as collateral for the refunding lease agreement. No deferred loss on refunding was reported as a result of the transaction, because the amount recognized was deemed to be trivial to the financial statements.

The annual debt service requirements for business-type activities (59%) are as follows:

Year Ending
June 30, Principal Interest Total
2024 $ 66,021 $ 17,934 $ 83,955
2025 67,415 16,539 83,954
2026 68,839 15,115 83,954
2027 70,293 13,662 83,955
2028 71,778 12,177 83,955
2027-2031 382,279 37,492 419,771
2032-2035 164,454 3,455 167,909
Total $ 891,079 $ 116,374 $ 1,007,453
Year Ending
June 30, Principal Interest Total
2024 $ 120,519 $ 3,689 $ 124,208
2025 121,848 2,360 124,208
2026 123,193 1,015 124,208
Total $ 365,560 $ 7,064 $372,624
66 Agenda Item Number 5
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City Council Meeting Packet of March 5, 2024

City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

7. LONG-TERM DEBT, Continued
B. Business-type Activities, Continued
Finance Purchase Agreement – Energy Conservation Measures In fiscal year 2022, the City entered into an equipment purchase agreement with Signature Public Funding Group to acquire various equipment and improvements, consisting of primarily energy efficiency and conservation projects, which includes equipment, design, build and installation work and various implementation measurement and verification services related to guaranteed energy savings.

The total equipment cost and proceeds received from Signature Public Funding Corp totaled $4,938,891.

Annual debt service requirements of $374,650 is due July 1st each year, commencing on July 1st, ,2022 and final payment due on July 1st, 2036. Annual interest charged on the financing agreement is 1.770%.

The annual debt service requirements for governmental activities (77.2%) are as follows:

8. COMPENSATED ABSENCES
It is the City’s policy to permit employees to accumulate earned but unused vacation and sick pay benefits.

There is a liability for a portion of unpaid accumulated sick leave since the City does have a policy to pay certain amounts when employees separate from service with the City.

A summary of changes in compensated absences for the year ended June 30, 2023 is as follows:

Year Ending
June 30, Principal Interest Total
2024 $ 226,265 $ 62,999 $ 289,264
2025 230,270 58,994 289,264
2026 234,346 54,918 289,264
2027 238,494 50,770 289,264
2028 242,716 46,548 289,264
2029-2033 1,279,550 166,764 1,446,314
2034-2037 1,107,613 49,443 1,157,056
Total $ 3,559,254 $ 490,436 $4,049,690
Due Due in
Balance Balance Within More than
July 1, 2022 Additions Retirements June 30, 2023 One Year One Year Governmental activities $ 1,020,612 $ 770,500 $ (756,610) $ 1,034,502 $ 750,000 $ 284,502 Business-type activities 53,716 40,553 (39,821) 54,448 4,000 50,448 Total $ 1,074,328 $ 811,053 $ (796,431) $ 1,088,950 $ 754,000 $ 334,950 67 Agenda Item Number 5
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

9. OTHER FUND DISCLOSURES
A. Deficit Balances
At June 30, 2023, the funds below had the following deficit fund balance or net position. The deficit balance is caused by expenditures reported in the current year that will be reimbursed in subsequent years.

10. RISK MANAGEMENT
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the City carries insurance. The City, due to the costs of available coverage, participates as a member of the California Intergovernmental Risk Authority Joint Powers Authority (CIRA). CIRA provides joint protection programs for public entities covering automobile, general liability, errors and omissions, property and workers compensation claims. Under the program, the City has a $5,000 retention limit similar to a deductible with the CIRA being responsible for losses above that amount up to $500,000 for liability losses, $1,000,000 for workers compensation claims, and $25,000 for property damage. The Fund carries purchased excess commercial liability insurance of $39.5 million in excess of its $500,000 limit, and a commercial property policy for $300 million. Financial information pertaining to CIRA can be obtained from its administrative offices at 414 W. Napa Street, Sonoma, California 95476.

Liabilities of the City are reported in the statement of net position when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported (IBNRs). The result of the process to estimate the claims liability is not an exact amount as it depends on many complex factors, such as inflation, changes in legal doctrines, and damage awards. Accordingly, claims are reevaluated periodically to consider the effects of inflation, recent claim settlement trends (including frequency and amount of pay-outs), and other economic and social factors. The City's only exposure to claim liabilities would be for losses, if any, not covered by CIRA.

There have been no significant changes in insurance coverages in fiscal 2023. Settlements have not exceeded coverage for each of the past three fiscal years. The City has no significant uninsured claim liabilities at June 30, 2023.

Major governmental Funds:

General Capital Project 5,687$
Non-major governmental Funds:

Downtown Association 66$
Supplemental Planning Grant (SB2 & LEAP) 177,597$
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

11. PENSION PLANS
A. Plan Description
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 two miscellaneous rate plans and four safety rate plans. 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.

B. 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 age 55 with statutorily reduced benefits. All members are eligible for nonduty 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 Employee’s Retirement Law. 69 Agenda Item Number 5
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

11. PENSION PLANS, Continued
B. Benefits Provided, Continued
The rate plan provisions and benefits in effect at June 30, 2023 are summarized as follows:

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 actuarial basis, annually and is effective on July 1 following notice of a change in the rate. Funding contributions for the Plan are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. The General Fund has typically been used to liquidate pension liabilities for governmental funds.

The City’s contributions to the Plan for the measurement period ended June 30, 2022 were $1,827,570.

The City’s contributions to the Plan for the fiscal year ended June 30, 2023 were $1,763,271.

Safety
Miscellaneous
PEPRA
Miscellaneous
Safety Fire
Hire date Prior to January 1,
2013
On or after
January 1, 2013
Prior to January 1
2013
Benefit formula 2.0% @ 55 2.0% @ 62 3% @ 50
Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 - 55 50 - 55 50 - 55
Monthly benefits, as a % of eligible compensation 2.0% to 2.5% 2.0% to 2.5% 2.0% Required employee contribution rates 7.000% 6.750% 9.000% Required employer contribution rates 10.870% 7.470% 22.470% Required unfunded liability payment $ 504,360 $ 6,375 $ 73,786 Safety Police
PEPRA
Safety Fire
PEPRA
Safety Police
Hire date - Fire
Prior to January 1
2013
On or after
January 1, 2013
On or after
January 1, 2013
Benefit formula 3% @ 50 2.7% @ 57 2.7% @ 57
Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 - 55 50 - 57 50 - 57

2.0% 2.0% to 2.7% 2.0% to 2.7%

9.000% N/A 12.000%

22.470% 12.780% 12.780%
$ 717,907 $ 12 $ 4,798
Miscellaneous
Monthly benefits, as a % of eligible compensation
Required employee contribution rates
Required employer contribution rates
Required unfunded liability payment
Safety
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

11. PENSION PLANS, Continued
C. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions
As of June 30, 2023, the City reported a net pension liability for its proportionate share of the net pension liability of the Plan of $15,526,113.

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 the Plan is measured as of June 30, 2022, and the total pension liability for the Plan used to calculate the net pension liability was determined by actuarial valuations as of June 30, 2021 rolled forward to June 30, 2022 using standard update procedures. The City’s proportionate share of the net pension liability was based on the City’s plan liability and assetrelated information where available, and proportional allocations of individual plan amounts as of the valuation date where not available.

The City’s proportionate share of the net pension liability for each Plan as of measurement dates June 30, 2021 and 2022 were as follows:

For the year ended June 30, 2023, the City recognized pension income of $288,278. At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Proportion - June 30, 2021 0.16022%
Proportion - June 30, 2022 0.13442%
Change - Increase (Decrease) -0.02580%
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Pension contributions subsequent to
measurement date $ 1,763,271 $ -
Changes of assumptions 1,577,245 -
Differences between expected and
actual experience 490,097 187,143
Changes in employer's proportion 15,670 366,516
Differences between the employer's
contribution and the employer's
proportionate share of contributions 2,888 388,948
Net differences between projected
and actual earnings on plan
investments 2,632,568 -
Total $ 6,481,739 $ 942,607
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

11. PENSION PLANS, Continued
C. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions, Continued
$1,763,271 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 ending June 30, 2024. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Actuarial Assumptions – The total pension liability in the June 30, 2021 actuarial valuations were determined using the following actuarial assumptions:

The mortality table used was developed based on CalPERS-specific data. The table includes 15 years of mortality improvements using Society of Actuaries Scale 90% of scale MP 2016. Further details of the December 2017 Experience Study can be found on the CalPERS website www.calpers.ca.gov.

Discount Rate – The discount rate used to measure the total pension liability was 6.90% for the Plan.

To determine whether the municipal bond rate should be used in the calculation of a discount rate for the Plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 6.90 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of 6.90 percent will be applied to all plans in the Public Employees Retirement Fund (PERF). The stress test results are presented in a detailed report that can be obtained from the CalPERS website.

Fiscal Year
Ending June 30:
2024 $ 963,115
2025 776,203
2026 428,517
2027 1,608,026
Valuation Date June 30, 2021
Measurement Date June 30, 2022
Actuarial Cost Method Entry-Age Normal Cost
Method
Actuarial Assumptions:

Discount Rate 6.90%
Inflation 2.30%
Projected Salary Increase Varies by entry age and
service
Investment Rate of Return
(1) 6.90%
Mortality Derived by CalPERS
membership data for all
funds
(1) Net of pension plan investment expenses.
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

11. PENSION PLANS, Continued
C. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions, Continued
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.

The table below reflects the long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These rates of return are net of administrative expenses.

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 discount rate that is 1-percentage point lower or 1- percentage point higher than the current rate:

New
Strategic
Asset Class Allocation Real Return
(1)(2)
Global Equity - Non-Cap-Weighted 30.00% 4.45%
Global Equity - Cap-Weighted 12.00% 3.84%
Private Equity 13.00% 7.28%
Treasury 5.00% 0.27%
Mortgage-Backed Securities 5.00% 0.50%
Investment Grade Corporates 10.00% 1.56%
High Yield 5.00% 2.27%
Emerging Market Debt 5.00% 2.48%
Private Debt 5.00% 3.57%
Real Assets 15.00% 3.21%
Leverage -5.00% -0.59%
Total 100.00%
(1)
An expected inflation of 2.0% used for this period.
(2)
An expected inflation of 2.92% used for this period.
1% Decrease 5.90%
Net Pension Liability $ 22,801,258
Current Discount Rate 6.90%
Net Pension Liability $ 15,526,113
1% Increase 7.90%
Net Pension Liability $ 9,559,887
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

11. PENSION PLANS, Continued
C. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions, Continued
Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

Payable to the Pension Plan
At June 30, 2023, the City reported no payable for outstanding amount of contributions to the pension plan required for the year ended June 30, 2023.

Change in Assumptions
For the measurement period ended June 30, 2022, the discount rate was reduced to 6.90%.

12. OTHER POSTEMPLOYMENT HEALTH CARE BENEFITS
A. Plan Description
The City administers the City's retired employees' healthcare plan, a single employer defined benefit health care plan. The plan provides medical benefits to eligible retired employees and their beneficiaries. City resolutions and agreements assign the authority to establish and amend benefit provisions to the City. A separate OPEB trust account has not been established by the City for the Plan.

B. Employees Covered
As of the June 30, 2021 actuarial valuation, the following current and former employees were covered by the benefit terms under the Retiree Health Plan:

Active employees 15
Inactive employees or beneficiaries currently receiving benefits 28 Total 43
C. Contribution
The contribution requirements of plan members and the City are established and may be amended by the City. The required contribution is based on a projected pay-as-you-go financing requirements, with additional amounts to prefund benefits determined annually by the City Council. For the measurement period ended June 30, 2022, the City contributed $95,469 of current year premiums (100% of total premiums) and zero to prefund benefits. Plan members receiving benefits contributed no amounts to the total premiums. The General Fund has typically been used to liquidate OPEB liabilities for governmental funds.
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

12. OTHER POSTEMPLOYMENT HEALTH CARE BENEFITS, Continued D. Total OPEB Liability
The City’s total OPEB liability was measured as of June 30, 2022 and was determined by an actuarial valuation dated June 30, 2021 actuarial methods and assumptions:
(1) Pre-retirement mortality information was derived from data collected during 1997 to 2015 CalPERS Experience Study dated December 2017 and post-retirement mortality information was derived from the 2007 to 2015 CalPERS Experience Study. The Experience Study Reports may be accessed on the CalPERS website www.calpers.ca.gov under Forms and Publications.

E. Change of Assumption
The discount rate used to measure the total OPEB liability was changed from 2.19% to 4.09% for measurement period ended June 30, 2022.

F. Discount Rate
The discount rate used to measure the total OPEB liability was 4.09%. The City’s OPEB Plan is an unfunded plan, therefore the discount rate was set to the rate of tax-exempt, high quality 20-year municipal bonds, as of the measurement date.

G. Changes in the Total OPEB Liability
The changes in the total OPEB liability for the OPEB Plan are as follows:

Valuation Date June 30, 2021
Measurement Date June 30, 2022
Actuarial Cost Method Entry-Age Normal Cost Method
Discount Rate 4.09%
Inflation 2.30%
Salary Increases 2.80%
Mortality
(1) Derived by CalPERS
membership data for all funds
Healthcare cost trend rates: 4.04% to 5.75%
Total OPEB
Liability
Balance at June 30, 2021 $ 2,186,427
Changes in the year:

Service cost 22,458
Interest on the total OPEB liability 47,335
Differences between actual and expected experience (23,434) Changes in assumptions (425,755)
Benefits paid to retirees (95,469)
Net changes (474,865)
Balance at June 30, 2022 $ 1,711,562
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

12. OTHER POSTEMPLOYMENT HEALTH CARE BENEFITS, Continued H. Sensitivity of the Total OPEB Liability to Changes in the Discount Rate The following presents the total OPEB liability of the City if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2022:

I. Sensitivity of the Total OPEB Liability to Changes in the Health Care Cost Trend Rates The following presents the total OPEB liability of the City if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2022:

J. OPEB Expense and Deferred Outflows/(Inflows) of Resources Related to OPEB For the fiscal year ended June 30, 2023, the City recognized OPEB income of $377,287. For the fiscal year ended June 30, 2023, the City reported deferred outflows of resources related to OPEB from the following sources:
1% Decrease - 3.09%
Total OPEB liability $ 1,916,290
Current Discount Rate - 4.09%
Total OPEB liability $ 1,711,562
1% Increase - 5.09%
Total OPEB liability $ 1,540,857
1% Decrease -
Total OPEB liability $ 1,657,027
Current Rate -
Total OPEB liability $ 1,711,562
1% Increase -
Total OPEB liability $ 1,777,560
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
OPEB contributions subsequent to
measurement date $ 90,823 $ -
Differences between expected and
actual experience - 480,519
Changes of assumptions 82,594 280,232
Total $ 173,417 $ 760,751
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City of Sebastopol
Notes to Basic Financial Statements
For the year ended June 30, 2023

12. OTHER POSTEMPLOYMENT HEALTH CARE BENEFITS, Continued J. OPEB Expense and Deferred Outflows/(Inflows) of Resources Related to OPEB, Continued The $90,823 reported as deferred outflows of resources related to contributions subsequent to the June 30, 2022 measurement date will be recognized as a reduction of the Total OPEB liability during the fiscal year ending June 30, 2024. Other amounts reported as deferred outflows and deferred inflows of resources related to OPEB will be recognized as expense as follows:

13. JOINTLY GOVERNED ORGANIZATIONS AND OPERATING AGREEMENTS Jointly governed organizations are legal entities or other organizations that result from a contractual arrangement and that are owned, operated, or governed by two or more participants as a separate and specific activity subject to joint control in which the participants retain an ongoing financial interest or ongoing financial responsibility. The City is a participant in the following organizations other than the insurance authority described in the preceding notes. The City is a party to the following agreement:

Santa Rosa Subregional Wastewater System - The City has an agreement with System for the treatment of wastewater as the City does not own or operate its own wastewater treatment plant. The City's obligations under the agreement are to pay to the System its share of the costs of operating the system and treatment of wastewater. The City records these payments as operating expenses in its wastewater enterprise fund.

Fiscal Year
Ending June 30:
2024 $ (453,474)
2025 (54,899)
2026 (54,899)
2027 (54,894)
2028 (38,062)
Thereafter (21,929)
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REQUIRED

SUPPLEMENTARY INFORMATION
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City of Sebastopol
Required Supplementary Information
For the year ended June 30, 2023

1. BUDGETS AND BUDGETARY ACCOUNTING
Annual budgets are adopted on a basis consistent with generally accepted accounting principles for all government funds. Appropriations lapse at fiscal year-end. The appropriated budget is prepared by fund, function and department. The City manager may make transfers of appropriations within a department.

Transfers between departments and other changes require City Council approval. The legal level of control is the department and fund level. The Council made supplemental appropriations during the fiscal year.

Encumbrance accounting is not employed in governmental funds.

The following is the budget comparison schedule for the General Fund 80 Agenda Item Number 5
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City of Sebastopol
Required Supplementary Information
For the year ended June 30, 2023

1. BUDGETS AND BUDGETARY ACCOUNTING, Continued
Budgetary Comparison Schedule - General Fund
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Taxes:

Property $ 3,093,610 $ 3,178,200 $ 3,293,347 $ 115,147
Real property transfer 60,000 45,000 49,530 4,530
Transient occupancy tax 400,000 450,000 544,128 94,128
Sales and use 5,769,300 5,639,400 5,568,941 (70,459)
Franchises 370,000 370,000 468,871 98,871
Subtotal 9,692,910 9,682,600 9,924,817 242,217
Licenses, permits and fees:

Business licenses 135,000 140,000 157,170 17,170
Animal licenses 10,600 10,700 12,850 2,150
Building permits 200,000 500,000 558,094 58,094
Subtotal 345,600 650,700 728,114 77,414
Fines, forfeitures and penalties:

Vehicle code 8,500 8,500 10,388 1,888
Parking fines 4,500 10,700 18,378 7,678
Subtotal 13,000 19,200 28,766 9,566
Interest and rentals:

Investment earnings 27,160 29,156 (43,261) (72,417)
Rent - cell tower 40,000 40,000 39,581 (419)
Rent - other 5,500 5,500 6,474 974
Subtotal 72,660 74,656 2,794 (71,862)
Intergovernmental:

State motor vehicle in-lieu tax 5,700 5,700 7,710 2,010 Reimbursements 6,100 6,100 7,418 1,318
Other 932,850 969,850 2,104,101 1,134,251
Subtotal 944,650 981,650 2,119,229 1,137,579
Charges for current services:

Sales of publications 300 300 200 (100)
Planning fees 25,000 28,300 44,217 15,917
Encroachment permits 40,000 40,000 27,074 (12,926)
Public works services - - 8,940 8,940
Public safety services 17,500 17,500 35,897 18,397
Fire inspection fees 30,000 40,000 57,534 17,534
Other charges 22,100 22,100 64,580 42,480
Subtotal 134,900 148,200 238,442 90,242
Donations and miscellaneous:

Donations and contributions - 423,000 427,775 4,775
Sale of land/building - 25,000 31,222 6,222
Miscellaneous 77,000 77,000 329,855 252,855
Subtotal 77,000 525,000 788,852 263,852
Total revenues 11,280,720 12,082,006 13,831,014 1,749,008 Budget Amounts
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City of Sebastopol
Required Supplementary Information
For the year ended June 30, 2023

1. BUDGETS AND BUDGETARY ACCOUNTING, Continued
Budgetary Comparison Schedule - General Fund, Continued Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES:

Current:

General Government:

City Council 482,479 502,480 440,684 61,796
City Manager 229,306 229,306 226,816 2,490
City Attorney 222,479 300,679 435,786 (135,107)
City Clerk 392,055 399,492 363,890 35,602
Finance and accounting 339,720 345,345 306,996 38,349
Planning 608,886 608,886 548,669 60,217
Building inspection 182,792 182,792 186,400 (3,608)
General government non-departmental 413,262 430,642 344,644 85,998 Subtotal 2,870,979 2,999,622 2,853,885 145,737
Public safety:

Police protection 5,732,760 5,850,760 4,988,949 861,811 Animal control 22,100 22,100 13,750 8,350
Fire protection 1,273,505 1,299,080 1,193,875 105,205
Fire emergency procedures 26,000 26,000 6,207 19,793
Subtotal 7,054,365 7,197,940 6,202,781 995,159
Public works:

Corporation Yard 101,936 101,936 98,343 3,593
Streets Maintenance 482,195 535,670 399,889 135,781
Parking Lots Maintenance 140,350 149,850 133,488 16,362 Engineering 318,134 335,134 263,820 71,314
Subtotal 1,042,615 1,122,590 895,540 227,050
Parks and recreation:

Parks & Landscaping Maintenance 445,900 445,900 396,528 49,372 Ives Pool 132,925 132,925 146,925 (14,000)
Recreation administration and programs 365,000 424,300 384,843 39,457 Subtotal 943,825 1,003,125 928,296 74,829
Capital outlay 510,100 693,675 214,698 478,977
Debt service:

Principal 233,591 233,591 226,848 6,743
Interest 28,211 28,211 27,292 919
Subtotal 261,802 261,802 254,140 7,662
Total expenditures 12,683,686 13,278,754 11,349,340 1,929,414

REVENUES OVER (UNDER)
EXPENDITURES (1,402,966) (1,196,748) 2,481,674 3,678,422 Budget Amounts
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City of Sebastopol
Required Supplementary Information
For the year ended June 30, 2023

1. BUDGETS AND BUDGETARY ACCOUNTING, Continued
Budgetary Comparison Schedule - General Fund, Continued Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
OTHER FINANCING SOURCES (USES):

Transfers in 202,500 202,500 202,500 -
Transfers out (260,000) (260,000) (1,055,397) (795,397) Total other financing sources (uses) (57,500) (57,500) (852,897) (795,397) Net change in fund balances $ (1,460,466) $ (1,254,248) 1,628,777 $ 2,883,025 FUND BALANCES:

Beginning of year $ 10,342,361
End of year $ 11,971,138
Budget Amounts
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City of Sebastopol
Required Supplementary Information
For the Year Ended June 30, 2023
2023 2022 2021 2020
Measurement date 6/30/2022 6/30/2021 6/30/2020 6/30/2019 Proportionate share of the net pension liability $ 15,526,113 $ 8,665,009 $ 13,864,877 $ 13,028,541 Proportion of the net pension liability 0.13442% 0.16022% 0.12743% 0.12714% Covered payroll $ 4,318,106 $ 4,348,774 $ 4,272,937 $ 4,137,211 Proportionate share of the net pension liability as
percentage of covered payroll 359.56% 199.25% 324.48% 314.91% Plan fiduciary net position as a percentage of the total pension liability 70.72% 88.29% 75.10% 75.26%
Notes to Schedule
*Fiscal year 2015 was the 1st year of implementation, therefore only nine years are shown.

The CalPERS discount rate was increased from 7.5% to 7.65% in fiscal year 2016, and then decreased from 7.65% to 7.15% in fiscal year 2018. In fiscal year 2023, the discount rate was decreased to 6.9%.

The CalPERS mortality assumptions were adjusted in fiscal year 2019.

A. Schedule of the City's Proportionate Share of the Net Pension Liability - Last 10 Years*

2. DEFINED BENEFIT PENSION PLAN
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2019 2018 2017 2016 2015
6/30/2018 6/30/2017 6/30/2016 6/30/2015 6/30/2014
$ 12,272,694 $ 12,460,116 $ 11,055,177 $ 8,978,404 $ 8,365,442

0.12736% 0.12564% 0.12776% 0.13081% 0.13444%
$ 3,956,662 $ 3,908,821 $ 3,816,628 $ 3,636,221 $ 3,289,261 310.18% 318.77% 289.66% 246.92% 254.33%

75.26% 73.31% 74.06% 78.40% 79.82%
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City of Sebastopol
Required Supplementary Information
For the Year Ended June 30, 2023
2023 2022 2021 2020
Contractually required contribution
(actuarially determined) $ 1,763,271 $ 1,827,570 $1,686,413 $1,530,553 Contribution in relation to the actuarially determined
contributions (1,763,271) (1,827,570) (1,686,413) (1,530,553) Contribution deficiency (excess) $ - $ - $ - $ -
Covered payroll $ 4,138,192 $ 4,318,106 $ 4,348,774 $ 4,272,937 Contributions as a percentage of covered payroll 42.61% 42.32% 38.78% 35.82% Notes to Schedule
*Fiscal year 2015 was the 1st year of implementation, therefore only nine years are shown.

Methods and assumptions used to determine contribution rates:

Valuation date : 6/30/2020 6/30/2019 6/30/2018 6/30/2017 Actuarial cost method: Entry Age Entry Age Entry Age Entry Age Amortization method: (1) (1) (1) (1)
Assets valuation method: Market Value Market Value Market Value Market Value Inflation: 2.50% 2.50% 2.50% 2.63%
Salary increases: (2) (2) (2) (2)
Investment rate of return: 7.00% 7.00% 7.00% 7.25%
Retirement age: (3) (3) (3) (3)
Mortality: (4) (4) (4) (4)
(1) Level percentage of payroll, closed
(2) Depending on age, service, and type of employment
(3) 50 for all plans, with the exception of 52 for Miscellaneous PEPRA 2%@62
(4) Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board.

B. Schedule of Contributions - Last 10 Years*

2. DEFINED BENEFIT PENSION PLAN, Continued
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2019 2018 2017 2016 2015
$1,343,860 $1,187,535 $1,099,458 $920,324 $796,771
(1,343,860) (1,187,535) (1,099,458) (920,324) (796,771) $ - $ - $ - $ - $ -
$ 4,137,211 $ 3,956,662 $ 3,908,821 $ 3,816,628 $ 3,636,221

32.48% 30.01% 28.13% 24.11% 21.91%
6/30/2016 6/30/2015 6/30/2014 6/30/2013 6/30/2012
Entry Age Entry Age Entry Age Entry Age Entry Age
(1) (1) (1) (1) (1)
Market Value Market Value Market Value Market Value 15 Year Smoothed
Market
Method

2.75% 2.75% 2.75% 2.75% 2.75%
(2) (2) (2) (2) (2)

7.375% 7.50% 7.50% 7.50% 7.50%
(3) (3) (3) (3) (3)
(4) (4) (4) (4) (4)
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City of Sebastopol
Required Supplementary Information
For the Year Ended June 30, 2023
2023 2022 2021 2020
Measurement Date 6/30/2022 6/30/2021 6/30/2020 6/30/2019 Total OPEB Liability
Service Cost $ 22,458 $ 27,917 $ 27,295 $ 56,412
Interest on the total OPEB liability 47,335 72,014 73,479 89,484 Differences between expected and actual experience (23,434) (551,283) - (492,345) Changes of assumptions (425,755) 10,152 44,769 75,694
Benefit payments (95,469) (102,849) (97,430) (99,403)
Net change in total OPEB liability (474,865) (544,049) 48,113 (370,158) Total OPEB Liability - beginning 2,186,427 2,730,476 2,682,363 3,052,521 Total OPEB Liability - ending (a) $ 1,711,562 $ 2,186,427 $ 2,730,476 $ 2,682,363 Covered-employee payroll** $ 4,299,547 $ 4,348,774 $ 4,272,937 $ 4,137,211 Total OPEB liability as a percentage of
covered-employee payroll 39.81% 50.28% 63.90% 64.84%
Notes to Schedule
* Historical information is required only for measurement periods for which GASB 75 is applicable.

Changes of assumptions (measurement period ended June 30,):
2022 - Discount rate was changed to 4.09%.
2021 - Discount rate was changed to 2.19%.
2020 - Discount rate was changed to 2.66%.
2018 - Discount rate was changed to 2.98%.

A. Schedule of Changes in the City's Total OPEB Liability and Related Ratios - Last 10 Years*
Fiduciary Net Position - There are currently no assets accumulated in a trust that meets the criteria of GASB codification P22.101 or P52.101 to pay related benefits for the OPEB plan. 2019 - Discount rate was changed to 2.79%. Mortality rates were updated based on CalPERS 2015 Experience Study.

3. OTHER POSTEMPLOYMENT HEALTHCARE BENEFITS
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2019 2018
6/30/2018 6/30/2017
$ 54,769 $ 58,870
90,545 81,308
- -
57,987 (168,395)
(87,182) (71,368)
116,119 (99,585)
2,936,402 3,035,987
$ 3,052,521 $ 2,936,402
$ 3,956,662 $ 3,982,276

77.15% 73.74%
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SUPPLEMENTARY INFORMATION
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General Capital Projects Fund accounts for financial resources to be used for the acquisition or construction of major capital facilities.

GENERAL FUND AND SPECIAL REVENUE FUNDS

BUDGETED MAJOR GOVERNMENTAL FUNDS OTHER THAN
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Capital Projects
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Miscellaneous $ - $ - $ 6,453 $ 6,453
Total revenues - - 6,453 6,453
EXPENDITURES:

Capital outlay 3,314,347 3,314,347 1,454,794 1,859,553
Total expenditures 3,314,347 3,314,347 1,454,794 1,859,553

REVENUES OVER
(UNDER) EXPENDITURES (3,314,347) (3,314,347) (1,448,341) 1,866,006 OTHER FINANCING SOURCES (USES):

Transfers in 3,314,347 3,314,347 1,450,430 (1,863,917)
Total other financing sources (uses) 3,314,347 3,314,347 1,450,430 (1,863,917) Net change in fund balances $ - $ - 2,089 $ 2,089
FUND BALANCES:

Beginning of the year (7,776)
End of year $ (5,687)
Budget Amounts
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Police Grant Fund accounts for accounts for the revenues and expenditures of State and Federal grants such as State SLESF (Supplemental Law Enforcement Services Fund).

Gas Tax Fund accounts for funds from the State of California under the Street and Highway Code Sections 2103, 2105, 2106, 2107 and 2107.5. The use of funds is restricted to street related projects, which can include related public facilities for non-motorized traffic, e.g. bike and pedestrian paths.

Park in Lieu receives revenue from new residential and hotel development,to mitigate the impact of such new development on City park and recreation facilities. The use of revenues from the Fund is restricted to park and recreation capital improvements.

Traffic Impact was established to reduce the traffic impacts caused by new development within the City limits and certain public improvements (transportation system infrastructure) and revenue collected from these fees shall be used solely to pay for the City’s future construction of facilities or services or reimburse the City for facilities constructed by the City with funds advanced by the City from other sources.

Street Lighting Assessment is established to receive special assessment district monies used for maintenance and or servicing of existing and future public lighting facilities, and the installation or construction of public lighting for the maintenance of servicing thereof, including grading, clearing, removal of debris, the installation of curbs and gutters, walls, sidewalks or paving or water, irrigation, drainage or electrical facilities.

Asset Forfeiture is used for specified police activities (excluding regular salary) from confiscated assets of convicted drug felons.

Downtown Association is used to account for revenues and expenditures for the Downtown Association District.

Art in Lieu accounts for developer contributions in lieu of installation of public art on project sites and income received from art programs and events to fund public artwork, cultural programs, maintenance/conservation, and administrative costs relating to the Art in Public Places Program.

Measure M receives funding from the County for construction of eligible transportation projects that improve the quality of roads, sidewalks and bike lanes.

Housing General Plan identifies the City’s housing conditions and needs, establishes the goals, objectives, and policies that are the foundation of the City’s housing and growth strategy.

Street Reserve accounts for the tax reserved for local streets and roads.

Vehicle Abatement accounts for monies for inspection, mark, or tow the vehicles that appear to be abandoned, non-operable, or not registered.

NON-MAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS
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Inclusionary and Linkage Housing accounts for revenue receives from fee payment to be used for the exclusive purpose of providing housing affordable to low and moderate income households in the City for construction of three or more new dwelling units, or for the division or subdivision of land into three or more lots for residential use.

Building Permit Incremental Fund accounts for revenue receives from construction inspection and plan checks to fund training, certification exams and courses.

Community Development Block Grant accounts for revenue and expenditures of CDBG funds awarded by the Department of Housing and Urban Development.

SB1 Road and Maintenance Fund accounts for revenue and expenditures of SB1 monies.

General Government Facilities Fee Fund accounts for general government facilities fees and related expenses.

Fire Facilities Fee Fund accounts for fire facilities fees and related expenses.

Stormwater Facilities Fee Fund accounts for stormwater facilities fees and related expenses.

Supplemental Planning Grant (SB2 and LEAP) Fund accounts for revenue and expenditures of SB2 and LEAP supplemental planning grant monies.

Undergrounding is an in-lieu fee paid by development projects, where the City Engineer has determined physical undergrounding of overhead utilities is not practical. The Fund is used for general City utility undergrounding projects.

Woodstone Assessment District is the bonds which were issued to finance construction including street improvements, drainage, streets lights and signalization to the Fairfield Inn (formerly Holiday Inn), and acquisition of certain public improvements specically benefitting properties located within the boundaries of City Assessement District 1992-1 (Woodstone Center).

Clean Renewable Energy Bonds is used for projects include solar panels to generate electricity at the City Hall/Library complex, the Police station and at the sewer lift station, and funds to implement projects for pedestrian safety contained in the Street Smart Study.

CAPITAL PROJECTS FUNDS

DEBT SERVICE FUNDS

NON-MAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS, CONTINUED
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City of Sebastopol
Combining Balance Sheet
Non-Major Governmental Funds
June 30, 2023
Police Park in Traffic
Grants Gas Tax Lieu Impact
ASSETS
Cash and investments $ 64,978 $ 26,710 $ 16,237 $ 175,279 Accounts receivable 140 - - -
Taxes receivable - 17,080 - -
Accrued interest receivable 366 115 142 764
Notes receivable - - - -
Due from other funds - - - -
Total assets $ 65,484 $ 43,905 $ 16,379 $ 176,043

LIABILITIES, DEFERRED INFLOWS OF

RESOURCE AND FUND BALANCES
Liabilities:

Accounts payable $ - $ 47 $ - $ -
Due to other funds - - - -
Unearned revenues - - - -
Total liabilities - 47 - -
Deferred inflows of resources:

Unavailable revenue - - - -
Fund Balances:

Restricted for :

Highways and streets - - - 176,043
Public safety 65,484 43,858 - -
Debt service - - - -
Affordable housing - - - -
Parks and recreation - - 16,379 -
Other - - - -
Committed for street projects - - - -
Unassigned - - - -
Total fund balances 65,484 43,858 16,379 176,043
Total liabilities, deferred inflows
of resources, and fund balances $ 65,484 $ 43,905 $ 16,379 $ 176,043 Special Revenue
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Street Lighting Asset Downtown Art in Housing
Assessment Forfeiture Association Lieu Measure M General Plan Street Reserve $ 29,498 $ 10,284 $ - $ 98,183 $ 453,021 $ 88,156 $ 429,288 - - - - - 37,073 -
245 - - - 45,457 - -
92 42 15 414 1,887 299 1,799
- - - - - - -
- - - - - 25,000 -
$ 29,835 $ 10,326 $ 15 $ 98,597 $ 500,365 $ 150,528 $ 431,087 $ - $ - $ - $ - $ - $ - $ -
- - 81 - - - -
- 8,283 - - - - -
- 8,283 81 - - - -
- - - - - 35,915 -
29,835 - - - 500,365 - -
- 2,043 - - - - -
- - - - - - -
- - - - - 114,613 -
- - - 98,597 - - -
- - - - - - -
- - - - - - 431,087
- - (66) - - - -
29,835 2,043 (66) 98,597 500,365 114,613 431,087
$ 29,835 $ 10,326 $ 15 $ 98,597 $ 500,365 $ 150,528 $ 431,087 Special Revenue
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City of Sebastopol
Combining Balance Sheet
Non-Major Governmental Funds
June 30, 2023
Inclusionary Building Permit Community
Vehicle and Linkage Incremental Development
Abatement Housing Fund Block Grant
ASSETS
Cash and investments $ 2,573 $ 123,917 $ 107,615 $ 74,481 Accounts receivable - - - -
Taxes receivable - - - -
Accrued interest receivable 16 518 416 361
Notes receivable - - - -
Due from other funds - - - -
Total assets $ 2,589 $ 124,435 $ 108,031 $ 74,842

LIABILITIES, DEFERRED INFLOWS OF

RESOURCE AND FUND BALANCES
Liabilities:

Accounts payable $ - $ - $ - $ -
Due to other funds - - - -
Unearned revenues - - - -
Total liabilities - - - -
Deferred inflows of resources:

Unavailable revenue - - - -
Fund Balances:

Restricted for :

Highways and streets - - - -
Public safety 2,589 - - -
Debt service - - - -
Affordable housing - 124,435 - -
Parks and recreation - - - -
Other - - - 74,842
Committed for street projects - - 108,031 -
Unassigned - - - -
Total fund balances 2,589 124,435 108,031 74,842
Total liabilities, deferred inflows
of resources, and fund balances $ 2,589 $ 124,435 $ 108,031 $ 74,842 Special Revenue
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Capital Project
General Supplemental
SB1 Road and Government Fire Stormwater Planning Grant
Maintenance Facilities Fee Facilities Fee Facilities Fee (SB2 & LEAP) Undergrounding $ 123,495 $ 2,960 $ 981 $ 6,308 $ - $ 239,815
- 12 4 - 152,597 -
29,416 - - - - -
923 - - 26 - 1,003
- - - - - -
- - - - - -
$ 153,834 $ 2,972 $ 985 $ 6,334 $ 152,597 $ 240,818
$ - $ - $ - $ - $ - $ -
- - - - 177,597 -
- - - - - -
- - - - 177,597 -
- - - - 152,597 -
153,834 - - - - 240,818
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- 2,972 985 6,334 - -
- - - - - -
- - - - (177,597) -
153,834 2,972 985 6,334 (177,597) 240,818
$ 153,834 $ 2,972 $ 985 $ 6,334 $ 152,597 $ 240,818
Special Revenue
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City of Sebastopol
Combining Balance Sheet
Non-Major Governmental Funds
June 30, 2023
Total
Woodstone Clean Non-Major
Assessment Renewable Governmental
District Energy Bonds Funds
ASSETS
Cash and investments $ - $ 2,856 $ 2,076,635
Accounts receivable - - 189,826
Taxes receivable - - 92,198
Accrued interest receivable - 8 9,206
Notes receivable - 188,573 188,573
Due from other funds - - 25,000
Total assets $ - $ 191,437 $ 2,581,438

LIABILITIES, DEFERRED INFLOWS OF

RESOURCE AND FUND BALANCES
Liabilities:

Accounts payable $ - $ - $ 47
Due to other funds - - 177,678
Unearned revenues - - 8,283
Total liabilities - - 186,008
Deferred inflows of resources:

Unavailable revenue - 188,573 377,085
Fund Balances:

Restricted for :

Highways and streets - - 1,100,895
Public safety - - 113,974
Debt service - 2,864 2,864
Affordable housing - - 239,048
Parks and recreation - - 114,976
Other - - 85,133
Committed for street projects - - 539,118
Unassigned - - (177,663)
Total fund balances - 2,864 2,018,345
Total liabilities, deferred inflows
of resources, and fund balances $ - $ 191,437 $ 2,581,438 Debt Service
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City of Sebastopol
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds
For the year ended June 30, 2023
Police Park in Traffic
Grants Gas Tax Lieu Impact
REVENUES:

Property taxes $ - $ - $ - $ -
Sales and use taxes - - - -
Licenses and permits - - - -
Intergovernmental 132,371 196,298 100,000 -
Interest and rents (1,315) (535) (19) 1,935
Charges for services - - - -
Miscellaneous 785 - - -
Total revenues 131,841 195,763 99,981 1,935
EXPENDITURES:

Current:

General Government - - - -
Public works - 169,589 - -
Debt service:

Principal - - 26,394 -
Interest - - 1,108 -
Total expenditures - 169,589 27,502 -

REVENUES OVER
(UNDER) EXPENDITURES 131,841 26,174 72,479 1,935
OTHER FINANCING SOURCES (USES):

Transfers in - - - -
Transfers out (100,000) - (59,670) (37,838)
Total other financing sources (uses) (100,000) - (59,670) (37,838) Net change in fund balances 31,841 26,174 12,809 (35,903) FUND BALANCES:

Beginning of the year $ 33,643 $ 17,684 $ 3,570 $ 211,946 End of year $ 65,484 $ 43,858 $ 16,379 $ 176,043
Special Revenue
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Street Lighting Asset Downtown Art in Housing
Assessment Forfeiture Association Lieu Measure M General Plan Street Reserve $ 126,170 $ - $ - $ - $ - $ - $ -
- - - - 197,844 - -
- - 8,138 - - - -
- - - - - 1,158 -
(14) 43 (42) 897 (1,186) 525 2,205
- - - - - 79,193 -
- - - - - - -
126,156 43 8,096 897 196,658 80,876 2,205
13,610 - 9,900 9,453 - 44,559 -
106,191 - - - - - -
- - - - - - -
- - - - - - -
119,801 - 9,900 9,453 - 44,559 -
6,355 43 (1,804) (8,556) 196,658 36,317 2,205
- - - - - 56,786 -
- - - - (86,470) - (3,684)
- - - - (86,470) 56,786 (3,684)
6,355 43 (1,804) (8,556) 110,188 93,103 (1,479)
$ 23,480 $ 2,000 $ 1,738 $ 107,153 $ 390,177 $ 21,510 $ 432,566 $ 29,835 $ 2,043 $ (66) $ 98,597 $ 500,365 $ 114,613 $ 431,087 Special Revenue
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City of Sebastopol
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds
For the year ended June 30, 2023
Inclusionary Building Permit Community
Vehicle and Linkage Incremental Development
Abatement Housing Fund Block Grant
REVENUES:

Property taxes $ - $ - $ - $ -
Sales and use taxes - - - -
Licenses and permits - - - -
Intergovernmental - - - -
Interest and rents 102 629 (646) 463
Charges for services - - 49,026 -
Miscellaneous - - - -
Total revenues 102 629 48,380 463
EXPENDITURES:

Current:

General Government - - - -
Public works - - - -
Debt service:

Principal - - - -
Interest - - - -
Total expenditures - - - -

REVENUES OVER
(UNDER) EXPENDITURES 102 629 48,380 463
OTHER FINANCING SOURCES (USES):

Transfers in - - - -
Transfers out (2,500) (73) - (27,289)
Total other financing sources (uses) (2,500) (73) - (27,289) Net change in fund balances (2,398) 556 48,380 (26,826) FUND BALANCES:

Beginning of the year $ 4,987 $ 123,879 $ 59,651 $ 101,668 End of year $ 2,589 $ 124,435 $ 108,031 $ 74,842
Special Revenue
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Capital Project
General Supplemental
SB1 Road and Government Fire Stormwater Planning Grant
Maintenance Facilities Fee Facilities Fee Facilities Fee (SB2 & LEAP) Undergrounding $ - $ - $ - $ - $ - $ -
- - - - - -
- - - - - -
180,447 - - - 20,000 -
2,967 (16) (6) (25) - 1,177
- - - 873 - -
- - - - - -
183,414 (16) (6) 848 20,000 1,177
- - - - 140,811 -
- - - - - -
- - - - - -
- - - - - -
- - - - 140,811 -
183,414 (16) (6) 848 (120,811) 1,177
- - - - - -
(298,120) - - - (56,786) -
(298,120) - - - (56,786) -
(114,706) (16) (6) 848 (177,597) 1,177
$ 268,540 $ 2,988 $ 991 $ 5,486 $ - $ 239,641
$ 153,834 $ 2,972 $ 985 $ 6,334 $ (177,597) $ 240,818
Special Revenue
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City of Sebastopol
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds
For the year ended June 30, 2023
Total
Woodstone Clean Non-Major
Assessment Renewable Governmental
District Energy Bonds Funds
REVENUES:

Property taxes $ - $ - $ 126,170
Sales and use taxes - - 197,844
Licenses and permits - - 8,138
Intergovernmental - - 630,274
Interest and rents 140 (64) 7,215
Charges for services - 16,833 145,925
Miscellaneous - - 785
Total revenues 140 16,769 1,116,351
EXPENDITURES:

Current:

General Government - - 218,333
Public works - - 275,780
Debt service:

Principal 35,000 51,322 112,716
Interest 2,293 - 3,401
Total expenditures 37,293 51,322 610,230

REVENUES OVER
(UNDER) EXPENDITURES (37,153) (34,553) 506,121
OTHER FINANCING SOURCES (USES):

Transfers in 18,111 31,024 105,921
Transfers out - - (672,430)
Total other financing sources (uses) 18,111 31,024 (566,509) Net change in fund balances (19,042) (3,529) (60,388)
FUND BALANCES:

Beginning of the year $ 19,042 $ 6,393 2,078,733
End of year $ - $ 2,864 $ 2,018,345
Debt Service
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Police Grants
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Intergovernmental $ 105,000 $ 105,000 $ 132,371 $ 27,371 Interest and rents 50 50 (1,315) (1,365)
Miscellaneous 800 800 785 (15)
Total revenues 105,850 105,850 131,841 25,991
EXPENDITURES:

Current:

Public safety - - - -
Total expenditures - - - -

REVENUES OVER
(UNDER) EXPENDITURES 105,850 105,850 131,841 25,991
OTHER FINANCING SOURCES (USES):

Transfers out (100,000) (100,000) (100,000) -
Total other financing sources (uses) (100,000) (100,000) (100,000) - Net change in fund balances $ 5,850 $ 5,850 31,841 $ 25,991 FUND BALANCES:

Beginning of the year $ 33,643
End of year $ 65,484
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Gas Tax
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Intergovernmental $ 229,750 $ 229,750 $ 196,298 $ (33,452) Interest and rents - - (535) (535)
Total revenues 229,750 229,750 195,763 (33,987)
EXPENDITURES:

Current:

Public works 218,475 218,475 169,589 48,886
Total expenditures 218,475 218,475 169,589 48,886
Net change in fund balances $ 11,275 $ 11,275 26,174 $ 14,899 FUND BALANCES:

Beginning of the year $ 17,684
End of year $ 43,858
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Park in Lieu
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Intergovernmental $ 304,850 $ 304,850 $ 100,000 $ (204,850) Interest and rents 150 150 (19) (169)
Charges for services 15,000 15,000 - (15,000)
Miscellaneous 28,000 28,000 - (28,000)
Total revenues 348,000 348,000 99,981 (248,019)
EXPENDITURES:

Debt service:

Principal 28,200 28,200 26,394 1,806
Interest 1,185 1,185 1,108 77
Total expenditures 29,385 29,385 27,502 1,883

REVENUES OVER
(UNDER) EXPENDITURES 318,615 318,615 72,479 (246,136)
OTHER FINANCING SOURCES (USES):

Transfers in 11,000 11,000 - (11,000)
Transfers out (331,849) (331,849) (59,670) 272,179
Total other financing sources (uses) (320,849) (320,849) (59,670) 261,179 Net change in fund balances $ (2,234) $ (2,234) 12,809 $ 15,043 FUND BALANCES:

Beginning of the year $ 3,570
End of year $ 16,379
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Traffic Impact
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Interest and rents $ 1,800 $ 1,800 $ 1,935 $ 135
Total revenues 1,800 1,800 1,935 135
EXPENDITURES:

Current:

Public safety - - - -
Total expenditures - - - -

REVENUES OVER
(UNDER) EXPENDITURES 1,800 1,800 1,935 135
OTHER FINANCING SOURCES (USES):

Transfers out (213,847) (213,847) (37,838) 176,009
Total other financing sources (uses) (213,847) (213,847) (37,838) 176,009 Net change in fund balances $ (212,047) $ (212,047) (35,903) $ 176,144 FUND BALANCES:

Beginning of the year $ 211,946
End of year $ 176,043
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Street Lighting Assessment
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Property taxes $ 128,156 $ 128,156 $ 126,170 $ (1,986)
Interest and rents 100 100 (14) (114)
Total revenues 128,256 128,256 126,156 (2,100)
EXPENDITURES:

Current:

General government 13,200 13,200 13,610 (410)
Public works 112,300 112,300 106,191 6,109
Total expenditures 125,500 125,500 119,801 5,699
Net change in fund balances $ 2,756 $ 2,756 6,355 $ 3,599 FUND BALANCES:

Beginning of the year 23,480
End of year $ 29,835
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Asset Forfeiture
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Interest and rents $ - $ - $ 43 $ 43
Total revenues - - 43 43
EXPENDITURES:

Current:

Public safety - - - -
Total expenditures - - - -
Net change in fund balances $ - $ - 43 $ 43
FUND BALANCES:

Beginning of the year 2,000
End of year $ 2,043
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Downtown Association
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Licenses and permits $ 8,700 $ 8,700 $ 8,138 $ (562)
Interest and rents - - (42) (42)
Total revenues 8,700 8,700 8,096 (604)
EXPENDITURES:

Current:

General government 8,700 8,700 9,900 (1,200)
Total expenditures 8,700 8,700 9,900 (1,200)
Net change in fund balances $ - $ - (1,804) $ (1,804)
FUND BALANCES:

Beginning of the year 1,738
End of year $ (66)
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Art in Lieu
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Interest and rents $ 700 $ 700 $ 897 $ 197
Total revenues 700 700 897 197
EXPENDITURES:

Current:

General government - - 9,453 (9,453)
Total expenditures - - 9,453 (9,453)

REVENUES OVER
(UNDER) EXPENDITURES 700 700 (8,556) (9,256)
OTHER FINANCING SOURCES (USES):

Transfers out (51,500) (51,500) - 51,500
Total other financing sources (uses) (51,500) (51,500) - 51,500 Net change in fund balances $ (50,800) $ (50,800) (8,556) $ 42,244 FUND BALANCES:

Beginning of the year 107,153
End of year $ 98,597
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Measure M
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Sales and use taxes $ 190,400 $ 190,400 $ 197,844 $ 7,444 Interest and rents 2,000 2,000 (1,186) (3,186)
Total revenues 192,400 192,400 196,658 4,258
EXPENDITURES:

Capital outlay - - - -
Total expenditures - - - -

REVENUES OVER
(UNDER) EXPENDITURES 192,400 192,400 196,658 4,258
OTHER FINANCING SOURCES (USES):

Transfers out (628,651) (628,651) (86,470) 542,181
Total other financing sources (uses) (628,651) (628,651) (86,470) 542,181 Net change in fund balances $ (436,251) $ (436,251) 110,188 $ 546,439 FUND BALANCES:

Beginning of the year 390,177
End of year $ 500,365
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Housing General Plan
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Intergovernmental $ - $ - $ 1,158 $ 1,158
Interest and rents 500 500 525 25
Charges for services 4,000 4,000 79,193 75,193
Total revenues 4,500 4,500 80,876 76,376
EXPENDITURES:

Current:

General government 41,500 41,500 44,559 3,059
Total expenditures 41,500 41,500 44,559 3,059
Net change in fund balances $ (37,000) $ (37,000) 93,103 $ 130,103 FUND BALANCES:

Beginning of the year 21,510
End of year $ 114,613
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Street Reserve
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Intergovernmental $ 1,095,000 $ 1,095,000 $ - $ (1,095,000) Interest and rents 800 800 2,205 1,405
Total revenues 1,095,800 1,095,800 2,205 (1,093,595)
EXPENDITURES:

Capital outlay - - - -
Total expenditures - - - -

REVENUES OVER
(UNDER) EXPENDITURES 1,095,800 1,095,800 2,205 (1,093,595) OTHER FINANCING SOURCES (USES):

Transfers in 100,000 100,000 - (100,000)
Transfers out (1,308,500) (1,308,500) (3,684) 1,304,816 Total other financing sources (uses) (1,208,500) (1,208,500) (3,684) 1,204,816 Net change in fund balances $ (112,700) $ (112,700) (1,479) $ 111,221 FUND BALANCES:

Beginning of the year 432,566
End of year $ 431,087
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Vehicle Abatement
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Interest and rents $ 10 $ 10 $ 102 $ 92
Charges for services 500 500 - (500)
Total revenues 510 510 102 (408)
EXPENDITURES:

Current:

Public safety - - - -
Total expenditures - - - -

REVENUES OVER
(UNDER) EXPENDITURES 510 510 102 (408)
OTHER FINANCING SOURCES (USES):

Transfers out (2,500) (2,500) (2,500) -
Total other financing sources (uses) (2,500) (2,500) (2,500) - Net change in fund balances $ (1,990) $ (1,990) (2,398) $ (408) FUND BALANCES:

Beginning of the year 4,987
End of year $ 2,589
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Inclusionary and Linkage Housing
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Interest and rents $ 700 $ 700 $ 629 $ (71)
Total revenues 700 700 629 (71)
EXPENDITURES:

Current:

General government - - - -
Total expenditures - - - -

REVENUES OVER
(UNDER) EXPENDITURES 700 700 629 (71)
OTHER FINANCING SOURCES (USES):

Transfers out (10,000) (10,000) (73) 9,927
Total other financing sources (uses) (10,000) (10,000) (73) 9,927 Net change in fund balances $ (9,300) $ (9,300) 556 $ 9,856 FUND BALANCES:

Beginning of the year 123,879
End of year $ 124,435
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Building Permit Incremental Fund
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Interest and rents $ 300 $ 300 $ (646) $ (946)
Charges for services 10,000 10,000 49,026 39,026
Total revenues 10,300 10,300 48,380 38,080
EXPENDITURES:

Current:

General government - - - -
Total expenditures - - - -
Net change in fund balances $ 10,300 $ 10,300 48,380 $ 38,080 FUND BALANCES:

Beginning of the year 59,651
End of year $ 108,031
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Community Development Block Grant
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Intergovernmental $ 376,000 $ 376,000 $ - $ (376,000)
Interest and rents - - 463 463
Total revenues 376,000 376,000 463 (375,537)
EXPENDITURES:

Current:

General government - - - -
Total expenditures - - - -

REVENUES OVER
(UNDER) EXPENDITURES 376,000 376,000 463 (375,537)
OTHER FINANCING SOURCES (USES):

Transfers out (376,000) (376,000) (27,289) 348,711
Total other financing sources (uses) (376,000) (376,000) (27,289) 348,711 Net change in fund balances $ - $ - (26,826) $ (26,826) FUND BALANCES:

Beginning of the year 101,668
End of year $ 74,842
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual SB1 Road and Maintenance
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Intergovernmental $ 174,500 $ 174,500 $ 180,447 $ 5,947 Interest and rents - - 2,967 2,967
Total revenues 174,500 174,500 183,414 8,914
EXPENDITURES:

Current:

Public works 2,000 2,000 - (2,000)
Total expenditures 2,000 2,000 - (2,000)

REVENUES OVER
(UNDER) EXPENDITURES 172,500 172,500 183,414 10,914
OTHER FINANCING SOURCES (USES):

Transfers out (345,000) (345,000) (298,120) 46,880
Total other financing sources (uses) (345,000) (345,000) (298,120) 46,880 Net change in fund balances $ (172,500) $ (172,500) (114,706) $ 57,794 FUND BALANCES:

Beginning of the year, as restated 268,540
End of year $ 153,834
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Government Facilities Fee
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Interest and rents $ - $ - $ (16) $ (16)
Total revenues - - (16) (16)
EXPENDITURES:

Current:

General government - - - -
Total expenditures - - - -
Net change in fund balances $ - $ - (16) $ (16)
FUND BALANCES:

Beginning of the year 2,988
End of year $ 2,972
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Fire Facilities Fee
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Interest and rents - - (6) (6)
Total revenues - - (6) (6)
EXPENDITURES:

Current:

Public safety - - - -
Total expenditures - - - -
Net change in fund balances $ - $ - (6) $ (6)
FUND BALANCES:

Beginning of the year 991
End of year $ 985
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Stormwater Facilities Fee
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Interest and rents $ - $ - $ (25) $ (25)
Charges for services - - 873 873
Total revenues - - 848 848
EXPENDITURES:

Current:

Public works - - - -
Total expenditures - - - -
Net change in fund balances $ - $ - 848 $ 848
FUND BALANCES:

Beginning of the year 5,486
End of year $ 6,334
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Supplemental Planning Grant (SB2 and LEAP)
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Intergovernmental $ 175,000 $ 175,000 $ 20,000 $ (155,000) Total revenues 175,000 175,000 20,000 (155,000)
EXPENDITURES:

Current:

General government 175,000 175,000 140,811 34,189
Total expenditures 175,000 175,000 140,811 34,189

REVENUES OVER
(UNDER) EXPENDITURES - - (120,811) (120,811)
OTHER FINANCING SOURCES (USES):

Transfers out - - (56,786) (56,786)
Total other financing sources (uses) - - (56,786) (56,786) Net change in fund balances $ - $ - (177,597) $ (177,597) FUND BALANCES:

Beginning of the year -
End of year $ (177,597)
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Undergrounding
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Interest and rents $ 1,400 $ 1,400 $ 1,177 $ (223)
Total revenues 1,400 1,400 1,177 (223)
EXPENDITURES:

Capital outlay - - - -
Total expenditures - - - -
Net change in fund balances $ 1,400 $ 1,400 1,177 $ (223) FUND BALANCES:

Beginning of the year 239,641
End of year $ 240,818
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Woodstone Assessment District
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Interest and rents $ - $ - $ 140 $ 140
Total revenues - - 140 140
EXPENDITURES:

Debt service:

Principal 35,000 35,000 35,000 -
Interest 4,380 4,380 2,293 2,087
Total expenditures 39,380 39,380 37,293 2,087
Net change in fund balances $ (39,380) $ (39,380) (19,042) $ 20,338 FUND BALANCES:

Beginning of the year 19,042
End of year $ -
Budget Amounts
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City of Sebastopol
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Clean Renewable Energy Bonds
For the year ended June 30, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Interest and rents $ - $ - $ (64) $ (64)
Charges for services - - 16,833 16,833
Total revenues - - 16,769 16,769
EXPENDITURES:

Principal $ 20,299 20,299 51,322 (31,023)
Total expenditures 20,299 20,299 51,322 (31,023)

REVENUES OVER
(UNDER) EXPENDITURES (20,299) (20,299) (34,553) (14,254) OTHER FINANCING SOURCES (USES):

Transfers in - - 31,024 31,024
Total other financing sources (uses) - - 31,024 31,024
Net change in fund balances $ (20,299) $ (20,299) (3,529) $ 16,770 FUND BALANCES:

Beginning of the year 6,393
End of year $ 2,864
Budget Amounts
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Index
Financial Trends
Revenue Capacity
Debt Capacity
Demographic and Economic Information
Operating Information
These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs.

STATISTICAL SECTION
This part of the City of Sebastopol’s annual comprehensive financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City.

These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time.

These schedules contain information to help the reader assess the City’s most significant local revenue source, the property tax.

These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability issues additional debt in the future.

These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. 133 Agenda Item Number 5
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2014 2015 2016 2017
Governmental Activities
Net Investment In Capital Assets $ 7,657,875 $ 8,085,194 $ 8,017,313 $ 8,461,885 Restricted 7,398,898 4,128,962 4,314,008 2,279,908
Unrestricted 1,926,598 (4,937,921) (3,524,869) (847,289) Total Governmental Activities Net Position $ 16,983,371 $ 7,276,235 $ 8,806,452 $ 9,894,504 Business-Type Activities
Net Investment In Capital Assets $ 5,232,877 $ 4,566,315 $ 4,799,099 $ 4,705,054 Restricted 523,783 1,544,038 1,404,798 1,468,204
Unrestricted 2,413,672 1,051,968 1,691,465 2,900,417
Total Business-Type Activities Net Position $ 8,170,332 $ 7,162,321 $ 7,895,362 $ 9,073,675 Primary Government
Net Investment In Capital Assets $ 12,890,752 $ 12,651,509 $ 12,816,412 $ 13,166,939 Restricted 7,922,681 5,673,000 5,718,806 3,748,112
Unrestricted 4,340,270 (3,885,953) (1,833,404) 2,053,128 Total Primary Government Net Position $ 25,153,703 $ 14,438,556 $ 16,701,814 $ 18,968,179 Note: The City implemented GASB Statement No. 68 in FY 2015, which required the City to record their net pension liability in the statement of net position.

Source: Basic Financial Statements- City of Sebastopol, California

CITY OF SEBASTOPOL

NET POSITION BY COMPONENT

LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
Fiscal Year
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2018 2019 2020 2021 2022 2023
$ 9,242,243 $ 9,448,772 $ 9,494,832 $ 9,355,475 $ 9,702,362 $ 10,407,888 1,660,668 1,450,299 2,827,215 3,067,342 3,599,203 2,696,032 (3,254,719) (2,485,538) (3,011,697) (4,241,598) (5,490,293) 56,266 $ 7,648,192 $ 8,413,533 $ 9,310,350 $ 8,181,219 $ 7,811,272 $ 13,160,186 $ 5,956,258 $ 5,966,945 $ 5,594,545 $ 5,199,403 $ 5,259,183 $ 5,366,755 - - - - - -
3,430,964 3,563,944 3,204,183 2,840,979 1,782,914 847,207 $ 9,387,222 $ 9,530,889 $ 8,798,728 $ 8,040,382 $ 7,042,097 $ 6,213,962 $ 15,198,501 $ 15,415,717 $ 15,089,377 $ 14,554,878 $ 14,961,545 $ 15,774,643 1,660,668 1,450,299 2,827,215 3,067,342 3,599,203 2,696,032 176,245 1,078,406 192,486 (1,400,619) (3,707,379) 903,473 $ 17,035,414 $ 17,944,422 $ 18,109,078 $ 16,221,601 $ 14,853,369 $ 19,374,148 Fiscal Year
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2014 2015 2016 2017
Expenses
Governmental Activities
General government $ 1,327,123 $ 1,451,524 $ 1,761,437 $ 2,055,024 Public safety 4,154,787 4,397,921 4,193,457 5,260,822
Community development 141,771 34,936 9,155 -
Public works 1,207,688 1,331,944 1,376,165 938,036
Parks and recreation 771,708 644,813 1,066,267 749,005
Interest on long-term debt 103,767 91,304 83,446 80,566 Total Governmental Activities Expenses 7,706,844 7,952,442 8,489,927 9,083,453 Business-Type Activities
Water 1,298,601 1,368,427 1,669,223 1,716,237
Wastewater 2,605,752 2,795,925 2,887,638 2,889,787
Total Business-Type Activities Expenses 3,904,353 4,164,352 4,556,861 4,606,024 Total Primary Government Net Expenses $ 11,611,197 $ 12,116,794 $ 13,046,788 $ 13,689,477 Program Revenues
Governmental Activities
Charges for services
General government $ 435,632 $ 342,911 $ 915,735 $ 180,139 Public safety 248,479 278,638 240,886 190,018
Community development 19,942 14,390 162,652 -
Public works 193,334 182,878 305,614 539,617
Parks and recreation 130,691 89,971 100,630 66,739
Operating Contributions and Grants 553,751 579,188 484,480 209,472 Capital Contributions and Grants 288,575 742,670 446,248 525,005 Total Governmental Activities Program Revenues 1,870,404 2,230,646 2,656,245 1,710,990 Business-Type Activities
Charges for services
Water 1,709,463 1,933,720 2,061,253 2,457,698
Wastewater 2,688,194 2,959,002 3,116,767 3,324,934
Capital Contributions and Grants 107,307 30,356 142,905 - Total Business-Type Activities Program Revenues 4,504,964 4,923,078 5,320,925 5,782,632 Total Primary Government Program Revenues $ 6,375,368 $ 7,153,724 $ 7,977,170 $ 7,493,622 Source: Basic Financial Statements- City of Sebastopol, California Fiscal Year

CITY OF SEBASTOPOL

CHANGES IN NET POSITION

LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
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2018 2019 2020 2021 2022 2023
$ 2,278,030 $ 2,000,974 $ 2,609,862 $ 2,657,999 $ 2,966,273 $ 2,702,550 5,397,701 5,813,782 6,263,272 6,760,025 6,741,592 5,108,708 - - - - - -
1,301,865 1,220,155 1,448,514 1,633,132 2,102,767 928,845 801,006 976,489 1,159,950 965,252 1,030,936 1,010,731
72,765 72,530 70,118 37,858 19,063 30,692
9,851,367 10,083,930 11,551,716 12,054,266 12,860,631 9,781,526 1,893,951 1,933,059 2,393,602 2,490,214 2,572,104 2,505,812 3,090,686 3,333,798 3,562,838 3,519,884 3,845,631 3,765,130 4,984,637 5,266,857 5,956,440 6,010,098 6,417,735 6,270,942 $ 14,836,004 $ 15,350,787 $ 17,508,156 $ 18,064,364 $ 19,278,366 $ 16,052,468 $ 208,574 $ 188,613 $ 214,999 $ 205,711 $ 212,591 $ 218,820 171,292 179,531 152,232 134,888 109,257 134,997
- - - - - -
324,193 345,425 421,397 520,283 394,056 817,936
44,247 26,588 50,605 75,314 24,383 6,675
348,082 239,765 1,856,224 799,896 548,966 2,527,480
473,052 380,700 477,809 741,050 715,013 574,589
1,569,440 1,360,622 3,173,266 2,477,142 2,004,266 4,280,497 2,270,224 2,229,367 2,295,614 2,613,289 2,519,592 2,353,715 3,028,330 3,104,920 2,895,155 3,024,497 3,053,622 3,005,604 - - - - - -
5,298,554 5,334,287 5,190,769 5,637,786 5,573,214 5,359,319 $ 6,867,994 $ 6,694,909 $ 8,364,035 $ 8,114,928 $ 7,577,480 $ 9,639,816 Fiscal Year
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2014 2015 2016
Net (Expense)/Revenue
Governmental Activities $ (5,836,440) $ (5,721,796) $ (5,833,682) Business-Type Activities 600,611 758,726 764,064
Total Primary Government Net Expense (5,235,829) (4,963,070) (5,069,618) General Revenues and Other Changes in Net Position
Governmental Activities
Taxes
Property taxes 1,602,494 1,392,443 1,393,021
Sales and use taxes 1,673,360 1,713,697 1,748,368
Motor vehicle in lieu taxes 566,513 591,353 621,440
Transient lodging taxes 329,577 359,892 482,164
Other taxes 1,924,257 2,273,971 2,761,809
Incremental property taxes - - -
Investment Earnings - - -
Unrestricted interest and rents (5,330) 22,017 10,492
Miscellaneous 269,884 257,126 327,178
Transfers 31,023 31,024 31,024
Special item: Dissolution of redevelopment agency - - - Special item: Contribution of long-term loans to Sonoma County - - (3,602,937) Extraordinary item: Theft of investment funds - - -
Total Governmental Activities 6,391,778 6,641,523 3,772,559 Business-Type Activities
Investment Earnings - - -
Transfers (31,023) (31,024) (31,024)
Extraordinary item: Theft of investment funds - - -
Total Business-Type Activities (31,023) (31,024) (31,024) Total Primary Government 6,360,755 6,610,499 3,741,535
Change in Net Position
Governmental Activities 555,338 919,727 (2,061,123)
Business-Type Activities 569,588 727,702 733,040
Total Primary Government $ 1,124,926 $ 1,647,429 $ (1,328,083) Source: Basic Financial Statements- City of Sebastopol, California Fiscal Year

CITY OF SEBASTOPOL

CHANGES IN NET POSITION

LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
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2017 2018 2019 2020 2021 2022 2023
$ (7,372,463) $ (8,281,927) $ (8,723,308) $ (8,378,450) $ (9,577,124) $ (10,856,365) $ (5,501,029) 1,176,608 313,917 67,430 (765,671) (372,312) (844,521) (911,623) (6,195,855) (7,968,010) (8,655,878) (9,144,121) (9,949,436) (11,700,886) (6,412,652) 2,459,296 2,478,979 2,618,913 2,891,222 2,981,745 3,004,264 3,469,046 2,069,199 3,923,850 3,714,794 3,958,244 3,697,726 4,362,811 4,608,918 - - - - - - -
483,738 514,225 529,810 631,742 518,175 402,255 544,128 2,246,817 1,134,089 1,097,589 1,153,243 1,100,380 1,158,279 1,436,605 - - - - - - -
- 67,458 57,812 259,216 343,753 (7,279) (36,045)
73,826 - - - - - -
- 260,341 523,614 563,958 602,464 315,678 796,267
31,023 31,023 32,259 31,024 31,024 31,024 31,024
- - - - - - -
- - - - - - -
- - - - - (819,039) -
7,363,899 8,409,965 8,574,791 9,488,649 9,275,267 8,447,993 10,849,943 - 32,728 31,889 107,261 91,655 25,951 114,512
(31,023) (31,023) (32,259) (31,024) (31,024) (31,024) (31,024) - - - - - (380,961) -
(31,023) 1,705 (370) 76,237 60,631 (386,034) 83,488
7,332,876 8,411,670 8,574,421 9,564,886 9,335,898 8,061,959 10,933,431 (8,564) 128,038 (148,517) 1,110,199 (301,857) (2,408,372) 5,348,914 1,145,585 315,622 67,060 (689,434) (311,681) (1,230,555) (828,135) $ 1,137,021 $ 443,660 $ (81,457) $ 420,765 $ (613,538) $ (3,638,927) $ 4,520,779 Fiscal Year
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2014 2015 2016
General Fund
Nonspendable $ - $ - $ -
Restricted - - -
Committed 458,000 1,015,000 1,015,000
Assigned - - -
Unassigned 1,113,028 2,077,523 3,265,624
Total General Fund $ 1,571,028 $ 3,092,523 $ 4,280,624
All Other Governmental Funds
Nonspendable $ - $ - $ -
Restricted 3,169,424 3,573,382 3,827,777
Committed 471,226 595,718 464,800
Unassigned - - -
Total All Other Governmental Funds 3,640,650 4,169,100 4,292,577 Total Governmental Funds $5,211,678 $7,261,623 $8,573,201 Source: Basic Financial Statements- City of Sebastopol, California

CITY OF SEBASTOPOL

FUND BALANCES OF GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
Fiscal Year
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2017 2018 2019 2020 2021 2022 2023
$ 11,127 $ 46,392 $ 28,818 $ 76,529 $ 42,386 $ 180,191 $ 187,748 - - - 1,186,330 1,161,558 2,013,242 1,234,900
185,000 185,000 - - - - -
2,785,000 3,335,000 3,579,535 4,610,435 5,049,534 4,601,816 4,601,125 3,669,067 3,882,742 4,993,434 4,269,513 3,028,639 3,547,112 5,947,365 $ 6,650,194 $ 7,449,134 $ 8,601,787 $ 10,142,807 $ 9,282,117 $ 10,342,361 $ 11,971,138 $ - $ - $ - $ 2,651 $ - $ 555 $ -
2,279,908 1,660,668 1,450,299 1,640,885 1,905,784 1,585,961 1,656,890 154,351 279,229 436,477 475,327 491,317 492,217 539,118 (79,673) (48,819) (113,745) (10,535) (6,926) (7,776) (183,350) 2,354,586 1,891,078 1,773,031 2,108,328 2,390,175 2,070,957 2,012,658 $9,004,780 $9,340,212 $10,374,818 $12,251,135 $11,672,292 $12,413,318 $13,983,796 Fiscal Year
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2014 2015 2016 2017
Revenues
Property taxes $ 1,392,443 $ 1,393,024 $ 2,459,296 $ 2,681,062 Sales and use taxes 3,214,480 3,652,138 3,940,169 4,454,450 Other taxes 1,070,444 1,218,306 - -
Transient occupany taxes - - 483,738 514,225
Franchise fees - - 351,568 359,466
Licenses and permits 290,026 314,693 488,234 412,678
Fines and forfeits 117,358 158,380 122,235 88,747
Intergovernmental 1,412,805 1,443,193 979,119 676,542
Interest and rents 76,670 43,433 92,985 112,795
Charges for services 922,178 843,764 717,270 428,703
Miscellaneous 54,189 67,948 434,506 294,146
Total Revenues 8,550,593 9,134,879 10,069,120 10,022,814 Expenditures
Current
General Government 1,308,096 1,501,999 1,628,362 2,272,637 Public Safety 3,950,740 4,175,290 4,329,264 4,429,352
Community development 140,258 35,436 9,600 -
Parks and recreation 679,488 544,596 524,035 605,061
Public works 1,124,226 1,073,855 1,443,331 930,256
Capital Outlay 240,332 80,472 554,243 1,188,516
Debt Service:

Principal 357,250 358,175 302,357 233,469
Interest 105,278 93,135 82,796 80,566
Cost of debt issuance - - - -
Total Expenditures 7,905,668 7,862,958 8,873,988 9,739,857 Excess of Revenues Over (Under) Expenditures 644,925 1,271,921 1,195,132 282,957 Other Financing Sources (Uses)
Lease financing - - 85,423 66,250
Proceeds from debt - - - -
Payment to escrow - - - -
Sales of capital assets - - - 799
Transfers In 256,529 256,301 417,645 198,741
Transfers Out (225,505) (225,277) (386,622) (167,718)
Total Other Financing Sources (Uses) 31,024 31,024 116,446 98,072 Extraordinary/Special Items - - - -
Net Change In Fund Balances $675,949 $1,302,945 $1,311,578 $381,029 Debt Service as a percentage
of non-capital expenditures 6.0% 5.8% 4.6% 3.6%
Source: Basic Financial Statements- City of Sebastopol, California Fiscal Year

CITY OF SEBASTOPOL

CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
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2018 2019 2020 2021 2022 2023
$ 2,618,914 $ 2,891,222 $ 2,981,746 $ 3,004,264 $ 3,333,748 $ 3,469,047 4,686,751 4,907,892 4,609,379 5,321,931 5,744,161 5,766,785 - - - - - -
529,810 631,742 518,175 402,255 504,292 544,128
323,496 358,299 336,738 363,167 405,507 468,871
304,268 324,928 458,640 507,434 454,321 736,252
82,605 55,501 48,171 30,439 27,452 28,766
765,572 540,760 2,213,385 1,401,853 1,071,029 2,749,503 106,357 309,812 390,766 38,129 (257,367) 10,009
320,219 318,062 293,920 361,904 261,074 384,367
523,223 563,549 602,471 315,177 927,480 796,090
10,261,215 10,901,767 12,453,391 11,746,553 12,471,697 14,953,818 1,879,155 1,933,038 2,216,083 2,308,287 2,678,185 3,072,218 4,780,975 4,998,720 5,448,918 6,292,688 6,059,990 6,202,781 - - - - - -
639,930 826,945 970,013 792,038 799,261 928,296
868,491 1,051,102 1,062,194 1,161,841 1,293,535 1,171,320 1,471,598 766,230 590,256 680,072 1,797,036 1,669,492
245,128 249,619 250,516 275,351 240,932 339,564
72,766 72,531 70,118 37,858 19,063 30,693
- - - 12,842 - -
9,958,043 9,898,185 10,608,098 11,560,977 12,888,002 13,414,364 303,172 1,003,582 1,845,293 185,576 (416,305) 1,539,454 - - - - - -
- - - 420,626 1,126,307 -
- - - (397,030) - -
- - - - - -
1,396,214 2,912,182 632,536 632,536 1,511,475 1,758,851 (1,363,955) (2,881,158) (601,512) (601,512) (1,480,451) (1,727,827) 32,259 31,024 31,024 54,620 1,157,331 31,024
- - - (819,039) - -
$335,431 $1,034,606 $1,876,317 ($578,843) $741,026 $1,570,478

3.7% 3.5% 3.2% 3.0% 2.3% 3.3%
Fiscal Year
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Total Taxable Estimated
Fiscal Secured Unsecured SBE Assessed Actual Taxable Total Direct Year Property Property Nonunitary Value1 Value2
Tax Rate3
2014 $ 984,165,141 $ 33,736,420 $ - $ 1,017,901,561 $ - 1.1247% 2015 1,030,201,370 33,857,950 - 1,064,059,320 - 1.1157% 2016 1,101,325,085 34,718,413 - 1,136,043,498 - 1.1152% 2017 1,159,102,311 36,169,711 - 1,195,272,022 - 1.1247% 2018 1,213,563,175 40,451,873 - 1,254,015,048 1,506,046,992 1.1322% 2019 1,293,160,893 41,422,754 - 1,334,583,647 - 1.1322% 2020 1,346,424,183 39,548,176 - 1,385,972,359 1,769,357,484 1.1570% 2021 1,396,730,880 40,985,208 - 1,437,716,088 1,787,188,307 1.1560% 2022 1,442,646,754 42,502,411 - 1,485,149,165 1,939,139,162 1.1776% 2023 1,519,838,181 40,116,647 - 1,559,954,828 2,307,922,054 1.1369% 1 Article XIIIA, added to the California Constitution by Proposition 13 in 1978, fixed the base for valuation of property subject to taxes at the full cash value as it appeared on the Assessor's 1975-76 assessment roll.

Thereafter, full cash value can be increased to reflect:
a) annual inflation up to 2 percent
b) current market value at time of ownership change;
c) market value for new construction
2 3
Total direct tax rate is represented by TRA 05-001, 05-022.

Source: Sonoma County Assessor data, Avenu Insights & Analytics Estimated Actual Value is derived from a series of calculations comparing median assessed values from 1940 to current median sale prices. Based on these calculations a multiplier value was extrapolated and applied to current assessed values.

CITY OF SEBASTOPOL

ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY

LAST TEN FISCAL YEARS
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Agency 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Basic Levy 1

1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 Palm Drive Health Care District 0.00550 0.00520 0.00520 0.00520 0.00520 0.00520 0.00300 0.00300 0.00260 0.00260 Sebastopol Elementary Bonds 0.03810 0.03700 0.03500 0.03300 0.03550 0.03450 0.03350 0.03600 0.06600 0.05700 Sonoma County Junior College 0.02100 0.01800 0.01600 0.01500 0.01400 0.03600 0.01300 0.01300 0.01300 0.01200 Sonoma County Junior College 2014 0.00000 0.00000 0.00000 0.02500 0.02300 0.00000 0.02400 0.02400 0.02400 0.02300 Twin Hills Elementary 0.03700 0.03300 0.03300 0.03200 0.03050 0.03000 0.03000 0.02900 0.02500 0.00000 West Sonoma County Unified High 0.01610 0.01550 0.01900 0.01750 0.01700 0.04850 0.04650 0.04400 0.04000 0.03530 West Sonoma Russian River Project 0.00700 0.00700 0.00700 0.00700 0.00700 0.00700 0.00700 0.00700 0.00700 0.00700 Total Direct & Overlapping Tax Rates2

1.12470 1.11570 1.11520 1.13470 1.13220 1.16120 1.15700 1.15600 1.17760 1.13690 Note:

Source: Sonoma County Assessor data, Avenu Insights & Analytics ¹ In 1978, California voters passed Proposition 13 which set the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of any voter approved bonds.
³ City'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. ERAF general fund tax shifts may not be included in tax ratio figures.

Fiscal Year

CITY OF SEBASTOPOL

DIRECT AND OVERLAPPING PROPERTY TAX RATES

LAST TEN FISCAL YEARS
² Overlapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates apply to all city property owners.
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Percent Of Percent Of
Total Total
Taxable Assessed Taxable Assessed
Taxpayer Assessed Value Valuation Assessed Value1 Valuation Barlow Star LLC $ 31,208,607 2.00% N/A N/A
H-1 Real Estate LLC Et Al 15,242,087 0.98% N/A N/A
Longs Drug Stores California LLC 9,943,581 0.64% 6,828,096 0.68% Duckhorn Wine Company 7,924,410 0.51% N/A N/A
Redwood Marketplace 7,447,360 0.48% 6,417,950 0.64%
970 Gravenstein Hwy LLC 6,665,000 0.43% N/A N/A
Maxwell Myers Co & Maxwell A Myers LLC 5,912,246 0.38% N/A N/A Lok Sebastopol Hotel Co LLC 5,760,472 0.37% 5,202,545 0.52% Sonoma Real Estate Holdings LLC 5,358,948 0.34% N/A N/A Diajeff LLC Et Al 5,178,693 0.33% 4,462,847 0.44%
Total Top 10 Taxpayers 100,641,404 6.45% $ 22,911,438 2.27% Total Taxable Value $ 1,559,954,828 100.00% $ 1,007,405,010 100.00% Source: Sonoma County Assessor data, Avenu Insights & Analytics Fiscal Year 2014

CITY OF SEBASTOPOL

PRINCIPAL PROPERTY TAXPAYERS

CURRENT YEAR AND NINE YEARS AGO
Fiscal Year 2023
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Fiscal RDA/Successor Percent of
Year City Agency Total1 Amount Levy
2017 $ 2,523,397 $ 825,365 $ 3,348,762 $ 3,348,762 100.00% 2018 2,433,418 827,985 3,261,403 3,261,403 100.00%
2019 2,714,491 743,087 3,457,578 3,457,578 100.00%
2020 2,781,985 656,366 3,438,351 3,438,351 100.00%
2021 2,909,941 319,262 3,229,203 3,229,203 100.00%
2022 3,202,351 - 3,202,351 3,202,351 100.00%
2023 3,293,347 - 3,293,347 3,293,347 100.00%
1 Schedule excludes unitary tax.
2 * The schedule is intended to show information for ten years, additional years will be displayed as it becomes available.

Source: Sonoma County Tax Collector/Treasurer
The City of Sebastopol participates in the County of Sonoma "Teeter Plan" for property tax distributions. This plan distributes 100% of the secured taxes to participants; and in turn, allows the County to keep related penalties and interest for late tax payments.

CITY OF SEBASTOPOL

PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS*
Taxes Levied for the Fiscal Year
Collections within the
Fiscal Year of the Levy
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City of Sebastopol - Bradley Burns
Category 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Eating and Drinking Places $ 39,035 $ 40,730 $ 43,265 $ 33,525 $ 44,326 $ 39,036 $ 36,947 $ 32,746 $ 31,626 $ 29,686 Food Stores 31,691 33,067 35,126 32,999 39,915 44,478 41,357 39,236 39,368 23,074 Apparel Stores 2,399 2,503 2,659 2,840 3,636 3,883 3,784 3,904 3,873 1,044 Auto Dealers and Supplies 9,932 10,363 11,008 9,243 8,837 8,706 9,284 8,252 8,344 158,109 Service Stations 17,525 18,286 19,424 16,734 21,926 19,190 16,825 17,131 20,449 430 Other Retail Stores 32,346 33,751 35,851 31,820 34,202 32,551 31,599 28,826 28,248 3,399 All Other Outlets 27,598 28,796 30,589 27,608 29,984 21,972 21,472 23,529 23,206 31,304 Total $ 160,525 $ 167,497 $ 177,922 $ 154,770 $ 182,826 $ 169,816 $ 161,269 $ 153,625 $ 155,114 $ 247,046 City of Sebastopol - Measure Y
Category 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Eating and Drinking Places $ 36,868 $ 38,469 $ 40,863 $ 33,537 $ 42,423 $ 39,585 $ 37,757 $ 33,618 $ 32,338 $ 29,203 Food Stores 35,413 36,951 39,251 37,966 36,386 38,962 46,524 44,990 42,992 39,556 Apparel Stores 5,600 5,843 6,207 5,293 6,201 6,298 6,676 6,093 6,069 4,950 Auto Dealers and Supplies 38,325 39,990 42,478 33,575 41,451 40,643 44,124 41,412 40,325 40,242 Service Stations 17,876 18,652 19,813 17,106 22,139 19,419 17,085 17,183 19,886 22,676 Other Retail Stores 63,732 66,501 70,639 58,284 53,109 52,863 50,032 47,131 43,757 39,932 All Other Outlets 72,414 75,559 80,262 66,878 68,588 60,692 57,283 56,718 55,486 54,916 Total $ 270,228 $ 281,964 $ 299,513 $ 252,641 $ 270,297 $ 258,462 $ 259,481 $ 247,145 $ 240,853 $ 231,474 City of Sebastopol - Measure T
Category 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Eating and Drinking Places $ 36,868 $ 38,469 $ 40,863 $ 33,537 $ 42,423 $ 39,585 $ 37,757 $ 33,618 $ 32,338 $ 29,203 Food Stores 35,413 36,951 39,251 37,966 36,386 38,962 46,524 44,990 42,992 39,556 Apparel Stores 5,600 5,843 6,207 5,293 6,201 6,298 6,676 6,093 6,069 4,950 Auto Dealers and Supplies 38,325 39,990 42,478 33,575 41,451 40,643 44,124 41,412 40,325 40,242 Service Stations 17,876 18,652 19,813 17,106 22,139 19,419 17,085 17,183 19,886 22,676 Other Retail Stores 63,732 66,501 70,639 58,284 53,109 52,863 50,032 47,131 43,757 39,932 All Other Outlets 72,414 75,559 80,262 66,878 68,588 60,692 57,283 56,718 55,486 54,916 Total $ 270,228 $ 281,964 $ 299,513 $ 252,641 $ 270,297 $ 258,462 $ 259,481 $ 247,145 $ 240,853 $ 231,474 City of Sebastopol - Total
Category 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Eating and Drinking Places $ 112,819 $ 117,719 $ 125,046 $ 100,593 $ 129,249 $ 118,216 $ 112,516 $ 100,029 $ 96,436 $ 89,102 Food Stores 102,478 106,929 113,584 108,895 112,665 122,367 134,383 129,670 125,326 102,265 Apparel Stores 13,550 14,138 15,018 13,380 15,995 16,528 17,077 16,080 15,980 10,921 Auto Dealers and Supplies 86,793 90,563 96,199 76,513 91,855 90,004 97,536 94,005 89,250 238,577 Service Stations 53,276 55,590 59,050 50,907 66,208 58,032 50,997 51,592 61,102 44,970 Other Retail Stores 159,665 166,600 176,969 148,224 140,420 138,145 131,621 122,975 115,389 83,500 All Other Outlets 171,861 179,326 190,487 161,117 166,791 143,070 135,790 136,807 134,947 140,945 Total $ 700,443 $ 730,864 $ 776,353 $ 659,628 $ 723,183 $ 686,363 $ 679,920 $ 651,158 $ 638,431 $ 710,281 * Categories of sales activity, and amounts displayed for the current reporting period are estimated based on prior years' activity. Actual amounts and categories are updated when consultant's analysis of sales taxes become available.

Calendar Year
Calendar Year
Calendar Year

CITY OF SEBASTOPOL

TAXABLE SALES BY CATEGORY

LAST TEN CALENDAR YEARS (IN THOUSANDS OF DOLLARS)
Calendar Year
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Special Finance Lease- Finance
Fiscal Assessment Purchase CEC Leaseback Installment Purchase Year Bonds Agreements Loan Agreements Total2
Agreement Agreements
2014 $ 225,000 $ 3,001,169 $ 12,974 $ - $ 3,239,143 $ - $ 1,244,969 2015 205,000 2,415,429 - - 2,620,429 1,200,000 1,150,336 2016 185,000 2,273,334 - 2,458,334 1,160,118 1,130,420
2017 160,000 2,075,657 - - 2,235,657 1,118,601 1,147,458 2018 140,000 1,850,529 - - 1,990,529 1,075,382 990,710
2019 115,000 1,625,911 - - 1,740,911 1,030,391 859,552
2020 90,000 1,400,395 - - 1,490,395 983,555 737,003
2021 65,000 1,173,640 - - 1,238,640 - 627,380
2022 35,000 1,126,307 - 933,133 2,094,440 - 3,812,582
2023 - 1,050,637 - 710,239 1,760,876 - 3,559,254
Note: Details regarding the City's outstanding debt can be found in the Notes to the Financial Statements. 1 See Demographic and Economic Indicators schedule for personal income and population data. 2 Totals do not include other post-employment benefits payable or compensated absences. n/a: not available
Source: Basic Financial Statements - City of Sebastopol, California

LAST TEN FISCAL YEARS

CITY OF SEBASTOPOL

RATIOS OF OUTSTANDING DEBT BY TYPE
Governmental Activities Business-Type Activities
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Lease- Refunding State Total Percentage
Leaseback Loan Payable Drinking CEC Primary of Personal Per Agreements Truist Water Loan Loan Total2
Government Income1 Capita1
$ - $ - $ - $ 6,193 $ 1,251,162 $ 4,490,305 1.82% 604
- - 142,819 - 2,493,155 5,113,584 1.97% 686
- - 170,415 - 2,460,953 3,761,788 1.42% 500
- - 249,339 - 2,515,398 3,912,195 1.38% 516
- - 148,328 - 2,214,420 3,353,458 1.10% 435
- - 98,863 - 1,988,806 2,947,221 0.97% 382
- - 75,481 - 1,796,039 2,608,523 0.84% 337
- 1,019,462 - - 1,646,842 3,293,684 1.00% 430
487,375 955,734 - - 5,255,691 10,511,382 2.83% 1,404
365,560 891,079 - - 4,815,893 9,631,786 2.27% 1,311
Business-Type Activities
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Percentage of
Percentage Total Taxable
Fiscal of Personal Assessed Per
Year Total Income1 Value2 Capita1
2014 $ - N/A N/A N/A
2015 - N/A N/A N/A
2016 - N/A N/A N/A
2017 - N/A N/A N/A
2018 - N/A N/A N/A
2019 - N/A N/A N/A
2020 - N/A N/A N/A
2021 - N/A N/A N/A
2022 - N/A N/A N/A
2023 - N/A N/A N/A
1 See Demographic and Economic Indicators schedule for personal income and population data. 2 See Assessed Value and Actual Value of Taxable Property schedule for property value data.

Source: Basic Financial Statements - City of Sebastopol, California Debt Outstanding
General Bonded

CITY OF SEBASTOPOL

RATIOS OF GENERAL BONDED DEBT OUTSTANDING

LAST TEN FISCAL YEARS
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City's
Share of
Total Debt Percent Debt as of
June 30, 2023 Applicable1June 30, 2023
OVERLAPPING TAX AND ASSESSMENT DEBT:

Sonoma County Joint Community College District $ 397,820,000 1.432% $ 5,696,782 West Sonoma County Union High School District 80,003,954 13.367% 10,694,129 Sebastopol Union School District 14,909,364 58.717% 8,754,331 Twin Hills Union Shool District 2,710,978 0.730% 19,790 Palm Drive Healthcare District 2,296,145 12.538% 287,891 Palm Drive Healthcare District Parcel Tax Obligations 10,085,480 12.538% 1,264,517 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $ 26,717,440
DIRECT AND OVERLAPPING GENERAL FUND DEBT:

Sonoma County Certificates of Participation $ 7,046,000 1.442% $ 101,603 Sonoma County Pension Obligation Bonds 204,945,000 1.442% 2,955,307 Sonoma County Office of Education Certificates of Participation 2,936,227 1.442% 42,340 West Sonoma County Union High School District General Fund Obligations 842,078 13.367% 112,561 Sebastopol Union School District Certificates of Participation 143,677 58.717% 84,363 Twin Hills Union School District Certificates of Participation 121,792 0.730% 889 City of Sebastopol Obligations 1,760,876 100.000% 1,760,876 TOTAL DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT $ 5,057,939 COMBINED TOTAL DEBT $ 31,775,380
TOTAL DIRECT DEBT $ 1,760,876
TOTAL OVERLAPPING DEBT 30,014,504
COMBINED TOTAL DEBT $ 31,775,380 2
1 The percentage of overlapping debt applicable to the City is estimated using taxable assessed property value.

Applicable percentages were estimated by determinating 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. 2 Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and non-bonded lease obligations RATIOS TO 2022-23 ASSESSED VALUATION:

Total Overlapping Tax and Assessment Debt 1.70%
Combined Direct Debt 0.11%
Combined Total Debt 2.02%

CITY OF SEBASTOPOL

DIRECT AND OVERLAPPING DEBT GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30, 2023
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2014 2015 2016 2017
Total assessed value of all real
and personal property $ 1,017,901,561 $ 1,064,059,320 $ 1,136,043,498 $ 1,195,272,022 Debt limit percentage 3.75% 3.75% 3.75% 3.75%
Total debt limit 38,171,309 39,902,225 42,601,631 44,822,701 Amount applicable to debt limit 3,239,143 2,620,429 2,458,334 - Legal debt margin $ 34,932,166 $ 37,281,796 $ 40,143,297 $ 44,822,701 Total net debt applicable to the limit as a
percentage of debt limit 8.49% 6.57% 5.77% 0.00%
Note: California Government Code, Section 43605 sets the debt limit at 15%. The Code section was enacted when assessed valuations were based on 25% of full market value. This has since changed to 100% of full market value. Thus the limit shown is 3.75% (1/4 of 15%).

Source: Basic Financial Statements - City of Sebastopol, California Fiscal year

CITY OF SEBASTOPOL

LEGAL DEBT MARGIN INFORMATION

LAST TEN FISCAL YEARS
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2018 2019 2020 2021 2022 2023
$ 1,254,015,048 $ 1,293,160,893 $ 1,346,424,183 $ 1,396,730,880 $ 1,442,646,754 $ 1,519,838,181

3.75% 3.75% 3.75% 3.75% 3.75% 3.75%
47,025,564 48,493,533 50,490,907 52,377,408 54,099,253 56,993,932 1,990,529 1,740,911 1,490,395 1,238,640 2,059,440 1,760,876 $ 45,035,035 $ 45,035,035 $ 49,000,512 $ 51,138,768 $ 52,039,813 $ 55,233,056

4.23% 3.59% 2.95% 2.36% 3.81% 3.09%
Fiscal year
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Fiscal Special
Year Assessments Principal Interest Coverage
2014 $ 32,121 $ 15,000 $ 19,924 0.92
2015 31,082 20,000 17,004 0.84
2016 32,420 20,000 15,312 0.92
2017 31,194 25,000 11,455 0.86
2018 32,344 20,000 10,005 1.08
2019 33,315 25,000 9,686 0.96
2020 31,712 25,000 6,868 1.00
2021 32,512 25,000 8,371 0.97
2022 33,131 30,000 6,596 0.91
2023 - 35,000 2,293 0.00
Note: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements.

Source: Basic Financial Statements - City of Sebastopol, California Special Assessment Bonds

CITY OF SEBASTOPOL

PLEDGED REVENUE COVERAGE

GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS
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Adjusted Net
Fiscal Operating Operating Available
Year Revenue Expenses Revenue Principal Interest Coverage 2014 n/a n/a n/a n/a n/a n/a
2015 1,933,720 (1,194,003) 739,717 - - n/a
2016 2,061,253 (1,493,267) 567,986 39,881 49,201 6.38
2017 2,467,685 (1,538,204) 929,481 41,517 47,565 10.43
2018 2,284,764 (1,763,844) 520,920 101,011 45,217 3.56
2019 2,280,988 (1,737,823) 543,165 93,902 48,047 3.83
2020 2,343,362 (2,159,899) 183,463 97,338 45,177 1.29
2021 2,613,289 (2,245,148) 368,141 74,943 117,541 1.91
2022 2,519,592 (2,300,500) 219,092 133,663 24,535 1.38
2023 2,353,715 (2,212,048) 141,667 277,668 42,579 0.44
Note: There were no pledges of non-general obligation debt from 2013 to 2014.

Note: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. Operating expenses do not include interest, depreciation or amortization.

Source: Basic Financial Statements - City of Sebastopol, California Refunding Loan Payable - Truist, Refunding Lease Agreement, and Finance Purchase Agreements

CITY OF SEBASTOPOL

PLEDGED REVENUE COVERAGE

PROPRIETARY FUNDS

LAST TEN FISCAL YEARS
Installment Sale Agreement, State Drinking Water Loan,
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CITY OF SEBASTOPOL

DEMOGRAPHIC STATISTICS

LAST TEN FISCAL YEARS
% of Pop 25+ % of Pop 25+
Fiscal Total Per with High with Bachelors Unemployment Median Year Population (in thousands) Capita School Degree Degree Rate Age 2014 7,454 259,973 34,877 94.90% 39.20% 4.8% 48.70
2015 7,527 264,433 35,131 94.70% 42.90% 3.8% 49.70
2016 7,579 283,772 37,441 93.80% 41.20% 3.4% 51.30
2017 7,709 305,392 39,615 96.10% 48.30% 3.4% 51.30
2018 7,885 303,177 38,449 96.10% 48.30% 4.1% 47.90
2019 7,826 314,018 40,125 93.10% 38.60% 2.4% 47.20
2020 7,745 328,140 42,368 95.70% 43.80% 20.7% 47.60
2021 7,657 330,501 43,163 95.50% 44.90% 11.90% 46.80
2022 7,489 351,291 49,578 96.10% 44.60% 2.6% 48.50
2023 7,348 424,918 57,828 95.60% 47.00% 3.6% 49.10
Source:

Population: California State Department of Finance. Unemployment Data: California Employment Development Department.

Census. Projections are developed by incorporating all of the prior census data released to date. Demographic Data is totaled from Census Block Groups that overlap the City's boundaries 2010 and later - Income, Age and Education Data - US Census Bureau, most recent American Community Survey Personal Income
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