CITY COUNCIL MEETING AGENDA April 7, 2026
CITY OF SHASTA LAKE
CITY COUNCIL
MEETING AGENDA
April 7, 2026
6:00 P.M.
Shasta Lake City Council Chambers
4488 Red Bluff Street Shasta Lake, CA 96019
Mayor: Justin Jones
Vice Mayor: Greg Watkins
Council Members: Toni Coates, Pamelyn Morgan, Dan Ringwelski
OTHER WAYS TO PARTICIPATE IN THE MEETING
• Watch a livestream of the meeting online or view the recording any time after the meeting concludes at the following: cityofshastalake.gov/meetings • Submit public comment electronically before the meeting to:
[email protected]. Public comment by email will be read into the record during consideration of the item the comment addresses. Each public comment will be limited to three minutes of reading. Include the item number you are commenting on in the subject line of the email. Once the vote has taken place on an item, no additional public comments will beaccepted.
• Submit public comment by mail addressed to City Clerk, City of Shasta Lake, PO Box 777, Shasta Lake, CA 96019. Mailed comments must be received one day prior to the meeting to be included.
1.0 CALL TO ORDER – REGULAR MEETING:
1.1 Call to order (please place electronic devices on silent)
1.2 Statement for the record of Council Members present or absent
1.3 Pledge of Allegiance
1.4 Invocation by Lynn Fritz, Karuk Tribal Descendant/Chair of Shasta Interfaith, and Native American flute by Joey Carroll.
2.0 AWARDS & RECOGNITIONS:
2.1 Proclamation: Week of the Young Child April 11th-18th, 2026 (pg. 4)
3.0 PRESENTATIONS:
3.1 Shasta Lake Damboree Pet Mayor presentation (pg. 5)
4.0 COMMISSION, COMMITTEE, AND OUTSIDE AGENCY REPORTS:
4.1 Youth Options Report, Jennifer Coulter
4.2 Chemical People Report, Betty Cunningham
1 CITY COUNCIL MEETING AGENDA April 7, 2026
4.3 Shasta Lake Damboree Report, Brian Hargrave
5.0 PUBLIC COMMENT:
This time is set aside for citizens to address the City Council on matters listed on the Consent Agenda as well as other items not included on the Regular Agenda. If your comments concern an item noted on the regular agenda, please address the Council when that item is open for public comment. Each speaker is allocated three (3) minutes to speak. Speakers may not cede their time. Comments should be limited to matters within the jurisdiction of the City. Council discussion or action cannot be taken on items not listed on the agenda other than to receive comments. Speaker forms are available from the City Clerk, 4477 Main Street, Shasta Lake, on the City’s website, or at the back of the meeting hall. If you have documents to present to members of Council, please provide a minimum of seven copies. Pursuant to The Brown Act, the City Council cannot take action on Public Comment Items.
6.0 CONSENT AGENDA:
The items listed under the Consent Agenda are considered routine business and will be voted on together by one motion unless a Council Member requests a specific item to be removed and discussed separately.
6.1 Minutes of the Regular Meeting of March 17, 2026. (pg. 7)
6.2 Payrolls: (pg. 11)
Period Ending: 3/14/2026 Paid Date: 3/20/2026 $201,379.90 Period Ending: 3/28/2026 Paid Date: 4/03/2026 $184,371.05
6.3 Checks, E-payments, and wires: (pg. 13)
2/26/2026 $874,578.79
3/05/2026 $1,480,841.27
3/12/2026 $575,791.23
3/19/2026 $674,964.62
3/25/2026 $1,371,450.82
6.4 Possible action to approve a Resolution accepting the Civic Center Mobility Project (Bid No. 2025-06) and authorize the filing of a Notice of Completion. (pg. 35)
6.5 Possible action to approve a Resolution for a supplemental budget appropriation in the amount of $160,000 and award a construction contract to JS Builders, Inc. for construction of the Park Pavilions & Restrooms Project (Bid No. 2026-04). (pg. 39)
6.6 Possible action to approve a Resolution authorizing the City Manager to execute a contract with Dynamic Planning + Science for the creation of the Shasta Lake Resiliency Plan. (pg. 49)
2 CITY COUNCIL MEETING AGENDA April 7, 2026
7.0 PUBLIC HEARINGS:
7.1 Discussion and possible action to approve a Resolution accepting the Report of Job Vacancies pursuant to Assembly Bill 2561. (pg. 65)
8.0 REGULAR AGENDA:
8.1 Discussion and possible action to approve a Resolution appointing Jennifer Coy to the Shasta Economic Development Corporation (EDC) Board of Directors. (pg. 71)
8.2 Discussion and possible action to approve a Resolution for a supplemental budget appropriation in the amount of $100,000.00 for the development of the updated Title 22 Engineering Report. (pg. 75)
8.3 Discussion and possible action to approve a Resolution accepting the Audited Financial Statements, Single Audit Act Report, Management Letter, and Auditor’s Letter to Council for the fiscal year ending June 30, 2025. (pg. 87)
8.4 Discussion and possible action to approve a Resolution adopting the Fiscal Year 2025-2026 Mid-Year Budget. (pg. 245)
8.5 Discussion and possible action to approve a Resolution accepting the Annual Review and Update of the Investment Policy. (pg. 255)
9.0 STAFF COMMENTS:
10.0 CITY COUNCIL COMMENTS AND REPORTS:
This is the time set aside for Council Members, who may so desire, to give brief comments or reports concerning City matters. The City Council may not enter into discussion on matters reported. Statements made by individual Council Members should not be interpreted as a statement of the City Council. The City Council only takes action by majority vote. • Brief reports by members of the Council regarding correspondence, events and/or meetings attended, and upcoming meetings/events.
• Suggestions/motions for future agenda items.
• In compliance with Assembly Bill 1234, Council will report on attendance at conferences/meetings/events where expenses are reimbursed by the City.
ADJOURNMENT:
Meetings are broadcast as scheduled on Charter Channel 181.
Videos of meetings are also available through the City website: www.cityofshastalake.gov In Compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please call (530) 275-7407. Notification 48 hours prior to the meeting is requested to enable the City to make reasonable arrangements to ensure accessibility to this meeting (28 CFR 35.102-35.104 ADA Title II). 3 April 11-18, 2026
“WEEK OF THE YOUNG CHILD”
WHEREAS, First 5 Shasta, in conjunction with the National Association for the Education of Young Children (NAEYC), are celebrating the Week of the Young Child, April 11-18, 2026; and WHEREAS, First 5 Shasta works in partnership with the community to promote, support and improve the early health, development, and learning of children from the prenatal stage through five years of age; and
WHEREAS, the first years of a child’s life are the period of the most rapid brain development and lay the foundation for all future learning; and
WHEREAS, children’s cognitive, physical, social and emotional, and language and literacy development are built on a foundation of children’s positive interactions with adults, peers, and their environment; and
WHEREAS, participation in high-quality early childhood education saves taxpayer dollars, makes working families more economically secure, and prepares children to succeed in school, earn higher wages, and live healthier lives; and
WHEREAS, public policies that support early learning are crucial not only for the success of young children, but also for the prosperity of our society as a whole; and WHEREAS, paper dolls will be displayed in local businesses and the community as a reminder that young children are our future.
NOW, THEREFORE, I, Justin Jones, Mayor of the City of Shasta Lake, do hereby proclaim April 11-18, 2026, as the Week of the Young Child in Shasta Lake, CA, and call upon all citizens to join in supporting and investing in the future of early childhood education in our community.
Dated this 7th day of April, 2026
___
Justin Jones, Mayor
4 Report and Recommendations 4.0
Reviewed and Approved
City Manager
AGENDA ITEM
City Council
TO:
FROM:
DATE:
SUBJECT:
FILE NO.:
Mayor and City Council Members
Kathie Reid, Executive Assistant
April 7, 2026
OUTSIDE AGENCY DONATION REPORTS FY 2024-2025
F-200-060-000
RECOMMENDATION:
Presentations By:
Youth Options – Jennifer Coulter
Shasta County Chemical People – Betty Cunningham
Shasta Damboree – Brian Hargrave
BACKGROUND
The City of Shasta Lake provides annual donations to various outside agencies for services that benefit our community. At the request of the City Council, staff periodically invites these agencies to provide written and/or verbal updates on the status of their expenditures. Staff has notified the agencies of the upcoming Council meeting, and representatives will be present to report on how the donated funds have been used.
FISCAL IMPACTS:
None
ATTACHMENTS:
None
DISTRIBUTION:
City Council
5 6
CITY OF SHASTA LAKE
CITY COUNCIL MEETING MINUTES
MINUTES OF THE REGULAR MEETING
HELD TUESDAY, MARCH 17, 2026, AT THE
CITY COUNCIL CHAMBERS, 4488 RED BLUFF ST, SHASTA LAKE, CALIFORNIA
1.0 CALL TO ORDER – REGULAR MEETING:
1.1 Mayor Jones convened the regular meeting at 6:00 PM
1.2 Council Members present: Coates, Jones, Morgan, Ringwelski, Watkins
1.3 The Pledge of Allegiance was led by Mayor Jones
1.4 Invocation was led by Amarjit Singh
2.0 AWARDS & RECOGNITIONS:
2.1 None
3.0 PRESENTATIONS:
3.1 Antonio Recio, Central Valley High School Sober Grad.
3.2 Rebecca Baer, Executive Director, Shasta EDC.
3.3 Chris Carr, Water Use Objective and “Conservation as a Way of Life.”
3.4 Heather Mello-Schultz, YMCA
4.0 COMMISSION, COMMITTEE, AND OUTSIDE AGENCY REPORTS:
4.1 Anne Morningstar, Shasta Mosquito Vector and Control
5.0 PUBLIC COMMENT:
Janice Powell, Shasta Lake resident
Jim Mark, Shasta Lake resident
Gina Beer, Shasta Lake resident
6.0 CONSENT AGENDA:
6.1 Minutes of the Regular Meeting of March 3, 2026.
6.2 Payrolls:
Period Ending: 2/28/2026 Paid Date: 3/06/2026 $185,015.79
6.3 Monthly Report of Investment Transactions:
LAIF:
February $12,129,342.72
Chandler:
February $37,527,598.91
7 6.4 Resolution CC 2026-15 authorizing the City Manager to execute a contract with Blue Point Planning, LLC. for the Parks and Recreation Master Plan update.
6.5 Second reading of Ordinance CC 2026-311 amending Chapter 12.08 of the Shasta Lake Municipal Code.
6.6 Resolution CC 2026-16 approving a Professional Services Agreement with Shasta Economic Development Corporation (EDC).
6.7 Resolution CC 2026-17 verifying review of the 2025 Annual General Plan and Housing Element Progress Reports and directing submission to the California Department of Housing and Community Development (HCD) and the Governor’s Office of Land Use and Climate Innovation (LCI).
6.8 Resolution CC 2026-18 accepting the Quarterly Cash and Investment Report for the period ending December 31, 2025.
Motion/Vote
Councilwoman Morgan requested Item 6.4 be pulled from the Consent Agenda.
Councilman Ringwelski requested Item 6.6 be pulled from the Consent Agenda.
By motion made/seconded (Morgan/Watkins), and carried unanimously, the Consent Agenda, excluding Items 6.4 and 6.6, was approved.
Motion/Vote 6.4
After discussion on Item 6.4, Mayor Jones opened the Item for Public Comment.
Public Comment
None
By motion made/seconded (Watkins/Coates), and carried unanimously, Item 6.4 was approved.
Motion/Vote 6.6
After discussion on Item 6.6, Mayor Jones opened the Item for Public Comment.
Public Comment
None
By motion made/seconded (Watkins/Morgan), and carried unanimously, Item 6.6 was approved.
7.0 PUBLIC HEARINGS:
7.1 None
8.0 REGULAR AGENDA:
8.1 Resolution CC 2026-19 acknowledging completion and authorizing the closeout of the CDBG-DR Multifamily Housing Program (DR-MHP) Grant – Agreement No. 21-DRMHP-21002. 8
Public Comment
None
Motion/Vote:
A motion was made/seconded (Morgan/Coates), and carried unanimously, Item
8.1 was approved.
8.2 Discussion and possible action to approve a MOU letter for the Redding Rancheria TTIP.
Public Comment
None
Motion/Vote:
The City Council unanimously supported an MOU letter for the Redding Rancheria TTIP.
8.3 Discussion and possible action to approve a Letter of Support to Lisa Calderon, California State Assembly, for AB 2517, which would improve the Fire Hazard Severity Zone (FHSZ) designation process and ensure consistent updates to Local Responsible Area (LRA) maps.
Public Comment
None
Motion/Vote:
Vice Mayor Watkins requested that additional language be added to the letter.
The City Council unanimously supported a Letter of Support to Lisa Calderon, California State Assembly, for AB 2517.
9.0 STAFF COMMENTS:
City Manager Jessaca Lugo informed the City Council that the True North project was not awarded funding.
The Centimudi tank is currently under construction.
The TNVR Ad Hoc Committee meeting will be on March 31, 2026, at 6 pm.
April 22, 2026, will be the Poker Run and Car Show in Shasta Lake.
10.0 CITY COUNCIL COMMENTS AND REPORTS:
ADJOURNMENT:
With no further business, Mayor Jones adjourned the meeting at 8:04 PM. ____________________________
CHARITY TATLOW, City Clerk
9 10
3/18/2026 8:32:42 AM Page 6 of 6
Payroll Check Register
City of Shasta Lake Report Summary
Pay Period: 3/1/2026-3/14/2026
Packet: PYPKT00715 - PE 3.14.2026
Payroll Set: City of Shasta Lake - 01
Type
4 Count
0 3,512.55
0.00 Regular Checks
Manual Checks
0 0.00
0 0.00
Amount
92 197,867.35
Total 96 201,379.90
Reversals
Voided Checks
Direct Deposits
11 4/1/2026 8:39:08 AM Page 6 of 6
Payroll Check Register
City of Shasta Lake Report Summary
Pay Period: 3/15/2026-3/28/2026
Packet: PYPKT00717 - PE 3.28.2026
Payroll Set: City of Shasta Lake - 01
Type
2 Count
0 3,275.31
0.00 Regular Checks
Manual Checks
0 0.00
0 0.00
Amount
79 181,095.74
Total 81 184,371.05
Reversals
Voided Checks
Direct Deposits
12 13
14 15
16 17
18 19
20 21
22 23
24 25
26 27
28 29
30 31
32 33
34 Report and Recommendations 6.4 Reviewed and Approved City Manager
AGENDA ITEM
City Council
TO: Mayor and City Council Members
FROM: Will Bond, Public Works Director/City Engineer
DATE: April 7, 2026
SUBJECT: AUTHORIZATION TO FILE A NOTICE OF COMPLETION
CIVIC CENTER MOBILITY PROJECT – (BID NO. 2025-06)
FILE NO.:
RECOMMENDATION:
Staff requests that the City Council consider accepting the project as complete and authorize the filing of a Notice of Completion (NOC) for the Civic Center Mobility Project – Bid No. 2025-06.
BACKGROUND:
On September 02, 2025, the City Council approved resolution CC-2025-58 authorizing the City Manager to enter into a contract with SnL Group, Inc for the purposes of performing the above project.
Staff has determined that the work specified in the contract has been completed and is in substantial conformance with the Plans and Specifications. Therefore, staff recommends that the Council accept the Project and authorize the filing of a Notice of Completion at the Shasta County Recorder’s Office.
FISCAL IMPACTS:
Awarded construction contract: $ 646,600.00
Approved expenditure not to exceed: $ 850,000.00
Total project construction cost: $ 849,633.60
This project is funded through currently budgeted Reap 2.0 Grant and Transportation Funds (270-340 and 250-340).
35 ATTACHMENTS:
Resolution
DISTRIBUTION:
City Council
36 RESOLUTION CC 2026-XX
______________________________________________________________________
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SHASTA LAKE TO
ACCEPT THE CIVIC CENTER MOBILITY PROJECT AND AUTHORIZE THE FILING
OF A NOTICE OF COMPLETION
______________________________________________________________________ WHEREAS, the City entered into a contract with SnL Group, Inc. for the performance of the Civic Center Mobility project; and
WHEREAS, SnL Group, Inc. has completed the project to the satisfaction of City staff.
NOW, THEREFORE BE IT RESOLVED THAT the City of Shasta Lake City Council hereby accepts the Civic Center Mobility Project (2025-06) as complete and authorizes staff to file a Notice of Completion with the Shasta County Recorder’s Office.
PASSED, APPROVED, AND ADOPTED this 7th day of April 2026, by the following vote:
AYES:
NOES:
ABSENT:
_______________________________
JUSTIN JONES, Mayor
ATTEST:
____________________________
CHARITY TATLOW, CMC
City Clerk
37 38
Report and Recommendations 6.5 Reviewed and Approved
City Manager
AGENDA ITEM
City Council
TO: Mayor and City Council Members
FROM: Will Bond, City Engineer/Public Works Director
Brennan Adams, Assistant Engineer
DATE: April 7, 2026
SUBJECT: SUPPLEMENTAL BUDGET APPROPRIATION
CONSTRUCTION CONTRACT AWARD
PARK PAVILIONS & RESTROOMS PROJECT (BID NO. 2026-04)
FILE NO.: (New)
RECOMMENDATION
Staff requests the City Council consider a supplemental budget appropriation in the amount of $290,000 and award the Park Pavilions and Restrooms project to JS Builders. of Palo Cedro, CA in the amount of $759,650.00 and approve a total of $830,000.00 to allow for a contract contingency.
BACKGROUND
The Park Pavilions and Restrooms project includes the installation of premanufactured restroom buildings and the erection of a premanufactured (erector set) open air pavilion structure at two locations in the City. Picnic tables, benches and waste receptacles will also be included. The first pavilion and restroom will be installed at Margret Polf Park near the existing playground south of the parking lot. The second will be installed at City Hall on Hardenbrook Avenue south of the Skatepark. The project design process began in December of 2024 by NMR Architects. The City received a Caltrans Clean California Grant to construct this project along with the Spirit Parkway (completed).
The City advertised the project for bid on February 24th, 2026, and seven (7) bids were received on April 1st, 2026. Six of the bids were deemed responsive. The Engineer’s estimate was $600,000. The bids ranged from a low bid of $759,650.00 (26% above the Engineer’s estimate) to a high bid of $967,039.00(61% above the Engineer’s estimate).
A Bid Summary is attached.
39 The City has $1,316,980.79 left on the Clean CA Grant for use on this project. After purchasing the premanufactured restrooms and pavilions, and the remaining Architectural/Engineering services costs, staff approximates that $540,000.00 will be left for the construction budget. Staff requests approval to use Wastewater Capital Reserve (Acct: 530-340-6136) in the amount of $130,000.00 to construct the wastewater portions of the project. Staff requests that a supplemental budget appropriation from the following accounts; Wastewater Capital Reserve (Acct: 530-340) in the amount of $130,000.00 to construct the wastewater portions, Water Capital Fund (Acct:510-340) in the amount of $30,000.00 to install the water system for the restrooms, and $130,000.00 from Parks Plant & Facilities Capacity (P&FCC) (Acct: 214-340) to assist with funding the project.
The budget appropriated from the Wastewater fund and Water fund will only be used for the construction of utilities associated with the wastewater and water infrastructure.
Wastewater infrastructure included approximately 220-feet of 6-inch main line and sewer lateral for the City Hall restroom and a mounded septic leach field and dosing system for the Margaret Polf Park restroom. Water improvements include associate water services and backflow preventors for both bathrooms. The P&FCC will be used for supplemental funding for the project and contingency budget as the project will provide beneficial public use for residents and visitors.
FISCAL IMPACTS:
The majority of the project is funded through the Caltrans Clean California Local Grant Program CCL-5474(021) (Acct: 270-340-6273). Other portions of the project to be funded through the Wastewater fund (Acct: 530-340), Water fund (510-340), and P&FCC (214- 340).
ATTACHMENTS
Resolution
Location Map
Bid Summary
DISTRIBUTION
City Council
Finance Department
40 LOCATION MAP:
Margret Polf Park
41 City Hall Pavillion
42 ARCHITECTURAL RENDERINGS (POLF):
Margaret Polf Park Pavilion (32’ wide X 42’ long X 19’ tall – top ridge) City Hall Pavilion (35’ wide X 45’ long X 20’ tall – top ridge) 43 44
RESOLUTION CC 2026-XX
______________________________________________________________________
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SHASTA LAKE TO
APPROVE A SUPPLEMENTAL BUDGET APPROPRIATION IN THE AMOUNT OF $290,000.00 AND TO DECLARE JS BUILDERS, INC. THE LOWEST RESPONSIVE,
RESPONSIBLE BIDDER, AWARD A CONSTRUCTION CONTRACT IN THE AMOUNT OF $759,650.00 TO JS BUILDERS, INC. FOR THE CONSTRUCTION OF
THE PARK PAVILIONS AND RESTROOMS PROJECT AND APPROVE TOTAL EXPENDITURE FOR CONSTRUCTION NOT TO EXCEED $830,000.00
______________________________________________________________________ WHEREAS, the City advertised for competitive bids to construct the above project starting on February 24, 2026; and
WHEREAS, the City opened 7 competitive bids on April 1, 2026; and WHEREAS, the lowest responsive, responsible bidder was JS Builders Inc. of Palo Cedro, CA, with a bid of $759,650.00; and
WHEREAS, in addition to the construction contract funds, contingency funds need to be allocated, creating a construction budget of $830,000.00 NOW, THEREFORE, BE IT RESOLVED THAT:
1. The City Council of the City of Shasta Lake hereby approves a supplemental budget request in the amount of $290.000.00 to be used for the construction of the Park Pavilions and Restrooms Project.
510-340 Water Capital Fund $ 30,000.00
530-340 Wastewater Capital Fund $ 130,000.00
214-340 Parks Plant & Facility Capacity $ 130,000.00
2. The City of Shasta Lake hereby declares JS Builders Inc., the lowest responsive, responsible bidder, awards a construction contract in the amount of $759,650.00 to JS Builders Inc. for the construction of the Park Pavilion and Restroom project, and approves a total expenditure, for construction, not to exceed $830,000.00
PASSED, APPROVED, AND ADOPTED this 7th day of April 2026 by the following vote:
AYES:
NOES:
ABSENT:
_______________________________
JUSTIN JONES, Mayor
ATTEST:
45 ____________________________
CHARITY TATLOW, CMC
City Clerk
46 Item # Description Est. Quantity Unit Unit Price Total Unit Price Total Unit Price Total 1 Margaret Polf Park Pavilion & Restroom 1 LS $429,125.00 $429,125.00 $461,720.00 $461,720.00 $571,557.00 $571,557.00 2 City Hall Pavilion & Restroom 1 LS $170,005.00 $170,005.00 $297,930.00 $297,930.00 $331,151.00 $331,151.00 Base Bid Total: $599,130.00 $759,650.00 $902,708.00
Subcontractors: Subcontractors:
N&T Digmore Eagle Paving & Grading
Stephens Electrical, Inc Muse Concrete Contractors
Wagner Electric
SJR Masonry & Construction
Walgamuth Painting
Item # Description Est. Quantity Unit Unit Price Total Unit Price Total Unit Price Total Unit Price Total 1 Margaret Polf Park Pavilion & Restroom 1 LS $577,000.00 $577,000.00 $579,852.00 $579,852.00 $647,455.00 $647,455.00 $630,461.00 $630,461.00 2 City Hall Pavilion & Restroom 1 LS $336,000.00 $336,000.00 $359,765.00 $359,765.00 $318,035.00 $318,035.00 $336,578.00 $336,578.00 Base Bid Total: $913,000.00 $939,617.00 $965,490.00 $967,039.00 Subcontractors: Subcontractors:
Backcounty Excavating Wards Concrete Wagner Electric Eagle Paving Reed Construction Eagle Paving Darren Taylor Construction Ledford Construction & Concrete Sharran Dunlap Sawyer Wagner Electric Butler Engineering Group True North Constructors Isringhausen Paving & Grading Ken Silva Masonary SJR Masonry & Construction Wagner Electric Stephens Electric
Walgamuth Painting
DIR: 100013164
Park Pavilions and Bathrooms
Bid Opening Date: 4/1/26
Bid No. 2026-04
JS Builders, Inc.
Engineer's Estimate CSLB Lic: 1109971
DIR: 2000004325
M5 Excavation
Non Responsive
Allen Gill Construction, Inc
CLSB Lic: 623652
CSLB Lic: 575300
DIR: 1000002327 DIR: 1000008025 DIR: 100000652
SnL Group, Inc Axner Excavating Inc S.T. Rhoades Construction Eddie Axner Construction Subcontractors: Subcontactors:
DIR: 1000013338
CSLB Lic: 987763 CSLB Lic: 613824 CSLB Lic: 930684
47 48
Report and Recommendations 6.6
Reviewed and Approved
City Manager
AGENDA ITEM
City Council
TO: Mayor and City Council Members
FROM: Peter Bird, Senior Planner
DATE: April 7, 2026
SUBJECT: EXECUTION OF CONTRACT WITH DYNAMIC PLANNING +
SCIENCE FOR THE RESILIENCY PLAN PROJECT
FILE NO.:
RECOMMENDATION
Staff recommends that the City Council authorize the City Manager, or designee, to execute a contract with Dynamic Planning + Science, not to exceed $225,000 for the creation of the City of Shasta Lake Resiliency Plan project.
BACKGROUND
At a Council meeting on January 2, 2024, Council approved (Resolution CC-2024-01) an application for funding and the execution of a grant agreement to the State’s 2017/2018 CDBG MIT-PPS Program, for the purpose of completing the City of Shasta Lake Resiliency Plan.
The Citywide Resiliency Plan is intended to implement provisions of the City’s Local Hazard Mitigation Plan and advance a coordinated strategy for reducing risk from wildfire, flooding, extreme weather, drought, and related infrastructure vulnerabilities. The work focuses on identifying and prioritizing capital improvements and other mitigation actions to strengthen evacuation safety, address drainage and roadway deficiencies, improve water infrastructure resilience, and better position the City to pursue future state and federal funding opportunities.
The Resiliency Plan is being prepared at a conceptual, non-engineering level and will build on the City’s 2040 General Plan, General Plan EIR, 2021 Local Hazard Mitigation Plan, and other adopted infrastructure planning documents. The final product is intended to serve as a grant-ready implementation roadmap that translates previously identified 49 hazards and deficiencies into site- and corridor-specific projects, supported by prioritization criteria, planning-level cost information, environmental considerations, and funding strategy recommendations.
SELECTION PROCESS:
On December 30, 2025, a formal Request for Qualifications and Proposal (RFQ&P) was advertised to obtain a qualified firm to complete the Plan. Proposals were required to include service fees for the entire scope of services in a separate envelope to be opened after the proposal ranking and interview process.
A review and selection panel was formed with City staff members from the Development Services, Economic and Community Development, and Public Works departments. Two proposals and service fee submittals were received by February 6th, from Dynamic Planning + Science and Resilient Communities.
Upon completion of the review process, the selection panel found that Dynamic Planning + Science was best qualified to complete the project based on the firm’s understanding of local conditions, familiarity with the City’s adopted planning framework, and experience preparing hazard mitigation and resiliency planning documents. Staff then worked with the consultant to refine the scope of work to clearly align with the City’s priorities, the grant requirements, and the anticipated task structure for the Resiliency Plan.
The planning effort also includes community engagement and interdepartmental coordination to ensure that the resulting project portfolio reflects local conditions, City priorities, and the needs of vulnerable populations. Upon completion, the Resiliency Plan will provide the City with a prioritized set of mitigation projects suitable for future capital planning and competitive grant applications.
Council Action Requested
Staff requests that the City Council authorize the City Manager, or designee, to execute a contract with Dynamic Planning + Science, for an amount not to exceed $225,000 for the completion of the City of Shasta Lake Resiliency Plan.
FISCAL IMPACTS:
Contract is funded entirely through CDBG MIT-PPS Program grant funds, not to exceed $225,000
ATTACHMENTS
Resolution
Attachment B: Dynamic Planning + Science Scope
DISTRIBUTION
City Council
50 RESOLUTION CC 2026-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SHASTA LAKE
AUTHORIZING THE CITY MANAGER, OR DESIGNEE, TO EXECUTE A CONTRACT WITH DYNAMIC PLANNING + SCIENCE FOR THE CREATION OF THE CITY OF SHASTA LAKE RESILIENCY PLAN, IN AN AMOUNT NOT TO EXCEED $225,000.00 WHEREAS, the City wishes to proceed as previously directed by the City Council and complete City of Shasta Lake Resiliency Plan; and
WHEREAS, the City has issued a Request for Qualifications and Proposals, has received and reviewed said proposals, has selected the most qualified firm to provide professional services for the project, and has negotiated an acceptable scope of work and fee for said services.
NOW, THEREFORE, BE IT RESOLVED that the City of Shasta Lake hereby authorizes the City Manager, or designee, to enter into a contract with Dynamic Planning + Science for the City of Shasta Lake Resiliency Plan, in an amount not to exceed $225,000.
PASSED, APPROVED, AND ADOPTED this 7th day of April 2026, by the following vote:
AYES:
NOES:
ABSENT:
_______________________________
JUSTIN JONES, Mayor
ATTEST:
____________________________
CHARITY TATLOW, CMC
City Clerk
51 Attachment B: Dynamic Planning + Science Scope
52 1
EXHIBIT “A” SOW
Scope of Work (SOW) Introduction
The Consultant shall prepare the City of Shasta Lake Resiliency Plan through a task-based scope of work consistent with the requirements of the Community Development Block Grant Mitigation (CDBG-MIT) Planning and Public Services program. All work shall be performed at a conceptual, non-engineering level and shall support the identification, prioritization, and advancement of implementation-ready mitigation projects.
The Consultant shall build upon the City’s adopted General Plan, General Plan EIR, and Local Hazard Mitigation Plan, using existing policy, technical analysis, and data as the basis for project development. The Consultant shall synthesize prior planning efforts into prioritized, grant-ready capital improvement projects and shall not duplicate previously completed analyses.
The Consultant shall serve as the prime consultant and shall be responsible for overall project management, coordination, integration of technical analyses, quality control, and delivery of all work products. The City shall provide available data, participate in coordination meetings, and review deliverables to ensure consistency with City priorities and operational conditions.
The Resiliency Plan shall function as a grant-ready implementation roadmap that advances the goals and policies of the City’s 2040 General Plan, 2021 Local Hazard Mitigation Plan, and adopted water and wastewater master plans. The Consultant shall translate previously identified hazards into site- and corridor-specific mitigation projects addressing evacuation safety, water and drainage infrastructure, roadway deficiencies, and long-term climate resilience.
The Consultant shall prepare the Resiliency Plan to include, at a minimum:
Multi-hazard risk reduction addressing wildfire, flooding, extreme weather, drought, and climate change
Infrastructure-focused solutions developed at a conceptual, non-engineering level A prioritization approach incorporating equity considerations, including benefits to low- and moderate-income (LMI) populations
Consistency with applicable state and federal funding requirements, including FEMA, Cal OES, CAL FIRE, and HCD
The Resiliency Plan shall result in a prioritized portfolio of mitigation projects, including supporting documentation sufficient to support funding applications and coordinated capital planning and implementation.
Standards and Compliance
The Consultant shall perform all work in accordance with applicable federal, state, and local requirements associated with the Community Development Block Grant Mitigation (CDBG-MIT) 53 2
Planning and Public Services program. All tasks, analyses, and deliverables shall be consistent with program eligibility requirements and shall support the development of mitigation strategies and projects suitable for state and federal funding.
The Consultant shall ensure compliance with all applicable laws, regulations, and guidance, including but not limited to requirements related to environmental review, public engagement, equity considerations, and documentation necessary to support grant reimbursement, monitoring, and audit.
All deliverables shall meet professional planning and technical standards and shall be prepared in a clear, organized, and defensible manner suitable for public review and adoption. Deliverables shall include appropriate documentation of data sources, assumptions, and methodologies and shall be provided in formats specified by the City, including editable and final electronic files.
The Consultant shall coordinate with the City to ensure that all work products are consistent with the City’s adopted plans, policies, and operational practices.
Assumptions and Limitations
The Consultant shall perform the services described in this Scope of Work based on the following assumptions and limitations:
The Consultant shall rely on data, reports, and information provided by the City and other publicly available sources. The Consultant shall not be responsible for the accuracy or completeness of data supplied by others but shall identify any known data gaps or inconsistencies that may affect the analysis.
All work shall be performed at a conceptual, planning level and shall not include detailed engineering design, construction documents, or site-specific geotechnical or hydraulic analysis. Any cost estimates provided shall be planning-level opinions of probable cost and shall not be used for final budgeting or construction purposes.
The Scope of Work assumes reasonable and timely participation by the City, including provision of data, coordination with staff, and review of deliverables. Delays in City input or direction may affect the project schedule.
The Scope of Work assumes that required data, mapping, and prior planning documents are available in usable formats. Significant data development, field surveys, or creation of new baseline datasets beyond those described may require a contract amendment.
The Consultant shall not be responsible for securing permits, environmental clearances, or regulatory approvals; however, the Consultant shall identify potential permitting and environmental considerations at a planning level.
This Scope of Work does not include detailed traffic modeling, hydraulic modeling, fire behavior modeling, or other advanced engineering analyses beyond planning-level evaluation unless otherwise specified.
The Consultant shall perform services consistent with the standard of care ordinarily exercised by members of the same profession practicing under similar circumstances. 54 3
SOW Tasks
The Consultant shall complete the Resiliency Plan through a structured, task-based approach. Tasks shall be sequenced to build from the City’s existing plans, master plans, and available datasets toward preparation of a cohesive, grant-ready Resiliency Plan. The Consultant shall maintain regular coordination with City staff and stakeholders throughout all phases of work.
Each task shall produce defined deliverables that support hazard risk reduction, capital planning, and funding eligibility, and shall be consistent with Community Development Block Grant Mitigation (CDBGMIT) requirements and the City’s adopted policy framework.
The Courses of Action set forth herein establish the tasks, sequencing, and deliverable structure for purposes of cost estimating, schedule development, progress tracking, and contract administration.
Detailed methodologies, analytical procedures, and technical assumptions are provided in the Technical Approach and are incorporated by reference but are not repeated herein.
The Consultant shall perform the following tasks:
Task 1: Project Management and Coordination
Task 2: Data Collection and Existing Conditions Analysis Task 3: Multi-Hazard Infrastructure Vulnerability Assessment Task 4: Mitigation and Capital Project Development
Task 5: Prioritization and Funding Strategy
Task 6: Community Engagement
Task 7: Draft and Final Resiliency Plan
Task 1: Project Management and Coordination
The Consultant shall provide overall project management and coordination for all tasks under this Agreement. Responsibilities shall include management of schedule, budget, quality control, and coordination of all subconsultants and technical work efforts.
The Consultant shall manage and oversee all subconsultants, including defining scopes of work, coordinating technical activities, integrating work products, and ensuring consistency with applicable Community Development Block Grant Mitigation (CDBG-MIT) requirements. The Consultant shall serve as the single point of contact and maintain full responsibility for all deliverables.
The Consultant shall prepare and maintain a project schedule and budget, track progress and expenditures, and provide regular reporting to the City. The Consultant shall coordinate all deliverables, review work products for quality and consistency, and manage invoicing and reporting associated with all project activities.
The City shall provide available data, designate staff for coordination, and participate in scheduled meetings and review of deliverables.
55 4
TASK 1: DELIVERABLES
Project work plan and schedule
Project organization and communication protocols
Meeting agendas, materials, and summaries
Schedule and budget tracking updates
Subconsultant coordination and reporting documentation Regular progress and status reports
Task 2: Data Collection and Existing Conditions Analysis The Consultant shall compile, review, and integrate available data to establish a baseline of existing conditions to support the Resiliency Plan. Work under this task shall focus on synthesizing and refining existing information and shall not duplicate analyses previously completed by the City.
The Consultant shall review and integrate, at a minimum, the following:
FEMA Flood Insurance Rate Maps (FIRM) and Flood Insurance Studies (FIS) Topographic, slope, and elevation data
Soil stability and geotechnical information
Wildfire hazard and wildland urban interface (WUI) datasets Infrastructure inventories, including transportation, drainage, water, and wastewater systems Relevant City plans and studies, including adopted master plans and safety-related documents Applicable regional and state hazard and climate guidance The Consultant shall coordinate with the City to obtain available GIS data, reports, and supporting information. The Consultant shall conduct coordination meetings to confirm assumptions, validate datasets, and identify data gaps that may affect subsequent tasks. The Consultant shall analyze and document existing conditions, including:
Identification and mapping of infrastructure networks and key facilities Identification of hazard exposure areas and overlapping risk conditions Identification of vulnerable populations and equity considerations consistent with CDBG-MIT requirements
Establishment of a consistent baseline dataset to support subsequent vulnerability assessment, mitigation development, and project prioritization
The Consultant shall evaluate all datasets for relevance, resolution, and consistency and shall integrate such data into a unified GIS framework suitable for mapping, analysis, and future City use.
TASK 2: DELIVERABLES
Existing Conditions Summary Memorandum (data sources, assumptions, and key findings) GIS datasets and summary maps (infrastructure, hazards, and vulnerable populations) Supporting data files for use in subsequent tasks
56 5
Task 3: Multi-Hazard Infrastructure Vulnerability Assessment The Consultant shall conduct a Multi-Hazard Infrastructure Vulnerability Assessment to identify where infrastructure systems, facilities, and neighborhoods are exposed to wildfire, flooding, extreme weather, drought, and climate-related impacts. The assessment shall translate hazard conditions into locationspecific vulnerabilities to support mitigation project development and prioritization.
The Consultant shall integrate existing plans, datasets, GIS analysis, and available modeling outputs to evaluate the interaction between hazards and infrastructure performance, access, and service continuity.
The assessment shall prioritize life-safety systems, including evacuation routes, transportation networks, water and drainage infrastructure, and critical facilities.
Subtask 3.1 Multi-Hazard Spatial and Infrastructure Analysis The Consultant shall perform GIS-based analysis to evaluate hazard exposure and infrastructure vulnerability, including:
Overlay of hazard data with infrastructure networks, facilities, and populations Identification of infrastructure constraints related to terrain, access, and system condition Integration of available modeling outputs and prior analyses Development of a unified GIS framework to support mapping and analysis Subtask 3.2 Wildfire Exposure and WUI Analysis
The Consultant shall evaluate wildfire exposure and wildland–urban interface (WUI) conditions, including:
Review of applicable wildfire hazard datasets
Identification of exposure to infrastructure, facilities, and neighborhoods Evaluation of defensible space and vegetation-related constraints Identification of access and life-safety vulnerabilities Subtask 3.3 Evacuation and Roadway Deficiency Assessment The Consultant shall evaluate evacuation routes and roadway constraints using a planning-level, scenario-based approach, including:
Screening of roadway networks to identify limited access and constrained corridors Identification of single-access neighborhoods and roadway deficiencies Evaluation of evacuation routes under representative hazard scenarios Identification of bottlenecks, capacity constraints, and access limitations Documentation of roadway deficiencies affecting evacuation safety Subtask 3.4 Flooding, Stormwater, and Runoff Assessment The Consultant shall evaluate flooding, drainage, and runoff conditions affecting infrastructure and access, including:
57 6
Review of floodplain mapping, studies, and available data Identification of drainage deficiencies, undersized culverts, and runoff constraints Evaluation of slope-related runoff and debris flow impacts Identification of infrastructure subject to inundation, washout, or access disruption Subtask 3.5 Vulnerability Synthesis and Risk Characterization The Consultant shall synthesize findings across hazard types to:
Identify exposed, constrained, or underperforming infrastructure and facilities Evaluate impacts to emergency access, evacuation, and essential services Identify planning-level mitigation opportunities consistent with CDBG-MIT requirements Incorporate equity considerations and vulnerable populations Develop a consistent vulnerability framework to support subsequent tasks The Consultant shall address existing and future conditions, including climate-related impacts, and shall integrate findings across all hazard types to support decision-making and project development.
TASK 3: DELIVERABLES
Multi-Hazard Vulnerability Report
GIS-based vulnerability maps
Risk tables linking hazards, infrastructure, and impacts Technical appendix (data, assumptions, methods)
Summary of findings to support subsequent tasks
Task 4: Mitigation and Capital Project Development
The Consultant shall develop mitigation concepts and capital improvement projects to address vulnerabilities identified in Task 3. All projects shall be prepared at a conceptual, non-engineering level and shall be suitable for evaluation, prioritization, and advancement for funding consistent with CDBGMIT requirements.
The Consultant shall translate identified risks into defined project concepts that improve life safety, reduce risk, and enhance infrastructure resilience. Project development shall address wildfire exposure and evacuation constraints, flooding and stormwater deficiencies, extreme weather impacts, drought and water supply reliability, and long-term climate adaptation. The Consultant shall incorporate equity considerations, including benefits to low- and moderate-income (LMI) populations.
The Consultant shall coordinate project development with applicable City plans and infrastructure systems to ensure consistency and feasibility. The Consultant shall identify, where feasible, multi-benefit projects that address multiple hazards or infrastructure deficiencies. The Consultant shall identify environmental considerations and potential permitting constraints to inform project feasibility.
The Consultant shall prepare a project sheet for each mitigation project. Each project sheet shall include sufficient detail to support funding applications and capital planning. 58 7
TASK 4: DELIVERABLES
Mitigation and Capital Project Sheets for each proposed project, including:
□ Location and affected infrastructure
□ Problem statement
□ Conceptual project description
□ Planning-level cost estimate and phasing
□ Environmental and permitting considerations
□ Public safety, resilience, and equity benefits
Draft Project Portfolio
Cost summary table
Supporting maps and graphics
Task 5: Prioritization and Funding Strategy
The Consultant shall develop a prioritized set of mitigation strategies and projects based on findings from Tasks 2 through 4. The prioritization framework shall translate identified vulnerabilities and mitigation concepts into implementation-ready actions suitable for funding and capital planning.
The Consultant shall establish and apply a transparent prioritization methodology that evaluates, at a minimum, risk reduction potential, infrastructure criticality, feasibility, cost considerations, equity benefits, and funding readiness. The Consultant shall incorporate input from the City to confirm alignment with existing plans, capital improvement priorities, operational considerations, and applicable funding requirements.
The Consultant shall identify implementation sequencing and phasing considerations and shall evaluate potential funding opportunities to support project advancement.
TASK 5: DELIVERABLES
Prioritized mitigation strategy matrix
Mitigation strategy descriptions (purpose, location, and benefits) Implementation guidance (phasing, funding, and coordination) Supporting materials for use in the Resiliency Plan and funding applications Task 6: Community Engagement
The Consultant shall implement a community engagement program to support the development of the Resiliency Plan. Engagement activities shall be conducted throughout the project and shall be coordinated with key technical milestones to inform analysis, validate mitigation concepts, and support project prioritization.
The Consultant shall ensure that outreach is inclusive and accessible and shall comply with all applicable Community Development Block Grant Mitigation (CDBG-MIT) requirements, including outreach to low- and moderate-income (LMI) populations, accommodation of Limited English Proficiency (LEP) populations, and accessibility for persons with disabilities. 59 8
The Consultant shall create and facilitate a stakeholder group comprised of citizens and responsible agencies and shall conduct at least two workshops with the stakeholder group during the course of the project. Stakeholder workshops shall be used to review baseline conditions, confirm hazard and infrastructure priorities, evaluate mitigation concepts, and provide feedback on draft project prioritization and implementation measures.
The Consultant shall conduct at least four in-person public engagement meetings or workshops during the project. At a minimum, outreach shall include early public outreach to identify community concerns, local knowledge, and priority issues; intermediate outreach to present and refine hazard findings and mitigation concepts; outreach to review prioritized projects and implementation strategies; and final outreach supporting public review of draft resiliency recommendations. In addition, the Consultant shall conduct one Planning Commission meeting and one City Council presentation in support of project review and plan development.
The Consultant shall conduct engagement activities that include, at a minimum:
Early outreach to identify community concerns, local knowledge, and priority issues Mid-project engagement to present and refine hazard findings and mitigation concepts Plan review outreach to present prioritized projects and implementation strategies The Consultant shall coordinate with City staff and relevant agencies to support outreach efforts and ensure consistency with City practices and requirements.
The Consultant shall document all outreach activities, input received, and responses, and shall incorporate such input into project development and prioritization.
TASK 6: DELIVERABLES
Community Engagement Plan (methods, schedule, and compliance measures) Stakeholder and public meeting materials and summaries Documentation of public input and responses
Planning Commission and City Council presentation materials CDBG-MIT compliance documentation (LMI, LEP, notices, ADA, Section 3) Community Engagement Summary Report
Task 7: Draft and Final Resiliency Plan
DP+S will prepare the Draft and Final City of Shasta Lake Resiliency Plan, integrating findings, maps, analyses, and prioritized mitigation strategies developed through the preceding tasks into a cohesive, publication-ready document. The Resiliency Plan will be structured to support City adoption and immediate use in state and federal grant applications, while remaining accessible to City staff, decisionmakers, and the public.
DP+S will lead preparation of all draft and final plan materials, coordinate review with City staff and subconsultants, and incorporate comments received through technical review and public engagement.
The City will assist by reviewing draft materials, providing policy and implementation feedback, and supporting the plan adoption process through Planning Commission and City Council review. 60 9
Key activities include:
Preparation of a comprehensive Draft Resiliency Plan integrating all technical analyses and mitigation strategies
Coordination of City and stakeholder review, including consolidation and response to comments Refinement of plan content to ensure clarity, consistency, and grant readiness Preparation of adoption-ready materials and presentation support for City decision-making bodies TASK 7: DELIVERABLES
A prioritized mitigation strategy matrix summarizing recommended actions and relative priority Conceptual mitigation strategy descriptions, including purpose, location, and anticipated benefits Implementation guidance addressing phasing, funding opportunities, and coordination considerations
Supporting materials suitable for incorporation into the Resiliency Plan and use in grant applications and capital planning efforts
61 10
Program Management and Schedule
The Consultant shall serve as the overall program manager for the Resiliency Plan and shall be responsible for delivering the work within the approved schedule, budget, and in compliance with CDBGMIT requirements. The Consultant shall serve as the primary point of contact and shall manage day-today coordination, technical tasks, quality control, and integration of all work products.
The City shall participate in coordination meetings, review interim deliverables, and provide direction at key decision points to ensure alignment with City priorities and operational conditions.
The Consultant shall implement the work as a task-based program consistent with the required 26- month project duration. Work shall be organized by task, with defined sequencing, City review periods, and coordination points to support technical analysis, community engagement, project development, prioritization, and plan adoption.
The Consultant shall maintain a project schedule that aligns with required reporting and reimbursement milestones, including interim benchmarks corresponding to approximately 50 percent and 75 percent of project completion. The Consultant shall complete all work, including delivery of final plan documents and supporting materials, within the required project timeframe. 62 11
Project Period of Performance Gnatt Chart
63 12
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64 Report and Recommendations 7.1 Reviewed and Approved
City Manager
AGENDA ITEM
City Council
TO: Mayor and City Council Members
FROM: Jason Peterson, Finance Director
DATE: April 7, 2026
SUBJECT: PUBLIC HEARING TO ACCEPT THE REPORT OF VACANCIES PURSUANT TO ASSEMBLY BILL 2561
FILE NO:
RECOMMENDATION
Staff recommends that the City Council conduct a public hearing and adopt a Resolution accepting the report of job vacancies pursuant to Assembly Bill (AB) 2561.
BACKGROUND
Assembly Bill 2561, which took effect on January 1, 2025, was implemented by the City Council through Resolution CC 2025-18 on April 15, 2025. This legislation amends the California Government Code to require public agencies to notify current employees of any job vacancies for which they may be qualified before the position is publicly advertised.
The law aims to increase internal promotional opportunities and transparency in public employment.
Key Requirements for Local Public Agencies
1. Annual Public Hearing on Vacancies
• Frequency and Timing: Local public agencies must present the status of job vacancies and their recruitment and retention strategies at a public hearing before the governing board at least once per fiscal year. This presentation must take place prior to the adoption of the agency’s final budget for that fiscal year. • Content: The presentation should include a detailed summary of current vacancies, ongoing recruitment efforts, and any policies or procedures that may be affecting the agency’s ability to reduce vacancies.
65 2. Enhanced Reporting for High Vacancy Rates
• Threshold: If vacancies within a single bargaining unit reach or exceed 20% of the total number of authorized full-time positions, the agency must provide additional reporting.
• Upon Request: At the request of the recognized employee organization, the agency must provide:
• The total number of job vacancies within the bargaining unit • The total number of applicants for the vacant positions • The average time to complete the hiring process, measured from the posting date
• A description of potential improvements in compensation and working conditions that may assist in filling these positions
3. Employee Organization Participation
• Recognized employee organizations must be allowed to present their perspectives at the same public hearing in which the agency discusses vacancies and recruitment strategies.
• Notification of the Public Hearing was published on March 25, 2026. • Notification of the Public Hearing was provided to the employee organizations on April 3, 2026.
FISCAL IMPACTS
None
ATTACHMENTS
Resolution
Attachment A: List of Vacancies as of 03/16/2026, and Calculation of 20% Threshold Published Public Hearing Notice
DISTRIBUTION
City of Shasta Lake City Council
IBEW Local Union 1245
Teamsters Local 137
City of Shasta Lake Files
66 RESOLUTION CC 2026-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SHASTA LAKE
ACCEPTING THE REPORT OF JOB VACANCIES IN COMPLIANCE WITH ASSEMBLY BILL 2561
WHEREAS, Assembly Bill 2561 requires local public agencies in California to present the status of job vacancies, along with their recruitment and retention strategies, at a public hearing before the governing board at least once per fiscal year; and WHEREAS, this presentation should take place prior to the adoption of the agency’s final budget for that fiscal year; and
WHEREAS, the City of Shasta Lake adopts a two-year budget, and for the second year of the budget cycle, this presentation shall occur within that second fiscal year; and WHEREAS, if vacancies within a single bargaining unit reach or exceed 20% of the total authorized full-time positions, additional reporting is required; and WHEREAS, as of this date, the City has not exceeded a 20% vacancy rate for any of its units.
NOW, THEREFORE, BE IT RESOLVED that the Shasta Lake City Council hereby accepts the report of vacancies pursuant to Assembly Bill 2561.
PASSED, APPROVED, AND ADOPTED this 7th day of April 2026, by the following vote:
AYES:
NOES:
ABSENT:
______________________________
JUSTIN JONES, Mayor
ATTEST:
_______________________________
CHARITY TATLOW, CMC
City Clerk
67 Attachment A
List of Vacancies as of 03/16/2026, and Calculation of 20% Threshold Vacancies:
Teamsters: None
IBEW: None
Calculation of 20% Threshold:
The threshold has not been met, so no additional reporting is required. 68 CITY OF SHASTA LAKE
NOTICE OF PUBLIC HEARING
NOTICE IS HEREBY GIVEN that the City Council of the City of Shasta Lake, State of California will hold a PUBLIC HEARING at the Shasta Lake Council Chambers, 4488 Red Bluff Street, Shasta Lake, California, on Tuesday, April 07, 2026, with the session commencing at 6:00 P.M., or as soon thereafter as possible, to DISCUSS AND CONSIDER ADOPTION AND IMPLEMENTATION OF AB 2561 – NOTICE OF VACANCIES.
Assembly Bill 2561, which became effective on January 1, 2025, amends the California Government Code requires public agencies to provide current employees with notice of any job vacancies for which they may be qualified before the position is publicly advertised. The law aims to increase internal promotional opportunities and transparency in public employment.
ALL HEARINGS ARE OFFICIALLY SET FOR 6:00 P.M. and will be conducted as soon thereafter as the business of the City Council will allow. All interested parties may either submit written comments to Charity Tatlow, City Clerk, prior to the hearing, or appear and present oral testimony.
69 70
Report and Recommendations 8.1 Reviewed and Approved
City Manager
AGENDA ITEM
City Council
TO: Mayor and City Council Members
FROM: Jessaca Lugo, City Manager
DATE: April 7, 2026
SUBJECT: APPOINTMENT TO THE SHASTA ECONOMIC DEVELOPMENT
CORPORATION (EDC) BOARD OF DIRECTORS
FILE NO.: E-030-120-575
RECOMMENDATION
Adopt a resolution appointing Jennifer Coy to the Economic Development Corporation of Shasta County (EDC) Board of Directors to represent the City of Shasta Lake and fill the unexpired term of Stuart Sutherland.
BACKGROUND
EDC has requested that the City appoint Jennifer Coy, a local business owner, to fill Mr.
Sutherland’s unexpired term. The term would continue to be reaffirmed annually through the Mayor’s appointments process.
As a business owner within the City of Shasta Lake, Ms. Coy’s appointment would provide strong local representation and help ensure the City remains well-informed on EDC initiatives and regional economic development efforts. Her participation would support alignment with the City Council’s priorities and maintain the City’s active role in regional economic development discussions.
Having an engaged and informed representative is essential to ensuring effective coordination between the City and regional partners on business retention, industrial recruitment, and economic growth opportunities that directly impact Shasta Lake.
FISCAL IMPACTS:
71 There is no direct fiscal impact associated with this appointment. The City maintains an annual contractual relationship with the EDC for economic development services.
ATTACHMENTS
Resolution
Jennifer Coy Biography
DISTRIBUTION
City Council
Shasta EDC, Rebecca Baer
72 RESOLUTION CC 2026-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SHASTA LAKE
APPOINTING JENNIFER COY TO THE SHASTA ECONOMIC DEVELOPMENT
CORPORATION (EDC) BOARD OF DIRECTORS
WHEREAS, the Shasta Economic Development Corporation (EDC) is a private, nonprofit corporation founded in 1958 to assist local business expansion and to promote Shasta County and its cities for new industrial development; and WHEREAS, the EDC provides services including business development, retention and expansion; industrial recruitment; business financial services; and enterprise zone and recycling zone information; and
WHEREAS, the EDC Board of Directors oversees the general operation of the organization, and directors are appointed by its permanent members, including the City of Shasta Lake; and
WHEREAS, the City Council wants to appoint a representative to serve on the EDC Board of Directors to represent the interests of the City of Shasta Lake.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SHASTA LAKE DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. The City Council hereby appoints Jennifer Coy to serve as the City of Shasta Lake’s representative on the Shasta Economic Development Corporation Board of Directors.
Section 2. This appointment shall not have a fixed term. The City Council shall reaffirm the appointment annually in conjunction with the Mayor’s appointments, unless otherwise modified by action of the City Council.
Section 3. This Resolution shall take effect immediately upon its adoption.
PASSED, APPROVED, AND ADOPTED this 7th day of April 2026, by the following vote:
AYES:
NOES:
ABSENT:
______________________________
JUSTIN JONES, Mayor
ATTEST:
_______________________________
CHARITY TATLOW, CMC
City Clerk
73 Jennifer LaFayette Coy
Owner & CEO, Beauty Care Choices
Jennifer LaFayette Coy is an accomplished entrepreneur, business leader, and writer whose career reflects a unique blend of creativity, discipline, and purpose-driven leadership. She holds a Bachelor of Arts in English, is a licensed cosmetologist, and earned her private pilot’s license, bringing a well-rounded and strategic perspective to both business and life.
Jennifer is the co-founder and CEO of Beauty Care Choices (2962 Cascade Blvd, Shasta Lake, CA 96019), a family-owned beauty e-commerce company she founded in 2004 in Shasta Lake, CA. Built on the belief that consumers deserve better education and guidance when selecting products for their hair and skin, the company has grown into a trusted resource serving customers across the United States and Canada. With over a million orders shipped and more than 500 brands tested, reviewed, and offered, Beauty Care Choices is recognized for its commitment to personalized service and expert consultation.
From the beginning, Jennifer understood that beauty is personal. What works for one person may not work for another, and no product is one-size-fits-all. That philosophy continues to guide the company today. By employing licensed beauty professionals to support customers and prioritizing education around product safety, ingredients, and effectiveness, Beauty Care Choices has built lasting relationships rooted in trust.
The company remains dedicated to helping customers navigate everything from product changes and sensitivities to evolving beauty needs with care and expertise.
Under Jennifer’s leadership, Beauty Care Choices has earned national recognition, including the Better Business Bureau Torch Award for Ethics and multiple Bizrate Platinum Circle of Excellence Awards for outstanding customer satisfaction. These honors reflect her unwavering commitment to integrity, service, and doing business the right way.
In addition to her executive leadership, Jennifer has a strong background in writing and communications.
She has contributed to publications such as Forbes, and brings a thoughtful, authentic voice to brand development, education, and industry insight. Her work emphasizes clear communication, consumer empowerment, and aligning products with personal values.
Jennifer’s professional experience extends beyond beauty into aviation, consulting, and public relations, giving her a broad understanding of entrepreneurship, operations, and innovation. She is known for her thoughtful leadership style, clear vision, and
ability to build meaningful relationships both
within her business and throughout the
community.
A longtime North State resident, Jennifer is
deeply invested in the success of the region. She
raised her two children in the Redding area, both
of whom have returned to work in the family
business after completing their college
education. She has served on numerous boards,
supported local nonprofit initiatives, and
remains committed to strengthening her
community through both leadership and service.
74 Report and Recommendations 8.2 Reviewed and Approved
City Manager
AGENDA ITEM
City Council
TO: Mayor and City Council Members
FROM: Will Bond, City Engineer/Public Works Director
Steve Rickel, Waste Water Treatment Plant Superintendent
DATE: April 7, 2026
SUBJECT: SUPPLEMENTAL BUDGET APPROPRIATION TO PREPARE AN UPDATED TITLE 22 ENGINEERING REPORT
FILE NO.:
RECOMMENDATION
Staff requests that the City Council approve a supplemental budget appropriation in the amount of $100,000.00 for an updated for the Title 22 Engineering Report
BACKGROUND
Title 22 Engineering Report
The City’s Wastewater Treatment Plant (WWTP) has produced Title 22 recycled (nonpotable) water since beginning operations in 1977. This treated wastewater, characterized by low turbidity, is suitable for landscape irrigation and industrial uses.
The City currently supplies recycled water to three customers: Knauf Fiberglass, Sierra Pacific Industries, and Caltrans. The City maintains use-agreements with each customer and currently charges $0.00172 per hundred cubic feet (HCF). Since 2022, approximately 270 million gallons of recycled water have been distributed. All of the City’s wastewater is treated to Title 22 standard.
A Title 22 Engineering Report is required to demonstrate compliance with California public health and water reuse regulations. The report is reviewed by regulatory agencies including the Regional Water Quality Control Board (RWQCB) and the State Water Resources Control Board, Division of Drinking Water (DDW). 75 The City last prepared a Title 22 Engineering Report in 2020 as the WWTP upgrade project was nearing completion. The report was submitted to RWQCB, and no comments were received.
In August 2025, RWQCB notified the City that its National Pollutant Discharge Elimination System (NPDES) permit will expire in 2026 and must be renewed. The NPDES permit is an individual permit that authorizes operation of the WWTP and establishes discharge requirements specific to the facility.
During permit renewal discussions, RWQCB indicated its intent to transition the City from an individual NPDES permit to coverage under a Municipal General Order (MGO). While the MGO is a general permit, it can incorporate site-specific limitations based on WWTP characteristics such as influent and effluent quality, discharge location, and wastewater chemistry.
The MGO allows for the production of recycled water but does not authorize its distribution. The City currently both produces and distributes recycled water. The City owns and operates distribution pipelines serving Knauf Fiberglass and Caltrans, while Sierra Pacific Industries owns and operates its own distribution system from the WWTP to its facility.
Even though the City has produced and distributed recycled water, RWQCB has indicated that the City must obtain permit coverage from DDW to act as a recycled water administrator. The first step in this process is to submit a Title 22 Engineering Report and a Notice of Intent to DDW.
The City’s 2020 Engineering Report, that was submitted to the RWQCB, was not submitted to DDW for review at that time, thus DDW permit coverage was not obtained.
As a result, the City has been producing and distributing recycled water without formal DDW authorization. During this period, regulatory requirements related to recycled water administration were not clearly identified during ongoing coordination with RWQCB.
In August 2025, staff submitted the 2020 Engineering Report to DDW and received comments on January 11, 2026. Based on the DDW’s comments, the City will need to contract with a consultant to update the report and obtain approval from DDW. Staff anticipates that recycled water permit coverage will be obtained by August 2027.
During the permitting process, staff will coordinate with Knauf Fiberglass, Sierra Pacific Industries, and Caltrans to amend existing recycled water use agreements. The new permit is expected to require increased testing, monitoring, and reporting for both the City and its customers. Staff will also evaluate and negotiate adjustments to the recycled water rate to recover costs associated with compliance, including reporting, monitoring, and future regulatory requirements.
RWQCB anticipates enrolling the City under the MGO in June 2026. However, it remains unclear how the City can be enrolled in the MGO prior to obtaining the required recycled water permit from DDW. RWQCB has not yet provided clarification regarding this sequencing.
76 Municipal General Order – WWTP
In addition to the recycled water permitting issue, the draft MGO includes revised effluent limits for zinc that present compliance challenges for the City.
In 2014, the City received Waste Discharge Requirements through its NPDES permit, which established zinc effluent limits of 12 µg/L (monthly average) and 22 µg/L (maximum daily). These limits proved to be unattainable under existing conditions.
Between 2014 and 2015, the City conducted multiple studies of WWTP performance.
Based on a mixing zone evaluation, a WWTP upgrade was determined to be the most effective long-term solution to support year-round discharge compliance.
During the design and construction of the upgraded WWTP, RWQCB issued a Time Schedule Order (TSO) that temporarily increased allowable zinc limits to 48 µg/L (monthly average) and 59.2 µg/L (maximum daily).
Following completion of the WWTP upgrade in 2020, RWQCB revised permit requirements, establishing zinc limits of 30 µg/L (monthly average) and 40 µg/L (maximum daily). While the City has complied with all other permit requirements, zinc concentrations have continued to exceed these limits.
In 2021, RWQCB issued a subsequent Time Schedule Order (TSO), increasing interim zinc limits to 149 µg/L (monthly average) and 264 µg/L (maximum daily). This TSO expired in 2024, and the permit limits reverted to 30 µg/L and 40 µg/L, respectively.
The City currently conducts monthly zinc sampling. Under current conditions, zinc concentrations exceed permit limits approximately half of the time, most frequently during summer months when the wastewater system experiences minimal infiltration and inflow (i.e. dilution). Each exceedance is subject to a minimum mandatory penalty of $3,000.
Under the proposed MGO, zinc limits are expected to be further reduced to 15 µg/L (monthly average) and 22 µg/L (maximum daily). Staff anticipates that compliance with these limits will not be feasible under current conditions, resulting in consistent exceedances and associated penalties.
Zinc Mitigation Discharge Project
In 2022, City Council authorized staff (CC-2022-115) to prepare and submit a Clean Water State Revolving Fund (CWSRF) planning grant application to the State Water Resources Control Board Division of Financial Assistance (DFA) for a WWTP Zinc Discharge Mitigation Project.
The original $1.6 million planning grant scope of work included the following tasks:
1. Biological Assessment of Zinc Impacts to Churn Creek
2. Watershed-Scale Study of Zinc in the Upper Sacramento River
3. Facility Zinc Removal Bench-Scale Testing
4. Additional Zinc Source Sampling
77 5. Preliminary Engineering Report
6. Environmental Documentation
7. 30% Design Documents
8. Construction Funding Application
The initial proposed scope was accepted by DFA and placed on the agency’s priority list for funding. In 2025, when the project advanced, DFA requested additional information from the City to finalize the planning grant application and subsequently routed the application to RWQCB for concurrence.
In July 2025, RWQCB indicated that it did not support Tasks 1 and 2 of the proposed scope. RWQCB stated that environmental impacts related to zinc had been previously studied, referencing work completed in the early 1980s, and that numeric water quality objectives had already been established. RWQCB further indicated that additional biological or watershed-level studies would not meaningfully contribute to achieving compliance with current zinc effluent limits.
As a result, the City revised the scope of work to remove Tasks 1 and 2 and focus on Tasks 3 through 8. Based on this revised scope, the City anticipates receiving approximately $750,000 in grant funding in the coming months.
Over the past six years, City staff, in coordination with multiple engineering consultants, has conducted extensive analysis of both the water and wastewater systems to identify the source of zinc within the WWTP influent. Early assumptions suggested that cannabis cultivation activities may have been a primary contributor; however, subsequent sampling and analysis determined that their contribution is minimal.
Current findings indicate that the primary source of zinc is likely corrosion from residential galvanized plumbing. This source is widespread throughout our service area, and largely outside of the City’s direct control, which significantly limits feasible mitigation strategies at the source level.
The remaining scope of work under the planning grant is focused on evaluating treatmentbased solutions at the WWTP, including bench-scale testing and preliminary design of zinc removal processes. These efforts are intended to identify a technically feasible and cost-effective approach to achieving compliance with current and anticipated permit limits.
It should be noted that while zinc concentrations in WWTP effluent will continue to exceed regulatory limits, they remain relatively low in absolute terms with regard to drinking water standards for humans. Additionally, zinc concentrations in the City’s drinking water system are well below the U.S. Environmental Protection Agency (EPA) secondary maximum contaminant level of 5 mg/L (5,000 µg/L), indicating no public health concern.
FISCAL IMPACTS
This report will be funded by Wastewater Utility capital project reserves (530-340).
ATTACHMENTS
78 Title 22 Engineering Report Comments – DDW dated January 11, 2026 2020 Title 22 Engineering Report: https://www.cityofshastalake.gov/1108/Documents Resolution
DISTRIBUTION:
City Council
Finance Department
79 RESOLUTION CC 2026-xx
__________________________________________________________________________
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SHASTA LAKE TO APPROVE A SUPPLEMENTAL BUDGET APPROPRIATION IN THE AMOUNT OF $100,000.00 FOR THE DEVELOPMENT OF THE UPDATED TITLE 22 ENGINEERING REPORT __________________________________________________________________________ WHEREAS, The City prepared and submitted a Title 22 Engineering Report 2020; and WHEREAS, The City submitted the 2020 Title 22 Engineering Report to the Regional Water Quality Control Board; and
WHEREAS, The City needs to update the Title 22 Engineering Report to obtain regulatory compliance;
NOW, THEREFORE BE IT RESOLVED THAT the City of Shasta Lake City Council hereby:
Approves a Supplemental Budget Appropriation in the amount $100,000.00 for the development of the updated Title 22 Engineering Report
PASSED, APPROVED, AND ADOPTED this 7th day of April 2026, by the following vote:
AYES:
NOES:
ABSENT:
______________________________
JUSTIN JONES, Mayor
ATTEST:
_______________________________
CHARITY TATLOW, CMC
City Clerk
80 State Water Resources Control Board
Division of Drinking Water
January 11, 2026
Mr. William S. Bond
Public Works Director – City Engineer
City of Shasta Lake
4477 Main Street
Shasta Lake, CA 96019
DIVISON OF DRINKING WATER COMMENTS ON THE TITLE 22 ENGINEERING
REPORT FOR THE CITY OF SHASTA LAKE WASTEWATER TREATMENT PLANT (4590006-705)
Dear Mr. Bond:
The State Water Resources Control Board, Division of Drinking Water (DDW) received a Title 22 Engineering Report, dated November 17, 2020, in August 2025 (Engineering Report) for the City of Shasta Lake Wastewater Treatment Plant. The City of Shasta Lake Wastewater Treatment Plant (WWTP) is located at 3700 Tibbits Road, Shasta Lake, CA 96019.
The Shasta Lake WWTP is owned and operated by the City of Shasta Lake (City). The City of Shasta Lake WWTP produces disinfected tertiary recycled water. The City is responsible for the maintenance and operation of the onsite treatment processes. The users are responsible for the maintenance and operation of the distribution pipelines and storage and use facilities. There are three recycled water users which include Caltrans, Sierra Pacific Industries, and Knauf Fiberglass. Caltrans uses the recycled water for irrigation along certain interchanges on the 1-5, Sierra Pacific Industries uses the recycled water for soaking log decks, and Kauff Fiberglass uses the recycled water for landscape and turf irrigation. The City has water use agreements with these three users. The City maintains flowmeters on each user’s recycled water distribution line to measure the amount of water that was distributed. Recycled water is also used onsite at the WWTP for process water uses and onsite maintenance. The WWTP is permitted by the California Regional Water Quality Control Board, Central Valley Region (Regional Board) under Waste Discharge Requirements (WDRs) Order R5-2014-0052-01, NPDES NO. CA0079511.
The WWTP treats an average dry weather flow of 1.3 MGD. The WWTP’s treatment process consists of influent screening, screened raw sewage equalization and pumping, 81 Mr. Bond, City of Shasta Lake - 2 - January 11, 2026 5-stage Bardenpho aeration basins followed by secondary clarification. There are two Westec SuperDisc filters and a WEDECO Duron UV disinfection system. The recycled water is stored in a recycled water storage basin sent for distribution via the recycled water pump station.
DDW has the following comments for the Engineering Report, which must be revised and re-submitted to DDW for further review:
1. General. Specify that the WWTP is producing tertiary treated recycled water.
2. Raw Wastewater Characteristics. The Engineering Report must be revised to address the following:
a. Update the data tables throughout the section to include the most recent data.
b. Per ER Guidelines (June 2023), summarize raw wastewater quality over recent past (e.g., last 5 years). At a minimum, provide the following statistical summary results:
i. Minimum
ii. Median (or mean)
iii. 95th percentile values
iv. Maximum
c. Include discussion of any source control programs.
d. Provide a description of the proportion of industrial waste.
3. Treatment Process. The Engineering Report must be revised to address the following:
a. Update the Process Flow Diagram in Appendix B to include:
i. Compliance sampling location for influent and effluent filter turbidity and total coliform; and
ii. Flow metering.
b. List personnel that will operate the facility including their position, training certifications, and hours during which the facility will be staffed (see Title 22 Section 60325).
4. Tertiary Filters. Include the filtration backwash rate to Table 10 (Tertiary Filter Upgrade Design Criteria) on pdf page 12.
5. Filter Influent and Effluent Turbidities. Provide the expected turbidities of filter effluent.
6. Filtration Aid Chemicals. When polymer is used, explain what determines where the polymer will be injected, either into the mixed liquor for flocculation within the secondary clarifiers, or to the rapid mixing chamber.
7. Operation and Maintenance. The Engineering Report must be revised to address the following:
a. Submit a copy of the operation and maintenance manual. b. Describe the preventive maintenance program (see Title 22 Section 60327).
8. Plant Reliability Features. The Engineering Report must be revised to address the following:
a. Per Title 22 Section 60341, describe all the facilities used to hold or dispose of untreated or off-spec treated wastewater.
82 Mr. Bond, City of Shasta Lake - 3 - January 11, 2026 b. Per Title 22 Section 60343 through Title 22 Section 60355, describe the reliability features provided for each of the following treatment processes:
i. Primary Treatment
1. Describe how the primary treatment design is intended to meet the requirements of Title 22 Section 60343.
ii. Secondary Treatment
1. Describe how the biological treatment design is intended to meet the requirements of Title 22 Section 60345.
2. Describe how the secondary sedimentation design is
intended to meet the requirements of Title 22 Section
60347.
iii. Coagulation
1. Describe how the coagulant dosing system design is
intended to meet the requirements of Title 22 Section
60349(a) to ensure uninterrupted coagulant feed.
2. Clarify how the coagulant dosing system design is intended to meet the requirements of Title 22 Section 60349(b).
iv. Tertiary Filtration
1. Clarify how the filtration system design is intended to meet the requirements of Title 22 Section 60351.
v. UV Disinfection
1. Describe how the UV system design is intended to meet the reliability requirements of Title 22 Section 60355.
9. Alarms. The Engineering Report must be revised to address the following:
a. To clarify how the project meets the requirements of Title 22 Section 60335(a), summarize in a table format all the alarms provided for recycled water production and related processes parameters, the numerical setpoints for the alarms, and the triggered actions when the alarm setpoints are exceeded.
b. Provide the alarm time delays for all alarms that cause diversion, shutdown, or retreatment.
c. Per Title 22 Section 60335(b), all required alarm devices must have access to power that is independent of the normal power supply of the facility.
d. Clarify if operators are onsite on the weekends and if so, specify what time they are there from.
10.Monitoring and Reporting. Describe the planned monitoring and reporting program, including all monitoring required by the Water Recycling Criteria:
a. Per Title 22 Section 60321(a) and (c), total coliform bacteria must be sampled by the producer or supplier at least daily in the disinfected effluent and analyzed by an approved laboratory (“approved laboratory” as defined by Title 22 Section 60301.100).
b. Describe how total coliform results will be used to meet the requirements of Title 22 Section 60301.230(b).
c. Per Title 22 Section 60321(b), turbidity must be sampled continuously following filtration.
83 Mr. Bond, City of Shasta Lake - 4 - January 11, 2026 d. Per Title 22 Section 60304, the turbidity of the influent to the filter must be continuously measured.
e. Where continuous analysis and recording equipment is used, describe the method and frequency of calibration.
11.Contingency Plan.
a. Include a description of the diversion area holding time. b. Specify if the Emergency Retention Basins (ERBs) are lined or unlined. c. Clarify in the Contingency Plan Section and Table 14 (Contingency Plans) on pdf page 17, which ERB is being referred to (ERB 1, ERB 2, or ERB 3). d. Clarify if Pond 4 is ERB 3.
12.Standby Power. The Engineering Report must be revised to address the following:
a. Per Title 22 Section 60337, describe what reliability feature(s) are provided for the power supply.
b. Describe how often the emergency power source (e.g., generator) is tested.
c. During a power source transfer from the main power to the standby generator, clarify if the equipment at each unit process shuts down and how the equipment is re-started.
13.Transmission System. The Engineering Report must be revised to address the following as Appendix F is not inclusive of all of the items listed below:
a. Include maps and/or plans showing the service area boundary, location of the transmission facilities and the distribution system layout. The plans should include the ownership and location of all potable water lines, recycled water lines and sewer lines within the recycled water service area and use area(s). Include in the map and/or plans, the systems and facilities discussed in this section (e.g., irrigation piping systems, hydro pneumatic tank, and wetwell).
b. Add the non-potable utility/ recycled water (W3) pumping station to the Overall Site Plan and Yand Piping Area 3 in Appendix F. c. Define “REW” as mentioned in a note on the Overall Site Plan in Appendix F.
d. Appendix F does not show/ provides the plans for modified facility number 120, Reclaimed Water Reservoir & Pump Station. Please update the plans to be inclusive of facility number 120.
e. Yard Piping Area 4 and 5 are missing from Appendix F. Please include those plans.
14.Include the following information as it pertains to all of the existing recycled water users or to minimize duplications on use area requirements, the City of Shasta Lake can consider providing the recycled water user agreement(s) as an Appendix and refer to it within the Engineering Report discussion. The Title 22 Engineering Report contains the sections below and includes discussion for onsite use of recycled water at the WWTP. The items below are also needed for the other three recycled water users, and for onsite use, if not already included in the Title 22 Engineering Report.
a. Use Areas. The Engineering Report must be revised to address the following:
84 Mr. Bond, City of Shasta Lake - 5 - January 11, 2026 i. Include maps for the three recycled water users and onsite use, to Appendix G (Use Area Map) showing:
1. Specific areas of use;
2. Areas of public access;
3. Surrounding land uses;
4. The location of drinking wells in or within 1000 feet of the use area;
5. Location and type of signage;
6. Method of irrigation;
7. Direction of drainage and description of the area to which the drainage will flow; and
8. All piping networks within the use area including recycled, potable, sewage, and others as applicable
ii. Define “TYP” as used in Appendix G, Yard Piping Area 1 plan. b. Use Area Containment Measures. The Engineering Report must be revised to address the following:
i. Discuss use area containment measures;
ii. Discuss the degree of potential access by employees and/or the public;
iii. The proposed irrigation schedule (if public access is included); iv. For use areas where both potable and recycled water lines exist, a description of the cross-connection control procedures which will be used;
v. Describe how the use area(s) meet the use area requirements of Title 22 Section 60310; and
vi. Describe the color-coding requirements of recycled water infrastructure (e.g., pipes) and associated appurtenances (e.g., irrigation equipment) to protect against possible cross-connections or misuse.
c. Use Area Inspections and Monitoring. Use area inspection program must describe the personnel (site supervisors) in charge of RW use monitoring, reporting, and following up on use area problems, such as irrigation practices that can cause ponding, runoff, overspray, and cross connections, etc.
d. Training. Describe the use area trainings that are provided to site supervisors/employees:
i. Identify the entity providing the training;
ii. State the frequency(ies) of training; and
iii. Provide any written manuals of practice that are made available to the employees.
85 Mr. Bond, City of Shasta Lake - 6 - January 11, 2026 If you have any questions regarding this letter, please contact Susana Vargas at (714) 942-6693 or via email at [email protected] or myself at (818) 551- 2046 or via email at [email protected].
Sincerely,
Dr. Ginachi Amah P.E.
Recycled Water Unit Supervisor
Division of Drinking Water
State Water Resources Control Board
500 North Central Ave., Suite 500
Glendale, CA 91203
cc:
Ginachi Amah, DDW (via email)
Steve Watson, DDW (via email)
Stacy Gotham, Central Valley - Redding Regional Water Quality Control Board (via email)
Steve Rickel, City of Shasta Lake (via email)
86 Report and Recommendations 8.3 Reviewed and Approved
City Manager
AGENDA ITEM
City Council
TO: Mayor and City Council Members
FROM: Jason Peterson, Finance Director
DATE: April 7, 2026
SUBJECT: RESOLUTION ACCEPTING THE FINANCIAL STATEMENTS, SINGLE AUDIT ACT REPORTS, AND AUDITOR’S LETTER TO
COUNCIL FOR THE FISCAL YEAR ENDING JUNE 30, 2025
FILE NO:
RECOMMENDATION:
Staff recommends approval of a Resolution by the Shasta Lake City Council accepting the Financial Statements, Single Audit Act Report, and Auditor’s Letter to Council for the Fiscal Year Ending June 30, 2025, for the City of Shasta Lake.
BACKGROUND:
The financial report is an accumulation of information relating to the activities directed and approved by the City Council, along with the actions necessary by Management to carry out the desires of the City Council. This year, as in prior years, the staff records these transactions and works diligently to ensure that everything is proceeding within the guidance given by the City Council.
FISCAL IMPACTS:
No Fiscal Impact
ATTACHMENTS:
• Resolution accepting the Audited Financial Statements for the Fiscal Year Ending June 30, 2025
• Financial Statements Together with Independent Auditor’s Report for the Fiscal Year Ended June 30, 2025
87 • Single Audit Act Reports and Schedules for the Year Ended June 30, 2025 • Auditor’s Letter to Council
DISTRIBUTION:
City Manager
City Attorney
88 RESOLUTION CC-2026-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SHASTA LAKE
ACCEPTING THE AUDITED FINANCIAL STATEMENTS, SINGLE AUDIT ACT REPORT, MANAGEMENT LETTER, AND AUDITOR’S LETTER TO COUNCIL FOR FISCAL YEAR ENDING JUNE 30, 2025
WHEREAS, the Shasta Lake City Council is required by Government Code to have an Annual Audit; and
WHEREAS, the audit has been completed by Smith & Newell, Certified Public Accountants; and
WHEREAS, the audit was due to the Federal Audit Clearinghouse, and the State Controller’s Office, by March 31, 2026. It was received and submitted to both on March 13, 2026; and
NOW, THEREFORE, BE IT RESOLVED that the Financial Statements, Single Audit Act Report, Management Letter, and Auditor’s Letter to Council for the fiscal year ending June 30, 2025 is hereby accepted.
BE IT FURTHER RESOLVED that the Finance Director is hereby authorized and directed to disseminate that audited report to the appropriate recipients.
PASSED, APPROVED, AND ADOPTED this 7th day of April, 2026, by the following vote:
AYES:
NOES:
ABSENT:
JUSTIN JONES, Mayor
ATTEST:
CHARITY TATLOW, City Clerk
89 CITY OF SHASTA LAKE,
CALIFORNIA
FINANCIAL STATEMENTS
TOGETHER WITH
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED
JUNE 30, 2025
90 THIS PAGE INTENTIONALLY LEFT BLANK
91 CITY OF SHASTA LAKE
Annual Financial Report
For the Year Ended June 30, 2025
Table of Contents
Page
INTRODUCTORY SECTION
List of Officials..............................................................................................................................................i
FINANCIAL SECTION
Independent Auditor’s Report....................................................................................................................1-4 Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Position .............................................................................................................5-6 Statement of Activities..................................................................................................................... 7 Fund Financial Statements:
Governmental Funds:
Balance Sheet ............................................................................................................................ 8 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position – Governmental Activities ............................ 9 Statement of Revenues, Expenditures and Changes in Fund Balances................................... 10 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Government-Wide Statement of Activities – Governmental Activities............................................................................... 11 Proprietary Funds:
Statement of Net Position...................................................................................................12-13 Statement of Revenues, Expenses and Changes in Net Position............................................. 14 Statement of Cash Flows....................................................................................................15-16 Fiduciary Funds:
Statement of Fiduciary Net Position........................................................................................ 17 Statement of Changes in Fiduciary Net Position..................................................................... 18 Notes to Basic Financial Statements ...............................................................................................19-57 Required Supplementary Information (Unaudited):
City Pension Plan – Schedule of Proportionate Share of the Net Pension Liability ............................ 58 City Pension Plan – Schedule of Contributions.................................................................................... 59 City Pension Plan – Notes to City Pension Plan .................................................................................. 60 City OPEB Plan – Schedule of Changes in the Net OPEB Liability and Related Ratios .................... 61 City OPEB Plan – Schedule of Contributions...................................................................................... 62 City OPEB Plan – Notes to City OPEB Plan ....................................................................................... 63 Budgetary Comparison Schedule – General Fund ............................................................................... 64 Budgetary Comparison Schedule – Grant – Major Special Revenue Fund.......................................... 65 Note to Budgetary Comparison Schedules........................................................................................... 66 Combining Nonmajor Fund Financial Statements:
Nonmajor Governmental Funds:
Combining Balance Sheet.............................................................................................................. 67 Combining Statement of Revenues, Expenditures and Changes in Fund Balances....................... 68 92 CITY OF SHASTA LAKE
Annual Financial Report
For the Year Ended June 30, 2025
Table of Contents
Page
FINANCIAL SECTION (CONTINUED)
Combining Nonmajor Fund Financial Statements: (Continued) Nonmajor Governmental Funds: (Continued)
Special Revenue Funds:
Combining Balance Sheet ....................................................................................................... 69 Combining Statement of Revenues, Expenditures and Changes in Fund Balances................ 70 Debt Service Funds:
Combining Balance Sheet ....................................................................................................... 71 Combining Statement of Revenues, Expenditures and Changes in Fund Balances................ 72 Internal Service Funds:
Combining Statement of Net Position ........................................................................................... 73 Combining Statement of Revenues, Expenses and Changes in Net Position ................................ 74 Combining Statement of Cash Flows .......................................................................................75-76 93 INTRODUCTORY SECTION
• List of Officials
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95 CITY OF SHASTA LAKE
List of Officials
For the Year Ended June 30, 2025
-iElected Officials
Pamelyn Morgan Mayor
Justin Jones Vice-Mayor
Dan Ringwelski Member
Toni Coates Member
Greg Watkins Member
Administrative Personnel
Jessaca Lugo City Manager
Vacant Assistant City Manager
John Kenny City Attorney
Wendy Howard Finance Director
Jason Peterson Finance and General Services Manager
James Takehara Electric Utility Director
William Bond City Engineer
Chris Carr Water Treatment Plant Superintendent
Steve Rickel Wastewater Treatment Superintendent
Kody Bodner Sheriff’s Lieutenant
Charity Tatlow City Clerk/Permit Center Manager
96 THIS PAGE INTENTIONALLY LEFT BLANK
97 FINANCIAL SECTION
• Independent Auditor’s Report
• Basic Financial Statements
• Required Supplementary Information
• Combining Nonmajor Fund Financial Statements
98 THIS PAGE INTENTIONALLY LEFT BLANK
99 CERTIFIED PUBLIC ACCOUNTANTS
-1-
950 THARP ROAD, SUITE 502 YUBA CITY, CA 95993 TEL: (530) 673-9790 FAX: (530) 673-1305 [email protected]
SMITH & NEWELL
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Shasta Lake, California (City), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 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 and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. 100
-2-
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Change in Accounting Principle
As discussed in Note 1U to the financial statements, in 2024-2025, the City adopted new accounting guidance, GASB No. 101, Compensated Absences. Our opinion is not modified with respect to this matter. 101
-3-
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the City Pension Plan information, City OPEB Plan information, and budgetary comparison information as listed in the table of contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquires, the basic financial statements, and other knowledge we obtain 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 accompanying combining nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the annual report. The other information comprises the introductory section 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.
102
-4-
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 15, 2026, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.
Smith & Newell CPAs
Yuba City, California
January 15, 2026
103
Basic Financial Statements
• Government-Wide Financial Statements
104
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105
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106
CITY OF SHASTA LAKE
Statement of Net Position
June 30, 2025
Governmental Business-Type
Activities Activities Totals
ASSETS
Cash and investments $ 10,855,894 $ 43,872,818 $ 54,728,712 Cash with fiscal agent 1,224,190 - 1,224,190
Receivables:
Accounts, net 100,127 6,685,231 6,785,358
Interest 34,380 137,371 171,751
Taxes 476,491 - 476,491
Intergovernmental 2,258,357 - 2,258,357
Assessments 1,856,000 470,000 2,326,000
Deposits 4,428 1,849,780 1,854,208
Prepaid costs 15,706 78,481 94,187
Inventory - 759,065 759,065
Internal balances 829,031 (829,031) -
Restricted cash and investments 308,971 - 308,971
Loans receivable 8,205,935 - 8,205,935
Land held for resale 534,984 - 534,984
Capital assets:
Non-depreciable 6,107,724 5,152,686 11,260,410
Depreciable, net 51,827,926 45,843,172 97,671,098
Total capital assets 57,935,650 50,995,858 108,931,508
Total Assets 84,640,144 104,019,573 188,659,717
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension adjustments 968,155 2,170,040 3,138,195 Deferred OPEB adjustments 1,274,132 1,632,856 2,906,988 Total Deferred Outflows of Resources 2,242,287 3,802,896 6,045,183
LIABILITIES
Accounts payable 2,293,243 2,534,448 4,827,691
Retentions payable 220,892 21,981 242,873
Salaries and benefits payable 54,705 107,517 162,222
Deposits payable 566,958 9,943 576,901
Interest payable 183,716 90,938 274,654
Unearned revenues 268,001 - 268,001
Long-term liabilities:
Due within one year 764,402 1,105,857 1,870,259
Due in more than one year 11,035,631 14,783,024 25,818,655 Net pension liability 784,957 1,759,415 2,544,372
Net OPEB liability 1,214,442 1,556,361 2,770,803
Total Liabilities 17,386,947 21,969,484 39,356,431
DEFERRED INFLOWS OF RESOURCES
Deferred pension adjustments 517,693 1,160,370 1,678,063 Deferred OPEB adjustments 398,322 510,467 908,789
Total Deferred Inflows of Resources 916,015 1,670,837 2,586,852 The notes to the basic financial statements are an integral part of this statement. -5-
Continued (Page 1 of 2)
107
CITY OF SHASTA LAKE
Statement of Net Position
June 30, 2025
Governmental Business-Type
Activities Activities Totals
NET POSITION
Net investment in capital assets 53,819,915 35,552,643 89,372,558 Restricted for:
General government 2,770,781 - 2,770,781
Public safety 14,131 - 14,131
Public ways and facilities 138,208 - 138,208
Community development 2,874,222 - 2,874,222
Debt service 3,210,415 627,586 3,838,001
Unrestricted 5,751,797 48,001,919 53,753,716
Total Net Position $ 68,579,469 $ 84,182,148 $152,761,617 The notes to the basic financial statements are an integral part of this statement. -6-
Continued (Page 2 of 2)
108
CITY OF SHASTA LAKE
Statement of Activities
For the Year Ended June 30, 2025
Program Revenues
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Governmental activities:
General government $ 4,833,101 $ 486,263 $ 6,285,326 $ - Public safety 4,953,482 178,747 - -
Public ways and facilities 2,123,141 4,557,834 (4,700) 149,334 Planning 971,860 - - -
Culture and recreation 492,453 - - -
Community development 367,930 - 978,733 -
Interest on long-term debt 418,518 - - -
Total Governmental Activities 14,160,485 5,222,844 7,259,359 149,334 Business-type activities:
Water 5,052,673 4,890,954 - -
Electric 37,556,003 38,815,909 - -
Wastewater 5,401,647 3,910,729 - -
Industrial park 34,275 31,423 - -
Total Business-Type Activities 48,044,598 47,649,015 - - Total $ 62,205,083 $ 52,871,859 $ 7,259,359 $ 149,334
General revenues:
Taxes:
Property taxes
Sales and use taxes
Transient occupancy taxes
Franchise taxes
Other taxes
Unrestricted grants and contributions
Interest and investment earnings
Miscellaneous
Transfers
Total General Revenues Transfers
Change in Net Position
Net Position - Beginning
Change in accounting principle
Prior period adjustment
Net Position - Beginning, Restated
Net Position - Ending
The notes to the basic financial statements are an integral part of this statement. -7-
109
Net (Expense) Revenue and
Changes in Net Position
Governmental Business-Type
Activities Activities Totals
$ 1,938,488 $ - $ 1,938,488
(4,774,735) - (4,774,735)
2,579,327 - 2,579,327
(971,860) - (971,860)
(492,453) - (492,453)
610,803 - 610,803
(418,518) - (418,518)
(1,528,948) - (1,528,948)
- (161,719) (161,719)
- 1,259,906 1,259,906
- (1,490,918) (1,490,918)
- (2,852) (2,852)
- (395,583) (395,583)
(1,528,948) (395,583) (1,924,531)
1,739,487 - 1,739,487
881,939 - 881,939
34,726 - 34,726
194,047 - 194,047
664,205 - 664,205
1,229,080 10,763 1,239,843
537,772 1,952,497 2,490,269
265,547 357,627 623,174
(350,000) 350,000 -
5,196,803 2,670,887 7,867,690
3,667,855 2,275,304 5,943,159
62,791,616 81,930,533 144,722,149
(24,458) (23,689) (48,147)
2,144,456 - 2,144,456
64,911,614 81,906,844 146,818,458
$ 68,579,469 $ 84,182,148 $ 152,761,617
The notes to the basic financial statements are an integral part of this statement. -7-
110
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111
Basic Financial Statements
• Fund Financial Statements
112
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113
CITY OF SHASTA LAKE
Balance Sheet
Governmental Funds
June 30, 2025
Other
Governmental
General Grant Funds Totals
ASSETS
Cash and investments $ 5,733,332 $ - $ 5,122,562 $ 10,855,894 Cash with fiscal agent 1,224,190 - - 1,224,190
Receivables:
Accounts, net 100,127 - - 100,127
Interest 13,803 1,507 19,070 34,380
Taxes 394,983 - 81,508 476,491
Intergovernmental 130,734 1,472,608 655,015 2,258,357
Assessments - - 1,856,000 1,856,000
Deposits 4,428 - - 4,428
Prepaid costs 15,706 - - 15,706
Due from other funds 1,393,082 - - 1,393,082
Restricted cash and investments - - 308,971 308,971
Loans receivable 947,000 2,223,619 5,035,316 8,205,935
Land held for resale - - 534,984 534,984
Total Assets $ 9,957,385 $ 3,697,734 $ 13,613,426 $ 27,268,545
LIABILITIES
Accounts payable $ 1,675,825 $ 294,399 $ 323,019 $ 2,293,243 Retentions payable - 87,601 133,291 220,892
Salaries and benefits payable 54,705 - - 54,705
Deposits payable 566,958 - - 566,958
Due to other funds - 804,787 140,667 945,454
Unearned revenues 24,447 243,554 - 268,001
Total Liabilities 2,321,935 1,430,341 596,977 4,349,253
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues 85,937 1,248,518 583,863 1,918,318 Total Deferred Inflows of Resources 85,937 1,248,518 583,863 1,918,318
FUND BALANCES
Nonspendable 962,706 2,223,619 5,035,316 8,221,641
Restricted 688,715 - 7,810,550 8,499,265
Unassigned 5,898,092 (1,204,744) (413,280) 4,280,068
Total Fund Balances 7,549,513 1,018,875 12,432,586 21,000,974 Total Liabilities, Deferred Inflows of
Resources and Fund Balances $ 9,957,385 $ 3,697,734 $ 13,613,426 $ 27,268,545 The notes to the basic financial statements are an integral part of this statement. -8-
114
CITY OF SHASTA LAKE
Reconciliation of the Governmental Funds Balance
Sheet to the Government-Wide Statement of
Net Position - Governmental Activities
June 30, 2025
Total Fund Balance - Total Governmental Funds $ 21,000,974 Amounts reported for governmental activities in the Statement of Net Position are different because:
Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds Balance Sheet. 57,935,650 Other long-term assets are not available to pay for current period expenditures and therefore are reported as unavailable revenues in the governmental funds. 1,918,318 Interest payable on long-term debt does not require the use of current financial resources and therefore is not accrued as a liability in the governmental funds Balance Sheet. (183,716) Deferred outflows of resources related to pension and OPEB are not reported in the governmental funds. 2,242,287 Deferred inflows of resources related to pension and OPEB are not reported in the governmental funds. (916,015) Certain liabilities are not due and payable in the current period and therefore are not reported in the governmental funds.
Revenue bonds payable (1,839,735)
Special assessment bonds payable (17,000)
Certificates of participation, less unamortized discount of $212.806 (9,726,194) Compensated absences (217,104)
Net pension liability (784,957)
Net OPEB liability (1,214,442)
Internal service funds are used by management to charge the cost of certain activities, such as equipment maintenance and operations, to individual funds. The assets and liabilities of the internal service funds must be added to the statement of net position. 381,403 Net Position of Governmental Activities $ 68,579,469
The notes to the basic financial statements are an integral part of this statement. -9-
115
CITY OF SHASTA LAKE
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds
For the Year Ended June 30, 2025
Other
Governmental
General Grant Funds Totals
REVENUES
Taxes and assessments $ 3,407,049 $ - $ 21,984 $ 3,429,033 Licenses and permits 197,140 - - 197,140
Fines and forfeitures 9,496 - - 9,496
Use of money and property 279,754 14,376 243,642 537,772 Intergovernmental revenue 1,235,434 4,950,871 2,528,347 8,714,652 Charges for services 4,965,916 - 50,292 5,016,208
Other revenues 265,547 - - 265,547
Total Revenues 10,360,336 4,965,247 2,844,265 18,169,848
EXPENDITURES
Current:
General government 3,534,612 617,418 30,348 4,182,378
Public safety 4,754,369 - 100,000 4,854,369
Public ways and facilities 160,725 - 769,430 930,155
Planning 889,097 - - 889,097
Culture and recreation 360,616 - - 360,616
Community development - - 333,821 333,821
Debt service:
Principal 438,000 - 146,040 584,040
Interest and other charges 339,768 - 86,931 426,699
Capital outlay 78,260 2,420,444 494,221 2,992,925
Total Expenditures 10,555,447 3,037,862 1,960,791 15,554,100 Excess of Revenues Over (Under)
Expenditures (195,111) 1,927,385 883,474 2,615,748
OTHER FINANCING SOURCES (USES)
Transfers in 1,000 - - 1,000
Transfers out - - (351,000) (351,000)
Total Other Financing Sources (Uses) 1,000 - (351,000) (350,000) Net Change in Fund Balances (194,111) 1,927,385 532,474 2,265,748 Fund Balances - Beginning 6,796,624 (908,510) 10,568,478 16,456,592 Prior period adjustment 947,000 - 1,331,634 2,278,634
Fund Balances - Beginning, Restated 7,743,624 (908,510) 11,900,112 18,735,226 Fund Balances - Ending $ 7,549,513 $ 1,018,875 $ 12,432,586 $ 21,000,974 The notes to the basic financial statements are an integral part of this statement. -10-
116
CITY OF SHASTA LAKE
Net Change in Fund Balances - Total Governmental Funds $ 2,265,748 Amounts reported for governmental activities in the Statement of Activities are different because:
Governmental funds report capital outlay as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.
Expenditures for capital outlay 2,992,925
Less current year depreciation (1,473,715)
Debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Position. Repayment of principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position.
Principal retirements 584,040
Amortization of bond issue costs (14,187)
Some revenues reported in the Statement of Activities will not be collected for several months after the City's year end and do not provide current financial resources and therefore are not reported as revenues in the governmental funds.
Change in unavailable revenues 8,492
Certain changes in deferred outflows and deferred inflows of resources reported in the Statement of Activities relate to long-term liabilities and are not reported in the governmental funds.
Change in deferred outflows of resources related to pension (570,898) Change in deferred inflows of resources related to pension 86,044 Change in deferred outflows of resources related to OPEB 194,142 Change in deferred inflows of resources related to OPEB (82,996) Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds.
Change in compensated absences payable (2,489)
Change in net pension liability 88,925
Change in net OPEB liability (308,068)
Change in accrued interest on long-term debt 8,181
Internal service funds are used by management to charge the cost of certain activities, such as equipment maintenance and operations, to individual funds. The net revenue (expense) of certain internal service funds is reported with governmental activities. (108,289) Change in Net Position of Governmental Activities $ 3,667,855 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the For the Year Ended June 30, 2025
Government-Wide Statement of Activities - Governmental Activities The notes to the basic financial statements are an integral part of this statement. -11-
117
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118
CITY OF SHASTA LAKE
Statement of Net Position
Proprietary Funds
June 30, 2025
Business-Type Activities - Enterprise Funds
Major Funds Nonmajor
Industrial
Water Electric Wastewater Park
ASSETS
Current Assets:
Cash and investments $ 3,404,228 $ 32,507,401 $ 6,454,078 $ - Receivables:
Accounts, net 645,039 5,602,289 437,903 -
Interest 10,977 101,153 21,063 -
Assessments - - - 470,000
Deposits - 1,849,780 - -
Prepaid costs 10,587 67,894 - -
Inventory 4,108 754,957 - -
Total Current Assets 4,074,939 40,883,474 6,913,044 470,000 Noncurrent Assets:
Capital assets:
Non-depreciable 1,036,298 1,893,857 718,167 1,392,696
Depreciable, net 11,475,152 9,070,022 23,553,549 -
Total capital assets 12,511,450 10,963,879 24,271,716 1,392,696 Total Noncurrent Assets 12,511,450 10,963,879 24,271,716 1,392,696 Total Assets 16,586,389 51,847,353 31,184,760 1,862,696
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension adjustments 230,661 1,134,578 223,712 - Deferred OPEB adjustments 271,513 496,514 201,164 -
Total Deferred Outflows of Resources 502,174 1,631,092 424,876 - The notes to the basic financial statements are an integral part of this statement. -12-
Continued (Page 1 of 2)
119
Governmental/
Business-Type
ds Activities
Internal
Service
Totals Funds
$ 42,365,707 $ 1,507,111
6,685,231 -
133,193 4,178
470,000 -
1,849,780 -
78,481 -
759,065 -
52,341,457 1,511,289
5,041,018 111,668
44,098,723 1,744,449
49,139,741 1,856,117
49,139,741 1,856,117
101,481,198 3,367,406
1,588,951 581,089
969,191 663,665
2,558,142 1,244,754
The notes to the basic financial statements are an integral part of this statement. -12-
Continued (Page 1 of 2)
120
CITY OF SHASTA LAKE
Statement of Net Position
Proprietary Funds
June 30, 2025
Business-Type Activities - Enterprise Funds
Major Funds Nonmajor
Industrial
Water Electric Wastewater Park
LIABILITIES
Current Liabilities:
Accounts payable 138,005 2,280,635 59,423 -
Retentions payable 21,981 - - -
Salaries and benefits payable 12,231 50,863 11,234 -
Deposits payable 9,943 - - -
Due to other funds - - - 102,512
Interest payable 28,758 - 53,955 8,225
Compensated absences payable 31,554 202,442 58,186 -
Loans payable 198,426 - 411,765 -
Bonds payable - - - 50,000
Total Current Liabilities 440,898 2,533,940 594,563 160,737 Noncurrent Liabilities:
Loans payable 2,079,442 - 12,283,582 -
Bonds payable - - - 420,000
Net pension liability 187,014 919,888 181,380 -
Net OPEB liability 258,793 473,253 191,740 -
Total Noncurrent Liabilities 2,525,249 1,393,141 12,656,702 420,000 Total Liabilities 2,966,147 3,927,081 13,251,265 580,737
DEFERRED INFLOWS OF RESOURCES
Deferred pension adjustments 123,340 606,684 119,624 -
Deferred OPEB adjustments 84,881 155,221 62,888 -
Total Deferred Inflows of Resources 208,221 761,905 182,512 -
NET POSITION
Net investment in capital assets 10,233,582 10,963,879 11,576,369 922,696 Restricted - - 627,586 -
Unrestricted 3,680,613 37,825,580 5,971,904 359,263
Total Net Position $ 13,914,195 $ 48,789,459 $ 18,175,859 $ 1,281,959 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Net Position of Business-Type Activities
The notes to the basic financial statements are an integral part of this statement. -13-
Continued (Page 2 of 2)
121
Governmental/
Business-Type
ds Activities
Internal
Service
Totals Funds
2,478,063 56,385
21,981 -
74,328 33,189
9,943 -
102,512 345,116
90,938 -
292,182 153,484
610,191 -
50,000 -
3,730,138 588,174
14,363,024 -
420,000 -
1,288,282 471,133
923,786 632,575
16,995,092 1,103,708
20,725,230 1,691,882
849,648 310,722
302,990 207,477
1,152,638 518,199
33,696,526 1,856,117
627,586 -
47,837,360 545,962
82,161,472 $ 2,402,079
2,020,676
$ 84,182,148
The notes to the basic financial statements are an integral part of this statement. -13-
Continued (Page 2 of 2)
122
CITY OF SHASTA LAKE
Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds
For the Year Ended June 30, 2025
Business-Type Activities - Enterprise Funds
Major Funds Nonmajor
Industrial
Water Electric Wastewater Park
OPERATING REVENUES
Charges for services $ 4,890,954 $ 38,815,909 $ 3,910,729 $ - Other revenues 28,140 329,487 - -
Total Operating Revenues 4,919,094 39,145,396 3,910,729 -
OPERATING EXPENSES
Salaries and benefits 2,068,451 3,504,683 1,661,760 -
Administration 718,386 3,889,311 660,981 8,038
Power and water 615,799 26,736,873 418,781 -
Insurance 118,319 380,361 138,648 601
Supplies 92,537 91,966 22,797 -
Repair and maintenance 371,312 1,452,787 714,442 -
Professional services 28,915 81,707 43,412 567
Depreciation 645,014 789,851 1,280,636 -
Other expense 6,234 532,985 9,000 -
Total Operating Expenses 4,664,967 37,460,524 4,950,457 9,206 Operating Income (Loss) 254,127 1,684,872 (1,039,728) (9,206)
NON-OPERATING REVENUES (EXPENSES)
Assessment revenue - - - 31,423
Interest income 150,698 1,434,600 296,522 -
Interest expense (76,916) - (220,983) (25,069)
Intergovernmental - - - -
Transfers in 350,000 - - -
Transfers out - (216,711) -
Total Non-Operating Revenues (Expenses) 423,782 1,217,889 75,539 6,354 Change in Net Position 677,909 2,902,761 (964,189) (2,852) Total Net Position - Beginning 13,239,173 45,889,941 19,141,126 1,284,811 Change in accounting principle (2,887) (3,243) (1,078) - Total Net Position - Beginning, Restated 13,236,286 45,886,698 19,140,048 1,284,811 Total Net Position - Ending $ 13,914,195 $ 48,789,459 $ 18,175,859 $ 1,281,959 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Change in Net Position of Business-Type Activities
The notes to the basic financial statements are an integral part of this statement. -14-
123
Governmental/
Business-Type
ds Activities
Internal
Service
Totals Funds
$ 47,617,592 $ 3,279,326
357,627 1,464
47,975,219 3,280,790
7,234,894 2,604,249
5,276,716 769,955
27,771,453 -
637,929 42,276
207,300 18,441
2,538,541 169,656
154,601 24,342
2,715,501 375,339
548,219 -
47,085,154 4,004,258
890,065 (723,468)
31,423 -
1,881,820 70,677
(322,968) (21,297)
- 10,763
350,000 216,711
(216,711) -
1,723,564 276,854
2,613,629 (446,614)
2,865,174
(16,481)
2,848,693
$ 2,402,079
(338,325)
$ 2,275,304
The notes to the basic financial statements are an integral part of this statement. -14-
124
CITY OF SHASTA LAKE
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2025
Business-Type Activities - Enterprise Funds
Major Funds Nonmajor
Industrial
Water Electric Wastewater Park
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 4,834,780 $ 38,864,733 $ 3,887,895 $ - Receipts from interfund services - - - -
Payments to suppliers (1,961,688) (34,244,745) (2,020,885) (10,501) Payments to employees (1,928,971) (2,942,102) (1,531,888) - Net Cash Provided by Operating Activities 944,121 1,677,886 335,122 (10,501)
CASH FLOWS FROM NON-CAPITAL FINANCING
ACTIVITIES
Interfund loans received - - - 102,512
Interfund loans repaid - - - (97,577)
Interfund loans repayments received - - - -
Grants, assessments, and other receipts - - - 76,423
Transfers from other funds 350,000 - - -
Transfers to other funds - (216,711) - -
Net Cash Provided (Used) by Non-Capital
Financing Activities 350,000 (216,711) - 81,358
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition of capital assets (912,975) (831,749) (35,378) - Proceeds from disposition of capital assets - 95,767 - - Principal paid on debt (192,590) - (404,882) (45,000)
Interest paid on debt (79,348) - (222,704) (25,857)
Net Cash Provided (Used) by Capital and
Related Financing Activities (1,184,913) (735,982) (662,964) (70,857)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments 179,285 1,652,151 344,022 -
Net Cash Provided by Investing Activities 179,285 1,652,151 344,022 - Net Increase (Decrease) in Cash and
Cash Equivalents 288,493 2,377,344 16,180 -
Balances - Beginning 3,115,735 30,130,057 6,437,898 -
Balances - Ending $ 3,404,228 $ 32,507,401 $ 6,454,078 $ - The notes to the basic financial statements are an integral part of this statement. -15-
Continued (Page 1 of 2)
125
Governmental/
Business-Type
ds Activities
Internal
Service
Totals Funds
$ 47,587,408 $ 1,464
- 3,281,586
(38,237,819) (1,009,567)
(6,402,961) (2,254,487)
2,946,628 18,996
102,512 345,116
(97,577) -
- -
76,423 10,762
350,000 216,711
(216,711) -
214,647 572,589
(1,780,102) (900,023)
95,767 -
(642,472) -
(327,909) (21,297)
(2,654,716) (921,320)
2,175,458 89,542
2,175,458 89,542
2,682,017 (240,193)
39,683,690 1,747,304
$ 42,365,707 $ 1,507,111
The notes to the basic financial statements are an integral part of this statement. -15-
Continued (Page 1 of 2)
126
CITY OF SHASTA LAKE
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2025
Business-Type Activities - Enterprise Funds
Major Funds Nonmajor
Industrial
Water Electric Wastewater Park
RECONCILIATION OF OPERATING INCOME
(LOSS) TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
Operating income (loss) $ 254,127 $ 1,684,872 $ (1,039,728) $ (9,206) Adjustments to reconcile operating income (loss) to
net cash provided by operating activities:
Depreciation 645,014 789,851 1,280,636 -
Decrease (increase) in:
Accounts receivable (83,377) (280,663) (22,834) -
Deposits - (1,075,474) - -
Prepaid costs 191 (50,400) - -
Inventory - (42,273) - -
Pension adjustment - deferred outflows 108,609 434,070 112,001 - OPEB adjustment - deferred outflows (7,770) (14,803) (26,045) - Increase (decrease) in:
Accounts payable (10,377) 89,392 (12,824) (1,295)
Salaries and benefits payable 2,629 10,582 2,427 -
Deposits payable (937) - - -
Compensated absences 6,063 28,639 6,268 -
Net pension liability (5,626) 29,200 (9,240) -
Net OPEB liability 37,448 68,981 44,772 -
Pension adjustment - deferred inflows (9,749) (8,663) (12,069) - OPEB adjustment - deferred inflows 7,876 14,575 11,758 - Net Cash Provided by Operating Activities $ 944,121 $ 1,677,886 $ 335,122 $ (10,501) The notes to the basic financial statements are an integral part of this statement. -16-
Continued (Page 2 of 2)
127
Governmental/
Business-Type
ds Activities
Internal
Service
Totals Funds
$ 890,065 $ (723,468)
2,715,501 375,339
(386,874) 2,260
(1,075,474) -
(50,209) -
(42,273) -
654,680 332,130
(48,618) (2,843)
64,896 15,103
15,638 6,857
(937) -
40,970 16,011
14,334 (47,398)
151,201 77,984
(30,481) (47,515)
34,209 14,536
$ 2,946,628 $ 18,996
The notes to the basic financial statements are an integral part of this statement. -16-
Continued (Page 2 of 2)
128
CITY OF SHASTA LAKE
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2025
Private Custodial
Purpose Fund
Trust Fund (Community Total
(Successor Facilities Fiduciary
ASSETS Agency) District) Funds
Current Assets:
Cash and investments $ 589,350 $ 606,527 $ 1,195,877
Receivables:
Interest 1,062 1,763 2,825
Taxes - 1,086 1,086
Total Current Assets 590,412 609,376 1,199,788
Noncurrent Assets:
Land held for resale 484 - 484
Total Noncurrent Assets 484 - 484
Total Assets 590,896 609,376 1,200,272
LIABILITIES
Current Liabilities:
Accounts payable - 2,615 2,615
Interest payable 2,438 - 2,438
Unearned revenues 402,625 - 402,625
Loans payable 385,000 - 385,000
Total Current Liabilities 790,063 2,615 792,678
Noncurrent Liabilities:
Loans payable 400,000 - 400,000
Total Noncurrent Liabilities 400,000 - 400,000
Total Liabilities 1,190,063 2,615 1,192,678
NET POSITION
Restricted for:
Successor Agency to the Redevelopment Agency (599,167) - (599,167) Individuals, organizations, and other governments - 606,761 606,761 Total Net Position $ (599,167) $ 606,761 $ 7,594
The notes to the basic financial statements are an integral part of this statement. -17-
129
CITY OF SHASTA LAKE
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Year Ended June 30, 2025
Private Custodial
Purpose Fund
Trust Fund (Community Total
(Successor Facilities Fiduciary
Agency) District) Funds
ADDITIONS
Taxes and assessments $ 411,703 $ 112,960 $ 524,663
Interest income 14,975 25,399 40,374
Total Additions 426,678 138,359 565,037
DEDUCTIONS
Administrative expenses 4,306 - 4,306
Distribution of funds held for others - 97,161 97,161
Interest expense 32,961 - 32,961
Total Deductions 37,267 97,161 134,428
Net Increase (Decrease) in Fiduciary Net Position 389,411 41,198 430,609 Total Net Position - Beginning (988,578) 565,563 (423,015) Total Net Position - Ending $ (599,167) $ 606,761 $ 7,594 The notes to the basic financial statements are an integral part of this statement. -18-
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Basic Financial Statements
• Notes to Basic Financial Statements
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133
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-19-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The City operates under a Council form of government and provides the following services: sanitation, electric, water and wastewater services; the construction and maintenance of highways, streets and infrastructure; recreational activities and cultural events.
Component Units
Generally accepted accounting principles require government financial statements to include the primary government and its component units. Component units of a governmental entity are legally separate entities for which the primary government is considered to be financially accountable and for which the nature and significance of their relationship with the primary government are such that exclusion would cause the combined financial statements to be misleading. The primary government is considered to be financially accountable if it appoints a majority of an organization’s governing body and is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to or impose specific financial burdens on the primary government.
Reporting for component units on the City’s financial statements can be blended or discretely presented.
Blended component units are, although legally separate entities, in substance part of the City’s operations and, therefore, data from these units are combined with data of the primary government. Discretely presented component units, on the other hand, would be reported in a separate column in the governmentwide financial statements to emphasize it is legally separate from the government.
For financial reporting purposes, the City’s basic financial statements include all financial activities that are controlled by or are dependent upon actions taken by the City Council. The financial statements of the individual component units may be obtained by writing to the City of Shasta Lake, 4477 Main Street, Shasta Lake, CA 96019.
Blended Component Units
Shasta Lake Public Financing Authority (PFA) - The Authority, established in 1994, was created for the purpose of financing public capital improvements. The City is financially accountable for this entity.
Financial accountability is primarily demonstrated by the City Council acting as the governing board for the PFA and its ability to impose its will. The financing activity of the PFA has been included in the City’s financial statements in the major debt service fund, Wastewater Treatment Debt.
The City of Shasta Lake Housing Authority - The Authority, established in 1994, was created for the purpose of administering housing programs. The housing programs and services are clustered in two broad categories: affordable housing and special projects. Because of the nature of the programs and their intended outcomes, the categories will often overlap. The City is financially accountable for this entity.
Financial accountability is primarily demonstrated by the City Council acting as the governing board for the Authority and its ability to impose its will. As an integral part of the City, the Authority is reported as a nonmajor special revenue fund of the City.
Discretely Presented Component Units
There are no component units of the City which meet the criteria for discrete presentation. 134
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-20-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) A. Reporting Entity (Continued)
Joint Agencies
The City is a participant in Small Cities Organized Risk Effort (SCORE), the purpose of which is for member cities to share in the administrative costs of providing liability and workers’ compensation insurance. SCORE is composed of 18 member cities and is governed by a board of directors appointed by the member cities. Complete financial information can be obtained from the SCORE offices at 2180 Harvard Street, Suite 460, Sacramento, CA 95815. The City is not financially accountable for this organization and therefore it is not a component unit under Statement Nos. 14, 39 and 61 of the Governmental Accounting Standards Board.
The City is a participant in the Redding Area Bus Authority (RABA), the purpose of which is to provide a public transit system to the City of Redding, City of Anderson, City of Shasta Lake, and adjacent urbanized areas in unincorporated areas of Shasta County. The governing board of RABA is comprised of eight members, five appointed by the City of Redding and one member by the City of Anderson, City of Shasta Lake, and Shasta County. Complete financial statements for RABA can be obtained from the City of Redding Finance Division, 777 Cypress Avenue, Redding, CA 96001. The City is not financially accountable for this organization and therefore it is not a component unit under Statement Nos. 14, 39 and 61 of the Governmental Accounting Standards Board.
B. Basis of Presentation
Government-Wide Financial Statements
The Statement of Net Position and Statement of Activities display information on all of the nonfiduciary activities of the City and its blended component units. These statements include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Interfund services provided and used are not eliminated in the process of consolidation. These statements distinguish between the governmental and business-type activities of the City. Governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent, on fees charged to external parties.
The Statement of Activities presents a comparison between direct expenses and program revenues for each different identifiable activity of the City’s business-type activities and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and; therefore, are clearly identifiable to a particular function. Program revenues include 1) charges paid by the recipients of goods and services offered by the program, 2) operating grants and contributions, and 3) capital grants and contributions. Taxes and other items not properly included among program revenues are reported instead as general revenues.
Fund Financial Statements
The fund financial statements provide information about the City’s funds, including fiduciary funds and blended component units. Funds are organized into three major categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories; each is displayed in a separate column. All remaining governmental and proprietary funds are separately aggregated and reported as nonmajor funds.
135
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-21-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Basis of Presentation (Continued)
Fund Financial Statements (Continued)
The City reports the following major governmental funds:
• The General fund is used to account for all revenues and expenditures necessary to carry out basic governmental activities of the City that are not accounted for through other funds. For the City, the General fund includes such activities as general government, public protection, community development, public ways and facilities, planning, and culture and recreation services. • The Grant fund is a special revenue fund used to account for the various grant programs of the City.
Funding comes primarily from grant revenues.
The City reports the following major proprietary funds:
• The Water fund is an enterprise fund used to account for activity related to providing customers with water service and billing for water service provided by the City. • The Electric fund is an enterprise fund used to account for activity related to providing customers with electric service and billing for electric service provided by the City. • The Wastewater fund is an enterprise fund used to account for activity related to providing customers with wastewater service and billing for wastewater service provided by the City.
The City reports the following additional fund types:
• Internal Service funds (ISF) account for the City’s motor pool and public works departments, which provide services to other departments on a cost reimbursement basis. • Private-purpose trust funds are used to report all fiduciary activities that (a) are not required to be reported in pension (and other employee benefit) trust funds or investment trust funds and (b) are held in a trust in which the assets are (a) administered through a trust in which the government itself is not a beneficiary, (b) dedicated to providing benefits to recipients in accordance with the benefit terms, and (c) legally protected from the creditors of the government. • Custodial funds are used to report fiduciary activities that are not required to be reported in pension trust funds, investment trust funds, or private-purpose trust funds.
C. Basis of Accounting and Measurement Focus
The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.
Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange, include property and sales tax, grants, entitlements, and donations. Under the accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied.
Revenues from sales tax are recognized when the underlying transactions take place. Revenues from grants, entitlements, and donations are recognized in the fiscal year in which all eligibility requirements have been satisfied.
136
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-22-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Basis of Accounting and Measurement Focus (Continued) Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available.
Property and sales taxes, interest, certain state and federal grants and charges for services are considered susceptible to accrual and are accrued when their receipt occurs within sixty days after the end of the fiscal year. Expenditures are generally recorded when a liability is incurred, as under accrual accounting.
However, debt service expenditures as well as expenditures related to claims and judgments are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in the various functions of the governmental funds. Proceeds of governmental long-term debt and acquisitions under capital leases are reported as other financing sources.
Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the enterprise and internal service funds are charges to customers for sales and services. Operating expenses for enterprise and internal service funds include the cost of sales and services, administrative expenses, and depreciation of capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.
Fiduciary funds include private-purpose trust funds and custodial funds. The fiduciary funds are reported using the accrual basis of accounting to recognize receivables and payables.
D. Non-Current Governmental Assets/Liabilities
Non-current governmental assets and liabilities, such as capital assets and long-term liabilities, are reported in the governmental activities column in the government-wide Statement of Net Position.
E. Cash and Cash Equivalents
For purposes of the accompanying Statement of Cash Flows, the City considers all highly liquid investments, including restricted cash and investments, with an original maturity of three months or less and amounts held in the City’s investment pool to be cash and cash equivalents.
F. Investments
The City pools cash and investments of all funds. Each fund’s share in this pool is displayed in the accompanying financial statements as cash and investments.
Investment transactions are recorded on the trade date. The fair value of investments is determined monthly.
Investments in nonparticipating interest-earning investment contracts are reported at cost; short term investments are reported at amortized cost, investments in the State of California Local Agency Investment Fund, an external pool, are reported at amortized cost which approximates fair value, and the fair value of all other investments are obtained by using quotations obtained from independent published sources or by the safekeeping institution. The fair value represents the amount the City could reasonably expect to receive for an investment in a current sale between a willing buyer and seller. 137
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-23-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) F. Investments (Continued)
Income from pooled investments is allocated to the individual funds based on the fund or participant’s average daily cash balance at quarter end in relation to the total pool investments. Income from non-pooled investments is recorded based on the specific investments held by the fund. The interest income is recorded in the fund that earned the interest.
G. Restricted Cash and Investments
Restricted assets in the governmental funds represent cash and investments held in the Wastewater Treatment Debt fund for debt service of $308,971.
H. Receivables
Receivables for governmental activities consist mainly of accounts, interest, taxes, intergovernmental revenues, and special assessments. Management records an allowance for doubtful accounts based on historical trends and the periodic aging of receivables. At June 30, 2025, the allowance for doubtful accounts was $843.
Receivables for business-type activities consist mainly of user fees, interest, and special assessments.
Management records an allowance for doubtful accounts based on historical trends and the periodic aging of receivables. At June 30, 2025, the allowance for doubtful accounts was $7,681.
I. Other Assets
Deposits
The City has recorded deposits in several funds. The General fund made payments during the year to various other agencies and the Electric fund of the City made payments during the year to Western Area Power Administration for future construction projects.
Inventory
Governmental fund inventories are recorded as expenditures at the time inventory is purchased rather than when consumed. Records are not maintained of inventory and supplies on hand, although these amounts are not considered material.
Inventories are stated at cost using the first-in, first-out method for proprietary funds. Inventory recorded by the proprietary funds includes electric power equipment. Proprietary fund inventories are recorded as expenses when consumed.
Prepaid Items
Payments made for services that will benefit periods beyond June 30, 2025, are recorded as prepaid costs in both the government-wide and fund financial statements. The cost of prepaid items is recorded as expenditures/expenses when consumed rather than when purchased. 138
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-24-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) J. Loans Receivable
The General Fund had loans receivable at June 30, 2025, as follows:
Loan to Shasta Lake Downtown Housing, L.P., for the purchase of land from the City with a 0% interest rate and deferred for 55 years. $ 947,000 Total General Fund Loan Receivable 947,000
The Grant major special revenue fund had loans receivable at June 30, 2025, as follows:
Loan to Shasta Lake Downtown Housing, L.P., for the development of multi-family residential units with an effective interest rate of 0% and deferred for 55 years. 2,223,619 Total Grant fund Loans Receivable 2,223,619
The CDBG Project nonmajor special revenue fund had loans receivable at June 30, 2025, as follows:
Loan to Shasta Lake Downtown Housing, L.P., for the development of multi-family residential units with an effective interest rate of 0% and deferred for 55 years. 1,331,634 Total CDBG Project fund Loans Receivable 1,331,634
The following nonmajor special revenue funds had loans receivable at June 30, 2025, as follows:
Low interest notes and related accrued interest to finance multi-family and single-family construction and rehabilitation projects and homebuyer assistance for low-income families. Loan terms are 15 to 55 years with an interest rate at 0 to 5 percent. The primary source of funding for these loans comes from grants from the Federal Community Development Block Grant (CDBG) program and Home Investment Partnerships (HOME) program and the State CalHome program. The CDBG, HOME and CalHome grants contain monitoring requirements to ensure grant compliance. These requirements are reflected in the loan agreements.
HOME 2,790,058
CDBG Housing Rehabilitation 71,805
CDBG Project 336,001
Housing Authority 505,818
Total Loans Receivable $ 8,205,935
K. Land Held for Resale
Land held for resale is generally acquired under Developer Disposition Agreements in the normal course of Low and Moderate Fund activity. The Developer Disposition Agreements provide for transfer of property to developers after certain obligations have been fulfilled. This property is carried at cost until an event occurs to indicate a net realizable value.
L. Capital Assets
Capital assets, including public domain (infrastructure such as roads, bridges, sidewalks, sewer, and similar items) are defined by the City as assets with a cost greater than $5,000 for equipment, $25,000 for buildings and improvements, and $50,000 for infrastructure assets. Capital assets are recorded at historical cost or estimated historical cost if actual historical cost is unavailable. Contributed capital assets are recorded at their acquisition value at the date of donation.
139
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-25-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) L. Capital Assets (Continued)
Capital assets used in operations are depreciated or amortized using the straight-line method over the assets’ estimated useful lives in the government-wide financial statements. The range of estimated useful lives by type of asset is as follows:
Depreciable Asset Estimated Lives
Electric, water and wastewater system assets 20 to 50 years Other system assets 20 to 33 years
Buildings 33 years
Equipment 5 to 10 years
Infrastructure 20 to 50 years
Maintenance and repairs are charged to operations when incurred. Betterments and major improvements which significantly increase values, change capacities or extend useful lives are capitalized. Upon sale or retirement of capital assets, the cost and related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the results of operations.
M. Property Tax
Shasta County assesses properties, bills, collects, and distributes property taxes to the City. The County remits the entire amount levied and handles all delinquencies, retaining interest and penalties.
Property taxes are levied on a fiscal year (July 1 - June 30). The secured property tax assessments are due on November 1 and February 1 and become delinquent after December 10 and April 10, respectively. The unsecured property tax assessments are due on August 1 and become delinquent after August 31. Property taxes become a lien on the property effective January 1 of the preceding year.
The City recognizes property taxes when the individual installments are due provided they are collected within 60 days after year end.
N. Interfund Transactions
Interfund transactions are reflected as either loans, services provided or used, reimbursements or transfers.
Loans reported as receivables and payables are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the noncurrent portion of interfund loans) as appropriate and are subject to elimination upon consolidation. Any residual balances outstanding between the governmental activities and the business-type activities are reported in the government-wide financial statements as “internal balances.” Advances between funds, as reported in the fund financial statements, are offset by a nonspendable fund balance account in applicable governmental funds to indicate that they are not in spendable form.
Services provided or used, deemed to be at market or near market rates, are treated as revenues and expenditures or expenses. These services provide information on the net cost of each government function and therefore are not eliminated in the process of preparing the government-wide statement of activities. 140
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-26-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) N. Interfund Transactions (Continued)
Reimbursements occur when the funds responsible for particular expenditures or expenses repay the funds that initially paid for them. Such reimbursements are reflected as expenditures or expenses in the reimbursing fund and reductions to expenditures or expenses in the reimbursed fund.
All other interfund transactions are treated as transfers. Transfers between funds are netted as part of the reconciliation to the government-wide presentation.
O. Unearned Revenue
Under the accrual and modified accrual basis of accounting, revenue may be recognized only when it is earned. When assets are recognized in connection with a transaction before the earnings process is complete, those assets are offset by a corresponding liability for unearned revenue.
P. Compensated Absences
In the government-wide financial statements, vested or accumulated vacation leave that is expected to be liquidated with expendable available financial resources is recorded as an expense and related liability with the current portion estimated based on historical trends. In the governmental fund financial statements, the expenditures and liabilities related to those obligations are recognized only when they mature. Vested or accumulated vacation leave of proprietary funds and in the government-wide financial statements is recorded as an expense and liability of those funds as the benefits accrue to employees.
Sick leave, however, does not vest to the employees and is payable only when sick leave is taken or when an individual has been employed by the City for ten years or longer. These employees receive 25 percent of their accrued sick pay, up to 100 hours, as additional termination pay.
In accordance with GASB Statement No. 101, Compensated Absences, leave is recognized when it is attributable to services already rendered, the leave accumulates, and the leave is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means. Management evaluates sick leave for other City employees to determine the amount that is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means.
In accordance with GASB Statement No. 16, no liability is recorded for non-vesting accumulating rights to receive sick pay benefits. However, a liability is recognized for that portion of accumulated sick leave benefits that is estimated to be taken as additional termination pay.
All vacation and sick leave is accrued when incurred in the government-wide and proprietary fund financial statements. In governmental funds, the cost of vacation and sick leave benefits is recognized when payments are made to employees.
Q. Pension
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pension and pension expense, information about the fiduciary net position of the City’s California Public Employees’ Retirement System (CalPERS) plan (Plan) and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 141
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-27-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Q. Pension (Continued)
Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:
Valuation Date June 30, 2023
Measurement Date June 30, 2024
Measurement Period July 1, 2023, to June 30, 2024
R. Other Postemployment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s plan (OPEB Plan) and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms.
Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:
Valuation Date June 30, 2023
Measurement Date June 30, 2024
Measurement Period June 30, 2023, to June 30, 2024
S. Deferred Outflows/Inflows of Resources
In addition to assets, the Statement of Financial Position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to future periods and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has two items which qualify for reporting in this category. These items relate to the outflows from changes in the net pension liability and the net OPEB liability and are reportable on the Statement of Net Position.
In addition to liabilities, the Statement of Financial Position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. The City has three types of items which qualify for reporting in this category. One item, unavailable revenue, is reported only in the governmental funds Balance Sheet.
The governmental funds report unavailable revenues for receivables that have not been received within the modified accrual period. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The second and third items relate to the inflows from changes in the net pension liability and the net OPEB liability and are reportable on the Statement of Net Position.
T. Estimates
The preparation of basic financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 142
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-28-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) U. Implementation of Governmental Accounting Standards Board (GASB) Statements The following Governmental Accounting Standards Board (GASB) Statements have been implemented, if applicable, in the current financial statements.
Statement No. 101, Compensated Absences. The objective of this statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures.
Statement No. 102, Certain Risk Disclosures. The objective of this statement is to provide users of government financial statements with essential information about its risks related to a government’s vulnerabilities due to certain concentrations or constraints.
V. Future Accounting Pronouncements
The following GASB Statements will be implemented, if applicable, in future financial statements:
Statement No. 103 “Financial Reporting Model Improvements” The requirements of this statement are effective for fiscal years beginning after June 15, 2025. (FY 25/26) Statement No. 104 “Disclosure of Certain Capital Assets” The requirements of this statement are effective for fiscal years beginning after June 15, 2025. (FY 25/26) NOTE 2: STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. Deficit Fund Balance
The following major special revenue fund had a deficit fund balance:
• The Grant fund had a fund balance deficit of $1,204,744, which is expected to be eliminated in future years through intergovernmental revenues.
The following nonmajor special revenue funds had deficit fund balances:
• The CDBG Project fund had a fund balance deficit of $66,328, which is expected to be eliminated in future years through grant revenues.
• The Wastewater P & FCC Charges fund had a fund balance deficit of $10,951, which is expected to be eliminated in future years through increased charges for services.
B. Restatement of Net Position
During fiscal year ended June 30, 2025, the City recorded an additional expenditure for sick leave due to the implementation of GASB No. 101 which was not previously reported in the financial statements resulting in an understatement of prior year expenditures of $48,147 as well as a correction to loans receivable and capital assets. The effect of this change in accounting principle and corrections are shown in the table below.
143
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-29-
NOTE 2: STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (CONTINUED) B. Restatement of Net Position (Continued)
During fiscal year 2025, a change in accounting principle and corrections in adjustments and restatements of beginning net position is as follows:
Reporting Units Affected by Adjustments to and Restatement of Beginning Balances
June 30, 2024 Change in Correction of
as Previously Accounting Loans Rec. and June 30, 2024
Reported Principle Capital Assets as Restated
Governmental Activities $ 62,791,616 ($ 24,458) $ 2,144,456 $ 64,911,614 Business-Type Activities 81,930,533 ( 23,689) - 81,906,844 General Fund 6,796,624 - 947,000 7,743,624
Other Governmental Funds 10,568,478 - 1,331,634 11,900,112 Water Fund 13,239,173 ( 2,887) - 13,236,286
Electric Fund 45,889,941 ( 3,243) - 45,886,698
Wastewater Fund 19,141,126 ( 1,078) - 19,140,048
Internal Service Funds 2,865,174 ( 16,481) - 2,848,693
C. Rebatable Arbitrage
The Tax Reform Act of 1986 instituted certain arbitrage restrictions with respect to the issuance of taxexempt bonds after August 31, 1986. Arbitrage regulations deal with the investment of all tax-exempt bond proceeds at an interest yield greater than the interest yield paid to bondholders. Generally, all interest paid to bondholders can be retroactively rendered taxable if applicable rebates are not reported and paid to the Internal Revenue Service (IRS) at least every five years. During the current year, the City performed calculations of excess investment earnings on various bonds and financing and at June 30, 2025, does not expect to incur a liability.
NOTE 3: CASH AND INVESTMENTS
A. Financial Statement Presentation
As of June 30, 2025, the City’s cash and investments are reported in the financial statements as follows:
Governmental activities $ 12,389,055
Business-type activities 43,872,818
Fiduciary funds 1,195,877
Total Cash and Investments $ 57,457,750
144
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-30-
NOTE 3: CASH AND INVESTMENTS (CONTINUED)
A. Financial Statement Presentation (Continued)
As of June 30, 2025, the City’s cash and investments consisted of the following:
Cash:
Cash on hand $ 2,072
Deposits (less outstanding checks) 4,198,243
Cash with fiscal agent 1,224,190
Total Cash 5,424,505
Investments:
In City’s pool 52,033,245
Total Investments 52,033,245
Total Cash and Investments $ 57,457,750
B. Cash
At year end, the carrying amount of the City’s cash deposits (including amounts in checking accounts and money market accounts) was $5,422,433 and the bank balance was $3,740,389. The difference between the bank balance and the carrying amount represents outstanding checks and deposits in transit. In addition, the City had cash on hand of $2,072.
Custodial Credit Risk for Deposits - Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the City will not be able to recover its deposits or collateral securities that are in the possession of an outside party. The City’s investment policy requires that deposits in banks must meet the requirements of the California Government Code. Under this code, deposits of more than $250,000 must be collateralized at 105 percent to 150 percent of the value of the deposit to guarantee the safety of the public funds. The first $250,000 of the City’s deposits are insured by the Federal Deposit Insurance Corporation (FDIC). Deposits of more than the $250,000 insured amount are collateralized.
C. Investments
Pursuant to Section 53646 of the Government Code, the City prepares an investment policy annually and presents it to the City Council for review and approval. The investment policy provides the basis for the management of a prudent, conservative investment program. Funds are invested to provide the maximum security of principal with secondary emphasis on achieving the highest return, while meeting daily cash flow needs. All investments are made in accordance with the Government Code and, in general, the investment policy is more restrictive than state law.
145
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-31-
NOTE 3: CASH AND INVESTMENTS (CONTINUED)
C. Investments (Continued)
Under the provisions of the City’s investment policy the City may invest or deposit in the following:
Municipal Securities
U.S. Treasuries
Federal Agencies
Bankers’ Acceptances
Federally Insured Time Deposits
Collateralized Time Deposits
Certificate of Deposit Placement Service (CDARS)
Negotiable Certificates of Deposit
Repurchase Agreement
Commercial Paper
State of California Local Agency Investment Fund (LAIF) Corporate Medium-Term Notes
Asset-Backed, Mortgage-Backed, Mortgage Pass-Through Securities, and Collateralized Mortgage Obligations
Money Market Mutual Funds
Supranationals
Fair Value of Investments - The City measures and records its investments using fair value measurement guidelines established by generally accepted accounting principles. These guidelines recognize a threetiered fair value hierarchy as follows:
Level 1: Quoted prices for identical investments in active markets; Level 2: Observable inputs other than quoted market prices; and, Level 3: Unobservable inputs
The City’s position in external investment pools is in itself regarded as a type of investment and looking through to the underlying investments of the pool is not appropriate. Therefore, the City’s investments in external investment pools are not recognized in the three-tiered fair value hierarchy described above.
At June 30, 2025, the City had the following recurring fair value measurements:
Fair Value Measurements Using
Investment Type Fair Value Level 1 Level 2 Level 3
Investments by Fair Value Level
Federal Agencies $ 4,906,547 $ 4,906,547 $ - $ -
U.S. Treasuries 13,872,470 13,872,470 - -
Collateralized Mortgage Obligations 3,501,636 3,501,636 - - Corporate Medium-Term Notes 12,360,543 12,360,543 - -
Supranationals 1,390,379 1,390,379 - -
Total Investments Measured at Fair Value 36,031,575 $36,031,575 $ - $ - Investments in External Investment Pools
Shasta County Investment Pool 308,971
LAIF 15,692,699
Total Investments $ 52,033,245
146
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-32-
NOTE 3: CASH AND INVESTMENTS (CONTINUED)
C. Investments (Continued)
Interest Rate Risk - Interest rate risk is the risk of loss due to the fair value of an investment falling due to interest rates rising. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. To limit the exposure to fair value losses resulting from increases in interest rates, the City’s investment policy limits investment maturities to a term appropriate to the need for funds so as to permit the City to meet all projected obligations. Any investments that mature more than five years from the date of purchase cannot occur without prior approval of the City Council.
As of June 30, 2025, the City had the following investments, all of which had a maturity of 5 years or less:
Maturities Weighted
Average
Interest Fair Maturity
Investment Type Rates 0-1 year 1-5 years Value (Years)
Federal Agencies 0.125-4.500% $ 2,072,374 $ 2,834,173 $ 4,906,547 1.15 U.S. Treasury 0.125-3.250% 2,933,865 10,938,605 13,872,470 2.13 Collateralized Mortgage Obligations 2.745-3.850% 573,156 2,928,480 3,501,636 2.49 Corporate Medium-Term Notes 0.350-4.600% 1,116,785 11,243,758 12,360,543 2.84 Supranationals 0.500% - 1,390,379 1,390,379 0.34
Shasta County Investment Pool Variable 308,971 - 308,971 - LAIF Variable 15,692,699 - 15,692,699 -
Total Investments $22,697,850 $29,335,395 $52,033,245 1.53 Credit Risk - Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The City’s investment policy sets specific parameters by type of investment to be met at the time of purchase. Presented below is the minimum rating required (where applicable) by the California Government Code or the City’s investment policy, and the actual rating as of year-end for each investment type.
147
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-33-
NOTE 3: CASH AND INVESTMENTS (CONTINUED)
C. Investments (Continued)
Minimum Standard &
Legal Poor’s Moody’s % of
Investment Type Rating Rating Rating Portfolio
Federal National Mortgage Association - - - 1.15%
Federal Farm Credit Bank - - - 1.52%
Federal Home Loan Bank - - - 6.77%
U.S. Treasury - - - 26.66%
Collateralized Mortgage Obligations - - - 6.73%
Corporate Medium-Term Notes A A A1 1.53%
Corporate Medium-Term Notes A A+ A1 2.36%
Corporate Medium-Term Notes A A- A1 1.82%
Corporate Medium-Term Notes A AA A1 0.42%
Corporate Medium-Term Notes A AA- A1 0.85%
Corporate Medium-Term Notes A A A2 3.07%
Corporate Medium-Term Notes A A- A2 0.78%
Corporate Medium-Term Notes A A+ A2 1.29%
Corporate Medium-Term Notes A A- A3 0.68%
Corporate Medium-Term Notes A A+ AA2 0.58%
Corporate Medium-Term Notes A AA AA2 1.14%
Corporate Medium-Term Notes A A AA3 1.77%
Corporate Medium-Term Notes A AA- AA3 0.78%
Corporate Medium-Term Notes A AAA AAA 0.93%
Corporate Medium-Term Notes A AAA NR 3.58%
Corporate Medium-Term Notes A NR AAA 2.19%
Supranationals Baa3 A A1 0.67%
Supranationals Baa3 A A2 0.58%
Supranationals Baa3 AAA AAA 1.41%
Shasta County Investment Pool N/A NR NR 0.59%
LAIF N/A NR NR 30.15%
Total 100.00%
Custodial Credit Risk - Custodial credit risk for investments is the risk that, in the event of the failure of a depository financial institution, the City will not be able to recover its deposits or collateral securities that are in the possession of an outside party. To mitigate the custodial credit risk the City’s investment policy requires that all of its managed investments be held in the name of the City in safekeeping by a third-party bank trust department.
Concentration of Credit Risk - Concentration of credit risk is the risk of loss attributed to the magnitude of the City’s investment in a single issuer of securities. When investments are concentrated in one issuer, this concentration presents a heightened risk of potential loss. The City’s investment policy contains limitations on the amount that can be invested in any one issuer. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) at June 30, 2025, that represent 5 percent or more of total City investments are as follows:
Percentage of
Investment Type Amount Invested Investments
Federal Home Loan Bank $ 3,521,579 6.77%
148
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-34-
NOTE 3: CASH AND INVESTMENTS (CONTINUED)
D. Investment in External Investment Pools
The Shasta County Pooled Investment Fund is a pooled investment fund program governed by the County which monitors and reviews the management of public funds maintained in the investment pool in accordance with the County investment policy and the California Government Code. The Board of Supervisors review and approve the investment policy annually. The County Treasurer prepares and submits a comprehensive investment report to the Board of Supervisors every month. The report covers the type of investments in the pool, maturity dates, par value, actual cost and fair value. Investments in the Shasta County Pooled Investment Fund are regarded as highly liquid as deposits and withdrawals can be made at any time without penalty. The Pool does not impose a maximum investment limit. Required disclosure information regarding categorization of investments and other deposit and investment risk disclosures can be found in the County’s financial statements. The County of Shasta’s financial statements may be obtained by contacting the County of Shasta Auditor-Controller’s office at 1450 Court Street, Suite 238, Redding, CA 96001.
The City of Shasta Lake maintains an investment in the State of California Local Agency Investment Fund (LAIF), managed by the State Treasurer. This fund is not registered with the Securities and Exchange Commission as an investment company but is required to invest according to California State Code. The Local Investment Advisory Board (Board) has oversight responsibility for LAIF. The Board consists of five members as designated by State Statute. At June 30, 2025, the City’s investment in LAIF valued at amortized cost was $15,692,699 and is the same as the value of the pool shares. There are no restrictions on withdrawal of funds. The total amount invested by all public agencies in LAIF on that day was $178.1 billion. Of that amount, 96.19 percent is invested in non-derivative financial products and 3.81 percent in structured notes and asset-backed securities.
149
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-35-
NOTE 4: CAPITAL ASSETS
Capital assets activity for the year ended June 30, 2025, was as follows:
Balance Transfers/ Balance
July 1, 2024 Additions Adjustments June 30, 2025
Governmental Activities
Capital Assets, Not Being Depreciated
Land, easements, and right of way $ 3,808,336 $ 45,678 ($ 47,746) $ 3,806,268 Construction in progress 1,054,364 2,894,209 ( 1,647,117) 2,301,456 Total Capital Assets, Not Being
Depreciated 4,862,700 2,939,887 ( 1,694,863) 6,107,724
Capital Assets, Being Depreciated
Infrastructure and land improvements 61,861,864 20,456 1,430,162 63,312,482 Buildings and improvements 16,380,756 - - 16,380,756
Machinery and equipment 758,063 32,582 - 790,645
Vehicles 34,571 - - 34,571
Total Capital Assets, Being Depreciated 79,035,254 53,038 1,430,162 80,518,454 Less Accumulated Depreciation For:
Infrastructure and land improvements ( 22,524,942) ( 1,014,254) 130,523 ( 23,408,673) Building and improvements ( 4,078,549) ( 441,068) - ( 4,519,617) Machinery and equipment ( 709,274) ( 18,393) - ( 727,667) Vehicles ( 34,571) - - ( 34,571)
Total Accumulated Depreciation ( 27,347,336) ( 1,473,715) 130,523 ( 28,690,528) Total Capital Assets, Being Depreciated,
Net 51,687,918 ( 1,420,677) 1,560,685 51,827,926
Governmental Activities Capital Assets,
Net $ 56,550,618 $ 1,519,210 ($ 134,178) $ 57,935,650
150
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-36-
NOTE 4: CAPITAL ASSETS (CONTINUED)
Balance Transfers/ Balance
July 1, 2024 Additions Retirements Adjustments June 30, 2025 Business-Type Activities
Capital Assets, Not Being Depreciated
Land $ 1,837,377 $ - $ - $ - $ 1,837,377
Construction in progress 1,863,657 1,820,158 ( 95,767) ( 272,739) 3,315,309 Total Capital Assets, Not Being
Depreciated 3,701,034 1,820,158 ( 95,767) ( 272,739) 5,152,686 Capital Assets, Being Depreciated
General and utility plant 99,488,956 - - 247,859 99,736,815 Buildings and improvements 4,205,223 - - 24,880 4,230,103 Equipment and vehicles 4,984,917 797,975 - - 5,782,892
Total Capital Assets,
Being Depreciated 108,679,096 797,975 - 272,739 109,749,810 Less Accumulated Depreciation For:
General and utility plant ( 56,033,531) ( 2,591,937) - - ( 58,625,468) Building and improvements ( 948,055) ( 123,061) - ( 391) ( 1,071,507) Equipment and vehicles ( 3,833,821) ( 375,842) - - ( 4,209,663) Total Accumulated Depreciation ( 60,815,407) ( 3,090,840) - ( 391) ( 63,906,638) Total Capital Assets,
Being Depreciated, Net 47,863,689 ( 2,292,865) - 272,348 45,843,172 Business-Type Activities
Capital Assets, Net $51,564,723 ($ 472,707) ($ 95,767) ($ 391) $ 50,995,858 Depreciation
Depreciation expense was charged to governmental activities as follows:
General government $ 162,932
Public safety 7,917
Public ways and facilities 1,185,713
Culture and recreation 117,153
Total Depreciation and Expense – Governmental Activities $ 1,473,715 Depreciation expense was charged to business-type activities as follows:
Water $ 645,014
Electric 789,851
Wastewater 1,280,636
Internal Service Funds 375,339
Total Depreciation Expense – Business-Type Activities $ 3,090,840 Construction in Progress
Construction in progress for governmental activities relates primarily to work performed on road and bridge projects. Construction in progress for business-type activities relates primarily to work performed on water projects, electric projects, and the wastewater treatment plant. 151
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-37-
NOTE 5: INTERFUND TRANSACTIONS
Due From/To Other Funds
During the course of operations, transactions occur between funds to account for goods received or services rendered. These receivables and payables are classified as due from or due to other funds. In addition, when funds overdraw their share of pooled cash, the receivables and payables are also classified as due from or due to other funds.
The following are due from and due to balances as of June 30, 2025:
Due From Due To
Other Funds Other Funds
General Fund $ 1,393,082 $ -
Grant fund - 804,787
Nonmajor governmental funds - 140,667
Nonmajor enterprise funds - 102,512
Internal service funds - 345,116
Total $ 1,393,082 $ 1,393,082
Transfers
Transfers are indicative of funding for capital projects, lease payments or debt service, subsidies of various City operations and re-allocations of special revenues.
The following are the interfund transfers for fiscal year ended June 30, 2025:
Transfers Transfers
In Out
General Fund $ 1,000 $ -
Nonmajor governmental funds - 351,000
Water 350,000 -
Electric - 216,711
Internal service funds 216,711 -
Total $ 567,711 $ 567,711
NOTE 6: UNEARNED/UNAVAILABLE REVENUES
At June 30, 2025, components of unearned and unavailable revenues were as follows:
Unearned Unavailable Totals
General Fund
Utility overpayments and deposit refunds $ 24,447 $ - $ 24,447 Grants receivable - 85,937 85,937
Grant Fund
Grants receivable - 1,248,518 1,248,518
ARPA Funds 243,554 - 243,554
Nonmajor Governmental Funds
Grants receivable - 583,863 583,863
Total $ 268,001 $ 1,918,318 $ 2,186,319
152
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-38-
NOTE 7: LONG-TERM LIABILITIES
The following is a summary of changes in long-term liabilities for the year ended June 30, 2025:
Amounts
Balance Adjustments/ Balance Due Within
Type of Indebtedness July 1, 2024 Additions Retirements June 30, 2025 One Year Governmental Activities
Revenue Bonds $ 1,982,775 $ - ($ 143,040) $ 1,839,735 $ 152,000 Special Assessment Bonds 20,000 - ( 3,000) 17,000 3,000 Certificates of Participation 10,377,000 - ( 438,000) 9,939,000 449,000 Unamortized Discount ( 226,993) - 14,187 ( 212,806) ( 14,187) Certificates of Participation, Net 10,150,007 - ( 423,813) 9,726,194 434,813 Compensated Absences 190,157 26,947 - 217,104 174,589
Total Governmental Activities $ 12,342,939 $ 26,947 ($ 569,853) $11,800,033 $ 764,402 Business-Type Activities
Loans $ 15,570,685 $ - ($ 597,470) $14,973,215 $ 610,190 Special Assessment Bonds 515,000 - ( 45,000) 470,000 50,000 Compensated Absences 364,995 80,673 - 445,666 445,667
Total Business-Type Activities $ 16,450,680 $ 80,673 ($ 642,470) $15,888,881 $1,105,857 Internal service funds predominately serve the enterprise funds. Accordingly, long-term liabilities for these funds are included as part of the above totals for business-type activities.
Compensated absences for the governmental activities are generally liquidated by the fund where the accrued liability occurred, which is primarily the General fund. Principal and interest payments for the governmental activities are generally paid by a debt service fund.
For the business-type activities, all debt is accounted for in the proprietary fund where the liability occurred.
Individual issues of debt payable outstanding at June 30, 2025, are as follows:
Governmental Activities
Revenue Bonds:
1995 Wastewater Revenue Bonds - Series A issued by the Shasta Lake Public Financing Authority to finance construction of the Wastewater Treatment Plant expansion. Principal payments, ranging from $49,000 to $210,000, are due annually on September 2, and mature September 2, 2034. Interest payments at 4.50% are due semi-annually. The bonds are secured by property assessment payments.
1995 Wastewater Revenue Bonds - Series B issued by the Shasta Lake Public Financing Authority to finance construction of the Wastewater Treatment Plant expansion. Principal payments, ranging from $6,000 to $27,000, are due annually on September 2, and mature September 2, 2034. Interest payments at 4.50% are due semi-annually. The bonds are secured by property assessment payments.
Total Revenue Bonds
$ 1,633,960
205,775
1,839,735
153
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-39-
NOTE 7: LONG-TERM LIABILITIES (CONTINUED)
Governmental Activities (Continued)
Special Assessment Bonds:
Riddle Road Assessment Bonds transferred from Shasta Dam Area Public Utility District - voter approved 1989. $64,932 issue of bonds (Farmers’ Home Administration) for the assessment district share of construction costs for the Riddle Road water system. Principal payments, ranging from $900 to $4,000, plus interest at 5%, are due annually on September 2. Final maturity of the issue is scheduled for 2029. The bonds are secured by property assessment payments.
Total Special Assessment Bonds
17,000
17,000
Certificates of Participation:
2018 Certificates of Participation issued February 15, 2018, in the amount of $2,500,000, payable in annual installments of $31,000 to $114,000, with an interest rate of 3.25% and maturity on January 1, 2058. The certificates were used to finance construction of certain improvements to the City Hall/Community Center Project and are secured by lease payments pursuant to a lease-leaseback arrangement, as well as a lien on the property. 2,259,000
2019 Certificates of Participation issued October 8, 2019, in the amount of $9,500,000, payable in annual installments of $280,000 to $645,000 with an interest rate of 2.05 to 3.70% and maturity on July 15, 2039. The certificates were used to refinance a portion of the City’s unfunded actuarial accrued liability (UAAL) with respect to its payments to CalPERS and are secured by lease payments pursuant to a lease-leaseback arrangement, as well as a lien on the property. 7,680,000 Total Certificates of Participation 9,939,000
Total Governmental Activities $ 11,795,735
Business-Type Activities
Loans:
State of California Infrastructure Bank Water Loan used to finance the Reservoir and Water System Improvement Project (Project), issued in the amount of $5,000,000, payable in annual principal payments ranging from $115,944 to $259,579 with interest payable semi-annually at an annual rate of 3.03%. The loan also consists of an annual fee ranging from $779 to $15,000. The loan is amortized over 30 years with the final payment due in 2034. The loan is secured by a lien on and pledge of the net system of revenues.
California State Water Resources Control Board Small Community Wastewater Loan, issued in the amount of $15,000,000, payable in annual installments of $249,617 with an interest rate of 1.70%. Principal payments are due annually on March 30 beginning 2021 with the final payment due March 30, 2050. The loan is being used to finance wastewater treatment plant facility upgrades. The loan is secured by a lien on and pledge of net revenues and a reserve fund.
Total Loans
$ 2,277,867
12,695,348
14,973,215
154
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-40-
NOTE 7: LONG-TERM LIABILITIES (CONTINUED)
Business-Type Activities (Continued)
Special Assessment Bonds:
Shasta Gateway Industrial Park Assessment Bonds transferred from Shasta Dam Area Public Utility District - voter approved 1989. $64,932 issue of bonds (Farmers’ Home Administration) for the assessment district share of construction costs for the Shasta Gateway Industrial Park water system. Principal payments, ranging from $900 to $4,000, plus interest at 5%, are due annually on September 2. Final maturity of the issue is scheduled for 2029. The bonds are secured by property assessment payments.
Total Special Assessment Bonds
Total Business-Type Activities
470,000
470,000
$ 15,443,214
Following is a schedule of debt payment requirements of governmental activities and business-type activities to maturity for long-term debt, excluding compensated absences that have indefinite maturities.
Governmental Activities
Revenue Bonds
Year Ended
June 30 Principal Interest Total
2026 $ 152,000 $ 79,335 $ 231,335
2027 155,000 72,428 227,428
2028 164,000 65,250 229,250
2029 172,000 57,690 229,690
2030 177,000 49,838 226,838
2031-2035 1,019,735 119,048 1,138,783
Total $ 1,839,735 $ 443,589 $ 2,283,324
Special Assessment Bonds
Year Ended
June 30 Principal Interest Total
2026 $ 3,000 $ 625 $ 3,625
2027 3,000 450 3,450
2028 4,000 250 4,250
2029 4,000 75 4,075
2030 3,000 - 3,000
Total $ 17,000 $ 1,400 $ 18,400
155
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-41-
NOTE 7: LONG-TERM LIABILITIES (CONTINUED)
Governmental Activities (Continued)
Certificates of Participation
Year Ended
June 30 Principal Interest Total
2026 $ 449,000 $ 327,849 $ 776,849
2027 460,000 315,218 775,218
2028 472,000 301,803 773,803
2029 488,000 287,639 775,639
2030 499,000 272,853 771,853
2031-2035 2,765,000 1,096,270 3,861,270
2036-2040 3,287,000 561,013 3,848,013
2041-2045 337,000 225,680 562,680
2046-2050 396,000 167,147 563,147
2051-2055 465,000 98,474 563,474
2056-2058 321,000 21,254 342,254
Total $ 9,939,000 $ 3,675,200 $ 13,614,200
Business-Type Activities
Loans
Year Ended
June 30 Principal Interest Total
2026 $ 610,190 $ 281,834 $ 892,024
2027 623,202 268,731 891,933
2028 636,516 255,323 891,839
2029 650,138 241,605 891,743
2030 664,076 227,566 891,642
2031-2035 3,541,106 915,504 4,456,610
2036-2040 2,521,123 616,805 3,137,928
2041-2045 2,742,829 440,948 3,183,777
2046-2050 2,984,035 153,896 3,137,931
Total $ 14,973,215 $ 3,402,212 $18,375,427
Special Assessment Bonds
Year Ended
June 30 Principal Interest Total
2026 $ 50,000 $ 23,363 $ 73,363
2027 50,000 20,738 70,738
2028 55,000 17,982 72,982
2029 55,000 15,094 70,094
2030 60,000 12,075 72,075
2031-2032 200,000 16,014 216,014
Total $ 470,000 $ 105,266 $ 575,266
156
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-42-
NOTE 8: NET POSITION
The government-wide and proprietary fund financial statements utilize a net position presentation. Net position is categorized as net investment in capital assets, restricted and unrestricted. • Net investment in capital assets - consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction or improvement of those assets.
• Restricted net position - consists of net position with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. • Unrestricted net position - all other net position that does not meet the definition of “restricted” or “net investment in capital assets”.
Net Position Restricted by Enabling Legislation
The government-wide Statement of Net Position reports $9,635,343 of restricted net position, of which $3,619,452 is restricted by enabling legislation.
Net Position Flow Assumption
When a government funds outlays for a particular purpose from both restricted and unrestricted resources, a flow assumption must be made about the order in which the resources are considered to be applied. When both restricted and unrestricted net position are available, it is considered that restricted resources are used first, followed by the unrestricted resources.
NOTE 9: FUND BALANCES
As prescribed by GASB Statement No. 54, governmental funds report fund balance in classifications based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the funds can be spent. Fund balances for governmental funds can be made up of the following:
• Nonspendable fund balance - amounts that cannot be spent because they are either (a) not in spendable form, or (b) legally or contractually required to be maintained intact. The “not in spendable form” criterion includes items that are not expected to be converted to cash, for example:
inventories and prepaid amounts.
• Restricted fund balance - amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation. Restrictions may effectively be changed or lifted with the consent of resource providers. • Committed fund balance - amounts that can only be used for the specific purposes determined by formal action of the City’s highest level of decision-making authority. The City Council is the highest level of decision-making authority for the City that can, by adoption of an ordinance commit fund balance. Once adopted, the limitation imposed remains in place until a similar action is taken to remove or revise the limitation. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period. 157
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-43-
NOTE 9: FUND BALANCES (CONTINUED)
• Assigned fund balance - amounts that are constrained by the City’s intent to be used for specific purposes. The intent can be established by the City Council or official or body to whom the Council has delegated its authority.
• Unassigned fund balance - the residual classification for the City’s General fund that includes all amounts not contained in the other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes.
The fund balances for all major and nonmajor governmental funds as of June 30, 2025, were distributed as follows:
Other
General Grant Governmental
Fund Fund Funds Totals
Nonspendable:
Prepaid costs $ 15,706 $ - $ - $ 15,706
Loans receivable 947,000 2,223,619 5,035,316 8,205,935
Subtotal 962,706 2,223,619 5,035,316 8,221,641
Restricted for:
HOME - - 1,877,939 1,877,939
Wastewater treatment debt - - 2,495,050 2,495,050
Law enforcement fund (COPS) - - 14,131 14,131
Water P&FCC charges - - 217,895 217,895
State trafficway - - 1,763,453 1,763,453
Electric P&FCC charges - - 360,220 360,220
CDBG housing rehabilitation - - 110,307 110,307
Parks P&FCC charges - - 358,211 358,211
Former RDA low/moderate - - 586,694 586,694
Debt service 688,715 - 26,650 715,365
Subtotal 688,715 - 7,810,550 8,499,265
Unassigned 5,898,092 ( 1,204,744) ( 413,280) 4,280,068
Total $ 7,549,513 ($ 1,204,744) $ 12,432,586 $ 21,000,974 Fund Balance Flow Assumptions
When a government funds outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance), a flow assumption must be made about the order in which the resources are considered to be applied. When both restricted and unrestricted fund balance are available, it is considered that restricted fund balance is depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance.
Unassigned fund balance is applied last.
158
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
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NOTE 9: FUND BALANCES (CONTINUED)
Fund Balance Policy
The City Council adopted the City of Shasta Lake Fund Balance Policy in 2011. The policy establishes procedures for reporting fund balance classifications, establishes prudent reserve requirements, and establishes a hierarchy of fund balance expenditures. The policy also provides for a measure of financial protection for the City against unforeseen circumstances and to comply with GASB Statement No. 54.
NOTE 10: PENSION PLAN
A. General Information about the Pension Plan
Plan Description
All qualified permanent and probationary employees are eligible to participate in the City’s Miscellaneous Employee Pension Plan, a cost-sharing multiple employer-defined benefit pension plan administered by the California Public Employees’ Retirement System (CalPERS). 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.
Effective January 1, 2013, the City added retirement tiers for the Miscellaneous Rate Plan for new employees as required under the Public Employee Pension Reform Act (PEPRA). Classic employees are generally defined as employees who have been a member of any public retirement system who have had less than a six-month break in service. Applicable new hires to the City defined as classic employees as determined by PERS will be subject to the non-PEPRA tier (i.e., Miscellaneous). New non-classic employees hired on or after January 1, 2013, will be subject to new, lower pension formulas, caps on pensionable income levels and new definitions of pensionable income. In addition, new non-classic employees will be required to contribute half of the total normal cost of the pension benefit unless impaired by an existing Memorandum of Understanding. The cumulative effect of these PEPRA changes will ultimately reduce the City’s retirement costs.
Summary of Rate of Tiers and Eligible Participants
Open for New Enrollment
Miscellaneous PEPRA Miscellaneous members hired on or after January 1, 2013 Closed to New Enrollment
Miscellaneous First Tier Miscellaneous employees hired before January 1, 2013 Miscellaneous Second Tier Miscellaneous employees hired before January 1, 2013 Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 (age 52 for Miscellaneous Plan members if membership date is on or after January 1, 2013) with statutorily reduced benefits. Retirement benefits are paid monthly for life. 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 costof-living adjustments for the plan are applied as specified by the Public Employees’ Retirement Law. 159
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
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NOTE 10: PENSION PLAN (CONTINUED)
A. General Information about the Pension Plan (Continued) Benefits Provided (Continued)
Each Rate Tier’s specific provisions and benefits in effect at June 30, 2025, are summarized as follows:
Monthly Benefits
Benefit Retirement as a % of
Formula Age Eligible Compensation
Miscellaneous First Tier 3.0% @ 60 50-60 2.000% - 3.000% Miscellaneous Second Tier 2.0% @ 60 50-63 1.092% - 2.418% Miscellaneous PEPRA 2.0% @ 62 52-67 1.000% - 2.500%
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for all Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.
Employer Employee Employer Paid
Contribution Contribution Member
Rates Rates Contribution Rates
Miscellaneous First Tier 17.330% 8.000% 0.000%
Miscellaneous Second Tier 10.710% 7.000% 0.000%
Miscellaneous PEPRA 7.870% 7.750% 0.000%
For the year ended June 30, 2025, the contributions recognized as part of pension expense were as follows:
Contributions-Employee
Contributions-Employer (Paid by Employer)
Miscellaneous $ 617,200 $ -
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pension
The City’s net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability of the Plan is measured as of June 30, 2024, and the total pension liability for the Plan used to calculate the net pension liability was determined by 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 plan relative to the projected contributions of all participating employers, actuarially determined. The City’s proportionate share of the net pension liability as of the June 30, 2024, and 2025, was as follows:
Proportion Proportion Change-
June 30, 2024 June 30, 2025 Increase (Decrease)
Miscellaneous 0.05332% 0.05261% -0.00071%
160
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
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NOTE 10: PENSION PLAN (CONTINUED)
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pension (Continued)
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:
Proportionate
Share of Net
Pension Liability
Miscellaneous $ 2,544,372
Total Net Pension Liability (Asset) $ 2,544,372
For the year ended June 30, 2025, the City recognized pension expense of $2,062,030. At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Pension contributions subsequent to the measurement date $ 790,552 $ - Change in assumptions 65,396 -
Difference between expected and actual experience 219,984 ( 8,584) Difference between projected and actual earnings on
pension plan investments 146,476 -
Difference between City contributions and proportionate share of contributions. - ( 1,669,479)
Amortization due to differences in proportions 1,915,787 - Total $ 3,138,195 ($ 1,678,063)
$790,552 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2026. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Fiscal
Year Ended
June 30
2026 $ 701,617
2027 84,139
2028 ( 65,980)
2029 ( 50,196)
Thereafter -
Total $ 669,580
161
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-47-
NOTE 10: PENSION PLAN (CONTINUED)
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pension (Continued)
Actuarial Assumptions
The total pension liability in the June 30, 2023, actuarial valuation was 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%
Investment Rate of Return 6.90%
Inflation 2.30%
Salary Increases Varies by entry-age and service
Mortality Rate Table Derived using CalPERS’ membership data for all funds Post-Retirement Benefit Increase Contract COLA up to 2.30% until Purchasing Power Protection Allowance Floor on Purchasing Power
applies
The mortality table used was developed based on CalPERS-specific data. The rates incorporate Generational Mortality to capture ongoing mortality improvement using 80 percent of Scale MP-2020 published by the Society of Actuaries. For more details, please refer to the CalPERS 2021 experience study that can be found on the CalPERS website.
Long-Term Expected Rate of Return
In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations, as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated and combined with risk estimates, are used to project compound (geometric) returns over the long-term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return.
162
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-48-
NOTE 10: PENSION PLAN (CONTINUED)
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pension (Continued)
Long-Term Expected Rate of Return (Continued)
The expected real rates of return by asset class are as follows:
Assumed Real Return
Asset Years 1-10
Asset Class Allocation (1, 2)
Global Equity – Cap-Weighted 30.0% 4.54%
Global Equity – Non-Cap-Weighted 12.0% 3.84%
Private Equity 13.0% 7.28%
Treasury 5.0% 0.27%
Mortgage-backed Securities 5.0% 0.50%
Investment Grade Corporates 10.0% 1.56%
High Yield 5.0% 2.27%
Emerging Market Debt 5.0% 2.48%
Private Debt 5.0% 3.57%
Real Assets 15.0% 3.21%
Leverage ( 5.0%) ( 0.59%)
Total 100.0%
(1) An expected price inflation of 2.30% used for this period (2) Figures are based on the 2021-22 Asset Liability Management Study Discount Rate
The discount rate used to measure the total pension liability was 6.90 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Sensitivity of Proportionate Share of the Net Pension Liability (Asset) to Changes in the Discount Rate
The following presents the City’s proportionate share of the net pension liability as of the measurement date, calculated using the discount rate for the Plan, as well as what the City’s proportionate share of the net pension liability (asset) would be if it were calculated using as discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:
1% Decrease Discount Rate 1% Increase
5.90% 6.90% 7.90%
Miscellaneous $ 8,989,570 $ 2,544,372 ($ 2,760,975)
163
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-49-
NOTE 11: OTHER POSTEMPLOYMENT BENEFITS (OPEB)
A. General Information about the OPEB Plan
Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.
Plan Description
The City’s defined benefit OPEB plan (Plan) provides OPEB for all permanent full-time employees of the City. The Plan is an agent multiple employer-defined benefit OPEB plan administered by the California Public Employees’ Retirement System (CalPERS). The City Council has the authority to establish and amend the benefit terms of the Plan.
The City provides medical coverage for qualifying retirees. Retirees eligible for medical coverage can also elect dental and vision coverage, but the dental and vision coverage is entirely at the retiree’s own expense.
Medical coverage is currently provided through CalPERS as permitted under the Public Employees’ Medical and Hospital Care Act (PEMHCA). This coverage requires the employee to satisfy the requirements for retirement under CalPERS, which requires attainment of age 50 (age 52, if a miscellaneous employee new to PERS on or after January 1, 2013) with 5 years of State or public agency service or approved disability retirement.
Unless covered by a PEMHCA Vesting resolution, the employee must begin his or her retirement warrant within 120 days of terminating employment with the City to be eligible to continue medical coverage through the City and be entitled to the employer subsidy.
If an eligible employee is not already enrolled in the medical plan, he or she may enroll within 60 days of retirement or during any future open enrollment period. Coverage may be continued at the retiree’s option for his or her lifetime. A surviving spouse and other eligible dependents may also continue coverage.
Employees Covered by Benefit Terms
At the OPEB liability measurement date of June 30, 2024, the following employees were covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefit payments 29 Inactive employees entitled to but not yet receiving benefit payments 10 Active employees 57
Total 96
Contributions
As a condition of participation in the CalPERS medical program, the City is obligated to contribute toward the cost of retiree medical coverage for the retiree’s lifetime or until coverage is discontinued. A spouse and other eligible dependents may also continue coverage and receive the City contribution. 164
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-50-
NOTE 11: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) A. General Information about the OPEB Plan (Continued)
Contributions (Continued)
The City currently maintains two different types of resolutions with CalPERS defining the level of the City’s contribution. The resolutions apply to those eligible for coverages, based on the employee’s hire date and/or irrevocable election:
• Retirees hired before June 1, 2010, are covered by ‘unequal contribution’ resolutions, initially adopted in 1994. For active employees, the City contributes 100 percent of the premium for the employee and his or her dependents, subject to a maximum monthly amount. The following chart shows the maximum monthly amounts (“City Non-Vesting Caps”) for active employee medical costs for 2024:
City Non – Vesting Caps
Group Ee Only Ee + Sp Ee + Fam
Management $ 1,013.70 $ 2,027.40 $ 2,635.62
Teamsters 1,013.70 2,027.40 2,635.62
IBEW 1,013.70 2,027.40 2,635.62
The City’s contribution for retirees covered by these unequal contribution resolutions is determined by multiplying: (a) 5 percent times (b) the number of years the employer has been contracted with PEMHCA times (c) the contribution the employer makes towards active employee health benefits, as described above.
The maximum increase in the dollar amount of the monthly retiree contribution for anyone fiscal year is $100. In no event will the City’s total subsidy for retiree medical expenses exceed the retiree’s actual premium.
Employees hired prior to June 1, 2010, were given the option to have their benefits calculated using the vesting resolution (described below) if they so desired. All current active employees hired prior to June 1, 2010 have chosen that option.
• Retirees hired on or after June 1, 2010, are covered by PEMHCA ‘Vesting’ resolutions. Under these resolutions, the City’s contribution toward retiree medical benefits is determined as the lesser of:
• 100 percent of the medical plan premiums for the retiree and his or her eligible dependents; and • The “100/90” formula maximum benefits (caps) multiplied by the vesting percent.
The cap amounts vary by coverage level and are adjusted annually. For 2022, the caps are $1,060 (employee), $2,039 (employee plus one) and $2,551 (employee plus family). 165
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-51-
NOTE 11: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) A. General Information about the OPEB Plan (Continued)
Contributions (Continued)
The vested percent is based on the retiree’s years of CalPERS membership, as shown in the table below, though a minimum of 5 years of City service is required to be vested.
Employees who retire on approved disability retirement are 100 percent vested regardless of service.
Years of
Qualifying
Service Vested Percent
Years of
Qualifying
Service Vested Percent
Less than 10
10 11
12 13
14 0%
50%
55%
60%
65%
70%
15 16
17 18
19 20 or more
75%
80%
85%
90%
95%
100%
Employees covered by the PEMHCA vesting resolution who complete at least 20 years of service with the City are entitled to these subsidized medical benefits from the City once they commence their CalPERS retirement warrant, even if they terminate employment prior to reaching age 50.
Current premium rates: The 2025 CalPERS monthly medical plan rates in the Region 1 area rate group are shown in the table below, though other regional rates were also applied. The CalPERS administration fee is assumed to be expensed each year and has not been projected as an OPEB liability in this valuation.
Region 1 2025 Health Plan Rates
Activities and Pre-Med Retirees Medicare Eligible Retirees Plan Ee Only Ee & 1 Ee & 2+ Ee Only Ee & 1 Ee & 2+
Kaiser HMO $ 1,112.90 $ 2,225.80 $ 2,893.54 $ 408.31 $ 816.62 $ 1,484.36 PERS Platinum PPO 1,013.70 2,027.40 2,635.62 546.13 1,092.26 1,700.48 PERS Gold PPO 1,476.10 2,952.20 3,837.86 584.70 1,169.40 2,055.06 B. Net OPEB Liability
The City’s net OPEB Liability of $2,770,803 was measured as of June 30, 2024, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of June 30, 2023. 166
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-52-
NOTE 11: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) B. Net OPEB Liability (Continued)
Actuarial Assumptions and Other Inputs
The total OPEB liability in the June 30, 2023, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:
Valuation Date June 30, 2023
Funding Method Entry Age Normal Cost, level of percent of pay Asset Valuation Method Market value of assets
Discount Rates 5.95% as of June 30, 2024, and 5.65% as of June 30, 2023 Participants Valued Only current active employees and retired participants and covered dependents are valued. No future entrants are considered in this valuation.
Salary Increase 3.00% per year; since benefits do not depend on salary, this is used only to allocate the cost of benefits between service years and to determine the amortization payment component of the Actuarially Determined Contributions
General Inflation Rate 2.50% per year
Healthcare cost trend rates 6.00% on Jan. 2026, fluctuating down to an ultimate rate of 3.90% for 2075 and later years
Mortality rates CalPERS 2021 experience study
Demographic actuarial assumptions used in the valuation are based on the 2021 experience study of the California Public Employees Retirement System using data from 1997 to 2019, except for a different basis used to project future mortality improvements.
Discount Rate
The discount rate used to measure the total OPEB liability was 5.95 percent. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability. 167
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-53-
NOTE 11: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) C. Changes in the Net OPEB Liability (Asset)
The table below shows the changes in the total OPEB liability, the Plan fiduciary net position (i.e. fair value of the Plan assets), and the net OPEB liability (asset) during the measurement period ending on June 30, 2024, for the City’s proportionate share.
Increases (Decreases)
Total OPEB Plan Fiduciary Net OPEB
Liability Net Position Liability/(Asset)
Balances at Fiscal Year Ending June 30, 2024 $ 11,029,772 $ 8,796,222 $ 2,233,550 Changes for the year:
Service cost 651,115 - 651,115
Interest 647,503 - 647,503
Difference between expected and actual experience 912,777 - 912,777 Change of assumptions ( 515,349) - ( 515,349)
Contributions – employer - 441,306 ( 441,306)
Net investment income - 720,319 ( 720,319)
Benefit payments, ( 441,306) ( 441,306) -
Administrative expense - ( 2,832) 2,832
Net Changes 1,254,740 717,487 537,253
Balances at Fiscal Year Ending June 30, 2025 $ 12,284,512 $ 9,513,709 $ 2,770,803 Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net OPEB liability of the City, as well as what the City’s net OPEB 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 discount rate:
1% Decrease Discount Rate 1% Increase
4.95% 5.95% 6.95%
Net OPEB liability (asset) $ 4,620,905 $ 2,770,803 $ 1,263,532 Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rates The following presents the net OPEB liability of the City, as well as what the City’s net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1- percentage-point higher than the current healthcare cost trend rates:
Healthcare Cost
1% Decrease Trend Rates 1% Increase
Net OPEB liability (asset) $ 1,034,822 $ 2,770,803 $ 4,960,863 OPEB Plan Fiduciary Net Position
Detailed information about the OPEB plan’s fiduciary net position is available in the separately issued CalPERS financial report.
168
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-54-
NOTE 11: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) D. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
For the year ended June 30, 2025, the City recognized OPEB expense of $930,378. 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 Deferred Inflows
of Resources of Resources
Contributions made subsequent to the measurement date $ 506,986 $ - Changes of assumptions 851,690 ( 501,484)
Difference between expected and actual experience 1,124,880 ( 407,305) Net differences between projected and actual earnings
on OPEB plan investments 423,432 -
Total $ 2,906,988 ($ 908,789)
$506,986 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability (asset) in the year ended June 30, 2026.
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:
Fiscal
Year Ended
June 30
2026 $ 94,264
2027 514,930
2028 245,463
2029 192,142
2030 225,897
Thereafter 218,517
Total $ 1,491,213
Payable to the OPEB Plan
At June 30, 2025, the City reported a payable of $0 for the outstanding amount of contributions to the Plan required for the year.
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; injuries to employees; and natural disaster. The City maintains insurance coverage from a commercial carrier for its medical, short-term and long-term disability, and dental and vision plan.
There is no claims liability to be reported based on the requirements of GASB Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated.
There are no significant reductions in insurance coverage from prior years and there have been no settlements exceeding the insurance coverages for each of the past three fiscal years. 169
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-55-
NOTE 12: RISK MANAGEMENT (CONTINUED)
The City is a member of the Small Cities Organized Risk Effort joint powers authority (SCORE), which provides the City with liability coverage with limits of $40,000,000 for each occurrence, workers’ compensation coverage with limits to $5,000,000 for each occurrence and property coverage for replacement. SCORE provides these limits and coverage by participating in the California Joint Powers Risk Management Authority (CJPRMA) for excess liability and Local City Workers’ Compensation Excess Liability joint powers authority (LAWCX) for excess workers’ compensation. Property coverage is obtained by a group purchase from insurance companies with the City’s deductible being $10,000 each claim for vehicles and property.
NOTE 13: JOINT VENTURES
A. NCPA
Northern California Power Agency
The City is a member of Northern California Power Agency (NCPA), a joint powers agency which operates under a joint powers agreement among sixteen public agencies. NCPA Commission is the agency’s governing board with each member appointing one Commission Representative. The purpose of NCPA is to provide its members cost effective wholesale power, energy-related services, and advocacy on behalf of public power consumers through joint action. NCPA provides services to its members through a set of programs, such as the Legislative & Regulatory Program and Power Management Program. NCPA owns generation projects and its Generation Services division operates and maintains these resources on behalf of participating members. Members are only obligated for agency costs related to programs and services expressly selected by members. Members are empowered to opt in to programs and projects and agree to fund a pro rata share allocation associated with selected programs and projects. As a member of NCPA, the City participates in the Legislative & Regulatory Affairs Program.
NCPA’s Legislative & Regulatory Affairs Program is primarily focused on advocacy efforts at Federal and State levels dealing with matters of legislation and regulation that affect electric ratepayers. NCPA engages in policy discussions in forums that include but are not limited to Congress, California State Legislature, Federal Energy Regulatory Commission, California Energy Commission, and California Air Resources Board. The Legislative & Regulatory Affairs Program allows NCPA members to interact with key policy makers with a single coordinated voice. The L&R team also assists NCPA members in addressing numerous energy and environmental reporting obligations and developing capabilities in marketing customer-oriented energy-saving programs.
B. Balancing Authority of Northern California
The Balancing Authority of Northern California (BANC) is a joint powers agency consisting of the Sacramento Municipal Utility District (SMUD), Modesto Irrigation District (MID), City of Roseville, City of Redding (REU) and the City of Shasta Lake as its founding members. On June 26, 2013, BANC members voted to accept Trinity Public Utilities District (TPUD) as a new member. BANC assumed the balancing authority responsibilities from SMUD on May 1, 2011, and is responsible for the matching of generation to load and coordinating system operations with neighboring Balancing Authorities. The resources within the BANC footprint include but are not limited to the Central Valley project (CVP) generation, owned by the Bureau of Reclamation; the CVP transmission network, owned by the Western Area Power Administration (WAPA); and the 500-kV California Oregon Transmission Project (COTP), which is jointly owned by several parties including WAPA and the Transmission Agency of Northern California (TANC). BANC members contract for about 40 percent of the CVP hydroelectric resource. 170
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-56-
NOTE 13: JOINT VENTURES (CONTINUED)
B. Balancing Authority of Northern California (Continued) BANC offers its members cost savings and greater influence through joint action. BANC is engaged in several external policy forums focused on balancing authority matters and allows its members to speak with a unified voice. BANC’s structure provides flexibility to jointly develop and expand operational capabilities at significant cost savings relative to individual development costs. BANC is governed by its members and clarifies roles and responsibilities of the members regarding reliability standard compliance.
The members’ rights and expense-sharing are based on the participation percentages in most BANC activities. BANC members’ participation percentages are based on each members’ retail sales, which are approximately 68.8 percent, 16.5 percent, 7.8 percent, 5.0 percent, 1.2 percent and 0.7 percent for SMUD, MID, Roseville, REU, Shasta Lake and TPUD respectively. These participation percentages can be updated as the need requires.
Complete separate financial statements for each of the joint ventures in which the City participants may be obtained from the City of Shasta Lake Finance Department, 447 Main Street, Shasta Lake, California 96019.
NOTE 14: OTHER INFORMATION
A. Commitments and Contingencies
At June 30, 2025, the City had construction commitments outstanding of approximately $6,728,598.
The City is a defendant in various lawsuits. Management and Counsel believe the suits will not have a material adverse effect on the City’s financial condition.
B. Successor Agency Trust for Assets of Former Redevelopment Agency In accordance with Assembly Bill 1X26 and Assembly Bill 1434, all redevelopment agencies in the State of California were dissolved and ceased to operate as legal entities as of February 1, 2012. The activity of the Successor Agency Trust for Assets of Former Redevelopment Agency (Successor Agency) is recorded in a private purpose trust.
The following is a summary of changes in long-term liabilities for the year ended June 30, 2025:
Amounts
Balance Additions/ Balance Due Within
Type of Indebtedness July 1, 2024 Adjustments Retirements June 30, 2025 One Year Tax Allocation Bonds $ 1,160,000 $ - ($ 375,000) $ 785,000 $ 385,000 Total $ 1,160,000 $ - ($ 375,000) $ 785,000 $ 385,000
171
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-57-
NOTE 14: OTHER INFORMATION (CONTINUED)
B. Successor Agency Trust for Assets of Former Redevelopment Agency (Continued) Individual issues of debt payable outstanding at June 30, 2025, are as follows:
Tax Allocation Bonds:
Tax Allocation Revenue Refunding Bonds, Series 2014, issued by the Shasta Lake Public Financing Authority in the amount of $3,900,000 and payable in annual installments of $265,000 to $400,000, with an interest rate of 2.00% to 5.00% and maturity on December 1, 2026. The bonds were used to refund the 2006 Tax Allocation Revenue Bonds.
Total Tax Allocation Bonds
$ 785,000
$ 785,000
Following is a schedule of debt payment requirements to maturity for long-term debt:
Tax Allocation Bonds
Year Ended
June 30 Principal Interest Total
2026 $ 385,000 $ 19,625 $ 404,625
2027 400,000 5,000 405,000
Total $ 785,000 $ 24,625 $ 809,625
C. Subsequent Events
Management has evaluated events subsequent to June 30, 2025, through January 15, 2026, the date on which the financial statements were available for issuance and has determined no other subsequent events requiring disclosure have occurred.
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Required Supplementary Information
(Unaudited)
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176
CITY OF SHASTA LAKE
Required Supplementary Information
City Pension Plan
Schedule of Proportionate Share of the Net Pension Liability For the Year Ended June 30, 2025
Last 10 Years
Measurement Date 2013/2014 2014/2015 2015/2016 2016/2017 Miscellaneous Plan
Proportion of the net pension liability 0.17774% 0.17492% 0.18668% 0.19250% Proportionate share of the net pension
liability $ 4,392,836 $ 4,798,851 $ 6,485,096 $ 7,588,576 Covered payroll 3,288,389 3,191,503 3,310,634 3,655,228 Proportionate share of the net pension
liability as a percentage of covered payroll 133.59% 150.36% 195.89% 207.61% Plan fiduciary net position as a percentage
of the total pension liability 83.80% 82.80% 78.07% 76.44% -58-
177
2017/2018 2018/2019 2019/2020 2020/2021 2021/2022 2022/2023 2023/2024
0.19678% 0.20417% 0.00547% -0.29722% 0.03736% 0.05332% 0.05261% $ 7,416,000 $ 8,175,847 $ 230,682 $ (5,643,653) $ 1,748,131 $ 2,666,361 $ 2,544,372 3,897,624 3,931,301 4,292,114 4,698,897 4,874,966 5,166,506 5,420,836 190.27% 207.97% 5.37% -120.11% 35.86% 51.61% 46.94%
78.08% 77.37% 99.39% 114.18% 95.98% 94.14% 94.67%
-58-
178
CITY OF SHASTA LAKE
Required Supplementary Information
City Pension Plan
Schedule of Contributions
For the Year Ended June 30, 2025
Last 10 Years
Fiscal Year 2014/2015 2015/2016 2016/2017 2017/2018
Miscellaneous Plan
Contractually required contribution
(actuarially determined) $ 539,884 $ 373,644 $ 405,356 $ 414,691 Contributions in relation to the actuarially
determined contributions (2,502,238) (604,944) (670,799) (723,724) Contribution deficiency (excess) $ (1,962,354) $ (231,300) $ (265,443) $ (309,033) Covered payroll $ 3,191,503 $ 3,310,634 $ 3,655,228 $ 3,897,624 Contributions as a percentage of covered
payroll 78.40% 18.27% 18.35% 18.57%
-59-
179
2018/2019 2019/2020 2020/2021 2021/2022 2022/2023 2023/2024 2024/2025 $ 425,624 $ 472,300 $ 563,348 $ 571,048 $ 617,749 $ 617,200 $ 790,552 (817,880) (9,341,569) (563,348) (571,048) (617,749) (617,200) (790,552) $ (392,256) $ (8,869,269) $ - $ - $ - $ - $ -
$ 3,931,301 $ 4,292,114 $ 4,698,897 $ 4,874,966 $ 5,166,506 $ 5,420,836 $ 5,956,780
20.80% 217.64% 11.99% 11.71% 11.96% 11.39% 13.27%
-59-
180
CITY OF SHASTA LAKE
Required Supplementary Information
City Pension Plan
Notes to City Pension Plan
For the Year Ended June 30, 2025
-60-
NOTE 1: SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY Change of Assumptions and Methods
Benefit Changes: None
Changes of Assumptions: None
NOTE 2: SCHEDULE OF CONTRIBUTIONS
Methods and assumptions used to determine the contribution rates were as follows:
Valuation Date June 30, 2022
Actuarial cost method Individual Entry Age Normal
Amortization method Level Percentage of Payroll and Direct Rate Smoothing Remaining Amortization Period Differs by employer rate plan but no more than 30 years Asset valuation method Fair value
Discount Rate 6.80%
Inflation 2.30%
Salary increases Varies based on entry age and service
Investment rate of return 6.80%
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182
CITY OF SHASTA LAKE
Required Supplementary Information
City OPEB Plan
Schedule of Changes in the Net OPEB Liability and Related Ratios For the Year Ended June 30, 2025
Last 10 Year Fiscal Years*
Measurement Date 2016/2017 2017/2018 2018/2019 2019/2020 Total OPEB Liability
Service cost $ 291,008 $ 326,791 $ 361,837 $ 333,816
Interest 566,870 551,780 582,324 484,815
Differences between expected and actual experience (1,046,313) - (1,835,068) - Changes of assumptions 244,005 351,325 (297,932) -
Benefit payments (303,321) (327,846) (402,009) (328,882) Net Change in Total OPEB Liability (247,751) 902,050 (1,590,848) 489,749 Total OPEB Liability - Beginning 8,283,687 8,035,936 8,937,986 7,347,138 Total OPEB Liability - Ending (a) $ 8,035,936 $ 8,937,986 $ 7,347,138 $ 7,836,887 Plan Fiduciary Net Position
Contributions - employer $ 473,437 $ 472,498 $ 445,979 $ 328,882 Net investment income 435,349 406,313 503,091 414,776
Benefit payments (303,321) (327,846) (402,009) (328,882) Administrative expenses (3,167) (3,480) (1,535) (3,782) Other expenses - (8,704) - -
Net Change in Plan Fiduciary Net Position 602,298 538,781 545,526 410,994 Plan Fiduciary Net Position - Beginning 5,978,934 6,581,232 7,120,013 7,665,539 Plan Fiduciary Net Position - Ending (b) $ 6,581,232 $ 7,120,013 $ 7,665,539 $ 8,076,533 Net OPEB Liability (Asset) - Ending (a) - (b) $ 1,454,704 $ 1,817,973 $ (318,401) $ (239,646) Plan fiduciary net position as a percentage of the total OPEB liability 81.90% 79.66% 104.33% 103.06%
Covered employee payroll $ 3,655,228 $ 3,897,624 $ 3,928,111 $ 4,292,114 Net OPEB liability as a percentage of covered employee payroll 39.80% 46.64% -8.11% -5.58% * The City implemented GASB 75 for the fiscal year June 30, 2018, therefore only eight years are shown. -61-
183
2020/2021 2021/2022 2022/2023 2023/2024
$ 343,830 $ 395,738 $ 407,610 $ 651,115
517,584 497,581 527,592 647,503
(180,309) - 445,027 -
392,586 - 905,993 397,428
(312,321) (374,514) (373,513) (441,306)
761,370 518,805 1,912,709 1,254,740
7,836,887 8,598,257 9,117,062 11,029,772
$ 8,598,257 $ 9,117,062 $ 11,029,771 $ 12,284,512
$ 372,321 $ 374,514 $ 373,513 $ 441,306
1,587,391 (1,222,414) 302,542 720,319
(312,321) (374,514) (373,513) (441,306)
(2,940) (2,456) (2,434) (2,832)
- - - -
1,644,451 (1,224,870) 300,108 717,487
8,076,533 9,720,984 8,496,114 8,796,222
$ 9,720,984 $ 8,496,114 $ 8,796,222 $ 9,513,709
$ (1,122,727) $ 620,948 $ 2,233,549 $ 2,770,803
113.06% 93.19% 79.75% 77.44%
$ 4,420,877 $ 4,766,358 $ 5,154,429 $ 5,283,935
-25.40% 13.03% 43.33% 52.44%
-61-
184
CITY OF SHASTA LAKE
Required Supplementary Information
City OPEB Plan
Schedule of Contributions
For the Year Ended June 30, 2025
Last 10 Fiscal Years*
Fiscal Year 2017/2018 2018/2019 2019/2020 2020/2021
Actuarially determined contribution $ 505,772 $ 487,373 $ 346,279 $ 358,770 Contributions in relation to the actuarially determined contribution (472,498) (445,979) (328,882) (372,321) Contribution deficiency (excess) $ 33,274 $ 41,394 $ 17,397 $ (13,551) Covered employee payroll $ 3,897,624 $ 3,928,111 $ 4,292,114 $ 4,420,877 Contributions as a percentage of covered employee payroll 12.12% 11.35% 7.66% 8.42% * The City implemented GASB 75 for the fiscal year June 30, 2018, therefore only eight years are shown. -62-
185
2021/2022 2022/2023 2023/2024 2024/2025
$ 367,955 $ 342,178 $ 355,771 $ 875,764
(374,514) (373,513) (441,306) (506,986)
$ (6,559) $ (31,335) $ (85,535) $ 368,778
$ 4,766,358 $ 5,154,429 $ 5,283,935 $ 5,841,941
7.86% 7.25% 8.35% 8.68%
-62-
186
CITY OF SHASTA LAKE
Required Supplementary Information
City OPEB Plan
Notes to City OPEB Plan
For the Year Ended June 30, 2025
-63-
NOTE 1: SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS
Summary of Changes of Benefits or Assumptions
Discount Rate: The discount rate was changed from 5.65% as of June 30, 2024, to 5.95% as of June 30, 2025, based on the published change in return for the applicable municipal bond index.
NOTE 2: SCHEDULE OF CONTRIBUTIONS
The actuarially determined contribution (ADC) developed for the City’s fiscal year ending June 30, 2025, was determined and presented in the June 30, 2023, Actuarial Valuation report.
Methods and Assumptions Used to Determine Contributions:
Actuarial cost method Entry Age Normal Level % of Pay
Amortization method Level dollar Open 30 years
Amortization period 30 years
Asset valuation method Market value
Inflation 2.50%
Healthcare cost trend rates 9.00% pre-MC, 22.00% post-MC, fluctuating down to 3.90% by 2075 Salary increases 3.00%
Investment rate of return 5.65%
Retirement age From 50 to 75
Mortality CalPERS 2021 Experience Study
Mortality improvement MW Scale 2022 generationally
187
CITY OF SHASTA LAKE
Required Supplementary Information
Budgetary Comparison Schedule
General Fund
For the Year Ended June 30, 2025
Variance with
Final Budget
Original Final Actual Positive
Budget Budget Amounts (Negative)
REVENUES
Taxes and assessments $ 3,166,993 $ 3,166,993 $ 3,407,049 $ 240,056 Licenses and permits 201,600 201,600 197,140 (4,460)
Fines and forfeitures 9,250 9,250 9,496 246
Use of money and property 95,000 95,000 279,754 184,754 Intergovernmental revenue 1,219,500 1,219,500 1,235,434 15,934 Charges for services 4,617,885 4,617,885 4,965,916 348,031 Other revenues 20,000 20,000 265,547 245,547
Total Revenues 9,330,228 9,330,228 10,360,336 1,030,108
EXPENDITURES
Current:
General government 4,076,270 4,160,362 3,534,612 625,750 Public safety 4,560,215 4,569,395 4,754,369 (184,974)
Public ways and facilities 287,784 287,784 160,725 127,059 Planning 1,034,841 1,055,321 889,097 166,224
Culture and recreation 455,805 466,395 360,616 105,779
Debt service:
Principal 390,000 390,000 438,000 (48,000)
Interest 275,093 275,093 339,768 (64,675)
Capital outlay 87,000 101,500 78,260 23,240
Total Expenditures 11,167,008 11,305,850 10,555,447 750,403 Excess of Revenues Over (Under) Expenditures (1,836,780) (1,975,622) (195,111) 1,780,511
OTHER FINANCING SOURCES (USES)
Transfers in 427,830 427,830 1,000 (426,830)
Total Other Financing Sources (Uses) 427,830 427,830 1,000 (426,830) Net Change in Fund Balances (1,408,950) (1,547,792) (194,111) 1,353,681 Fund Balances - Beginning 6,796,624 6,796,624 6,796,624 - Prior period adjustment - - 947,000 947,000
Fund Balances - Beginning, Restated 6,796,624 6,796,624 7,743,624 947,000 Fund Balances - Ending $ 5,387,674 $ 5,248,832 $ 7,549,513 $ 2,300,681 -64-
188
CITY OF SHASTA LAKE
Required Supplementary Information
Budgetary Comparison Schedule
Grant Fund
For the Year Ended June 30, 2025
Variance with
Final Budget
Original Final Actual Positive
Budget Budget Amounts (Negative)
REVENUES
Use of money and property $ - $ - $ 14,376 $ 14,376
Intergovernmental revenue 7,330,735 8,359,585 4,950,871 (3,408,714) Total Revenues 7,330,735 8,359,585 4,965,247 (3,394,338)
EXPENDITURES
Current:
General government 1,887,033 1,887,033 617,418 1,269,615 Capital outlay 11,790,927 12,846,427 2,420,444 10,425,983 Total Expenditures 13,677,960 14,733,460 3,037,862 11,695,598 Net Change in Fund Balances (6,347,225) (6,373,875) 1,927,385 8,301,260 Fund Balances - Beginning (908,510) (908,510) (908,510) - Fund Balances - Ending $ (7,255,735) $ (7,282,385) $ 1,018,875 $ 8,301,260 -65-
189
CITY OF SHASTA LAKE
Required Supplementary Information
Note to Budgetary Comparison Schedule
For the Year Ended June 30, 2025
-66-
NOTE 1: BUDGETARY BASIS OF ACCOUNTING
Formal budgetary integration is employed as a management control device during the year for the General fund and Special Revenue funds, and is controlled at the department level for the City. Budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP). Accordingly, actual revenues and expenditures can be compared with related budgeted amounts without any significant adjustments.
The following procedures are performed by the City in establishing the budgetary data reflected in the financial statements:
(1) The two-year operating budget of the City is adopted by the City of Shasta Lake City Council prior to July 1 on even numbered years, primarily on the cash basis. (2) The City manager is authorized to transfer budget amounts between departments within any fund; however, any revisions that alter the total expenditures of any fund requires City Council resolution
The City does not use encumbrance accounting under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation.
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191
Combining Nonmajor Fund Financial Statements
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193
Nonmajor Governmental Funds
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195
CITY OF SHASTA LAKE
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2025
Special Debt
Revenue Service
Funds Funds Totals
ASSETS
Cash and investments $ 4,775,643 $ 346,919 $ 5,122,562
Receivables:
Interest 14,932 4,138 19,070
Taxes 75,836 5,672 81,508
Intergovernmental 655,015 - 655,015
Assessments - 1,856,000 1,856,000
Restricted cash and investments - 308,971 308,971
Loans receivable 5,035,316 - 5,035,316
Land held for resale 534,984 - 534,984
Total Assets $ 11,091,726 $ 2,521,700 $ 13,613,426
LIABILITIES
Accounts payable $ 323,019 $ - $ 323,019
Retentions payable 133,291 - 133,291
Due to other funds 140,667 - 140,667
Total Liabilities 596,977 - 596,977
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues 583,863 - 583,863
Total Deferred Inflows of Resources 583,863 - 583,863
FUND BALANCES
Nonspendable 5,035,316 - 5,035,316
Restricted 5,288,850 2,521,700 7,810,550
Unassigned (413,280) - (413,280)
Total Fund Balances 9,910,886 2,521,700 12,432,586
Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 11,091,726 $ 2,521,700 $ 13,613,426 -67-
196
CITY OF SHASTA LAKE
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
Nonmajor Governmental Funds
For the Year Ended June 30, 2025
Special Debt
Revenue Service
Funds Funds Totals
REVENUES
Taxes and assessments $ - $ 21,984 $ 21,984
Use of money and property 215,982 27,660 243,642
Intergovernmental revenue 2,528,347 - 2,528,347
Charges for services 50,292 - 50,292
Total Revenues 2,794,621 49,644 2,844,265
EXPENDITURES
Current:
General government 30,348 - 30,348
Public safety 100,000 - 100,000
Public ways and facilities 769,430 - 769,430
Community development 324,010 9,811 333,821
Debt service:
Principal - 146,040 146,040
Interest - 86,931 86,931
Capital outlay 494,221 - 494,221
Total Expenditures 1,718,009 242,782 1,960,791
Excess of Revenues Over (Under) Expenditures 1,076,612 (193,138) 883,474
OTHER FINANCING SOURCES (USES)
Transfers out (351,000) - (351,000)
Total Other Financing Sources (Uses) (351,000) - (351,000) Net Change in Fund Balances 725,612 (193,138) 532,474
Fund Balances - Beginning 7,853,640 2,714,838 10,568,478 Prior period adjustment 1,331,634 1,331,634
Fund Balances - Beginning, Restated 9,185,274 2,714,838 11,900,112 Fund Balances - Ending $ 9,910,886 $ 2,521,700 $ 12,432,586 -68-
197
Nonmajor Governmental Funds
• Special Revenue Funds
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200
CITY OF SHASTA LAKE
Combining Balance Sheet
Nonmajor Special Revenue Funds
June 30, 2025
Law Water Electric CDBG
Enforcement P&FCC P&FCC Housing
(COPS) Charges Charges HOME Rehabilitation
ASSETS
Cash and investments $ 47,378 $ 216,217 $ 359,124 $ 1,872,220 $ 109,965 Receivables:
Interest 86 1,678 1,096 5,719 342
Taxes - - - - -
Intergovernmental - - - - -
Loans receivable - - - 2,790,058 71,805
Land held for resale - - - - -
Total Assets $ 47,464 $ 217,895 $ 360,220 $ 4,667,997 $ 182,112
LIABILITIES
Accounts payable $ 33,333 $ - $ - $ - $ -
Retentions payable - - - - -
Due to other funds - - - - -
Total Liabilities 33,333 - - - -
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - - - - -
Total Deferred Inflows of Resources - - - - -
FUND BALANCES (DEFICIT)
Nonspendable - - - 2,790,058 71,805
Restricted 14,131 217,895 360,220 1,877,939 110,307
Unassigned - - - - -
Total Fund Balances (Deficit) 14,131 217,895 360,220 4,667,997 182,112 Total Liabilities, Deferred Inflows
of Resources and Fund Balances $ 47,464 $ 217,895 $ 360,220 $ 4,667,997 $ 182,112 -69-
201
Wastewater Parks
CDBG P&FCC P&FCC Housing State
Project Charges Charges Authority Trafficway Totals
$ - $ - $ 357,115 $ 58,888 $ 1,754,736 $ 4,775,643
- - 1,096 188 4,727 14,932
- - - - 75,836 75,836
370,434 - - - 284,581 655,015
1,667,635 - - 505,818 - 5,035,316
- - - 534,984 - 534,984
$ 2,038,069 $ - $ 358,211 $ 1,099,878 $ 2,119,880 $ 11,091,726 $ 210,457 $ 17 $ - 7,366 $ 71,846 $ 323,019
133,291 - - - - 133,291
129,733 10,934 - - - 140,667
473,481 10,951 - 7,366 71,846 596,977
299,282 - - - 284,581 583,863
299,282 - - - 284,581 583,863
1,667,635 - - 505,818 - 5,035,316
- - 358,211 586,694 1,763,453 5,288,850
(402,329) (10,951) - - - (413,280)
1,265,306 (10,951) 358,211 1,092,512 1,763,453 9,910,886 $ 2,038,069 $ - $ 358,211 $ 1,099,878 $ 2,119,880 $ 11,091,726 -69-
202
CITY OF SHASTA LAKE
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
Nonmajor Special Revenue Funds
For the Year Ended June 30, 2025
Law Water Electric CDBG
Enforcement P&FCC P&FCC Housing
(COPS) Charges Charges HOME Rehabilitation
REVENUES
Use of money and property $ 1,146 $ 23,804 $ 15,399 $ 81,491 $ 4,868 Intergovernmental revenue 100,000 - - - -
Charges for services - 27,909 - - -
Total Revenues 101,146 51,713 15,399 81,491 4,868
EXPENDITURES
Current:
General government - 10,718 2,177 - -
Public safety 100,000 - - - -
Public ways and facilities - - - - -
Community development - - - 1,100 -
Capital outlay - - - - -
Total Expenditures 100,000 10,718 2,177 1,100 -
Excess of Revenues Over (Under)
Expenditures 1,146 40,995 13,222 80,391 4,868
OTHER FINANCING SOURCES (USES)
Transfers out - (350,000) - - (1,000)
Change in Net Position 1,146 (309,005) 13,222 80,391 3,868 Fund Balances (Deficit) - Beginning 12,985 526,900 346,998 4,587,606 178,244 Prior period adjustment - - - - -
Fund Balances (Deficit) - Beginning, Restated 12,985 526,900 346,998 4,587,606 178,244 Fund Balances (Deficit) - Ending $ 14,131 $ 217,895 $ 360,220 $ 4,667,997 $ 182,112 -70-
203
Wastewater Parks
CDBG P&FCC P&FCC Housing State
Project Charges Charges Authority Trafficway Totals
$ - $ (242) $ 15,399 $ 2,647 $ 71,470 $ 215,982
525,916 - - - 1,902,431 2,528,347
- 7,280 9,579 - 5,524 50,292
525,916 7,038 24,978 2,647 1,979,425 2,794,621
- 14,311 3,142 - - 30,348
- - - - - 100,000
- - - - 769,430 769,430
312,363 - - 10,547 - 324,010
40,252 - 20,456 - 433,513 494,221
352,615 14,311 23,598 10,547 1,202,943 1,718,009
173,301 (7,273) 1,380 (7,900) 776,482 1,076,612
- - - - - (351,000)
173,301 (7,273) 1,380 (7,900) 776,482 725,612
(239,629) (3,678) 356,831 1,100,412 986,971 7,853,640
1,331,634 - - - - 1,331,634
1,092,005 (3,678) 356,831 1,100,412 986,971 9,185,274
$ 1,265,306 $ (10,951) $ 358,211 $ 1,092,512 $ 1,763,453 $ 9,910,886 -70-
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205
Nonmajor Governmental Funds
• Debt Service Funds
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CITY OF SHASTA LAKE
Combining Balance Sheet
Nonmajor Debt Service Funds
June 30, 2025
Wastewater Riddle
Treatment Road
Debt Water Bond Totals
ASSETS
Cash and investments $ 337,441 $ 9,478 $ 346,919
Receivables:
Interest 4,121 17 4,138
Taxes 5,517 155 5,672
Assessments 1,839,000 17,000 1,856,000
Restricted cash and investments 308,971 - 308,971
Total Assets $ 2,495,050 $ 26,650 $ 2,521,700
LIABILITIES
Accounts payable $ - $ - $ -
Total Liabilities - - -
FUND BALANCES
Restricted 2,495,050 26,650 2,521,700
Total Fund Balances 2,495,050 26,650 2,521,700
Total Liabilities and Fund Balances $ 2,495,050 $ 26,650 $ 2,521,700 -71-
208
CITY OF SHASTA LAKE
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
Nonmajor Debt Service Funds
For the Year Ended June 30, 2025
Wastewater Riddle
Treatment Road
Debt Water Bond Totals
REVENUES
Taxes and assessments $ 20,983 $ 1,001 $ 21,984
Use of money and property 27,419 241 27,660
Total Revenues 48,402 1,242 49,644
EXPENDITURES
Community development
Debt service: 9,811 - 9,811
Principal 143,040 3,000 146,040
Interest 86,006 925 86,931
Total Expenditures 238,857 3,925 242,782
Net Change in Fund Balances (190,455) (2,683) (193,138) Fund Balances - Beginning 2,685,505 29,333 2,714,838
Fund Balances - Ending $ 2,495,050 $ 26,650 $ 2,521,700 -72-
209
Internal Service Funds
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211
CITY OF SHASTA LAKE
Combining Statement of Net Position
Internal Service Funds
June 30, 2025
Motor Public
Pool Works Totals
ASSETS
Current Assets:
Cash and investments $ - $ 1,507,111 $ 1,507,111
Receivables:
Interest (908) 5,086 4,178
Total Current Assets (908) 1,512,197 1,511,289
Noncurrent Assets:
Capital assets:
Non-depreciable 111,668 - 111,668
Depreciable, net 1,590,064 154,385 1,744,449
Total capital assets 1,701,732 154,385 1,856,117
Total Noncurrent Assets 1,701,732 154,385 1,856,117
Total Assets 1,700,824 1,666,582 3,367,406
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension adjustments 102,372 478,717 581,089
Deferred OPEB adjustments 81,686 581,979 663,665
Total Deferred Outflows of Resources 184,058 1,060,696 1,244,754
LIABILITIES
Current Liabilities:
Accounts payable 49,038 7,347 56,385
Salaries and benefits payable 4,414 28,775 33,189
Due to other funds 345,116 - 345,116
Compensated absences payable 22,863 130,621 153,484
Total Current Liabilities 421,431 166,743 588,174
Noncurrent Liabilities:
Net pension liability 83,001 388,132 471,133
Net OPEB liability 77,860 554,715 632,575
Total Noncurrent Liabilities 160,861 942,847 1,103,708
Total Liabilities 582,292 1,109,590 1,691,882
DEFERRED INFLOWS OF RESOURCES
Deferred pension adjustments 54,741 255,981 310,722
Deferred OPEB adjustments 25,537 181,940 207,477
Total Deferred Inflows of Resources 80,278 437,921 518,199
NET POSITION
Investment in capital assets 1,701,732 154,385 1,856,117 Unrestricted (479,420) 1,025,382 545,962
Total Net Position $ 1,222,312 $ 1,179,767 $ 2,402,079
-73-
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CITY OF SHASTA LAKE
Combining Statement of Revenues, Expenses and Changes in Net Position Internal Service Funds
For the Year Ended June 30, 2025
Motor Public
Pool Works Totals
OPERATING REVENUES
Charges for services $ 883,764 $ 2,395,562 $ 3,279,326
Other revenue - 1,464 1,464
Total Operating Revenues 883,764 2,397,026 3,280,790
OPERATING EXPENSES
Salaries and benefits 338,419 2,265,830 2,604,249
Administration 241,861 528,094 769,955
Insurance 15,694 26,582 42,276
Supplies 5,908 12,533 18,441
Repairs and maintenance 134,070 35,586 169,656
Professional services 12,433 11,909 24,342
Depreciation 364,421 10,918 375,339
Total Operating Expenses 1,112,806 2,891,452 4,004,258
Operating Income (Loss) (229,042) (494,426) (723,468)
NON-OPERATING REVENUES (EXPENSES)
Interest income - 70,677 70,677
Interest expense (21,297) - (21,297)
Intergovernmental - 10,763 10,763
Transfers In 216,711 - 216,711
Total Non-Operating Revenues (Expenses) 195,414 81,440 276,854 Change in Net Position (33,628) (412,986) (446,614)
Total Net Position - Beginning 1,255,909 1,609,265 2,865,174 Prior period adjustment 31 (16,512) (16,481)
Total Net Position - Beginning, Restated 1,255,940 1,592,753 2,848,693 Total Net Position - Ending $ 1,222,312 $ 1,179,767 $ 2,402,079 -74-
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CITY OF SHASTA LAKE
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended June 30, 2025
Motor Public
Pool Works Totals
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ - $ 1,464 $ 1,464
Receipts from interfund services 886,024 2,395,562 3,281,586 Payments to suppliers (395,022) (614,545) (1,009,567)
Payments to employees (284,273) (1,970,214) (2,254,487) Net Cash Provided (Used) by Operating Activities 206,729 (187,733) 18,996
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Grants and other receipts - 10,762 10,762
Interfund loans received 345,116 - 345,116
Net Cash Provided (Used) by Non-Capital Financing Activities 345,116 10,762 355,878
CASH FLOWS FROM CAPITAL AND RELATED FINANCING
ACTIVITIES
Acquisition of capital assets (900,023) - (900,023)
Interest paid on debt (21,297) - (21,297)
Transfers from other funds 216,711 - 216,711
Net Cash Provided (Used) by Capital and Related Financing Activities (704,609) - (704,609)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments 6,473 83,069 89,542
Net Cash Provided by Investing Activities 6,473 83,069 89,542 Net Increase (Decrease) in Cash and Cash Equivalents (146,291) (93,902) (240,193) Balances - Beginning 146,291 1,601,013 1,747,304
Balances - Ending $ - $ 1,507,111 $ 1,507,111
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CITY OF SHASTA LAKE
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended June 30, 2025
Motor Public
Pool Works Totals
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Operating income (loss) $ (229,042) $ (494,426) $ (723,468) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:
Depreciation 364,421 10,918 375,339
Decrease (increase) in:
Accounts receivable 2,260 - 2,260
Pension adjustment - deferred outflows 45,120 287,010 332,130 OPEB adjustment - deferred outflows 15,455 (18,298) (2,843) Increase (decrease) in:
Accounts payable 14,944 159 15,103
Salaries and benefits payable 1,068 5,789 6,857
Compensated absences 2,856 13,155 16,011
Net pension liability (746) (46,652) (47,398)
Net OPEB liability (3,665) 81,649 77,984
Pension adjustment - deferred inflows (3,117) (44,398) (47,515) OPEB adjustment - deferred inflows (2,825) 17,361 14,536 Net Cash Provided (Used) by Operating Activities $ 206,729 $ (187,733) $ 18,996 -76-
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CITY OF SHASTA LAKE,
CALIFORNIA
SINGLE AUDIT ACT
REPORTS AND SCHEDULES
FOR THE YEAR ENDED
JUNE 30, 2025
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CITY OF SHASTA LAKE
Single Audit Act
For the Year Ended June 30, 2025
Table of Contents
Page
Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards............................................................................1-2 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance.................................................3-5 Schedule of Expenditures of Federal Awards for the Year Ended June 30, 2025 ........................................ 6 Notes to Schedule of Expenditures of Federal Awards .............................................................................7-8 Schedule of Findings and Questioned Costs............................................................................................9-11 Schedule of Prior Year Findings and Questioned Costs............................................................................. 12 Management’s Corrective Action Plan ....................................................................................................... 13 220
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CERTIFIED PUBLIC ACCOUNTANTS
-1-
950 THARP ROAD, SUITE 502 YUBA CITY, CA 95993 TEL: (530) 673-9790 FAX: (530) 673-1305 [email protected]
SMITH & NEWELL
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Shasta Lake, (City) as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated January 15, 2026.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified. 222
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To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Smith & Newell CPAs
Yuba City, California
January 15, 2026
223
CERTIFIED PUBLIC ACCOUNTANTS
-3-
950 THARP ROAD, SUITE 502 YUBA CITY, CA 95993 TEL: (530) 673-9790 FAX: (530) 673-1305 [email protected]
SMITH & NEWELL
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM
AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY
THE UNIFORM GUIDANCE
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City of Shasta Lake, California's (City) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for the year ended June 30, 2025. The City's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.
In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2025.
Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with 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 opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City’s federal programs.
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-4-
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of each major federal program as a whole.
In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance, 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 City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. • Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance.
Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.
Other Matters
The results of our auditing procedures disclosed instances of noncompliance which are required to be reported in accordance with the Uniform Guidance and which are described in the accompanying schedule of findings and questioned costs as item 2025-001. Our opinion on each major federal program is not modified with respect to these matters.
Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the noncompliance findings identified in our compliance audit described in the accompanying schedule of findings and questioned costs. The City’s response was not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. 225
-5-
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Report on Internal Control Over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the City of Shasta Lake, California, (City) as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City's basic financial statements. We issued our report thereon dated January 15, 2026, which contained unmodified opinions on those financial statements. Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.
Smith & Newell CPAs
Yuba City, California
January 15, 2026
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CITY OF SHASTA LAKE
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2025
Pass-Through
Assistance Entity Passed Total
Federal Grantor/Pass-Through Listing Identifying Through to Federal Grantor/Program Title Number Number Subrecipients Expenditures U.S. Department of Housing and Urban Development
State Department of Housing and Community Development:
Community Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228 18-DRINFRA-18008 $ - $ 40,252 Community Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228 21-CDBG-CV-TRIB-0004 - 99,613 Community Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228 21-CDBG-CV-TRIB-0006 - 75,800 Community Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228 21-CDBG-CV-TRIB-0008 - 81,009 Community Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228 21-CDBG-CV-TRIB-0010 - 54,104 Community Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228 Outstanding Loans - 408,806 Subtotal 14.228 - 759,584
Home Investment Partnerships Program 14.239 - - 1,100
Home Investment Partnerships Program 14.239 Outstanding Loans - 2,208,167 Subtotal 14.239 - 2,209,267
Total U.S. Department of Housing and Urban Development - 2,968,851 U.S. Department of Transportation
State Department of Transportation:
Highway Planning and Construction 20.205 BRLS-5474 (015) - 244,369 Subtotal 20.205 - 244,369
Total U.S. Department of Transportation - 244,369
U.S. Department of the Treasury
Direct Program:
Coronavirus State and Local Fiscal Recovery Funds 21.027 - - 1,471,953 Total U.S. Department of the Treasury - 1,471,953
Total $ - $ 4,685,173
See the accompanying Notes to Schedule of Expenditures of Federal Awards -6-
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CITY OF SHASTA LAKE
Notes to Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2025
-7-
1. REPORTING ENTITY
The accompanying Schedule of Expenditures of Federal Awards presents the activity of all federal financial assistance programs of the City of Shasta Lake, California (City). The City’s reporting entity is defined in Note 1 to the City’s basic financial statements. All federal awards received directly from federal agencies as well as federal awards passed through other government agencies are included on the Schedule of Expenditures of Federal Awards. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position or cash flows of the City.
2. BASIS OF ACCOUNTING
Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements, regardless of the measurement focus applied. The accompanying Schedule of Expenditures of Federal Awards, is presented using the modified accrual basis of accounting for grants accounted for in the governmental fund types and the accrual basis of accounting for grants accounted for in the proprietary fund types, as described in the notes to the City financial statements. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowed or are limited as to reimbursements. In addition, the outstanding balance of prior years’ loans that have significant continuing compliance requirements have been included in total federal expenditures.
3. INDIRECT COST RATE
The City has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.
4. RELATIONSHIP TO FEDERAL FINANCIAL REPORTS
The amounts reported in the accompanying Schedule of Expenditures of Federal Awards agree or can be reconciled with amounts reported in the related federal financial assistance reports.
5. RELATIONSHIP TO BASIC FINANCIAL STATEMENTS
The amounts reported in the accompanying Schedule of Expenditures of Federal Awards agree or can be reconciled with amounts reported in the City’s basic financial statements.
6. PASS-THROUGH ENTITIES’ IDENTIFYING NUMBER
When federal awards were received from a pass-through entity, the Schedule of Expenditures of Federal Awards shows, if available, the identifying number assigned by the pass-through entity. When no identifying number is shown, the City determined that no identifying number is assigned for the program or the City was unable to obtain an identifying number from the pass-through entity. 230
CITY OF SHASTA LAKE
Notes to Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2025
-8-
7. LOANS WITH CONTINUING COMPLIANCE REQUIREMENTS
The City participates in certain federal award programs that sponsor revolving loan programs, which are administered by the City. These programs require servicing arrangements with the City. The funds are returned to the programs upon repayment of the principal and interest. In accordance with Section 200.510 of the Uniform Guidance, the City has reported the outstanding balance of loans from previous years that have significant continuing compliance requirements as of June 30, 2025, along with the value of total outstanding and new loans made during the current year.
The programs listed below had the following aggregate, federally funded loans outstanding at June 30, 2025:
Assistance Amount Outstanding
Listing
Number Program Title July 1, 2024 June 30, 2025
14.228 Community Development Block Grants/State’s Program and Non-Entitlement Grants in Hawaii $ 408,806 $ 407,806
14.239 Home Investment Partnerships Program 2,208,167 2,208,167 Total Loans Outstanding $ 2,616,973 $ 2,615,973
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CITY OF SHASTA LAKE
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2025
-9-
SECTION I - SUMMARY OF AUDITOR’S RESULTS
Financial Statements Status
1. Type of auditor’s report issued Unmodified
2. Internal controls over financial reporting:
a. Material weaknesses identified? No
b. Significant deficiencies identified and not considered to be material weaknesses? No
3. Noncompliance material to financial statements noted? No Federal Awards
1. Internal control over major programs:
a. Material weaknesses identified? No
b. Significant deficiencies identified and not considered to be material weaknesses? No
2. Type of auditor’s report issued on compliance for major programs: Unmodified
3. Any audit findings disclosed that are required to be reported in accordance with 2 CFR Section 200.516(a)? Yes
4. Identification of major programs:
14.228 Community Development Block Grants/State’s Program and Non-Entitlement Grants in Hawaii
21.027 Coronavirus State and Local Fiscal Recovery Funds
5. Dollar threshold used to distinguish between Type A and Type B programs? $750,000
6. Auditee qualified as a low-risk auditee under 2 CFR Section 200.520? No
SECTION II - FINANCIAL STATEMENT FINDINGS
None
SECTION III - FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS Community Development Block Grants/State’s Program and
Non-Entitlement Grants in Hawaii 2025-001
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CITY OF SHASTA LAKE
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2025
-10-
2025-001 (Compliance)
Name: Community Development Block Grants/State’s Program and NonEntitlement Grants in Hawaii ASL #: 14.228
Federal Grantor: U.S. Department of Housing and Urban Development Pass Through Entity: State Department of Housing and Community Development Award No.: 21-CDBG-CV-TRIB
Year: 2024/2025
Compliance Requirement: Other
Criteria
2 CFR § 200.302 (Financial Management) and 2 CFR § 200.334 (Retention Requirements for Records) require that non-federal entities maintain documentation that adequately supports federal expenditures, including original invoices, receipts, and approvals demonstrating that costs were allowable, necessary, and reasonable.
Condition
During our testing of 40 disbursements for the Community Development Block Grants/State’s Program and Non-Entitlement Grants in Hawaii, we identified two instances (5% error rate) totaling $24.98 where the disbursement was not supported by an original vendor invoice or receipt.
Cause
Controls were not consistently followed before processing payments.
Effect
The lack of supporting documentation increases the risk that unauthorized, unallowable, or fraudulent expenditures could be charged to the federal program without detection.
Questioned Cost
As a result, we are questioning costs of $24.98.
Context
The sample was intended to be a systematically valid sample from a population of 556 transactions.
Repeat Finding
This is not a repeat finding.
Recommendation
We recommend that the management strengthen controls over disbursements by ensuring that no payment is processed without a valid, itemized invoice that has been approved by authorized personnel. Furthermore, all supporting documentation should be attached to the payment voucher and retained for audit procedures.
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CITY OF SHASTA LAKE
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2025
-11-
2025-001 (Compliance) (Continued)
Views of Responsible Officials and Planned Corrective Action Refer to separate Management’s Corrective Action Plan for views of responsible officials and management’s responses.
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PO BOX 777 | 4477 Main Street
Shasta Lake, CA 96019
(530) 275-7400
www.cityofshastalake.org
CITY OF SHASTA LAKE, CALIFORNIA
Schedule of Prior Year Findings and Questioned Costs
And
Corrective Action Plan
For the Year Ended June 30, 2025
Compiled by: Wendy Howard, Finance Director
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CITY OF SHASTA LAKE
Schedule of Prior Year Findings and Questioned Costs
For the Year Ended June 30, 2025
-12-
Audit Reference
2024-001
Status of Prior Year Recommendation
Reconciliation of Cash and Investments of the City
Recommendation
We recommend that all cash and investment accounts on the City’s records be reconciled to the cash in the bank in a timely manner.
Status
Implemented
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CITY OF SHASTA LAKE
Management’s Corrective Action Plan
For the Year Ended June 30, 2025
-13-
2025-001 Community Development Block Grants/State’s Program and Non-Entitlement Grants in Hawaii
We recommend that the management strengthen controls over disbursements by ensuring that no payment is processed without a valid, itemized invoice that has been approved by authorized personnel.
Furthermore, all supporting documentation should be attached to the payment voucher and retained for audit procedures.
Management’s Response: The City agrees, and controls will be strengthened over disbursements, and all supporting documentation will be attached and retained for audit procedures.
Responsible Individual: Wendy Howard, Finance Director
Corrective Action Plan: Management has strengthened internal controls over disbursements. All payments will be supported by valid, itemized invoices and approved by authorized personnel. Supporting documentation will be attached prior to payment and retained for audit procedures.
Anticipated Completion Date: 2/6/2026
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Report and Recommendations 8.4 Reviewed and Approved
City Manager
AGENDA ITEM
City Council
TO: Mayor and City Council Members
FROM: Jason Peterson, Finance Director
Margaret Youngs, Senior Accountant
DATE: April 7, 2026
SUBJECT: RESOLUTION ADOPTING FISCAL YEAR 2025-2026 MID-YEAR BUDGET
FILE NO.:
RECOMMENDATION
Staff respectfully submits for approval the fiscal year 2025-26 Mid-Year Budget for the City of Shasta Lake.
BACKGROUND
If Council desires any further budgetary changes, a motion to amend the Mid-Year Budget would be required.
FISCAL IMPACTS
The Mid-Year Budget revisions include revenue and expenditure changes for various funds as presented in the attached Budget Review Message.
ATTACHMENTS
• Resolution adopting the FY 2025-26 Mid-Year Budget.
• Budget Review Message
DISTRIBUTION
City of Shasta Lake City Council
245
RESOLUTION CC-2026-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SHASTA LAKE APPROVING AND ADOPTING THE FISCAL YEAR 2025-26 MID-YEAR BUDGET.
WHEREAS, the City of Shasta Lake annually appropriates funds to conduct the business of the City, and;
WHEREAS, the City Council has reviewed the proposed Mid-Year budget revisions for the Fiscal Year 2025-26, as presented in the attached Budget Review Message.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Shasta Lake hereby approves and adopts the FY 2025-26 Mid-Year Budget for the City of Shasta Lake; authorizes the collection of revenues and appropriates the funds necessary to implement its policies, priorities and objectives.
PASSED, APPROVED, AND ADOPTED this 7th day of April 2026, by the following vote:
AYES:
NOES:
ABSENT:
______________________________
JUSTIN JONES, Mayor
ATTEST:
_______________________________
CHARITY TATLOW, CMC
City Clerk
246
MEMORANDUM
TO: Mayor and City Council Members
FROM: Jason Peterson, Finance Director
Margaret Youngs, Senior Accountant
DATE: April 07, 2026
SUBJECT: FISCAL YEAR 2025-26 MID-YEAR BUDGET REVIEW MESSAGE The City of Shasta Lake’s (the City) budget review for the fiscal year ending June 30, 2026, is presented here and includes all the funds the City anticipates will be received and expended for the balance of the current budget cycle. This is the second year of the City’s two-year budget. In most instances, revenues and expenditures are based on known information likely to occur. However, it is essential to note that the City is reliant on many factors when making projections for the balance of this fiscal year.
The City maintains and accounts for separate funds. Each of these funds includes its own revenues and expenditures and is accounted for separately. With very few exceptions, revenue collected within a fund must be expended for the operations for which the fund is intended.
General Fund
General Fund Revenues
The General Fund has a proposed a net revenue decrease of ($129,000) to the originally approved General Fund budget of $10,031,162 for a new estimate of $9,902,162.
The following table represents the budgeted General Fund revenue for fiscal year 2025/26:
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General Fund Expenditures
The General Fund has proposed expenditure increases of $485,000 increase to the originally approved General Fund budget of $11,236,496 for a new estimate of $11,721,496.
The following table represents the recommended changes to expenditures within the City’s General Fund for the fiscal year ending June 30, 2026.
The table below shows these changes by department:
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With changes and adjustments recommended by Staff, subsequently approved by the City Council, and maintaining a fiscally conservative approach, the City of Shasta Lake has continued to maintain a viable General Fund. This fiscally conservative approach entails estimating revenues low and expenditures high. This means that in most fiscal years there are budget savings. That is the case here, and even though there are expenditure increases being proposed, the General Fund is projected to remain in a stable position at the end of this fiscal year.
The tables below shows notable changes to expenditures, including offsetting revenues, for some of the City’s other funds, as noted, for the fiscal year ending June 30, 2026:
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Special Revenue Funds
CDBG Projects Funds
The CDBG program is a pass-through federal grant, awarded by the State of California Housing and Community Development to grant small cities with a population under 50,000. This funding is released through a Notice of Funding Availability (NOFA), and is a competitive application process. CDBG funding may be used for projects such as community service, infrastructure improvements, and housing for low-income residents.
Typical projects funded in the past include infrastructure improvements and construction of public facilities.
Revenues – The City is very active in securing Community Development Block Grant (CDBG) funding. These grants operate on a reimbursement basis, which means it never has a cash balance available to earn interest income.
Expenditures – This increase of $14,982,701 is for multiple ongoing projects, and are offset by grant revenues. The total amount requested is comprised of carryforward funds which were appropriated in a prior year for projects currently still in progress.
Other Grant Funds
The City has been awarded multiple grant contracts from both Federal and State agencies to fund various City projects. Projects include Fuel Reduction and Fire Mitigation funded by Cal Fire; major street improvements for the Shasta Dam Blvd Complete Streets project and Commercial Center Safe Routes to School project funded by the California Department of Community Development; a new Skatepark, Disc Golf Course, and ball field lighting improvements funded by the Federal American Rescue Plan Act (ARPA); park revitalization for Margaret Polf Park and Community Spirit Parkway funded by Cal Trans Clean California Grant.
Revenues – The City is very active in securing outside grant funding. These grants operate on a reimbursement basis, which means it never has a cash balance available to earn interest income.
Expenditures – This increase of $9,821,965 is for multiple ongoing projects, and are offset by grant revenues. The total amount requested is comprised of carryforward funds which were appropriated in a prior year for projects currently still in progress.
Trafficway / Transportation Funds
Expenditures – A $68,000 increase, of which $18,000 is a carry forward from the prior fiscal year approved budget. These funds are used for annual street lighting maintenance and completion of the Civic Center mobility project.
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Motor Pool Funds
Expenditures – An $80,000 increase, of which $46,000 is a carryforward from prior year appropriations. The City had planned to replace retired police vehicles over the course of both FY2025 and FY2026 with funds authorized in the two-year adopted budget. Due to supply constraints, the City purchased all vehicles in year one to ensure the vendor could fulfill the order timely. A corresponding appropriation transfer of $160,000 was approved, which moved funding from budget year 2 (FY2026) into budget year 1 (FY2025). The timing of the purchase resulted in an additional vehicle to police fleet prior to another vehicle being ready for retirement. The City was unable to utilize the installed equipment from an older vehicle (radios, computers, etc.) to be transferred into the new vehicle. The City will need additional funds to cover the cost of outfitting the new vehicle with specialized police equipment.
Debt Service Funds
Riddle Road Water Bond
Revenues – The City collects special property tax assessments on specific parcels within the Riddle Road Assessment District.
Expenditures – This increase of $1,000 will set the annual appropriation equal to the required annual debt service payment. Expenditures are offset by assessment revenues.
Fiduciary Funds
Successor Agency Funds
Revenues – The City receives distributions twice annually from City of Shasta Lake Successor Agency Redevelopment Property Tax Funds (RPTTF).
Expenditures – This increase of $25,000 will set the annual appropriation equal to the required annual debt service payment. Expenditures are offset by redevelopment agency revenues.
Enterprise Funds
Shasta Gateway Industrial Park LMD Funds
Revenues – The City collects special property tax assessments on specific parcels within the Shasta Gateway Industrial Park special district.
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Expenditures – This increase of $10,000 are for utility costs not previously budgeted during the biennial budget process. The LMD was formed in March 2024. Expenditures are offset by assessment revenues.
Wastewater Enterprise
Expenditures – A $263,673 increase for FY 25/26 as a carryforward of funds appropriated in a prior year for ongoing projects. These expenses are related to the Wastewater Rate Study, Wastewater Treatment Plant Water Effects Ratio and Translator Study, and Wastewater Master Plan.
Water Enterprise
Expenditures – A $467,800 increase for FY 25/26, of which $403,800 is a carryforward of prior year appropriations for ongoing projects. These expenses are for the water management plan update, the treatment plant centrifuge skid unit, UCMR5 testing, and backwash basin pumps.
Electric Enterprise
Expenditures – A $1,301,248 increase for FY 25/26, as a carryforward of funds appropriated in a prior year for ongoing projects. Projects include transmission pole replacements, public EV charging, and lighting upgrades at Margaret Polf Park 254
Report and Recommendations 8.5 Reviewed and Approved
City Manager
AGENDA ITEM
City Council
TO: Mayor and City Council Members
FROM: Jason Peterson, Finance Director
Margaret Youngs, Senior Accountant
DATE: April 7, 2026
SUBJECT: ANNUAL REVIEW OF INVESTMENT POLICY
FILE NO:
RECOMMENDATION
Staff requests City Council review and accept the updated investment policy.
BACKGROUND
The investment policy provides the basis for the management of a prudent, conservative investment program. Pursuant to Section 53646 of the California Government Code, and Senate Bills 564 and 866, City Council should review and approve the investment policy annually. The currently adopted investment policy was reviewed and approved by Council on February 4, 2025.
There are only minor, non-substantive changes that have been incorporated in this updated policy. These are:
XI. Authorized Investments
• Extend the term limit on Commercial Paper from 270 to 397 days as per Senate Bill 595 passed and took effect on January 1, 2026
• Expanded definitions for LAIF, LGIPs, JPA Pools as an authorized sector We currently use Chandler Investments to manage the portion of the City’s portfolio.
Chandler is familiar with, and ensures that we are in compliance with, the related Government Code. They have reviewed this policy and recommended the changes. 255
FISCAL IMPACTS
None
ATTACHMENTS
• Resolution
• City of Shasta Lake Investment Policy
DISTRIBUTION
City of Shasta Lake City Council
City of Shasta Lake Files
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RESOLUTION CC 2026-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SHASTA LAKE
ACCEPTING THE UPDATED INVESTMENT POLICY
WHEREAS, Government Code Section 53646 authorizes the Chief Fiscal Officer to annually render to the City Council a statement of investment policy, and WHEREAS, Government Code Section 53646 requires the City Council to review and approve, at a public meeting, the statement of investment policy, and WHEREAS, the Investment Policy describes the investment of City funds in compliance with the Municipal Code and state law.
NOW, THEREFORE BE IT RESOLVED that the Shasta Lake City Council approves the Statement of Investment Policy.
PASSED, APPROVED, AND ADOPTED this 7th day of April 2026, by the following vote:
AYES:
NOES:
ABSENT:
______________________________
JUSTIN JONES, Mayor
ATTEST:
_______________________________
CHARITY TATLOW, CMC
City Clerk
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INVESTMENT POLICY
ADOPTED APRIL 07, 2026
CONTENTS
I. INTRODUCTION ...................................................................................................................1 II. SCOPE.................................................................................................................................1 III. OBJECTIVES........................................................................................................................1 IV. DELEGATION OF AUTHORITY..............................................................................................2 V. PRUDENCE..........................................................................................................................2 VI. ETHICS AND CONFLICTS OF INTEREST.................................................................................3 VII. INTERNAL CONTROLS .........................................................................................................3 VIII. AUTHORIZED FINANCIAL INSTITUTIONS, DEPOSITORIES, AND BROKER/DEALERS ...............3 IX. COLLATERALIZATION .........................................................................................................5 X. DELIVERY, SAFEKEEPING AND CUSTODY............................................................................5 XI. AUTHORIZED INVESTMENTS .............................................................................................. 6 XII. MAXIMUM MATURITY ......................................................................................................10 XIII. PROHIBITED INVESTMENT VEHICLES AND PRACTICES.......................................................11 XIV. INVESTMENT POOLS/MUTUAL FUNDS…………………………………………………..11 XV. RISK MANAGEMENT AND DIVERSIFICATION .....................................................................12 XVI. REVIEW OF INVESTMENT PORTFOLIO................................................................................13 XVII. PERFORMANCE EVALUATION............................................................................................13 XVIII. REPORTING.......................................................................................................................13 XIX. REVIEW OF INVESTMENT POLICY......................................................................................14 GLOSSARY OF INVESTMENT TERMS .................................................................................................15 258
1 I. INTRODUCTION
The purpose of this investment policy is to identify various policies and procedures that will foster a prudent and systematic investment program designed to seek the City of Shasta Lake’s objectives of safety, liquidity and yield through a diversified investment portfolio.
This policy also serves to organize and formalize the City’s investment-related activities, while complying with all applicable statutes governing the investment of public funds. This policy is written to incorporate industry best practices and recommendations from sources such as the Government Finance Officers Association (GFOA), California Municipal Treasurers Association (CMTA), California Debt and Investment Advisory Commission (CDIAC) and the Association of Public Treasurers (APT).
This investment policy was endorsed and adopted by the City Council and is effective as of the 7th day of April, 2026, and replaces any previous versions.
II. SCOPE
This policy covers all funds and investment activities under the direct authority of the City, as set forth in the State Government Code, Sections 53600 et seq., with the following exceptions:
• Proceeds of debt issuance shall be invested in accordance with the City’s general investment philosophy as set forth in this policy; however, such proceeds are to be invested pursuant to the permitted investment provisions of their specific bond indentures.
• Any other funds specifically exempted by the City.
POOLING OF FUNDS
Except for cash in certain restricted and special funds, the City will consolidate cash and reserve balances from all funds to maximize investment earnings and to increase efficiencies with regard to investment pricing, safekeeping and administration. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles.
III. OBJECTIVES
The City’s overall investment program shall be designed and managed with a degree of professionalism worthy of the public trust. The overriding objectives of the program are to preserve principal, provide sufficient liquidity, and manage investment risks, while seeking a market-rate of return.
SAFETY. Safety of principal is the foremost objective of the investment program. Investments will be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio.
To attain this objective, the City will diversify its investments by investing funds among a variety of securities with independent returns.
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2 • LIQUIDITY. The investment portfolio will remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. • YIELD. The investment portfolio will be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints for safety and liquidity needs.
IV. DELEGATION OF AUTHORITY
Authority to manage the City’s investment program is derived from California Government Code, Sections 53600 et seq.
The City Council is responsible for the management of City funds, including the administration of this investment policy. Management responsibility for the cash management of City funds is hereby delegated to the Finance Director.
The Finance Director will be responsible for all transactions undertaken and will establish a system of procedures and controls to regulate the activities of subordinate employees.
Such procedures will include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Finance Director.
The City may engage the services of one or more external investment advisers, who are registered under the Investment Advisers Act of 1940, to assist in the management of the City’s investment portfolio in a manner consistent with the City’s objectives. External investment advisers may be granted discretion to purchase and sell investment securities in accordance with this investment policy.
The City’s overall investment program shall be designed and managed with a degree of professionalism that is worthy of the public trust. The City recognizes that in a diversified portfolio, occasional measured losses may be inevitable and must be considered within the context of the overall portfolio’s return and the cash flow requirements of the City. The Finance Director and other authorized persons responsible for managing City funds acting in accordance with written procedures and the investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments.
V. PRUDENCE
Pursuant to California Government Code, Section 53600.3, all persons authorized to make investment decisions on behalf of the City are trustees and therefore fiduciaries subject to the Prudent Investor Standard:
“…all governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to this 260
3 chapter are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the City, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the City. Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law.”
VI. ETHICS AND CONFLICTS OF INTEREST
All participants in the investment process shall act as custodians of the public trust.
Investment officials shall recognize that the investment portfolio is subject to public review and evaluation. Thus employees and officials involved in the investment process shall refrain from personal business activity that could create a conflict of interest or the appearance of a conflict with proper execution of the investment program, or impairs their ability to make impartial investment decisions.
Employees and investment officials shall disclose to the Finance Director any material interests in financial institutions with which they conduct business, and they shall further disclose any large personal financial/investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking any personal investment transactions with the same individual with whom business is conducted on behalf of the City.
VII. INTERNAL CONTROLS
The Finance Director is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the entity are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management.
Periodically, as deemed appropriate by the City and/or the City Council, an independent analysis by an external auditor shall be conducted to review internal controls, account activity and compliance with policies and procedures.
VIII. AUTHORIZED FINANCIAL INSTITUTIONS, DEPOSITORIES, AND BROKER/DEALERS To the extent practical, the Finance Director shall endeavor to complete investment transactions using a competitive bid process whenever possible. The City’s Finance Director will determine which financial institutions are authorized to provide investment services to the City. It shall be the City’s policy to purchase securities only from authorized institutions and firms.
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4 The Finance Director shall maintain procedures for establishing a list of authorized broker/dealers and financial institutions which are approved for investment purposes that are selected through a process of due diligence determined by the City. These institutions may include "primary" dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15c3-1 (uniform net capital rule).
Institutions eligible to transact investment business with the City include:
• Institutions licensed by the state as a broker-dealer. • Institutions that are members of a federally regulated securities exchange. • Primary government dealers as designated by the Federal Reserve Bank and nonprimary government dealers. • Nationally or state-chartered banks.
• The Federal Reserve Bank.
• Direct issuers of securities eligible for purchase.
Selection of financial institutions and broker/dealers authorized to engage in transactions will be at the sole discretion of the City, except where the City utilizes an external investment adviser in which case the City may rely on the adviser for selection.
All financial institutions which desire to become qualified bidders for investment transactions (and which are not dealing only with the investment adviser) must supply the Finance Director with a statement certifying that the institution has reviewed the California Government Code, Section 53600 et seq. and the City’s investment policy.
Public deposits will be made only in qualified public depositories as established by State law. Deposits will be insured by the Federal Deposit Insurance Corporation, or, to the extent the amount exceeds the insured maximum, will be collateralized in accordance with State law.
EXTERNAL INVESTMENT ADVISERS
Selection of broker/dealers used by an external investment adviser retained by the City will be at the sole discretion of the adviser. Where possible, transactions with broker/dealers shall be selected on a competitive basis and their bid or offering prices shall be recorded. If there is no other readily available competitive offering, the investment adviser shall make their best efforts to document quotations for comparable or alternative securities. If qualitative characteristics of a transaction, including, but not limited to, complexity of the transaction, or sector expertise of the broker, prevent a competitive selection process, investment advisers shall use brokerage selection practices as described above. When purchasing new issue securities, no competitive offerings will be required as all dealers in the selling group offer the securities at the same original price. 262
5 IX. COLLATERALIZATION
CERTIFICATES OF DEPOSIT (CDS). The City shall require any commercial bank or savings and loan association to deposit eligible securities with a City of a depository approved by the State Banking Department to secure any uninsured portion of a Non- Negotiable Certificate of Deposit. The value of eligible securities as defined pursuant to California Government Code, Section 53651, pledged against a Certificate of Deposit shall be equal to 150% of the face value of the CD if the securities are classified as mortgages and 110% of the face value of the CD for all other classes of security.
COLLATERALIZATION OF BANK DEPOSITS. This is the process by which a bank or financial institution pledges securities, or other deposits for the purpose of securing repayment of deposited funds. The City shall require any bank or financial institution to comply with the collateralization criteria defined in California Government Code, Section 53651.
REPURCHASE AGREEMENTS. The City requires that Repurchase Agreements be collateralized only by securities authorized in accordance with California Government Code:
• The securities which collateralize the repurchase agreement shall be priced at Market Value, including any Accrued Interest plus a margin. The Market Value of the securities that underlie a repurchase agreement shall be valued at 102% or greater of the funds borrowed against those securities. • Financial institutions shall mark the value of the collateral to market at least monthly and increase or decrease the collateral to satisfy the ratio requirement described above.
• The City shall receive monthly statements of collateral.
X. DELIVERY, SAFEKEEPING AND CUSTODY
DELIVERY-VERSUS-PAYMENT (DVP). Settlement of all investment transactions will be completed using standard delivery-vs.-payment procedures.
SAFEKEEPING AND CUSTODY. To protect against potential losses due to failure of individual securities dealers, and to enhance access to securities, interest payments and maturity proceeds, all cash and securities in the City’s portfolio shall be held in safekeeping in the City’s name by a third party custodian, acting as agent for the City under the terms of a custody agreement executed by the bank and the City. All investment transactions will require a safekeeping receipt or acknowledgment generated from the trade. A monthly report will be received by the City from the custodian listing all securities held in safekeeping with current market data and other information.
The only exceptions to the foregoing shall be depository accounts and securities purchases made with: (i) local government investment pools; (ii) time certificates of deposit, and, (iii) mutual funds and money market mutual funds, since the purchased securities are not 263
6 deliverable. Term and non-negotiable instruments, such as Certificates of Deposit, can be held by the Finance Director, or in safekeeping as the Finance Director deems appropriate.
XI. AUTHORIZED INVESTMENTS
The City’s investments are governed by California Government Code, Sections 53600 et seq. Within the investments permitted by the Code, the City seeks to further restrict eligible investments to the guidelines listed below. In the event a discrepancy is found between this policy and the Code, the more restrictive parameters will take precedence. Percentage holding limits listed in this section apply at the time the security is purchased.
Any investment currently held at the time the policy is adopted which does not meet the new policy guidelines can be held until maturity, and shall be exempt from the current policy. At the time of the investment’s maturity or liquidation, such funds shall be reinvested only as provided in the current policy.
An appropriate risk level shall be maintained by primarily purchasing securities that are of high quality, liquid, and marketable. The portfolio shall be diversified by security type and institution to avoid incurring unreasonable and avoidable risks regarding specific security types or individual financial institutions.
1. MUNICIPAL SECURITIES include obligations of the City, the State of California, any of the other 49 states, and any local agency within the State of California, provided that:
• The securities are rated in the “A” category or its equivalent or better by at least one nationally recognized statistical rating organization (“NRSRO”). • No more than 5% of the total portfolio may be invested in any issuer. • No more than 30% of the total portfolio may be in Municipal Securities. • The maximum maturity does not exceed five years.
2. MUNICIPAL SECURITIES (REGISTERED TREASURY NOTES OR BONDS) of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency or authority of any of the other 49 states, in addition to California, provided that:
• The securities are rated in the “A” category or its equivalent or better by at least one NRSRO.
• No more than 5% of the total portfolio may be invested in any issuer. • No more than 30% of the total portfolio may be in Municipal Securities. • The maximum maturity does not exceed five years.
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7 3. U.S. TREASURIES and other government obligations for which the full faith and credit of the United States are pledged for the payment of principal and interest. There are no limits on the dollar amount or percentage that the City may invest in U.S. Treasuries, provided that:
• The maximum maturity does not exceed five years.
4. FEDERAL AGENCIES or United States Government-Sponsored Enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government-sponsored enterprises. There are no limits on the dollar amount or percentage that the City may invest in Federal Agency or Government-Sponsored Enterprises (GSEs), provided that:
• No more than 30% of the total portfolio may be invested in a single Agency/GSE issuer.
• No more than 20% of the total portfolio may be invested in callable agency securities.
• The maximum maturity does not exceed five years.
5. BANKER’S ACCEPTANCES, provided that:
• They are issued by institutions which have short-term debt obligations rated “A- 1” or its equivalent or its equivalent or better by at least one nationally recognized statistical- rating organization; or long-term debt obligations which are rated in the “A” category or its equivalent or better by at least one NRSRO. • No more than 40% of the total portfolio may be invested in Banker’s Acceptances. • No more than 5% of the total portfolio may be invested in any issuer. • The maximum maturity does not exceed 180 days.
6. FEDERALLY INSURED TIME DEPOSITS (Non-Negotiable Certificates of Deposit) in state or federally chartered banks, savings and loans, or credit unions, provided that:
• The amount per institution is limited to the maximum covered under federal insurance.
• No more than 20% of the total portfolio will be invested in a combination of federally insured and collateralized time deposits.
• The maximum maturity does not exceed five years.
7. COLLATERALIZED TIME DEPOSITS (Non-Negotiable Certificates of Deposit) in state or federally chartered banks, savings and loans, or credit unions in excess of insured amounts which are fully collateralized with securities in accordance with California law, provided that:
• No more than 20% of the total portfolio will be invested in a combination of federally insured and collateralized time deposits.
• The maximum maturity does not exceed five years.
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8 8. CERTIFICATE OF DEPOSIT PLACEMENT SERVICE (CDARS)
• No more than 30% of the total portfolio may be invested in a combination of Certificates of Deposit, including CDARS.
• The maximum maturity does not exceed five years.
9. COLLATERALIZED BANK DEPOSITS. Agency’s deposits with financial institutions will be collateralized with pledged securities per California Government Code, Section 53651.
10. NEGOTIABLE CERTIFICATES OF DEPOSIT (NCDS), issued by a nationally or statechartered bank, a savings association, or a federal association, a state or federal credit union, or by a federally licensed or state licensed branch of a foreign bank, provided that:
• The amount of the NCD insured up to the FDIC limit does not require any credit ratings.
• Any amount above the FDIC limit must be issued by institutions which have shortterm debt obligations rated “A-1” or its equivalent or better by at least NRSRO; or long-term obligations are rated in the “A” category or its equivalent or better by at least one NRSRO.
• No more than 30% of the total portfolio may be invested in NCDs. • No more than 5% of the total portfolio may be invested in any issuer. • The maximum maturity does not exceed five years.
11. REPURCHASE AGREEMENTS collateralized with securities authorized under by California Government Code, maintained at a level of at least 102% of the market value of the Repurchase Agreement. There are no limits on the dollar amount or percentage that the City may invest, provided that:
• Securities used as collateral for Repurchase Agreements will be delivered to the City’s custodian.
• Repurchase Agreements are subject to a Master Repurchase Agreement between the City and the provider of the repurchase agreement. The Master Repurchase Agreement will be substantially in the form developed by the Securities Industry and Financial Markets Association (SIFMA).
• The maximum maturity does not exceed one year.
12. COMMERCIAL PAPER, provided that the securities are issued by an entity that meets all of the following conditions in either paragraph (a) or (b) and other requirements specified below:
a. SECURITIES issued by corporations:
• The issuer is a corporation organized and operating in the United States with assets in excess of $500 million.
• The securities are rated “A-1” or its equivalent of better by at least one NRSRO. • If the issuer has other debt obligations, they must be rated in a rating category of “A” of its equivalent or higher by at least one NRSRO. 266
9 b. SECURITIES issued by other entities:
• The issuer is organized within the United States as a special purpose corporation, trust, or limited liability company.
• The securities must have program-wide credit enhancements including, but not limited to, overcollateralization, letters of credit, or surety bond. • The securities are rated “A-1” or its equivalent or better by at least one NRSRO. • No more than 10% of the outstanding commercial paper of any single issuer. • No more than 25% of the total portfolio may be invested in Commercial Paper. • No more than 5% of the total portfolio may be invested in any issuer. • The maximum maturity does not exceed 397 days.
13. LOCAL GOVERNMENT INVESTMENT POOLS (LGIP)
a. STATE OF CALIFORNIA LOCAL AGENCY INVESTMENT FUND (LAIF), created by California Government Code Section 16429.1, provided that:
• The Agency may invest up to the maximum amount permitted by LAIF. • LAIF’s investments in instruments prohibited by or not specified in the Agency’s policy do not exclude the investment in LAIF itself from the Agency’s list of allowable investments, provided LAIF’s reports allow the Designated Official to adequately judge the risk inherent in LAIF’s portfolio.
b. SHARES OF BENEFICIAL INTEREST ISSUED BY A JOINT POWERS AUTHORITY (JPA), provided that:
• The JPA is organized pursuant to California Government Code Section 6509.7 and invests in the securities and obligations authorized in subdivisions (a) to (r), inclusive. • Each share shall represent an equal proportional interest in the underlying pool of securities owned by the JPA.
• The JPA has retained an investment advisor who is registered with the SEC (or exempt from registration), has assets under management in excess of $500 million, and has at least five years’ experience investing in instruments authorized by Section 53601, subdivisions (a) to (q).
c. OTHER LOCAL GOVERNMENT INVESTMENT POOLS (LGIP)
• Other LGIPs permitted by the agency (such as a County Pool as defined by California Government Code Section 27000.3).
• No more than 20% of the total portfolio may be invested in LGIPs other than LAIF and JPAs.
14. CORPORATEMEDIUM TERM NOTES (MTNS), provided that:
a. The issuer is a corporation organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States.
b. The securities are rated in the “A” category or its equivalent or better by at least one NRSRO.
c. No more than 30% of the total portfolio may be invested in MTNs. d. No more than 5% of the total portfolio may be invested in any issuer. 267
10 e. The maximum maturity does not exceed five years.
15. ASSET-BACKED, MORTGAGE-BACKED, MORTGAGE PASS-THROUGH SECURITIES, AND COLLATERALIZED MORTGAGE OBLIGATIONS, provided that:
a. The securities are rated in the “AA” category or its equivalent or better by a NRSRO.
b. No more than 20% of the total portfolio may be invested in these securities. c. No more than 5% of the total portfolio may be invested in any Asset-Backed or Commercial Mortgage security issuer. There is no issuer limitation on any Mortgage security where the issuer is the US Treasury or a Federal Agency/GSE. d. The maximum maturity does not exceed five years.
16. MUTUAL FUNDS AND MONEY MARKET MUTUAL FUNDS that are registered with the Securities and Exchange Commission under the Investment Company Act of 1940, provided that:
a. MUTUAL FUNDS that invest in the securities and obligations as authorized under California Government Code, Section 53601 (a) to (k) and (m) to (q) inclusive and that meet either of the following criteria:
1. Attained the highest ranking or the highest letter and numerical rating provided by not less than two (2) NRSROs; or
2. Have retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience investing in the securities and obligations authorized by California Government Code, Section 53601 and with assets under management in excess of $500 million.
3. No more than 10% of the total portfolio may be invested in shares of any one mutual fund.
b. MONEY MARKET MUTUAL FUNDS registered with the Securities and Exchange Commission under the Investment Company Act of 1940 and issued by diversified management companies and meet either of the following criteria:
1. Have attained the highest ranking or the highest letter and numerical rating provided by not less than two (2) NRSROs; or
2. Have retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience managing money market mutual funds with assets under management in excess of $500 million.
3. No more than 20% of the total portfolio may be invested in the shares of any one Money Market Mutual Funds.
c. No more than 20% of the total portfolio may be invested in these securities.
17. SUPRANATIONALS, provided that:
a. Issues are US dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction 268
11 and Development, International Finance Corporation, or Inter-American Development Bank.
b. The securities are rated in a rating category of “AA” or its equivalent or better by a NRSRO.
c. No more than 30% of the total portfolio may be invested in these securities. d. No more than 10% of the total portfolio may be invested in any single issuer. e. The maximum maturity does not exceed five (5) years.
XII. MAXIMUM MATURITY
To the extent possible, investments shall be matched with anticipated cash flow requirements and known future liabilities. The City will not invest in securities maturing more than five years from the date of trade settlement, unless the City Council has by resolution granted authority to make such an investment. 269
12 XIII. PROHIBITED INVESTMENT VEHICLES AND PRACTICES
• State law notwithstanding, any investments not specifically described herein are prohibited, including, but not limited to futures and options. • In accordance with Government Code, Section 53601.6, investment in inverse floaters, range notes, or mortgage derived interest-only strips is prohibited. • Investment in any security that could result in a zero interest accrual if held to maturity is prohibited.
• Trading securities for the sole purpose of speculating on the future direction of interest rates is prohibited.
• Purchasing or selling securities on margin is prohibited. • The use of reverse repurchase agreements, securities lending or any other form of borrowing or leverage is prohibited.
• The purchase of foreign currency denominated securities is prohibited. • The purchase of security with a forward settlement date exceeding 45 days from the time of the investment is prohibited.
XIV. INVESTMENT POOLS/MUTUAL FUNDS
The City shall conduct a thorough investigation of any pool or mutual fund prior to making an investment, and on a continual basis thereafter. The Finance Director shall develop a questionnaire which will answer the following general questions:
• A description of eligible investment securities, and a written statement of investment policy and objectives.
• A description of interest calculations and how it is distributed, and how gains and losses are treated.
• A description of how the securities are safeguarded (including the settlement processes), and how often the securities are priced and the program audited. • A description of who may invest in the program, how often, what size deposit and withdrawal are allowed.
• A schedule for receiving statements and portfolio listings. • Are reserves, retained earnings, etc. utilized by the pool/fund? • A fee schedule, and when and how is it assessed.
• Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds? 270
13 XV. RISK MANAGEMENT AND DIVERSIFICATION
MITIGATING CREDIT RISK IN THE PORTFOLIO
Credit risk is the risk that a security or a portfolio will lose some or all of its value due to a real or perceived change in the ability of the issuer to repay its debt. The City will mitigate credit risk by adopting the following strategies:
• The diversification requirements included in the “Authorized Investments” section of this policy are designed to mitigate credit risk in the portfolio. • No more than 5% of the total portfolio may be invested in securities of any single issuer, unless otherwise specified in this policy.
• The City may elect to sell a security prior to its maturity and record a capital gain or loss in order to improve the quality, liquidity or yield of the portfolio in response to market conditions or City’s risk preferences.
• If securities owned by the City are downgraded to a level below the quality required by this investment policy, it will be the City’s policy to review the credit situation and make a determination as to whether to sell or retain such securities in the portfolio. • If a security is downgraded, the Finance Director will use discretion in determining whether to sell or hold the security based on its current maturity, the economic outlook for the issuer, and other relevant factors.
• If a decision is made to retain a downgraded security in the portfolio, its presence in the portfolio will be monitored and reported monthly to the City Council.
MITIGATING MARKET RISK IN THE PORTFOLIO
Market risk is the risk that the portfolio value will fluctuate due to changes in the general level of interest rates. The City recognizes that, over time, longer-term portfolios have the potential to achieve higher returns. On the other hand, longer-term portfolios have higher volatility of return. The City will mitigate market risk by providing adequate liquidity for short-term cash needs, and by making longer-term investments only with funds that are not needed for current cashflow purposes.
The City further recognizes that certain types of securities, including variable rate securities, securities with principal paydowns prior to maturity, and securities with embedded options, will affect the market risk profile of the portfolio differently in different interest rate environments. The City, therefore, adopts the following strategies to control and mitigate its exposure to market risk:
• The City will maintain a minimum of six months of budgeted operating expenditures in short term investments to provide sufficient liquidity for expected disbursements. • The maximum percent of callable securities (does not include “make whole call” securities) in the portfolio will be 20%.
• The maximum stated final maturity of individual securities in the portfolio will be 271
14 five years, except as otherwise stated in this policy. • The duration of the portfolio will at all times be approximately equal to the duration (typically, plus or minus 20%) of a Market Benchmark, an index selected by the City based on the City’s investment objectives, constraints and risk tolerances.
XVI. REVIEW OF INVESTMENT PORTFOLIO
The Finance Director shall periodically, but no less than quarterly, review the portfolio to identify investments that do not comply with this investment policy and establish protocols for reporting major and critical incidences of noncompliance to the City Council.
XVII. PERFORMANCE EVALUATION
The investment portfolio shall be designed to attain a market-average rate of return throughout budgetary and economic cycles, taking into account the City’s risk constraints, the cash flow characteristics of the portfolio, and state and local laws, ordinances or resolutions that restrict investments.
The Finance Director shall monitor and evaluate the portfolio’s performance relative to market benchmark, which will be included in the Finance Director’s quarterly report. The Finance Director shall select an appropriate, readily available index to use as a market benchmark.
XVIII.REPORTING
MONTHLY REPORTS
Monthly transaction reports will be submitted by the Finance Director to the City Council in accordance with California Government Code Section 53607.
QUARTERLY REPORTS
Quarterly investment reports will be submitted by the Finance Director to the City Council within 45 days after the end of the quarter.. These reports will disclose, at a minimum, the following information about the characteristics of the City’s portfolio:
1. An asset listing showing par value, cost and accurate and complete market value of each security, type of investment, issuer, and interest rate.
2. Quarterly transactions for the period.
3. A description of the funds, investments and programs (including lending programs) managed by contracted parties (e.g. LAIF, investment pools, outside money managers and securities lending agents.)
4. A one-page summary report that shows:
a. Average maturity of the portfolio and modified duration of the portfolio; b. Maturity distribution of the portfolio;
c. Average portfolio credit quality; and,
d. Time-weighted total rate of return for the portfolio for the prior one month, three months, twelve months, year to date, and since inception compared to the City’s 272
15 market benchmark returns for the same periods;
5. A statement of compliance with investment policy, including a schedule of any transactions or holdings which do not comply with this policy or with the California Government Code, including a justification for their presence in the portfolio and a timetable for resolution.
6. A statement that the City has adequate funds to meet its cash flow requirements for the next six months.
ANNUAL REPORTS
A comprehensive annual report will be presented to the City Council. This report will include comparisons of the City’s return to the market benchmark return, suggest policies and improvements that might enhance the investment program, and will include an investment plan for the coming year.
XIX. REVIEW OF INVESTMENT POLICY
The investment policy will be reviewed and adopted at least annually within 120 days of the end of the fiscal year to ensure its consistency with the overall objectives of preservation of principal, liquidity and return, and its relevance to current law and financial and economic trends.
Any recommended modifications or amendments shall be presented by Staff to the City Council for their consideration and adoption.
Prepared by:
Jason Peterson, Finance Director
Approved:
John Kenny, Attorney at Law
City Attorney
Approved:
Justin Jones, Mayor City
Council
Date:
273
16 GLOSSARY OF INVESTMENT TERMS
AGENCIES. Shorthand market terminology for any obligation issued by a government-sponsored entity (GSE), or a federally related institution. Most obligations of GSEs are not guaranteed by the full faith and credit of the US government. Examples are:
FFCB. The Federal Farm Credit Bank System provides credit and liquidity in the agricultural industry. FFCB issues discount notes and bonds.
FHLB. The Federal Home Loan Bank provides credit and liquidity in the housing market.
FHLB issues discount notes and bonds.
FHLMC. Like FHLB, the Federal Home Loan Mortgage Corporation provides credit and liquidity in the housing market. FHLMC, also called “FreddieMac” issues discount notes, bonds and mortgage pass-through securities.
FNMA. Like FHLB and FreddieMac, the Federal National Mortgage Association was established to provide credit and liquidity in the housing market. FNMA, also known as “FannieMae,” issues discount notes, bonds and mortgage pass-through securities.
GNMA. The Government National Mortgage Association, known as “GinnieMae,” issues mortgage pass-through securities, which are guaranteed by the full faith and credit of the US Government.
PEFCO. The Private Export Funding Corporation assists exporters. Obligations of PEFCO are not guaranteed by the full faith and credit of the US government.
TVA. The Tennessee Valley Authority provides flood control and power and promotes development in portions of the Tennessee, Ohio, and Mississippi River valleys. TVA currently issues discount notes and bonds.
ASKED. The price at which a seller offers to sell a security.
ASSET BACKED SECURITIES. Securities supported by pools of installment loans or leases or by pools of revolving lines of credit.
AVERAGE LIFE. In mortgage-related investments, including CMOs, the average time to expected receipt of principal payments, weighted by the amount of principal expected.
BANKER’S ACCEPTANCE. A money market instrument created to facilitate international trade transactions. It is highly liquid and safe because the risk of the trade transaction is transferred to the bank which “accepts” the obligation to pay the investor.
BENCHMARK. A comparison security or portfolio. A performance benchmark is a partial market index, which reflects the mix of securities allowed under a specific investment policy.
BID. The price at which a buyer offers to buy a security.
BROKER. A broker brings buyers and sellers together for a transaction for which the broker receives a commission. A broker does not sell securities from his own position.
CALLABLE. A callable security gives the issuer the option to call it from the investor prior to its maturity. The main cause of a call is a decline in interest rates. If interest rates decline since an issuer issues securities, it will likely call its current securities and reissue them at a lower rate of interest. Callable securities have reinvestment risk as the investor may receive its principal back when interest rates are lower than when the investment was initially made.
CERTIFICATE OF DEPOSIT (CD). A time deposit with a specific maturity evidenced by a certificate. Large denomination CDs may be marketable.
COLLATERAL. Securities or cash pledged by a borrower to secure repayment of a loan or repurchase agreement. Also, securities pledged by a financial institution to secure deposits of public monies.
COLLATERALIZED MORTGAGE OBLIGATIONS (CMO). Classes of bonds that redistribute the cash flows of mortgage securities (and whole loans) to create securities that have different levels 274
17 of prepayment risk, as compared to the underlying mortgage securities.
COMMERCIAL PAPER. The short-term unsecured debt of corporations.
COUPON. The rate of return at which interest is paid on a bond.
CREDIT RISK. The risk that principal and/or interest on an investment will not be paid in a timely manner due to changes in the condition of the issuer.
CURRENT YIELD. The annual income from an investment divided by the current market value.
Since the mathematical calculation relies on the current market value rather than the investor’s cost, current yield is unrelated to the actual return the investor will earn if the security is held to maturity.
DEALER. A dealer acts as a principal in security transactions, selling securities from and buying securities for his own position.
DELIVERY VS. PAYMENT (DVP). A securities industry procedure whereby payment for a security must be made at the time the security is delivered to the purchaser’s agent.
DISCOUNT. The difference between the par value of a bond and the cost of the bond, when the cost is below par. Some short-term securities, such as T-bills and banker’s acceptances, are known as discount securities. They sell at a discount from par, and return the par value to the investor at maturity without additional interest. Other securities, which have fixed coupons, trade at a discount when the coupon rate is lower than the current market rate for securities of that maturity and/or quality.
DIVERSIFICATION. Dividing investment funds among a variety of investments to avoid excessive exposure to any one source of risk.
DURATION. The weighted average time to maturity of a bond where the weights are the present values of the future cash flows. Duration measures the price sensitivity of a bond to changes in interest rates. (See modified duration).
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC). The Federal Deposit Insurance Corporation (FDIC) is an independent federal agency insuring deposits in U.S. banks and thrifts in the event of bank failures. The FDIC was created in 1933 to maintain public confidence and encourage stability in the financial system through the promotion of sound banking practices.
FEDERALLY INSURED TIME DEPOSIT. A time deposit is an interest-bearing bank deposit account that has a specified date of maturity, such as a certificate of deposit (CD). These deposits are limited to funds insured in accordance with FDIC insurance deposit limits.
FIDUCIARY. A person or organization that acts on behalf of another person(s) or organization that puts their clients’ interest ahead of their own as they are bound both legally and ethically to act in the other’s best interests.
LEVERAGE. Borrowing funds in order to invest in securities that have the potential to pay earnings at a rate higher than the cost of borrowing.
LIQUIDITY. The speed and ease with which an asset can be converted to cash.
MAKE WHOLE CALL. A type of call provision on a bond that allows the issuer to pay off the remaining debt early. Unlike a call option, with a make whole call provision, the issuer makes a lump sum payment that equals the net present value (NPV) of future coupon payments that will not be paid because of the call. With this type of call, an investor is compensated, or "made whole."
MARGIN. The difference between the market value of a security and the loan a broker makes using that security as collateral.
MARKET RISK. The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates.
MARKET VALUE. The price at which a security can be traded. 275
18 MATURITY. The final date upon which the principal of a security becomes due and payable. The investment’s term or remaining maturity is measured from the settlement date to final maturity.
MEDIUM TERM NOTES. Unsecured, investment-grade senior debt securities of major corporations which are sold in relatively small amounts on either a continuous or an intermittent basis.
MTNs are highly flexible debt instruments that can be structured to respond to market opportunities or to investor preferences.
MODIFIED DURATION. The percent change in price for a 100 basis point change in yields.
Modified duration is the best single measure of a portfolio’s or security’s exposure to market risk.
MONEY MARKET. The market in which short-term debt instruments (T-bills, discount notes, commercial paper, and banker’s acceptances) are issued and traded.
MONEY MARKET MUTUAL FUND. A mutual fund that invests exclusively in short-term securities.
Examples of investments in money market funds are certificates of deposit and U.S.
Treasury securities. Money market funds attempt to keep their net asset values at $1 per share.
MORTGAGE PASS-THROUGH SECURITIES. A securitized participation in the interest and principal cash flows from a specified pool of mortgages. Principal and interest payments made on the mortgages are passed through to the holder of the security.
MUNICIPAL SECURITIES. Securities issued by state and local agencies to finance capital and operating expenses.
MUTUAL FUND. An entity which pools the funds of investors and invests those funds in a set of securities which is specifically defined in the fund’s prospectus. Mutual funds can be invested in various types of domestic and/or international stocks, bonds, and money market instruments, as set forth in the individual fund’s prospectus. For most large, institutional investors, the costs associated with investing in mutual funds are higher than the investor can obtain through an individually managed portfolio.
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION (NRSRO). A credit rating agency that the Securities and Exchange Commission in the United States uses for regulatory purposes. Credit rating agencies provide assessments of an investment's risk.
The issuers of investments, especially debt securities, pay credit rating agencies to provide them with ratings. The three most prominent NRSROs are Fitch, S&P, and Moody's.
NEGOTIABLE CERTIFICATE OF DEPOSIT (CD). A short-term debt instrument that pays interest and is issued by a bank, savings or federal association, state or federal credit union, or statelicensed branch of a foreign bank. Negotiable CDs are traded in a secondary market.
PAYDOWN. A reduction in the principal amount owed on a bond, loan, or other debt.
PREMIUM. The difference between the par value of a bond and the cost of the bond, when the cost is above par.
PRIMARY DEALER. A financial institution (1) that is a trading counterparty with the Federal Reserve in its execution of market operations to carry out U.S. monetary policy, and (2) that participates for statistical reporting purposes in compiling data on activity in the U.S.
Government securities market.
PRUDENT INVESTOR (PRUDENT PERSON) RULE. A standard of responsibility which applies to fiduciaries. In California, the rule is stated as “Investments shall be managed with the care, skill, prudence and diligence, under the circumstances then prevailing, that a prudent person, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of like character and with like aims to accomplish similar purposes.” REGIONAL DEALER. A financial intermediary that buys and sells securities for the benefit of its customers without maintaining substantial inventories of securities and that is not a primary 276
19 dealer.
REPURCHASE AGREEMENT. Short-term purchases of securities with a simultaneous agreement to sell the securities back at a higher price. From the seller’s point of view, the same transaction is a reverse repurchase agreement.
SAFEKEEPING. A service to bank customers whereby securities are held by the bank in the customer’s name.
STRUCTURED NOTE. A complex, fixed income instrument, which pays interest, based on a formula tied to other interest rates, commodities or indices. Examples include inverse floating rate notes which have coupons that increase when other interest rates are falling, and which fall when other interest rates are rising, and "dual index floaters," which pay interest based on the relationship between two other interest rates - for example, the yield on the ten-year Treasury note minus the Libor rate. Issuers of such notes lock in a reduced cost of borrowing by purchasing interest rate swap agreements.
SURPANATIONAL. A Supranational is a multi-national organization whereby member states transcend national boundaries or interests to share in the decision making to promote economic development in the member countries.
TOTAL RATE OF RETURN. A measure of a portfolio’s performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending value; it includes interest earnings, realized and unrealized gains, and losses in the portfolio.
U.S.TREASURY OBLIGATIONS. Securities issued by the U.S. Treasury and backed by the full faith and credit of the United States. Treasuries are considered to have no credit risk, and are the benchmark for interest rates on all other securities in the US and overseas. The Treasury issues both discounted securities and fixed coupon notes and bonds.
TREASURY BILLS. All securities issued with initial maturities of one year or less are issued as discounted instruments, and are called Treasury bills. The Treasury currently issues three- and six-month T-bills at regular weekly auctions. It also issues “cash management” bills as needed to smooth out cash flows.
TREASURY NOTES. All securities issued with initial maturities of two to ten years are called Treasury notes, and pay interest semi-annually.
TREASURY BONDS. All securities issued with initial maturities greater than ten years are called Treasury bonds. Like Treasury notes, they pay interest semi-annually.
VOLATILITY. The rate at which security prices change with changes in general economic conditions or the general level of interest rates.
YIELD TO MATURITY. The annualized internal rate of return on an investment which equates the expected cash flows from the investment to its cost.
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