Sebastopol City Council
January 20, 2026

CITY OF SEBASTOPOL CITY COUNCIL
AGENDA ITEM REPORT FOR MEETING OF: January 20, 2026
=========================================================================================== 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, 2025 =========================================================================================== 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, 2025.

EXECUTIVE SUMMARY:

The audit was conducted by Chavan and Associates, LLP, 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 2024-25, 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 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 financial condition of the City, that will be presented in forthcoming reports focused on the City’s budget .

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The ACFR is not a direct translation of a private sector financial statements. One key difference is the scope and purpose of the reports. Private sector financial statements focus on profitability and return on investment for shareholders, while the ACFR emphasizes accountability and transparency in the use of public funds. The ACFR includes additional sections such as the Management's Discussion and Analysis (MD&A), statistical data, and notes to the financial statements, providing a broader context for understanding the City's financial activities. Moreover, the ACFR adheresto Governmental Accounting Standards Board (GASB) standards, requiring additional information beyond the basic financial statements, including budgetary reporting, funding and liability data on pensions and other post-employment benefits (OPEB), and infrastructure condition assessments. In summary, while both the ACFR and private sector financial statements aim to present a clear picture of financial health, their objectives, scope, and reporting standards differ significantly.

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.

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.

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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. The City prepares two types of financial statements that measure its finances differently; Government-wide (starting page 33) and Fund Statements (starting page 39). 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. These statements are designed to offer both long-term and short-term information about the government's financial position and performance. They help readers assess the financial health and operational outcomes of the entire government entity, encompassing all its activities; whereas Fund Statements provide detailed financials in a short term annual budgetary basis on specific funds.
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 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 33. 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.

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BUDGET COMMITTEE REVIEW:

The Budget Committee will be reviewing the ACFR on January 12, 2026.

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, 2025 – City of Sebastopol Power Point Document
Governance Audit Letter (Exhibit A) & Management Letter (Exhibit B) APPROVALS:

Department Head Approval: Approval Date:_12/28/25______ CEQA Determination (Planning): Approval Date:_N/A______ The proposed action is not a project under the California Environmental Quality Act (CEQA) Administrative Services (Financial) Approval Date:_12/28/25______ Costs authorized in City Approved Budget: ☐ Yes ☐ No  N/A Account Code (f applicable) ___________________________ City Attorney Approval: Approval Date: __1/7/26_______
City Manager Approval: Approval Date: __1/7/26________
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City of
Sebastopol
JUNE 30, 2025

AUDIT RESULTS
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Audit Standards
and Auditor
Responsibilities
GAAS
GAGAS
• Express an Opinion on the Financial
Statements
Objective
• Reasonable Assurance
• Risk Based
• Materiality
• Internal Controls
Responsibilities
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Annual Comprehensive Financial Report (ACFR)
Section 1 Introductory • Letter of Transmittal
• Elected Officials
•Organizational Chart
Section 2 Financial • Auditor’s Opinion
• MD&A
• Financial Statements and Notes
• Required Supplementary Information
• Supplementary Information
Section 3 Statistical • Fiscal
• Historical
• Demographic Information
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Statement of Net Position
$19,115,265
$23,616,570
$5,022,928
$2,305,415
$22,733,127
$1,086,720
$18,690,091
$4,365,473
$(1,426,063)
$16,302,946
$25,077,092
$6,425,757
$3,124,478
$23,568,860
$1,267,001
$19,312,420
$2,592,120
$(2,059,084)
-$5,000,000 $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 Current and other assets
Capital assets
Deferred outflows of resources
Current and other liabilities
Noncurrent liabilities
Deferred inflows of resources
Net investment in capital assets
Restricted net position
Unrestricted net position
2024 2025
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Governmental Activities - Revenues
$3,096,537
$467,855
$535,356
$11,515,275
$616,231
$(230,204)
$855,816
$752,416
$2,265,289
$10,116,521
$496,694
$174,431
-$2,000,000 $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 Charges for services
Operating grants
Capital grants
Taxes
Investment earnings
Other revenues (losses)
2024 2025
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Governmental Expenses by Function
$5,457,746
$7,213,977
$1,262,578
$2,172,239
$78,845
$3,215,865
$6,374,018
$1,542,964
$1,163,946
$33,287
$0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 General government
Public safety
Parks and recreation
Public works
Interest
2024 2025
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Business-Type Activities - Water
$3,441,843
$45,900
$2,412,802
$52,229
$2,433,539
$66,060
$2,866,889
$56,599
$0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 Charges for services
Investment earnings
Operating expenses
Interest expense
2024 2025
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Business-Type Activities - Wastewater
$4,970,764
$50,000
$20,578
$4,063,105
$32,569
$2,870,624
$-
$32,619
$4,235,974
$33,182
$0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 Charges for services
Operating grants
Investment earnings
Operating expenses
Interest expense
2024 2025
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Audit
Results
No Exceptions in Audit
Opinions
No Material Weaknesses
No Significant
Deficiencies
No Disagreements with
Management
No Significant Passed on
Adjustments
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Page | 1 16450 Monterey Road, Suite #5, Morgan Hill, CA 95037 Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] • www.cnallp.com
To the City Council of the
City of Sebastopol
We have audited the basic financial statements of the City of Sebastopol as of and for the year ended June 30, 2025, and have issued our report thereon dated November 16, 2025. Professional standards require that we advise you of the following matters relating to our audit.

Our Responsibility under Generally Accepted Auditing Standards and Government Auditing Standards
As communicated in our engagement letter, our responsibility, as described by professional standards, is to form and express an opinion(s) about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in conformity with accounting principles generally accepted in the United States of America.

Our audit of the financial statements does not relieve you or management of your respective responsibilities.

Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of the City of Sebastopol solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control.

We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you.

Other Information in Documents Containing Audited Financial Statements Pursuant to professional standards, our responsibility as auditors for other information in documents containing City of Sebastopol’s audited financial statements does not extend beyond the financial information identified in the audit report, and we are not required to perform any procedures to corroborate such other information.

Our responsibility also includes communicating to you any information which we believe is a material misstatement of fact. Nothing came to our attention that caused us to believe that such information, or its manner of presentation, is materially inconsistent with the information, or manner of its presentation, appearing in the financial statements.

Exhibit A Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

Page | 2 16450 Monterey Road, Suite #5, Morgan Hill, CA 95037 Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] • www.cnallp.com
Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously communicated with management
Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, and our firm have complied with all relevant ethical requirements regarding independence.

Significant Risks Identified
We did not identify any significant risks that required special audit consideration.

Qualitative Aspects of the Authority’s Significant Accounting Practices Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by the City of Sebastopol is included in Note 1 to the financial statements. There have been no initial selection of accounting policies and no changes in significant accounting policies or their application during June 30, 2025 except for an update to accounting treatment of compensated absences as described in Note 1 to the financials tatements. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus.

Significant Accounting Estimates
Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events.

Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments.

The most sensitive accounting estimates affecting the financial statements include actuarial assumptions included in employee retirement plans that impact pension and other postemployment balances reported in the financial statements and the useful lives of depreciable capital assets.

We evaluated the key factors and assumptions used to develop the identified estimates and Exhibit A Agenda Item Number 5
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City Council Meeting Packet of January 20, 2026

Page | 3 16450 Monterey Road, Suite #5, Morgan Hill, CA 95037 Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] • www.cnallp.com
determined that it is reasonable in relation to the basic financial statements taken as a whole and in relation to the applicable opinion units.

Financial Statement Disclosures
Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting City of Sebastopol’s financial statements relate to cash and investments, capital assets, pensions, and long-term liabilities.

Significant Unusual Transactions
For purposes of this communication, professional standards require us to communicate to you significant unusual transactions identified during our audit. As summarized in Note 6 to the financial statements, the City transferred its fire services to the Gold Ridge Fire Protection District during the year. This was not discovered as a result of our audit procedures but has been reported as a special item in the financial statements.

No significant unusual transactions were identified as a result of our audit procedures that required the attention of management.

Identified or Suspected Fraud
We did not identify nor obtain information that indicates that fraud may have occurred.

Uncorrected and Corrected Misstatements
For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole and each applicable opinion unit. There were no material uncorrected financial statement misstatements identified.

In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our audit procedures. There were no material adjustments proposed as a result of our audit.

Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the City of Sebastopol’s financial statements or Exhibit A Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

Page | 4 16450 Monterey Road, Suite #5, Morgan Hill, CA 95037 Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] • www.cnallp.com
the auditor’s report. No such disagreements arose during the course of the audit.

Circumstances that Affect the Form and Content of the Auditor’s Report For purposes of this letter, professional standards require that we communicate any circumstances that affect the form and content of our auditor’s report. There were no circumstances that affect the form and content of our auditor’s report.

Representations Requested from Management
We have requested certain written representations from management, which are included in the attached letter dated November 16, 2025.

Management’s Consultations with Other Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters.

Other Significant Matters, Findings, or Issues
In the normal course of our professional association with the City of Sebastopol, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, operating and regulatory conditions affecting the City, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as the City of Sebastopol’s auditors.

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

November 16, 2025
Morgan Hill, California
Exhibit A Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

Page | 1 16450 Monterey Road, Suite #5, Morgan Hill, CA 95037 Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] • www.cnallp.com
City of Sebastopol
City Council and Management
Sebastopol, California
In planning and performing our audit of the financial statements of City of Sebastopol as of and for the year ended June 30, 2025, 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, we considered City of Sebastopol’s internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of City of Sebastopol’s internal control. Accordingly, we do not express an opinion on the effectiveness of City of Sebastopol’s internal control over financial reporting.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis. A reasonable possibility exists when the likelihood of an event occurring is either reasonably possible or probable as defined as follows:
 Reasonably possible: The chance of the future event or events occurring is more than remote but less than likely.
 Probable: The future event or events are likely to occur.

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

The following are recommendations that will improve internal controls over financial reporting that were not considered to be material weaknesses or significant deficiencies:

1. We recommend that management implement a routine and timely petty cash count and reconciliation process at the Police Department or remove petty cash from the Police Department if it is not necessary.

2. We recommend that management coordinate with the Police Department to implement a routine deposit process for cash collections. For example, management may want to establish a dollar threshold that triggers when to deposit collections.

3. We recommend that management coordinate with the Police Department to ensure that vacation and timecards are approved and updated timely in Springbrook.

Exhibit B Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

Page | 2 16450 Monterey Road, Suite #5, Morgan Hill, CA 95037 Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] • www.cnallp.com
Respectfully,
November 16, 2025
Morgan Hill, California
Exhibit B Agenda Item Number 5
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CITY OF SEBASTOPOL

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FISCAL YEAR 2024 - 2025
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City of
Sebastopol
Sebastopol, California
Annual Comprehensive Financial Report
For the year ended June 30, 2025
Prepared by:

Administrative Services Department
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CITY OF SEBASTOPOL

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

TABLE OF CONTENTS

INTRODUCTORY SECTION
Transmittal Letter ............................................................................................................................1 Directory of City Officials .................................................................................................................4 Organizational Chart ........................................................................................................................5 GFOA Certificate of Achievement for Excellence in Financial Reporting ..........................................6

FINANCIAL SECTION
Independent Auditor’s Report .......................................................................................................8 Management’s Discussion and Analysis .......................................................................................13 Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position .................................................................................................... 33 Statement of Activities........................................................................................................34 Fund Financial Statements
Governmental Funds:

Balance Sheet................................................................................................................39 Reconciliation of the Government Funds Balance Sheet
to the Government-Wide Financial Statement of Net Position ....................................40 Statement of Revenues, Expenditures and Changes in Fund Balances.............................. 41 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities ............................................................................................. 42 Proprietary Funds:

Statement of Net Position ..............................................................................................44 Statement of Revenues, Expenses, and Changes in Fund Net Position .............................45 Statement of Cash Flows................................................................................................46

Notes to the Basic Financial Statements ....................................................................................48 Required Supplementary Information (Unaudited):

Budget and Budgetary Accounting..................................................................................................81 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual (GAAP Basis):

General Fund ......................................................................................................................82 Schedule of Pension Contributions..................................................................................................83 Schedule of Proportionate Share of Net Pension Liability................................................................84 Schedule of Changes in the Total OPEB Liability ...........................................................................85 Supplementary Information:

Nonmajor Governmental Funds:

Combining Balance Sheet............................................................................................................... 91 Combining Statement of Revenues, Expenditures and Changes in Fund Balances............................. 98 Agenda Item Number 5
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City Council Meeting Packet of January 20, 2026

CITY OF SEBASTOPOL

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

TABLE OF CONTENTS
Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual (GAAP Basis):

Street Reserve ............................................................................................................................................. 105 Vehicle Abatement ..................................................................................................................................... 106 Gas Tax ....................................................................................................................................................... 107 Measure M .................................................................................................................................................. 108 Art In-Lieu .................................................................................................................................................. 109 Inclusionary and Linkage Housing ............................................................................................................. 110 Building Permit Incremental....................................................................................................................... 111 Downtown Improvement District ............................................................................................................... 112 Housing General Plan ................................................................................................................................. 113 Police Grants .............................................................................................................................................. 114 Asset Forfeiture .......................................................................................................................................... 115 Transportation Grants ................................................................................................................................. 116 Park in Lieu ................................................................................................................................................ 117 Traffic Impact Fee ...................................................................................................................................... 118 Street Lighting Assessment ........................................................................................................................ 119 Community Development Block Grant ....................................................................................................... 120 SB1 Road and Maintenance......................................................................................................................... 121 General Government Facilities Fee ............................................................................................................. 122 Fire Facilities Fee ........................................................................................................................................ 123 Stormwater Facilities Fee ............................................................................................................................ 124 Go Sonoma Roads ....................................................................................................................................... 125 OTS Police Fed Grants ................................................................................................................................ 126 Supplemental Planning Grant (SB2 &L EAP) ............................................................................................ 127 Measure H ................................................................................................................................................... 128 CREBS Debt Service Fund .......................................................................................................................... 129 Underground Utilities Fee ........................................................................................................................... 130 General Capital Projects ............................................................................................................................. 131

STATISTICAL SECTION
Summary of Contents......................................................................................................................... 135 Financial Trends
Net Position by Component .......................................................................................................... 136 Changes in Net Position ............................................................................................................... 138 Fund Balance of Governmental Funds........................................................................................... 142 Changes in Fund Balances of Governmental Funds ....................................................................... 144 Revenue Capacity
Assessed Value and Estimated Actual Value of Taxable Property .................................................. 145 Direct and Overlapping Property Tax Rates .................................................................................. 146 Principal Property Taxpayers........................................................................................................ 147 Property Tax Levies and Collections ............................................................................................ 148 Taxable Sales by Category ........................................................................................................... 149 Debt Capacity
Ratios of Outstanding Debt by Type ............................................................................................. 150 Ratios of General Bonded Debt Outstanding ................................................................................. 151 Direct and Overlapping Governmental Activities Debt .................................................................. 152 Agenda Item Number 5
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CITY OF SEBASTOPOL

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

TABLE OF CONTENTS
Legal Debt Margin Information .................................................................................................... 154 Pledged-Revenue Coverage .......................................................................................................... 156 Demographic and Economic Information
Demographic and Economic Statistics .......................................................................................... 157 Principal Employers for City of Sebastopol .................................................................................. 158 Operating Information
Full-Time Equivalent City Government Employees by Function .................................................... 159 Operating Indicators by Function.................................................................................................. 160 Capital Asset Statistics by Function.............................................................................................. 161

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INTRODUCTORY SECTION
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December 12, 2025
Honorable Mayor, Members of the Council and Citizens of the City of Sebastopol:

City staff is pleased to present the Annual Comprehensive Financial Report (ACFR) for the City of Sebastopol (City) for the fiscal year ended June 30, 2025. This report was prepared by the Administrative Services (Finance) Department, which is responsible for both the accuracy of the data presented, and the completeness of the presentation.

The goal of the independent audit is to provide reasonable assurance that the City’s financial statements for the fiscal year ended June 30, 2025 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. Chavan & Associates, LLP, a firm of certified public accountants, has audited the City’s financial statements. They concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified (“clean”) opinion that the City’s financial statements for the fiscal year ended June 30, 2025 are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component 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.

The ACFR presents management's representations regarding the City's finances in a format required by the Government Accounting Standards Board (GASB). We recognize that while the ACFR meets these requirements, it is challenging for most people to readily understand the City’s fiscal condition from this report due to its highly technical nature. Management takes full responsibility for ensuring that all information in this report is complete and reliable. To support these representations, the City's management has established an internal control system aimed at protecting the government's assets from loss, theft, or misuse, and at gathering reliable information for preparing the City's financial statements in accordance with GAAP. Given that the cost of internal controls should not exceed their benefits, the City's internal control system is designed to provide reasonable, rather than absolute, assurance that the financial statements are free from material misstatement. As management, we affirm that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.

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 in 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, recommending an annual budget, 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: A Community That Values Its People
Sebastopol is a community that truly values its people. It embraces inclusion, diversity, and sustainable environmental practices, while prioritizing the well-being and success of its residents and businesses. Visitors, whether from the San Francisco Bay Area or from around the globe, are drawn to Sebastopol for its natural beauty, fine dining, welcoming accommodations, and a variety of recreational and educational activities.

The City is renowned for its leadership in environmental sustainability, with a strong focus on conserving natural resources like energy and water. Sebastopol hosts numerous local events that celebrate the arts, supported by a vibrant Community Center that offers accessible space for local artisans, actors, and communicators. The city also features a "makers' space.” Sebastopol aims to create an environment where citizens and visitors can learn and grow together in a nurturing and supportive atmosphere.

Budget Process
Each year, the City Council approves a budget that outlines the policies and fiscal actions to be taken by the City. This annual budget serves as the cornerstone of Sebastopol’s financial planning and expenditure control system. The Budget Committee reviews the proposed operating and capital budgets and making recommendations to the City Council for final enactment. This structured budget process is designed to achieve the fiscal and policy goals for the upcoming fiscal year.

The process includes collaboration among the departments and City Manager. It also includes discussions and feedback from the Budget Committee, and considers requests from Councilmembers. Public hearings, typically starting in June, are held by the Council to review and gather input on the proposed budget before its formal adoption. The budget is adopted by fund, department, and account classification.

Active public involvement is essential to balancing the goals of continuous service improvement and fiscal sustainability.

This report includes budget-to-actual comparisons for each governmental fund with an appropriated annual budget, ensuring transparency and accountability in the City's financial management.

Local Economy
The City is situated in the scenic Sonoma County, about sixty miles north of San Francisco, Sebastopol boasts a unique mix of specialty shops, including the charming Main Street and the Barlow retail area, which features restaurants and entertainment venues. This charming city attracts numerous visitors each year, contributing to its revenue through sales taxes and transient occupancy taxes. Visitors are drawn to Sebastopol for its appealing recreational opportunities, excellent food and wine, and specialty retail shops offering locally made products. The warm welcomes and friendly service ensure that they keep coming back.

The City is committed to supporting local employees by promoting new housing that reflects the City’s character and values.

A key example is the Canopy Project, which began partial construction in 2025 and will continue with its next phase in 2026.

These housing initiatives aim to provide modern, affordable options, helping residents live closer to where they work. This not only strengthens the local economy but also enhances community well-being by reducing commute times and encouraging residents to shop locally, ultimately boosting sales tax revenue. Housing development is a critical component of creating a resilient and inclusive community.

Tourism remains a major economic driver for our region, yet with only one hotel currently operating, we are missing out on significant opportunities to capture visitor spending. Hotels play a vital role in supporting local businesses and generating revenue through Transient Occupancy Taxes (TOT) and property taxes, which fund essential services. While we remain optimistic about future hotel development, we are cautious about relying on this revenue until projects are much substantially close to completion. The hotel market can be unpredictable, and associated revenues are too uncertain to include in long-term financial planning at this stage.

The City’s Financial Outlook, Challenges and Path Forward The City has recognized that recurring expenses have consistently exceeded recurring revenues, creating a structural imbalance that cannot be sustained long-term. To address this, on April 1, 2025, the City Council adopted a one-year goal and set priorities to guide decision-making and align resources are aligned with community needs.

Current Budget Dynamics
The FY25-26 budget includes temporary revenues, particularly building permit fees driven by a peak in construction activity.

While these revenues provide short-term relief, they are non-recurring making this approach unsustainable for future fiscal years and underscores the need for sustainable strategies.

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Revenue and Expense Pressures
The City faces financial strain on both sides of the ledger:
• Sales tax, the City’s largest funding source, has remained stagnant, reflecting uncertainty and volatility in the current economic environment.
• In November 2024, voters approved Measure U, a ½-cent local sales tax increase, projected to generate $1.5 million annually. While this measure provides critical support for services such as 911 emergency medical/police/fire response, wildfire/emergency preparedness, maintenance of streets/roads, parks/trails, library, youth and senior services, retaining/attracting local businesses; and for general government use as outlined in the measure, it does not fully offset rising costs.
• Operating expenses—including personnel, public safety, and infrastructure continue to outpace revenue growth, leaving the City vulnerable to deficits without additional revenue streams or cost containment measures.

Working Together Toward Solutions
City leadership, staff and community partners are fully aware of these challenges and committed to working together on long-term, sustainable solutions. This is not something that can be resolved overnight; it will take time, collaboration, and careful planning. The City is actively exploring options to strengthen recurring revenues, improve operational efficiency, and prioritize core services to ensure financial stability for years to come.

The Bottom Line
Even with Measure U and temporary construction-related revenues, the City’s fiscal position remains challenging. While the current environment presents challenges, the City is taking proactive steps to live within our means, maintain careful spending, and identify cost-saving opportunities when applicable. With continued teamwork and transparency, we are confident in our ability to navigate this period and prioritize services and create a sustainable future.

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, 2024. 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 eight consecutive years (fiscal years ended 2017 through 2024). 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.

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. We want to express our appreciation to everyone who assisted and contributed to the preparation of this report.

Respectfully Submitted,
Mary Gourley Ana Kwong
Interim City Manager Administrative Services Director

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CITY OFFICIALS
(as of the date of the Financial Statements)
City Council:

Jill McLewis, Mayor
Sandra Maurer, Vice Mayor
Phill Carter, Councilmember
Neysa Hinton, Councilmember
Stephen Zollman, Councilmember
City Staff (Support):

Interim City Manager ………………..……………………………..Mary Gourley
City Attorney ……………………………………………………… Alex Mog (Contract) Assistant City Manager | City Clerk ......................................... Mary Gourley Administrative Services Director .................……………………. Ana Kwong Building Official ............…………………………………………… Steve Brown (Contract) Community Development Director...…………………………… Jane Riley (Contract) Acting Director of Public Works……………............................. Erik Billing Police Chief ..........................................………………………… Sean McDonagh Advisory Commissions or Committees:

Planning Commission
Design Review Board
Public Arts Committee
Climate Action Committee
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Citizens of
Sebastopol
City Organization
(as of the date of the Financial Statements)
City Wide Organization Chart by Function
Council
Meeting
Municipal Code
Public Record
City Council
Mary Gourley
Interim City
Manager
Alex Mog
City Attorney
(Contract)
Mary Gourley
Assistant City Mgr
City Clerk
Election
Information
Building Official
Steve Brown
(Contract)
Planning Director
Jane Riley
(Contract)
Ana Kwong
Administrative
Services Director
Sean McDonagh
Police Chief
Planning
Advance
Planning
Economic
Development
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
Crime
Preventions
Investigations
Patrol
Unit
Dispatcher &
Records
Animal
Control
Permit &
Insurance
Processing
Public
Art
Climate
Action
Erik Billing
Acting Director of
Public Works
Development
Review

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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, 2024
Executive Director/CEO
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FINANCIAL SECTION
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16450 Monterey Road, Suite #5, Morgan Hill, CA 95037
Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] • www.cnallp.com
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, business-type activities, each major fund, and the aggregate remaining fund information of the City of Sebastopol (the “City"), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise 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, business-type activities, each major fund, and the aggregate remaining fund information of the City of Sebastopol, as of June 30, 2025, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the 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 City 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.

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 GAAS will always detect a material Agenda Item Number 5
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16450 Monterey Road, Suite #5, Morgan Hill, CA 95037
Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] • www.cnallp.com
misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

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

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual fund financial statements, schedules, and other information listed in the supplementary information section of the table of contents 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 Agenda Item Number 5
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16450 Monterey Road, Suite #5, Morgan Hill, CA 95037
Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] • www.cnallp.com
been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the combining and individual fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information
Management is responsible for the other information included in the annual comprehensive financial 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 November 16, 2025 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.

The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Chavan & Associates, LLP
Certified Public Accountants
November 16, 2025
Morgan Hill, California
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MANAGEMENT’S DISCUSSION

AND ANALYSIS
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CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2025
(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, 2024 and ended June 30, 2025 (FY24-25). 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 $21,629,000 (net position) at June 30, 2025: Governmental activities’ net position was $15,307,000; and business-type activities’ net position was $6,322,000.
 Total government-wide net position is categorized as follows:
o $18,690,000 is the net investment in capital assets;
o $4,365,000 is restricted for specific purposes (restricted net position); and, o (1,426,000) 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 activities decreased by ($184,000) and business-type activities increased by $1,968,000; accounting for a government-wide increase in net position of $1,784,000.
 At June 30, 2025, the city’s governmental funds reported a combined ending fund balance of $14,508,000. Governmental funds’ balances increased by $1,308,000 for the year reported.  The general fund reports fund balance of $11,906,000 at June 30, 2025; and it is distributed in these categories:
1) $1,306,000 is categorized as non-spendable, and is comprised of prepaid items. 2) $2,030,000 is reported as restricted for pension obligation. 3) $4,290,000 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, $995,000; and  Equipment, vehicle and technology replacement, $1,037,000; and,  Pension and other post-employment liabilities rate stabilization, $1,245,000; and  Flood recovery repair, $1,012,000
4) $4,280,000 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 $6,322,000 at June 30, 2025; with $4,380,000 reported in the water fund; and $1,942,000 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, 2025
(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 long-term and short-term information about the City's overall financial status.  The remaining statements are fund financial statements that focus on individual parts of the City government, 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, 2025
(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 long-term 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 as revenues pertaining to uncollected taxes and expenses pertaining to earned but unused vacation and sick leave.

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CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2025
(Rounded to the nearest $1,000)
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.

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 Agenda Item Number 5
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CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2025
(Rounded to the nearest $1,000)
are not available to support the government’s own programs. The City does not report fiduciary funds for the year ended June 30, 2025.

GOVERNMENT-WIDE FINANCIAL ANALYSIS
Net Position: The City's combined net position, including both governmental activities and business-type activities is reflected in Table A-1
2025 2024 2025 2024 2025 2024
Current and other assets $ 16,307,000 $ 15,377,000 $ 3,909,000 $ 2,026,000 $ 20,216,000 $ 17,403,000 Capital assets 13,799,000 14,855,000 8,717,000 9,122,000 22,516,000 23,977,000 Total assets 30,106,000 30,232,000 12,626,000 11,148,000 42,732,000 41,380,000 Deferred outflows of Resources
Deferred Outflows Pension and OPEB 4,138,000 5,303,000 885,000 1,123,000 5,023,000 6,426,000 Total deferred outflows of resources 4,138,000 5,303,000 885,000 1,123,000 5,023,000 6,426,000 Current Liabilities 1,763,000 2,375,000 543,000 750,000 2,306,000 3,125,000 Long-term Liabilities 16,193,000 16,570,000 6,540,000 6,999,000 22,733,000 23,569,000 Total liabilities 17,956,000 18,945,000 7,083,000 7,749,000 25,039,000 26,694,000 Deferred inflows of Resources
Deferred inflows - Pension and OPEB 981,000 1,099,000 106,000 168,000 1,087,000 1,267,000 Total deferred inflows of resources 981,000 1,099,000 106,000 168,000 1,087,000 1,267,000 Net Position
Invested in capital assets 12,735,000 13,491,000 5,955,000 5,821,000 18,690,000 19,312,000 Restricted 4,365,000 2,592,000 - - 4,365,000 2,592,000
Unrestricted (1,793,000) (592,000) 367,000 (1,467,000) (1,426,000) (2,059,000) Total net position $ 15,307,000 $ 15,491,000 $ 6,322,000 $ 4,354,000 $ 21,629,000 $ 19,845,000 Table A-1
City of Sebastopol’s Net Position
(rounded , nearest thousand dollars)
Governmental Activities Business-Type Activities Total
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2025
(Rounded to the nearest $1,000)
Total net position, (assets and deferred outflows, less liabilities and deferred inflows), was $21,629,000 at June 30, 2025. Governmental activities net position was $15,307,000; and business-type activities’ net position was $6,322,000.

The largest component of the City’s net position is invested in capital assets; and is reported at $18,690,000. This component represents 86% of total net position as of June 30, 2025. 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.

An additional portion of the City’s net position represents resources that are subject to external restrictions on how they may be used, with $4,365,000 reported as restricted at June 30, 2025.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2025
(Rounded to the nearest $1,000)
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, 2025 and June 30, 2024. 2025 2024 2025 2024 2025 2024
Revenues
Program revenues:

Charges for services $ 3,097,000 $ 856,000 $ 8,413,000 $ 5,304,000 $ 11,510,000 $ 6,160,000 Grants and contributions 468,000 752,000 50,000 518,000 752,000 Capital grants and contributions 535,000 2,265,000 535,000 2,265,000 General revenues:

Property taxes 3,832,000 3,608,000 3,832,000 3,608,000
Sales taxes 5,799,000 4,521,000 5,799,000 4,521,000
Transient occupancy tax 480,000 519,000 480,000 519,000 Utility users tax 914,000 863,000 914,000 863,000
Franchise taxes 490,000 490,000 490,000 490,000
Investment earnings 616,000 497,000 616,000 497,000
Other income 485,000 220,000 66,000 98,000 551,000 318,000 Total revenues 16,716,000 14,591,000 8,529,000 5,402,000 25,245,000 19,993,000 Expenses
General government 5,458,000 3,216,000 5,458,000 3,216,000 Public safety 7,214,000 6,374,000 7,214,000 6,374,000
Parks and recreation 1,262,000 1,164,000 1,262,000 1,164,000 Public works 2,172,000 1,543,000 2,172,000 1,543,000
Fire - Transfer ssset to GRFD 715,000 715,000 -
Interest 79,000 33,000 79,000 33,000
Water 2,465,000 2,923,000 2,465,000 2,923,000
Wastewater 4,096,000 4,269,000 4,096,000 4,269,000
Total expenses 16,900,000 12,330,000 6,561,000 7,192,000 23,461,000 19,522,000 Increase in net position before
transfers and special item (184,000) 2,261,000 1,968,000 (1,790,000) 1,784,000 471,000 Transfers - 70,000 (70,000) - -
Increase (decrease) in net position (184,000) 2,331,000 1,968,000 (1,860,000) 1,784,000 471,000 Change in Net Position (184,000) 2,331,000 1,968,000 (1,860,000) 1,784,000 471,000 Net position beginning 15,491,000 13,160,000 4,354,000 6,214,000 19,845,000 19,374,000 Net position, ending $ 15,307,000 $ 15,491,000 $ 6,322,000 $ 4,354,000 $ 21,629,000 $ 19,845,000 Governmental Activities Business Type Activities Total
Table A-2
Changes in City of Sebastopol’s Net Position
(rounded to nearest thousand dollars)
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City Council Meeting Packet of January 20, 2026

CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2025
(Rounded to the nearest $1,000)
Governmental Activities:

The government-wide net position increased by $1,784,000, reflecting overall financial growth despite mixed results across activities. This change was composed of:
 Governmental Activities: A decrease of $184,000, primarily due to higher spending levels in various programs, which offset revenue gains from the updated cost allocation methodology, the implementation of Sales Tax Measure U, and higher interest earnings.
 Business-Type Activities: A significant increase of $1,968,000, driven mainly by the water and sewer rate adjustments. These rate increases strengthened utility revenues and supported long-term infrastructure sustainability.

The net improvement was supported by:
 Updated Cost Allocation Plan – More accurate distribution of shared service costs.  New Sales Tax Measure U – Additional revenue stream for governmental operations.  Higher Interest Earnings – Favorable market conditions boosted investment returns.

In summary: While governmental activities experienced a slight decline due to increased spending, the substantial growth in business-type activities—primarily from water rate increases—was the key factor behind the overall positive change in net position.

Governmental Activities Revenue
Governmental activities were funded through a combination of tax revenues, service charges, grants, and other income sources:
 Tax Revenues – A total of $11,515,000 was collected from property taxes, retail sales, utility use, and hotel occupancy.
o Sales taxes represent approximately 35% of governmental activities revenue. o Property taxes make up 23% of total revenue and Transient occupancy taxes account for 3%. o Franchise fees and utility taxes contribute for 8%
Note: Sales and occupancy taxes are more sensitive to short-term economic fluctuations compared to property taxes.
 Charges for Services – Individuals who directly benefited from programs paid $3,096,000 in service fees, with the bulk of this amount—approximately $1,762,000—stemming from the updated cost allocation plan, which redistributed shared service costs across departments accounting for 18% of total revenue.  Grants and Contributions – Operating grants totaled $468,000, while capital grants contributed $535,000, supporting specific programs and projects accounting for 6%.  Other Income – Tax revenues remain the primary funding source for governmental activities, while grants, service charges, and other income—including interest earnings, miscellaneous revenues, and transfers from other funds totaling $1,101,000—collectively account for about 7% of revenue.

A graphical representation of the relative weights of governmental activities revenues follow Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2025
(Rounded to the nearest $1,000)
Total FY 2024-25 governmental activities revenues reached $16,716,000, reflecting a 15% increase $2,125,000 over the prior year. Of this total, program revenues contributed $4,100,000 (25%) and general revenues, primarily taxes, accounted for $12,616,000 (75%). General revenues grew by $1,399,000, while program revenues rose by $226,000.

Property taxes totaled $3,832,000, an increase of $224,000 (7%) from the prior year’s $3,608,000. Under the California Constitution, baseline growth in assessed property values is generally limited to 2%. However, assessed values can rise beyond this limit—typically ranging from 2% to 4%—due to factors such as property transfers and reassessment catch-up adjustments. These conditions contributed to the higher property tax collections this year.

Sales taxes totaled $5,799,000, an increase of $1,278,000 (29%) from the prior year’s $4,521,000. This strong growth was driven by adjustments in local and countywide sales tax rates, which resulted in higher collections and contributed to the substantial improvement in revenue.

Transient Occupancy Taxes totaled $480,000, a decrease of $39,000 (9%) from the prior year’s $519,000. This decline is largely attributed to reduced travel and lodging demand, influenced by broader economic conditions such as higher interest rates and inflationary pressures. These factors have constrained discretionary spending, which reflects the interconnected impact on tourism and consumer behavior.

Utility Users Tax and Franchise Taxes totaled $1,404,000, reflecting an increase of $51,000 (4%) compared to the prior year’s $1,353,000. This modest growth is primarily due to inflation.

Other revenues totaled $1,101,000, an increase of $385,000 (54%) over the prior year’s $716,000. This growth was primarily driven by two factors: (1) favorable interest earnings resulting from improved market conditions, which boosted returns on invested funds; and (2) reimbursements related to support provided for the implementation of new hauler services, reflecting cost recovery for operational assistance. Together, these sources contributed significantly to the overall increase in this revenue category.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2025
(Rounded to the nearest $1,000)
Program revenues overall of $4,099,000 increased by $226,000, or 6%, compared to the prior year $3,873,000.

This change was primarily driven by the following factors:
 Increase of $1,760,000 due to reclassification of charges for services as revenue rather than expense reductions under the new Cost Allocation Plan.
 Increase of $480,000 in revenue from building permits related to large developments.  Decrease of ($284,000) due to a one-time grant for repairing the library roof.  Decrease of ($1,730,000) from reduced transportation projects previously funded by grants.

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:

Percentage
Change
2025 2024 2024-2025
General Government 5,458,000 3,216,000 69.7%
Public Safety 7,929,000 6,374,000 24.4%
Parks and recreation 1,262,000 1,164,000 8.4%
Public Works 2,172,000 1,543,000 40.8%
Interest on Long term Debt 79,000 33,000 139.4%
Total 16,900,000 12,330,000 37.1%
Expenses by Function
Table A-3
Cost of City Sebastopol’s Governmental Activities
(in rounded nearest one thousand dollars)
The increase in functional areas’ shares of total expenses is largely attributable to a change in the cost allocation methodology. Previously, allocated amounts were treated as reductions to departmental expenses. Under the new approach, these amounts—approximately $1,760,000—are now recorded as charges for services revenue rather than expense offsets, resulting in higher reported expenses compared to the prior year. Moreover, other costs rose due to increased personnel expenses, including higher salaries, routine merit adjustments, cost-of-living increases, and rising benefit costs.

During the fiscal year, the City finalized the consolidation of its fire services with the Gold Ridge Fire Protection District. This reorganization was approved following the LAFCO protest hearing. The transition is expected to improve service delivery, provide upgraded facilities, and ensure sustainable staffing levels.

The City transferred capital assets to the Gold Ridge Fire Protection District as part of an interagency agreement to improve regional fire protection services. The transaction resulted in a recognized loss and the accounting treatment reflects the difference between the asset’s carrying value on the City’s financial records and the amount realized upon transfer. While this loss impacts the current fiscal year’s financial results, it represents a planned and necessary step toward achieving long-term service improvements and cost efficiencies.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2025
(Rounded to the nearest $1,000)
Business-Type Activities:

The City’s business-type activities consist of transactions within the water and wastewater enterprise funds. At June 30, 2025, the combined net position for these funds was $6,322,000, with $4,380,000 in the water fund and $1,942,000 in the wastewater fund. Of this total, investment in capital assets accounted for $3,524,000 in the water fund and $2,432,000 in the wastewater fund.

For FY 2024-25, the net position of business-type activities increased by $1,968,000, representing a 46% change from the combined beginning net position. The water fund grew by $909,000, while the wastewater fund increased by $1,060,000.

This improvement reflects a revenue windfall from the implementation of water and sewer rate increases, which significantly boosted utility revenues and strengthened financial sustainability.

Investment in capital assets represents the largest component of the business-type activities’ net position, totaling $5,955,000, which accounts for approximately 95% of the overall net position. This category reflects the City’s significant investment in water and wastewater infrastructure, including treatment facilities, distribution systems, and related equipment—assets essential for delivering reliable utility services and supporting long-term sustainability.

Unrestricted net position, which equals total net position less the amount invested in capital assets, is $367,000, or about 5% of the total. This portion provides flexibility for operational needs, contingencies, and short-term financial obligations, ensuring the enterprise funds maintain liquidity while continuing to invest in critical infrastructure.

FINANCIAL ANALYSIS OF THE CITY'S FUNDS
Governmental Funds: The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s shortterm 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 non-major 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.

As of June 30, 2025, the City’s governmental funds reported a total fund balance of $14,508,000, an increase of $1,309,000 compared to the prior year’s balance of $13,199,000. This total consists of the General Fund balance of $11,906,000 and the combined balances of non-major governmental funds totaling $2,602,000.

The total fund balance is reported within these categories:
 $1,306,000 is “non-spendable” because the financial resources have been used to prepay expenditure and advances to wastewater fund.
 $4,365,000 is “restricted,” and is only available to spend as specified by external funding sources.  $491,000 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.  $4,290,000 is “assigned” for a particular future use.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2025
(Rounded to the nearest $1,000)
 $4,056,000 is “unassigned,” and as such is considered available to finance future years’ budgetary needs at the discretion of the City Council.

General Fund:

The General Fund serves as the City’s primary operating fund. During FY 2024–25, its balance increased by $240,000, bringing the total to $11,906,000 as of June 30, 2025. This fund balance is allocated across the following categories:
 $1,306,000 is “non-spendable” because the financial resources have been used to prepay expenditure and advances to wastewater fund.
 $2,030,000 is restricted for uses specified by external funding sources or law.  $4,290,000 is “assigned” for these stated uses:
o $995,000 for buildings and infrastructure;
o $1,037,000 for equipment, technology and vehicle replacement; and, o $1,245,000 for pension and post-employment medical benefits. o $1,012,000 for flood recovery repairs
 $4,280,000 is “unassigned,” and as such is considered available to finance future years’ budgetary needs at the discretion of the City Council.

General Fund expenditures for FY 2024–25 totaled $14,282,000, an increase of $2,819,000, or 25%, compared to the prior year’s expenditures of $11,463,000. This significant increase is primarily attributable to a change in the City’s cost allocation methodology. In the prior year, cost allocations were applied as offsets to departmental expenses, reducing reported expenditures. In FY 2024–25, however, the cost allocation plan was recorded as charges for services rather than offsets. This adjustment resulted in higher reported expenditures across departments but also generated corresponding revenue to recognize these charges. The revised accounting treatment enhances transparency by providing a clearer representation of departmental costs and revenue flows.

To assess the City Council’s budgetary flexibility within the General Fund, it is useful to consider the unassigned fund balance as a percentage of annual expenditures. As of June 30, 2025, the unassigned General Fund balance was $4,280,000, which represents approximately 30% of FY 2024–25 General Fund expenditures totaling $14,282,000. This ratio indicates a strong level of fiscal capacity to address unforeseen needs or emergencies.

General Fund Budgetary Highlights
This section has always been a source of both interest and complexity for the public. While this section highlights the general fund budgetary aspects, this detailed write-up is referencing page 82. Additionally, it is standard practice to define the general fund more broadly in audits (including additional funds) than in the budget, resulting in the financial statements not providing a direct reconciliation between this document and the budget document.

The original budget for the FY 2024-25 general fund projected a decrease in fund balance of ($734,000). During the year, this budget was amended to anticipate a further decrease in fund balance of ($914,000). For more details, please refer to the net change in fund balances on page 82.

During fiscal year 2024–25, the General Fund achieved results that were more favorable than anticipated:
 Revenues: Actual revenues exceeded the final budget estimates by $117,000. This increase was primarily due to the implementation of a newly enacted sales tax measure, which generated additional revenue. The gain was partially offset by lower-than-expected building permit activity.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2025
(Rounded to the nearest $1,000)
 Expenditures: Total expenditures were $826,000 below the final appropriations. The variance is mainly attributed to salary savings resulting from position vacancies and reduction in operational spending during the fiscal year.
 Other Financing Sources (Uses): A favorable variance of $211,000 occurred in this category, largely due to a shift in fire engine debt service payments being funded through Measure H sources.

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.

Non-major Governmental Funds:

Non-major governmental funds, in the aggregate reported June 30, 2025 fund balances of $2,602,000. 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 increased by $1,069,000 during FY 2024-25. The increase is attributed to the appropriate use of financial resources accumulated in prior years to fulfill the purposes for which those accumulated resources were intended.

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 of enterprise funds at June 30, 2025 is $6,322,000; with $5,955,000 representing the net investment in capital assets and $367,000 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, 2025.

CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
At the end of 2025 the City had invested $23,617,000, (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 decrease of $1,461,000 for FY 2024-25.

Governmental activities capital assets, net of accumulated depreciation decreased by $1,050,000 during FY 24-25 The primary driver was the transfer of fixed assets to Gold Ridge Fire District as part of the reorganization, totaling $715,000. The remaining activity largely involved routine vehicle and equipment replacements, construction in progress for energy conservation initiatives, and standard depreciation..

Business-type activities capital assets, net of accumulated depreciation, decreased by $406,000 during FY 24-25.

This reduction primarily reflects the impact of routine depreciation on existing fixed assets, which is a normal part Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2025
(Rounded to the nearest $1,000)
of the asset lifecycle. No significant acquisitions or disposals occurred during the year, so the decrease is largely attributable to the systematic allocation of asset costs over their useful lives.

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). 2025 2024 2025 2024 2025 2024
Land and CIP 3.54 7.71 0.30 3.95 3.84 11.66
Buildings & structures 9.61 8.05 3.75 13.36 8.05
Machinery and equipment 2.98 2.88 0.24 0.24 3.22 3.12
Reservoirs

4.29 4.29 4.29 4.29
Pipelines & water system 4.83 4.83 4.83 4.83
Pipelines & wastewater system 8.94 8.97 8.94 8.97
Vehicles 2.50 3.13 1.02 1.02 3.52 4.15
Infrastructure 11.66 9.49 - - 11.66 9.49
Accumulated depreciation (16.50) (16.42) (13.56) (13.08) (30.06) (29.50) Total 13.79 14.84 9.81 10.22 23.60 25.06
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 $299,000 and total $1,065,000 as of June 30, 2025. Significant transactions included $299,000 reductions in long-term obligations due to scheduled payments. Detailed information for long-term debt obligations is provided in note 7.

For FY 24-25 business-type long term debt obligations decreased by $540,000 and total $3,862,000 as of June 30, 2025. Significant transactions consist of normal reductions in debt obligation principal due to scheduled payments, $539,000.

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

ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES:

The City continues to implement strategic budgeting practices designed to safeguard financial stability while maintaining flexibility and responsiveness to evolving community needs and economic conditions. These practices include establishing realistic revenue projections, prioritizing essential services, and exercising discipline in discretionary spending. To maintain transparency and oversight, the City conducts regular reviews of revenues and expenditures throughout the fiscal year, including monthly meetings with the Budget Committee.

These meetings ensure the committee remains informed of any changes, monitors financial performance, identifies emerging trends, and supports forward looking with management of public resources.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

CITY OF SEBASTOPOL

MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2025
(Rounded to the nearest $1,000)
A significant development in FY 2024–25 was the voter-approved ½-cent sales tax measure on November 5, 2024. This measure is expected to generate approximately $1,500,000 in additional annual revenue, providing a dedicated funding source to support critical services and infrastructure improvements. The new revenue stream enhances the City’s ability to maintain service levels, invest in capital projects, and build reserves for future contingencies, further strengthening its fiscal resilience.

For the 2026 fiscal year, (starts July 1, 2025 and ends June 30, 2026) the following budgetary highlights are noted:
 The projected General Fund revenues for FY 2025–26 are estimated at $15,690,000, representing an increase of $1,548,000 compared to the prior year’s adjusted budget. On the expenditure side, the budget includes $15,686,000 in General Fund expenses, which reflects a increase of $507,000 from the previous year. This moderate rise in spending underscores the City’s commitment to maintaining service levels and investing in critical areas, even as cost pressures persist. The increase is carefully managed to align with strategic goals and ensure fiscal sustainability.
 Despite these challenges, the FY 2025–26 budget achieves a small surplus of $3,900, marking a significant improvement from previous years that faced budget deficits. Closing this one-year budgetary gap is both an accomplishment and a challenge, requiring disciplined financial management and strategic prioritization. This progress represents an important step toward fulfilling the City Council’s longstanding goal of maintaining a balanced budget, reinforcing the City’s commitment to fiscal responsibility and long-term sustainability.
 The City’s water and wastewater systems are in poor condition due to years of underinvestment and low rates. Historically, revenues have been insufficient to cover operating costs, fund major projects, and maintain reserves. While essential maintenance continues to prevent service disruptions, a comprehensive Water Master Plan will outline needed capital improvements aligned with available funding. According to the rate study, an additional $9,000,000 will be required over the next three years: $7,700,000 for operating deficits, $700,000 for critical capital projects, and $800,000 to restore reserves. The Wastewater Fund must also reimburse the General Fund for over $1 million previously borrowed. Recent rate increases aim to stabilize finances, address deferred maintenance, and replenish reserves—representing the minimum needed to balance operations and begin infrastructure renewal. These actions mark a shift toward fiscal responsibility, though recovery will take time. The FY 2025-26 budget surplus is part of a strategy to rebuild the Enterprise Funds.

The City of Sebastopol invites interested readers to review the detailed operating budget by visiting the website:
https://www.cityofsebastopol.gov/resource_library/city-budgets/ 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 Administrative Services Director at the City of Sebastopol, 7120 Bodega Avenue, Sebastopol, CA 95472, (707) 823-7863, [email protected].

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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, 2025
BusinessGovernmental Type
ASSETS Activities Activities Total
Current Assets:

Cash and investments $ 10,725,899 $ 2,157,954 $ 12,883,853 Resitricted cash and investments 2,029,908 - 2,029,908
Accounts receivable 236,708 1,449,354 1,686,062
Taxes receivable 1,477,064 - 1,477,064
Interest receivable 51,109 12,597 63,706
Prepaid items and other 281,876 289,263 571,139
Leases receivable 37,190 - 37,190
Total Current Assets 14,839,754 3,909,168 18,748,922
Noncurrent Assets:

Leases receivable 192,729 - 192,729
Notes receivable 173,614 - 173,614
Internal balances 1,100,000 (1,100,000) -
Capital Assets:

Nondepreciable 3,543,624 301,685 3,845,309
Depreciable, net of accumulated depreciation 10,256,153 9,515,108 19,771,261 Total Capital Assets, Net 13,799,777 9,816,793 23,616,570 Total Noncurrent Assets 15,266,120 8,716,793 23,982,913 Total Assets $ 30,105,874 $ 12,625,961 $ 42,731,835

DEFERRED OUTFLOWS OF RESOURCES
Pension Adjustments $ 3,918,382 $ 884,789 $ 4,803,171
OPEB Adjustments 219,757 - 219,757
Total Deferred Outflows of Resources $ 4,138,139 $ 884,789 $ 5,022,928

LIABILITIES
Current Liabilities:

Accounts payable $ 1,166,866 $ 223,625 $ 1,390,491
Interest payable 3,680 5,444 9,124
Deposits payable 217,815 2,875 220,690
Unearned revenue 8,982 366 9,348
Total OPEB liability, due within one year 90,085 - 90,085 Compensated absences, due within one year 147,623 7,770 155,393 Long-term debt, due within one year 127,734 302,550 430,284 Total Current Liabilities 1,762,785 542,630 2,305,415
Noncurrent Liabilities:

Net pension liability 13,062,636 2,949,607 16,012,243
Total OPEB liability 1,603,118 - 1,603,118
Compensated absences, due in more than one year 590,493 31,078 621,571 Long-term debt, due in more than one year 937,146 3,559,049 4,496,195 Total Noncurrent Liabilities 16,193,393 6,539,734 22,733,127 Total Liabilities $ 17,956,178 $ 7,082,364 $ 25,038,542

DEFERRED INFLOWS OF RESOURCES
Leases $ 222,111 $ - $ 222,111
Pension Adjustments 468,647 105,823 574,470
OPEB Adjustments 290,139 - 290,139
Total Deferred Inflows of Resources $ 980,897 $ 105,823 $ 1,086,720

NET POSITION
Net investment in capital assets $ 12,734,897 $ 5,955,194 $ 18,690,091 Restricted for:

Highway and streets 1,571,340 - 1,571,340
Public safety 247,696 - 247,696
Affordable housing 249,756 - 249,756
Parks and recreation 116,957 - 116,957
Pensions and OPEB 2,179,724 - 2,179,724
Total Restricted 4,365,473 - 4,365,473
Unrestricted (1,793,432) 367,369 (1,426,063)
Total Net Position $ 15,306,938 $ 6,322,563 $ 21,629,501 The accompanying notes are an integral part of these financial statements.

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City of Sebastopol
Statement of Activities
For the Year Ended June 30, 2025
Operating Capital
Charges for Grants and Grants and Governmental Business-Type Functions/Programs Expenses Services Contributions Contributions Total Activities Activities Total Primary Government:

Governmental Activities:

General government $ 5,457,746 $ 1,989,338 $ 183,886 $ - $2,173,224 $ (3,284,522) $ (3,284,522) Public safety 7,213,977 162,386 283,969 - 446,355 (6,767,622) (6,767,622) Parks and recreation 1,262,578 167,997 - - 167,997 (1,094,581) (1,094,581) Public works 2,172,239 776,816 - 535,356 1,312,172 (860,067) (860,067) Interest 78,845 - - - - (78,845) (78,845)
Total Governmental Activities $ 16,185,385 $ 3,096,537 $ 467,855 $ 535,356 $4,099,748 (12,085,637) (12,085,637) Business-Type Activities:

Water $ 2,465,031 $ 3,441,843 $ - $ - $3,441,843 $ 976,812 976,812 Wastewater 4,095,674 4,970,764 50,000 - 5,020,764 925,090 925,090 Total Business-Type Activities $ 6,560,705 $ 8,412,607 $ 50,000 $ - $8,462,607 1,901,902 1,901,902 General Revenues:

Taxes:

Property taxes 3,831,902 - 3,831,902
Sales taxes 5,799,149 - 5,799,149
Transient occupancy tax 480,263 - 480,263
Utility users tax 913,843 - 913,843
Franchise taxes 490,118 - 490,118
Total taxes 11,515,275 - 11,515,275
Investment earnings 616,231 66,478 682,709
Other revenues 484,696 - 484,696
Total General Revenues 12,616,202 66,478 12,682,680
Special item:

Loss on transfer of asset to the Gold Ridge Fire Protection District (714,900) - (714,900) Total General Revenues and Special Item 11,901,302 66,478 11,967,780 Change in Net Position (184,335) 1,968,380 1,784,045
Net Position - Beginning of Year 15,491,273 4,354,183 19,845,456 Net Position - End of Year $15,306,938 $ 6,322,563 $21,629,501 The accompanying notes are an integral part of these financial statements.

Program Revenues
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FUND FINANCIAL

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

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City of Sebastopol
Balance Sheet
Governmental Funds
June 30, 2025
Major Fund Nonmajor Total
General Governmental Governmental
Fund Funds Funds
ASSETS
Cash and investments $ 8,000,237 $ 2,574,377 $ 10,574,614 Restricted cash and investments 2,029,908 - 2,029,908
Accounts receivable 216,240 17,124 233,364
Taxes receivable 1,344,679 132,385 1,477,064
Interest receivable 36,161 14,948 51,109
Leases receivable 229,919 - 229,919
Prepaid items and other 198,228 - 198,228
Notes receivable 173,614 - 173,614
Due from other funds - 115,729 115,729
Advances to other funds 1,100,000 - 1,100,000
Total assets $ 13,328,986 $ 2,854,563 $ 16,183,549

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES AND FUND BALANCES
Liabilities:

Accounts payable $ 800,914 $ 128,726 $ 929,640
Deposits payable 217,815 - 217,815
Unearned revenue 699 8,283 8,982
Due to other funds - 115,729 115,729
Total liabilities 1,019,428 252,738 1,272,166
Deferred Inflows of Resources:

Leases 222,111 - 222,111
Unavailable revenues 181,422 - 181,422
Total deferred inflows of resources 403,533 - 403,533
Fund Balances:

Nonspendable:

Prepaid items and other 198,228 - 198,228
Advances to other funds 1,100,000 - 1,100,000
Leases 7,808 - 7,808
Restricted:

Highway and streets - 1,571,340 1,571,340
Public safety - 247,696 247,696
Affordable housing - 249,756 249,756
Parks and recreation - 116,957 116,957
Pensions and OPEB 2,029,908 149,816 2,179,724
Committed:

Street projects - 490,603 490,603
Assigned:

Buildings, facilities and infrastructure 995,296 - 995,296 Equipment, technology and vehicles 1,036,805 - 1,036,805 Pensions and OPEB 1,245,027 - 1,245,027
Flood recovery 1,012,495 - 1,012,495
Unassigned 4,280,458 (224,343) 4,056,115
Total fund balances 11,906,025 2,601,825 14,507,850
Total liabilities, deferred inflows of
resources and fund balances $ 13,328,986 $ 2,854,563 $ 16,183,549 The accompanying notes are an integral part of these financial statements.

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City of Sebastopol
Reconciliation of the Government Funds Balance Sheet
to the Government-Wide Statement of Net Position
June 30, 2025
Total Fund Balances - Total Governmental Funds $ 14,507,850 Amounts reported for governmental activities in the statement of net position were different because:

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:

Capital assets 30,303,888
Less: accumulated depreciation (16,504,111)
Total Capital Assets 13,799,777
Interest payable on long-term debt did not require current financial resources. Therefore, interest payable was not reported as a liability in Governmental Funds Balance Sheet. (3,680) Internal service funds are used by management to charge the costs of vehicles and equipment replacement to individual funds. The assets and liabilities of the internal service funds are included in governmental activities. 1,051
The differences from benefit plan assumptions and estimates versus actuals are not included in the plan's actuarial study until the next fiscal year and are reported as deferred inflows or deferred outflows of resources in the statement of net position. 3,379,353 Liabilities were reported for certain revenues that were not available to pay current period expenditures and were reported as unearned in the fund statements. 181,422 Long-term obligations were not due and payable in the current period. Therefore, they were not reported in the Governmental Funds Balance Sheet. The long-term liabilities were adjusted as follows:

Long-term debt (1,064,880)
Compensated absences (738,116)
Net pension liability (13,062,636)
Total OPEB liability (1,693,203)
Total Long-Term Obligations (16,558,835)
Net Position of Governmental Activities $ 15,306,938
The accompanying notes are an integral part of these financial statements.

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City of Sebastopol
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
For the Year Ended June 30, 2025
General
Transportation Capital Nonmajor Total
General Grants Projects Governmental Governmental
Fund Fund Fund Funds Funds

REVENUES
Property taxes $ 3,704,759 $ - $ - $ 127,143 $ 3,831,902 Sales and use taxes 5,015,508 - - 783,641 5,799,149
Transient occupancy tax 480,263 - - - 480,263
Utility users tax 913,843 - - - 913,843
Franchise fees 490,118 - - - 490,118
License and permits 695,666 - - 7,683 703,349
Fine and forfeitures 28,921 - - - 28,921
Intergovernmental 224,375 - - 1,205,033 1,429,408
Interest and rents 537,620 - - 115,906 653,526
Charges for services 1,986,650 - - 326,711 2,313,361
Miscellaneous 436,030 - - 56,880 492,910
Total Revenues 14,513,753 - - 2,622,997 17,136,750

EXPENDITURES
Current:

General government 4,807,419 - - 254,771 5,062,190
Public safety 6,546,911 - - 93,748 6,640,659
Parks and recreation 1,062,886 - - 188 1,063,074
Public works 1,369,304 - - 299,959 1,669,263
Capital outlay 225,224 - - 1,009,896 1,235,120
Debt service
Principal 241,872 - - 695,603 937,475
Interest 28,108 - - 56,201 84,309
Total Expenditures 14,281,724 - - 2,410,366 16,692,090
Excess (Deficiency) of
Revenues over Expenditures 232,029 - - 212,631 444,660

OTHER FINANCING SOURCES (USES)
Debt issuance - - - 638,745 638,745
Sale of capital assets - - - 225,013 225,013
Transfers in 72,815 - - 451,322 524,137
Transfers out (65,310) - - (458,827) (524,137)
Total Other Financing Sources (Uses) 7,505 - - 856,253 863,758 Net Change in Fund Balances 239,534 - - 1,068,884 1,308,418 Fund Balances Beginning 11,666,491 (369,251) (50,752) 1,952,944 13,199,432 Restatements and Major/Nonmajor Reclassifications - 369,251 50,752 (420,003) - Fund Balances Beginning, as Adjusted 11,666,491 - - 1,532,941 13,199,432 Fund Balances Ending $ 11,906,025 $ - $ - $ 2,601,825 $ 14,507,850 The accompanying notes are an integral part of these financial statements.

Major Funds
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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, 2025
Net Change in Fund Balances - Total Governmental Funds $ 1,308,418 Amounts reported for governmental activities in the Statement of Activities and Changes in net position were different because:

Governmental Funds report capital outlay as expenditures. However, in the Government-Wide Statement of Activities and Changes in net position, the cost of those assets was allocated over their estimated useful lives as depreciation expense.

Capital outlay 1,224,815
Depreciation expense (926,021)
Gains and losses related to capital assets in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds but have been allocated by funciton in the Statement of Activities. (1,353,644) Compensated absences not required to be paid with current financial resources are not reported in the governmental funds, but are accrued as noncurrent liabilities in the Government Wide Statement Net Position. The change from prior year accrued compensated absences is reported in the applicable 426,824 program expense.

Certain revenues were not recorded or were deferred inflows in the governmental funds because they did not meet the revenue recognition criteria of availability. However, they were included as revenue in the Government-Wide Statement of Activities under the full accrual basis. (420,801) In governmental funds, actual contributions to benefit plans are reported as expenditures in the year incurred. However, in the government-wide statement of activities, only the current year benefit expense as noted in the plans' valuation reports is reported as an expense, as adjusted for deferred inflows and outflows of resources. (748,121)
Repayment of long-term debt was an expenditure in governmental funds, but the repayment reduced long-term liabilities in the Government-Wide Statement of Net Position. 937,475 Loans issued in the governmental funds re reported as other financing sources but are required to be presented as long-term debt in the Government-Wide Statemen of Net Position. (638,745) Interest expense on long-term debt was reported in the Government-Wide Statement of Activities and Changes in net position, but it did not require the use of current financial resources. Therefore, interest expense was not reported as expenditures in governmental funds. The following amount represented the net change in accrued interest from from prior year. 5,465
Change in Net Position of Governmental Activities $ (184,335) The accompanying notes are an integral part of these financial statements.

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PROPRIETARY FUND FINANCIAL STATEMENTS
Water Fund
The Water Fund accounts for the activities associated with providing water services.

Wastewater Fund
The 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, 2025
Governmental
Activities
Total
Enterprise
Water Wastewater Funds
ASSETS
Current assets:

Cash and investments $ 1,227,874 $ 930,080 $ 2,157,954 $ 151,285 Accounts receivable 624,150 825,204 1,449,354 3,344
Interest receivable 7,210 5,387 12,597 -
Prepaid items 168,592 120,671 289,263 83,648
Total current assets 2,027,826 1,881,342 3,909,168 238,277 Noncurrent assets:

Capital assets:

Nondepreciable 301,685 - 301,685 -
Depreciable, net of accumulated depreciation 5,818,580 3,696,528 9,515,108 - Total noncurrent assets 6,120,265 3,696,528 9,816,793 - Total assets $ 8,148,091 $ 5,577,870 $ 13,725,961 $ 238,277

DEFERRED OUTFLOWS OF RESOURCES
Pension adjustments $ 453,738 $ 431,051 $ 884,789 $ -
Total deferred outflows of resources $ 453,738 $ 431,051 $ 884,789 $ -

LIABILITIES
Current liabilities:

Accounts payable $ 36,000 $ 187,625 $ 223,625 $ 237,226 Interest payable 2,879 2,565 5,444 -
Deposits payable 2,875 - 2,875 -
Unearned revenue 366 - 366 -
Compensated absences, due within one year 3,108 4,662 7,770 - Long-term debt, due within one year 207,305 95,245 302,550 - Total current liabilities 252,533 290,097 542,630 237,226 Noncurrent liabilities:

Advances from other funds - 1,100,000 1,100,000 -
Compensated absences, due in more than one year 12,431 18,647 31,078 - Net pension liability 1,512,619 1,436,988 2,949,607 -
Long-term debt, due in more than one year 2,389,329 1,169,720 3,559,049 - Total noncurrent liabilities 3,914,379 3,725,355 7,639,734 - Total liabilities $ 4,166,912 $ 4,015,452 $ 8,182,364 $ 237,226

DEFERRED INFLOWS OF RESOURCES
Pension adjustments $ 54,268 $ 51,555 $ 105,823 $ -
Total deferred inflows of resources $ 54,268 $ 51,555 $ 105,823 $ -

NET POSITION
Net Investment in capital assets $ 3,523,631 $ 2,431,563 $ 5,955,194 $ - Unrestricted 857,018 (489,649) 367,369 1,051
Total net position $ 4,380,649 $ 1,941,914 $ 6,322,563 $ 1,051 The accompanying notes are an integral part of these financial statements.

Internal Service
Funds/Insurance
and Benefits
Business-Type Activities - Enterprise Funds
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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, 2025
Total
Enterprise
Water Wastewater Funds

OPERATING REVENUES
Charges for services $ 3,395,878 $ 4,970,764 $ 8,366,642 $ 1,276,212 Other revenues 45,965 50,000 95,965 -
Total operating revenues 3,441,843 5,020,764 8,462,607 1,276,212

OPERATING EXPENSES
Personnel services 641,718 549,012 1,190,730 -
Interfund charges for services 852,863 908,934 1,761,797 - Contractual and other services 188,528 41,678 230,206 - Intergovernmental treatment costs - 2,118,436 2,118,436 - Utilities 235,946 68,698 304,644 -
Supplies 171,105 71,960 243,065 -
Insurance, claims, and expenses 81,510 57,065 138,575 1,276,212 Depreciation 241,132 247,322 488,454 -
Total operating expenses 2,412,802 4,063,105 6,475,907 1,276,212 Operating income (loss) 1,029,041 957,659 1,986,700 -

NONOPERATING REVENUES (EXPENSES)
Interest expense (52,229) (32,569) (84,798) -
Investment earnings 45,900 20,578 66,478 -
Total nonoperating revenues (expenses) (6,329) (11,991) (18,320) - Income (loss) before operating transfers 1,022,712 945,668 1,968,380 -

TRANSFERS
Transfers in 95,017 146,663 241,680 -
Transfers out (209,129) (32,551) (241,680) -
Total transfers (114,112) 114,112 - -
Change in net position 908,600 1,059,780 1,968,380 -
Total net position - beginning 3,472,049 882,134 4,354,183 1,051 Total net position - ending $ 4,380,649 $ 1,941,914 $ 6,322,563 $ 1,051 The accompanying notes are an integral part of these financial statements.

Business-Type Activities - Enterprise Funds
Governmental
Activities
Internal Service
Funds/Isurance
and Benefits
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City of Sebastopol
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2025
Total
Enterprise
Water Wastewater Funds
Cash flows from operating activities:

Receipts from customers and others $ 3,120,009 $ 4,552,508 $ 7,672,517 $ - Receipts from interfund charges for services - - - 1,272,868 Payments to other funds for services (852,863) - (852,863) - Payments to suppliers (803,031) (3,181,267) (3,984,298) (1,415,558) Payments to employees (565,847) (481,876) (1,047,723) - Net cash provided (used) by operating activities 898,268 889,365 1,787,633 (142,690) Cash flows from noncapital financing activities:

Interfund transfers (114,112) 114,112 - -
Net cash provided (used) by noncapital financing activities (114,112) 114,112 - - Cash flows from capital financing activities:

Acquisition of capital assets 63,881 (146,663) (82,782) - Principal payments on long-term debt (328,963) (210,500) (539,463) - Interest paid on long-term debt (52,229) (32,569) (84,798) - Net cash provided (used) by capital financing activities (317,311) (389,732) (707,043) - Cash flows from investing activities:

Investment receipts 42,286 15,191 57,477 -
Net cash provided (used) by investing activities 42,286 15,191 57,477 - Net increase (decrease) in cash and cash equivalents 509,131 628,936 1,138,067 (142,690) Cash and cash equivalents - beginning 718,743 301,144 1,019,887 293,975 Cash and cash equivalents - ending $ 1,227,874 $ 930,080 $ 2,157,954 $ 151,285 Reconciliation of operating income to net cash provided (used) by operating activities:

Operating income (loss) $ 1,029,041 $ 957,659 $ 1,986,700 $ - Adjustments to reconcile operating income (loss) .
to net cash provided (used) by operating activities:

Depreciation 241,132 247,322 488,454 -
Change in operating assets and liabilities:

Accounts receivables (317,420) (418,256) (735,676) (3,344) Prepaid items - (783) (783) (83,648)
Deferred outflows of resources 122,000 115,900 237,900 - Accounts payable (125,942) 86,287 (39,655) (55,698)
Deposits payable (4,615) - (4,615) -
Unearned revenue 201 (50,000) (49,799) -
Compensated absences (8,986) (13,479) (22,465) -
Net pension liability (5,503) (5,228) (10,731) -
Deferred inflows of resources (31,640) (30,057) (61,697) - Net cash provided (used) by operating activities $ 898,268 $ 889,365 $ 1,787,633 $ (142,690) The accompanying notes are an integral part of these financial statements.

Governmental
Business-Type Activities - Enterprise Funds Activities
Internal Service
Funds/Isurance
and Benefits
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NOTES TO THE BASIC

FINANCIAL STATEMENTS
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City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
NOTE 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 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 has no component units that are blended or discretely presented in these financial statements.

B. Basis of Presentation, Accounting and Measurement Focus The basic financial statements of the City of Sebastopol, California, (the City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies.

The Governmental Accounting Standards Boards (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.

The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity, revenues, and expenditures or expenses, as appropriate. 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 Financial Statements
The City's government-wide financial statements include a Statement of Net Position and a Statement of Activities and Changes in Net Position. These statements present summaries of governmental and business-type activities for the City. 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.

These statements are presented on an "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all of the City's assets, deferred outflows of resources, liabilities, deferred inflows of resources, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those clearly identifiable with a specific function or segment.

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City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
Certain types of transactions are reported as program revenues for the City in three categories:
 Charges for services
 Operating grants and contributions
 Capital grants and contributions
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.

Certain eliminations have been made as prescribed by GASB Statement No. 34 in-regards-to interfund activities, payables, and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. The following interfund activities have been eliminated:
 Due to/from other funds
 Advances to/from other funds
 Transfers in/Transfers out
The City applies all applicable GASB Pronouncements including all Interpretations currently in effect.

Governmental Fund Financial Statements
Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in net position as presented in these statements to the net position presented in the government-wide financial statements. The City has presented all major funds that met the applicable criteria.

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

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

Accordingly, revenues are recorded when received in cash, except that revenues subject to accrual (up to 60 days after year-end) are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the City, are property taxes, taxpayer-assessed tax revenues (sales taxes, transient occupancy taxes, etc.), grant revenues and earnings on investments. Expenditures are recorded in the accounting period in which the related fund liability is incurred.

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City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
The City reports the following funds as major funds:

General Fund
The General Fund is the general operating fund of the City. It is used for all financial resources except those required to be accounted for in another fund.

Proprietary Funds
In the fund financial statements, proprietary funds are presented using the accrual basis of accounting.

Revenues are recognized when they are earned and expenses are recognized when the related goods or services are delivered. In the fund financial statements, proprietary funds are presented using the “economic resources measurement focus”. This means all assets, deferred outflows of resources, liabilities (whether current or noncurrent) and deferred inflows of resources associated with their activities are included on their balance sheets. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in total net position.

Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal value. Non-operating revenues, such as subsidies, taxes, and investment earnings result from nonexchange transactions or ancillary activities. Amounts paid to acquire capital assets are capitalized as assets in the proprietary fund financial statements.

The City has the following enterprise fund that have been reported as major:

Water Fund
This fund is used to account for the operations of the City’s water treatment and distribution system.

Wastewater Fund
This fund is used to account for the operations of the City’s wastewater treatment and distribution system.

The City also reports the following internal service fund:

Insurance and Benefits Fund
This is used to finance and account for insurance and benefits for each department and manage associated costs.

C. 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 Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
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.

D. Restricted Cash and Investments
Certain restricted cash and investments are held in trusts for employee benefit plans.

E. Inventories
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. Inventories reported in governmental funds are offset by nonspendable fund balance, which indicates that inventories do not represent expendable available financial resources.

F. Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. In governmental funds, prepaid items are accounted for using the consumption method and a portion of fund balance equal to the prepaid items has been offset by nonspendable fund balance to indicate that is not available for appropriation.

G. Interfund Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” or “advances to/from other funds.” Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable government funds to indicate that they are not available for appropriation and are not expendable available financial resources. The City considers all trade and property tax receivables to be fully collectible and therefore no allowance for uncollectible accounts is considered necessary.

Interfund loans are formal agreements where one fund lends money to another fund with a documented expectation of repayment. Interfund loans are typically used for temporary financing for specific projects or to cover cash shortfalls, and they are expected to be repaid with interest. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” H. Receivables
Billed, but unpaid, services provided are recorded as accounts receivable. Revenues earned but not collected by year-end are accrued. No allowance for uncollectible accounts receivable has been provided in the governmental funds as management has determined that uncollectible accounts have historically been immaterial and the direct write-off method does not result in a material difference from the Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
allowance method. City reported an allowance of $16,000 in the water and wastewater fund for accounts that may not be collected within the next fiscal year.

I. Notes Receivable
Repayments of the outstanding loans are classified as a revenue source in the fund where the original loans were made from. The portion of loans receivable deemed to be unavailable have been offset by Unavailable Revenues in the accompanying financial statements, which is a part of deferred inflows of resources.

J. Leases Receivable
The City’s leases receivable are measured at the present value of lease payments expected to be received during the lease term. Deferred inflow of resources are recorded for the leases. The deferred inflow of resources are recorded at the initiation of the lease in an amount equal to the initial recording of the lease receivable plus incentive payments received. The deferred inflow of resources are amortized on a straightline basis over the term of the lease.

K. 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.

Intangible right-to-use assets are amortized over the shorter of the lease term or the useful life of the underlying asset, unless the lease contains a purchase option that the City has determined is reasonably certain of being exercised, then the lease asset is amortized over the useful life of the underlying asset.

Intangible right-to-use subscription assets are amortized over the shorter of the subscription term or the useful life of the underlying asset.

Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows:

Public domain infrastructure 50 Years
Buildings and structures 40 Years
System infrastructure 15-40 Years
Vehicles and equipment 5-15 Years
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
L. Deferred Outflows/Deferred Inflows
In addition to assets, the statement of financial position or balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then.

In addition to liabilities, the statement of financial position or balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time.

M. Interest Payable
In the government-wide and proprietary fund financial statements, interest payable for long-term debt is recognized as an incurred liability. The City has not allocated the interest on long-term debt to departments. In the fund financial statements, governmental fund types do not recognize the interest payable when the liability is incurred. Interest on long-term debt is recorded in the governmental fund statements when payment is made.

N. Unearned Revenue
Unearned revenue arises when assets are received before revenue recognition criteria have been satisfied.

Grants and entitlements received before eligibility requirements are met are recorded as unearned revenue. In the governmental fund financial statements, receivables associated with non-exchange transactions that will not be collected within the availability period have been recorded as deferred inflows from unavailable revenue.

O. Compensated Absences
The City recognizes a liability for compensated absences for leave time that (1) has been earned for services previously rendered by employees, (2) accumulates and is allowed to be carried over to subsequent years, and (3) is more likely than not to be used as time off or settled during or upon separation from employment. Based on the criteria listed, two types of leave qualify for liability recognition for compensated absences – vacation and sick leave. The liability for compensated absences is reported as incurred in the government-wide and proprietary fund financial statements. The liability for compensated absences includes salary-related taxes and benefits, where applicable.

Vacation
The City’s policy permits employees to accumulate earned but unused vacation benefits, which are eligible for payment at the employee’s current pay rate upon separation from employment.

Sick Leave
The City’s policy permits employees to accumulate earned but unused sick leave. The City’s policy requires the payment of certain sick leave balances upon separation from service. In addition, a liability for the estimated value of sick leave that will be used by employees is included in the liability for compensated absences.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
P. Long-Term Liabilities
In the government-wide financial statements and proprietary fund statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental or business-type 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 bond premium or discount. Debt issuance costs are expensed in year incurred. 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 debt issued is reported as other financial sources. Premiums received on debt issuance are reported as other financing sources while discounts on debt issuance reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

Q. Lease Liabilities
When applicable, the City recognizes a lease liability and an intangible right‐to‐use lease asset (capital asset) in the government‐wide financial statements.

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

Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments.  The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for leases.
 The lease term includes the noncancellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise.

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

Lease assets are reported separately with capital assets as right of use assets and lease liabilities are reported with long-term liabilities in the statement of net position.

R. Benefit Plans
Pension Expense
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s California Public Employees’ Retirement System (CalPERS) plans (the Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
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.

For this report, the following timeframes are used:

Valuation Date June 30, 2023
Measurement Date June 30, 2024
Measurement Period July 1, 2023 to June 30, 2024
Other Postemployment Benefits
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. Investments are reported at fair value. Generally accepted accounting principles required 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, 2023
Measurement Date June 30, 2024
Measurement Period July 1, 2023 to June 30, 2024
S. Fund Balances
In accordance with Government Accounting Standards Board 54, Fund Balance Reporting and Governmental Fund Type Definitions, the City classifies governmental fund balances as follows:

Nonspendable
Nonspendable fund balance represents balances set aside to indicate items that do not represent available, spendable resources even though they are a component of assets. Fund balances required to be maintained intact, such as Permanent Funds, and assets not expected to be converted to cash, such as prepaids, notes receivable, leases receivable in excess of deferred inflows of resources and land held for redevelopment are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed, or assigned, then Nonspendable amounts are required to be presented as a component of the applicable category.

Restricted
Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation which requires the resources to be used only for specific purpose.

Encumbrances and nonspendable amounts subject to restrictions are included along with spendable resources.

Committed
The City Council, as the City’s highest level of decision-making authority, may commit fund balance for specific purposes pursuant to the constraints imposed by formal actions taken, such as an ordinance or resolution. These committed amounts cannot be used for any other purpose unless the City Council removes or changes the specified use through the same type of formal action taken to establish the Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
commitment. City Council action to commit fund balance needs to occur within the fiscal reporting period; however the specific amounts can be determined subsequently.

Assigned
Assigned fund balances are amounts constrained by the City’s intent to be used for a specific purpose, but are neither restricted nor committed. Intent is expressed by the City Council or its designee, the City Manager or Administrative Services Director, and may be changed at the discretion of the City Council or its designee.

Unassigned
Unassigned fund balance represents residual amounts that have not been restricted, committed, or assigned. This includes the residual general fund balance and residual fund deficits, if any, of other governmental funds.

Flow Assumption / Spending Order Policy
When expenditures are incurred for purposes for which both restricted and unrestricted fund balance is available, the City considers restricted funds to be spent first. When expenditures are incurred for which committed, assigned, or unassigned fund balances are available, the City considers amounts to be spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed, unless the City Council has directed otherwise.

T. Net Position
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 are attributed to the acquisition, construction, or improvement of the assets. In addition, deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt also are included in the net investment in capital assets component of net position.

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." The detail of amounts reported for each of the above defined net position categories is reported in the government-wide Statement of Net Position.

Use of Restricted/Unrestricted Net Position
When an expense is incurred for purposes for which both restricted and unrestricted net position are available, the City's policy is to apply restricted net position first.

U. Interfund Transactions
Interfund services provided and used are accounted for as revenue, expenditures or expenses, as appropriate. Transactions that constitute reimbursements to a fund for expenditures/expenses initially Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
made from it that are properly applicable to another fund are recorded as expenditures/expenses in the reimbursed fund. All other interfund transactions, except for interfund services provided and used and reimbursements, are reported as transfers. Nonrecurring or nonroutine permanent transfers of equity are reported as residual equity transfers. All other interfund transfers are reported as transfers.

V. Property Taxes and Special Assessments
Under California law, property taxes are assessed and collected by the counties at a rate of up to 1% of assessed value, plus other increases approved by the voters. Property taxes go into a pool and are then allocated to cities based on complex formulas. Property taxes are collected by the Auditor-Controller Treasurer-Tax Collector of the County of Sonoma (County) and are remitted upon collection to the various taxing entities, including the City.

For assessment and collection purposes, property is classified as either “secured” or “unsecured” and is listed accordingly on separate parts of the assessment roll. The “secured roll” is that part of the assessment roll containing State-assessed property and real property having a tax lien that is sufficient, in the opinion of the County Assessor, to secure payment of the taxes. Unsecured property comprises all taxable property not attached to land, such as personal property or business property. Every tax levied by a county that becomes a lien on secured property has priority over all present and future private liens arising pursuant to State law on the secured property, regardless of the time of the creation of the other liens. A tax levied on unsecured property does not become a lien against the taxed unsecured property, but may become a lien on other property owned by the taxpayer.

Valuation of secured property and establishment of a statutory tax lien occur as of January 1 prior to the tax year (the tax year is the July 1 – June 30 fiscal year of the State) of the related tax levy, and the secured and unsecured tax rolls are certified on or before July 31 of the tax year by the County Assessor.

The County assesses property values, levies bills, and collects taxes as follows:

Secured Unsecured
Lien Dates January 1 January 1
Levy Dates January 1 January 1
Due Dates 50% on November 1
50% on February 1
July 1
Delinquent After December 10 (for November)
April 10 (for February
August 31
Property taxes are recorded as revenue when received, in the fiscal year of levy, due to the adoption of the “alternative method of property tax distribution”, known as the Teeter Plan, by the City and County of Sonoma. The Teeter Plan authorizes the Auditor-Controller Treasurer-Tax Collector of the County of Sonoma to allocate 100% of the secured property taxes billed, but not yet paid.

W. Budgetary Information
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.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
X. Use of Estimates
The preparation of basic 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.

Y. Implementation of New Accounting Pronouncements
GASB Statement No. 101, Compensated Absences
This Statement requires that liabilities for compensated absences be recognized for (1) leave that has not been used and (2) leave that has been used but not yet paid in cash or settled through noncash means. A liability should be recognized for leave that has not been used if (a) the leave is attributable to services already rendered, (b) the leave accumulates, and (c) the leave is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means. Leave is attributable to services already rendered when an employee has performed the services required to earn the leave. Leave that accumulates is carried forward from the reporting period in which it is earned to a future reporting period during which it may be used for time off or otherwise paid or settled. In estimating the leave that is more likely than not to be used or otherwise paid or settled, a government should consider relevant factors such as employment policies related to compensated absences and historical information about the use or payment of compensated absences. However, leave that is more likely than not to be settled through conversion to defined benefit postemployment benefits should not be included in a liability for compensated absences.

This Statement requires that a liability for certain types of compensated absences - including parental leave, military leave, and jury duty leave—not be recognized until the leave commences. This Statement also requires that a liability for specific types of compensated absences not be recognized until the leave is used. A liability for leave that has been used but not yet paid or settled should be measured at the amount of the cash payment or noncash settlement to be made. Certain salary-related payments that are directly and incrementally associated with payments for leave also should be included in the measurement of the liabilities. The implementation of this standard did not have a material impact on the City’s financial statements.

GASB Statement No. 102, Certain Risk Disclosures
This Statement requires a government to assess whether a concentration or constraint makes the primary government reporting unit or other reporting units that report a liability for revenue debt vulnerable to the risk of a substantial impact. Additionally, this Statement requires a government to assess whether an event or events associated with a concentration or constraint that could cause the substantial impact have occurred, have begun to occur, or are more likely than not to begin to occur within 12 months of the date the financial statements are issued.

If a government determines that those criteria for disclosure have been met for a concentration or constraint, it should disclose information in notes to financial statements in sufficient detail to enable users of financial statements to understand the nature of the circumstances disclosed and the government’s vulnerability to the risk of a substantial impact. The disclosure should include descriptions for (1) the concentration or constraint (2) each event associated with the concentration or constraint that could cause a substantial impact if the event had occurred or had begun to occur prior to the issuance of Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
the financial statements (3) actions taken by the government prior to the issuance of the financial statements to mitigate the risk.

The implementation of this standard did not have a material impact on the City’s financial statements and management determined there were no were concentrations or constraints that make the City vulnerable to the risk of substantial impact.

Z. Upcoming New Accounting Pronouncements
The City is currently analyzing its accounting practices to identify the potential impact on the financial statements of the following GASB Statements:

GASB Statement No. 103, Financial Reporting Model Improvements This Statement is to improve key components of the financial reporting model to enhance its effectiveness in providing information that is essential for decision making and assessing a government’s accountability.

This Statement establishes new accounting and financial reporting requirements or modifies existing requirements related to (a) Management’s discussion and analysis (MD&A) (b) Unusual or infrequent items (c) Presentation of the proprietary fund statement of revenues, expenses, and changes in fund net position (d) Information about major component units in basic financial statements (5) Budgetary comparison information (6) Financial trend information in the statistical section. The requirements of this Statement are effective for fiscal years beginning after June 15, 2025, and all reporting periods thereafter.

GASB Statement No. 104, Disclosure of Certain Capital Assets This Statement requires certain types of capital assets to be disclosed separately in the capital assets note disclosures required by Statement 34. Lease assets recognized in accordance with Statement No. 87, Leases, and intangible right-to-use assets recognized in accordance with Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, should be disclosed separately by major class of underlying asset in the capital as-sets note disclosures. Subscription assets recognized in accordance with Statement No. 96, Subscription-Based Information Technology Arrangements, also should be separately disclosed. In addition, this Statement requires intangible assets other than those three types to be disclosed separately by major class.

This Statement also requires additional disclosures for capital assets held for sale. A capital asset is a capital asset held for sale if (a) the government has decided to pursue the sale of the capital asset and (b) it is probable that the sale will be finalized within one year of the financial statement date. Governments should consider relevant factors to evaluate the likelihood of the capital asset being sold within the established time frame. This Statement requires that capital assets held for sale be evaluated each reporting period. Governments should disclose (1) the ending balance of capital assets held for sale, with separate disclosure for historical cost and accumulated depreciation by major class of asset, and (2) the carrying amount of debt for which the capital assets held for sale are pledged as collateral for each major class of asset. The requirements of this Statement are effective for fiscal years beginning after June 15, 2025, and all reporting periods thereafter.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
NOTE 2 - CASH AND INVESTMENTS
As of June 30, 2025, cash and investments were reported in the financial statements as follows:

Governmental
Activities
Business-Type
Activities Total
Operating cash and investments $ 10,725,899 $ 2,157,954 $ 12,883,853 Restricted cash and investments 2,029,908 - 2,029,908
Total cash and investments $ 12,755,807 $ 2,157,954 $ 14,913,761 Government Wide
Statement of Net Position
Cash and investments consisted of the following as of June 30, 2025:

Deposits:

Cash on hand $ 500
Deposits with financial institutions 1,219,208
Total Deposits 1,219,708
Investments:

County of Sonoma investment pool 83,579
Local Agency Investment Fund 4,870,776
Certificates of deposit 2,795,148
Money market funds 2,385,095
U.S. government bonds 1,529,547
Total investments 11,664,145
Total City Treasury 12,883,853
Restricted cash and investments:

Section 115 trust for pension 2,029,908
Total cash and investments $ 14,913,761
Cash Deposits
The California Government Code requires California banks and savings and loan associations to secure the City's cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest, and places the City ahead of general creditors of the institution. The fair value of pledged securities must equal at least 110 percent of the City's cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes that have a value of 150 percent of the City's total cash deposits. The City has waived the collateral requirements for cash deposits which are fully insured to $250,000 by the Federal Deposit Insurance Corporation (FDIC).

The bank balances before reconciling items totaled $1,314,592 at June 30, 2025 and were different from carrying amounts due to deposits in transit and outstanding checks. The amount uninsured was $1,064,592, which was collateralized by securities held by pledging financial institutions. The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents. Interest income earned on pooled cash and investments is allocated to the various funds based on the period-end cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
Fair Value Measurements
GASB 72 established a hierarchy of inputs to the valuation techniques with three levels:
 Level 1 inputs are quoted prices in active markets for identical assets or liabilities.  Level 2 inputs are quoted market prices for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other than quoted prices that are not observable
 Level 3 inputs are unobservable inputs, such as a property valuation or an appraisal.

Investment Policy
Under the provisions of the City's investment policy, and in accordance with California Government Code, the following investments are authorized:

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
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.

Local Agency Investment Fund (LAIF)
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by Code Section 16429 under the oversight of the Treasurer of the State of California. The City’s investments with LAIF at June 30, 2025 include a portion of the pool funds invested in Structured Notes and Asset-Backed Securities. These investments included structure notes and asset-backed securities described below.

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.

The LAIF fair value factor of 1.001198310 was used to calculate the fair value of the investments in LAIF. The City is also a voluntary participant in the Sonoma County Investment Pool (County Pool) that is regulated by the County’s Investment Policy under the oversight of the Treasury of the County. The County does not 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.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
Restricted Cash and Investments
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, interestbearing 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.

A. 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.

Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of an investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. As of June 30, 2025, the City’s investments were in compliance with the ratings required by the City’s investment policy and Government Code.

Concentrations of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. As of June 30, 2025, the City was in compliance with the concentration requirements of the City’s investment policy and government code.

Custodial Credit Risk
For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside 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 investments.

With respect to investments, custodial credit risk generally applies only to direct investments in marketable securities. Custodial credit risk does not apply to a local government's indirect investment in securities through the use of mutual funds or government investment pools (such as LAIF).

As of June 30, 2025, the City’s investments had the following maturities:
12 Months or
Less
13 to 24
Months Fair Value
Fair Value
Input Levels
Min. Legal
Rating
County of Sonoma investment pool $ 83,579 $ - $ 83,579 n/a n/a Local Agency Investment Fund 4,870,776 - 4,870,776 n/a n/a Certificates of deposit 2,311,988 483,160 2,795,148 Level 2 n/a Money market funds 2,385,095 - 2,385,095 n/a n/a
U.S. government bonds 719,817 809,730 1,529,547 Level 2 Aaa Total Investments $ 10,371,255 $ 1,292,890 $ 11,664,145 Investment Type
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
NOTE 3 - NOTES RECEIVABLE
As of June 30, 2025, loans receivable consisted of solar power equipment installation loans by individual property owners totaling $173,614. The solar equipment installation loans are repayable in equal bimonthly installments over a period of 32 years by the homeowners, and repayments are made through the City's enterprise utility billing and collection system.

NOTE 4 - LEASES RECEIVABLE
Cell Tower Lease
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, 2025 was $229,919, and related deferred inflow of resources as of June 30, 2025 was $222,111. For the year ended June 30, 2025, the City recognized $37,540 in lease revenue related to the lease.

The following summarizes the future lease payments to be received by the City:

Year Ending June 30 Principal Interest Total
2026 $ 37,190 $ 3,769 $ 40,959
2027 37,853 3,105 40,958
2028 38,529 2,430 40,959
2029 39,216 1,742 40,958
2030 39,916 1,042 40,958
2031 37,215 330 37,545
Total $ 229,919 $ 12,418 $ 242,337
NOTE 5 - INTERFUND TRANSACTIONS
Interfund Receivables and Payables
Amounts due to or due from other funds reflect inter-fund balances for services rendered or short-term loans expected to be repaid in the next fiscal year. Advances to or from other funds are long-term loans between funds that are to be repaid in their entirety over several years. Interfund loans between funds are long-term advances that are more formal with set interest rates and repayment terms.

The following summarizes the amounts due to or due from other funds as of June 30, 2025:

Due from Due to
Fund Other Funds Other Funds
Nonmajor Funds:

Police Grants Fund $ 12,282 $ -
Traffic Impact Fee Fund 103,447 -
Tansportation Grants Fund - 103,447
OTS Police Federal Grants Fund - 12,282
Total Due from/to $ 115,729 $ 115,729
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
The following summarizes interfund advances as of June 30, 2025:

Advances Advances
to from
Fund Other Funds Other Funds
General Fund 1,100,000 $ -
Waste Water Fund - 1,100,000
Total advances $ 1,100,000 $ 1,100,000
During the fiscal year ended June 30, 2024, the City’s General Fund provided the City’s Wastewater Enterprise Fund an advance of $1,100,000 for operating activities. The loan is interest free and is to be repaid in full by June 30, 2032. The loan does not have a formal repayment schedule.

Transfers In/Out
The following summarizes transfers between funds during the fiscal year ended June 30, 2025:

Fund Transfer In Transfer Out
General Fund $ 72,815 $ 65,310
Water Fund 95,017 209,129
Wastewater Fund 146,663 32,551
Nonmajor Fund 451,322 458,827
Total Transfers $ 765,817 $ 765,817
Transfers were made from the General Fund to the nonmajor funds to backfill programs in those funds and make debt service payments. Transfers were made between the Water Fund and the Wastewater Fund to cover cash needs during the year for each fund. Transfers between nonmajor funds were made to cover operating costs for programs accounted for in specific funds and to fund capital projects.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
NOTE 6 - CAPITAL ASSETS
Capital assets for governmental activities consisted of the following as of June 30, 2025:

Balance Deletions/ Balance
Governmental Activities June 30, 2024 Additions Transfers June 30, 2025 Non-depreciable:

Land $ 2,151,948 $ - $ - $ 2,151,948
Construction in Progress 5,563,258 371,151 (4,542,733) 1,391,676 Total Non-Depreciable 7,715,206 371,151 (4,542,733) 3,543,624 Depreciable and amortizable:

Buildings and improvements 8,051,797 2,394,867 (839,972) 9,606,692 Machinery and equipment 2,884,019 740,630 (638,745) 2,985,904 Vehicles 3,139,449 85,960 (722,098) 2,503,311
Infrastructure 9,489,416 2,174,941 - 11,664,357
Total Depreciable and Amortizable 23,564,681 5,396,398 (2,200,815) 26,760,264 Less Accumulated Depreciation and
Amortization for:

Buildings and improvements (6,273,277) (142,031) 551,009 (5,864,299) Machinery and equipment (2,652,566) (80,591) - (2,733,157) Vehicles (2,145,188) (208,995) 296,162 (2,058,021)
Infrastructure (5,354,230) (494,404) - (5,848,634)
Total Accumulated Deprec. And Amort. (16,425,261) (926,021) 847,171 (16,504,111) Total Deprec/Amort Capital Assets - Net 7,139,420 4,470,377 (1,353,644) 10,256,153 Total Governmental Capital Assets $ 14,854,626 $ 4,841,528 $ (5,896,377) $ 13,799,777 Depreciation and amortization expense for governmental activities during the year was as follows:

General government $ 134,180
Public safety 230,440
Parks and recreation 144,614
Public works 416,787
Total depreciation/amortization expense $ 926,021
During the year, the City transferred its fire services to the Gold Ridge Fire Protection District. Beginning in December 2025, the City will make an annual payment of $1,110,000 to the District for fire and emergency services. As part of the reorganization, the City also conveyed ownership of the fire station at 7425 Bodega Avenue, along with fire equipment including engines, to the District in “as is” condition.

Following the transfer, the District assumes full responsibility for all maintenance and upkeep.

The following summarizes the assets that were disposed as a result of the transfer and the loss recognized as a special item in the statement of activities:

Buildings and Improvements $ 839,973
Vehicles 722,098
Accumulated Depreciation (847,171)
Losson Disposal - Special Item $ 714,900
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
Capital assets for business-type activities consisted of the following as of June 30, 2025:

Balance Deletions/ Balance
Business Type Activities June 30, 2024 Additions Transfers June 30, 2025 Non Depreciable
Land $ 86,440 $ - $ - $ 86,440
Construction in progress 3,863,002 82,781 (3,730,538) 215,245 Total Non-Depreciable 3,949,442 82,781 (3,730,538) 301,685 Depreciable:

Buildings/Structures - 3,727,480 25,428 3,752,908
Reservoirs 4,290,965 - - 4,290,965
Pipelines and water distribution system 4,827,175 1,529 - 4,828,704 Pipelines and wastewater collection system 8,966,956 1,529 (25,428) 8,943,057 Machinery and equipment 240,177 1 - 240,178
Vehicles 1,025,747 - - 1,025,747
Total Depreciable 19,351,020 3,730,539 - 23,081,559
Less Accumulated Depreciation
Reservoirs (1,882,556) (139,290) - (2,021,846)
Pipelines and water distribution system (3,441,014) (61,183) - (3,502,197) Pipelines and wastewater collection system (7,013,201) (185,193) - (7,198,394) Machinery and equipment (62,314) (39,206) - (101,520)
Vehicles (678,912) (63,582) - (742,494)
Total Accumulated Depreciation (13,077,997) (488,454) - (13,566,451) Total Depreciable Capital Assets - Net 6,273,023 3,242,085 - 9,515,108 Total Business Type - Capital Assets $ 10,222,465 $ 3,324,866 $ (3,730,538) $ 9,816,793 Depreciation and amortization expense for business-type activities for the year was as follows:

Water 241,132
Wastewaster 247,322
Total depreciation and amortization expense $ 488,454
NOTE 7 - NONCURRENT LIABILITIES
The City's noncurrent liabilities consisted of the following as of June 30, 2025:

Balance Balance Due Within
Description July 01, 2024 Additions Retirements June 30, 2025 One Year Governmental Activities:

Lease-leaseback agreements:

Refunding lease 2021 - Truist Bank $ 172,307 $ - $ 172,307 $ - $ - Mobile home park 205,428 - 55,187 150,241 57,924
Finance purchase agreements:

Energy conservation measures 985,875 - 71,236 914,639 69,810 Community leasing partner fire engine - 638,745 638,745 - - Compensates absences 1,164,940 748,621 1,175,445 738,116 147,623 Net pension liabilities 13,369,294 11,658,314 11,964,972 13,062,636 - Total OPEB liabilities 1,722,309 409,748 438,854 1,693,203 90,085 Total Governmental Activities $ 17,620,153 $ 13,455,428 $ 14,516,746 $ 16,558,835 $ 365,442 Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
Balance Balance Due Within
Description July 01, 2024 Additions Retirements June 30, 2025 One Year Business Type Activities
Lease-leaseback agreements:

Refunding lease 2021 - Truist Bank $ 245,041 $ - $ 245,041 $ - $ - Refunding loan 2021 - Truist Bank 825,058 - 67,415 757,643 68,839 Finance purchase agreements:

Energy conservation measures 3,330,963 - 227,007 3,103,956 233,711 Compensates absences 61,313 39,401 61,866 38,848 7,770
Net pension liabilities 2,960,338 2,581,479 2,592,210 2,949,607 - Total Business Type Activities $ 7,422,713 $ 2,620,880 $ 3,193,539 $ 6,850,054 $ 310,320 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 per 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 had pledged the fire station as collateral for the refunding lease agreement. This debt was repaid during the year and the fire station was transferred to the Gold Ridge Fire Protection District.

Lease-leaseback Agreements – Mobile Home Park
The City entered into a lease financing arrangement with the Municipal Finance Corporation to obtain partial financing for the purchase of a mobile home park as part of an open space program of the City.

The total lease was $817,500 and it also is payable from any source of legally available funds.

The following summarizes the future debt service payments:

Fiscal Year Pricipal Interest Total
2026 $ 57,924 $ 6,661 $ 64,585
2027 60,797 3,788 64,585
2028 31,520 772 32,292
Total $ 150,241 $ 11,221 $ 161,462
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 the final payment due on July 1st, 2036. Annual interest charged on the financing agreement is 1.77 percent.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
The following summarizes the future debt service payments for governmental activities:

Fiscal Year Principal Interest Total
2026 $ 69,175 $ 16,211 $ 85,386
2027 70,400 14,987 85,387
2028 71,646 13,741 85,387
2029 72,914 12,472 85,386
2030 74,203 11,182 85,385
2031-2035 391,194 35,736 426,930
2036-2037 165,107 4,429 169,536
Total $ 914,639 $ 108,758 $ 1,023,397
The following summarizes the future debt service payments for business-type activities:

Fiscal Year Principal Interest Total
2026 $ 234,346 $ 54,918 $ 289,264
2027 238,493 50,770 289,263
2028 242,714 46,548 289,262
2029 247,010 42,253 289,263
2030 251,378 37,881 289,259
2031-2035 1,325,253 121,067 1,446,320
2036-2037 564,762 15,006 579,768
Total $ 3,103,956 $ 368,443 $ 3,472,399
Refunding Loan 2021 – Truist Bank
In fiscal year 2015, the City 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 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. 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 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. 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 Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
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 $2,499,599, ($122,529), and $318,126 respectively for fiscal year 2025. Net revenues were equal 0% of total debt service for the Water Fund for fiscal year 2025 that was below the required 120%. The City underwent a rate study to ensure compliance with the net revenues covenant in future years.

The following summarizes the future debt service payments:

Fiscal Year Principal Interest Total
2026 $ 68,839 $ 15,115 $ 83,954
2027 70,293 13,662 83,955
2028 71,778 12,177 83,955
2029 73,294 10,660 83,954
2030 74,842 9,112 83,954
2031-2035 398,597 21,175 419,772
Total $ 757,643 $ 81,901 $ 839,544
NOTE 8 - DEFICIT FUND BALANCES
As of June 30, 2025, the following funds had deficit fund balances.

General Capital Projects $ (50,752)
OTS Police Federal Grants $ (25,695)
Transportation Grants $ (147,896)
The deficit balances were the result of expenditures reported in the current year that will be reimbursed in subsequent years or were funded by beginning fund balance.

NOTE 9 - RETIREMENT PLANS
General Information about the Pension Plans
Plan Description
All qualified permanent and probationary employees are eligible to participate in the Public Agency CostSharing 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 three miscellaneous 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.

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 Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
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 non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for each plan are applied as specified by the Public Employee’s Retirement Law. The general fund typically is used to liquidate pension liabilities for governmental funds.

The Plans’ provisions and benefits in effect at June 30, 2025, are summarized as follows:

Tier 1 PEPRA Fire/Police
PEPRA
Fire/Police
Hire date
Prior to
January 1, 2013
On or after
January 1, 2013
Prior to January 1,
2013
On or after
January 1, 2013
Benefit formula 2% @ 55 2% @ 62 3% @ 50 2.5% @ 57
Benefit vesting schedule 5 Years 5 Years 5 Years 5 Years Benefit payments Monthly for Life Monthly for Life Monthly for Life Monthly for Life Retirement age 50-55 50-55 50-55 50-57
Monthly benefits as a
% of eligible compensation 2.0% to 2.5% 2.0% to 2.5% 2.00% 2.0% to 2.70% Required employee contribution rates 7.00% 7.75% 8.99% 13.75% Required employer contribution rates 12.52% 7.87% 25.86% 13.76% Miscellaneous Safety
Employees Covered
At June 30, 2025, the following employees were covered by the benefit terms for the Plans:

Miscellaneous Safety
Active 26 14
Transferred 11 4
Separated 14 4
Retired 52 40
Total 103 62
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rates are 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. For the year ended June 30, 2025, the City’s contributions were as follows:

Employer
Contributions
Miscellaneous $ 903,503
Safety 1,040,837
Total Employer Contributions $ 1,944,340
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
As of June 30, 2025, the City reported a net pension liability for its proportionate share of the net pension liability of the Plan as follows:

Miscellaneous
Safety
Total
Proportionate Share of
Net Pension
Liability/(Asset)
$ 7,563,096
8,449,147
$ 16,012,243
The City’s net pension liability for the Plans is measured as the proportionate share of the net pension liability. The net pension liability of the Plans are measured as of June 30, 2024, and the total pension liability for the Plans used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2023 rolled forward to June 30, 2024 using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The City’s proportionate share of the net pension liability for the Plans as of June 30, 2024 and 2025 was as follows:

Miscellaneous Safety Combined Plans
Proportion - June 30, 2024 0.15177% 0.11691% 0.13088%
Proportion - June 30, 2025 0.15637% 0.11589% 0.13203%
Change - Increase/(Decrease) 0.00460% -0.00103% 0.00115% For the year ended June 30, 2025, the City recognized pension expense of $2,932,295. At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Changes of Assumptions $ 402,557 $ -
Differences between Expected and Actual Experience 1,343,424 47,934 Differences between Projected and Actual Investment Earnings 843,791 - Differences between Employer's Contributions and
Proportionate Share of Contributions 269,059 163,393
Change in Employer's Proportion - 363,144
Pension Contributions Made Subsequent to Measurement Date 1,944,340 - Total $ 4,803,171 $ 574,471
The City reported $1,944,340 as deferred outflows of resources related to contributions subsequent to the measurement date that will be recognized as a reduction of the net pension liability in the year ended June 30, 2026.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Miscellaneous Safety Total
$ 963,924 $ (214,606) $ 749,317
1,350,537 503,441 1,853,978
177,711 (207,404) (29,693)
(149,206) (139,734) (288,939)
- - -
- - -
$ 2,342,966 $ (58,303) $ 2,284,663
Deferred Outflows/(Inflows) of
Fiscal Year Ending Resources
June 30:
2030
Total
2027
2028
2029
Thereafter
2026
Actuarial Assumptions
The total pension liabilities in the June 30, 2023 actuarial valuations were determined using the following actuarial assumptions:

Valuation Date June 30, 2023
Measurement Date June 30, 2024
Actuarial Cost Method Entry-Age
Normal Cost
Method
Actuarial Assumptions:

Discount Rate 6.90%
Inflation 2.30%
Payroll Growth 2.80%
Projected Salary Increase (1)
Investment Rate of Return 6.8% (2)
Mortality (3)
(1) Varies by entry age and service
(2) Net of pension plan investment expenses, including inflation (3) Derived using CalPERS' membership data for all funds Discount Rate
The discount rate used to measure the total pension liability was 6.9 percent 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 6.9 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long-term expected discount rate of 6.9 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. The long-term expected rate of return on pension plan investments was determined using a building block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and longterm returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. The table below reflects the longterm 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.

Assumed Long-Term
Asset Expected Real
Asset Class (a) Allocation Return (1)(2)
Global Equity Cap Weighted 30.00% 4.54%
Global Equity NonCap 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 2.3% used for this period. (2) Figures are based on the 2021-22 Asset Liability Study.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
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 Plans, calculated using the discount rate for the Plans, 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:

Miscellaneous Safety
1% Decrease 5.90% 5.90%
Net Pension Liability $ 11,585,131 12,123,274
Current 6.90% 6.90%
Net Pension Liability $ 7,563,096 8,449,147
1% Increase 7.90% 7.90%
Net Pension Liability $ 4,252,369 5,444,228
Pension Plan Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports. See https://www.calpers.ca.gov/page/investments/about-investmentoffice/investment-financial-reports?stream=top.

NOTE 10 - OTHER POSTEMPLOYMENT BENEFITS
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.

Benefits Provided
Employees are eligible for lifetime retiree health benefits. The earliest service retirement eligibility requirements under CalPERS are as follows: hired before 1/1/2013, age 50 with 5 years of CalPERS service, or hired on/after 1/1/2013, age 52 with 5 years of CalPERS service. Employees are allowed to elect spousal coverage at retirement. Retiree medical coverage continues to surviving spouses at the death of retirees as long as the required contributions are made and the retiree elects for the surviving spouse to continue receiving benefits. There is no surviving spouse coverage at the death of active employees.

Retirees contribute the portion of premium rates not covered by the employer subsidy. The employer subsidy varies by the bargaining unit and hire date, as well as the retiree tier and whether the retiree is Medicare eligibile or not.

Employees Covered by Benefit Terms
At June 30, 2023 (the valuation date), the benefit terms covered the following employees:

Active employees 44
Iactive employees 23
Total employees 67
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
Contributions
The City makes contributions based on a pay-as-you go basis as approved by the authority of the City’s Council. Total benefit payments included in the measurement period were $87,176. The City’s contributions during the year of $108,135 were 2.25% of covered employee payroll. Employees are not required to contribute to the OPEB Plan. There have been no assets accumulated in a trust to provide for the benefits of this OPEB Plan.

Actuarial Assumptions
The following summarized the actuarial assumptions for the OPEB plan included in this fiscal year:

Valuation Date:

Measurement Date:

Actuarial Cost Method:

Actuarial Assumptions:

Discount Rate
Inflation
Payroll Increases
Trend Rate
Pre-Medicare 6.80%
Medicare 4.17%
Mortality

4.09%
2017 CalPERS Mortality for Miscellaneous and Schools
Entry-Age Normal Cost Method
Based on CalPERS Tables
June 30, 2023
June 30, 2024

2.30%

2.80%
Discount Rate
The discount rate was based on the Bond Buyer 20-bond General Obligation Index. The discount rate was increased from 3.86% to 4.09%.

Changes in the Total OPEB Liability
The following summarizes the changes in the total OPEB liability during the year ended June 30, 2025:

Fiscal Year Ended June 30, 2025
Total OPEB
Liability
Balance at June 30, 2023 $ 1,722,309
Service cost 30,848
Interest in Total OPEB Liability 65,767
Balance of diff between actual/exp experience 9,943
Balance of changes in assumptions (36,950)
Benefit payments (87,176)
Implicit subsidy fullfilled (11,538)
Net changes (29,106)
Balance at June 30, 2025 $ 1,693,203
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
Deferred Inflows and Outflows of Resources
At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Difference between actual and expected experience $ 8,800 $ 223,762 Difference between actual and expected earnings - -
Change in assumptions 102,822 66,377
OPEB contribution subsequent to measurement date 108,135 - Totals $ 219,757 $ 290,139
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year Ended June 30,
2026 $ (55,740)
2027 (55,735)
2028 (38,903)
2029 (22,770)
2030 (841)
Thereafter (4,528)
Total $ (178,517)
OPEB Expense
The following summarizes the OPEB expense by source during the year ended June 30, 2025:

Service cost $ 30,848
Interest in TOL 65,767
Difference between actual and expected experience (57,008) Change in assumptions 1,268
OPEB Expense $ 40,875
The following summarizes changes in the total OPEB liability as reconciled to OPEB expense during the year ended June 30, 2025:
$ 1,693,203
(1,722,309)
(29,106)
Changes in deferred outflows (2,945)
Changes in deferred inflows (42,289)
Employer contributions and implicit subsidy 115,215
OPEB Expense $ 40,875
Net OPEB liability ending
Net OPEB liability beginning
Change in net OPEB liability
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
Sensitivity to Changes in the Municipal Bond Rate
The total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using a municipal bond rate (used to determine the discount rate) that is one percentage point lower or one percentage point higher, is as follows:
(1% Decrease ) 4.09% (1% Increase )
Total OPEB Liability $ 1,864,198 $ 1,693,203 $ 1,546,879 Discount Rate
Sensitivity to Changes in the Healthcare Cost Trend Rates The total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using healthcare cost trend rates that are one percentage point lower or one percentage point higher than current healthcare cost trend rates, is as follows:
(1% Decrease ) Current (1% Increase )
Total OPEB Liability $ 1,626,468 $ 1,693,203 $ 1,770,918 Trend Rate
NOTE 11 - COMMITMENTS AND CONTINGENCIES
Litigation
The City is subject to certain matters of litigation that may arise in the normal course of conducting City business. City management believes, based upon consultation with legal counsel, that these cases, in the aggregate, are not expected to result in a material adverse financial impact on the City. Additionally, City management believes that the City's insurance programs are sufficient to cover any potential losses should an unfavorable outcome materialize.

Federal and State Grant Programs
The City participates in Federal and State grant programs. These programs are audited by the City's independent accountants if required by and in accordance with the provisions of the Uniform Guidance and applicable State requirements. For Federal programs, the City did not reach the level of qualifying expenditures during the current fiscal year that would require a single audit. Expenditures which may be disallowed, if any, by the granting agencies, cannot be determined at this time. The City expects such amounts, if any, to be immaterial.

NOTE 12 - 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 2330 E.

Bidwell Street, Suite 150 Folsom CA 95630.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Notes to the Basic Financial Statements
June 30, 2025
Liabilities of the City are reported in the financial statements 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 (IBNR). Because estimating claims involves complex factors such as inflation, legal changes, and settlement trends, claim liabilities are periodically reevaluated. The City’s exposure is limited to deductible or retention amounts and any losses exceeding program coverage.

There have been no significant changes in insurance coverages in fiscal 2025. Settlements have not exceeded coverage for each of the past four fiscal years. The City has no material claim liabilities at June 30, 2025. There were no claims liabilities as of June 30, 2025.

NOTE 13 - JOINTLY GOVERNED ORGANIZATIONS
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.

NOTE 14 - PRIOR PERIOD RESTATEMENTS
The City had the following funds reclassified from Major to Nonmajor during the year:

Changes to
Beginning or Within the
Balance Financial Beginning
Previously Reporting Balance
Reported Entity Restated
Fund Balance: Governmental Funds
Major Funds $ (420,003) $ 420,003 $ -
Nonmajor Funds - (420,003) (420,003)
Total Governmental Funds $ (420,003) $ - $ (420,003)
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

REQUIRED SUPPLEMENTARY

INFORMATION
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City Council Meeting Packet of January 20, 2026

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Agenda Item Number 5
Agenda Item Number 5
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City of Sebastopol
Budget and Budgetary Accounting
June 30, 2025
Budgetary Information
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 and function or 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.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual (GAAP Basis)
General Fund
For the Year Ended June 30, 2025
Variance with
Budgeted Amounts Final Budget
Actual Positive
Original Final Amounts (Negative)

REVENUES
Property taxes $ 3,660,000 $ 3,660,000 $ 3,704,759 $ 44,759 Sales and use taxes 4,563,925 4,563,925 5,015,508 451,583 Transient occupancy tax 519,000 519,000 480,263 (38,737) Utility users tax 877,175 877,175 913,843 36,668
Franchise fees 502,250 502,250 490,118 (12,132)
License and permits 1,459,500 1,459,500 695,666 (763,834) Fine and forfeitures 31,700 31,700 28,921 (2,779)
Intergovernmental 50,890 58,390 224,375 165,985
Interest and rents 495,750 495,750 537,620 41,870
Charges for services 1,969,797 1,969,797 1,986,650 16,853 Miscellaneous 184,425 259,425 436,030 176,605
Total Revenues 14,314,412 14,396,912 14,513,753 116,841

EXPENDITURES
Current:

General Government:

City Council 198,625 200,125 176,805 23,320
City Manager 698,885 773,885 827,311 (53,426)
City Attorney 647,900 647,900 646,785 1,115
City Clerk 430,771 477,471 457,159 20,312
Finance and accounting 1,438,423 1,449,265 1,398,572 50,693 Planning 802,126 659,401 679,001 (19,600)
Building inspection 319,720 305,536 303,408 2,128
Nondepartmental 488,747 490,884 318,378 172,506
Public safety:

Police 5,316,488 5,480,162 5,054,636 425,526
Fire protection 1,523,910 1,526,726 1,492,275 34,451
Parks and recreation 1,133,823 1,014,085 1,062,886 (48,801) Public works 1,472,723 1,487,755 1,369,304 118,451
Capital outlay 239,800 329,800 225,224 104,576
Debt service
Principal retirement 381,024 236,682 241,872 (5,190)
Interest and fiscal charges 65,070 28,061 28,108 (47)
Total Expenditures 15,158,035 15,107,738 14,281,724 826,014 Excess (Deficiency) of Revenues over Expenditures (843,623) (710,826) 232,029 942,855

OTHER FINANCING SOURCES (USES)
Transfers in 364,551 126,500 72,815 (53,685)
Transfers out (255,000) (330,000) (65,310) 264,690
Total Other Financing Sources (Uses) 109,551 (203,500) 7,505 211,005 Net Change in Fund Balance (734,072) (914,326) 239,534 1,153,860 Fund Balance Beginning 11,666,491 11,666,491 11,666,491 - Fund Balance Ending $ 10,932,419 $ 10,752,165 $ 11,906,025 $ 1,153,860 Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Pension Contributions
(Last Ten Years)
Miscellaneous and Safety Plan
Plan Measurement Date 2015 2016 2017 2018 2019
Fiscal Year Ended 2016 2017 2018 2019 2020
Contractually Required Contributions $ 920,324 $ 1,099,458 $ 1,187,535 $ 1,343,860 $ 1,530,553 Contributions in Relation to
Contractually Required Contributions 920,324 1,099,458 1,187,535 1,343,860 1,530,553 Contribution Deficiency (Excess) $ - $ - $ - $ - $ -
Covered Payroll $ 3,816,628 $ 3,908,821 $ 3,956,662 $ 4,137,211 $ 4,272,937 Contributions as a % of Covered Payroll 24.11% 28.13% 30.01% 32.48% 35.82% Miscellaneous and Safety Plan
Plan Measurement Date 2020 2021 2022 2023 2024
Fiscal Year Ended 2021 2022 2023 2024 2025
Contractually Required Contributions $ 1,686,413 $ 1,827,570 $ 1,763,271 $ 1,657,901 $ 1,944,340 Contributions in Relation to
Contractually Required Contributions 1,686,413 1,827,570 1,763,271 1,657,901 1,944,340 Contribution Deficiency (Excess) $ - $ - $ - $ - $ -
Covered Payroll $ 4,348,774 $ 4,318,106 $ 4,138,191 $ 4,807,478 $ 4,957,148 Contributions as a % of Covered Payroll 38.78% 42.32% 42.61% 34.49% 39.22% Notes to Schedule:

Valuation Date: June 30, 2023
Assumptions Used: Entry Age Method used for Actuarial Cost Method Level Percentage of Payroll and Direct Rate Smoothing
Remaining Amortization Period no more than 26 years
Inflation Assumed at 2.30%
Investment Rate of Returns set at 6.8%
The CalPERS discount rate was increased from 7.50% to 7.65% in FY2016, to 7.15% in FY2018, and then decreased to 6.90% in FY2023.

The CalPERS mortality assumptions was adjusted in fiscal year 2021.

The mortality table was developed based on CalPERS-specific data. The rates includes 15 years of mortality improvements using Society of Actuaries Scale MP-2016. For more details, please refer to the 2021 experience study report that can be found on the CalPERS website.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Proportionate Share of Net Pension Liability (Last Ten Years)
Miscellaneous and Safety Plan
Plan Measurement Date 2015 2016 2017 2018 2019
Fiscal Year Ended 2016 2017 2018 2019 2020
Proportion of Net Pension
Liability (Safety and Misc) 0.13081% 0.12776% 0.12564% 0.12736% 0.12714% Proportion of Net Pension
Liability (Misc Plan Only) 0.32726% 0.31824% 0.31608% 0.32565% 0.32535% Proportionate Share of
Net Pension Liability $ 8,978,404 $ 11,055,177 $ 12,460,116 $ 12,272,694 $ 13,028,541 Covered Payroll $ 3,636,221 $ 3,816,628 $ 3,908,821 $ 3,956,662 $ 4,137,211 Proportionate Share of NPL
as a % of Covered Payroll 246.92% 289.66% 318.77% 310.18% 314.91% Plan's Fiduciary Net Position
as a % of the TPL 76.02% 71.74% 70.97% 71.83% 71.59%
Miscellaneous and Safety Plan
Plan Measurement Date 2020 2021 2022 2023 2024
Fiscal Year Ended 2021 2022 2023 2024 2025
Proportion of Net Pension
Liability (Safety and Misc) 0.12743% 0.16022% 0.13442% 0.13090% 0.13203% Proportion of Net Pension
Liability (Misc Plan Only) 0.32870% 0.45634% 0.33181% 0.32657% 0.15637% Proportionate Share of
Net Pension Liability $ 13,864,877 $ 8,665,009 $ 15,526,113 $ 16,329,632 $ 16,012,243 Covered Payroll $ 4,272,937 $ 4,348,774 $ 4,318,106 $ 4,138,191 $ 4,807,478 Proportionate Share of NPL
as a % of Covered Payroll 324.48% 199.25% 359.56% 394.61% 333.07% Plan's Fiduciary Net Position
as a % of the TPL 70.91% 82.62% 70.72% 70.47% 71.76%
The CalPERS discount rate was increased from 7.50% to 7.65% in FY2016, to 7.15% in FY2018, and then decreased to 6.90% in FY2023.

The CalPERS mortality assumptions was adjusted in fiscal year 2021.

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Changes in the City’s Total OPEB Liability
(Last Ten Years)
Fiscal Year Ended 2018 2019 2020 2021 2022 2023 2024 2025 Total OPEB liability
Service cost $ 58,870 $ 54,769 $ 56,412 $ 27,295 $ 27,917 $ 22,458 $ 14,299 $ 30,848 Interest 81,308 90,545 89,484 73,479 72,014 47,335 68,708 65,767 Diff. between expected/actual experience - - (492,345) - (551,283) (23,434) (55,023) 9,943 Changes of assumptions (168,395) 57,987 75,694 44,769 10,152 (425,755) 74,720 (36,950) Benefit payments (71,368) (87,182) (99,403) (97,430) (102,849) (95,469) (91,957) (87,176) Implicit subsidy fulfilled - - - - - - - (11,538)
Net change in Total OPEB Liability (99,585) 116,119 (370,158) 48,113 (544,049) (474,865) 10,747 (29,106) Total OPEB Liability - beginning 3,035,987 2,936,402 3,052,521 2,682,363 2,730,476 2,186,427 1,711,562 1,722,309 Total OPEB Liability - ending $ 2,936,402 $ 3,052,521 $ 2,682,363 $ 2,730,476 $ 2,186,427 $ 1,711,562 $ 1,722,309 $ 1,693,203 Plan fiduciary net position as a %
of the total OPEB liability 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Covered Employee Payroll $ 3,982,276 $ 3,956,662 $ 4,137,211 $ 4,272,937 $ 4,348,774 $ 4,299,547 $ 4,533,006 $ 4,807,478 TOL as a % of covered employee payroll 73.74% 77.15% 64.84% 63.90% 50.28% 39.81% 37.99% 35.22% Other Notes
GASB 75 requires a schedule of contributions for the last ten fiscal years, or for as many years as are available if less than ten years are available. GASB 75 was adopted as of June Discount rates changed from 3.86% in FY2024 to 4.09% in FY2025.

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City Council Meeting Packet of January 20, 2026

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SUPPLEMENTARY INFORMATION
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City Council Meeting Packet of January 20, 2026

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NONMAJOR GOVERNMENTAL FUNDS
Special Revenue Funds
Street Reserve Fund accounts for the tax reserved for local streets and roads.

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

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.

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

Art in Lieu Fund 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.

Inclusionary and Linkage Housing Fund 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.

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

Housing General Plan Fund 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.

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).

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

Transportation Grants Fund accounts for the revenues and expenditures of transportation grants awarded to the City.

Park in Lieu Fund 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 Fund 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 Fund 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 Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

NONMAJOR GOVERNMENTAL FUNDS
debris, the installation of curbs and gutters, walls, sidewalks or paving or water, irrigation, drainage or electrical facilities.

Community Development Block Grant Fund 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.

Go Sonoma Roads Fund accounts for roads maintenance taxes fees and related expenses.

OTS Police Federal Grants accounts for Office of Traffic Safety federal grants and related expenses.

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

Measure H Fund accounts for funding from sales taxes and related expenses.

Debt Service Funds
Clean Renewable Energy Bonds Fund accounts 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
Underground Utilities Fee Fund accounts for in-lieu fees paid by developers whereas the City Engineer has determined physical undergrounding of overhead utilities is not practical. The Fund is used for general City utility undergrounding projects.

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

Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2025
Street Reserve Vehicle Abatement Gas Tax Measure M
ASSETS
Cash and investments $ 332,317 $ 19,934 $ 92,639 $ 500,028 Accounts receivable - 5,049 - -
Taxes receivable - - 18,415 38,549
Interest receivable 1,888 103 520 2,742
Due from other funds - - - -
Total assets $ 334,205 $ 25,086 $ 111,574 $ 541,319

LIABILITIES AND FUND BALANCES
Liabilities:

Accounts payable $ - $ - $ - $ -
Unearned revenue - - - -
Due to other funds - - - -
Total liabilities - - - -
Fund Balances:

Restricted:

Highway and streets - - - 541,319
Public safety - 25,086 111,574 -
Affordable housing - - - -
Parks and recreation - - - -
Other - - - -
Committed
Street projects 334,205 - - -
Unassigned - - - -
Total fund balances 334,205 25,086 111,574 541,319
Total liabilities and fund balances $ 334,205 $ 25,086 $ 111,574 $ 541,319 Continued
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2025
ASSETS
Cash and investments
Accounts receivable
Taxes receivable
Interest receivable
Due from other funds
Total assets

LIABILITIES AND FUND BALANCES
Liabilities:

Accounts payable
Unearned revenue
Due to other funds
Total liabilities
Fund Balances:

Restricted:

Highway and streets
Public safety
Affordable housing
Parks and recreation
Other
Committed
Street projects
Unassigned
Total fund balances
Total liabilities and fund balances
Art In-Lieu
Inclusionary and
Linkage Housing
Building Permit
Incremental
Downtown
Improvement
District
$ 24,310 $ 135,005 $ 149,573 $ 7,960
- - 6,000 -
- - - -
208 765 825 44
- - - -
$ 24,518 $ 135,770 $ 156,398 $ 8,004
$ - $ - $ - $ -
- - - -
- - - -
- - - -
- - - -
- - - -
- 135,770 - -
24,518 - - -
- - - 8,004
- - 156,398 -
- - - -
24,518 135,770 156,398 8,004
$ 24,518 $ 135,770 $ 156,398 $ 8,004
Continued
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2025
ASSETS
Cash and investments
Accounts receivable
Taxes receivable
Interest receivable
Due from other funds
Total assets

LIABILITIES AND FUND BALANCES
Liabilities:

Accounts payable
Unearned revenue
Due to other funds
Total liabilities
Fund Balances:

Restricted:

Highway and streets
Public safety
Affordable housing
Parks and recreation
Other
Committed
Street projects
Unassigned
Total fund balances
Total liabilities and fund balances
Housing General
Plan Police Grants Asset Forfeiture
Transportation
Grants
$ 113,347 $ 89,110 $ 11,197 $ -
- 235 - -
- - - -
639 400 63 -
- 12,282 - -
$ 113,986 $ 102,027 $ 11,260 $ -
$ - $ - $ - $ 44,449
- - 8,283 -
- - - 103,447
- - 8,283 147,896
- - - -
- 102,027 2,977 -
113,986 - - -
- - - -
- - - -
- - - -
- - - (147,896)
113,986 102,027 2,977 (147,896)
$ 113,986 $ 102,027 $ 11,260 $ -
Continued
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2025
ASSETS
Cash and investments
Accounts receivable
Taxes receivable
Interest receivable
Due from other funds
Total assets

LIABILITIES AND FUND BALANCES
Liabilities:

Accounts payable
Unearned revenue
Due to other funds
Total liabilities
Fund Balances:

Restricted:

Highway and streets
Public safety
Affordable housing
Parks and recreation
Other
Committed
Street projects
Unassigned
Total fund balances
Total liabilities and fund balances
Park in Lieu Traffic Impact Fee
Street Lighting
Assessment
Community
Development Block
Grant
$ 91,789 $ 70,187 $ 25,821 $ 98,442
- - - 5,840
- - 310 -
650 1,012 77 563
- 103,447 - -
$ 92,439 $ 174,646 $ 26,208 $ 104,845
$ - $ 398 $ - $ -
- - - -
- - - -
- 398 - -
- 174,248 26,208 -
- - - -
- - - -
92,439 - - -
- - - 104,845
- - - -
- - - -
92,439 174,248 26,208 104,845
$ 92,439 $ 174,646 $ 26,208 $ 104,845
Continued
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2025
ASSETS
Cash and investments
Accounts receivable
Taxes receivable
Interest receivable
Due from other funds
Total assets

LIABILITIES AND FUND BALANCES
Liabilities:

Accounts payable
Unearned revenue
Due to other funds
Total liabilities
Fund Balances:

Restricted:

Highway and streets
Public safety
Affordable housing
Parks and recreation
Other
Committed
Street projects
Unassigned
Total fund balances
Total liabilities and fund balances
SB1 Road and
Maintenance
General Government
Facilities Fee Fire Facilities Fee
Stormwater
Facilities Fee
$ 489,039 $ 7,871 $ 4,126 $ 24,772
- - - -
17,206 - - -
2,662 40 21 137
- - - -
$ 508,907 $ 7,911 $ 4,147 $ 24,909
$ - $ - $ - $ -
- - - -
- - - -
- - - -
508,907 - - -
- - - -
- - - -
- - - -
- 7,911 4,147 24,909
- - - -
- - - -
508,907 7,911 4,147 24,909
$ 508,907 $ 7,911 $ 4,147 $ 24,909
Continued
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2025
ASSETS
Cash and investments
Accounts receivable
Taxes receivable
Interest receivable
Due from other funds
Total assets

LIABILITIES AND FUND BALANCES
Liabilities:

Accounts payable
Unearned revenue
Due to other funds
Total liabilities
Fund Balances:

Restricted:

Highway and streets
Public safety
Affordable housing
Parks and recreation
Other
Committed
Street projects
Unassigned
Total fund balances
Total liabilities and fund balances
Go Sonoma Roads
OTS Police Federal
Grants
Supplemental
Planning Grant (SB2
&L EAP) Measure H
$ - $ - $ - $ 12,442
- - - -
57,905 - - -
- - - 108
- - - -
$ 57,905 $ - $ - $ 12,550
$ - $ 13,413 $ - $ 6,518
- - - -
- 12,282 - -
- 25,695 - 6,518
57,905 - - -
- - - 6,032
- - - -
- - - -
- - - -
- - - -
- (25,695) - -
57,905 (25,695) - 6,032
$ 57,905 $ - $ - $ 12,550
Continued
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2025
ASSETS
Cash and investments
Accounts receivable
Taxes receivable
Interest receivable
Due from other funds
Total assets

LIABILITIES AND FUND BALANCES
Liabilities:

Accounts payable
Unearned revenue
Due to other funds
Total liabilities
Fund Balances:

Restricted:

Highway and streets
Public safety
Affordable housing
Parks and recreation
Other
Committed
Street projects
Unassigned
Total fund balances
Total liabilities and fund balances
Clean Energy
Renewable Bonds
Underground
Utilities Fee
General Capital
Projects
Total Nonmajor
Governmental Funds
$ - $ 261,272 $ 13,196 $ 2,574,377
- - - 17,124
- - - 132,385
- 1,481 - 14,948
- - - 115,729
$ - $ 262,753 $ 13,196 $ 2,854,563
$ - $ - $ 63,948 $ 128,726
- - - 8,283
- - - 115,729
- - 63,948 252,738
- 262,753 - 1,571,340
- - - 247,696
- - - 249,756
- - - 116,957
- - - 149,816
- - - 490,603
- - (50,752) (224,343)
- 262,753 (50,752) 2,601,825
$ - $ 262,753 $ 13,196 $ 2,854,563
Concluded
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Combining Statement of Revenues, Expenditures
and Changes in Fund Balances
Nonmajor Governmental Funds
For the Year Ended June 30, 2025
Street Reserve Vehicle Abatement Gas Tax Measure M

REVENUES
Property taxes $ - $ - $ - $ -
Sales and use taxes - - - 182,677
License and permits - - - -
Intergovernmental - - 217,328 -
Interest and rents 16,459 501 3,504 20,754
Charges for services - 18,074 - -
Miscellaneous 36,005 - - -
Total Revenues 52,464 18,575 220,832 203,431

EXPENDITURES
Current:

General government - - - -
Public safety - - - -
Parks and recreation - - - -
Public works - - 185,773 -
Capital outlay - - - -
Debt service:

Principal - - - -
Interest - - - -
Total Expenditures - - 185,773 -
Excess (Deficiency) of Revenues over Expenditures 52,464 18,575 35,059 203,431

OTHER FINANCING SOURCES (USES)
Debt issuance - - - -
Sale of capital assets - - - -
Transfers in - - - -
Transfers out (8,712) (4,500) - (79,911)
Total Other Financing Sources (Uses) (8,712) (4,500) - (79,911) Net Change in Fund Balances 43,752 14,075 35,059 123,520 Fund Balances Beginning 290,453 11,011 76,515 417,799
Restatements and Major/Nonmajor Reclassifications - - - - Fund Balances Beginning, as Restated 290,453 11,011 76,515 417,799 Fund Balances Ending $ 334,205 $ 25,086 $ 111,574 $ 541,319 Continued
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Combining Statement of Revenues, Expenditures
and Changes in Fund Balances
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, as Restated
Fund Balances Ending
Art In-Lieu
Inclusionary and
Linkage Housing
Bldg Permit
Incremental
Downtown
Improvement
District
$ - $ - $ - $ -
- - - -
- - - 7,683
- - - -
3,548 6,988 6,917 377
- - 22,620 -
- - - -
3,548 6,988 29,537 8,060
35,868 - - 7,300
- - - -
188 - - -
- - - -
- - - -
- - - -
- - - -
36,056 - - 7,300
(32,508) 6,988 29,537 760
- - - -
- - - -
- - - -
- - - -
- - - -
(32,508) 6,988 29,537 760
57,026 128,782 126,861 7,244
- - - -
57,026 128,782 126,861 7,244
$ 24,518 $ 135,770 $ 156,398 $ 8,004
Continued
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Combining Statement of Revenues, Expenditures
and Changes in Fund Balances
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, as Restated
Fund Balances Ending
Housing General
Plan Police Grants Asset Forfeiture
Transportation
Grants
$ - $ - $ - $ -
- - - -
- - - -
29,085 122,698 - 481,539
4,206 6,934 579 -
1,200 - - -
- - - -
34,491 129,632 579 481,539
- - - 185,582
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - 185,582
34,491 129,632 579 295,957
- - - -
- - - -
- - - 20,458
- (120,000) - (95,060)
- (120,000) - (74,602)
34,491 9,632 579 221,355
79,495 92,395 2,398 -
- - - (369,251)
79,495 92,395 2,398 (369,251)
$ 113,986 $ 102,027 $ 2,977 $ (147,896)
Continued
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Combining Statement of Revenues, Expenditures
and Changes in Fund Balances
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, as Restated
Fund Balances Ending
Park in Lieu Traffic Impact Fee
Street Lighting
Assessment
Community
Development Block
Grant
$ - $ - $ 127,143 $ -
- - - -
- - - -
- - - 149,592
2,976 7,532 659 1,922
157,104 117,015 - -
- 20,875 - -
160,080 145,422 127,802 151,514
- 1,056 14,635 -
- - - -
- - - -
- - 114,186 -
- - - -
56,858 - - -
547 - - -
57,405 1,056 128,821 -
102,675 144,366 (1,019) 151,514
- - - -
- - - -
- - - -
(2,673) (52,982) - (69,007)
(2,673) (52,982) - (69,007)
100,002 91,384 (1,019) 82,507
(7,563) 82,864 27,227 22,338
- - - -
(7,563) 82,864 27,227 22,338
$ 92,439 $ 174,248 $ 26,208 $ 104,845
Continued
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Combining Statement of Revenues, Expenditures
and Changes in Fund Balances
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, as Restated
Fund Balances Ending
SB1 Road and
Maintenance
General Government
Facilities Fee Fire Facilities Fee
Stormwater Facilities
Fee
$ - $ - $ - $ -
- - - -
- - - -
204,496 - - -
17,087 293 151 879
- 1,555 1,000 8,143
- - - -
221,583 1,848 1,151 9,022
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
221,583 1,848 1,151 9,022
- - - -
- - - -
- - - -
(25,982) - - -
(25,982) - - -
195,601 1,848 1,151 9,022
313,306 6,063 2,996 15,887
- - - -
313,306 6,063 2,996 15,887
$ 508,907 $ 7,911 $ 4,147 $ 24,909
Continued
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Combining Statement of Revenues, Expenditures
and Changes in Fund Balances
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, as Restated
Fund Balances Ending
Go Sonoma Roads
OTS Police Federal
Grants
Supplemental
Planning Grant (SB2
&L EAP) Measure H
$ - $ - $ - $ -
57,905 - - 543,059
- - - -
- 295 - -
- - - 117
- - - -
- - - -
57,905 295 - 543,176
- - 10,330 -
- 25,990 - 67,758
- - - -
- - - -
- - - 638,745
- - - 638,745
- - - 55,654
- 25,990 10,330 1,400,902
57,905 (25,695) (10,330) (857,726)
- - - 638,745
- - - 225,013
- - 30,153 -
- - - -
- - 30,153 863,758
57,905 (25,695) 19,823 6,032
- - (19,823) -
- - - -
- - (19,823) -
$ 57,905 $ (25,695) $ - $ 6,032
Continued
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Combining Statement of Revenues, Expenditures
and Changes in Fund Balances
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, as Restated
Fund Balances Ending
Clean Energy
Renewable Bonds
Underground
Utilities Fee
General Capital
Projects
Total Nonmajor
Governmental Funds
$ - $ - $ - $ 127,143
- - - 783,641
- - - 7,683
- - - 1,205,033
- 13,523 - 115,906
- - - 326,711
- - - 56,880
- 13,523 - 2,622,997
- - - 254,771
- - - 93,748
- - - 188
- - - 299,959
- - 371,151 1,009,896
- - - 695,603
- - - 56,201
- - 371,151 2,410,366
- 13,523 (371,151) 212,631
- - - 638,745
- - - 225,013
29,560 - 371,151 451,322
- - - (458,827)
29,560 - 371,151 856,253
29,560 13,523 - 1,068,884
(29,560) 249,230 - 1,952,944
- - (50,752) (420,003)
(29,560) 249,230 (50,752) 1,532,941
$ - $ 262,753 $ (50,752) $ 2,601,825
Concluded
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2025
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)

REVENUES
Property taxes $ - $ - $ - $ -
Sales and use taxes - - - -
License and permits - - - -
Intergovernmental - - - -
Interest and rents 10,000 10,000 16,459 6,459
Charges for services - - - -
Miscellaneous - - 36,005 36,005
Total Revenues 10,000 10,000 52,464 42,464

EXPENDITURES
Current:

General government - - - -
Public safety - - - -
Parks and recreation - - - -
Public works - - - -
Capital outlay - - - -
Debt service:

Principal - - - -
Interest and fiscal charges - - - -
Total Expenditures - - - -
Excess (Deficiency) of Revenues over Expenditures 10,000 10,000 52,464 42,464

OTHER FINANCING SOURCES (USES)
Debt issuance - - - -
Sale of capital assets - - - -
Transfers in - - - -
Transfers out (55,000) (55,000) (8,712) 46,288
Total Other Financing Sources (Uses) (55,000) (55,000) (8,712) 46,288 Net Change in Fund Balances (45,000) (45,000) 43,752 88,752 Fund Balances Beginning 290,453 290,453 290,453 -
Restatements and Major/Nonmajor Reclassifications - - - - Fund Balances Beginning, Restated 290,453 290,453 290,453 - Fund Balances Ending $ 245,453 $ 245,453 $ 334,205 $ 88,752 Cont'd
Street Reserve
Budgeted Amounts
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, Restated
Fund Balances Ending
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
$ - $ - $ - $ -
- - - -
- - - -
- - - -
100 100 501 401
4,000 4,000 18,074 14,074
- - - -
4,100 4,100 18,575 14,475
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
4,100 4,100 18,575 14,475
- - - -
- - - -
- - - -
(4,500) (4,500) (4,500) -
(4,500) (4,500) (4,500) -
(400) (400) 14,075 14,475
11,011 11,011 11,011 -
- - - -
11,011 11,011 11,011 -
$ 10,611 $ 10,611 $ 25,086 $ 14,475
Cont'd
Vehicle Abatement
Budgeted Amounts
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, Restated
Fund Balances Ending
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
$ - $ - $ - $ -
- - - -
- - - -
219,735 219,735 217,328 (2,407)
700 700 3,504 2,804
- - - -
- - - -
220,435 220,435 220,832 397
- - - -
- - - -
- - - -
163,473 168,655 185,773 (17,118)
- - - -
- - - -
- - - -
163,473 168,655 185,773 (17,118)
56,962 51,780 35,059 (16,721)
- - - -
- - - -
- - - -
- - - -
- - - -
56,962 51,780 35,059 (16,721)
76,515 76,515 76,515 -
- - - -
76,515 76,515 76,515 -
$ 133,477 $ 128,295 $ 111,574 $ (16,721)
Cont'd
Gas Tax
Budgeted Amounts
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, Restated
Fund Balances Ending
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
$ - $ - $ - $ -
197,545 197,545 182,677 (14,868)
- - - -
- - - -
3,000 3,000 20,754 17,754
- - - -
- - - -
200,545 200,545 203,431 2,886
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
200,545 200,545 203,431 2,886
- - - -
- - - -
5,000 5,000 - (5,000)
(90,000) (90,000) (79,911) 10,089
(85,000) (85,000) (79,911) 5,089
115,545 115,545 123,520 7,975
417,799 417,799 417,799 -
- - - -
417,799 417,799 417,799 -
$ 533,344 $ 533,344 $ 541,319 $ 7,975
Cont'd
Measure M
Budgeted Amounts
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, Restated
Fund Balances Ending
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
$ - $ - $ - $ -
- - - -
- - - -
- - - -
500 500 3,548 3,048
- - - -
- - - -
500 500 3,548 3,048
34,500 34,500 35,868 (1,368)
- - - -
- - 188 (188)
- - - -
- - - -
- - - -
- - - -
34,500 34,500 36,056 (1,556)
(34,000) (34,000) (32,508) 1,492
- - - -
- - - -
- - - -
- - - -
- - - -
(34,000) (34,000) (32,508) 1,492
57,026 57,026 57,026 -
- - - -
57,026 57,026 57,026 -
$ 23,026 $ 23,026 $ 24,518 $ 1,492
Cont'd
Art In-Lieu
Budgeted Amounts
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, Restated
Fund Balances Ending
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
$ - $ - $ - $ -
- - - -
- - - -
- - - -
2,000 2,000 6,988 4,988
- - - -
- - - -
2,000 2,000 6,988 4,988
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
2,000 2,000 6,988 4,988
- - - -
- - - -
- - - -
(22,000) (22,000) - 22,000
(22,000) (22,000) - 22,000
(20,000) (20,000) 6,988 26,988
128,782 128,782 128,782 -
- - - -
128,782 128,782 128,782 -
$ 108,782 $ 108,782 $ 135,770 $ 26,988
Cont'd
Budgeted Amounts
Inclusionary and Linkage Housing
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, Restated
Fund Balances Ending
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
$ - $ - $ - $ -
- - - -
- - - -
- - - -
500 500 6,917 6,417
10,000 10,000 22,620 12,620
- - - -
10,500 10,500 29,537 19,037
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
10,500 10,500 29,537 19,037
- - - -
- - - -
- - - -
- - - -
- - - -
10,500 10,500 29,537 19,037
126,861 126,861 126,861 -
- - - -
126,861 126,861 126,861 -
$ 137,361 $ 137,361 $ 156,398 $ 19,037
Cont'd
Bldg Permit Incremental
Budgeted Amounts
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, Restated
Fund Balances Ending
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
$ - $ - $ - $ -
- - - -
8,700 8,700 7,683 (1,017)
- - - -
- - 377 377
- - - -
- - - -
8,700 8,700 8,060 (640)
16,000 16,000 7,300 8,700
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
16,000 16,000 7,300 8,700
(7,300) (7,300) 760 8,060
- - - -
- - - -
- - - -
- - - -
- - - -
(7,300) (7,300) 760 8,060
7,244 7,244 7,244 -
- - - -
7,244 7,244 7,244 -
$ (56) $ (56) $ 8,004 $ 8,060
Cont'd
Downtown Improvement District
Budgeted Amounts
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, Restated
Fund Balances Ending
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
$ - $ - $ - $ -
- - - -
- - - -
- - 29,085 29,085
4,000 4,000 4,206 206
110,000 110,000 1,200 (108,800)
- - - -
114,000 114,000 34,491 (79,509)
30,025 30,025 - 30,025
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
30,025 30,025 - 30,025
83,975 83,975 34,491 (49,484)
- - - -
- - - -
- - - -
- - - -
- - - -
83,975 83,975 34,491 (49,484)
79,495 79,495 79,495 -
- - - -
79,495 79,495 79,495 -
$ 163,470 $ 163,470 $ 113,986 $ (49,484)
Cont'd
Housing General Plan
Budgeted Amounts
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, Restated
Fund Balances Ending
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
$ - $ - $ - $ -
- - - -
- - - -
120,000 120,000 122,698 2,698
1,200 1,200 6,934 5,734
800 800 - (800)
- - - -
122,000 122,000 129,632 7,632
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
122,000 122,000 129,632 7,632
- - - -
- - - -
- - - -
(120,000) (120,000) (120,000) -
(120,000) (120,000) (120,000) -
2,000 2,000 9,632 7,632
92,395 92,395 92,395 -
- - - -
92,395 92,395 92,395 -
$ 94,395 $ 94,395 $ 102,027 $ 7,632
Cont'd
Police Grants
Budgeted Amounts
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, Restated
Fund Balances Ending
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
$ - $ - $ - $ -
- - - -
- - - -
- - - -
- - 579 579
- - - -
- - - -
- - 579 579
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - 579 579
- - - -
- - - -
- - - -
- - - -
- - - -
- - 579 579
2,398 2,398 2,398 -
- - - -
2,398 2,398 2,398 -
$ 2,398 $ 2,398 $ 2,977 $ 579
Cont'd
Asset Forfeiture
Budgeted Amounts
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, Restated
Fund Balances Ending
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
$ - $ - $ - $ -
- - - -
- - - -
781,080 781,080 481,539 (299,541)
- - - -
- - - -
- - - -
781,080 781,080 481,539 (299,541)
146,822 146,822 185,582 (38,760)
- - - -
- - - -
3,178 3,178 - 3,178
- - - -
- - - -
- - - -
150,000 150,000 185,582 (35,582)
631,080 631,080 295,957 (335,123)
- - - -
- - - -
- - 20,458 20,458
(631,080) (631,080) (95,060) 536,020
(631,080) (631,080) (74,602) 556,478
- - 221,355 221,355
- - - -
- - (369,251) -
- - (369,251) -
$ - $ - $ (147,896) $ 221,355
Cont'd
Transportation Grants
Budgeted Amounts
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, Restated
Fund Balances Ending
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
$ - $ - $ - $ -
- - - -
- - - -
126,943 126,943 - (126,943)
- - 2,976 2,976
563,969 563,969 157,104 (406,865)
- - - -
690,912 690,912 160,080 (530,832)
- - - -
- - - -
- - - -
- - - -
- - - -
26,979 54,279 56,858 (2,579)
558 558 547 11
27,537 54,837 57,405 (2,568)
663,375 636,075 102,675 (533,400)
- - - -
- - - -
- - - -
(339,455) (339,455) (2,673) 336,782
(339,455) (339,455) (2,673) 336,782
323,920 296,620 100,002 (196,618)
(7,563) (7,563) (7,563) -
- - - -
(7,563) (7,563) (7,563) -
$ 316,357 $ 289,057 $ 92,439 $ (196,618)
Cont'd
Budgeted Amounts
Park in Lieu
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, Restated
Fund Balances Ending
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
$ - $ - $ - $ -
- - - -
- - - -
- - - -
1,800 1,800 7,532 5,732
389,109 389,109 117,015 (272,094)
- - 20,875 20,875
390,909 390,909 145,422 (245,487)
27,622 27,622 1,056 26,566
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
27,622 27,622 1,056 26,566
363,287 363,287 144,366 (218,921)
- - - -
- - - -
- - - -
(209,830) (209,830) (52,982) 156,848
(209,830) (209,830) (52,982) 156,848
153,457 153,457 91,384 (62,073)
82,864 82,864 82,864 -
- - - -
82,864 82,864 82,864 -
$ 236,321 $ 236,321 $ 174,248 $ (62,073)
Cont'd
Budgeted Amounts
Traffic Impact Fee
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, Restated
Fund Balances Ending
Variance with
Amounts Final Budget
Actual Positive
Original Final Amounts (Negative)
$ 128,144 $ 128,144 $ 127,143 $ (1,001)
- - - -
- - - -
- - - -
350 350 659 309
- - - -
- - - -
128,494 128,494 127,802 (692)
16,516 16,516 14,635 1,881
- - - -
- - - -
124,563 124,941 114,186 10,755
- - - -
- - - -
- - - -
141,079 141,457 128,821 12,636
(12,585) (12,963) (1,019) 11,944
- - - -
- - - -
- - - -
- - - -
- - - -
(12,585) (12,963) (1,019) 11,944
27,227 27,227 27,227 -
- - - -
27,227 27,227 27,227 -
$ 14,642 $ 14,264 $ 26,208 $ 11,944
Cont'd
Street Lighting Assessment
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, Restated
Fund Balances Ending
Variance with
Amounts Final Budget
Actual Positive
Original Final Amounts (Negative)
$ - $ - $ - $ -
- - - -
- - - -
45,000 45,000 149,592 104,592
- - 1,922 1,922
- - - -
- - - -
45,000 45,000 151,514 106,514
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
45,000 45,000 151,514 106,514
- - - -
- - - -
- - - -
(45,000) (45,000) (69,007) (24,007)
(45,000) (45,000) (69,007) (24,007)
- - 82,507 82,507
22,338 22,338 22,338 -
- - - -
22,338 22,338 22,338 -
$ 22,338 $ 22,338 $ 104,845 $ 82,507
Cont'd
Community Development Block Grant
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026

City of Sebastopol
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2025

REVENUES
Property taxes
Sales and use taxes
License and permits
Intergovernmental
Interest and rents
Charges for services
Miscellaneous
Total Revenues

EXPENDITURES
Current:

General government
Public safety
Parks and recreation
Public works
Capital outlay
Debt service:

Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Debt issuance
Sale of capital assets
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Restatements and Major/Nonmajor Reclassifications
Fund Balances Beginning, Restated
Fund Balances Ending
Variance with
Amounts Final Budget
Actual Positive
Original Final Amounts (Negative)
$ - $ - $ - $ -
- - - -
- - - -
194,800 194,800 204,496 9,696
5,000 5,000 17,087 12,087
- - - -
- - - -
199,800 199,800 221,583 21,783
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
199,800 199,800 221,583 21,783
- - - -
- - - -
- - - -
(61,700) (61,700) (25,982) 35,718
(61,700) (61,700) (25,982) 35,718
138,100 138,100 195,601 57,501
313,306 313,306 313,306 -
- - - -
313,306 313,306 313,306 -
$ 451,406 $ 451,406 $ 508,907 $ 57,501
Cont'd
SB1 Road and Maintenance
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of January 20, 2026