Tracy City Council
March 7, 2023

Date Posted: March 2, 2023

THIS MEETING WILL BE OPEN TO THE PUBLIC FOR IN-PERSON AND REMOTE PARTICIPATION PURSUANT TO GOVERNMENT CODE SECTION 54953(e).

MEMBERS OF THE PUBLIC MAY PARTICIPATE REMOTELY IN THE MEETING VIA THE FOLLOWING METHOD:

As always, the public may view the City Council meetings live on the City of Tracy’s website at CityofTracy.org or on Comcast Channel 26/AT&T U-verse Channel 99. To view from the City’s website, open the “Government” menu at the top of the City’s homepage and select “City Council Meeting Videos” under the “City Council” section.

If you only wish to watch the meeting and do not wish to address the Council, the City requests that you stream the meeting through the City’s website or watch on Channel 26.

Remote Public Comment:

During the upcoming City Council meeting public comment will be accepted via the options listed below. If you would like to comment remotely, please follow the protocols below:
• Comments via:
o Online by visiting https://cityoftracyevents.webex.com and using the following Event Number: 2557 956 2341 and Event Password: TracyCC o If you would like to participate in the public comment anonymously, you may submit your comment in WebEx by typing “Anonymous” when prompted to provide a First and Last Name and inserting [email protected] when prompted to provide an email address.
o Join by phone by dialing +1-408-418-9388, enter 25579562341#8722922# Press *3 to raise the hand icon to speak on an item.

• Protocols for commenting via WebEx:
o If you wish to comment on the “Consent Calendar”, “Items from the Audience/Public Comment” or “Regular Agenda” portions of the agenda:
 Listen for the Mayor to open that portion of the agenda for discussion, then raise your hand to speak by clicking on the Hand icon on the Participants panel to the right of your screen.
 If you no longer wish to comment, you may lower your hand by clicking on the Hand icon again.
o Comments for the “Consent Calendar” “Items from the Agenda/Public Comment” or “Regular Agenda” portions of the agenda will be accepted until the public comment for that item is closed.

Comments received on Webex outside of the comment periods outlined above will not be included in the record.

TRACY CITY COUNCIL REGULAR MEETING AGENDA

Tuesday, March 7, 2023, 7:00 P.M.

A quorum of City Council will be in attendance at
Tracy City Hall Chambers, 333 Civic Center Plaza, Tracy Web Site: www.cityoftracy.org
and two Council Members will attend remotely at the following location:

Hyatt, 300 Reunion Boulevard, Dallas, Texas 75207

TRACY CITY COUNCIL AGENDA 2 March 7, 2023

Americans With Disabilities Act - The City of Tracy complies with the Americans with Disabilities Act and makes all reasonable accommodations for the disabled to participate in Council meetings. Persons requiring assistance or auxiliary aids should call City Hall (209/831-6105) 24 hours prior to the meeting.

Addressing the Council on Items on the Agenda - The Brown Act provides that every regular Council meeting shall provide an opportunity for the public to address the Council on any item within its jurisdiction before or during the Council's consideration of the item, provided no action shall be taken on any item not on the agenda. To facilitate the orderly process of public comment and to assist the Council to conduct its business as efficiently as possible, members of the public wishing to address the Council are requested to, but not required to, hand a speaker card, which includes the speaker’s name or other identifying designation and address to the City Clerk prior to the agenda item being called. Generally, once the City Council begins its consideration of an item, no more speaker cards will be accepted. An individual’s failure to present a speaker card or state their name shall not preclude the individual from addressing the Council. Each citizen will be allowed a maximum of five minutes for input or testimony. In the event there are 15 or more individuals wishing to speak regarding any agenda item including the “Items from the Audience/Public Comment” portion of the agenda and regular items, the maximum amount of time allowed per speaker will be three minutes. When speaking under a specific agenda item, each speaker should avoid repetition of the remarks of the prior speakers. To promote time efficiency and an orderly meeting, the Presiding Officer may request that a spokesperson be designated to represent similar views. A designated spokesperson shall have 10 minutes to speak. At the Presiding Officer’s discretion, additional time may be granted. The City Clerk shall be the timekeeper.

Consent Calendar - All items listed on the Consent Calendar are considered routine and/or consistent with previous City Council direction. One motion, a second, and a roll call vote may enact the items listed on the Consent Calendar. No separate discussion of Consent Calendar items shall take place unless a member of the City Council, City staff or the public request discussion on a specific item.

Addressing the Council on Items not on the Agenda – The Brown Act prohibits discussion or action on items not on the posted agenda. The City Council’s Meeting Protocols and Rules of Procedure provide that in the interest of allowing Council to have adequate time to address the agendized items of busines s, “Items from the Audience/Public Comment” following the Consent Calendar will be limited to 15- minutes maximum period. “Items from the Audience/Public Comment” listed near the end of the agenda will not have a maximum time limit. A five- minute maximum time limit per speaker will apply to all individuals speaking during “Items from the Audience/Public Comment”. For non-agendized items, Council Members may briefly respond to statements made or questions posed by individuals during public comment; ask questions for clarification; direct the individual to the appropriate staff member; or request that the matter be placed on a future agenda or that staff provide additional information to Council. When members of the public address the Council, they should be as specific as possible about their concerns. If several members of the public comment on the same issue an effort should be made to avoid repetition of views already expressed.

Notice - A 90 day limit is set by law for filing challenges in the Superior Court to certain City administrative decisions and orders when those decisions or orders require: (1) a hearing by law, (2) the receipt of evidence, and (3) the exercise of discretion. The 90 day limit begins on the date the decision is final (Code of Civil Procedure Section 1094.6). Further, if you challenge a City Council action in court, you may be limited, by California law, including but not limited to Government Code Section 65009, to raising only those issues you or someone else raised during the public hearing, or raised in written correspondence delivered to the City Council prior to or at the public hearing.

Full copies of the agenda are available on the City’s website: www.cityoftracy.org

Date Posted: March 2, 2023
TRACY CITY COUNCIL AGENDA 3 March 7, 2023
CALL

TO ORDER

PLEDGE OF ALLEGIANCE

INVOCATION

ROLL CALL

PRESENTATIONS

1. Employee of the Month

2. Cer
tificates of Recognition – San Joaquin County Mock Trial Winners

1. CONSENT CALENDAR

1.A Adoption of February 21, 2023 City Council Closed Session Minutes, Special Concurrent Meeting of the City Council and Transportation Advisory Commission Meeting Minutes and City Council Regular Meeting Minutes.

1.B Adopt a resolution approving permits under Tracy Municipal Code Chapter 4.40, to allow the consumption of alcoholic beverages on City streets for the following special events of community-wide interest occurring in 2023: (1) Downtown Block Parties (May 5, June 9, July 7, August 4, and September 8); (2) Blues, Brews, and BBQ (October 7); (3) Girls Night Out – Witches and Broomsticks (October 20); (4) Tracy City Center Association Events (Taps on Tenth on April 1, Downtown Tracy Wine Stroll on September 16, and Car Show with Clutch Burners on October 14); (5) Tracy African American Association Juneteenth Event (June 10); (6) Tracy Chamber of Commerce Centennial Celebration (June 24); and (7) South Side Community Organization Event (September 16).

1.C. Adopt
a resolution approving a Professional Services Agreement with Kjeldsen, Sinnock & Neudeck, Inc. to provide Topographic Surveying and Mapping Services for the Recycled Water System Expansion Project (CIP 74168) for a period of three (3) months and a total not-to-exceed amount of $61,191.

1.D. A dopt a
resolution approving a Professional Services Agreement with West Yost & Associates, Inc. to provide Program Management Services for the Recycled Water System Expansion Project (CIP 74168) for a period of three (3) years and a total not-to- exceed amount of $974,402.

1.E. A dopt a res
olution approving Utility Agreements related to the relocation of existing utilities for the I-580/Patterson Pass Road Interchange Project, CIP 73147, between the City and the following utility providers, for the respective not-to-exceed cost liability split amounts: 1) Pacific Gas & Electric, Inc. for $1,000,000, 2) Crimson Oil, for $600,000, and 3) AT&T California, for $1,000,000.

1.F. A dopt a resolution approving the execution of a Cooperative Agreement between City and the California Department of Transportation for Construction activities and the Right-of-Way Certification for the I-580/Patterson Pass Road Interchange Project, CIP 73147.

1.G. Adopt a resolution accepting the City of Tracy’s Annual Comprehensive Financial Report (ACFR) for the fiscal year ending June 30, 2022.

TRACY CITY COUNCIL AGENDA 4 March 7, 2023

2. ITEMS FROM THE AUDIENCE

3. REGULAR AGENDA

3.A City Council Conduct a public hearing to 1) consider the award of local priority funding allocations for Community Development Block Grant (CDBG) and HOME Investment Partnership program funds for Fiscal Year 2023-2024, and upon conclusion, 2) adopt a resolution authorizing the City Manager, or his designee, to execute the funding agreements and other implementing documents.

3.B. City Council 1) conduct a public hearing to receive comments regarding a temporary closure of the City-controlled portion of Hansen Road, at the north City limits, south of Interstate 205, for a period of eighteen (18) months to coincide with the County’s closure of its portion of Hansen Road and, upon conclusion, 2) to adopt a resolution approving such temporary closure to mitigate traffic safety concerns.

3.C. City Council (1) conduct a public hearing to receive and consider comments on the proposed Citywide Master Fee Schedule, and upon conclusion, (2) adopt a resolution (A) approving and adopting, effective as of July 1, 2023, the proposed Citywide Master Fee Schedule, reflecting a cost recovery target of 72% and (B) rescinding, effective as of July 1, 2023, Resolution 2020-110 that approved the current Citywide Master Fee Schedule.

3.D A dopt a resolution 1) authorizing the issuance and sale of special tax bonds for the purpose of financing authorized facilities and 2) approving and authorizing related documents and actions for Improvement Area No. 3 of the City of Tracy Community Facilities District No. 2016-2

3.E A dopt a resolution approving 1) the updated Emergency Operations Plan to provide community support during an emergency, in compliance with State and Federal laws, and 2) a Business Continuity Plan addressing the needs of the City following an emergency.

4. ITEMS FROM THE AUDIENCE

5. STAFF ITEMS

6. COUNCIL ITEMS

7. ADJOURNMENT

TRACY CITY COUNCIL - SPECIAL MEETING MINUTES

February 21, 2023, 5:00 p.m.

Tracy City Hall, 333 Civic Center Plaza, Tracy, CA.

1. Mayor Young called the meeting to order at 5:00 p.m.

2. Roll call found Council Members Arriola, Bedolla, Evans, Mayor Pro Tem Davis and Mayor Young present.

3. ITEMS FROM THE AUDIENCE – None

4. Request to Conduct Closed Session
Conference with Labor Negotiators (Gov. Code § 54957.6)

• City Negotiators
Midori Lichtwardt, Acting City Manager
Karin Schnaider, Assistant City Manager
Kimberly Murdaugh, Human Resources Director
Sara Cowell, Finance Director
Bijal Patel, City Attorney
Che Johnson, Special Counsel
Michael W. Jarvis, Special Counsel

• Employee Organizations:

General Teamsters Local No. 439, IBT
Tracy Mid Managers Bargaining Unit
Tracy Police Management Association
Tracy Police Officers’ Association
Tracy Technical and Support Services Employee Association

There was no public comment.

ACTION: Motion was made by Council Member Bedolla and seconded by Mayor Pro Tem Davis to recess to closed session. Roll call found all in favor; passed and so ordered. Time: 5:02 p.m.

5. Reconvened to Open Session – Time: 6:07 p.m.

6. Report of Final Action – None

7. Council Items and Comments – None

Special Meeting Minutes 2 February 21, 2023

8. Adjournment – Time: 6:07 p.m.

ACTION: Motion was made by Mayor Pro Tem Davis and seconded by Council Member Arriola to adjourn. Roll call found all in favor; passed and so ordered.

The above agenda was posted at the Tracy City Hall on February 16, 2023. The above are action minutes. A recording is available at the office of the City Clerk.

____________________________
Mayor
ATTEST:

___________________________
City Clerk

SPECIAL CONCURRENT MEETING MINUTES OF THE TRACY CITY COUNCIL AND

THE TRANSPORTATION ADVISORY COMMISSION

February 21, 2023, 6:00 p.m.

Tracy City Hall, 333 Civic Center Plaza, Tracy, CA.

1. Mayor Young called the meeting to order at 6:20 p.m.

2. Roll call found Council Members Arriola, Bedolla, Evans, Mayor Pro Tem Davis and Mayor Young present.

Roll call found Transportation Advisory Commissioners Rajpal Dhillon, Sharanjit Dhillon, Francis, Vice Chair Silva and Chair Cooper present.

3. ITEMS FROM THE AUDIENCE – None

4. DISCUSSION ITEMS:

4.A The Tracy City Council and the Tracy Transportation Advisory Commission, concurrently, conduct a workshop to review the City’s Transportation Master Plan Update and provide feedback

Jaylen French, Development Services Director provided the staff report and introduced Frederik Venter, Kimley-Horn who provided the presentation on the Transportation Master Plan and responded to questions.

Council and Commission questions followed.

A member of the public asked what plans the City has for improvements at the Patterson Pass/I-580 Interchange.

Robert Tanner asked if the VMT banking fees are over and above what developers are paying or is the fee set by state. Mr. Tanner asked if Valley Link was going to be downtown or down the middle of I-205.

Mike Souza spoke about Iron Horse Parkway Interchange Project and stated the Master Plan says no connections are known so that interchange is not evaluated in the Master Plan. It has already got PSR approved by Caltrans, being pushed by Prologis. Mr. Souza stated staff has to go back and analyze Iron Horse Interchange being in place and being impacted to the grid and impacts on other streets. Need to take into consideration what the cost increase means to fees and doing business in the City. Mr. Souza expressed the importance that the City gets funding.

Council accepted the report and provided feedback regarding the Transportation Master Plan and requested looking at the Iron Horse Interchange, Valley Link location and more information on the VMT bank not double dipping.

5. COUNCIL ITEMS AND COMMENTS – None

6. ADJOURNMENT – Time: 7:30 p.m.

Special Meeting Minutes 2 February 21, 2023

ACTION: Motion was made by Council Member Arriola and seconded by Mayor Pro Tem Davis to adjourn. Roll call found Council Members Arriola, Bedolla, Evans, Mayor Pro Tem Davis, Mayor Young, Transportation Advisory Commissioners Rajpal Dhillon, Sharanjit Dhillon, Francis, Vice Chair Silva and Chair Cooper in favor; passed and so ordered.

The above agenda was posted at the Tracy City Hall on February 16, 2023. The above are action minutes. A recording is available at the office of the City Clerk.

____________________________
Mayor
ATTEST:

___________________________
City Clerk

TRACY CITY COUNCIL REGULAR MEETING MINUTES

February 21, 2023, 7:00 p.m.

City Hall, 333 Civic Center Plaza, Tracy Web Site: www.cityoftracy.org

Mayor Young called the meeting to order at 7:39 p.m.

Zola Dinsmore led the Pledge of Allegiance.

Rabbi Levi Meijers, Chabad of Tracy Jewish Center provided the invocation.

Roll call found Council Members Arriola, Bedolla, Evans, Mayor Pro Tem Davis, and Mayor Young present.

Mayor Young proclaimed March as Women’s History Month and March 8 as International Women’s Day.

Midori Lichtwardt, Acting City Manager announced Item 3.B will be pulled from the agenda as there are corrections that need to be made and the item will be brought back at the next regular Council meeting.

1. CONSENT CALENDAR – Following the removal of Consent Items 1.B by Alice English and 1.E by Karen Moore motion was made by Council Member Arriola and seconded by Mayor Pro Tem Davis to adopt the Consent Calendar. Roll call found all in favor; passed and so ordered.

1.A Adoption of February 7, 2023, City Council Closed Session M inutes, Special
Concurrent Meeting of the City Council and Transportation Advisory Commission Meeting minutes and City Council Regular Meeting Minutes – Minutes were adopted.

1.C Adopt a resolution approving a Master Services Agreement with Crossroads, Inc. for the installation, implementation, training, and annual maintenance of automated traffic collision and citation technology for a term of five (5) years and a total not to exceed amount of $180,000, and authorizing the City Manager to execute the Agreement and any amendments.- Resolution 2023-028 approved a Master Services Agreement with Crossroads, Inc.

1.D C
ity Council (1) accept the construction for the Pavement Rehabilitation Project, FY 2019-2020, CIP 73176, work completed by Tracy Grading and Paving, Inc., of Tracy, California, (2) authorize the City Clerk to File the Notice of Completion, (3) authorize the City Engineer to release the bonds and retention payment, and (4) authorize the Finance Department to close the Project.- Resolution 2023-029 accepted the construction for the Pavement Rehabilitation Project, FY 2019- 2020, CIP 73176 by Tracy Grading and Paving, Inc., authorized filing the Notice of Completion and release of bonds.

Regular Meeting Minutes 2 February 21, 2023

1.F Adopt a resolution: (1) Approving a General Services Agreement with Sweeping Corp of America, LLC to provide street, alley, and parking lot sweeping services for an initial term of two (2) years and a total not to exceed amount $859,100 annually; (2) Authorizing the City Manager to execute the General Services Agreement, extensions up to five (5) years, and amendments to the Agreement; and (3) Appropriating $46,000 from the Solid Waste Fund (F531) to fund the Agreement for fiscal year 2023.– Resolution 2023-030 approved a General Services Agreement with Sweeping Corp of America, LLC., authorized the City Manager to execute the agreement and approved the appropriation.

1.G A
dopt a resolution declaring the intention to reimburse expenditures from proceeds of tax-exempt obligations to be issued by the City for and on behalf of City of Tracy Community Facilities District No. 2016-2 (ECFD). – Resolution 2023-031 declared the intention to reimburse expenditures from proceeds of tax- exempt obligations to be issued by the City for and on behalf of City of Tracy Community Facilities District No. 2016-2 (ECFD).

1.H Adopt a resolution declaring the intention to reimburse expenditures from proceeds of tax-exempt obligations to be issued by the City for and on behalf of City of Tracy Community Facilities District No. 2016-1 (Tracy Hills) – Resolution 2023-032 declared the intention to reimburse expenditures from proceeds of tax- exempt obligations to be issued by the City for and on behalf of City of Tracy Community Facilities District No. 2016-1 (Tracy Hills).

1.I. A dopt
a resolution amending the City’s Operating and Capital Budget for the Fiscal Year ending June 30, 2023, and authorize the Budget Officer to amend the City’s position control roster for FY2022-23. – Resolution 2023- 033 amended the City’s Operating and Capital Budget for the Fiscal Year ending June 30, 2023, and authorized the Budget Officer to amend the City’s position control roster for FY2022-23.

1.B Adopt a resolution: (1) Authorizing a Professional Services Agreement with MGT of America, LLC for diversity, equity, and inclusion consultant services for a total not-to-exceed amount of $166,500 for a one-year term; and (2) Appropriating funding in the amount of $116,500 from the General Fund reserves to the Human Resources operating budget and amend the FY 2022-23 Operating Budget to reflect such appropriation.

Alice English pulled the item to ask why the item is on consent and why the City is spending money on this as the City has been doing well over so many years, this is more of a political thing and not necessary. Need to spend money on police and hospital.

Kimberly Murdaugh, Human Resources Director provided the staff report and responded to questions.

Council comments followed.

ACTION: Motion was made by Council Member Arriola and seconded by Mayor Young to adopt Consent Item 1.B.

Regular Meeting Minutes 3 February 21, 2023

Bernal Shull shared her concerns regarding hiring consultants when there are high paid City staff that can do it, suggested putting money towards potholes and other infrastructure issues, and shared concerns regarding the City not being clean. Ms. Shul added it is a very diversified area, and shared concerns regarding City workers sitting in their trucks.

Robert Tanner stated it is a waste of money, have a diversified Council and staff and shared his concerns regarding potholes all over town and ribbons of open asphalt.

Heather Smiddy asked if there have been any employees that have been treated unfairly, looking for something that does not exist. Ms. Smiddy stated she has watched people come together as a community and they are happy, do not need to look for reasons to find fault in each other and do not need to spend money to find out if we have an issue in house.

Karen Moore stated she was frustrated with lack of knowledge regarding Diversity, Equity and Inclusion (DEI) and explained DEI. Looking for people that have different styles of communication. Sounds like a lot but this isn’t about the Police – it is listening to different kind of voices and respecting diverse people and their contribution in the workspace.

Lamont Browne, MGT Consultant provided input regarding the item.

Council comments continued.

ACTION: Council Member Arriola restated his motion to adopt Consent Item 1.B., which was previously seconded by Mayor Young. Roll call found Council Member Arriola and Mayor Young in favor. Council Members Bedolla, Evans and Mayor Pro Tem Davis opposed. Motion failed.

1.E A
dopt a resolution approving the Local Roadway Safety Plan and setting a Vision Zero goal for 2050.

Karen Moore asked why the City would wait for Vision Zero and wait for areas in town to be redesigned.

Koosun Kim, Acting City Engineer provided the staff report.

Karen Moore clarified her question. Other cities implemented faster and asked why our City is taking almost three times longer than other cities.

There were no questions from Council.

ACTION: Motion was made by Council Member Bedolla and seconded by Council Member Arriola to approve Resolution 2023-034 approving the Local Roadway Safety Plan and setting a Vision Zero for 2050. Roll call found all in favor; passed and so ordered.

Regular Meeting Minutes 4 February 21, 2023

2. ITEMS FROM THE AUDIENCE – Karen Moore shared a Lathrop Council process regarding agendizing a facilities property rental for a Juneteenth event and the Lathrop Mayor not understanding why staff had done that. Ms. Moore added that is what our City had done for the Pride Parade and nobody asked why we are looking at this group and making it part of an agenda to be voted on and stated because we are diverse does not mean we do not have blinders.

Council Member Bedolla disagreed with the characterization of the previous commenter.

Gabriella Machuca stated on October 18, 2022, Council requested that staff report back about possibly amending Ordinance 10.08.3193 – Mobile Food Vendors. There has not been an agenda item back to Council. Ms. Machuca formally requested an extension on Temporary Use Permits given to mobile food vendors to allow time for staff to present long term solutions to ensure they can continue to serve the community and urged Council to put on an agenda and for discussion.

Robert Tanner stated back in November there was an agenda item to reverse a couple of court rulings against the Aquatic Park and Development Agreement, but the item was pulled. In the agenda item there was a sentence about a possible lawsuit coming up from Surland. Mr. Tanner asked why the City did not accept the 16 acres back then. Mr.

Tanner also shared concerns regarding potholes on Parker Street and west bound on 11 th
Street, also B Street and 11th, and 10th Street west bound potholes.

Sherri Mackay spoke for Tracy Youth Soccer League (TYSL) Tracy United Soccer Club (TUSC) and Tracy Top Soccer Special Needs Group stating they are all volunteers. Ms.

Mackay shared her concerns regarding the warming center being located at the Sports Complex, TYSL relocating to Legacy Fields and the cost of restriping due to that relocation and requested a refund of $3,888 which was used for repairs of the field. Ms.

Mackay submitted a handout to the City Clerk.

Jennifer Dulkevich shared her concerns regarding the location of a warming center, and unsafe situation. Why approve a location that would take away from children to hold their sports activities.

Karin Schnaider, Assistant City Manager responded to questions regarding why the Sports Complex was selected for a warming center.

John Viera stated there has been four inches of rain recently, found a 30-inch hole in pond #10 which is on Middle Road and met with two City engineers and was told to wait until the water goes down to find the hole. Their engineer found the swirling hole and asked Public Works to sandbag it so it would quit leaking which they did. Mr. Viera stated he owns property behind the pond and shared his concerns about flooding again.

Greg Wright spoke about flooding from ponds going into the main drain and backing it up.

Under 5 inches of water and City staff said it was ground water. It took 15 days of pumping to get water out of his yard as the drain was completely full. Pumped City water for 26 days on Naglee Burk Irrigation District pumps. Have to suffer consequences of water that is sent to that pond and no one takes care of it. The City needs to do something about it.

Regular Meeting Minutes 5 February 21, 2023

Everett Rankins stated the way this system is set up right now with the leaks, their properties have become an extension of the drainage pond. For 16 days they were semi under water with fields flooded and requested Council fix it.

Ms. Schnaider encouraged people to submit claims.

A member of the public stated he is one inch from being under water. Has a hay field not sure if it will grow this summer.

Bubba Paris, TCCC stated they did not choose where the warming center is located but from 7:00 p.m. to 7:00 a.m. they operate the warming center. Mr. Paris added he personally makes sure it is managed in a proper way and very little impact to the community, and feels bad if anyone harasses children but cannot control what happens during the day.

Heather Smiddy shared concerns regarding the warming center not going before Council, stated if this had been handled differently it wouldn’t have ended up in the park. It is a misuse of power. There are groups in this town that work with the homeless. Ms. Smiddy suggested as we close the warming center to focus on making the shelter worth the money that is being spent and a place the homeless want to go to and be better when they leave it.

Jamie Medina stated the Homeless Advisory Commission meeting was comprehensive but missing services and counseling. Every organization and shelter in our County is staying in the same line and waiting for the same services. Mr. Medina stated he had submitted an unsolicited proposal to the Homeless Services Manager to let her know there are individuals here that provide services, stated he would come out of retirement and provide counseling for substance abuse onsite and spoke about his proposal.

Alice English stated she hoped new leadership does not let them dictate to Council what needs to be done. The reports aren’t being transparent to Council. Recommend having the Homeless Advisory Committee meetings once a month until we catch up. Ms. English hoped the soccer folks get their money reimbursed. Ms. English thanked Mayor Pro Tem Davis for the street sweeping schedule and asked for it to be in different languages.

Dotty Nygard asked for an update on the downtown parklets, is tired of orange barricades, businesses have been patient long enough and need more pleasant and inviting area.

3. REGULAR AGENDA

3.A S taff recommends that the City Council

1. Conduct a hearing on the Resolutions of Necessity (RON) to authorize the acquisition of fee simple interests, permanent easements and/or temporary construction easements for the I-580/Patterson Road Interchange Project (Project) and to make the required findings for five properties owned by and located at:

1. ARP Minimart Corporation – 25775 Patterson Pass Road (Assessor’s Parcel Number 209-100-040) (Minimart).

Regular Meeting Minutes 6 February 21, 2023

2. Debra Ann Leal & Janice Lynn Gee – 26116 Patterson Pass Road (Assessor’s Parcel Number 209-090-21) (Leal/Gee).

3. Harminder Kaur; Rajwinder Kaur; Gupreet Singh; Charnit Singh and Ramandeep Kaur, Trustees – 25883 S. Patterson Pass Road (Assessor’s Parcel Number 209-100-280) (Kaur
et al).

4. Pankaj Kalra and Tanu Kalra, Trustees; Kanwar Raj Singh and Priya Aggarwal, Trustees; Smile Dhir and Antima Ghai, Trustees; Atul Arora and Shefali Arora, Trustees; Tabir Singh Dhillon- 26106 Patterson Pass Road (Assessor’s Parcel
Number 209-100-300) (Kalra et al).

5. Jet Mulch, Inc. – Via Nicolo Road (Assessor’s Parcel Number 209-100-310) (Jet Mulch).

2. Adopt RONs for Minimart, Leal/Gee, Kaur et al, Kalra et al, and Jet Mulch, finding that the Public Interest, Convenience and Necessity require the Acquisition of Certain Property Interests for the Project, Authorizing the Acquisition Thereof, and directing the City Attorney to file Eminent Domain Proceedings

Mayor Young opened the public hearing.

Bijal Patel, City Attorney provided the staff report.

Anju Pillai, Senior Engineer continued with the staff report.

Council questions and comments followed.

Adrianne Richardson, City Clerk announced an email was received from David Hubbard, Hubbard Law Firm regarding the ARP Minimart Corporation property.

Mayor Young closed the public hearing.

ACTION: Motion was made by Council Member Arriola and seconded by Mayor Pro Tem Davis to adopt Resolution of Necessity 2023-035 of the City Council of the City of Tracy finding and determining that the public interest, convenience and necessity require the acquisition of certain property interests for a public project (I-580/Patterson Pass Road Interchange Project), authorizing the acquisition thereof, and directing the City Attorney to file eminent domain proceedings – (ARP Mini Mart Corporation, Assessor’s Parcel Number 209-100-040). Roll call found all in favor; passed and so ordered.

ACTION: Motion was made by Council Member Arriola and seconded by Mayor Pro Tem Davis to adopt Resolution of Necessity 2023-036 of the City Council of the City of Tracy finding and determining that the public interest, convenience and necessity require the acquisition of certain property interests for a public project (I-580/Patterson Pass Road Interchange Project), authorizing the acquisition thereof, and directing the City Attorney to file eminent domain proceedings – (Debra Ann Leal & Janice Lynn Gee – Assessor’s Parcel Number 209-090-21).

Roll call found all in favor; passed and so ordered.

Regular Meeting Minutes 7 February 21, 2023

ACTION: Motion was made by Council Member Arriola and seconded by Mayor Pro Tem Davis to adopt Resolution of Necessity 2023-037 of the City Council of the City of Tracy finding and determining that the public interest, convenience and necessity require the acquisition of certain property interests for a public project (I-580/Patterson Pass Road Interchange Project), authorizing the acquisition thereof, and directing the City Attorney to file eminent domain proceedings – (Harminder Kaur; Rajwinder Kaur; Gupreet Singh; Charnit Singh and Ramandeep Kaur, Trustees - APN 209-100-280). Roll call found all in favor; passed and so ordered.

ACTION: Motion was made by Council Member Arriola and seconded by Mayor Pro Tem Davis to adopt Resolution of Necessity 2023-038 of the City Council of the City of Tracy finding and determining that the public interest, convenience and necessity require the acquisition of certain property interests for a public project (I-580/Patterson Pass Road Interchange Project), authorizing the acquisition thereof, and directing the City Attorney to file eminent domain proceedings –
(Pankaj Kalra and Tanu Kalra, Trustees; Kanwar Raj Singh and Priya Aggarwal, Trustees: Smile Dhir and Antima Ghai, Trustees; Atul Arora and Shefali Arora, Trustees; Tabir Singh Dhillon – Assessor’s Parcel Number 209-100-300). Roll call found all in favor; passed and so ordered.

ACTION: Motion was made by Council Member Arriola and seconded by Mayor Pro Tem Davis to adopt Resolution of Necessity 2023-039 of the City Council of the City of Tracy finding and determining that the public interest, convenience and necessity require the acquisition of certain property interests for a public project (I-580/Patterson Pass Road Interchange Project), authorizing the acquisition thereof, and directing the City Attorney to file eminent domain proceedings - (Jet Mulch Inc., Assessor’s Parcel Number 209-100-310). Roll call found all in favor; passed and so ordered.

3.B Receive an informational report regarding the City of Tracy Police Department’s Annual Report for 2022.- ITEM PULLED FROM AGENDA

3.C Receive the annual informational report for the Parks and Community Services Commission for Fiscal Year 2021/2022.

Jolene Jauregui-Correll, Recreation Services Manager introduced Parks and Community Services Commissioners Lori Souza, and Steve Abercrombie, Vice Chair who provided the staff report and presentation.
.

Council questions and comments followed.

ACTION: Motion was made by Council Member Bedolla and seconded by Mayor Pro Tem Davis to receive the informational report for the Parks and Community Services Commission for Fiscal Year 2021/2022. Roll call found all in favor; passed and so ordered.

Regular Meeting Minutes 8 February 21, 2023

3.D Receive an informational report regarding the annual report of the Transportation Advisory Commission.

Ed Lovell, Transit Manager introduced Tim Silva, Vice Chair on the Transportation Advisory Commission who provided the staff report and presentation.

Council comments and questions followed.

Mr. Lovell responded to questions.

Dotty Nygard asked for an update for money from Measure K funds for Holly or Bessie Road for bike lane improvements.

Alice English stated she is glad the City is looking into the bus stop at Ellis because we are spreading more at South Tracy and thanked Tim Silva for his continued support on the commission and hopefully will see more improvements at the Airport.

ACTION: Motion was made by Council Member Evans and seconded by Mayor Pro Tem Davis to receive the informational report regarding the annual report of the Transportation Advisory Commission. Roll call found all in favor; passed and so ordered.

4. ITEMS FROM THE AUDIENCE – Sherri Mackay thanked Council for listening to TYSL and thanked Mayor Pro Tem Davis personally for talking to nervous and upset parents.

Ms. Mackay asked if there is a way for Council to look at the proposal given to the Clerk because their special needs and top soccer group do not pay one dime when they sign up for Tracy Youth Soccer. Field maintenance cuts into the budget and they also give scholarships and hoped Council can help them out.

Alice English spoke about effects of the warming center at the Sports Complex. Ms.

English stated she has a lot of faith with Council Member Bedolla being on Valley Link and asked for a report/update in April on the budget. It was supposed to come back last year with the EIR if Valley Link was going to go to I-205. Ms. English stated we have received $142 million in state funding and would like clarification if money will stay here.

Need transparency on Valley Link.

Kimberly Range asked to revisit discussion on Diversity, Equity and Inclusion. Lot of blind spots people have and having someone come in and do an assessment would serve our residents.

5. STAFF ITEMS – Midori Lichtwardt, Acting City Manager reported on the following:
• A wind advisory is in effect for Tracy through 4:00 a.m. March 22, and PG&E is mobilizing for this winter storm – customers are urged to prepare for potential weather-related power outages. Please report downed limbs and trees in the City of Tracy via our GoTracy! App or by calling Tracy Police’s non-emergency number:
(209) 831-6550 after hours. Our overnight warming center at Tracy Sports Complex is open and a full list of warming locations is on the City’s homepage. Call 211 to find one nearest you.

Regular Meeting Minutes 9 February 21, 2023

• Tomorrow is the deadline for residents in San Joaquin County who have been impacted by the severe winter storms to file for federal Disaster Unemployment Assistance (DUA), visit edd.ca.gov/unemployment or call 211 for support from your nearest disaster recovery center.
• The regular Planning Commission Meeting scheduled for tomorrow has been canceled but invite anyone interested in sharing their feedback about a potential BMX pump track at Clyde Bland Park to join us for a public meeting being held tomorrow at 6:00 p.m. upstairs in room 203 of Tracy City Hall. • The City of Tracy is currently recruiting for both youth and adult community representatives to serve on the Youth Advisory Commission – applications are available on the City’s website (CityOfTracy.org), and the deadline to apply is April 28 th.

6. COUNCIL ITEMS – Council Member Bedolla stated he received a letter and there were also two public comments made at the last meeting about possible loss of funding for the Animal Shelters neuter and return program. Received a response from Police Chief mid meeting and had not been able to review it, and requested for staff to look into anything that should be followed up on. Also regarding communications Council received from Gabriella Machuca, Council Member Bedolla wanted to confirm with staff if there is a pending conversation whether Council action item or item brought forward by the City Manager for a food truck ordinance.

Midori Lichtwardt, Acting City Manager responded staff is working on bringing an item regarding the food truck ordinance back to Council in late spring at this point.

Council Member Bedolla asked if there is any way to include in that discussion how the City can help with a food truck area like Lathrop.

Council Member Bedolla stated that he and Mayor Pro Tem Davis had talked about it and was requesting for the Homeless Advisory Committee to meet on a monthly basis and Council and the public to receive weekly memos on homeless services, construction and any updates. Council Member Evans and Mayor Pro Tem Davis seconded the request.

Mayor Pro Tem Davis echoed the sentiments of Council Member Bedolla and shared support for modifying the bylaws for the Homeless Advisory Committee to meet monthly for transparency. Mayor Pro Tem Davis asked how the City can help Ms. Machuca, is it in the authority of Council to extend the TUP and if so, is that something we can bring back sooner than later.

Bijal Patel, City Attorney responded the actual regulations are codified in the Planning Code so there are specific regulations or requirements under the Temporary Use Permit.

There is a separate section for the mobile food vending program, the food truck ordinance has not been updated in recent years, and is outdated as to what other cities may be doing. Council cannot override that without a formal amendment to those sections of the code. Because they are under the Planning Code, under state law an item would first have to go to Planning Commission for consideration, make a recommendation and then it comes to Council.

Mayor Young stated Ms. Machuca’s TUP specifically expires on March 14, asking to come back sooner than spring, can it go to the Planning Commission so that it can get to Regular Meeting Minutes 10 February 21, 2023

Council in time or is there any way to extend it so that these businesses are not having lulls or drops within their service and their ability to maintain business.

Ms. Patel responded under the code section for TUP’s they are only for 30 days but Ms.

Machuca was granted a 6-month TUP and that is expiring in March. Understand there was a separate Council/Planning Commission action to extend the 30 days to 6 months for certain types of TUP’s during COVID. There is no specific extension right in the current code so it would have to be an amendment to extend and wouldn’t just be for this one TUP, it would apply to a category of TUP’s. Ms. Patel stated she would have to research how it was previously extended from 30 days to 6 months. The only mechanism to do it is to do an amendment to existing code.

Mayor Young responded whatever we can do to not have businesses break in business, whatever you need from Council let us know.

Mayor Pro Tem Davis stated this was something that was requested and supported in October. For it to be six months later and not have it brought back is a disservice to all the mobile food trucks and in particular to this family who may be looking at not being able to operate and supported if the Council can do something to support.

Mayor Pro Tem Davis stated as Tracy is growing there is a need for a trauma ready hospital and asked for support for staff to look at how we get a hospital here. Council Member Bedolla supported the request.

Mayor Pro Tem Davis stated she has asked repeatedly for a memo regarding when the Corral Hollow Road widening in South Tracy from the aqueduct to I-580 will be completed. Still have not received that information and also have not received the information regarding Prologis’s responsibility to construct a roadway. Would love to get a memo sometime this year and would appreciate transparency about why it isn’t widened and when the repairs are going to be done. Council Member Bedolla supported the request. Council Member Bedolla asked Mayor Pro Tem Davis if she would be willing to include south of Linne. Mayor Pro Tem Davis responded yes.

Ms. Lichtwardt asked Mayor Pro Tem Davis for clarification if she is directing staff to expend the resources to do some research on how we can get a trauma ready hospital to our region or did she want it to come back as a discussion for Council and then direction for staff.

Mayor Pro Tem Davis clarified she was trying to get support for staff to research how to get a hospital and then bring it back and discuss it.

Mayor Pro Tem Davis stated she is not sure if anyone is having difficulty accessing the mandatory AB 1234 and the Anti-Harassment training. Did not know it was required until a direct email was received. Looking to find out if there is an easier way to fulfil the mandatory training online or in person. It is not user friendly.

Adrianne Richardson, City Clerk responded she is setting up AB 1234 training with the assistance of the City Attorney. Outside Counsel will do an in-person and virtual training.

An email will be sent this week to provide an option of the training.

Regular Meeting Minutes 11 February 21, 2023

Ms. Lichtwardt responded that she would have Human Resources reach out to Mayor Pro Tem Davis regarding the Target Solutions.

Council Member Arriola expressed condolences to the San Joaquin Sheriff’s Office as canine Duke was killed in line of duty in support of the Tracy Police Department incident.

Expressed condolences to the Sheriff’s Office, Tracy Police Department and the Duke’s handler and family. Council Member Arriola wished safe travels to his colleagues who will be going to the P3 Conference.

Council Member Evans thanked Council Member Bedolla for requesting a weekly report on homelessness and asked for support to ensure some things included in that weekly report that currently there are 39 rooms at the interim shelter on site for going on six weeks. Been at the site multiple times, looked at issues and have provided a full list of what he has seen to staff and would like all issues currently holding those rooms from being open listed on that report along with the current resolution, what needs to be done in order to get those rooms open and an estimated completion date of each one of those items. Should see a rolling report every week to track progress. It is critical to getting that finalization to clearing out El Pescadero Park. Mayor Pro Tem Davis seconded the request.

Council Member Evans asked with respect to the invoice paid for the field repair for the Tracy Soccer League does staff need direction from Council or is that something staff can pay or does staff need something from Council.

Ms. Patel responded the process is for the member of the public to file a claim. It is a claim process. Under the government torte claim, a claim is filed and the City processes that claim.

Council Member Evans stated although well intended, the warming center at the Tracy Sports Complex is the wrong location. The weather will be in the low 30’s for next few evenings, once we see decent weather we have to get that issue resolved. Wrong location.

Karin Schnaider, Assistant City Manager responded the warming center is scheduled to close on February 28 and that is still the target.

Council Member Evans asked the community to come out and support Jared Schmitz pub crawl from February 24 to 26. Raise a glass and help raise money. This event is in support of our veterans and honor heroes locally and nationwide that made the ultimate sacrifice for our freedoms. Council Member Evans announced the names of various restaurants participating and added the event will also be supporting Tracy home grown businesses.

Mayor Young requested support for an update on the downtown parklets. Mayor Pro Tem Davis supported the request.

Mayor Young requested to bring back a discussion on Diversity, Equity and Inclusion.

Council Member Arriola seconded the request but asked, what he heard earlier, it was specifically to external policy, and asked if Mayor Young’s intent for that discussion to be related to external policy.

Regular Meeting Minutes 12 February 21, 2023

Mayor Young responded we need to have a discussion and can decide from that discussion what we would like to bring out from that and what the focus will be. Council Member Arriola seconded the request.

Ms. Patel stated working with the Acting City Manager, it came to our attention in the last Council meeting there was an adopted implementation plan and the steps proposed today was one of the specific items that was in the implementation plan so asked Mayor Young for clarification of whether she is asking staff to bring back the implementation plan to consider further discussion if you want to reaffirm that plan.

Mayor Young responded it would be good to take a look at the implementation plan and where we want to go from that so we are all on the same page. Ms. Patel responded it would be a comprehensive discussion Council can do. Council Member Arriola seconded Mayor Young’s request.

Mayor Young reported on meetings and events she has attended from February 14, announced tomorrow is the Menchies awards and there will be a special Council meeting next Tuesday at 7:00 p.m.

Council Member Bedolla stated at the next regular meeting he will have an update on his attendance and occurrences at the EBCE meeting and Homeless Advisory Committee meeting.

7. ADJOURNMENT – Time: 10:51 p.m.

ACTION: Motion was made by Council Member Arriola and seconded by Mayor Pro Tem Davis to adjourn. Roll call found all in favor; passed and so ordered.

The above agenda was posted at the Tracy City Hall on February 16, 2023. The above are action minutes. A recording is available at the office of the City Clerk.

____________________________
Mayor

ATTEST:

__________________________
City Clerk
Marc h 7, 2023
Agenda Item 1.B

RECOMMENDATION
Staf
f recommends that City Council adopt a resolution approving permits under Tracy Municipal Code Chapter 4.40, to allow the consumption of alcoholic beverages on City streets for the following special events of community-wide interest occurring in 2023: (1) Downtown Block Parties (May 5, June 9, July 7, August 4, and September 8); (2) Blues, Brews, and BBQ (October 7); (3) Girls Night Out – Witches and Broomsticks (October 20); (4) Tracy City Center Association Events (Taps on Tenth on April 1, Downtown Tracy Wine Stroll on September 16, and Car Show with Clutch Burners on October 14); (5) Tracy African American Association Juneteenth Event (June 10); (6) Tracy Chamber of Commerce Centennial Celebration (June 24); and (7) South Side Community Organization Event (September 16).

EXECUTIVE SUMMARY
The Tracy
Municipal Code allows the City Council, by resolution, to issue a permit allowing the consumption of alcohol on public streets at an organized event of community-wide interest. The Parks & Recreation Department is coordinating several requests for alcohol permits in conjunction with community events and is seeking Council approval.

BACKGROUND AND LEGISLATIVE HISTORY
Tracy
Municipal Code Section 4.12.1190(d) states: “The Council, by resolution, may issue a permit under Chapter 4.40 allowing the consumption of intoxicating beverages on public property at an organized event of community-wide interest. The consumption of intoxicating beverages shall be restricted to the perimeters of the event as described in the permit.” Addit
ionally, Tracy Municipal Code Chapter 4.40 governs special event permits occurring on or within the public right-of-way.

For many
years, the City of Tracy has successfully coordinated special community events that have community-wide interest with various local non-profit organizations, including the Tracy Chamber of Commerce (Chamber), Tracy City Center Association (TCCA), Tracy African American Association (TAAA), and South Side Community Organization (SSCO). Many of these events have received City approval for the consumption of alcoholic beverages within the boundary of the events, with most of the approved events taking place within the Downtown Tracy Business District, also known as the downtown TCCA district boundaries.

The Cit
y and TCCA entered into a Memorandum of Understanding (MOU) on October 7, 2014, providing TCCA exclusive rights for purchase and resale of alcoholic beverages associated with any co-presented or City-sponsored event held within the downtown TCCA district boundaries, in exchange for a revenue share with the City, under Resolution 2014-166. This agreement is now being renewed as a Professional Service Agreement by authority of the City Manager according to the terms of the agreement, effective March 8, 2023. Therefore, for 2023 City events hosted in the downtown area, TCCA is requesting the alcohol permit.

Agenda Item 1.B
March 7, 2023

ANALYSIS
At the present time, the Parks & Recreation Department is coordinating several requests for alcohol permits to allow alcoholic beverages to be served as a component of the f ollowing community events:
• Tracy Cha
mber Centennial Celebration Event hosted by the Tracy Chamber of Commerce.
• Downtown Tracy Wine Stroll, Taps on Tenth, and Car Show, hosted by TCCA. • Juneteenth Event hosted by TAAA.
• September 16th Event hosted by the SSCO; and
• Girls’ Night Out – Witches & Broomsticks, Blues, Brews & BBQ, and a series of five Downtown Block Parties hosted by the City of Tracy.

Staff is requesting that Ci ty Council approve permits for the consumption of alcohol on City streets for the following special events:

Taps on Tenth: TCC A has requested a permit to serve alcoholic beverages at its event on S
aturday, April 1, 2023, from 4:00 p.m. to 8:00 p.m., on 10th Street from A Street to Central Avenue, and on B Street from Gillett Alley to Grunauer Alley.

Downtown Block Parties: TCCA has requested a permit to serve alcoholic beverages at t he City of Tracy’s five (5) block party events on Fridays, May 5, June 9, July 7, August 4, and September 8, 2023, from 6:00 p.m. to 9:00 p.m. on east- and west-bound 6th Street between Central Avenue and D Street and at Front Street Plaza.

Juneteenth Event: TAAA has requested a permit to serve alcoholic beverages at its event on Saturday, June 10, 2023, from 10:00 a.m. to 6:00 p.m., at Lincoln Park located on Eaton Avenue between Holly Drive and East Street.

Tracy Chamber Centennial Celebration: Chamber has requested a permit to serve alcoholic bever
ages at its event on Saturday, June 24, 2023, from 10:00 a.m. to 7:00 p.m., on Central Avenue from 11th Street to 6th Street.

September 16th Event: SSCO has requested a per mit to serve alcoholic beverages at its event on Saturday, September 1 6, 2023, from 11:00 a.m. to 6:00 p.m., at Lincoln Park located on Eaton Avenue between Holly Drive and East Street.

Downtown Tracy Wine Stroll: TCCA has requested a permit to serve alcoholic beverages at its event on Saturday, September 16, 2023, from 5:00 p.m. to 8:00 p.m., on Central Avenue from 11th Street to 6th Street, on 10th Street from A Street to Central Avenue, and on B Street from Gillett Alley to Grunauer Al ley.

Blues, Brews and BBQ: TCCA has requested a permit to serve alcoholic beverages at the City of Tracy’s event on Saturday, October 7, 2023, from 12:00 p.m. to 6:00 p.m. on east- and west- bound 6th Street between Central Avenue and D Street and at Front Street Plaza.

TCCA
Car Show with Clutch Burners: TCCA has requested a permit to serve alcoholic beverages at its event on Saturday, October 14, 2023, fro m 8:00 a.m. to 3:00 p.m., on Central Avenue from 10th Street to 6th Street to coincide with the Farmers Market.

Agenda Item 1.B
March 7, 2023

Girls’ Night Out – Witches and Broomsticks: TC CA has requested a permit to serve alcoholic beverages at t he C ity of Tracy’s event on Friday, October 20, 2023, from 6:00 p.m. to 10:00 p.m. on east- and west-bound 6th Street between Central Avenue and D Street and at Front Street Plaza.

FI

SCAL IMPACT
ABC license fees shall be paid by the event hosts. Costs for City of Tracy events are included in each
City event budget. Special Events held within the City of Tracy have the opportunity to increase vehicle and pedestrian traffic to local businesses which in turn increase sales tax revenue for
the City.

STRATEGIC PLAN
This agenda item supports t he Council’s Quality of Life Strategic Priority to provide an outstanding quality of life by enhancing the City’s amenities, business mix and services and cul
tivating connections to promote positive change and progress in our com munity, and specifically implements the following goal:

Goal 3: Provide City programming and event s that bolster quality of life

ACTION REQUESTED OF THE CITY COUNCIL
Staff recommends that City Council adopt a resolution approving permits under Tracy Municipal Code Chapter 4.40, to allow the consumption of alcoholic beverages on City streets for the following special events of community-w ide interest occurring in 2023: (1) Downtown Block Parties (May 5, June 9, July 7, August 4, and September 8); (2) Blues, Brews, and BBQ (October 7); (3) Girls Night Out – Witches and Broomsticks (October 20); ( 4) Tracy City Center Association Events (Taps on Tenth on A pril 1, Downtown Tracy Wine Stroll on September 16, and Car Show with Clutch Burners on October 14); (5) Tracy African American Association Juneteenth Event (June 10) ; ( 6) Tracy Chamber of Commerce Centennial Celebration (June 24); and (7) South Side Community Organization Event (September 16).

Prepared By: Katie Akre, Recreation Program Coordinator Reviewed By: Jolene Jauregui-Correll, Recreation Services Manager Brian MacDonald, Parks & Recreation Director
Karin Schnaider, Assistant City Manager
Approved
By: Midori Lichtwardt, Acting City Manager

APPROVED AS TO FORM AND LEGALITY
________________________
CIT
Y ATTORNEY’S OFFICE
TRAC

Y CITY COUNCIL
RES
OLUTION NO. _______________
APP
ROVING PERMITS UNDER TRACY MUNICIPAL CODE CHAPTER 4.40,

TO ALLOW THE CONSUMPTION OF ALCOHOLIC BEVERAGES ON CITY

STREETS FOR THE FOLLOWING SPECIAL EVENTS OF COMMUNITY -WIDE INTEREST OCCURRING IN 2023: (1) DOWNTOWN BLOCK PARTIES (MAY 5, JUNE 9, JULY 7, AUGUST 4, AND SEPTEMBER 8); (2) BLUES, BREWS, AND BBQ (OCTOBER 7); (3) GIRLS NIGHT OUT – WITCHES AND BROOMSTICKS (OCTOBER 20); (4) TRACY CITY CENTER ASSOCIATION EVENTS (TAPS ON TENTH ON APRIL 1, DOWNTOWN TRACY WINE STROLL ON SEPTEMBER 16, AND CAR SHOW WITH CLUTCH BURNERS ON OCTOBER 14); (5) TRACY AFRICAN AMERICAN ASSOCIATION JUNETEENTH EVENT (JUNE 10); (6) TRACY CHAMBER OF COMMERCE CENTENNIAL CELEBRATION (JUNE 24); AND (7) SOUTH SIDE COMMUNITY ORGANIZATION EVENT (SEPTEMBER 16)
WHER
EAS, Tracy Municipal Code (TMC) Section 4.12.1190(d) provides that the City Council, by resolution, may issue a permit under Chapter 4.40 allowing the consumption of intoxicating beverages on public property at an organized event of community-wide interest, and the consumption of intoxicating beverages shall be restricted to the perimeters of the event as described in the permit; and
WHER
EAS, the Downtown Block Parties on May 5, June 9, July 7, August 4, and September 8, Blues, Brews, and BBQ on October 7, and Girls Night Out – Witches and Broomsticks on October 20, 2023, require approval of a permit for the consumption of alcoholic beverages in public places pursuant to the TMC; and
WHER
EAS, Tracy African American Association (TAAA) has request ed a permit to conduct a Juneteenth Event in the City of Tracy on June 10, 2023, that requires approval of City Council to permit the consumption of alcoholic beverages in public places; and WHER
EAS, Tracy Chamber of Commerce (Chamber) has requested a permit to conduct a Tracy Chamber Centennial Celebration in the City of Tracy on June 24, 2023, that requires approval of City Council to permit the consumption of alcoholic beverages in public places; and WHER
EAS, Tracy City Center Association (TCCA) has requested permits to conduct a Taps on Tenth Event on April 1, Downtown Tracy Wine Stroll on September 16, and Car Show with Clutch Burners on October 14, 2023, in the City of Tracy that require approval of City Council to permit the consumption of alcoholic beverages in public places; and WHEREAS, the South Side Community Organization (SSCO) has requested a permit to conduct a September 16 th Event in the City of Tracy on September 16, 2023, that requires approval of City Council to permit the consumption of alcoholic beverages in public places; now, therefore, be it
RESOLVED: That City Council approves the issuance of permits for the following special events of community-wide interest occurring in 2023: (1) Downtown Block Parties (May 5, June 9, July 7, August 4, and September 8); (2) Blues, Brews, and BBQ (October 7); (3) Girls Night Out – Witches and Broomsticks (October 20); (4) Tracy City Center Association Events (Taps on Tenth on April 1, Downtown Tracy Wine Stroll on September 16, and Car Show with Clutch Burners on October 14); (5) Tracy African American Association Juneteenth Event (June 10); (6) Tracy Chamber of Commerce Centennial Celebration (June 24); and (7) South Side Community Organization Event (September 16).
* * * * * * * * * * * *
* *
The foregoing Resolution 2023-_____ was adopted by the Tracy City Council on March 7, 2023, by the following vote:

AYES: COUNCI
L MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

ABSTENTION: COUNCIL MEMBERS:
___________________________________________
NANCY D.

YOUNG
Mayor of the City of Tracy, California
ATTEST:

ADRIANNE RICHARDSON
City Clerk and Clerk of the Council of the
City of Tracy, California
Resolution 2023-

March 7, 2023
Agenda Item 1.C
REC

OMMENDATION
Staf
f recommends that City Council adopt a resolution approving a Professional Services Agreement with Kjeldsen, Sinnock & Neudeck, Inc. to provide Topographic Surveying and Mapping Services for the Recycled Water System Expansion Project (CIP 74168) for a period of three (3) months and a total not-to-exceed amount of $61,191.

EXECUT

IVE SUMMARY
The Cali
fornia Department of Water Resources (DWR) has awarded an Urban and Multibenefit Drought Relief Grant to the City in the amount of $20 million for a Recycled Water System Expansion Project. Proposed improvements under this project include the construction of a new recycled water booster pump station and recycled water pipelines within the streets right-of-way. Design support services, such as topographic surveying and mapping, are necessary to support the design of the booster pump station and pipelines. This agenda item requests authorization to enter into a PSA with Kjeldsen, Sinnock & Neudeck, Inc., selected through a Request for Proposal (RFP) process, to provide topographic surveying and mapping services for a not-to-exceed amount of $61,191.

BACK

GROUND AND LEGISLATIVE HISTORY

1. Back
ground
In 2022, DWR aw
arded an Urban and Multibenefit Drought Relief Grant to the City in the amount of $20 million for a Recycled Water System Expansion Project to extend the existing recycled water system to the far southern areas of the City.

2. Proje
ct
The scope o
f work for this project includes the design and construction of a recycled water booster pump station and recycled water pipelines within the streets right-of-way. To facilitate the development of the recycled water booster pump station and pipelines, topographic surveying and mapping services are needed from qualified engineering firms.

3. Profes
sional Services Agreement
To proceed
with next steps, a Request for Proposals was posted on the City website on January 03, 2023, and a total of seven (7) proposals were received on January 17, 2023.

After c
areful review of the proposals, the City believes that Kjeldsen, Sinnock & Neudeck, Inc. demonstrates the highest degree of relevant experience and past performance in providing topographic surveying and mapping services for projects of similar type and complexity in a satisfactory and timely manner.

Ag
Agenda Item 1.C
March 7, 2023

ANALYSIS
The scope of services includes providing an aerial survey of the pipeline route and perform associated field surveying. These services will provide critical field information to support the design of the pipelines and pump station for the Recycled Water System Expansion Project (CIP 74168).

If approved, Kjeldsen, Sinnock & Neudeck, Inc. will provide the necessary and required topographic surveying and mapping services for the City’s Recycled Water System Expansion Project (CIP 74168). This will contribute to ensuring that the project design is completed on schedule.

FISCAL IMPACT
The Recycled Water System Expansion (CIP 74168) is an approved project within the FY2022
-23 Capital Improvement Plan. Sufficient funding exists to cover the cost of the agreement for Kjeldsen, Sinnock & Neudeck, Inc.

PUBLIC OUTREACH/ INTEREST
No public outreach activity was conducted for this agenda item.

COORDINATION
No departments, agencies, and/or consultants were consulted with, for this agenda item.

CEQA DETERMINATION
This specific agenda item is exempt from CEQA requirements.

STRATEGIC PLAN
This agenda item is consistent with the City’s Quality of Life Strategy and meets the goals to ensure physical infrastructure and systems necessary for the del ivery of safe and clean water.

ACTION REQUESTED OF THE CITY COUNCIL
Staff recommends that City Council adopt a resolution approving a Professional Serv ices Agreement with Kjeldsen, Sinnock & Neudeck, Inc. to provide Topographic Surveying and Mapping Services for the Recycled Water System Expansion Project (CIP 74168) for a period of three (3) months and a total not-to-exceed amount of $61,191.

Prepared by: Lemar Saffi, Associate Engineer
Reviewed by: James A. Jackson, Director of Operations and Utilities S
ara Cowell, Finance Director
Karin Schnaider, Assistant City Manager
Approv
ed by: Midori Lichtwardt, Acting City Manager
Attachm
ents: A – PSA Kjeldsen, Sinnock & Neudeck, Inc.

City of Tracy -- Professional Services Agreement with Kjeldsen, Sinnock & Neudeck, Inc.

CITY OF TRACY

PROFESSIONAL SERVICES AGREEMENT WITH
Kjeldsen, Sinnock & Neudeck, Inc. for Topographic Surveying and Mapping Services related to the Recycled Water System Expansion Project (CIP 74168)

This Professional Services Agreement (Agreement) is entered into between the City of Tracy, a municipal corporation (City), and Kjeldsen, Sinnock & Neudeck, Inc., a California corporation (Consultant). City and Consultant are referred to individually as “Party” and collectively as “Parties.”

Recitals

A. City desires to retain Consultant to perform topographic surveying and mapping services; and

B. On January 3, 2023, the City issued a Request for Proposals (RFP) for Design Support Services – topographic surveying and mapping, geotechnical drilling and investigation, potholing services (Project). On January 17, 2023, Consultant submitted its proposal for the Project to the City.

City has determined that Consultant possesses the skills, experience and certification required to provide the services.

C. After negotiations between the City and Consultant, the Parties have reached an agreement for the performance of services in accordance with the terms set forth in this Agreement.

D. This Agreement is being executed pursuant to Resolution No. 2023-____ approved by Tracy City Council on March 7, 2023.

Now therefore, the Parties mutually agree as follows:

1. Scope of Work. Cons
ultant shall perform the services described in Exhibit “A” attached and incorporated by reference. The services shall be performed by, or under the direct supervision of, Consultant’s Authorized Representative: Kris F. Nehmer, PLS. Consultant shall not replace its Authorized Representative, nor shall Consultant replace any of the personnel listed in Exhibit “A,” nor shall Consultant use or replace any subcontractor or subconsultant, without City’s prior written consent.

A failure to obtain the City’s prior written consent for any change or replacement in personnel or subcontractor/subconsultant may result in the termination of this Agreement.

2. Time of Performance. Tim
e is of the essence in the performance of services under this Agreement and the timing requirements set forth shall be strictly adhered to unless otherwise modified in writing in accordance with this Agreement. Consultant shall begin performance, and shall complete all required services no later than the dates set forth in Exhibit “A.” Any services for which times for performance are not specified in this Agreement shall be started and completed by Consultant in a reasonably prompt and timely manner based upon the circumstances and direction communicated to the Consultant. Consultant shall submit all requests for time extensions to the City in writing no later than ten days after the start of the condition which purportedly caused the delay, and not later than the date on which performance is due. City shall grant or deny such requests at its sole discretion.

2.1 Te
rm. The term of this Agreement shall begin on March 8, 2023 and end on July 1, 2023, unless terminated in accordance with Section 6.

Attachment A
City of Tracy -- Professional Services Agreement with Kjeldsen, Sinnock & Neudeck, Inc.

3. Compensation. City shall pay Consultant on a time and expense basis, at the billing rates set forth in Exhibit “B,” attached and incorporated by reference for services performed under this Agreement.

3.1 Not to Exceed Amount. Consultant’s total compensation under this Agreement shall not exceed $61,191. Consultant’s billing rates shall cover all costs and expenses for Consultant’s performance of this Agreement. No work shall be performed by Consultant in excess of the total compensation amount provided in this section without the City’s prior written approval.

3.2 Invoices. Consultant shall submit monthly invoice(s) to the City that describe the services performed, including times, dates, and names of persons performing the services.

3.2.1 If Consultant is providing services in response to a development application, separate invoice(s) must be issued for each application and each invoice shall contain the City’s designated development application number.

3.2.2 Consultant’s failure to submit invoice(s) in accordance with these requirements may result in the City rejecting said invoice(s) and thereby delaying payment to Consultant.

3.3 Payment. Within 30 days after the City’s receipt of invoice(s), City shall make payment to the Consultant based upon the services described on the invoice(s) and approved by the City.

4. Indemnification. Consultant shall, to the fullest extent permitted by law, indemnify, defend (with independent counsel approved by the City), and hold harmless the City from and against any claims arising out of Consultant’s performance or failure to comply with obligations under this Agreement, except to the extent caused by the sole, active negligence or willful misconduct of the City.

In this s
ection, “City” means the City, its officials, officers, agents, employees and volunteers; “Consultant” means the Consultant, its employees, agents and subcontractors; “Claims” includes claims, demands, actions, losses, damages, injuries, and liability, direct or indirect (including any and all related costs and expenses) and any allegations of these; and “Arising out of” includes “pertaining to” and “relating to”.
(The duty of
a "design professional" to indemnify and defend the City is limited to claims that arise out of, pertain to, or relate to the negligence, recklessness or willful misconduct of the design professional, under Civ. Code § 2782.8.)
The provi
sions of this section survive completion of the services or the termination of this Agreement, and are not limited by the provisions of Section 5 relating to insurance.

5. Insurance. Consultant shall, throughout the duration of this Agreement, maintain insurance to cover Consultant, its agents, representatives, and employees in connection with the performance of services under this Agreement at the minimum levels set forth herein.

5.1 Commercial General Liability (with coverage at least as broad as ISO form CG 00 01 01 96) “
per occurrence” coverage shall be maintained in an amount not less than $4,000,000 general aggregate and $2,000,000 per occurrence for general liability, bodily injury, personal injury, and property damage.

5.2 Automobile Liability (with coverage at least as broad as ISO form CA 00 01 07 97, for “any auto”) “claims made” coverage shall be maintained in an amount not less than $1,000,000 per accident for bodily injury and property damage.

5.3 Workers’ Compensation coverage shall be maintained as required by the State of California.

5.4 Professional Liability “claims made” coverage shall be maintained to cover damages that may be the result of errors, omissions, or negligent acts of Consultant in an amount not less than $1,000,000 per claim.

City of Tracy -- Professional Services Agreement with Kjeldsen, Sinnock & Neudeck, Inc.

5.5 Endorsements. Consultant shall obtain endorsements to the automobile and commercial general liability insurance policies with the following provisions:

5.5.1 The City (including its elected officials, officers, employees, agents, and volunteers) shall be named as an additional “insured.”

5.5.2 For any claims related to this Agreement, Consultant’s coverage shall be primary insurance with respect to the City. Any insurance maintained by the City shall be excess of the Consultant’s insurance and shall not contribute with it.

5.6 Notice of Cancellation. Consultant shall notify the City if the policy is canceled before the expiration date. For the purpose of this notice requirement, any material change in the policy prior to the expiration shall be considered a cancellation. Consultant shall immediately obtain a replacement policy.

5.7 Authorized Insurers. All insurance companies providing coverage to Consultant shall be insurance organizations authorized by the Insurance Commissioner of the State of California to transact the business of insurance in the State of California.

5.8 Insurance Certificate. Consultant shall provide evidence of compliance with the insurance requirements listed above by providing a certificate of insurance and endorsements, in a form satisfactory to the City, before the City signs this Agreement.

5.9 Substitute Certificates. Consultant shall provide a substitute certificate of insurance no later than 30 days prior to the policy expiration date of any insurance policy required by this Agreement.

5.10 Consultant’s Obligation. Maintenance of insurance by the Consultant as specified in this Agreement shall in no way be interpreted as relieving the Consultant of any responsibility whatsoever (including indemnity obligations under this Agreement), and the Consultant may carry, at its own expense, such additional insurance as it deems necessary. Failure to provide or maintain any insurance policies or endorsements required herein may result in the City terminating this Agreement.

6. Termination. The City may terminate this Agreement by giving ten days’ written notice to Consultant. Upon termination, Consultant shall give the City electronic files in .pdf format of deliverable documents, including preliminary drafts and supporting documents, prepared by Consultant for this Agreement. The City shall pay Consultant for all services satisfactorily performed in accordance with this Agreement, up to the date notice is given.

7. Dispute Resolution. If any dispute arises between the City and Consultant that cannot be settled after engaging in good faith negotiations, City and Consultant agree to resolve the dispute in accordance with the following:

7.1 Each Par
ty shall designate a senior management or executive level representative to negotiate the dispute;

7.2 The representatives shall attempt, through good faith negotiations, to resolve the dispute by any means within their authority.

7.3 If the issue remains unresolved after fifteen (15) days of good faith negotiations, the Parties shall attempt to resolve the disagreement by negotiations between legal counsel. If the aforementioned process fails, the Parties shall resolve any remaining disputes through mediation to expedite the resolution of the dispute.

7.4 The mediation process shall provide for the selection within fifteen (15) days by both Parties of a disinterested third person as mediator, shall be commenced within thirty (30) days and shall be concluded within fifteen (15) days from the commencement of the mediation.

7.5 The Parties shall equally bear the costs of any third party in any alternative dispute resolution process.

7.6 The dispute resolution process is a material condition to this Agreement and must be exhausted prior to either Party initiating legal action. This dispute resolution process is not intended to nor shall be construed to change the time periods for filing a claim or action specified by Government Code §§ 900 et seq.

City of Tracy -- Professional Services Agreement with Kjeldsen, Sinnock & Neudeck, Inc.

8. Ownership of Work. All original documents prepared by Consultant for this Agreement, whether complete or in progress, are the property of the City, and shall be given to the City at the completion of Consultant’s services, or upon demand from the City. No such documents shall be revealed or made available by Consultant to any third party without the City’s prior written consent.

9. Independent Contractor Status. Consultant is an independent contractor and is solely responsible for the acts of its employees or agents, including any negligent acts or omissions.

Consultant is not City’s employee and Consultant shall have no authority, express or implied, to act on behalf of the City as an agent, or to bind the City to any obligation, unless the City provides prior written authorization. Consultant is free to work for other entities while under contract with the City.

Consultant, and its agents or employees, are not entitled to City benefits.

10. Conflicts of Interest. Consultant (including its employees, agents, and subconsultants) shall not maintain or acquire any direct or indirect interest that conflicts with the performance of this Agreement. If Consultant maintains or acquires such a conflicting interest, the City may terminate any contract (including this Agreement) involving Consultant’s conflicting interest.

11. Rebates, Kickbacks, or Other Unlawful Consideration. Consultant w arrants that this Agreement was not obtained or secured through rebates, kickbacks, or other unlawful consideration either promised or paid to any City official or employee. For breach of this warranty, City shall have the right, in its sole discretion, to terminate this Agreement without liability; to pay only for the value of the work actually performed; or to deduct from the contract price; or otherwise recover the full amount of such rebate, kickback, or other unlawful consideration.

12. Notices. All notices, demands, or other communications which this Agreement contemplates or authorizes shall be in writing and shall be personally delivered or mailed to the other party to the addresses listed below. Communications shall be deemed to have been given and received on the first to occur of: (1) actual receipt at the address designated below, or (2) three working days after the deposit in the United States Mail of registered or certified mail, sent to the address designated below.

To City: To Consultant:

Dir
ector of Operations & Utilities Kjeldsen, Sinnock & Neudeck, Inc. 520 N. Tracy Blvd. Stephen K. Sinnock, PE
Tracy, CA 95376 711 N. Pershing Ave.

Stockton, CA 95203
With a copy to:

City Attorney
333 Civic Center Plaza
Tracy, CA 95376

13. Miscellaneous.

13.1 S tandard of Care. Unless otherwise specified in this Agreement, the standard of care applicable to Consultant’s services will be the degree of skill and diligence ordinarily used by reputable professionals performing in the same or similar time and locality, and under the same or similar circumstances.

13.2 Amendments. This Agreement may not be modified orally or in any manner other than by an agreement in writing signed by both Parties.

City of Tracy -- Professional Services Agreement with Kjeldsen, Sinnock & Neudeck, Inc.

13.3 Waivers. Waiver of a breach or default under this Agreement shall not constitute a continuing waiver or a waiver of a subsequent breach of the same or any other provision of this Agreement.

13.4 Assignment and Delegation. Consultant may not assign, transfer or delegate this Agreement or any portion of it without the City’s written consent. Any attempt to do so will be void.

City’s consent to one assignment shall not be deemed to be a consent to any subsequent assignment.

13.5 Jurisdiction and Venue. The interpretation, validity, and enforcement of the Agreement shall be governed by and construed under the laws of the State of California. Any suit, claim, or legal proceeding of any kind related to this Agreement shall be filed and heard in a court of competent jurisdiction in the County of San Joaquin.

13.6 Compliance with the Law. Consultant shall comply with all applicable local, state, and federal laws, whether or not those laws are expressly stated in this Agreement.

13.6.1 Prevailing Wage Laws. Consultant is aware of the requirements of California Labor Code Section 1720, et seq., and 1770, et seq., as well as California Code of Regulations, Title 8, Section 16000, et seq., (“Prevailing Wage Laws”), which require the payment of prevailing wage rates; employment of apprentices (§ 1777.5), certified payroll records (§1776), hours of labor (§1813 and §1815), debarment of contractors and subcontractors (§1777.1) and the performance of other requirements on “public works” and “maintenance” projects. If the services being performed under this Agreement are part of a “public works” or “maintenance” project, as defined in the Prevailing Wage Laws, and if the total compensation is $1,000 or more, Consultant agrees to fully comply with such Prevailing Wage Laws. These prevailing rates are on file with the City and are available online at http://www.dir.ca.gov/DLSR. Consultant shall defend, indemnify and hold the City, its officials, officers, employees and agents, harmless from any and all claims, costs, penalties, or interests arising out of any failure or alleged failure to comply with the Prevailing Wage Laws.

13.6.2 No n -discrimination. Consultant represents and warrants that it is an equal opportunity employer and it shall not discriminate against any subconsultant, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age.

Consultant shall also comply with all applicable anti-discrimination federal and state laws, including but not limited to, the California Fair Employment and Housing Act (Gov. Code 12990 (a-f) et seq.).

13.7 Business Entity Status. Consultant is responsible for filing all required documents and/or forms with the California Secretary of State and meeting all requirements of the Franchise Tax Board, to the extent such requirements apply to Consultant. By entering into this Agreement, Consultant represents that it is not a suspended corporation. If Consultant is a suspended corporation at the time it enters this Agreement, City may take steps to have this Agreement declared voidable.

13.8 Business License. Before the City signs this Agreement, Consultant shall obtain a City of Tracy Business License. Consultant shall maintain an active City of Tracy Business License during the term of this Agreement.

13.9 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and assigns.

13. 10 Construction of Agreement. Each Party hereto has had an equivalent opportunity to participate in the drafting of this Agreement and/or to consult with legal counsel. Therefore, the usual construction of an agreement against the drafting Party shall not apply hereto.

13.11 Severability. If a term of this Agreement is held invalid by a court of competent jurisdiction, the Agreement shall be construed as not containing that term, and the remainder of this Agreement shall remain in effect.

13.12 Controlling Provisions. In the case of any conflict between the terms of this Agreement and the Exhibits hereto, and Consultant’s proposal (if any), the Agreement shall control. In the case of any conflict between the Exhibits hereto and the Consultant’s proposal (if any), the Exhibits shall control.

13.13 Entire Agreement. This Agreement and the attached Exhibits comprise the entire integrated understanding between the Parties concerning the services to be performed. This City of Tracy -- Professional Services Agreement with Kjeldsen, Sinnock & Neudeck, Inc.

Agreement supersedes all prior negotiations, representations or agreements. All exhibits attached hereto are incorporated by reference herein.

14. Signatures. The individuals executing this Agreement on behalf of Consultant represent and warrant that they have the right, power, legal capacity and authority to enter into and to execute this Agreement on behalf of Consultant.
[SI
GNATURES ON FOLLOWING PAGE]

City of Tracy -- Professional Services Agreement with Kjeldsen, Sinnock & Neudeck, Inc.

EXHIBIT A - Scope of Work
Consul
tant shall provide topographic surveying and mapping.

Task 1: Survey Control Network
• Establish a horizontal and vertical survey control network for the project based on the City of Tracy control system
• Horizontal control will be provided based on the California Coordinate System of 1983, Zone 3, U.S. Foot units
• Vertical control will be referenced to the North American Vertical Datum of 1988 (NAVD88) Task 2: Topographic Surveying and Mapping
• Set aerial control panels at locations and frequency adequate to meet national mapping accuracy standards
• Coordinate with and obtain permission from property owners prior to setting photo control targets
• Prepare aerial based topography mapping at the stated mapping scale and contour interval showing all visible surface features, contours, and spot elevations within the mapping limits Task 3: Supplemental Ground Surveys
• Perform ground surveys to collect critical design elements necessary for the design of the project
Scope of Service Deliverables
• Digital files of the topographic mapping in an AutoCAD Civil3D format • Comma delimited text file of all surveyed points
• Electronic files of aerial photos in tiff format
• PDF files of the final topographic survey
City of Tracy -- Professional Services Agreement with Kjeldsen, Sinnock & Neudeck, Inc.

EXHIBIT B – Compensation
Compens
ation shall include all items as outlined in Exhibit A for a total not to exceed amount of $61,191. Optional Task No. 4 is not included in the compensation.

APPROVED AS TO FORM AND LEGALITY
________________________
CITY
ATTORNEY’S OFFICE

TRACY CIT

Y COUNCIL
RES
OLUTION NO. _______________
APPRO

VING A PROFESSIONAL SERVICES AGREEMENT WITH KJELDSEN,
SINNOCK & NEUDECK, INC. TO PROVIDE TOPOGRAPHIC SURVEYING AND

MAPPING SERVICES FOR THE RECYCLED WATER SYSTEM EXPANSION PROJECT (CIP 74168) FOR A PERIOD OF THREE (3) MONTHS AND A TOTAL NOT-TO-EXCEED AMOUNT OF $61,191
WHERE
AS, the California Department of Water Resources (DWR) has awarded an Urban and Multibenefit Drought Relief Grant to the City of Tracy in the amount of $20 million for a Recycled Water System Expansion Project; and
WHERE
AS, proposed improvements under the project include the construction of a new recycled water booster pump station and recycled water pipelines within the streets right-of-way; and
WHERE
AS, a Request for Proposals for design support services was posted on the City website on January 3, 2023, and a total of seven (7) proposals were received on January 17, 2023; and
WHERE
AS, after careful review of the proposals, the City has determined that Kjeldsen, Sinnock & Neudeck, Inc. demonstrated the highest degree of relevant experience and past performance in providing geotechnical investigation, topographic surveying and mapping, and potholing services; and
WHERE
AS, the scope of services includes providing an aerial survey of the pipeline route, associated field surveying, providing geotechnical investigation, and drilling services, and providing potholing for the purpose of precisely locating underground utilities within the project area; now, therefore, be it
RESO
LVED: that the City Council of the City of Tracy hereby approves a Professional Services Agreement with Kjeldsen, Sinnock & Neudeck, Inc. to provide topographic surveying and mapping services for the Recycled Water System Expansion project (CIP 74168) for a period of three (3) months and a total not to exceed amount of $61,191. * * * * * * * * * * * * * *
Resolution 2023-

The foregoing Resolution 2023-_____ was adopted by the Tracy City Council on March 7, 2023,
by the following vote:

AYES: CO
UNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

ABSTENTION: COUNCIL MEMBERS:
___________________________________________
NANCY
D. YOUNG
Mayor of the City of Tracy, California
ATTEST
:

ADRIANNE RICHARDSON
City Clerk and Clerk of the Council of the
City of Tracy, California
March 7, 2023
Agenda Item 1.D

RECOMMENDATION
Staf
f recommends that City Council adopt a resolution approving a Professional Services Agreement with West Yost & Associates, Inc. to provide Program Management Services for the Recycled Water System Expansion Project (CIP 74168) for a period of three (3) years and a total not-to-exceed amount of $974,402.

EXECUTIVE SUMMARY
The Cali
fornia Department of Water Resources (DWR) has awarded an Urban and Multibenefit Drought Relief Grant to the City in the amount of $20 million for a Recycled Water System Expansion Project. Proposed improvements under the project include the construction of a new booster pump station and recycled water pipelines within the streets right-of-way. Due to the complexity of the project, program management services are crucial as they ensure that the project is executed, monitored, and controlled effectively.

The program manager will oversee the coordination of pertinent activities involved in the project, such as grant administration, design, procurement, and construction, to ensure that they are completed on time, within budget, and to the required quality standards. This agenda item requests authorization to enter into a PSA with the most qualified proposer, West Yost & Associates, Inc., selected through a Request for Proposal (RFP) process, to provide the program management services for a not-to-exceed amount of $974,402.

BACKGROUND AND LEGISLATIVE HISTORY

1. Background
In 2022, DWR aw
arded an Urban and Multibenefit Drought Relief Grant to the City in the amount of $20 million for a Recycled Water System Expansion Project to extend the existing recycled water system to the far southern areas of the City.

2. Project
The scope o
f work for this project includes the design and construction of a recycled water booster pump station and recycled water pipelines within the streets right-of-way. An experienced program manager is deemed necessary for the success of the project. This is due to the importance of aligning the project goals with the objectives outlines in DWR’s grant agreement. The program manager must possess not only a strong background in managing complex and large-scale recycled water projects, but also have expertise in grant management.

This will help ensure that the project is delivered in a structured and efficient manner, with the right resources and support in place.

3. Professional Services Agreement
A Reques
t for Proposals for program management services was posted on the City website on December 21, 2022, and a total of three (3) proposals were received on January 24, 2023.

Agenda Item 1.D
March 7, 2023

After careful review of the proposals, the City believes that West Yost & Associates, Inc. demonstrates the highest degree of relevant experience and past performance in providing program management services for projects of similar type and complexity in a satisfactory and timely manner.

ANALYSIS
A key
issue in completing the project successfully will be meeting the construction schedule outlined in the grant agreement. The support of an experienced program manager and their team will help ensure that the project is executed and completed in a timely and efficient manner.

Progra
m management services are vital to ensure that the project stays on track, the objectives outlined in the grant agreement are met, and the use of all pertinent resources are optimized. The program manager will work closely with the design and construction teams to ensure that the design and construction of the recycled water booster pump station and pipelines are in line with the project requirements and budget. In addition, the program manager will assist the City to complete all required grant related deliverables such as: invoices, progress reports, progress completion report, and any other required deliverables to the Department of Water Resources.

If approved,
West Yost & Associates, Inc. will provide program management services for the City’s Recycled Water System Expansion Project (CIP 74168). This will contribute to ensuring that the project is completed on schedule, within its allocated budget, and to the required quality standards.

FISCAL IMPACT
The Recy
cled Water System Expansion (CIP 74168) is an approved project within the FY2022-23 Capital Improvement Plan. Sufficient funding exists to cover the cost of the agreement with West Yost & Associates.

PUBLIC OUTREACH/ INTEREST
No publi
c outreach activity was conducted for this agenda item.

COORDINATION
No departm
ents, agencies, and/or consultants, outside of West Yost & Associates, Inc., were consulted with, for this agenda item.

CEQA DETERMINATION
West Yos
t & Associates, Inc. will assist the City to complete the required CEQA documentation for the Recycled Water System Expansion Project (CIP 74168).

STRATEGIC PLAN
This agenda
item is consistent with the City’s Quality of Life Strategy and meets the goals to ensure physical infrastructure and systems necessary for the delivery of safe and clean water.

Agenda Item 1.D
March 7, 2023

ACTION REQUESTED OF THE CITY COUNCIL
Staff rec
ommends that Tracy City Council adopt a resolution approving a Professional Services Agreement with West Yost & Associates, Inc. to provide program management services for the Recycled Water System Expansion Project (CIP 74168) for a period of three (3) years and a total not-to-exceed amount of $974,402.

Prepar
ed by: Lemar Saffi, Associate Engineer
Revi
ewed by: James Jackson, Director of Operations and Utilities Sara Cowell, Finance Director
Karin Schnaider, Assistant City Manager
Approv
ed by: Midori Lichtwardt, Acting City Manager
Attachm
ents: A – PSA West Yost Associates
City of Tracy -- Professional Services Agreement with West Yost & Associates, Inc.

CITY OF TRACY

PROFESSIONAL SERVICES AGREEMENT WITH
West Yost & Associates, Inc. for Program Management for the Recycled Water Expansion Project (Cl P 7 4167)
This Professional Services Agreement (Agreement) is entered into between the City of Tracy, a municipal corporation (City), and West Yost & Associates, Inc. a California Corporation (Consultant).

City and Consultant are referred to individually as "Party" and collectively as "Parties." Recitals
A. City desires to retain Consultant to perform program management services; and B. On December 21, 2022, the City issued a Request for Proposals (RFP) for the Program Management Services for City of Tracy Recycled Water Expansion Project (CIP 74167) (Project). On January 24, 2023, Consultant submitted its proposal for the Project to the City. City has determined that Consultant possesses the skills, experience and certification required to provide the services."] C. After negotiations between the City and Consultant, the Parties have reached an agreement for the performance of services in accordance with the terms set forth in this Agreement.

D. This Agreement is being executed pursuant to Resolution No. 2023-__ approved by Tracy City Council on March 7, 2023.

Now therefore, the Parties mutually agree as follows:

1. Scope of Work. Consultant shall perform the services described in Exhibit "A" attached and incorporated by reference. The services shall be performed by, or under the direct supervision of, Consultant's Authorized Representative: Elizabeth Drayer, PE. Consultant shall not replace its Authorized Representative, nor shall Consultant use or replace any subcontractor or subconsultant, without City's prior written consent. A failure to obtain the City's prior written consent for any change or replacement in personnel or subcontractor/subconsultant may result in the termination of this Agreement.

2. Time of Performance. Time is of the essence in the performance of services under this Agreement and the timing requirements set forth shall be strictly adhered to unless otherwise modified in writing in accordance with this Agreement. Consultant shall begin performance, and shall complete all required services no later than the dates set forth in Exhibit "A." Any services for which times for performance are not specified in this Agreement shall be started and completed by Consultant in a reasonably prompt and timely manner based upon the circumstances and direction communicated to the Consultant. Consultant shall submit all requests for time extensions to the City in writing no later than ten days after the start of the condition which purportedly caused the delay, and not later than the date on which performance is due. City shall grant or deny such requests at its sole discretion.

2.1 Term. The term of this Agreement shall begin on March 8, 2023 and end on February 28, 2026, unless terminated in accordance with Section 6.

3. Compensation. City shall pay Consultant on a time and expense basis, at the billing rates set forth in Exhibit "B," attached and incorporated by reference for services performed under this Agreement.

Attachment A
DocuSign Envelope ID: 7DBEBCF4-11AC-486C-8223-8071 DA7671 B9 City of Tracy- Professional SeNices Agreement with West Yost & Associates, Inc.

3.1 Not to Exceed Amount. Consultant's total compensation under this Agreement shall not exceed $974,402. Consultant's billing rates shall cover all costs and expenses for Consultant's performance of this Agreement. No work shall be performed by Consultant in excess of the total compensation amount provided in this section without the City's prior written approval.

3.2 Invoices. Consultant shall submit monthly invoice(s) to the City that describe the services performed, including times, dates, and names of persons performing the services.

3.2.1 If Consultant is providing services in response to a development application, separate invoice(s) must be issued for each application and each invoice shall contain the City's designated development application number.

3.2.2 Consultant's failure to submit invoice(s) in accordance with these requirements may result in the City rejecting said invoice(s) and thereby delaying payment to Consultant.

3.3 Payment. Within 30 days after the City's receipt of invoice(s), City shall make payment to the Consultant based upon the services described on the invoice(s) and approved by the City.

4. Indemnification. Consultant shall, to the fullest extent permitted by law, indemnify, defend (with independent counsel approved by the City), and hold harmless the City from and against any claims arising out of Consultant's performance or failure to comply with obligations under this Agreement, except to the extent caused by the sole, active negligence or willful misconduct of the City.

In this section, "City" means the City, its officials, officers, agents, employees and volunteers; "Consultant" means the Consultant, its employees, agents and subcontractors; "Claims" includes claims, demands, actions, losses, damages, injuries, and liability, direct or indirect (including any and all related costs and expenses) and any allegations of these; and "Arising out of' includes "pertaining to" and "relating to".
(The duty of a "design professional" to indemnify and defend the City is limited to claims that arise out of, pertain to, or relate to the negligence, recklessness or willful misconduct of the design professional, under Civ. Code§ 2782.8.)
The provisions of this section survive completion of the services or the termination of this Agreement, and are not limited by the provisions of Section 5 relating to insurance.

5. Insurance. Consultant shall, throughout the duration of this Agreement, maintain insurance to cover Consultant, its agents, representatives, and employees in connection with the performance of services under this Agreement at the minimum levels set forth herein.

5.1 Commercial General Liability (with coverage at least as broad as ISO form CG 00 01 01 96) "per occurrence" coverage shall be maintained in an amount not less than $4,000,000 general aggregate and $2,000,000 per occurrence for general liability, bodily injury, personal injury, and property damage.

5.2 Automobile Liability (with coverage at least as broad as ISO form CA 00 01 07 97, for "any auto") "claims made" coverage shall be maintained in an amount not less than $1,000,000 per accident for bodily injury and property damage.

5.3 Workers' Compensation coverage shall be maintained as required by the State of California.

5.4 Professional Liability "claims made" coverage shall be maintained to cover damages that may be the result of errors, omissions, or negligent acts of Consultant in an amount not less than $1,000,000 per claim.

5.5 Endorsements. Consultant shall obtain endorsements to the automobile and commercial general liability insurance policies with the following provisions:

5.5.1 The City (including its elected officials, officers, employees, agents, and volunteers) shall be named as an additional "insured."

DocuSign Envelope ID: 7D8EBCF4-11AC-486C-8223-8071DA7671 B9 City of Tracy - Professional Services Agreement with West Yost & Associates, Inc.

5.5.2 For any claims related to this Agreement, Consultant's coverage shall be primary insurance with respect to the City. Any insurance maintained by the City shall be excess of the Consultant's insurance and shall not contribute with it.

5.6 Notice of Cancellation. Consultant shall notify the City if the policy is canceled before the expiration date. For the purpose of this notice requirement, any material change in the policy prior to the expiration shall be considered a cancellation. Consultant shall immediately obtain a replacement policy.

5.7 Authorized Insurers. All insurance companies providing coverage to Consultant shall be insurance organizations authorized by the Insurance Commissioner of the State of California to transact the business of insurance in the State of California.

5.8 Insurance Certificate. Consultant shall provide evidence of compliance with the insurance requirements listed above by providing a certificate of insurance and endorsements, in a form satisfactory to the City, before the City signs this Agreement.

5.9 Substitute Certificates. Consultant shall provide a substitute certificate of insurance no later than 30 days prior to the policy expiration date of any insurance policy required by this Agreement.

5.10 Consultant's Obligation. Maintenance of insurance by the Consultant as specified in this Agreement shall in no way be interpreted as relieving the Consultant of any responsibility whatsoever (including indemnity obligations under this Agreement), and the Consultant may carry, at its own expense, such additional insurance as it deems necessary. Failure to provide or maintain any insurance policies or endorsements required herein may result in the City terminating this Agreement.

6. Termination. The City may terminate this Agreement by giving ten days' written notice to Consultant. Upon termination, Consultant shall give the City all original documents, including preliminary drafts and supporting documents, prepared by Consultant for this Agreement. The City shall pay Consultant for all services satisfactorily performed in accordance with this Agreement, up to the date notice is given.

7. Dispute Resolution. If any dispute arises between the City and Consultant that cannot be settled after engaging in good faith negotiations, City and Consultant agree to resolve the dispute in accordance with the following:

7.1 Each Party shall designate a senior management or executive level representative to negotiate the dispute;

7.2 The representatives shall attempt, through good faith negotiations, to resolve the dispute by any means within their authority.
7 .3 If the issue remains unresolved after fifteen (15) days of good faith negotiations, the Parties shall attempt to resolve the disagreement by negotiations between legal counsel. If the aforementioned process fails, the Parties shall resolve any remaining disputes through mediation to expedite the resolution of the dispute.

7.4 The mediation process shall provide for the selection within fifteen (15) days by both Parties of a disinterested third person as mediator, shall be commenced within thirty (30) days and shall be concluded within fifteen (15) days from the commencement of the mediation.

7.5 The Parties shall equally bear the costs of any third party in any alternative dispute resolution process.
7 .6 The dispute resolution process is a material condition to this Agreement and must be exhausted prior to either Party initiating legal action. This dispute resolution process is not intended to nor shall be construed to change the time periods for filing a claim or action specified by Government Code §§ 900 et seq.

8. Ownership of Work. All original documents prepared by Consultant for this Agreement, whether complete or in progress, are the property of the City, and shall be given to the City at the

DocuSign Envelope ID: 7D8EBCF4-11AC-486C-8223-8071 DA767189 City of Tracy- Professional Services Agreement with West Yost & Associates, Inc. completion of Consultant's services, or upon demand from the City. No such documents shall be revealed or made available by Consultant to any third party without the City's prior written consent.

9. Independent Contractor Status. Consultant is an independent contractor and is solely responsible for the acts of its employees or agents, including any negligent acts or omissions.

Consultant is not City's employee and Consultant shall have no authority, express or implied, to act on behalf of the City as an agent, or to bind the City to any obligation, unless the City provides prior written authorization. Consultant is free to work for other entities while under contract with the City.

Consultant, and its agents or employees, are not entitled to City benefits.

10. Conflicts of Interest. Consultant (including its employees, agents, and subconsultants) shall not maintain or acquire any direct or indirect interest that conflicts with the performance of this Agreement. If Consultant maintains or acquires such a conflicting interest, the City may terminate any contract (including this Agreement) involving Consultant's conflicting interest.

11. Rebates, Kickbacks, or Other Unlawful Consideration. Consultant warrants that this Agreement was not obtained or secured through rebates, kickbacks, or other unlawful consideration either promised or paid to any City official or employee. For breach of this warranty, City shall have the right, in its sole discretion, to terminate this Agreement without liability; to pay only for the value of the work actually performed; or to deduct from the contract price; or otherwise recover the full amount of such rebate, kickback, or other unlawful consideration.

12. Notices. All notices, demands, or other communications which this Agreement contemplates or authorizes shall be in writing and shall be personally delivered or mailed to the other party to the addresses listed below. Communications shall be deemed to have been given and received on the first to occur of: (1) actual receipt at the address designated below, or (2) three working days after the deposit in the United States Mail of registered or certified mail, sent to the address designated below.

To City:

Operations & Utilities Director
James A Jackson
520 N Tracy Blvd
Tracy, CA 95376
With a copy to:

City Attorney
333 Civic Center Plaza
Tracy, CA 95376

13. Miscellaneous.

To Consultant:

West Yost & Associates, Inc.

Elizabeth Drayer, PE
2020 Research Park Drive
Suite 100
Davis, CA 95618

13.1 Standard of Care. Unless otherwise specified in this Agreement, the standard of care applicable to Consultant's services will be the degree of skill and diligence ordinarily used by reputable professionals performing in the same or similar time and locality, and under the same or similar circumstances.

13.2 Amendments. This Agreement may not be modified orally or in any manner other than by an agreement in writing signed by both Parties.

DocuSign Envelope ID: 7D8EBCF4-11AC--486C-8223-8071 DA767189 City of Tracy -- Professional Services Agreement with West Yost & Associates, Inc.

13.3 Waivers. Waiver of a breach or default under this Agreement shall not constitute a continuing waiver or a waiver of a subsequent breach of the same or any other provision of this Agreement.

13.4 Assignment and Delegation. Consultant may not assign, transfer or delegate this Agreement or any portion of it without the City's written consent. Any attempt to do so will be void.

City's consent to one assignment shall not be deemed to be a consent to any subsequent assignment.

13.5 Jurisdiction and Venue. The interpretation, validity, and enforcement of the Agreement shall be governed by and construed under the laws of the State of California. Any suit, claim, or legal proceeding of any kind related to this Agreement shall be filed and heard in a court of competent jurisdiction in the County of San Joaquin.

13.6 Compliance with the Law. Consultant shall comply with all applicable local, state, and federal laws, whether or not those laws are expressly stated in this Agreement.

13.6.1 Prevailing Wage Laws. Consultant is aware of the requirements of California Labor Code Section 1720, et seq., and 1770, et seq., as well as California Code of Regulations, Title 8, Section 16000, et seq., ("Prevailing Wage Laws"), which require the payment of prevailing wage rates; employment of apprentices (§ 1777.5), certified payroll records (§1776), hours of labor (§1813 and §1815), debarment of contractors and subcontractors (§1777.1) and the performance of other requirements on "public works" and "maintenance" projects. If the services being performed under this Agreement are part of a "public works" or "maintenance" project, as defined in the Prevailing Wage Laws, and if the total compensation is $1,000 or more, Consultant agrees to fully comply with such Prevailing Wage Laws. These prevailing rates are on file with the City and are available online at http://www.dir.ca .gov/DLSR. Consultant shall defend, indemnify and hold the City, its officials, officers, employees and agents, harmless from any and all claims, costs, penalties, or interests arising out of any failure or alleged failure to comply with the Prevailing Wage Laws.

13.6.2 Non-discrimination. Consultant represents and warrants that it is an equal opportunity employer and it shall not discriminate against any subconsultant, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age.

Consultant shall also comply with all applicable anti-discrimination federal and state laws, including but not limited to, the California Fair Employment and Housing Act (Gov. Code 12990 (a-f) et seq.).

13.7 Business Entity Status. Consultant is responsible for filing all required documents and/or forms with the California Secretary of State and meeting all requirements of the Franchise Tax Board, to the extent such requirements apply to Consultant. By entering into this Agreement, Consultant represents that it is not a suspended corporation. If Consultant is a suspended corporation at the time it enters this Agreement, City may take steps to have this Agreement declared voidable.

13.8 Business License. Before the City signs this Agreement, Consultant shall obtain a City of Tracy Business License. Consultant shall maintain an active City of Tracy Business License during the term of this Agreement.

13.9 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and assigns.

13.10 Construction of Agreement. Each Party hereto has had an equivalent opportunity to participate in the drafting of this Agreement and/or to consult with legal counsel. Therefore, the usual construction of an agreement against the drafting Party shall not apply hereto.

13.11 Severability. If a term of this Agreement is held invalid by a court of competent jurisdiction, the Agreement shall be construed as not containing that term, and the remainder of this Agreement shall remain in effect.

13.12 Controlling Provisions. In the case of any conflict between the terms of this Agreement and the Exhibits hereto, and Consultant's proposal (if any), the Agreement shall control. In the case of any conflict between the Exhibits hereto and the Consultant's proposal (if any), the Exhibits shall control.

13.13 Entire Agreement. This Agreement and the attached Exhibits comprise the entire integrated understanding between the Parties concerning the services to be performed. This

DocuSign Envelope ID: 7DBEBCF4-11AC-486C-8223-8071 DA767189 City of Tracy -Professional Services Agreement with West Yost & Associates, Inc.

Agreement supersedes all prior negotiations, representations or agreements. All exhibits attached hereto are incorporated by reference herein.

14. Signatures. The individuals executing this Agreement on behalf of Consultant represent and warrant that they have the right, power, legal capacity and authority to enter into and to execute this Agreement on behalf of Consultant.
[SIGNATURES ON FOLLOWING PAGE]

DocuSign Envelope ID: 7D8EBCF4-11AC-486C-8223-8071 DA7671 B9 City of Tracy-- Professional Services Agreement with West Yost & Associates, Inc.

The Parties agree to the full performance of the terms set forth here.

City of Tracy Consultant
West Yost & Associates, Inc., a California
By: Nancy D. Young
Title: Mayor
Date: _________ _
Attest:

Adrianne Richardson, City Clerk
Approved as to form:

Bijal M. Patel, City Attorney
Exhibits:
f°'"iSA�ti.fJ r;\,:
�"JW� Dr�u-
By:
rCC4
�1FiaBe"th Drayer
Title: Vice President
Date: 2/9/2023 I 10: 05 AM PST
Federal Employer Tax ID No. ____ _
Title: Tregst,irer
Date: 2/9/2023 I 10: 16 AM PST
A Scope of Work, including personnel and time of performance (See Agreement sections 1 and 2.)
B Compensation (See Agreement section 3.)

DocuSign Envelope ID: 7D8EBCF4-11AC-486C-8223-8071 DA7671 B9 City of Tracy- Professional Services Agreement with West Yost & Associates, Inc.

EXHIBIT A- Scope of Work
Task 1: Program Management
• Kick off workshop and regular progress meetings
• Weekly meetings with City's project manager
• Monthly Project Team meetings
• Attend necessary City Council meetings
• Project Controls
o Work Breakdown Structure
o Schedule Tracking
o Budget Tracking
o Project Status Reports
o Document Controls
• Master Project Schedule Development
• Permit Matrix
Task 2: Consultant Management
• Request for Proposals Development
• Coordination of Consultants
• Deliverables Review
Task 3: Grant Administration
• Grand Administration Support
Task 4: Optional Services
• Construction Bidding Support
• Construction Management
• Recycle Water System Permitting and Compliance Monitoring

DocuSign Envelope ID: 7D8EBCF4-11AC-486C-8223-8071DA767189 City of Tracy-- Professional Services Agreement with West Yost & Associates, Inc.

EXHIBIT B - Compensation
The total contract amount for services outlined in Exhibit A shall be for a not to exceed amount of $974,402.
2023 Billing Rate Schedule
(Effective January 1, 2023 through December 31, 2023)*

POSITIONS
Principal/Vice President
Engineer Scientist Geologist Manager I
Pri11dµal E11gi11eer/Sde111isl/Geulugisl I/ II
Senior En lneer Scientist/Geologist I/ II
Engineering Aide
Field Monitoring Services
Administrative I / II/ Ill / IV

ENGINEERING TECHNOLOGY
Engineering Tech Manager I/ II
Principal Tech Specialist I II
Senior Tech Specialist I/ II
Senlo GIS Anal st
GIS Analyst
'Tee nlcal Specialist I/ II/ Ill/ IV
Technical Analyst I/ II

CONSTRUCTION MANAGEMENT
Senior Construction Manager
Construction Manager I/ II/ Ill/ IV
l\esldent Inspector (Prevailing Wage Groups 4 / 3 / 2 / 1) IA prentlce Inspector
r.M Arlmlnistrative I/ II
Field Services
.._,,
WEST.YOST
Waler. [ngineered.

LABOR CHARGES
(DOLLARS PER HOUR)
$92 / $115 /
$239
$128 / $152
$133 / $144 / $16 2 / $180
$322
=;.,;.,,===_.$cc2cc2�4 / $ 283
$ 213 / $221
$156
$83 / $11 2
$2 21
■ Hourly rates Include Technology and Communication charges such as general and CAO computer, software, telephone, routine In-house copies/prints, postage, miscellaneous supplies, and other Incidental project expenses. ■ Outside Services such as vendor reproductions, prints, shipping, and major West Yost reproduction efforts, as well as Englnceri11g Suµµlie,, elc. will ue ullled al actual cost µlus 15%. ■ The Ferleral Mileage Rate will be used for mileage charges and will be based on the Federal MIieage Rate applicable to when the mileage costs were Incurred. Travel other than mileage will be billed at cost. ■ Subconsultants will be billed at actual cost plus 10%. ■ Exµerl wilness, research, tedmlcal review, analysis, preparation and mr.ellngs hlllerl al 1SO% or standard hourly rates. Expert witness testimony and depositions billed at 200% of standard hourly rates. ■ II Finance Charge ol 1.5% per month (an Annual Rate of 18%) on the unpaid balance will be added to Invoice amounts If not paid within 45 days from the date of the Invoice. • This schedule is updated annually Page 1 of 2

DocuSign Envelope ID: 7D8EBCF4-11AC-486C-8223-8071DA767189 City of Tracy - Professional Services Agreement with West Yost & Associates, Inc. 2023 Billing Rate Schedule
(Effective January 1, 2023 through December 31, 2023)*
Equipment Charges

EQUIPMENT
2" Purge Pump & Control Box
Gas Detector
Generator
Hydrant Pressure Gauge
H drant Pressure Recorder, Im ulse Transient
Hydrant Pressure Recorder, Standard
Low Flow PUmJ> Back Pack
Low Flow Pump Controller
Powers Water Level Meter
Precision Water Level Meter 300ft
Precision Water Lev-e,,-l 'M,...e-te-r"'5'"'occo-ccft __________ ,,_ Precision Water Level Meter 700ft
QED Sample Pro B adder Pump
Stainless Steel Wire per foot
Storage Tank
Sump Pump
ransaucer Com onents (per Installation
Trimble GPS - Geo 7x
ube Lengtli Counter
Turbidity Meter
"''
WEST.YOST
Weiler. Engi neered.

BILLING RATES
$300 / day
$28 /_ <lay
$35 / day
$1 / mil
$80 / day
$60 / da
$10 / day
55 day
$40 / day
$135 l <lay
$200 / day
32 / <lay
$30 / day
$40 I da
$45 / day
$65 / day
$0 I day
$20 / da
$24 / day
$23 <lay
$220 / day
22 <lay
$30 / day
$10 / hour
$20 / day
-----------�- --"-$.a:..50:-..l_ <lay
Water Quality Multimeter
\well Sounder
• This schedule is updated annually

$185 / day
$30 I day

Rev. April 2022

APPROVED AS TO FORM AND LEGALITY

________________________
CITY ATTORNEY’S OFFICE

TRACY CITY COUNCIL

RESOLUTION NO. _______________

APPROVING A PROFESSIONAL SERVICES AGREEMENT WITH WEST YOST & ASSOCIATES, INC. TO PROVIDE PROGRAM MANAGEMENT SERVICES FOR THE RECYCLED WATER SYSTEM EXPANSION PROJECT (CIP 74168) FOR A PERIOD OF THREE (3) YEARS AND A TOTAL NOT -TO-EXCEED AMOUNT OF $974,402

WHEREAS, the California Department of Water Resources (DWR) has awarded an Urban and Multibenefit Drought Relief Grant to the City of Tracy in the amount of $20 million for a Recycled Water System Expansion Project; and

WHEREAS, proposed improvements under the project include the construction of a new booster pump station and recycled water pipelines within the streets right-of-way; and

WHEREAS, the program manager must possess not only a strong background in managing complex and large-scale recycled water projects, but also have expertise in grant management; which will help ensure that the project is delivered in a structured and efficient manner with the right resources and support in place; and

WHEREAS, a Request for Proposals for program management services was posted on the City website on December 21, 2022, and a total of three (3) proposals were received on January 24, 2023; and

WHEREAS, after careful review of the proposals, the City has determined that West Yost & Associates, Inc. demonstrates the highest degree of relevant experience and past performance in providing program management services for projects of similar type and complexity in a satisfactory and timely manner; and, now, therefore, be it

RESOLVED: That the City Council of the City of Tracy hereby approves a Professional Services Agreement with West Yost and Associates, Inc. to provide program management services for the Recycled Water System Expansion Project (CIP 74168) for a period of three (3) years and a total not-to-exceed amount of $974,402.

* * * * * * * * * * * * * *

Resoluti
on 2023-

The foregoing Resolution 2023-_____ was adopted by the Tracy City Council on March 7, 2023 by
the following vote:

AYES: COU
NCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

ABSTENTION: COUNCIL MEMBERS:
___________________________________________
NANCY
D. YOUNG
Mayor of the City of Tracy, California
ATTEST:

ADRIANNE RICHARDSON
City Clerk and Clerk of the Council of the
City of Tracy, California
March 7, 202 3
Agenda Item 1.E

RECOMMENDATION
Staff recommends that City Council adopt a resolution approving Utility Agreements related to the relocation of existing utilities for the I-580/Patterson Pass Road Interchange Project, CIP 73147, between the City and the following utility providers, for the respective not-to-exceed cost liability split amounts: 1) Pacific Gas & Electric, Inc. for $1,000,000, 2) Crimson Oil, for $600,000, and 3) AT&T California, for $1,000,000.

EXECUTIVE SUMMARY
The City of Tracy, in partnership with the California Department of Transportation (Caltrans), has completed the design Phase of the I-580/Patterson Pass Road Interchange Project, CIP 73147. The Project includes a new interchange, freeway auxiliary lanes, and connecting roadways at the existing Patterson Pass Road/International Parkway overcrossing on Interstate 580. In order to complete the construction of the interchange, relocation, and protection in place of existing private utilities is required. The total project cost (including construction, right of way, and support) is approximately $52.3 Million which is to be funded through a combination of Tracy Infrastructure Master Pl an (TIMP) Transportation Impact Fees, City Regional Transportation Impact Fee (RTIF), Measure K, and Senate Bill (SB)-1 Trade Corridor Enhancement Program (TCEP) grant funding. The SB1 TCEP funding is a total $24.9 Million.

To meet the grant funding deadlines, the California Transportation Commission (CTC) needs to obligate the funds at their June 2023 meeting. If this funding is not obligated in June, the City could lose the TCEP grant funding. In order to obtain approvals through Caltrans, the City is required to prepare a right of way certification to document those agreements for private utility relocation plans, which are in conflict with the proposed construction, have been executed. City is also required to enter into a cooperative agreement with Caltrans to assume construction responsibilities for the Project.

BACKGROUND AND LEGISLATIVE HISTORY
I-580/Patterson Pass Road Interchange Project is an approved City of Tracy Capital Improvement Project (CIP). On October 16, 2018, Resolution No. 2018 -216 was adopted by
Tracy City Council approving a Professional Services Agreement (PSA) with Mark Thomas and Company, Inc. to provide p
rofessional engineering services for the Project Approval (PA), Environmental Document (ED), and Plans, Specifications and Estimates (PS&E) phases of the Project, and for the I-205/Mountain House Interchange project.

As the P
roject Sponsor, the City of Tracy, has been actively involved in the development of project in partnership with Caltrans. The Draft Environmental Document was approved for public circulation on June 10, 2020, and the Draft Project Report was approved on June 23, 2020.

Community outreach took place during circulation of the Draft Environmental Document in July 2020. The Final Initial Study/Mitigated Negative Declaration (IS/MND) (California Environmental Quality Act (CEQA) Approval) and Categorical Exclusion (National Environmental Protection Act (NEPA) Approval) were obtained on February 25, 2021.

The design of the Project is now complete. The project’s design includes the reconstruction of Agenda Item 1.E
March 7, 2023

the existing interchange from a tight diamond configuration to a Diverging Diamond Interchange (DDI). The Project is important to the region as it will increase access to the growing fulfillment and distribution centers in the area, will improve freight operations along a federal Primary Freight Network (PFN) Route, will enhance safety, and benefit the regional and national economy.

The City received a grant of $24.9 million in 2020 from the California Transportation Commission (CTC) for the construction phase of the project. At the February 21, 2023 City Council meeting, the Council approved the Resolutions of Necessity (RONs) to authorize the acquisition of fee simple interests, permanent easements and/or temporary construction easements required for the construction of the project.

To ensure the City secures the $24.9 million Trade Corridor Enhancement Program (TCEP) grant, the Project is
required to be included in the agenda for the CTC’s June 2023 meeting.

The City
must achieve RTL (Ready to List) status with Caltrans prior to that meeting, which enables the City to proceed into the construction phase of the project. In order to obtain the RTL status
, the City is required to prepare a right of way certification per Caltrans requirements to document that agreements
for utility relocation plans for private utilities that conflict with the proposed construction have been executed. Staff is also bringing before Council, at the March 7, 2023 agenda, the approval for execution of the Cooperative Agreement with Caltrans identifying the City of Tracy as the project Construction lead.

ANALYSIS
As
a part of the design process, the City has been coordinating with the following private utility companies
to develop designs and approvals for utility relocation/protection plans that will clear conflicts with the proposed interchange design.

1. AT&T Cal
ifornia – Underground telecommunication facilities.

2. Pacific Gas & Electric Company (PG&E) – Overhead fiber optic and overhead electric facilities.

3. Crimson Oil Company – Underground oil pipeline facilities.

4. Lumen Technologies – Underground fiber optic duct bank.

5. Zayo Group – Underground fiber optic duct bank.

Documentation for
the utility coordination must follow Caltrans’ Right of Way Manual (Manual), which outlines the process and standard agreements needed for approval of the utility certification. Chapter 13 of the Manual prescribes the policies, procedures, standards, and practices for the statewide coordination of utility relocations required for construction projects.

Per the requirements of the Manual, the following agreements need to be executed between the City and the private utility companies:

1. Notice to O
wner – The California Streets & Highways Code Sections 673, 680, and 720 require that Owners be given formal notice to relocate, remove, abandon, protect, pothole, etc., their utility facilities to accommodate proposed transportation projects.

2. Utility Agreements – Pursuant to State Administrative Manual 8300, et seq., and the California Streets & Highways Code Division 1, Chapter 1, Article 3, Section 94, the City, and the Utility Owner must enter into a Utility Agreement whenever the City is paying or receiving payment for all or a portion of the cost of relocation of a utility facility, regardless of who performs the work.

Agenda Item 1.E
March 7, 2023

As a part of the coordination with the private utility companies, the City completed an inves
tigation for each private utility facility to determine cost liability for each relocation. This investi
gation included research of any prior land rights for each facility along with a review of the guidelines outlined in Chapter 13 of the Manual. Following this investigation, the appropriate cost liability split was determined for each private utility.

The cost liability split, and agreements needed with each private utility company are as follows:

1. AT&T California – Notice to Owner and Utility Agreement for the relocation of existing underground telecommunication facilities. The responsibility for the relocation costs will be split between the City and AT&T. The City is responsible for 50% of the relocation costs, and AT&T is
responsible for 50% of the relocation costs.

2. Pacific
Gas & Electric Company – Notice to Owner and Utility Agreement for the relocation of existing overhead fiber optic facilities. The responsibility for the relocation costs will be split between the City and PG&E. The City is responsible for 50% of the relocation costs, and PG&E is responsible for 50% of the relocation costs.

3. Pacific
Gas & Electric Company – Notice to Owner and Utility Agreement for the relocation of existing overhead electric facilities. The responsibility for the relocation costs
will be split between the City and PG&E. The City is responsible for 50% of the relocation costs, and PG&E is responsible for 50% of the relocation costs.

4. Crimson Oil
Company – Notice to Owner and Utility Agreement for the protection in place of an existi
ng underground oil pipeline. The City is responsible for 100% of the relocation costs.

5. Lumen Technologies – Notice to Owner for relocation of an existing underground fiber optic duct bank. Lumen Technologies is responsible for 100% of the relocation costs.

6. Zayo Group – Notice to
Owner for relocation of an existing underground fiber optic duct bank. Zayo Group
is responsible for 100% of the relocation costs.

FISCAL IMPACT
The total project c
osts (including construction, right of way, and support) is approximately $52.3 Million and will be funded through a combination of City TIMP, City RTIF, Measure K, and SB1 TCEP funding.

Based on preli
minary relocation costs and the determined cost liability splits, the City will be responsible for payment of the following not to exceed amounts:

1. Pacific
Gas & Electric Company - $1,000,000

2. AT&T California - $1,000,000

3. Crimson Oil Company - $600,000

PUBLIC OUTREACH / INTEREST
Caltrans an
d the City of Tracy circulated the draft Initial Study/Mitigated Negative Declaration (IS/MND) for public comment and review on July 1, 2020. An opportunity for a public meeting was offered, but none was requested. All written comments received were addressed in the final IS/MND and in the Categorical Exclusion, a National Environmental Protection Act (NEPA), the federal requirement. The Resolutions of Necessity (RONs) hearing for the required property acquisitions for the project was conducted by City Council on February 21, 2023.

Agenda Item 1.E
March 7, 2023

COORDINATION
The City’s Engineering Division coordinated with several stakeholders including Caltrans, San Joaquin County, San Joaquin Council of Governments (SJCOG), Federal Highway Administration (FHWA), California Public Utility Commission, and public and private utility companies.

CEQA DETERMINATION
The Final IS/MND (CEQA Approval) and CE (NEPA Approval) for the Project was obtained on February 25, 2021.

STRATEGIC PLAN
This agenda item supports the City of Tracy’s Quality of Life Strategic Priority, which is to provide an outstanding quality of life by enhancing the City’s amenities, business mix and services and cultivating connections to promote positive change and progress in our community.

ACTION REQUESTED OF THE CITY COUNCIL
Staff recommends that City Council, by resolution, approve Uti lity Agreements related to the
relocation of existing utilities for the I-580/Patters on Pass Road Interchange Project, CIP 73147, between the City and the following utility providers, for the respective not-to-exceed cost liability split amounts: 1) Pacific Gas & Electric, Inc. for $1,000,000, 2) Crimson Oil, for $600,000, and 3) AT&T California, for $1,000,000.

Prepared by: Anju Pillai, PE, Senior Civil Engineer
Reviewed by: Koosun Kim, PE, City Engineer / Assistant Director of Development Services Jaylen Fr
ench, Development Services Director
Sara Cowell, Finance Director
Karin Schnaider, Assistant City Manager
Approved by
: Midori Lichtwardt, Acting City Manager

APPROVED AS TO FORM AND LEGALITY
________________________

CITY ATTO
RNEY’S OFFICE

TRACY CITY

COUNCIL

RESOLUT
ION 2023-_____

APPROVING UTILITY AGREEMENTS RELATED TO THE RELOCATION OF EXISTING UTILITIES FOR THE I-580/PATTERSON PASS ROAD
INTERCHANGE PROJECT, CIP 73147, BETWEEN THE CITY AND THE

FOLLOWING UTILITY PROVIDERS, FOR THE RESPECTIVE NOT -TO- EXCEED COST LIABILITY SPLIT AMOUNTS: 1) PACIFIC GAS & ELECTRIC, INC. FOR $1,000,000, 2) CRIMSON OIL, FOR $600,000, AND 3) AT&T CALIFORNIA, FOR $1,000,000
WHEREAS, I-580 / Patterson Pass Road Interchange Project is an approved City of Tracy Capital Improvement Project (CIP); and
WHEREAS, as the Project Sponsor, the City of Tracy, has been actively involved i n the development of the project in partnership with the California Department of Transportation (Caltrans); and
WHEREAS, the Draft Environmental Document was approved for public circulation on June 10, 2020, and the Draft Project Report was approved on June 23, 2020, and the com
munity outreach took place during circulation of the Draft Environmental Document in July 2020; and
WHEREAS, the Final Initial Study/Mitigated Negative Declaration (California Environmental Quality Act Approval) and Categorical Exclusion (National Environmental Protection Act Approval) were obtained on February 25, 2021; and WHEREAS, the Project is now complete in design, which calls for the replacement of the existing
interchange from a tight diamond configuration to a Diverging Diamond Interchange (DDI), and the Project is important to the region as it will increase access to the growing fulfillment and distribution centers in the area, will improve freight operations along a federal Primary Freight Network (PFN) Route, will enhance safety, and benefit the regional and national
economy; and
WHEREAS, the City also approved the Resolutions of Necessity to authorize the acquisition of fee simple interests, permanent easements and/or temporary construction easements required for the construction of the project at the February 21, 2023 Tracy City Counc
il meeting; and
WHEREAS, the Project is required to be included in the agenda for the CTC’s June 2023 meeting for the City to secure the $24.9 million Trade Corridor Enhancement Program grant that was allocated to the project and the City should secure the Ready to List status with Resolution 2023-_____

Caltrans prior to that meeting, which enables the City to proceed into the construction phase of this project; and

WHEREAS,
in order to obtain the Ready To List, the City is required to prepare a right of way certification per Caltrans requirements to document that agreements for utility relocation plans for private utilities that conflict with the proposed construction have been executed and specifically, utility agreements need to be prepared/executed by the City and sent to the private utility companies along with Notices to Owners per Caltrans guidelines; and

WHEREAS,
as a part of the design process, the City has been coordinated with the following private utility companies to develop designs and approvals for utility relocation/protection plans that will clear conflicts with the proposed interchange designs:

1. AT&T Cali
fornia – Underground telecommunication facilities.

2. Pacific Gas & Electric Company (PG&E) – Overhead fiber optic and overhead electric facilities.

3. Crimson Oil Company – Underground oil pipeline facilities.

4. Lumen Technologies – Underground fiber optic duct bank.

5. Zay o Group – Underground fiber optic duct bank; and

WHEREAS,
Caltrans requires that the documentation for the utility coordination follow the Caltrans Right of Way Manual, which outlines the process and standard agreements needed for approval of the utility certification; and

WHEREAS,
as a part of the coordination with the private utility companies, the City completed an investigation for each private utility facility to determine cost liability for each relocation and this investigation included research of any prior land rights for each facility along with a review of the guidelines outlined in Chapter 13 of the Right of Way Manual; and

WHEREAS,
the cost liability split between City and each Utility company is as follows:

1. AT&T California – 50% City of Tracy, 50% AT&T

2. PG&E – 50% City of Tracy, 50% PG&E

3. Crimson Oil Company – 100% City of Tracy

4. Lumen Technologies – 100%
Lumen Technologies

5. Zayo Group – 100% Zayo Group

WHEREAS,
based on preliminary relocation costs and the determined cost liability splits, the City will be responsible for payment of the following not-to-exceed amounts:

1. Pacific
Gas & Electric Company - $1,000,000

2. AT&T California - $1,000,000

3. Crimson Oil Company - $600,000; and now, therefore, be it

RESOLVED
: That the City Council of the City of Tracy, by resolution, hereby approves the execution of Utility Agreements related to the relocation of existing utilities for the I- 580/Patterson Pass Road Interchange Project, CIP 73147, between the City and the following utility providers, for the respective not-to-exceed cost liability split amounts: 1) Pacific Gas & Electric, Inc. for $1,000,000, 2) Crimson Oil, for $600,000, and 3) AT&T California, for $1,000,000.

Resolution 2023-_____

* * * * * * * * * * * * * *
The foregoing Resolution 2023-_____ was adopted by the Tracy City Council on the 7th day of March 2023 by the following vote:

AYES: COU
NCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

ABSTENTION: COUNCIL MEMBERS:
___________________________________________
NANCY
D. YOUNG
Mayor of the City of Tracy, California
ATTEST:

ADRIANNE RICHARDSON
City Clerk and Clerk of the Council of the
City of Tracy, California
March 7, 2023
Agenda Item 1.F

RECOMMENDA
TION
Staff recommends that the City Council adopt a resolution approving the execution of a Cooperative Agreement between City and the California Department of Transportation for Construction activities and the Right-of-Way Certification for the I-580/Patterson Pass Road Interchange Project, CIP 73147.

EXECUTIVE SUMMARY
The City of Tracy, in partnership with the California Department of Transportation (Caltrans), has completed the design phase of the I-580/Patterson Pass Road Interchange Project, CIP 73147 (Project). The Project includes a new interchange, freeway auxiliary lanes, and connecting roadways at the existing Patterson Pass Road/International Parkway overcrossing on Interstate 580 (I-580). In order to complete the construction of the interchange, it is required to relocate or protect in place existing private utilities. The total project cost (including construction, right of way, and support) is approximately $52.3 Million which is to be funded through a combination of Tracy Infrastructure Master Plan (TIMP)Transportation Impact Fees, City Regional Transportation Impact Fee (RTIF), Measure K, and Senate Bill (SB)-1 Trade Corridor Enhancement Program (TCEP) grant funding. The SB1 TCEP funding is a total $24.9 Million. To meet the grant funding deadlines, the California Transportation Commission (CTC) needs to obligate the funds at their June 2023 meeting. If this funding is no t obligated in June, the City could lose the TCEP grant funding. In order to obtain approvals through Caltrans, the City is required to prepare a right-of-way certification to document those agreements for private utility relocation plan, which are in conflict with the proposed construction, have been executed.

City is also required to enter into a cooperative agreement with Caltrans to assume construction responsibilities for the Project.

BACKGROUND AND LEGISLATIVE HISTORY
I-580/Patterson Pass Road Interchange Project is an approved City of Tracy Cap ital Improvement Project (CIP). On October 16, 2018, Resolution No. 2018-216 was adopted by Tr
acy City C ouncil appr oving a Professional Services Agreement (PSA) with Mark Thomas and Company, Inc. to provide professional engineering services for the Project Approval (PA), Environmental Document (ED), and Plans, Specifications and Estimates (PS&E) phases of the Project, and for the I-205/Mountain House Interchange project.

As the Project Sponsor, the City of Tracy, has been actively involved in the development of project in partnership with Caltrans. The Draft Environmental Document was approved for public circulation on June 10, 2020, and the Draft Project Report was approved on June 23, 2020.

Community
outreach took place during the circulation of the Draft Environmental Document in July 2020. The Final Initial Study/Mitigated Negative Decla ration (IS/MND) (California Environmental Quality Act (CEQA) Approval) and Categorical Exclusion (National Environmental Protection Act
(NEPA) Approval) were obtained on February 25, 2021.

The design of
the Project is now complete. The project’s design includes the reconstruction of the existing interchange from a tight diamond configuration to a Diverging Diamond Interchange (DDI). The Project is important to the region as it will increase access to the growing fulfillment Agenda Item 1.F
March 7, 2023

and distribution centers in the area, as well as improve the freight operations along a federal Primary Freight Network (PFN) Route. The Project will also enhance traffic safety and benefit the regional and national economy.

The City received a grant of $24.9 million in 2020 from the California Transportation Commission (CTC) for the construction phase of the project. At the February 21, 2023, City Council meeting,
the Council approved the Resolutions of Necessity (RONs) to authorize the acquisition of fee
simple interests, permanent easements, and/or temporary construction easements required for the construction of the Project.

To ensure the
City secures the $24.9 million Trade Corridor Enhancement Program (TCEP) grant, the
Project is required to be included in the agenda for the CTC’s June 2023 meeting.

The City must
achieve RTL (Ready to List) status with Caltrans prior to that meeting, which enables the
City to proceed into the construction phase of the project. In order to obtain the RTL status, the City is required to prepare a right-of-way certification per Caltrans requirements to document those agreements for utility relocation plans for private utilities that conflict with the proposed construction tha
t has been executed. Staff is also bringing before Council, at the March 7, 2023 agenda, the approval for execution of utility agreements and the Cooperative Agreement with
Caltrans identifying the City of Tracy as the project Construction lead.

ANALYSIS
As a
part of the design process, the City is coordinating with Caltrans on the agreements needed to finalize
design and begin construction of the proposed interchange.

1. Cooperativ
e Agreement for Construction.

2. Right of Way Certification.

The requirem
ents and guidelines for these agreements are outlined in the Caltrans Project Development and Procedures Manual. These agreements are required to be approved by the City and Caltrans prior to the approval to advertise the project for construction. Details for each of the agreements are shown below.
• Cooperative Agreement – According to California law, Caltrans is the agency assigned to plan, design, construct, operate, and maintain the State Highway System. Whenever there is an exchange of effort, funding, or materials between Caltrans and a public entity regarding the
planning, design, or construction of an improvement or facility on the State Highway
System, a cooperative agreement is required. A Cooperative Agreement between the
City and Caltrans is required for the construction of the I-580/Patterson Pass Road
Interchange Project. The Cooperative Agreement identifies the City as the implementing agency
for the construction of the interchange project.
• Right
of Way Certification – The Right of Way Certification is a written statement summarizing the
status of each Right of Way related matter pertaining to a proposed construction project. The Right of Way Certification documents that the construction project
is ready for advertising. The City must have control of the property before work can be performed
which affects that property. A Right of Way Certification is needed for the construction
of the I-580/Patterson Pass Road Interchange Project. The Right of Way Certification occurs after all the utility agreements have been executed in Agenda Item 1.F
March 7, 2023

accordance with the agenda item that is brought before City Council on this current date of March 7, 2023.

FISCAL
IMPACT
The total project costs (including construction, ri ght of way, and support) is approximately $52.3 Million and will be funded through a combination of City TIMP, City RTIF, Measure K, and SB1 TCEP funding. The SB1 TCEP funding is a total $24.9 Million, which needs to be obligated by the California Transportation Commission (CTC) at their June 2023 meeting. If this funding is not
obligated by this meeting, the City co uld lose the TCEP share of the funding.

PUBLIC OUTREACH / INTEREST
Caltrans and the City of Tracy circulated the draft IS/MND for public comment and review on July 1, 2020. An opportunity for a public meeting was offered, but none was requested. All written comments received w ere addressed in the final IS/MND for CEQA and CE for NEPA.

The RONs hearing f or t he required property acquisitions for the project was conducted by City Council on February 21, 2023.

COORDINATION
The City’s Engineering Division coordinated with several stakeholders including Caltrans, San Joaquin County, San Joaquin Council of Governments (SJCOG), Fede ral Highway Administration (FHWA), California Public Utility Commission, public and private utility companies.

CEQA DETERMINATION
The Final IS/MND (CEQA Approval) and CE (NEPA Approval) for the Project was obtained on February 25, 2021.

STRATEGIC PLAN
This agenda item supports the City of Tracy’s Quality of Life Strategic Priority, which is to provide an outstanding quality of life by enhancing the City’s amenities, business mix and services and cultivating connections to promote positive change and progress in our community.

ACTION REQUESTED OF THE CITY COUNCIL
Staff recommends that the City Council, by resolution, app rove the execution of a Cooperative Agreement between City and the California Department of Transportation for Construction activities and the R ight-of-Way Certification for the I-580/Patterson Pass Road Interchange Project, CIP 73147.

Agenda Item 1.F
March 7, 2023

Prepared by: Anju Pillai, PE, Senior Civil Engineer

Reviewed by: Koosun Kim, PE, City Engineer / Assistant Director of Development Services Jaylen French, Development Services Director
Sara Cowell, Finance Director
Karin Schnaider, Assistant City Manager
Approved by: Midori Lichtwardt, Acting City Manager

APPROVED AS TO FORM AND LEGALITY
________________________
CITY
ATTORNEY’S OFFICE

TRACY CIT

Y COUNCIL
RESOLU
TION 2023-_____

APPROVIN

G THE EXECUTION OF A COOPERATIVE AGREEMENT

BETWEEN CITY AND THE CALIFORNIA DEPARTMENT OF

TRANSPORTATION FOR CONSTRUCTION ACTIVITIES AND THE RIGHT-OF- WAY CERTIFICATION FOR THE I -580/PATTERSON PASS ROAD
INTERCHANGE PROJECT, CIP 73147
WHEREAS, I-580/Patterson Pass Road Interchange Project is an approved Capital Improvement Project (CIP); and
WHEREAS, as the Project Sponsor, the City of Tracy, has been actively involved in the development of project in partnership with the California Department of Transportation (Caltrans); and
WHEREAS, the Draft Environmental Document was approved for public circulation on June 10, 2020, and the Draft Project Report was approved on June 23, 2020, and the community outreach t ook pl ace during circulation of the Draft Environmental Document in July 2020; and
WHEREAS, the Final IS/MND (CEQA Approval) and CE (NEPA Approval) were obtai
ned on February 25, 2021; and
WHEREAS, the Project is now complete in design, and it reconstructs the existing interchange from a tight diamond configuration to a Diverging Diamond Interchange (DDI), and the Project is very i mportant to the region as it will increase access to gr owing fulfillment and distribution centers, impr ove freight operations along a federal Primary Freight Network (PFN) Route, enhance safety, and benefit the regional and national economy; and WHEREAS, the City also approved the Resolutions of Necessity to authorize the acquisition of fee simple interests, permanent easements and/or temporary construction easements required for the construction of the project on the February 21, 2023 Council date; and

WHEREAS, the Project is required to be included in the agenda for the CTC’s June 2023 meeti
ng for the City to secure the $24.9 million Trade Corridor Enhancement Program (TCEP) grants that was allocated to the project and the City should secure the RTL (Ready to List) status with Caltrans prior to that meeting, which enables the City to proceed into the construction
phase of this project and get it advertised for construction; and Resolution 2023-_____

WHEREAS, in order to obtain the RTL, the City is required to prepare a right of way certification per Caltrans requirements to document that agreements for utility relocation plans for private utilities that conflict with the proposed construction have been executed; and WHER
EAS, staff is also bringing before City Council the approval for execution of utility agreements on this current Council date of March 7, 2023; and WHER
EAS, the City is also required to execute the Cooperative Agreement with Caltrans for the construction of the Project; and
WHER
EAS, as a part of the design process, the City has been coordinating with Caltrans on the below agreements needed to finalize design and begin construction of the proposed interchange.

1. Cooperat
ive Agreement for Construction.

2. Right of Way Certification; and
WHER
EAS, whenever there is an exchange of effort, funding, or materials between Caltrans and a public entity regarding the planning, design, or construction of an improvement or facility on the State Highway System, a cooperative agreement is required, and a Cooperative Agreement between the City and Caltrans is required for construction of the I- 580/Patterson Pass Road Interchange Project; and
WHER
EAS, the Right of Way Certification documents that the construction project is ready for advertising and the City must have control of the property before work can be performed which affects that property, and a Right of Way Certification is needed for construction of the I-580/Patterson Pass Road Interchange Project; now, therefore, be it RESOL
VED: That the City Council of the City of Tracy, by resolution, hereby approves the execution of a Cooperative Agreement between City and the California Department of Transportation for Construction activities and the Right-of-Way Certification for the I- 580/Patterson Pass Road Interchange Project, CIP 73147. * * *
* * * * * * * * * * *
Resolution 2023-_____

The foregoing Resolution 2023-_____ was adopted by the Tracy City Council on the 7th day of March 2023 by the following vote:

AYES: CO
UNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

ABSTENTION: COUNCIL MEMBERS:
___________________________________________
NANCY
D. YOUNG
Mayor of the City of Tracy, California
ATTEST
:

ADRIANNE RICHARDSON
City Clerk and Clerk of the Council of the
City of Tracy, California
March 7, 2023
Agenda Item 1.G

RECOMMENDATION
Adopt a resolution accepting the City of Tracy’s Annual Comprehensive Financial Report (ACFR) for the fiscal year ending June 30, 2022.

EXECUTIVE SUMMARY
The City of Tracy’s (City) auditor, The Pun Group, has completed the review of the City’s annual financial statements for the fiscal year ending June 30, 2022. The audited financial statements are incorporated into an Annual Comprehensive Financial Report (ACFR). The auditors have issued an unmodified (“clean”) audit opinion. An unmodified opinion indicates that the financial data of the City is fairly presented in accordance with accounting principles generally accepted in the United States of America and the standards applicable to financial audits contained in Government Audit Standards, issued by the Comptroller General of the United States. These standards require that the City’s auditors plan and perform the audits to obtain reasonable assurance as to whether the financial statements are free of material misstatement.

BACKGROUND AND LEGISLATIVE HISTORY
The City Council, on January 19, 2021, authorized the appointment of The Pun Group as the City’s Auditor for fiscal years 2020-2021 through 2022-2023. The City is required to have an independent audit of its financial records conducted on an annual basis. The auditors have completed their review of the June 30, 2022, financial statements and have issued an unmodified opinion stating that the “financial statements 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 of Tracy…”
The audited financial statements are incorporated into an Annual Comprehensive Financial Report, which provides additional analytical and statistical information to fully describe the City’s financial condition. The ACFR is submitted to the Government Financial Officers Association of the United States and Canada (GFOA) for consideration of Award of the Certificate of Achievement for Excellence in Financial Reporting. The City has received this award for 34 consecutive years.

At June 30, 2022, the City's governmental funds reported combined fund balances of $350.8 million, which is an increase of $85.0 million or 32.0%, from $254.3 million at June 30, 2021. Total revenues increased by $49.7 million or 30.2%, from $164 million at June 30, 2021, to $214 million at June 30, 2022. Of this total, $132 million was in the General Fund. Total expenditures increased by $15.5 million or 14.4%, from $107 million at June 30, 2021, to $123 million at June 30, 2022. Of this total, $85.3 million was in the General Fund. Expenditures increased in relation to capital outlay for capital improvement projects and the addition of City staff. Staffing levels expanded by an average of 4% annually throughout the organization.

Agenda Item 1.G
March 7, 2023

At June 30, 2022, the General Fund balance of $36.9 million, was comprised of $2.3 million restricted funds for medical leave banks, $16.4 million committed funds for Contingency/Emergency reserve, and $11.3 million in assigned funds. Included in this amount is $10.9 million for Economic/Budget stability and $0.4 million for carryover to balance FY23. There were $6.9 million in unassigned funds at June 30, 2022. Fund balances have been classified in accordance with generally accepted accounting principles. While amounts have been categorized as unassigned, they may be informally earmarked by the City Council for specific purposes.

Fiscal Year 2021-22 was the sixth year of “Measure V” collection; a voter approved additional half cent sales tax approved in the November 2016 elections. The amount of Measure V tax proceeds received and recorded during fiscal year 2021-22 was $13,017,279. The City Council has committed Measure V funds toward the development of a new aquatic center and multi-generational community gymnasium center, improvements at Legacy Fields Sports Complex, and a nature park.

Measure V Capital Funded City Amenities
F Y 2022 F Y 2021 Differ ence
Governmental Fund Balance 350,762$ 265,747$ 85,015$ Total City Revenues 301,909$ 254,377$ 47,532$ Total City Expenditures 202,314$ 191,980$ 10,334$ (in thousands of dollars)
(in thousands) 2022 2021 2020 2019 2018
General Fund: `
Non-spendable -$ 40$ 40$ 470$ 1,525$ Restricted 3,175$ 2,348$ - - -
Committed 14,505$ 16,401$ 14,479$ 14,883$ 14,961$ Assigned 11,435$ 11,277$ 6,112$ 15,213$ 20,997$ Unassigned 7,762$ 3,964$ - - 842$
Total General Fund 36,877$ 34,030$ 20,631$ 30,566$ 38,325$ F iscal Year
Project Accumulated Fund
Balance as of
June 30, 2021
Aquatic Center $41M
Multi-Gen Rec Center $3.6M
Legacy Fields-Phase 1E Debt Finance
Nature Park $0M
Ritter Family Ball Park $0M
Operations & Maintenance $1.2M
Agenda Item 1.G
March 7, 2023

The Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2022 can be found on the City of Tracy’s website.

STRATEGIC PLAN
This agenda item addresses Goal 2 of the Governance Strategy to ensure continued fiscal sustainability through financial and budgetary stewardship.

FISCAL IMPACT
There is no fiscal impact associated with this action.

RECOMMENDATION
Staff recommends that the City Council adopt a resolution accepting the Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2022.

Prepared by:

Robert Harmon, Interim Accounting Manager
Reviewed
by: Sara Cowell, Finance Director
Karin Schnaider, Assistant City Manager
Approved by: M
idori Lichtwardt, Acting City Manager
ATTACHMENTS:

Attachment A - Annual Comprehensive Financial Report (ACFR) for fiscal year ended June 30, 2022

ANNUAL COMPREHENSIVE

FINANCIAL REPORT
of the

CITY OF TRACY, CALIFORNIA
For the fiscal year ended
June 30, 2022
Prepared by the
Finance Department

KARIN SCHNAIDER
Finance Director

SARA COWELL
Accounting Manager

ROBERT HARMON, CPA
Senior Accountant

FELICIA GALINDO
Budget Officer

GUADALUPE PENA
Senior Accountant

ATTACHMENT A
This page intentionally left blank.

Introductory Section

This page intentionally left blank.

City of Tracy
Annual Comprehensive Financial Report
For the Year Ended June 30, 2022
Table of Contents
i
Page
INTRODUCTORY SECTION (Unaudited)
Table of Contents ............................................................................................................. ........................................... i
Organizational Chart .................................................................................................................................................. v List of Elected Officials ..................................................................................................... ....................................... vi List of Other Officials .............................................................................................................................................. vii Letter of Transmittal .................................................................................................................................................. ix

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

Government-Wide Financial Statements:

Statement of Net Position ..................................................................................................... ....................... 22 Statement of Activities ..................................................................................................... ........................... 24 Fund Financial Statements:

Governmental Funds Financial Statements:

Balance Sheet ........................................................................................................................................ 31 Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position ...................................................................... 33 Statement of Revenues, Expenditures, and Changes in Fund Balances ............................................... 34 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Position ..................................................................... 36 Proprietary Funds Financial Statements:

Statement of Net Position ..................................................................................................................... 38 Statement of Revenues, Expenses and Changes in Net Position .......................................................... 40 Statement of Cash Flows ...................................................................................................................... 42 Fiduciary Funds Financial Statements:

Statement of Fiduciary Net Position ..................................................................................................... 49 Statement of Changes in Fiduciary Net Position .................................................................................. 50 Notes to the Basic Financial Statements ........................................................................................................ 57 City of Tracy
Annual Comprehensive Financial Report
For the Year Ended June 30, 2022

Table of Contents (Continued)

ii

Page
FINANCIAL SECTION (Continued)

Required Supplementary Information (Unaudited):

Modified Approach to Repor ting Street Pavement Costs ................................................................................ 125 Budgetary Information ........................................................................................................ ............................. 127 Budgetary Comparison Schedules:

General Fund ................................................................................................................ ............................. 129 Housing Successor Special Revenue Fund....................................................................................... ......... 130 Community Development F ees Special Revenue Fund ............................................................................ 131 Schedule of Changes in the Net Pe nsion Liability and Related Ratios ............................................................ 132 Schedules of Contributions - Pension ......................................................................................... ..................... 134 Schedule of Changes in Total O PEB Liability and Related Ratios ................................................................. 136 Schedule of Contributions - OPEB ............................................................................................. ..................... 137

Supplementary Information:

Non-Major Governmental Funds:

Combining Balance Sheet ..................................................................................................... .................... 142 Combining Statement of Reve nues, Expenditures and Changes in Fund Balances ........................................................................................................... ...................... 148

Budgetary Comparison Schedules:

General Capital Projects Fund .............................................................................................. .............. 155 Tracy Infrastructure Master Plans Capital Projects Fund ................................................................... 156 TEA Grant Special Revenue Fund ............................................................................................. ......... 157 Business Improvement Distri ct Special Revenue Fund ...................................................................... 158 Asset Forfeiture Special Revenue Fund ...................................................................................... ........ 159 Transportation Developmen t Special Revenue Fund ......................................................................... 160 Proposition K Transportation Special Revenue Fund ......................................................................... 161 State Gas Tax Street Special Revenue Fund ....................................................................................... 162 Community Development Block Grant Special Revenue Fund ......................................................... 163 Landscaping District Special Revenue Fund ...................................................................................... 164 Residential and Commercial Rehabilita tion Loan Special Revenue Fund ......................................... 165 Community Access CTV Special Revenue Fund ............................................................................... 166 COPS Grant Special Revenue Fund ............................................................................................ ....... 167 CFD Services 2016-2
Special Revenue Fund ..................................................................................... 168 CFD Services 2018-1 Special Revenue Fund ..................................................................................... 169 North East Industrial Plan Area Storm Drain Grant Special Revenue Fund ...................................... 170

Non-Major Enterprise Funds:

Combining Statement of Net Position ......................................................................................... .............. 172 Combining Statement of Revenues, Expe nses, and Changes in Net Position ........................................... 173 Combining Statement of Cash Flows ........................................................................................... ............. 174 City of Tracy
Annual Comprehensive Financial Report
For the Year Ended June 30, 2022

Table of Contents (Continued)

iii

Page
FINANCIAL SECTION (Continued)

Supplementary Information (Continued):

Internal Service Funds:

Combining Statement of Net Position ......................................................................................... .............. 178 Combining Statement of Revenues, Expe nses, and Changes in Net Position ........................................... 180 Combining Statement of Cash Flows ........................................................................................... ............. 182

Fiduciary Funds - Custodial Funds:

Combining Statement of Fiduciary Net Position ............................................................................... ........ 188 Combining Statement of Cha nges in Fiduciary Net Position .................................................................... 191

STATISTICAL SECTION (Unaudited)

Table of Contents ................................................................................................................................................... 197

Financial Trends:

Net Position by Component – Last Ten Fiscal Years ............................................................................ .......... 198 Changes in Net Position – Last Ten Fiscal Years .............................................................................. .............. 200 Program Revenue by Function/Prog ram – Last Ten Fiscal Years ................................................................... 206 Fund Balances of Governmental Funds – Last Ten Fiscal Years .................................................................. .. 208 Changes in Fund Balances of Government al Funds – Last Ten Fiscal Years ................................................. 210

Revenue Capacity:

Governmental Activities Tax Revenues by Source – Last Ten Fiscal Years .................................................. 213 Assessed Value of Taxable Pr operty – Last Ten Fiscal Years......................................................................... 214 Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years ............................................................ . 216 Principal Property Tax Payers ................................................................................................ ......................... 218 Property Tax Levies and Collections .......................................................................................... ..................... 219 Sales Tax Rates - Direct a nd Overlapping Governments ................................................................................ 221 Taxable Sale s by Category..................................................................................................... .......................... 222 Principal Sales Tax Producers ................................................................................................ ......................... 224 Water and Wastewater Rates ................................................................................................... ........................ 225

Debt Capacity:

Ratios of Outstanding Debt by Ty pe – Last Ten Fiscal Years ......................................................................... 226 Ratios of General Bonded Debt Outstanding – Last Ten Fiscal Years ............................................................ 228 Direct and Overlapping Governmental Activities Debt .......................................................................... ......... 229 Legal Debt Margin Information – Last Ten Fiscal Years ........................................................................ ........ 230 Pledged Revenue Coverage – Last Ten Fiscal Years ...................................................................................... 232 City of Tracy
Annual Comprehensive Financial Report
For the Year Ended June 30, 2022

Table of Contents (Continued)

iv

Page
STATISTICAL SECTION (Unaudited) (Continued)

Demographic and Economic Information:

Demographic and Economic Statis tics – Last Ten Fiscal Years ..................................................................... 234 Principal Employers – Fiscal Year 2020 and Ten Years Prior ........................................................................ 236

Operating Information:

Full-Time and Part-Time City Em ployees – Last Ten Fiscal Years ................................................................ 237 Operating Indicators by Function/Program ..................................................................................... ................ 238 Capital Asset Statisti cs by Function/Program .................................................................................................. 240

CITY OF TRACY
ORGANIZATIONAL CHART
FISCAL YEAR 2021‐2022
City Population 100,584
City Electorate 41,833
City Council
Mayor & 4 Council
Members
City Manager
Assistant City Manager
Utilities
Public Works
Department
Parks & Recreation
Police Department Finance Department Development Services Human Resources City Attorney
City Treasurer
San Joaquin County Fire Authority
(City of Tracy and Tracy Rural JPA)
Boards and Commissions
v
vi

CITY OF TRACY, CALIFORNIA
COUNCIL – MANAGER FORM OF GOVERNMENT
June 30, 2022

CITY COUNCIL

NANCY YOUNG
Mayor

VERONICA VARGAS
Mayor Pro Tem

DAN ARRIOLA
Council Member

ELEASSIA DAVIS
Council Member

MATT BEDOLLA
Council Member

OTHER ELECTED OFFICIAL

RAYMOND MCCRAY
City Treasurer
vii

CITY OF TRACY, CALIFORNIA

EXECUTIVE TEAM

MICHAEL ROGERS
City Manager

MIDORI LICHTWARDT
Assistant City Manager
BIJAL M. PATEL
City Attor
ney
KRIS B
ALAJI
Director of Development Services

KARIN SCHNAIDER
Director of Finance

SEKOU MILLINGTON
Chief of Police

KIMBERLY MURDAUGH
Director of Human Resources

DONALD SCHOLL
Director of Public Works

BRIAN MACDONALD
Director of Parks & Recreation

KULDEEP SHARMA
Director of Utilities

viii
This page intentionally left blank.
viii
February , 202
Honorable Mayor and City Council Members
Citizens of the City of Tracy:

We are pleased to present the City Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2022. State law requires that every general-purpose local government publish, within six months of the close of each fiscal year, a complete set of audited financial statements. This report fulfills that requirement for the fiscal year ended June 30, 2022.

Management assumes full responsibility for the completeness and reliability of the information contained in this report; based upon a comprehensive framework of internal control that has been established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements.

The data in this report is presented in a manner that is designed to fairly set forth the financial position and results of operations of the City of Tracy (the City). It contains the disclosures necessary to promote in-depth understanding of the City's financial affairs and evaluate its financial condition. The City annually publishes a complete set of financial statements, presented in conformity with Generally Accepted Accounting Principles (GAAP) and audited by an independent, certified public accounting firm.

The Pun Group, Accountants & Advisors
of San Diego, Ca. The independent auditors concluded, based on their audit, that there was a reasonable basis for rendering an unmodified opinion; the City financial statements for the fiscal year (FY) ended June 30, 2021, are fairly presented in conformity with GAAP. The In addition to the financial audit, each year the City is required to undergo an audit of federal grant expenditures. That report is commonly referred to as a Single Audit report and is issued as a separate document and is not included herein. The Single Audit report includes the Schedule of Expenditures of Federal Awards, Findings and Recommendations, and an auditor's report on the internal control structure and compliance with applicable laws and regulations.

GAAP and Management require that management provide a narrative introduction, overview and analysis to accompany the basic financial statements entit read in conjunction with the MD&A, which can be found immediately following the report of the independent auditors in the financial section of the ACFR.

City of Tracy
333 Civic Center Plaza
Tracy, CA 95376
MAIN 209.831.6000
FAX 209.830.6120
www.cityoftracy.org

viii
Profile of the Government: Tracy is located on the western edge of the Central Valley in San Joaquin County. The City is 60 miles east of San Francisco and 70 miles south of Sacramento.

The City is situated within a triangle formed by three interstate freeways: I-5, I-205 and I-580.

Tracy was founded in 1878 as a railroad center and was incorporated as a city in 1910. For many decades, it served both as a railroad center and farm market town. After World War II, the US Army opened and continues to operate a defense supply center, which shifted transportation of goods and people from railway to highways as the interstate system was developed -processing plants and
small-related manufacturing operations. Over the decades, the City saw growth that has reflected the progression of suburban areas in the Bay Area; with large expansion in the have rebounded after the Great Recession. The
economy has diversified into local and international manufacturing, commercial and distribution centers.

Think
Inside the Triangle 580, and 205 create a triangle of transportation around Situated as the first major city east of the Altamont Pass, Tracy is considered an outer suburb of the Bay Area. It is the second largest City in San Joaquin County, and although the Stockton- Lodi Metropolitan Statistical Area (MSA) does not directly border San Francisco, it has now been added to the San Jose
San Francisco Oakland Combine Statistical Area (CSA) due to being economically connected to the other nine counties in the region. The population and size of Tracy has increased from 18,428 and 7.0 square miles in 1980 to over 95,000 and 29.1 square miles in 2022. The San Joaquin Council of Governments (SJCOG) population is anticipated to grow to nearly 130,000-150,000 by 2040. The SJCOG population projections are based on the growth projections developed by the Eberhardt School of Business at University of the Pacific (UOP) in collaboration with SJCOG.

The City operates under the council-manager form of government. Policymaking and legislative authority are vested in the City Council, which consists of a Mayor and a four-member Council.

The City Council is responsible for, among other things, passing ordinances, adopting the budget, appointing committees, and hiring the City Manager and City Attorney. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for

ix
overseeing the day-to-day operations of the government, and for appointing the heads of the -partisan basis. Council members
are elected to four-year staggered terms, with two Council members elected every two years.

The Mayor is elected every two years.

Economic Conditions and Outlook: Despite national worries about economic uncertainty, inflation, and rising energy prices, Tracy continues to thrive with a rapidly growing economy and robust development activity. In 2021, the City of Tracy experienced unparalleled growth in residential and industrial development, fueled by housing demands and growth in e-commerce and logistics. For example, Prologis is completing its 800,000 square foot state of the art e- commerce facility called Big Bird. With Amazon as the tenant, the building reflects cutting edge Commerce (IPC), an 1,800-acre master planned business park and regional hub of economic the largest business parks across the Country, it is home to Amazon, Crate and Barrel, FedEx, Medline, Smuckers, Thermo Fisher Scientific and Zinus. New businesses added in 2021 include Ghirardelli and Home Depot. Also under development is a retail/hotel site adjacent to the IPC area that will generate additional tax dollars to support City services. The City's Sales Tax revenues growth are reflective of the investment in e-commerce businesses. -
commerce businesses in its business parks, over half of the businesses are considered small businesses, which are the backbone of our community. The City of Tracy has been fortunate to experience a high number of new businesses since the beginning of the pandemic, which is reflective of our local entrepreneurial spirit and desire to invest in our community. The City also implemented the Retail Incentive Program, designed to encourage the private sector to invest in Tracy.
unemployment rate was at a historic low of 3.1%, below that of the Country and state. -Valley portion of the
Bay Area. Residents tend to work in the Livermore Valley, East Bay, and San Jose, but relocate to Tracy for the wide range of housing options, business-friendly environment, and high quality of life. The transit linkage to the Tri-Valley and the Silicon Valley with the ACE line and future Valley Link plan, combined with investment into historic downtown have allowed the City to emerge as a great place to live, work, and play.
erest
-edge businesses. These include
carbon capture technologies, desalinization plants, green energy power plants, hydrogen fuel suppliers, EV technology companies, and more.

As with the rest of the economy, the City has experienced labor shortages with most of its industries. The City has partnered with multiple training agencies that target the needs of the hardest hit and most in demand occupations. These no-cost agencies/programs include WorkVine209, San Joaquin County WDB, Codestack Academy, Bay Valley Tech, Delta College High School Apprenticeship Program, Volt Institute, and Community Workforce Initiative (CWI) funded by Prologis.
x
The City also is engaged with regional partners that are focused on many Pro-Business Initiatives to assist our businesses. These groups include iHub San Joaquin, San Joaquin Partnership, Northern San Joaquin Valley CERF initiative, and Team California.

Over the last two fiscal years, the City received approximately $15 million in stimulus from the American Rescue Plan Act (ARPA). The funds have provided services to the community with the construction of a temporary emergency housing facility, reconstruction of City streets, and aided residents and local business in their fiscal recovery from the pandemic.

General Fund Fiscal Highlights: New housing units being added to the assessor's roll, coupled with commercial developments in the community, and higher property values, have led to a steady increase in local property tax revenues. Developments in the community, in conjunction with increased consumer confidence and a strong labor market, have all contributed to the strengthening of the General Fund. Property Tax revenue increased in FY 2021-22 over FY 2020-21 by $1.5 million, approximately 5%. While the housing market has begun to slow, Tracy continues to see residential and commercial growth. The City estimates property tax will continue to grow another 3% annually over the next 3-5 years.

In addition to the growth in commercial and residential, the City Council and voters passed in November 2016 an additional ½ cent local sales tax (known as Measure V) that has a twenty- year sunset (expires April 2037). In fiscal year 2021-22, the Measure V tax proceeds received and recorded were $13.8 million. It should be noted that California Department of Tax and Fee result in the City having to refund some Measure V Sales Tax revenue that was potentially errantly reported by the retailer. The City anticipates a resolution to the audit in FY2025-26.

Staff will monitor and continue to update the City Council as the audit progresses.

Over the last five years, the City Council has adopted several resolutions, which prioritized Measure V Sales Tax to fund four amenities located in the City: The Aquatic Center, Multigenerational Recreation Center, Legacy Fields Sports Complex, and the Nature Park. xi
Below are the
projects, based on a hybrid of debt and pay-as-you-go funding.

Measure V Funded City Amenities
Project Measure V
Budget
Accumulated
Fund Balance
as of
June 30, 2022
Pay-Go Funding
Timeline*
Aquatic Center $55M $41.3M 2019-2026
Multi-Gen Rec Center-
Phase 1 $31M $3.1M 2019-2023
Legacy Fields-
Phase 1E $21M Debt finance 2022
(debt is fifteen-year term)
Nature Park $1M $0 After 2030
Operations &
Maintenance $40M $0 2019-2037
Note: Timelines may shift based on future Council direction regarding pay-go projects.

Projects may have multiple phases and/or funding during timeline.

Shortly after the adoption of the FY 2021-22 operating and capital budget, the City received the January-March 2021 Sales tax disbursement from the State of California Department of Tax Franchise Administration (CDTFA), which resulted in a significant chan General Fund revenues. The result was due to a recent change in tax reporting by a predominant e-commerce business located within Tracy. This reporting change shifted the tax allocation directly to Tracy as the point-of-sale jurisdiction. Prior to this, the e-commerce business reported California Bradley Burns Sales Tax through the County sales tax pool where the tax was distributed pro-rata throughout the State regardless of the location of the distribution center from which the goods shipped. The change has had General Fund revenues; nearly doubling the current Sales Tax revenues for the City. The revenues from the reporting change have grown an average of over $4.5 million a quarter.

The City General Fund is expected to maintain a surplus for the next three years. The City Council and staff developed a fiscal sustainability funding policy adopted with the FY2022-23 budget to fund liabilities, invest in infrastructure maintenance and new capital, and developing new or expanded programs to serve the community and businesses in Tracy.

Other Fund Fiscal Highlights: The Council has been committed to having development pay its own way. The City continues to review and update the developer impact fees throughout the City to ensure adequate infrastructure is in place to meet the demands of an ever-growing city.

The Council also adopted a Citywide Services Community Facilities District, CFD 2018-1, in January of 2018. It will be superseded by Citywide Services Community Facilities District, CFD 2021-2, which provides for a broader use of funded services. Any new development of 5 or more units is expected to join or mitigate the costs associated with the Police and Public Works services demands connected to new development. The CFD taxes are set at $70 per parcel, per year and has an inflation rate set to the Consumer Price Index; and will offset the costs associated with adding personnel to meet future population growth in the developing communities of Tracy. The City conditions new commercial development to fund street improvements and both residential and commercial to fund street and traffic light costs. xii
Development throughout the City has resulted in an increase in planning, engineering, and building revenues over prior year, $5.6 million or 50%.

In addition, the City has adopted several financing infrastructure plans (FIPs) and Master Plan Impact Fees to fund the improvements for new road, expansion of utility services, and enlargement of facilities needs that are brought on by new development. The City is also in the design and construction of several roadway and highway widening projects. These projects will be paired with regional impact fees, State and Federal grants and are estimated at $100 million over the next several years. The FY 2020-21 revenues increased approximately $9.5 million in total for all project areas, which is a 38% increase over FY 2020-21. For more information on AB 1600
report.

The City received the second American Rescue Plan Act (ARPA) payment in the amount of $7.4 million in FY 2021-22. These funds have been used to provide services to the community with the construction of a temporary emergency housing facility, reconstruction of City streets, and aided residents and local business in their fiscal recovery from the pandemic.

The City of Tracy has four utilities: Water, Wastewater, Solid Waste, and Storm Drain with approximately 27,000 customers depending on the service. The growth in residential and commercial development translated to a growth of 964 customers, or 3.6%. In FY 2021-22, the City applied and received grant funding in the amount of $1.2 million from the State Water Board for water and wastewater Customer Arrearages. The funding provided bill credits to approximately 2,000 past due utility customers.

Budgetary Controls: The Tracy Municipal Code requires that the City Council adopt a budget by no later than the close of the fiscal year. This annual budget serves as the foundation for the City
Fund,
Enterprise Fund, etc.), by department (e.g. Police, Fire, etc.), and by program (i.e. Patrol Services, Traffic Enforcement, Fire Support, etc.). Department heads may transfer resources within a department as they see fit with the approval of the City Manager. Amendments to total fund appropriations or transfers between funds, however, need approval from the City Council.

Quarterly, staff prepares a report to the City Council on the year-to-date revenues and expenditures as compared to the adopted and amended budget as part of the on-going budget monitoring process. These reports provide timely updates to the City Council on operating and capital budgets and provides the opportunity for consideration of budget augmentations.

Long-term Fiscal Planning: The City Council of Tracy remains committed to maintaining fiscal sustainability while providing high quality public safety, public works, and community development to meet its existing and future needs. In 2020, the Council adopted a two-year Strategic Priority Work plan and
economic, organizational, and environmental landscape. The Council adopted a governance strategy designed to retain and attract talent, enhance fiscal stability, improve the use of technology, and enhance transparency for the betterment of the community. In response, a set of strategic priorities, goals and objectives were adopted to carry out the vision of the City priorities, along with their goals and objectives, are the foundation for development of the budget and forecast.
xiii
The City prepares a ten-year fiscal plan annually as a tool for the Council to meet these strategic priorities and budget development.
financial forecast to evaluate current and future fiscal conditions and is to guide policy and programmatic decisions. As part of building the multi-year forecast, the City uses information based on past, current, and projected financial conditions. As part of the strategic planning and long-term forecasts, the City has developed and maintains several tools to provide analytic measurements of future fiscal impacts. First, the ten-year forecast includes two separate actuarial studies to analyze the impacts of employee retirement benefits over time. One is focused on the fiscal impacts of pension and one on retiree medical costs.

Secondly, the City has three separate studies on revenue forecasts based on economic trends surrounding short and long-term retail and housing markets. The City overlays each of these studies into the planning documents to create a multi-faceted approach to fiscal analysis and planning.
costs with community priorities and requirements. In preparing the FY 2021-22 Operating and Capital Budget, City staff reviewed the FY 2020-21 budget and estimated the expenditures and revenues anticipated for the next year, FY 2021-22.

T economy has recovered both in housing prices that bolster property tax and diversification in commercial and retail that grows and strengthens our sales tax revenue. With control. Housing prices are beginning to hold as interest rates have risen. Even with solid financial planning and long-term forecasting, not all future outcomes can be predicted. Knowing that, the City has positioned itself well by building financial reserves, adopting strong fiscal policies, and passing important revenue measures to support City services. However, even with these proactive steps, the City, like other agencies, will continue to be faced with unmet needs in an environment where resources are limited.

Creating a long-term financial forecast has helped identify future revenue and expenditure trends that may have an immediate or long-term influence on government policies, strategic goals, funding obligations, or community services. The City uses the five-year financial forecast as a management tool to best anticipate inflows and outflows of City resources in the short- term, then projects out these trends into the longer ten-year model to ensure budget sustainability. Modeling of long-term strategies also allows marginal shifts to occur over time to maintain healthy reserves while still actively improving services to the public. The forecast has become an integral part of the annual and mid-year budget process.

City Council Strategic Priorities and Major Initiatives in 2021-2023: The Annual Comprehensive Financial Report echoes our continued investment in City services to our residents and businesses, but also to those we invite to work in and/or visit the City of Tracy.

There are a number of economic development efforts that have been a City focus for several years, with job creation and growth being at the forefront. This continues to be a priority for the City, including ensuring a positive working relationship with the business community, so that the ries and retailers to our
community. Tracy strives to provide services that promote a safe community for our residents, businesses, and visitors. This remains a high priority to our City Council and City Administration.

The financials reflect the desired operational outcomes of each City department as they relate to -2023 Strategic Priorities Work Plan:
xiv
Economic Development
To enhance the competitiveness of the City while developing a strong and diverse economic base.

Approved over 160 zoning/land use/development-related permits, including 33 Development Review projects requiring Director, Commission or Council action.

Approved 6 Cannabis Dispensary CUPs.

Building valuation for construction work completed totaled $1.2 million.

Began Transit Oriented Development (TOD) Plan to develop land use planning and investment strategy to further revitalize Downtown by maximizing zoning opportunities on vacant lands, identifying greater connectivity options for access to Downtown and planning for successful integration of transit (including possible train station) into the Downtown fabric.

Completed one Specific Plan Amendment (SPA) for Tracy Hills Phase 2.

Secured funding for a downtown parklet program for continued outside dining opportunities in downtown.

Public Safety
To enhance community safety by promoting a responsive public safety system that includes civic engagement and partnerships, community involvement, public education and prevention, intervention, and suppression services that meet the needs of our community, inclusive of businesses and residents.

Secured capital funding and began constructing
Housing Facility Project
Coordinated the transition of personnel from the City of Tracy to SSJCFA effective January 2, 2022
Upgraded interview rooms to compliment single platform of evidence collection to evidence.com that is compatible with body worn cameras and cars Awarded $213,000 for Familiar Faces grant to provide funding for an ADA transport van, equipment, training and a consultant to develop the program for cost effective vulnerable populations within our community
Awarded $255,000 from Byrne Discretionary Grant to implement and fund a robust License Plate Reader (LPR) program that includes 46 license plate readers within the City to aid in improving our capacity to identify leads, solve criminal cases, reduce crime and effectively plan, manage and allocate response and investigative resources Installed Cradlepoint wireless routers and upgraded patrol vehicle in-car cameras to Axon Fleet 3 system to include license plate readers
Seized 3,057 marijuana plants, 6,392 lbs. of marijuana for sale, 998 grams of methamphetamine, and $278,343 in cash
Quality of Life
and services, and cultivating connections to promote a positive change and progress in our community.

Completed 39,216 building-related inspections; processed 4,515 building permits and issued 3,927 building permits; generated $11 million in permit review revenue.

Engaged
quality of life.

Accepted Park 1, Park 2, and Park 3 of Tracy Hills Phase 1A development adding approximately 11 acres of parkland.

Completed construction of $130,000 sidewalk, curb/gutter repairs for various streets.

Awarded $495,584 in CDBG funding to local non-profits and $180,173 in HOME funding to support the Tracy Affordable Senior Housing Project. xv
Completed construction of Alden and Yasui Park playgrounds.

Opened a new disc golf course at Dr. Powers Park
Received a $5M grant from California Senator Susan Talamantes- will be applied to the design and construction of the Multi-Generational Recreation Center.

Awarded construction contract for the Legacy Fields Sports Complex Phase 1E improvements, which include paving all parking lots and renovating 5 baseball fields with added stadium lighting.

Completed construction on the Legacy Fields Pump Station Improvements.

Completed the Lolly Hansen Senior Center renovations and reopened to the public Following a COVID-19 pause, the community events team hosted 5 block parties averaging 1,00 people per event.

Completion of the painting all City school yellow crosswalks.

Replacement of 2,400 water meters across the City.

Began design work of the Tracy Hills Phase 5 Water Pump Station; continued the connection of the Outfall Effluent Pipeline Project and the rehabilitation of the Lewis Manor Well #5.

Governance
To retain and attract new talent, enhance fiscal sustainability, improve the use of technology, and enhance transparency for the betterment of the Tracy community.

Assisted with the completion of a rate study for wastewater funds to maintain operations, debt, capital, and reserve levels to maintain the sustainability of these utilities.

Monitored, applied for, and was awarded over a $15 million in Federal grants across all City departments in FY2022.

Increased the number of electronic transaction options for customers, now including credit card auto pay for utilities and AR.

Hired 99 new employees and promoted 52 City of Tracy employees in calendar year 2022.

Partnered with the State to participate in the Low-Income Household Water Assistance Program (LIHWAP), to provide funding resources to assist residents in paying their utility bills.

Completed the roll-out of the new City website content management system.

Completed the National Community Survey and presented results to Council.

GASB 54: The City is required to produce its financial statements in conformity with GASB 54.

This GASB requirement concerns mainly the designation of fund balance into use categories.

In addition, Statement 54 clarifies how rainy-day amounts are reported by treating stabilization arrangements as a specified purpose. Consequently, amounts constrained to stabilization must be reported committed or assigned fund balance in the General Fund if they meet the other criteria for those classifications. In October 2014, the City Council adopted a stabilization policy and created three stabilization reserves and revised the policy in June 2020. Please refer to Note # 9 for more information.
xvi
Summary of the General Fund Reserves as of June 30, 2022 Restricted Fire Medical Leave Bank
Medical Leave Bank
Committed 17% Reserve (Emergency)
$ 
,

,,
Assigned 13% Reserve (Economic Stability)
Prior Year Re-Appropriations
Animal Control Trust
Unassigned
11,
,

320,865
22,193
7,,
36,876,695
GASB 68 & 71: These accounting standards deal with reporting of pension liabilities. These statements establish standards for measuring and recognizing liabilities, deferred outflows of resources, and deferred inflows of resources, and expense/expenditures. These standards were designed to improve and provide transparency to the accounting and financial reporting for state and local government defined benefit pension plans and to bring governmental employer accounting and reporting standards closer in line with private sector requirements. The City implemented GASB Statement No. 68 and GASB Statement No. 71 in FY 2014-15.

Prior to FY 2014-15, information on the pension liabilities were disclosed in the note disclosure and required supplementary information sections of the ACFR. With the implementation of GASB 68, the net pension liability is reported on the face of the Statement of Net Position, financial reporting requirements of pension obligations by reporting pension obligations not only on the note disclosure and required supplementary information sections but also on the face of the basic financial statements. GASB 68 affected
liability and the City has been disclosing and
is profoundly aware of this liability.

GASB 75 Accounting and Financial Reporting for Post-employment Benefits Other Than Pensions: The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for post-employment benefits other than pensions (other post-employment benefits or OPEB). It also improves information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all post-employment benefits (pensions and OPEB) with regard to providing decision-useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency.

This Statement replaced the requirements of Statements No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans, for OPEB. Statement No. 75, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, established new accounting and financial reporting requirements for OPEB plans.

xvii
The scope of this Statement addresses accounting and financial reporting for OPEB that is provided to the employees of state and local governmental employers. This Statement established standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this Statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about defined benefit OPEB are also addressed.

In addition, this Statement details the recognition and disclosure requirements for employers with payables to defined benefit OPEB plans that are administered through trusts that meet the specified criteria and for employers whose employees are provided with defined contribution OPEB. This Statement also addresses certain circumstances in which a non-employer entity provides financial support for OPEB of employees of another entity. The City implemented GASB 75 in FY 2017-18.

Gann Limit vs. Appropriations Subject to Limit: Proposition 4, the "Gann Initiative," was passed by California voters in 1978, and is intended to limit government appropriations. The appropriations limit is calculated each year based upon fiscal year 1978-79 appropriations, which is modified by the composite consumer price index and population changes that have occurred in subsequent years. The City's appropriations limit and the estimated appropriations subject to the limit for the FY 2021-22 amounted to $79,082,780 million and $64,289,152 million respectively. City appropriations subject to the limit have consistently remained far below the appropriation limits and are not expected to deviate from this trend in the foreseeable future.

Awards and Acknowledgements: The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Tracy for its Comprehensive Annual Financial Report (ACFR) for the fiscal year ended June 30, 2021.

This was the 34
th consecutive year that the government has received this prestigious award. To be awarded a Certificate of Achievement, the government had to publish an easily readable and efficiently organized ACFR that satisfied both GAAP and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe that our current ACFR
submitting it to the GFOA to determine its eligibility for another certificate.

The preparation of the Annual Comprehensive Financial Report was made possible by the dedicated service of the entire Finance Department staff. Each member of the Department has my appreciation for the contributions made in the preparation of this report. We would also like excellence in financial reporting.

Respectfully submitted,

Michael Rogers Sara Cowell
City Manager Director of Finance

Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Tracy
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2021
Executive Director/CEO
xx
2121 North California Blvd., Suite 290
Walnut Creek, California 94596

INDEPENDENT AUDITORS’ REPORT

To the Honorable Mayor and Members
of the City Council of the City of Tracy
Tracy, 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, the aggregate discretely presented component unit, each major f und, and the aggregate remaining fund information of the City of Tracy, California (the “City”), as of and for the year ended June 30, 2022, 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, the aggregate discretely presented component unit, each major fund, and the aggregate remaining fund informa tion of the City, as of June 30, 2022, and the respective changes in financial position and, where applicable, cash flows thereof for th e year then ended in accordance with accounting principles generally accepted in the United States of America.

We did not audit the financial statements of the South Sa n Joaquin County Fire Authority (the “Authority”), which represent 100% of the assets, net position, and revenues, r espectively, of the of the aggregate discretely presented component unit as of June 30, 2022. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Authority, is based solely on the report of the other auditors.

Basis for Opinions

We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to fi nancial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States. Our responsibilities under tho se standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements secti on of our report. We are requi red to be independent of the City, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Emphasis of Matter

Implementation of New GASB Pronouncements

As discussed in Note 1 to the basic fi nancial statements, the City implemented Governmental Accounting Standards Board (“GASB”) Statement No. 87, Leases during the year. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Financial Statements

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

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

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

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whet her the financial statements as a whole are free from material misstatement, whether due to fraud or error, a nd to issue an 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 auditing standards ge nerally accepted in the United States of America 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 ove rride 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 auditing standards generally accepted in the United States of America and Government Auditing Standards, we:

 Exercise professional judgment and maintain professional skepticism throughout the audit.

 Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

 Obtain an understanding of internal c ontrol relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.

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

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

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

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, Modified Approach to Reporting Street Pa vement Costs, Budgetary Comparison Schedules, Schedules of Changes in Net Pension Liability and Related Ratios, Schedules of Contributions – Pension, and Schedule of Changes in Total OPEB Liability and Related Ratios, and Schedul e of Contributions – OPEB, as listed in the accompanying table of contents, be presented to supplement the basic financ ial statements. Such informa tion, 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 fina ncial statements in an appr opriate operational, economic, or historical context.

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

3 We have applied certain limited proce dures to the required supplementary in formation in accordance with auditing standards generally accepted in the Unit ed States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other know ledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The Combining and Individual Fund Financial Statements and Budgetary Comparison Schedules 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 financ ial 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 and Individual Fund Financial Statements and Budgetary Comparison Schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information

Management is responsible for the othe r information included in the annual report. The other information comprises the Introductory and Statistical Sections but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.

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

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards , we have also issued our repor t dated February 27, 2023, on our consideration of 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 City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City’s internal control over financial reporting and compliance.

Walnut Creek, California
February 27, 2023

4 This page intentionally left blank.

City of Tracy
Management Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2022

5 MANAGEMENT'S DISCUSSION AND ANALYSIS

This discussion and analysis provide an overview of the City of Tracy’s financial performance for the fiscal year ended June 30, 2022. This report has been prepared in accordance with Generally Accepted Accounting Principles (GAAP) as established by the Governmental Accounting Standards Board (GASB). We encourage our readers to consider this information in conjunction with the information provided in th e accompanying basic financial statements and notes thereto.

FINANCIAL HIGHLIGHTS

 The City’s assets and deferred outflows of resources exceeds its liabilities and deferred inflows of resources at the close of the 2021-22 fiscal year by $1,436 million Net Pos ition. Of this amount, $137 million Unrestricted Net Position is designated to be used to meet ongoing obligations to citizens and creditors.

 The City’s total net position increased by $100 million, with $77 million attributable to governmental activities and $23 million attributable business-type activities.

 As of June 30, 2022, the City’s combined governmental funds reported fund balance of $350.8 million, of which $350.8 million is committed ($14.5 million), assigned ($91.2 million), or available ($7.5 million) to meet the City’s current and future needs.

 As of June 30, 2022, the fund balance for the General Fund was $36.9 million of which $-0- is designated as Non- Spendable for items such as deposits, pr epaid assets, inter-fund advances, and inventory. Restricted fund balance was $3.2 million, designated for medical leave bank. Committed fund balance was $14.5 million, designated for Contingency/Emergency. Assigned fund balance was $11.4 million, designated for items such as prior reappropriation and fiscal sustainability. Unassigned funds were $7.8 million as of June 30, 2022.

OVERVIEW OF THE ANNUAL COMPREHENSIVE FINANCIAL REPORT

The Management’s Discussion and Analysis is intended to serve as an introduction to the City’s basic financial statements, which are comprised of the following sections:

1) Introductory Section, which includes the Transmittal Letter and general information, 2) Management's Discussion and Analysis,
3) The Basic Financial Statements, which include the Government-wide and the Fund Financial Statements, along with the Notes to these financial statements,
4) Required Supplemental Information,
5) Combining Statements for Non-major Governmental Funds and Internal Service Funds, 6) Statistical Information

The Basic Financial Statements

The Basic Financial Statements are comprised of the Gove rnment-wide Financial Statements and the Fund Financial Statements. These two sets of financial statements provide two different views of the City’s financial activities and financial position.

City of Tracy
Management Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

6 OVERVIEW OF THE ANNUAL COMPREHENSIVE FINANCIAL REPORT (CONTINUED)

Government-wide Financial Statements

The Government-wide Financial Statemen ts provide a longer-term view of the City's activities as a whole and are presented in a manner similar to a private-sector business. These statements are comprised of:

Statement of Net Position – Presents information on all City assets a nd deferred outflows of resources and liabilities and deferred inflows of resources, with the difference between them reported as Net Position. Over time, increases or decreases in Net Position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

Statement of Activities – Presents information reflecting any change in the government's net position during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs (regardless of the timing of related cash flows). Thus , revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., earned but unused vacation and compensated time leaves).

Both of the Government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (gove rnment activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities).

 Governmental activities – All of the City's basic ser vices are considered to be governmental activities, including general government, public safety, public ways and facilities/transportation, public works, and culture and leisure. These services are supported by ge neral city revenues such as taxes, and by specific program revenues such as developer fees.

 The City’s governmental activities include not only the City of Tracy (known as the primary government), but also the activities of the Tracy Operating Partnership Joint Powers Authority, Tracy Public Financing Authority, and the Tracy Industrial Development Authority, which are controlled by and dependent on the City. While they are separate legal entities, City Council serves in separate sessions as the governing body of the Tracy Operating Partnership Joint Powers Authority, the Tracy Public Financing Authority, and the Tracy Industrial Development Authority; and the City is financially accountable for those entities. The financial activities of all three entities have been aggregated and merged, termed “blended”, with those of the City in the accompanying financial statements.

 Pursuant to ABxl 26 ("AB 26"), approved by Governor Brown on June 28, 2011 and upheld by the California State Supreme Court on December 29, 2011, the Tracy Community Development Agency ("Agency") was dissolved on January 31, 2012. The former Agency is now administered under the name of Successor Agency to the Community Development Agency of the City of Tracy. The activities of the Successor Agency can be found in the Fiduciary Fund Section of the Financial Statements.

 Business-type activities – All of the City’s enterprise activities are reported here, including water, wastewater, drainage, solid waste, transit, and airport. Unlike governmental services, these services are supported by charges paid by users based on the amount of the service they use.

City of Tracy
Management Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

7 OVERVIEW OF THE ANNUAL COMPREHENSIVE FINANCIAL REPORT (CONTINUED)

Fund Financial Statements

The Fund Financial Statements report the City's operations in more detail than the Government-wide Statements and focus primarily on the short-term activities of the City's General Fund and major funds. The Governmental Fund Financial Statements measure only curr ent revenues and expenditures and fund balances; they exclude capital assets, long-term debt, and other long-term amounts. Enterprise and Internal Service Fund Financial Statements are prepared on the full accrual basis and include all their assets, deferred outflows of resources, liabilities, and deferred inflows of resources, both current and long-term. Each major fund is presented individually, with all non-major funds summarized and presented only in a single column. Supplementary combining schedules present the detail of these non-major funds.

Major funds present the major activities of the City for the year and may change from year to year as a result of changes in the pattern of the City’s activities.

A "fund" is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities and objectives. All of the City's funds can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

 Governmental Funds – These funds are used to a ccount for essentially the same functions reported as governmental activities in the Government-wide Fina ncial Statements. Governmental Fund Financial Statements focus on near-term inflows and outflows of spendable resources and are therefore prepared on the modified accrual basis. Capital assets and other long-lived assets, along with long-term liabilities, are not presented in the Governmental Fund Financial Statements.

The City of Tracy has 39 governmental funds of which 6 are considered major funds for presentation purposes.

Each major fund is presented separately in the Governmental Fund Balance Sheet and the Governmental Fund Statement of Revenues, Expenditures and Changes in Fund Balances. The financial information for the remaining non-major governmental funds is combined into a single, aggregated presentation.

 Proprietary Funds – The City maintains two different types of proprietary funds; Enterprise Funds and Internal Service Funds. Enterprise Funds are used to report the same functions presented as "business-type activities" in the Government-wide Financial Statements. Internal Service Funds account for the financial activity of the City's central garage, central services departments, equipment replacement, building maintenance, and self- insurance. Financial statements for proprietary funds are prepared on the full accrual basis and include all their assets and liabilities, current and long-term.

Since the City's Internal Service Funds provide goods and services only to the City's governmental activities, their activities are reported only in the government-wid e financial statements as governmental activities.

Internal Service Funds may not be major funds because their revenues are derived from other City funds. These revenues are eliminated in the City-wide financial statem ents and any related profits or losses are returned to the activities which created them.

City of Tracy
Management Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

8 OVERVIEW OF THE ANNUAL COMPREHENSIVE FINANCIAL REPORT (CONTINUED)

 Fiduciary Funds – These funds are used to account for r esources held for the benefit of parties outside the government. Fiduciary Funds are not reflected in the Government-wide Financial Statements because the resources of those funds are not available to suppor t the City's own programs. The accounting used for Fiduciary Funds is similar to that used for Proprietary Funds. With the dissolution of the Community Development Agency per ABxl 26 and AB 1484, th e activities of the Successor Agency to the Tracy Community Development Agency are reported as a Private Purpose Trust Fund in the Fiduciary Fund section.

 Custodial Funds – These funds are used to account for r esources held for the benefit of parties outside the government. Fiduciary Funds are not reflected in the Government-wide Financial Statements because the resources of those funds are not available to suppor t the City's own programs. The accounting used for Fiduciary Funds is similar to that used for Proprietary Funds. These funds are used to report fiduciary activities that are not required to be reported in pension (and other employee benefit) trust funds, investment trust funds, or private purpose trust funds. The City’s custodial funds includes various Community Facilities Districts and Assessments Districts.

Notes to the Financial Statements

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

Required Supplemental Information

In addition to the basic financial statements and acco mpanying notes, this report also presents certain Required Supplementary Information concerning budgetary comparis on schedules for the General Fund and other major funds that are Special Revenue Funds, along with schedules related to the City’s net pension liabilities, total OPEB liability and contributions.

Combining Statements

This section of the report includes additional detailed information about non-major governmental, internal service and agency funds.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

Net Position – The net position for the City as a whole increased by $100 million or 7.4%, from $1,336 million at June 30, 2021 to $1,436 million at June 30, 2022. Restricted net position accounted for $238 million restricted for capital projects, debt service and legally segregated taxes, gran ts, and fees. The unrestricted net position increased by $83 million, from $53 million in at June 30, 2021 to $137 million at June 30, 2022 and is designated to be used to meet ongoing obligations to citizens and creditors. The Unrestrict ed Net Position reflects the inclusion of a Net Pension Liability of $54.0 million and Net OPEB Liability of $7.0 million in accordance with Generally Accepted Accounting Principles.

City of Tracy
Management Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

9 GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED)

The following table reflects the Summary of Net Position for the fiscal y ear ended June 30, 2022 with comparative data for the fiscal year ended June 30, 2021.

Statement of Net Position
Fiscal Year Ended June 30
(in thousands of dollars)

Total
2022 2021 2022 2021 2022 2021
354,579$ 285,127$ 65,195$ 50,066$ 419,774$ 335,193$ 73,383 54,344 24,739 18,171 98,122 72,515 681,830 674,737 447,769 441,183 1,129,599 1,115,920 Total Assets 1,109,792 1,014,208 537,703 509,420 1,647,495 1,523,628 18,476 24,054 2,456 2,757 20,932 26,811 47,605 43,483 12,220 8,231 59,825 51,714 98,962 121,111 32,764 39,423 131,726 160,534 Total Liabilities 146,567 164,594 44,984 47,654 191,551 212,248 2,217 - 3,784 - 6,001 - 30,566 1,638 4,260 99 34,826 1,737 Total Deferred Inflows 32,783 1,638 8,044 99 40,827 1,737 640,818 653,646 421,053 412,464 1,061,871 1,066,110 237,566 217,130 - - 237,566 217,130 70,533 1,254 66,078 51,961 136,611 53,215 Total Net Position 948,917$ 872,030$ 487,131$ 464,425$ 1,436,048$ 1,336,455$ Business-Type
ActivitiesActivities
Governmental
Assets
Restricted
Unrestricted
Cash and Investm ents
Other Assets
C api tal Assets
Deferred Outflows
Related to Pension/OPEB
Current Liabilities
Non-Current Liabilities
Deferred Inflows
Related to Pensions
Net Investm ent in Capital
Related to Leases

City of Tracy
Management Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

10 GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED)

The City’s Government-wide Net Position as of June 30, 2022, comprised of the following:

 Cash and investments combined increased by $84.6 million or 25.2%, from $335.2 million at June 30, 2021 to $419.8 million at June 30, 2022. The $419.8 million of cash and investments is in the city treasury and investments.

 Receivables decreased by $3.3 million, from $57.0 million at June 30, 2021 to $53.8 million at June 30, 2022.

Receivables were comprised of $37.7 million of current receivables and $16.1 million of long-term receivables.

Current receivables are primarily related to sales tax an d grants; and long-term receivables are related to housing loans provided by the former Community Development Agency and leases. The grants and loans have varying repayment terms and interest rates.

 Capital assets increased by $13.7 million or 1.2%, from $1,116 million at June 30, 2021 to $1,130 million at June 30, 2022. Net capital assets of $1,130 million include the City's infrastructure in addition to all other City assets.

 Restricted Net Position increased $20.5 million or 9.4%, from $217.1 million at June 30, 2021 to $236.6 million at June 30, 2022. Restricted Net Position is restricted for capital projects $180.0 million; low-moderate income housing projects $4.6 million; debt service $26.7 million; and $26.2 million may be spent on other projects as specified by funding source restrictions.

 Unrestricted Net Position increased by $83.4 million or 156.8%, from $53.2 million at June 30, 2021 to $136.6 million at June 30, 2022. The unrestricted net position is available to be used to finance day to day operations without constraints established by debt covenants or other legal requirements or restrictions. While these assets are technically unrestricted, most of these assets are committed or assigned for a specific use.

City of Tracy
Management Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

11 GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED)

The Change in Net Position expressed as the change in reve nues and expenses through June 30, 2022 is reflected in the Statement of Changes in Net Position.

Statement of Net Position
Fiscal Year Ended June 30
(in thousands of dollars)

2022 2021 2022 2021 2022 2021
30,044$ 22,823 $ 72,022 $ 64,432 $ 102,066 $ 87,255 $ 63,193 52,673 12,703 5,801 75,896 58,474 106,813 83,826 86,413 77,221 193,226 161,047 27,241 25,736 27,241 25,736
84,992 65,709 84,992 65,709
5,369 1,700 (1,498) 185 3,871 1,885 117,602 93,145 (1,498) 185 116,104 93,330 Total Revenues 224,415 176,971 84,915 77,406 309,330 254,377 26,685 22,135 26,685 22,135
38,889 38,346 38,889 38,346
16,807 17,849 16,807 17,849
12,322 12,571 12,322 12,571
22,081 19,463 22,081 19,463
4,800 3,848 4,800 3,848 990 675 990 675 24,886 21,177 24,886 21,177
23,435 21,238 23,435 21,238
28,418 25,987 28,418 25,987
2,114
2,195 2,114 2,195
2,228 1,144 2,228 1,144
6,080 5,352 6,080 5,352
122,574 114,887 87,161 77,093 209,735 191,980 Changes in net position before 101,841 62,084 (2,246) 313 99,595 62,397 transfers
Transfers (24,954) (3,609) 24,954 3,609 - - Change in Net Position 76,887 58,475 22,708 3,922 99,595 62,397 Net Position, Beginning 872,030 813,985 464,423 460,501 1,336,453 1,274,486 Net Position, Ending 948,917$ 872,460$ 487,131$ 464,423$ 1,436,048$ 1,336,883 $ Storm Drainage
Airport
Transit
Total Expenses
Total General Revenues
Solid Waste
Expe nse s
General Government
Police
Fire
Development & Engineering
Public Works
Parks & Community Services
Interest on Long-term Debt
Water
Wastewater
15,318
Capital Grants and Contributions
Total Program Revenues
General Revenues:
15,264 8,330 1,688 6,988 13,576 Other Taxes
Other General Revenues
Property Taxes
Program Revenues:

Charges for Services
Operating Contributions and
Grants
Revenues
Governmental
Activities
Business-Type
Activities Total
City of Tracy
Management Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

12 GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED)

Revenues

Total revenues increased by $55.0 million or 21.6%, fro m $254.4 million at June 30, 2021 to $309.3 million at June 30, 2022. Total governmental program revenues increased by $23.0 million, largely due to charges for services and grants. Total governmental general revenues increased by $24.5 million related to general sales tax.

Expenses

Total expenses for the City increased by $17.8 million or 9.3%, from $191.9 million at June 30, 2021 to $209.7 million at June 30, 2022. Governmental activities incurred $122.6 million of expenses while business-type activities incurred $87.1 million. Of the Governmental Activities, the largest expenses were in Public Safety $55.7 million; Public Works $22.1 million; and General Government $23.0 million.

Governmental Activities

Total resources available during the year to finance gove rnmental operations were $1,066. 6 million consisting of net position at June 30, 2021 of $872.0 million, program revenues of $106.8 million and general revenues, net of transfers, in amount of $87.8 million. Government Activities revenue is graphed below by the source of funding, followed by the expenses by program.

Charges for Services,

13.7%
Operating
Contributions and
Grants, 6.2%
Capital Grants and
Contributions, 28.8%
Property Taxes, 12.4%
Other Taxes,

2.6%
Other General
Revenues and
Transfers, 0.2%
Franchise taxes, 1.9%
Sales tax, 34.2%
Revenue by Source
City of Tracy
Management Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

13 GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED)

Program revenues of Business-type Activities increased $9. 2 million or 11.9%, from a total of $77.2 million at June 30, 2021 to a total of $86.4 m illion at June 30, 2022. This was a result of increases in charges for services and capital grants received.

2022 2021
Net Revenue (Expense)
from Business-type Activities
Water 4,517$ 3,852 $
Wastewater (3,153) (4,333)
Solid Waste (2,031) (1,658)
Drainage (577) (352)
Airport (1,525) (155)
Transit 2,021 2,775
Total Business-type Activities $ (748) $ 129 Business-type Activities
Changes in Business-Type Activities by Program
Fiscal Year Ended June 30
(in thousands of dollars)
City of Tracy
Management Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

14 FINANCIAL ANALYSIS OF THE CITY'S FUNDS

As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance related legal requirements.

Governmental Funds

The focus of the City's Governmental Funds is to provide information on near-term inflows, outflows, and balances of spending resources. Such information is useful in assessing the City's financing requirements. The classification of spendable fund balances to committed, assigned, and unassigned, is intended to be helpful in measuring the resources available for spending at the end of the fiscal year. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending.

At June 30, 2022, the City's governmental funds reported combined fund balances of $350.8 million, which is an increase of $85.0 million or 32.0%, from $254.3 million at J une 30, 2021. Total revenues increased by $49.7 million or 30.2%, from $164.4 million at June 30 , 2021 to $214.0 million at June 30, 2 022. Of this total, $131.8 million was in the General Fund. Total expenditures increased by $15.8 million or 14.7%, from $107.4 million at June 30, 2021 to $123.1 million at June 30, 2022. Of this total, $85.3 million was in the General Fund.

General Fund

At June 30, 2022, the General Fund balance of $36.9 m illion, was comprised of $14.5 million committed funds for contingency/emergency reserve , and $11.4 million in assigned funds. Include d in this amount is $11.1 million for Economic/Budget stability and $0.3 million for reappropriation to balance FY23, and $.02 million for Animal Control Trust. Restricted funds were $3.2 million for medical leave bank. Unassigned funds at June 30, 2022 were $7.8 million.

Fund balances have been classified in accordance with generally accepted accounting principles. While amounts have been categorized as unassigned, they may be informally earmarked by the City Council for specific purposes.

Housing Successor Special Revenue Fund

On June 28, 2011 the State of California adopted ABx1 26, amended by AB 1484 on June 27, 2012, which dissolved redevelopment agencies as of January 31, 2012. All assets of the former Redevelopment Agency were transferred as prescribed by law to either the Housing Successor or to the Successor Agency.

The City of Tracy elected to become the Housing Successor and established the Housing Successor Special Revenue Fund to account for the housing assets and activities previ ously provided by the Tracy Community Development Agency. As of June 30, 2022, the fund balance of the Housing Successor Special Revenue Fund was $4.6 million.

Community Development Fees Special Revenue Fund

The Community Development Fees Special Revenue Fund had revenues of $16.8 million, transfers in of $2.1 million and expenditures of $12.0 million. The ending fund balance increased from $0.9 million at June 30, 2021 to $7.9 million at June 30, 2022.

CARES/ARPA Grant Fund

The fund balance of the CARES/ARPA Grant Fund increased by $.5 million over the prior year. Fund balance was $1million at June 30, 2021 comparable to $1.5 million at June 30, 2022.

City of Tracy
Management Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

15 FINANCIAL ANALYSIS OF THE CITY'S FUNDS (CONTINUED)

General Projects Capital Fund

The General Projects Fund had revenues of $4.0 million, transfers in of $42.2 million, and expenditures of $4.9 million.

The fund balance increased $41.2 milli on from $38.5 million at J une 30, 2021 to $79.7 m illion at June 30, 2022.

Funding for the General Project Fund is transferred from th e City’s General Fund. Capita l project expenses included Alden & Yasui Park Playground Replacement (CIP 78173), Tracy Gateway SP/ EIR (CIP 79421). Future projects include Legacy Fields (1E), the Aquatic Center, and Multi-Generational Gymnasium.

Tracy Infrastructure Master Plan Capital Fund

The Tracy Infrastructure Master Plan (TIMP) Fund had re venues of $33.0 million and expenditures of $1.4 million.

The fund balance increased $32.5 million from $58.3 million at June 30, 2021 to $90.9 million at June 30, 2022. TIMP Funds cover areas of the City not covered by their own financing plan. Project expenditures included the Waste Water Treatment Expansion (CIP74107), Over cross upgrade I580 and Mountain House Parkway (CIP 73147), AW: Corral Hollow Rd, Linne Rd to Old Schulte (CIP73144). Future pr ojects include the continuing the Waste Water Treatment Expansion and Water Lines along Lammers Road.

Enterprise Funds

The City's Enterprise Funds provide the same type of information found in the Government-wide Financial Statements, but in more detail. The City's Enterprise Funds are comprised of the Water Utility Fund, the Wastewater Utility Fund, Drainage Fund, Solid Waste Fund, Municipal Airport and Municipal Transit Funds. Enterprise Fund net position totaled $487.1 million at June 30, 2022. Enterprise operating revenues were $72.3 million and operating expenses were $83.5 million in fiscal year 2022. Operating expenses included $14.5 million in depreciation expense. Future projects include the Wastewater treatment expansion.

Water Fund

The net position of the Water Fund at June 30, 2022 w as $200.9 million, an increase of $4.1 million over the prior fiscal year. The net position of the Water fund at June 30, 2021 was $196.8 million. Approximately $14.9 million of the Fund's net position was unrestricted at the fiscal year end with a net investment in capital assets of $192.4 million.

Activities for the year were comprised of $22.4 million in operating revenues for the current year and $23.4 million in operating expenses including $4.7 million in depreciation expense.

Wastewater Fund

The net position of the Wastewater Fund at June 30, 202 2 was $189.9 million, an incr ease of $20.5 million over the prior fiscal year. The net position of the Wastewater fund at June 30, 2021 was $169.5 million. Approximately $34.3 million of the Fund's net position was unrestricted at the fiscal year end with a net investment in capital assets of $175.9 million. Activities for the year were comprised of $15.2 m illion in operating revenues for the current year and $21.2 million in operating expenses including $5.9 million in depreciation expense.

Solid Waste Fund

The net position of the Solid Waste Fund at June 30, 2022 was $11.7 million, a decrease of $2.3 million over the prior fiscal year. The net position of the Solid Waste fund at June 30, 2021 was $14.0 million. The Fund's net position was unrestricted at the end of the fiscal year. Activities for the year were comprised of $25.8 million in operating revenues for the current year and $28.4 million in operating expense.

City of Tracy
Management Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

16 FINANCIAL ANALYSIS OF THE CITY'S FUNDS (CONTINUED)

Drainage Fund

The net position of the Drainage Fund at June 30, 2022 was $50.5 million, a decrease of $.6 million over the prior fiscal year. The net position of the Drainage fund at June 30, 2021 was $51 million. Approximately $(0.4) million of the Fund's net position was unrestricted at the fiscal year end with a net investment in capital assets of $50.9 million.

Activities for the year were comprised of $.7 million in operating revenues for the current year and $2.1 million in operating expenses including $1.7 million in depreciation expenses.

GENERAL FUND BUDGETARY HIGHLIGHTS

The final amended budget for the General Fund totaled $75.1 million. The difference in appropriations between the original budget and the final amended budget was $(2) million, largely due to various programming not offered during the pandemic. At the end of the fiscal year, the total actual expenses of the General Fund were $76.9 million; the General Fund’s assigned fund balance reappropriations were $0.3 million for items that began in 2021 but remained in progress in 2022.

CAPITAL ASSETS

At the end of fiscal 2022, the City had $1,130.0 million, net of depreciation, invested in a broad range of capital assets used in governmental and business type activities, as shown belo w. All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Contributed assets are valued at their estimated acquisition value on the date of contribution.

2022 2021 2022 2021 2022 2021
180,468$ 179,311 $ 19,057 $ 19,057 $ 199,525$ 198,368$ 325,970 320,140 - - 325,970 320,140 33,797 33,214 48,343 54,686 82,140 87,900 540,235 532,665 67,400 73,743 607,635 606,408 51,005 49,515 - - 51,005 49,515 31,888 27,150 8,118 3,571 40,006 30,721 32,156 35,506 47,814 44,678 79,970 80,184 12,219 12,219 386,284 368,706 398,503 380,925 1,367 973 73,476 72,883 74,843 73,856 141,363 142,072 380,369 367,440 521,732 509,512 Lease right to use assets
232 - - - 232 - 681,830$ 674,737 $ 447,769$ 441,183$ 1,129,599$ 1,115,920$ Net lease right to use assets
406 - Improvements Less: accumulated (174) - - - (174) - amortization B
uildings and 406 - - - Depreciable assets
Improvements 146,097 143,616 171,165
Improvements
Grading, Curbs & Gutters
Sidewalks & Driveway
169,888 Buildings and
depreciation
Traffic Signals
Equipment
Infrastructure
Intangible Assets
Land
Streets and Roads
Construction in-Progress
Total
G overnmental Activities Business-type Activities Totals Non-depreciable assets
32,135
Approaches
32,135 32,135 -
Less: accumulated
Net depreciable assets
Total Capital Assets
(471,992) (451,328) (165,504) (159,042) (306,488) (292,286) -
317,262 313,504
32,135

City of Tracy
Management Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

17 CAPITAL ASSETS (CONTINUED)

The City depreciates all its capital assets over their estimated useful lives, except for roads, which are reported using the Modified Approach. The purpose of depreciation is to spread the cost of a capital asset over the years of its useful life so that an allocable portion of the cost of the asset is borne by all users. Additional information on depreciable lives may be found in Note 6 to the financ ial statements. The Modified Approach requires the City to employ an asset management system that maintains a current inventory of these assets, estimates annual costs to maintain them, and assesses the condition of the assets in a replicable way.

The City has elected to use the modified approach discussed above with respect to its roads, most of which are relatively new. The City’s policy is to maintain these roads at an overall condition index level averaging 69, instead of providing depreciation. During fiscal year 2022, the City expended $5,587,759 to preserve its roads, and the condition index level was 69. The City estimates that it will be required to expend approximately $5,920,343 in fiscal year 2023 to maintain its roads at a condition level of 69.

DEBT SERVICE ADMINISTRATION

Each of the City’s debt issues is discussed in detail in Note 8 in the Notes to the Basic Financial Statements. The City’s Governmental Activities long-term debt outstanding incr eased by $19.5 million or 90.8%, from $21.5 million at June 30, 2021 to $41.0million at June 30, 2022. This was due to the City issuing new Lease Revenue Bonds to finance improvements at Legacy Fields, phase 1E. The City’s long debt outstanding decreased by $2.0 million or (7.0%, from $28.7 million at June 30, 2021 to $26.7 million at June 30, 2022, in debt associated with Business-Type Activities.

Outstanding Debt
Fiscal Year Ended June 30
(in thousands of dollars)

2022 2021 2022 2021 2022 2021
236$ 406 $ 236 $ 406 $
2020 Lease Revenue Refunding Bonds 3%-4% 17,040 17,635 17,040 17,635 2020 Lease Revenue Refunding Bonds Premium 3,409 3,455 3,409 2022 Lease Revenue Bonds 18,275 - 18,275 - 2022 Lease Revenue Refunding Bonds Premium 2,052 - 2,052 20,260 21,175 20,260 21,175
State of California-Departm ent
of Health Services Loan 6,457 7,544 6,457 7,544 41,012$ 21,496 $ 26,717 $ 28,719 $ 67,729 $ 46,760$ G overnm ental Activities Business-type Activities Totals Leases Payable
Total Long-Term Liabilities
2004 Wastewater Revenue Bonds
City of Tracy
Management Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2022

18 ECONOMIC OUTLOOK AND MAJOR INITIATIVES

Throughout fiscal year 2021-22, the City ’s economic development continued to grow through expansion of several existing businesses, construction of new distribution facilities, and office space, and the opening of new retail businesses. Property tax revenues steadily increased as a resu lt of new residential and commercial development and higher property values. The City’s prop erty tax revenue increased by $1.5 million, or 6% over fiscal year 2021-2022 and is expected to continue to grow by 5% annually over the next 3-5 years. General Fund revenues saw an increase over the prior fiscal year as a result of a recent change in tax reporting by a predominant e-commerce business located within Tracy.

During FY2021-22, the City received over $2.8 million in Federal CARES and ARPA stimulus funding. These funds will be used to offset the impacts of the COVID-19 pandemi c within the City of Tracy. The City has positioned itself well by building financial reserves, adopting strong fiscal policies, and passing important revenue measures to support City services. Over the next year, staff will continue to evaluate many options to balance resources and ensure Council priorities are met. More detail about the City’s economic outlook is discussed in the accompanying transmittal letter.

CONTACTING THE CITY'S FINANCIAL MANAGEMENT

This Annual Comprehensive Financial Report is intended to provide citizens, taxpayers, investors, and creditors with a general overview of the City's finances. Questions about this report should be directed to the Finance Department, at 333 Civic Center Plaza, Tracy, CA 95376.

BASIC FINANCIAL STATEMENTS
19 This page intentionally left blank.
20 GOVERNMENT-WIDE FINANCIAL STATEMENTS
21 Component Unit
South San
Governmental Business-Type Joaquin County
Activities Activities Total Fire Authority
ASSETS
Current assets:

Cash and investments 354,578,811 $ 65,194,764 $ 419,773,575 $ 4,080,717 $ Cash and investments with fiscal agents 20,008,617 206 20,008,823 - Accounts receivable, net 8,898,267 13,445,131 22,343,398 1,064,976 Intergovernmental receivable 15,939,910 8,226,188 24,166,098 - Interest receivable 1,001,472 197,633 1,199,105 - Lease receivable - due within one year 193,375 256,315 449,690 - Deposits 1,000,000 - 1,000,000 - Prepaid items 65,532 - 65,532 - Inventories - 570,994 570,994 - Due from Fiduciary Funds 4,902,529 - 4,902,529 - Due from Component Unit 3,575,233 - 3,575,233 - Internal balances 1,525,648 (1,525,648) - - Total current assets 411,689,394 86,365,583 498,054,977 5,145,693 Noncurrent assets:

Lease receivable - due in more than one year 2,040,471 3,568,010 5,608,481 - Loans receivable 14,231,876 - 14,231,876 - Capital assets:

Non-depreciable/amortizable 540,234,213 67,399,696 607,633,909 - Depreciable/amortizable, net 141,595,794 380,369,478 521,965,272 1,121,664 Total capital assets, net 681,830,007 447,769,174 1,129,599,181 1,121,664 Total noncurrent assets 698,102,354 451,337,184 1,149,439,538 1,121,664 Total assets 1,109,791,748
537,702,767 1,647,494,515 6,267,357

DEFERRED OUTFLOWS OF RESOURCES
Related to OPEB 625,168 128,501 753,669 - Related to pensions 17,851,106 2,327,032 20,178,138 1,028,868 Total deferred outflows of resources 18,476,274 2,455,533 20,931,807 1,028,868 City of Tracy
Primary Government
June 30, 2022
Statement of Net Position
See accompanying Notes to the Basic Financial Statements. 22 Component Unit
South San
Governmental Business-Type Joaquin County
Activities Activities Total Fire Authority

LIABILITIES
Current liabilities:

Accounts payable 12,997,024 7,717,462 20,714,486 393,927 Accrued payroll 1,338,568 576,535 1,915,103 816,969 Deposits 13,470,746 83,000 13,553,746 - Interest payable 117,567 1,257,194 1,374,761 - Unearned revenue 15,595,248 221,276 15,816,524 - Due to Primary Government - - - 3,575,233 Sick leave conversion - due within one year 901,484 - 901,484 - Compensated absences - due within one year 1,562,838 296,692 1,859,530 - Long-term debt - due within one year 1,621,425 2,068,312 3,689,737 - Total current liabilities 47,604,900 12,220,471 59,825,371 4,786,129 Noncurrent liabilities:

Total OPEB liability 5,852,529 1,202,962 7,055,491 - Net pension liability 47,641,337 6,343,406 53,984,743 - Sick leave conversion - due in more than one year 3,605,936 - 3,605,936 - Compensated absences - due in more than one year 2,472,052 569,375 3,041,427 - Long-term debt - due in more than one year 39,390,641 24,648,212 64,038,853 - Total noncurrent liabilities 98,962,495 32,763,955 131,726,450 - Total liabilities 146,567,395 44,984,426 191,551,821 4,786,129

DEFERRED INFLOWS OF RESOURCES
Related to leases 2,216,670 3,782,624 5,999,294 - Related to OPEB 851,154 174,952 1,026,106 - Related to pensions 29,715,402 4,085,376 33,800,778 - Total deferred inflows of resources 32,783,226 8,042,952 40,826,178 -

NET POSITION
Net investment in capital assets 640,817,941 421,052,650 1,061,870,591 - Restricted:

Debt service 26,654,572 206 26,654,778 - Public safety 926,127 - 926,127 - Streets and roads 14,240,664 - 14,240,664 - Community development 1,784,358 - 1,784,358 - Special districts 9,281,178 - 9,281,178 - Projects 180,043,432 - 180,043,432 - Housing services 4,636,384 - 4,636,384 - Total restricted 237,566,715 206 237,566,921 - Unrestricted (deficit) 70,532,745 66,078,066 136,610,811 2,510,096 948,917,401$ 487,130,922$ 1,436,048,323$ 2,510,096$ City of Tracy
Total net position
Primary Government
June 30, 2022
Statement of Net Position (Continued)
See accompanying Notes to the Basic Financial Statements. 23 Operating Capital
Charges for Grants an d Grants and
Functions/Programs Expenses Services Contributions Contributions Total Primary government:

Governmental activities:

General government
Economic development 1,037,457$ 218 $ 141,580$ 1,351,423 $ 1,493,221 $ General government 16,186,088 8,760,365 - 173,068 8,933,433 Finance 5,285,544 - - - - Non-departmental 4,176,020 202,255 2,854,006 82,089 3,138,350 Public safety
Police 38,889,036 196,001 1,809,255 458,521 2,463,777 Fire 16,806,851 374 - 31,994 32,368 Public ways and facilities
Development and engineering 12,321,607 17,279,268 - - 17,279,268 Public works 22,080,727 2,721,400 8,771,363 61,052,926 72,545,689 Community development
Parks and community services 4,800,263 883,889 - 42,753 926,642 Interest and fiscal charges 990,072 - - - - Total governmental activities 122,573,665 30,043,770 13,576,204 63,192,774 106,812,748 Business-type activities:

Water 24,885,875 22,407,181 706,680 6,289,391 29,403,252 Wastewater 23,434,985 14,973,113 495,735 4,813,415 20,282,263 Solid waste 28,417,923 25,757,693 - 628,709 26,386,402 Drainage 2,113,911 730,691 - 805,923 1,536,614 Municipal airport 2,228,230 582,364 - 121,219 703,583 Municipal transit 6,080,368 7,571,420 485,176 44,708 8,101,304 Total business-type activities 87,161,292 72,022,462 1,687,591 12,703,365 86,413,418 Total primary government 209,734,957$ 102,066,232 $ 15,263,795 $ 75,896,139 $ 193,226,166 $ Component unit:

South San Joaquin County Fire Authority 26,311,268$ 1,719,634 $ 25,873,270 $ 1,228,460 $ 28,821,364 $ Total component unit 26,311,268$ 1,719,634 $ 25,873,270 $ 1,228,460 $ 28,821,364 $

City of Tracy
Statement of Activities
For the Year Ended June 30, 2022
Program Revenues
See accompanying Notes to the Basic Financial Statements. 24 Component Unit
South San
Governmental Business-Type Joaquin County
Functions/Programs Activities Activities Total Fire Authority Primary government:

Governmental activities:

General government
Economic development 455,764$ - $ 455,764$ - $ General government (7,252,655) - (7,252,655) - Finance (5,285,544) - (5,285,544) - Non-departmental (1,037,670) - (1,037,670) - Public safety
Police (36,425,259) - (36,425,259) - Fire (16,774,483) - (16,774,483) - Public ways and facilities
Development and engineering 4,957,661 - 4,957,661 - Public works 50,464,962 - 50,464,962 - Community development
Parks and community services (3,873,621) - (3,873,621) - Interest and fiscal charges (990,072) - (990,072) - Total governmental activities (15,760,917) - (15,760,917) - Business-type activities:

Water - 4,517,377 4,517,377 - Wastewater - (3,152,722) (3,152,722) - Solid waste - (2,031,521) (2,031,521) - Drainage operations - (577,297) (577,297) - Municipal airport - (1,524,647) (1,524,647) - Municipal transit - 2,020,936 2,020,936 - Total business-type activities - (747,874) (747,874) - Total primary government (15,760,917) (747,874) (16,508,791) - Component unit:

South San Joaquin County Fire Authority - - - 2,510,096 Total component unit - - - 2,510,096 General Revenues and Transfers:

General revenues:

Taxes:

Property taxes 27,240,833 - 27,240,833 - Sales and use taxes 75,112,095 - 75,112,095 - Franchise taxes 4,265,613 - 4,265,613 - Transient occupancy tax 2,263,129 - 2,263,129 - Business license tax 1,036,747 - 1,036,747 - Transfer tax 2,314,759 - 2,314,759 - Total taxes 112,233,176 - 112,233,176 - Motor vehicle in lieu, unrestricted 113,909 - 113,909 - Investment income (loss) (8,948,933) (1,819,118) (10,768,051) - Other revenue 14,204,005 319,706 14,523,711 - Transfers (24,954,213) 24,954,213 - - Total general revenues and transfers 92,647,944 23,454,801 116,102,745 - Change in net position 76,887,027 22,706,927 99,593,954 2,510,096 Net Position:

Beginning of year 872,030,374 464,423,995 1,336,454,369 - End of year 948,917,401$ 487,130,922$ 1,436,048,323$ 2,510,096$ City of Tracy
Statement of Activities (Continued)
For the Year Ended June 30, 2022
Net (Expense) Revenue
and Changes in Net Position
See accompanying Notes to the Basic Financial Statements. 25 This page intentionally left blank.
26 FUND FINANCIAL STATEMENTS
27 This page intentionally left blank.
28 Governmental Funds Financial Statements
General Fund - This fund is used to account for all the general revenues of the City not specifically levied or collected for other City funds and the related expenditures. The General Fund accounts for all financial resources of a governmental unit which are not accounted for in another fund.

Housing Successor Special Revenue Fund - This fund is used to accounts for the revenues an d expenditures of the Housing Successor Agency. This fund was established to account for housing activities assumed by the City from the former Tracy Community Development Agency and revenues and expenditures related to the low and moderate income housing program.

Community Development Fees Special Revenue Fund - This fund is used to account for restricted revenues and specific activities of the Building, Engineering and Planning Divisions.

CARES/ARPA Grants Special Revenue Fund - This fund accounts for the grant revenues and expenditures received through the CARES act and the American Rescue Plan act.

General Project Capital Projects Fund - This fund is used to account for the construction of the capital project financed through transfers from the General Fund.

Tracy
Infrastructure Master Plans Capital Projects Fund - This fund is used to account for construction projects within Tracy Infrastructure Master Plan. The Tracy Infrastructure Master Plans were approved in 2012 and 2013 and cover all subsequent new development in areas of the City not covered by their own financing plan. Capital development fees are levied on developments in these areas and expenditures for various capital facilities to support the developments are accounted for in six functional categories.
29 This page intentionally left blank.
30 Housing Community
General Successor Development Fees CARES/ARPA
Fund Fund Fund Fund
ASSETS
Cash and investments 21,334,028 $ 4,741,865 $ 11,353,424 $ 13,625,818 $ Cash and investments with fiscal agents - - - - Accounts receivable, net 1,105,801 - 3,902,156 - Intergovernmental receivable 13,556,139 - - - Interest receivable 298,494 14,125 51,127 - Lease receivable 2,233,846 - - - Due from other funds 2,618,010 - - - Prepaid items - - - - Deposits - - - - Loans receivable - 12,493,567 - - Due from Fiduciary Funds - - - - Due from Component Unit 3,575,233 - - - Total assets 44,721,551$ 17,249,557 $ 15,306,707 $ 13,625,818 $

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 3,855,981 $ 118,157 $ 1,411,391 $ 777,868 $ Accrued payroll 743,662 - 312,910 12,081 Due to other funds - - - - Deposits payable 304,576 - 2,127,731 - Unearned revenues 694,616 - 3,568,963 11,331,669 Total liabilities 5,598,835 118,157 7,420,995 12,121,618

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 29,351 12,495,016 - - Related to leases 2,216,670 - - - Total deferred inflows of resources 2,246,021 12,495,016 - -

Fund Balances:

Nonspendable - - - - Restricted 3,174,977 4,636,384 7,885,712 1,504,200 Committed 14,505,000 - - - Assigned 11,435,117 - - - Unassigned (deficit) 7,761,601 - - - Total fund balances 36,876,695 4,636,384 7,885,712 1,504,200 Total liabilities, deferred inflows of
resources, and fund balances 44,721,551$ 17,249,557$ 15,306,707$ 13,625,818$ Major Funds
City of Tracy
Balance Sheet
Governmental Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 31 General Tracy Infrastructure Non-major Total
Capital Projects Master Plans Governmental Governmental Fund Fund Funds Funds
ASSETS
Cash and investments 80,183,510 $ 92,976,626 $ 117,582,778 $ 341,798,049 $ Cash and investments with fiscal agents - - 20,008,617 20,008,617 Accounts receivable, net 3,695,416 - 194,894 8,898,267 Intergovernmental receivable - - 2,383,771 15,939,910 Interest receivable - 274,002 326,154 963,902 Lease receivable - - - 2,233,846 Due from other funds - - - 2,618,010 Prepaid items - - - - Deposits - - 1,000,000 1,000,000 Loans receivable - - 1,738,309 14,231,876 Due from Fiduciary Funds - - 4,902,529 4,902,529 Due from Component Unit - - - 3,575,233 Total assets 83,878,926$ 93,250,628 $ 148,137,052 $ 416,170,239 $

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 3,448,804 $ 2,381,536 $ 697,839 $ 12,691,576$ Accrued payroll 6,122 - 108,843 1,183,618 Due to other funds - - 1,092,362 1,092,362 Deposits payable 681,713 - 10,349,968 13,463,988 Unearned revenues - - - 15,595,248 Total liabilities 4,136,639 2,381,536 12,249,012 44,026,792

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - 6,640,838 19,165,205 Related to leases - - - 2,216,670 Total deferred inflows of resources - - 6,640,838 21,381,875

Fund Balances:

Nonspendable - - - - Restricted - 90,869,092 129,496,350 237,566,715 Committed - - - 14,505,000 Assigned 79,742,287 - - 91,177,404 Unassigned (deficit) - - (249,148) 7,512,453 Total fund balances 79,742,287 90,869,092 129,247,202 350,761,572 Total liabilities, deferred inflows of
resources, and fund balances 83,878,926$ 93,250,628$ 148,137,052$ 416,170,239$ City of Tracy
Balance Sheet (Continued)
Governmental Funds
June 30, 2022
Major Funds
See accompanying Notes to the Basic Financial Statements. 32 Total Fund Balances - Total Governmental Funds 350,761,572$ Unavailable revenues reported on the Governmental Fund Financial Statements resulting from activities in which revenues were earned but were not available are reclassified as revenues in the Government-Wide Financial Statements. 19,165,205 Capital Assets used in the governmental activities were not financial resources and therefore were not reported in the Governmental Funds Balance Sheet.

Government-Wide Statement of Net Position 681,830,007
Less: capital assets reported in Internal Service Funds (10,657,810) Total capital assets 671,172,197
Long-term liabilities are not due and payable in the current period and therefore were not reported in the Governmental Funds Balance Sheet.

Amount reported in Government-Wide Statement of Net Position Sick leave conversion - due within one year (901,484)
Sick leave conversion - due in more than one year (3,605,936) Compensated absences - due within one yea
r (1,562,838)
Compensated absences - due in more than one year (2,472,052) Long-term debt - due within one year (1,621,425)
Long-term debt - due in more than one year (39,390,641) Less: amount reported in Internal Service Funds:

Compensated absences - due within one year 89,131
Compensated absences - due in more than one year 251,559 Total long-term liabilities (49,213,686)
Interest payable on long-ter m debt did not require current financial resources. Therefore, interest payable was not reported as a liability in the governmental funds. (117,567) Aggregate net pension liability and total OPEB liability used int he governmental activities were not financial resources and therefore were not reported in the Governmental Funds Balance Sheet.

Total OPEB liability (5,852,529)
Net pension liability (47,641,337)
Less: amount reported in Internal Service Funds:

Total OPEB liability 362,653
Net pension liability 1,917,152
Total OPEB/pension liability (51,214,061)
Deferred outflows of resources re lated to OPEB an d pensions are not ava ilable for current period and,t herefore, are deferred in the governmental funds or not recorded in the governmental funds.

Amount reported in Government-Wide Statement of Net Position Deferred outflows of resources related to OPEB 625,168
Deferred outflows of resources related to pensions 17,851,106 Less: amount reported in Internal Service Funds:

Deferred outflows of resources related to OPEB (38,738) Deferred outflows of resources related to pensions (703,292) Total deferred outflows of resources 17,734,244
Deferred inflows o f resources re lated to OPEB an d pensions are not ava ilable for current period and,t herefore, are deferred in the governmental funds or not recorded in the governmental funds.

Amount reported in Government-Wide Statement of Net Position Deferred inflows of resources related to OPEB (851,154) Deferred inflows of resources related to pensions (29,715,402) Less: amount reported in Internal Service Funds:

Deferred inflows of resources related to OPEB 52,742
Deferred inflows of resources related to pensions 1,234,712 Total deferred inflows of resources (29,279,102)
Internal service funds are used by management to charge the cost of fleet management, risk management, information technology, and building maintenance to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net position. 19,908,599 Net Position of Governmental Activitie
s 948,917,401$
Amounts reported for Governmental Activities in the Statement of Net Position were different because:

City of Tracy
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 33 Housing Community
General Successor Development Fees CARES/ARPA
Fund Fund Fund Fund
REVENUES:

Taxes 107,384,147$ -$ -$ -$ Licenses, permits and fees 4,149,346 - 9,770,405 - Fines and penalties 168,400 - - - Investment income (loss) (2,281,888) (16,730) (447,737) 34,516 Intergovernmental 2,360,007 - - 2,854,006 Charges for current services 12,485,210 - 7,485,271 - Special assessments 468,439 - - - Other revenue 7,097,109 16,018 23,966 - Total revenues 131,830,770 (712) 16,831,905 2,888,522

EXPENDITURES:

Current:

General government
Economic development 741,589 - - - General government 8,549,313 - - 14,796 Finance 5,285,544 - - - Non-departmental 1,904,536 - 819,077 831,346 Public safety
Police 39,796,986 - - 85,780 Fire 16,402,214 - - 45,851 Public ways and facilities
Development and engineering 212,389 - 11,121,085 16,870 Public works 8,216,190 - - - Community development
Parks and community services 4,041,955 - - - Capital outlay 13,558 901,766 - 1,890,330 Debt service:

Principal 158,533 - 11,313 - Interest and fiscal charges 720 - 55 - Total expenditures 85,323,527 901,766 11,951,530 2,884,973

REVENUES OVER
(UNDER) EXPENDITURES 46,507,243 (902,478) 4,880,375 3,549 OTHER FINANCING SOURCES (USES):

Proceeds from issuance of long-term debt - - - - Premium on bond issuance - - - - Transfers in 70,147 634,910 2,109,068 472,799 Transfers out (43,730,949) - - - Total other financing sources (uses) (43,660,802) 634,910 2,109,068 472,799 NET CHANGE IN FUND BALANCES 2,846,441 (267,568) 6,989,443 476,348 FUND BALANCES:

Beginning of year 34,030,254 4,903,952 896,269 1,027,852 End of year 36,876,695$ 4,636,384$ 7,885,712$ 1,504,200$ Major Funds
For the Year Ended June 30, 2022
Governmental Funds
Statement of Revenues, Expenditures, and Changes in Fund Balances City of Tracy
See accompanying Notes to the Basic Financial Statements. 34 General Tracy Infrastructure Non-major Total
Capital Projects Master Plans Governmental Governmental Fund Fund Funds Funds
REVENUES:

Taxes -$ -$ 2,780,862$ 110,165,009$ Licenses, permits and fees - - 164,568 14,084,319 Fines and penalties - - 86,143 254,543 Investment income (loss) 287,969 (2,237,354) (3,419,667) (8,080,891) Intergovernmental - - 6,248,422 11,462,435 Charges for current services - 35,268,383 14,674,946 69,913,810 Special assessments - - 4,647,754 5,116,193 Other revenue 3,695,416 - 289,571 11,122,080 Total revenues 3,983,385 33,031,029 25,472,599 214,037,498

EXPENDITURES:

Current:

General government
Economic development - - 295,868 1,037,457 General government - - - 8,564,109 Finance - - - 5,285,544 Non-departmental - - 621,061 4,176,020 Public safety
Police - - 210,865 40,093,631 Fire - - - 16,448,065 Public ways and facilities
Development and engineering - - 1,062,600 12,412,944 Public works - - 5,128,957 13,345,147 Community development
Parks and community services - - - 4,041,955 Capital outlay 4,906,096
1,424,355 6,801,259 15,937,364
Debt service:

Principal - - 595,000 764,846 Interest and fiscal charges - - 1,039,367 1,040,142 Total expenditures 4,906,096 1,424,355 15,754,977 123,147,224

REVENUES OVER
(UNDER) EXPENDITURES (922,711) 31,606,674 9,717,622 90,890,274 OTHER FINANCING SOURCES (USES):

Proceeds from issuance of long-term debt - - 18,275,000 18,275,000 Premium on bond issuance - - 2,051,917 2,051,917 Transfers in 42,157,239 10,276,042 62,486,118 118,206,323 Transfers out - (9,338,756) (91,338,837) (144,408,542) Total other financing sources (uses) 42,157,239 937,286 (8,525,802) (5,875,302) NET CHANGE IN FUND BALANCES 41,234,528 32,543,960 1,191,820 85,014,972 FUND BALANCES:

Beginning of year 38,507,759 58,325,132 128,055,382 265,746,600 End of year 79,742,287$ 90,869,092$ 129,247,202$ 350,761,572$ City of Tracy
Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Governmental Funds
For the Year Ended June 30, 2022
Major Funds
See accompanying Notes to the Basic Financial Statements. 35 Net Change in Fund Balances - Total Governmental Funds 85,014,972$ Governmental funds reported capital outlay as expenditures. However, in the Government-Wide Statement of Activities, the cost of those assets was allocated over their estimated useful lives as depreciation and amortization expenses. This is the amount of capital assets recorded in the current period (net of $2,566,125 added in internal service funds) ($2,141,072 of the governmental fund capital outlay balance were for repairs and maintenance expenditures). 13,796,292 In the Government-Wide Statement of Activities, donated assets are reported as a capital contribution. 7,400,467 Depreciation and amortization expense on capital assets was reported in the Government-Wide Statement of Activities, but they did not require the use of current financial resources. Therefore, depreciation and amortization expense, net of internal service funds of $1,618,446, was not reported as expenditures in the Governmental Funds. (8,657,241) The net effect of various miscellaneous transactions involving capital assets (i.e. sales, trade-ins, and donations) decreased net position (net of $1,897,433 in net capital asset retirements in internal service funds). (4,902,255) Issuance of long-term liabilities provides current financial resources to governmental funds, but the issuance increased long- term liabilities in the Government-Wide Statement of Net Position.

Bonds payable (18,275,000)
Premium on bonds payable (2,051,917)
Repayment of long-term liabilities was an expenditures in governmental funds, but the repayment reduced long-term liabilities in the Government-Wide Statement of Net Position
Principal payment of long-term debt 764,846
Amortization of bond premiu
m 46,069
Interest expense on long-term debt was reported in the Government-Wide Statement of Activities, but it did not require the use of current financial resources. This amount represented the changes in accrued interest from prior year. 4,001 Sick leave conversion expenses reported in the Government-Wide Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. (580,584) Compensated absences expenses reported in the Government-Wide Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds, net of $22,163 in internal service funds. 589,297
Revenues in the Government-Wide Statement of Activities that do not provide current financial resources and are not reported as revenue in the governmental funds. (261,361)
Certain pension expenses reported in the Government-Wide Statement of Activities do not require the use of current financial resources and therefore, are not reported as expenditures in governmental funds.

Changes in pension related deferred outflows of resources, net of $92,509 in internal service funds (5,642,871) Changes in net pension liabilities, net of $1,502,938 in internal service funds 39,195,111 Changes in pension related deferred inflows of resources, net of $1,222,088 in internal service funds (27,963,829) Certain OPEB expenses reported in the Government-Wide Statement of Activities do not require the use of current financial resources and therefore, are not reported as expenditures in governmental funds.

Changes in OPEB related deferred outflows of resources, net of $22,621 in internal service funds 134,905 Changes in total OPEB liabilities, net of $154,100 in internal service funds 353,207 Changes in OPEB related deferred inflows of resources, net of $14,551 in internal service funds 271,589 The internal service funds are used by management to charge the costs of fleet maintenance, facilities maintenance, and technology to individual funds. The net revenue of certain activities of internal service funds is reported with governmental activities. (2,348,671)
Chan
ge in Net Position of Governmental Activities 76,887,027$ Amounts reported for Governmental Activities in the Statement of Net Position were different because:

City of Tracy
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Position For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 36 Proprietary Funds Financial Statements
Water Fund - This fund is used to account for provision of water services to residents of the City. All activities necessary to provide such services are accounted for in this fund, including administrative, operations, capital improvements, maintenance, financing, and related debt service, and billing and collection.

Wastewater Fund - This fund is used to account for the activities associated with operating an d maintaining the City’s sewer and surface drainage system. All activities necessary to provide such services are accounted for in this fund including administration, operations, capital improvements, maintenance, financing, and related debt service, and billing and collection.

Solid Waste Fund - This fund is used to account for the provision of refuse collection services to residents of the City, accomplished through a franchised operator. This fund is also used to account for the activities of the City’s recycling program.

Drainage Fund - This fund is used to account for the activities of the City’s storm drainage operations are accounted for in this fund.

Internal Service Funds - These funds are used to provide goods and services by one department or agency to other departments or agencies of the City on a cost reimbursement basis. 37 Water Wastewate r Solid Waste Drainage
Fund Fund Fund Fund
ASSETS
Current assets:

Cash and investments 16,651,355 $ 37,490,846 $ 10,694,950 $ 357,613 $ Cash and investments with fiscal agents - 206 - - Accounts receivable, net 4,701,571 3,124,508 5,332,950 114,327 Intergovernmental receivable - - - - Interest receivable 51,539 110,579 33,923 1,065 Lease receivable - due within one year - 162,567 - - Prepaid items - - - - Inventories 570,994 - - - Total current assets 21,975,459 40,888,706 16,061,823 473,005 Noncurrent assets:

Lease receivable - due in more than one year - 1,625,899 - - Advances from other funds - 1,500,000 - - Capital assets:

Non-depreciable 1,672,953 51,029,386 - 13,252,602 Depreciable, net 190,761,035 124,841,259 - 37,690,767 Total capital assets, net 192,433,988 175,870,645 - 50,943,369 Total noncurrent assets 192,433,988 178,996,544 - 50,943,369 Total assets 214,409,447 219,885,250 16,061,823 51,416,374

DEFERRED OUTFLOW OF RESOURCES
Related to OPEB 47,858 55,998 13,340 3,090 Related to pensions 867,722 1,014,278 241,282 55,406 Total deferred outflow of resources 915,580 1,070,276 254,622 58,496

LIABILITIES
Current liabilities:

Accounts payable 968,602 3,130,041 3,072,848 3,062 Accrued payroll 210,297 261,152 55,834 12,230 Due to other funds - - - - Interest payable - 83,000 - - Deposits payable 549,350 500 - 653,633 Unearned revenue - - 160,737 - Compensated absences - due within one year 109,529 128,417 30,924 7,293 Long-term debt - due within one year 1,113,312 955,000 - - Total current liabilities 2,951,090 4,558,110 3,320,343 676,218 Noncurrent liabilities:

Advances from other funds 1,500,000 - - - Net OPEB liability 448,024 524,223 124,882 28,928 Net pension liability 2,365,379 2,764,887 657,727 151,033 Compensated absences - due in more than one year 218,638 243,916 55,675 20,906 Long term debt - due in more than one year 5,343,212 19,305,000 - - Total noncurrent liabilities 9,875,253 22,838,026 838,284 200,867 Total liabilities 12,826,343 27,396,136 4,158,627 877,085

DEFERRED INFLOWS OF RESOURCES
Related to leases - 1,763,466 - - Related to OPEB 65,158 76,240 18,162 4,207 Related to pensions 1,523,387 1,780,684 423,599 97,271 Total deferred inflows of resources 1,588,545 3,620,390 441,761 101,478

NET POSITION
Net investment in capital assets 185,977,464 155,610,645 - 50,943,369 Restricted - 206 - - Unrestricted (deficit) 14,932,675 34,328,149 11,716,057 (447,062) Total net position 200,910,139$ 189,939,000 $ 11,716,057 $ 50,496,307 $ Major Funds
City of Tracy
Statement of Net Position
Proprietary Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 38 Governmental
Activities
Non-major Internal
Funds Total Service Funds
ASSETS
Current assets:

Cash and investments - $ 65,194,764$ 12,780,762$ Cash and investments with fiscal agents - 206 - Accounts receivable, net 171,775 13,445,131 - Intergovernmental receivable 8,226,188 8,226,188 - Interest receivable 527 197,633 37,570 Lease receivable - due within one year 93,748 256,315 - Prepaid items - - 65,532 Inventories - 570,994 - Total current assets 8,492,238 87,891,231 12,883,864 Noncurrent assets:

Lease receivable - due in more than one year 1,942,111 3,568,010 - Advances from other funds - 1,500,000 - Capital assets:

Non-depreciable 1,444,755 67,399,696 118,147 Depreciable, net 27,076,417 380,369,478 10,539,663 Total capital assets, net 28,521,172 447,769,174 10,657,810 Total noncurrent assets 30,463,283 452,837,184 10,657,810 Total assets 38,955,521 540,728,415 23,541,674

DEFERRED OUTFLOW OF RESOURCES
Related to OPEB 8,215 128,501 38,738 Related to pensions 148,344 2,327,032 703,292 Total deferred outflow of resources 156,559 2,455,533 742,030

LIABILITIES
Current liabilities:

Accounts payable 542,909 7,717,462 305,448 Accrued payroll 37,022 576,535 154,950 Due to other funds 1,525,648 1,525,648 - Interest payable - 83,000 - Deposits payable 53,711 1,257,194 6,758 Unearned revenue 60,539 221,276 - Compensated absences - due within one year 20,529 296,692 89,131 Long-term debt - due within one year - 2,068,312 - Total current liabilities 2,240,358 13,746,119 556,287 Noncurrent liabilities:

Advances from other funds - 1,500,000 - Net OPEB liability 76,905 1,202,962 362,653 Net pension liability 404,380 6,343,406 1,917,152 Compensated absences - due in more than one year 30,240 569,375 251,559 Long term debt - due in more than one year - 24,648,212 - Total noncurrent liabilities 511,525 34,263,955 2,531,364 Total liabilities 2,751,883 48,010,074 3,087,651

DEFERRED INFLOWS OF RESOURCES
Related to leases 2,019,158 3,782,624 - Related to OPEB 11,185 174,952 52,742 Related to pensions 260,435 4,085,376 1,234,712 Total deferred inflows of resources 2,290,778 8,042,952 1,287,454

NET POSITION
Net investment in capital assets 28,521,172 421,052,650 10,657,810 Restricted - 206 - Unrestricted (deficit) 5,548,247 66,078,066 9,250,789 Total net position 34,069,419$ 487,130,922$ 19,908,599$ City of Tracy
Statement of Net Position (Continued)
Proprietary Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 39 Water Wastewater Solid Waste Drainage
Fund Fund Fund Fund
OPERATING REVENUES:

Sales and charges for services 22,407,181$ 14,973,113$ 25,757,693$ 730,691$ Other operating revenue 3,094 188,108 - - Total operating revenues 22,410,275 15,161,221 25,757,693 730,691 OPERATING EXPENSES:

Purchase of water 5,893,138 - - - Maintenance and operation 10,846,108 13,381,342 26,431,145 343,764 Administration 2,013,598 1,955,795 1,986,778 55,040 Insurance costs and claims - - - - Depreciation 4,655,818 5,888,177 - 1,715,107 Total operating expenses 23,408,662 21,225,314 28,417,923 2,113,911

OPERATING INCOME (LOSS) (998,387) (6,064,093) (2,660,230) (1,383,220) NONOPERATING REVENUES (EXPENSES):

Operating grants 706,680 495,735 - - Capital grants - - 628,709 17,749 Investment income (loss) (449,911) (1,088,780) (312,596) (9,357) Interest expense (186,671) (979,083) - - Gain (loss) on sale of capital assets (1,290,542) (1,230,588) - - Total nonoperating revenues (expenses) (1,220,444) (2,802,716) 316,113 8,392

INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS (2,218,831) (8,866,809) (2,344,117) (1,374,828)

CAPITAL CONTRIBUTIONS AND TRANSFERS
Capital contributions 6,289,391 4,813,415 - 788,174

Transfers in 30,214 24,528,062 - 423 Total capital contributions and transfers 6,319,605 29,341,477 - 788,597 Changes in net position 4,100,774 20,474,668 (2,344,117) (586,231) NET POSITION:

Beginning of year 196,809,365 169,464,332 14,060,174 51,082,538 End of year 200,910,139$ 189,939,000$ 11,716,057$ 50,496,307$ Major Funds
City of Tracy
Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 40 Governmental
Activities
Non-major Internal
Funds Total Service Funds
OPERATING REVENUES:

Sales and charges for services 8,153,784$ 72,022,462$ 13,092,240$ Other operating revenue 128,504 319,706 3,502,681 Total operating revenues 8,282,288 72,342,168 16,594,921 OPERATING EXPENSES:

Purchase of water - 5,893,138 - Maintenance and operation 5,574,890 56,577,249 8,924,011 Administration 497,093 6,508,304 1,084,051 Insurance costs and claims - - 6,427,150 Depreciation 2,239,719 14,498,821 1,618,446 Total operating expenses 8,311,702 83,477,512 18,053,658

OPERATING INCOME (LOSS) (29,414) (11,135,344) (1,458,737) NONOPERATING REVENUES (EXPENSES):

Operating grants 485,176 1,687,591 - Capital grants 165,927 812,385 - Investment income (loss) 41,526 (1,819,118) (346,469) Interest expense - (1,165,754) - Gain (loss) on sale of capital assets 3,104 (2,518,026) (1,873,560) Total nonoperating revenues (expenses) 695,733 (3,002,922) (2,220,029)

INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS 666,319 (14,138,266) (3,678,766)

CAPITAL CONTRIBUTIONS AND TRANSFERS
Capital contributions - 11,890,980 82,089 Transfers in 395,514 24,954,213 1,248,006 Total capital contributions and transfers 395,514 36,845,193 1,330,095 Changes in net position 1,061,833 22,706,927 (2,348,671)

NET POSITION:

Beginning of year 33,007,586 464,423,995 22,257,270 End of year 34,069,419$ 487,130,922$ 19,908,599$ For the Year Ended June 30, 2022
City of Tracy
Statement of Revenues, Expenses, and Changes in Net Position (Continued) Proprietary Funds
See accompanying Notes to the Basic Financial Statements. 41 Drainage
Water Sewe r Solid Waste Operations
Fund Fund Fund Fund
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers 22,617,526$ 15,206,401$ 25,624,806$ 701,530$ Cash payments to suppliers for goods and services (18,750,088) (12,962,068) (27,178,175) (407,165) Cash payments to employees for services 79,979 (238,856) 135,979 13 ,876 Other operating revenues and expenses 3,094 188 ,108 - - Net cash provided by (used in) operating activities 3,950,511 2,193,585 (1,417,390) 308,241 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Operating grants 706,680 495,735 - - Borrowing from other funds - 506 ,600 - - Repayment to other funds (506,600) - - - Transfers from other funds 30,214 24,528,062 - 423 Net cash provided by (used in) noncapital financing activities 230,294 25,530,397 - 423

CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:

Capital grants - - 628 ,709 17 ,749 Capital contributions from developers and others 6,289,391 4 ,813,415 - 788 ,174 Acquisition of capital assets (2,064,238) (18,758,314) - (979,033) Proceeds from the sale of assets (1,290,542) - - - Principal payment of long-term debt (1,087,711) (915,000) - - Interest paid on debt (186,671) (979,083) - - Net cash provided by (used in) capital and related financing activities 1,660,229 (15,838,982) 628,709 (173,110) CASH FLOWS FROM INVESTING ACTIVITIES:

Interest from investments (478,798) (1,133,347) (321,829) (9,956) Net cash provided by investing activities (478,798) (1,133,347) (321,829) (9,956) Net change in cash and cash equivalents 5,362,236 10,751,653 (1,110,510) 125,598 CASH AND CASH EQUIVALENTS:

Beginning of year 11,289,119 26,739,399 11,805,460 232,015 End of year 16,651,355$ 37,491,052 $ 10,694,950 $ 357,613 $

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

Cash and cash investments 16,651,355 $ 37,490,846 $ 10,694,950 $ 357,613 $ Restricted cash and investments - 206 - - Total cash and cash equivalents 16,651,355$ 37,491,052 $ 10,694,950 $ 357,613 $ (Continued)
Major Funds
City of Tracy
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 42 Water Wastewate r Solid Waste Drainage
Fund Fund Fund Fund

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

Operating income (loss) (998,387)$ (6,064,093)$ (2,660,230)$ (1,383,220)$ Adjustments to reconcile operating (loss) to net
cash provided by (used in) operating activities:

Depreciation 4,655,818 5 ,888,177 - 1 ,715,107 Changes in operating assets and liabilities, and
deferred outflows and inflows of resources:

Accounts receivable, net 367,107 258 ,288 (263,934) 6,175 Intergovernmental receivable - - - - Lease receivable - 163 ,108 - - Prepaid items - - - - Deferred outflows - OPEB related (39,444) (47,146) (11,377) (2,569) Deferred outflows - pension related 134,318 240 ,432 9 ,228 7 ,222 Accounts payable 2,756 2 ,375,069 1 ,239,748 (8,361) Accrued payroll 34,557 61,561 12,785 766 Deposits payable (156,762) - - (35,336) Unearned revenue - - 131 ,047 - Compensated absences (252) (91,980) 11,619 5,150 Net OPEB liability 339,145 409 ,672 99 ,472 22,178 Net pension liability (1,941,058) (2,627,440) (418,882) (118,119) Deferred inflows - lease related - (188,108) - - Deferred inflows - OPEB related 45,220 55,263 13,509 2,970 Deferred inflows - pension related 1,507,493 1 ,760,782 419 ,625 96 ,278 Total adjustments 4,948,898 8,257,678 1,242,840 1,691,461 Net cash provided by (used in) operating activities 3,950,511$ 2,193,585 $ (1,417,390)$ 308,241$ (Continued)
For the Year Ended June 30, 2022
Major Funds
City of Tracy
Statement of Cash Flows (Continued)
Proprietary Funds
See accompanying Notes to the Basic Financial Statements. 43 Governmental
Activities
Non-major Internal
Funds Total Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers 6,147,151$ 70 ,297,414$ 13,160,240$ Cash payments to suppliers for goods and services (5,327,635) (64,625,131) (16,470,913) Cash payments to employees for services (484,838) (493,860) (38,786) Other operating revenues and expenses 128,504 319 ,706 3 ,502,681 -Net cash provided by (used in) operating activities 463,182 5,498,129 153,222 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Operating grants 485,176 1,687,591 -
Borrowing from other funds - 506 ,600 - Repayment to other funds (1,039,721) (1,546,321) - Transfers from other funds 395,514 24 ,954,213 1,248,006 Net cash provided by (used in) noncapital financing activities (159,031) 25,602,083 1,248,006

CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:

Capital grants 165,927 812 ,385 -
Capital contributions from developers and others - 11 ,890,980 82,089 Acquisition of capital assets (511,077) (22,312,662) (2,542,252) Proceeds from the sale of assets - (1,290,542) - Principal payment of long-term debt - (2,002,711) - Interest paid on debt - (1,165,754) - Net cash provided by (used in) capital and related financing activities (345,150) (14,068,304) (2,460,163) CASH FLOWS FROM INVESTING ACTIVITIES:

Interest from investments 40,999
(1,902,931) (356,128)
Net cash provided by investing activities 40,999 (1,902,931) (356,128) Net change in cash and cash equivalents - 15,128,977 (1,415,063) CASH AND CASH EQUIVALENTS:

Beginning of year - 50,065,993 14,195,825 End of year -$ 65,194,970$ 12,780,762 $

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

Cash and cash investments -$ 65,194,764$ 12,780,762 $ Restricted cash and investments - 206 - Total cash and cash equivalents -$ 65,194,970$ 12,780,762 $ (Continued)
Statement of Cash Flows (Continued)
City of Tracy
Proprietary Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 44 Governmental
Activities
Non-major Internal
Funds Total Service Funds

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

Operating income (loss) (29,414)$ (11,135,344)$ (1,458,737)$ Adjustments to reconcile operating (loss) to net
cash provided by (used in) operating activities:

Depreciation 2,239,719 14 ,498,821 1,618,446
Changes in operating assets and liabilities, and
deferred outflows and inflows of resources:

Accounts receivable, net 6,238,496 6 ,606,132 68 ,000 Intergovernmental receivable (8,226,188) (8,226,188) - Lease receivable 109,228 272 ,336 -
Prepaid items - - (65,532) Deferred outflows - OPEB related (4,843) (105,379) (22,621) Deferred outflows - pension related 15,783 406,983 92 ,509 Accounts payable 247,255 3 ,856,467 29 ,831 Accrued payroll 10,230 119,899 25 ,688 Deposits payable (1,072) (193,170) -
Unearned revenue (1,168) 129,879 -
Compensated absences (2,228) (77,691) (22,163) Net OPEB liability 33,272 903,739 154 ,100 Net pension liability (300,985) (5,406,484) (1,502,938) Deferred inflows - lease related (125,929) (314,037) Deferred inflows - OPEB related 3,195 120 ,157 14 ,551 Deferred inflows - pension related 257,831 4 ,042,009 1 ,222,088 Total adjustments 492,596 16,633,473 1,611,959 Net cash provided by (used in) operating activities 463,182$ 5,498,129 $ 153,222 $ (Concluded)
For the Year Ended June 30, 2022
City of Tracy
Statement of Cash Flows (Continued)
Proprietary Funds
See accompanying Notes to the Basic Financial Statements. 45 This page intentionally left blank.
46 Fiduciary Funds Financial Statements
Custodial funds - These funds are used to report fiduciary activities that are not required to be reported in pension (and other employee benefit) trust funds, investment trust funds, or private purpose trust funds. This includes various Community Facilities Districts and Assessments Districts.

Private Purpose Funds - These funds account for resources of all other trust arrangements in which principal and income benefit individuals, private organizations, or other governments (i.e. unclaimed property/escheat property). This includes the Successor Agency Private Purpose Trust Fund. 47 This page intentionally left blank.
48 Successor Agency
Custodial Private Pur pose
Funds Trust Fund
ASSETS
Cash and investments 6,617,351$ 5,943,373 $
Cash and investments with fiscal agent 45,386,329 712 Total assets 52,003,680 5,944,085

DEFERRED OUTFLOWS

OF RESOURCES
Deferred loss on refunding - 1,743,710 Total deferred outflows of resources - 1,743,710

LIABILITIES
Accounts payable 6,410 -
Interest payable - 531,167
Deposits payable 298,184 -
Due to City - 4,902,529
Long-term debt - due within one year - 1,660,000 Long-term debt - due in more than one year - 28,066,226 Total liabilities 304,594 35,159,922

NET POSITION (DEFICIT)
Held for:

Individuals, organizations, and other governments 51,699,086 - Dissolution of RDA - (27,472,127) Total net position (deficit) 51,699,086$ (27,472,127)$ City of Tracy
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 49 Successor Agency
Custodial Private Pur pose
Funds Trust Fund
ADDITIONS:

Fee collections for other governments -$ 304,686$ Special assessments for other governments 15,615,215 - Investment income (loss) (1,668) (22,178) RDA property tax trust fund distribution - 2,965,206 Proceeds from debt issuance 21,348,629 -
Total additions 36,962,176 3,247,714
DEDUCTIONS:

Administration 255,967 -
Payments on conduit bonds - principal 8,065,000 - Payments on conduit bonds - interest 6,771,433 - Project payments 27,685,370 13,451
Transfers to City - 289,571
Interest expense - 1,091,039
Total deductions 42,840,370 1,394,061
Change in net position (5,878,194) 1,853,653
NET POSITION (DEFICIT):

Beginning of year 57,577,280 (29,325,780)
End of year 51,699,086$ (27,472,127)$
City of Tracy
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 50 51

NOTES TO THE BASIC FINANCIAL STATEMENTS

52 This page intentionally left blank.

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

53 Note 1 – Summary of Significant Accounting Policies ............................................................................................. 57

A. Financial Reporting Entity .................................................................................................... .................... 57 B. Basis of Presentation, Accounting and Measurement Focus ..................................................................... 58 C. Deferred Outflows and Inflows of Resources ........................................................................................... 63 D. Cash, Cash Equivalents and Investments .................................................................................................. 63 E. Cash and Investments with Fiscal Agents ................................................................................................. 64 F. Receivables ................................................................................................................................................ 64 G. Interfund Transactions ............................................................................................................................... 64 H. Inventories and Prepaid Items ................................................................................................................... 64 I. Leases ........................................................................................................................................................ 65 J. Capital Assets ............................................................................................................................................ 66 K. Long-Term Debt ........................................................................................................................................ 67 L. Compensated Absences/Sick Leave Conversion ....................................................................................... 68 M. Pension Plans ............................................................................................................................................. 69 N. Other Postemployment Benefits (OPEB) .................................................................................................. 69 O. Fund Balances ................................................................................................................. .......................... 70 P. Net Position ............................................................................................................................................... 72 Q. Revenue Recognition for Utility Funds ..................................................................................................... 72 R. Property Tax .............................................................................................................................................. 73 S. Use of Accounting Estimates ................................................................................................... ................. 74 T. Implementation of New GASB Pronouncements for the Year Ended June 30, 2022 ............................... 74 U. Upcoming Government Accounting Standards Implementations ............................................................. 75

Note 2 – Cash and Investments .................................................................................................................................. 76

A. Demand Deposits ....................................................................................................................................... 77 B. Investments Authorized b y the California Government Code and the City’s Investment Policy ............................................................................................... 77 C. Investments Authorized by Debt Agreements ........................................................................................... 78 D. Fair Value Measurement ........................................................................................................................... 78 E. Risk Disclosure .......................................................................................................................................... 79 F. Investment in State Investment Pool ......................................................................................................... 81 G. California Asset Management Program (CAMP) .................................................................................... . 81

Note 3 – Loans Receivable .......................................................................................................................................... 82

A. Summary of Loans Receivable and Unavailable Revenue ........................................................................ 82 B. Housing Successor Loans .......................................................................................................................... 82 C. Development Loan .................................................................................................................................... 83 D. Tracy Mall Partners, L.P. Loan ................................................................................................................. 83

Note 4 – Lease Receivable...................................................................................................... ..................................... 84

A. Governmental Activities ............................................................................................................................ 84 B. Business-Type Activities ........................................................................................................................... 85

Note 5 – Deposits Receivable ...................................................................................................................................... 86

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

54 Note 6 – Interfund Receivables, Payables, and Transfers ....................................................................................... 87

A. Due To / From Other Funds ...................................................................................................................... 87 B. Long-Term Advances ................................................................................................................................ 87 C. Transfers .................................................................................................................................................... 88

Note 7 – Due from Fiduciary Funds .......................................................................................................................... 89

A. Successor Agency Reimbursement Agreement ......................................................................................... 89

Note 8– Capital Assets ................................................................................................................................................ 90

A. Governmental Activities ............................................................................................................................ 90 B. Business-Type Activities ........................................................................................................................... 91 C. Component Unit ........................................................................................................................................ 92

Note 9 – Long-Term Liabilities .................................................................................................................................. 92

A. Summary ................................................................................................................................................... 92 B. Governmental Activities ............................................................................................................................ 93 C. Business-Type Activities ........................................................................................................................... 95 D. Fiduciary Fund Private Purpose Trust Funds - Successor Agency to the Former Community Development Agency of the City of Tracy ......................................................................................... 96

Note 10 – Special Assessment Debt with No City Commitment ..................................................................... ........ 98

Note 11 – Sick Leave Conversion ............................................................................................................................... 99

A. Governmental Activities ............................................................................................................................ 99

Note 12 – Compensated Absences .............................................................................................................................. 99

A. Governmental Activities ............................................................................................................................ 99 B. Business-Type Activities ........................................................................................................................... 99

Note 13 – Risk Management ..................................................................................................................................... 100

A. Coverage .................................................................................................................................................. 100 B. Liability for Uninsured Claims ................................................................................................................ 101

Note 14 – Pension Plans ............................................................................................................................................ 102

A. Summary ................................................................................................................................................. 102 B. City .......................................................................................................................................................... 103 C. Component Unit ...................................................................................................................................... 109

Note 15 – Other Postemployment Benefits ............................................................................................................. 110

A. Summary ................................................................................................................................................. 110 B. General Information about OPEB ........................................................................................................... 110 C. Total OPEB Liability, OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB ...................................................................................................... 112 City of Tracy
Index of Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2022

55 Note 16 – Deferred Compensation Plan .................................................................................................................. 114

Note 17 – Other Required Disclosures .................................................................................................................... 115

A. Deficit Fund Balances/Net Position ............................................................................................ ............ 115 B. Expenditures Exceeding Appropriations ................................................................................................. 115

Note 18 – Fund Balance Classification .................................................................................................................... 116

Note 19 – Net Investment in Capital Assets ............................................................................................................ 116

Note 20 – South San Joaquin Fire Authority Joint Powers Agreement ............................................................... 117

Note 21 – Community Development Agency Dissolution ...................................................................................... 117

Note 22 – Commitments and Contingencies ........................................................................................................... 119

A. Litigation ................................................................................................................................................. 119 B. Contingent Liabilities .............................................................................................................................. 119 C. Federal and State Grants .......................................................................................................................... 119 D. Revenue Limitations Imposed by California Proposition 218 ................................................................ 119 E. Measure V Sales Tax Revenues .............................................................................................................. 119 F. Location Agreements ............................................................................................................................... 120 G. Encumbrances and Construction Commitments ...................................................................................... 120 H. Housing Successor Excess Surplus ......................................................................................................... 120 I. State Approval of Enforceable Obligations ............................................................................................. 121

56 This page intentionally left blank.

City of Tracy
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022

57 Note 1 – Summary of Significant Accounting Policies

The basic financial statements of the City of Tracy, Califor nia (the “City”) have been pr epared in conformity with Accounting Principles Generally Accepted in the United St ates of America (U.S. GAAP) as applied to governmental agencies. The Governmental Accounting Standards Boar d (GASB) is the accepted standard setting body for establishing governmental accounting and fi nancial reporting standards in the United States. The more significant of the City’s accounting policies are described below.

A. Financial Reporting Entity

The City was incorporated on July 10, 1910 under the genera l laws of the State of California. The City operates under a Council-Manager form of government and provides the following services: public safety (police and fire), highways and streets, sanitation, culture-recreation, public improvements, pl anning and zoning, general administration services, and redevelopment.

Blended Component Units

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

Blended component units, although legally separate entities, are, in subs tance part of the government’s operation and so data from these units are combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the combined financial statements to emphasize that they are legally separate from the government.

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

The accompanying basic financial statements of the City include the financial activities of the City as well as the Tracy Operating Partnership Joint Powers Authority, Tr acy Public Financing Authority, and Tracy Industrial Development Authority, which are controlled by and dependent on the City. While they are separate legal entities, City Council serves in separate sessions as the governing bo dy of the Tracy Operating Partnership Joint Powers Authority, the Tracy Public Financing Authority, and the Tracy Industrial Development Authority; their financial activities are integral to those of the City. The financial activities of all three entities have been aggregated and merged (termed "blended") with those of the City in the accompanying financial statements. Further details about each entity follow:

The Tracy Operating Partnership Joint Powers Authority (TOP) , established in October 1995, is a separate governmental entity whose purpose is to assist in the financing and refinancing of certain redevelopment activities of the former Community Development Agency and certa in programs and projects of the City. The TOP is administered by a Governing Board who se members are the City Council of the City of Tracy, and the City also performs all accounting and administrative functions for the TOP. The TOP does not issue separate financial statements.

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

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

A. Financial Reporting Entity (Continued)

The Tracy Public Financing Authority (TPFA), established in May 2013, is a separate government entity whose purpose is to assist the City and the former South County Fire Authority (SCFA) with the financing or refinancing of certain public capital facilities within the City. The SCFA was dissolved on June 30, 2018 and was replaced as a member of the TPFA by the Tracy Industrial Development Authority. The TPFA has the power to purchase bonds issued by any local agency at public, or negotiated sale, and may sell such bonds to public or private purchasers at public, or negotiated sale. The TPFA is cont rolled by the City and has the same governing body as the City, which also performs all accounting and administrative functions for the TPFA. The TPFA does not issue separate financial statements.

The Tracy Industrial Development Authority (TIDA) , established in August 2018, is a separate governmental entity whose purpose is to implement the provisions of the California Industrial Development Financing Act. The TIDA is administered by a Governing Board whose members are the City Council of the City, and the City also performs all accounting and administrative functions for the TIDA. The TIDA does not issue separate financial statements.

Discretely Presented Component Units

A discretely presented component unit is reported in a separate column in the go vernment-wide financial statements to emphasize that it is legally separate from the City.

The South San Joaquin County Fire Authority (SSJCFA) was created in March 2018 by a Joint Exercise of Powers Agreement between the City and the Tracy Rural Fi re Protection District to provide fire administration, fire prevention and fire training and safety within the ju risdictional area of the SSJCFA. The jurisdictional area effective as of June 30, 2019 includes the City of Tracy and the Tracy Rural Fire Protection District. The SSJCFA is governed by a Board comprised of two members each from the City and the District. The City and District lease all facilities to be used in providing fire protection services to the SSJCFA and the City performs certain accounting and administrative functions for the SSJCFA. The SSJCFA i ssues separate financial statements that are available from the SSJCFA, 835 N. Central Avenue, Tracy, CA 95376. Further information regarding the SSJCFA is discussed in Note 20.

B. Basis of Presentation, Accounting and Measurement Focus

The accounts of the City are organized on the basis of fu nds, each of which is cons idered a separate accounting entity. The operations of each fund are accounted for by pr oviding a separate set of self-balancing accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity, revenues and expenditures or expenses, as appropriate. Fund acc ounting segregates funds according to their intended purpose and is used to aid management in demonstrati ng compliance with finance-re lated legal and contractual provisions. The minimum number of funds is maintained in accordance with legal and managerial requirements.

Government-Wide Financial Statements

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

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

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

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

Government-Wide Financial Statements (Continued)

These financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets and lia bilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accomp anying Statement of Net Position. The Statement of Activities presents changes in net position.

Under the accrual basis of accounting, revenues are recogni zed in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities, and deferred inflows of resources resulting from exchange and exchange-like transactions are recognized when the exchange takes place.

Revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities and deferred inflows of resources resulting from non-exchange transactions are recognized in accordance with the requirements of U.S.

GAAP.

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

 Charges for services
 Operating grants and contributions
 Capital grants and contributions

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

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

Governmental Fund Financial Statements

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

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

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

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

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

Governmental Fund Financial Statements (Continued)

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

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

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

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

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

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

The City reports the following major governmental funds:

General Fund - The General Fund is used for all the general re venues of the City not specifically levied or collected for other City funds and the related expenditures. The general fund accounts for all financial resources of a governmental unit which are not accounted for in another fund.

Housing Successor Special Revenue Fund - This fund was established to account for housing activities assumed by the City from the former Tracy Community Redevelopment Agency and revenues and expenditures related to the low- and moderate-income housing program.

Community Development Fees Special Revenue Fund - This fund is used to account for revenues and expenditures of the Building, Engineering and Planni ng Divisions. These funds were added in fiscal year 15-16 to better account for these specific activities and re stricted revenue sources. Prior to fiscal year 15- 16, these activities were in the General Fund.

CARES/ARPA Grants Special Revenue Fund - This fund accounts for the grant revenues and expenditures received through the CARES act and the American Rescue Plan act.

General Project Capital Projects Fund - This fund is used to account for the construction of the capital project financed through transfers from the General Fund.

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

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

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

Governmental Fund Financial Statements (Continued)

Tracy Infrastructure Master Plans Capital Projects Fund - This fund is used to account for the construction of the project with the Tracy Infrastruct ure Master Plan. The Tracy Infrastructure Master Plans were approved in 2012 and 2013 and cover all subsequent new development in areas of the City not covered by their own financing plan. Capital development fees are levied on developments in these areas and expenditures for various capital facilities to support the developments are accounted for in six functional categories.

Proprietary Fund Financial Statements

Proprietary Fund Financial Statements include a Statement of Net Position, a Statement of Revenues, Expenses and Changes in Fund Net Position, and a Statement of Cash Flows for each major Proprietary Fund.

A separate column representing internal service funds is also presented in these statements. However, internal service balances and activities have been combined with the governmental activities in the Government-Wide Financial Statements. The City’s internal service funds include funds which provide services directly to other City funds. These areas of service include fleet maintenance, facilities maintenance, and technology.

Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses a nd Changes in Fund Net Po sition presents increases (revenues) and decreases (expenses) in total Net Position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. In these funds, receivables have been r ecorded as revenue and provisions have been made for uncollectible amounts.

Operating revenues in the proprietary funds are those re venues that are generated fro m the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses.

The City reports the following major proprietary funds:

Water Fund – This fund is used to account for the provision of water services to the residential, commercial and industrial segments of the City . All activities necessary to provide su ch services are accounted for in this fund, including, but not limited to, administration, operations, maintenance, financing and related debt service, and billing and collection.

Wastewater Fund – This fund is used to account for the provision of treatment to residential, commercial and industrial segments of the City . All activities necessary to provide su ch services are accounted for in this fund, including, but not limited to, administration, operations, maintenance, financing and related debt service, and billing and collection.

Solid Waste Fund – This fund is used to account for City’s activities related to solid waste removal and street cleaning activities.

Drainage Fund – This fund is used to account for the City’s activities related to drainage operations.

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

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

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

Discretely Presented Component Unit Financial Statements

The activities of the Authority closely resemble those of ongoing businesses in which the purpose is to conserve and add to basic resources while meeting operating expenses from current revenues. The Authority provides services on a continuous basis and its activities are substa ntially financed by revenues derived from user charges and contributions from the member agencies. The Authority utilizes the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized as they are incurred.

Fiduciary Fund Financial Statements

Fiduciary fund financial statements include a Statement of Net Position and a Statement of Changes in Fiduciary Net Position. The City’s fiduciary funds represent custodi al funds and private purpose trust funds. Both custodial funds and the private purpose trust funds are accounted for on the full accrual basis of accounting. Fiduciary fund types are accounted for according to the nature of the fund.

Custodial funds are used to report fiduciary activities that are not required to be reported in pension (and other employee benefit) trust funds, investment trust funds, or private-purpose trust funds. They are also used to account for various assessment districts for which the City acts as an agent for debt service activity, as the City is prohibited from levy ing additional taxes for these districts. Such funds include various Community Facilities Districts, Assessments Districts, and the Tracy Rural Fire Medical Leave Bank Custodial Funds account for resources of all other trust arrangements in which principal and income bene fit individuals, private organizations, or other governments (i.e., unclaimed property/escheat property). The City’s private purpose trust fund is a fiduciary fund type used by the City to report assets , liabilities and activities of the Successor Agency to the Redevelopment Agency (Successor Agency ) for the City of Tracy. Its results of operations are presented on the Statement of Changes of Fiduciary Net Position.

Successor Agency of the Redevelopment Agency for the City of Tracy

The Redevelopment Obligation Retirement Fund was created to serve as a custodian for the assets and to wind down the affairs of the RDA on February 1, 2012, pursuant to Assembly Bill x1 26. Its purpose is to expeditiously wind down the affairs of the dissolved Redevelopment Agency (RDA). The Successor Agency is a separate public entity from the City, subject to the direction of an oversight board. The City Council serves as the governing board of the Successor Agency. In gene ral, the Successor Agency’s assets can only be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished projects that were subject to legally enforceable contract ual commitments). In future fiscal years, the Successor Agency will only be allocated revenue in the amount that is necessary to pay the estimated annual installment payments on enforceable obligations of th e former RDA until all enfor ceable obligations of the fo rmer RDA have been paid in full and all assets have been liquidated. Based upon the nature of the Su ccessor Agency’s custodial role, the Successor Agency has been included in the accompanying basic financial statements as a private purpose trust fund.

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

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

C. Deferred Outflows and Inflows of Resources

The Statement of Net Position and Balance Sheet – Gove rnmental Funds reports separate sections for Deferred Outflows of Resources, and Deferred In flows of Resources, when applicable.

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

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

D. Cash, Cash Equivalents and Investments

The City's dependence on property tax receipts, which are received semi-annually, requires it to maintain significant cash reserves to finance operations during th e remainder of the year. The City pools cash from all sources and all funds except Cash and Investments with Fiscal Agents so that it can be invested at the maximum yield, consistent with safety and liquidity , while individual funds can make expenditures at any time. It is the City's intent to hold investments to maturity.

Investments are reported in the accompanying financial statements at fair value, except for certain investment contracts that are reported at cost because they are not transferable and they have terms that are not affected by changes in market interest rates. Changes in fair value that occur du ring a fiscal year are recognized as investment income reported for that fiscal year, and may result in negative investment income in the accompanying financial statements. Investment income includes interest earnings, changes in fair value, and any gains or losses realized up on the liquidation, maturity, or sale of investments.

Investment income earned by the pooled investments is allocated to the various funds b ased on each fund's average cash and investment balance, except for investme nt income associated with funds not legally required to receive pooled investment income which has been assigned to and recorded as revenue of the general fund, as provided by California Government Code Section 53647.

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

Certain disclosure requirements, if applicable, for deposits and investment risks in the following areas:

 Interest rate risk
 Credit risk
- Overall
- Custodial credit risk
- Concentration of credit risk
 Foreign currency risk

In addition, other disclosures are speci fied including use of certain methods to present deposits and investments, highly sensitive investments, credit quality at year-end and other disclosures.

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

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

D. Cash, Cash Equivalents and Investments (Continued)

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

Levels of inputs are as follows:

Level 1 – Inputs are unadjusted, quoted prices for iden tical assets or liabilities in active markets at the measurement date.

Level 2 – Inputs, other than quoted prices included in Level 1, which are observable for the assets or liabilities through corroboration with market data at the measurement date.

Level 3 – Unobservable inputs that refl ect management’s best estimate of wh at market participants would use in pricing the assets or liabilities at the measurement date.

E. Cash and Investments with Fiscal Agents

Amounts reported as cash and investments with fiscal agents have been restricted by bond indentures or are to be used for specified purposes based on contract provisions, such as bonded debt service.

F. Receivables

Customer or trade receivables are re ported as “accounts receivable” and ar e shown net of an allowance for uncollectible accounts based on hist orical and management estimates.

Noncurrent portions of long-term receivables (e.g., “notes receivable”) due to governmental fund types are reported in their respective balance sheets despite their spendi ng measurement focus. Recogn ition of governmental fund type revenues represented by noncurrent receivables are deferred until they become current receivables.

Noncurrent portions of long-term notes receivable are offset by restricted fund balance in the special revenue funds.

G. Interfund Transactions

Activity between funds that are representative of lending/ borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from othe r funds” or “advances to/from other funds” (i.e., the current portion of interfund loans). Any residual balances outst anding between the governmental activities and business- type activities are reported in the Governmental-Wide Financial Statements as “internal balances.”

H. Inventories and Prepaid Items

Inventories are valued at cost, using the weighted-average method. Inventories of the Enterprise Funds. consist primarily of water storage held for future use. Certain payments to vendors reflect costs applicable to future fiscal years and are recorded as prepaid items in both government-wide and fund financial statements. The cost of prepaid items is recorded as expenditures/expenses when cons umed, rather than when purchased. Prepaid items in governmental funds are equally offset by nonspendable f und balance which indicates that they do not constitute available spendable resources even though they are a component of net current assets.

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

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

I. Leases

Lessee

The City has a policy to recognize a lease liability and a right ‐to‐use lease asset (lease as set) in the government ‐ wide financial statements. The City recognizes lease liabilities with an initial, individual value of $25,000 or more.

At the commencement of a lease, the C ity initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently , the lease liability is reduced by the principal portion of lease payments made.

Lease assets are recorded at the amount of the initial measurement of the lease liabilities and modified by any lease payments made to the lessor at or before the commencement of the lease term, less any lease incentives received from the lessor at or before the commencement of the lease term along with any initial direct costs that are ancillary charges necessary to place the lease asse ts into service. Lease assets are amor tized using the straight-line method over the shorter of the lease term or the useful life of the underlying asset, unless the lease contains a purchase option that the City has determined is reasonably certain of being exercised. In this case, the lease asset is amortized over the useful life of the underlying asset.

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

 The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for leases.

 The lease term includes the noncancellable period of the lease. Lease paymen ts included in the measurement of the lease liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise.

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

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

Lessor

The City is a lessor for leases of special purpose facilities, office and commercial space, and land. The City recognizes leases receivable and deferred inflows of resources in the financial statements.

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

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

I. Leases (Continued)

Lessor (Continued)

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

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

 The City uses its estimated incremental borrowing rate as the discount rate for leases.  The lease term includes the noncancellable period of the lease. Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee.

The City monitors changes in circum stances that would require a remeasureme nt of its lease and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that ar e expected to significantly affect the amount of the lease receivable.

J. Capital Assets

Capital assets, which include property, plant, equipment, infrastructure assets, and the right to use leased equipment and buildings, are reported in the applicable governmental or business-type activities columns in the government- wide financial statements. Such assets are recorded at historical cost (except for intangible right‐to‐use lease assets) or estimated historical cost if purchased or constructed. Donated assets are valued at the fair value of the assets on the date on which they were contributed. Donated works of art and similar items, and capital assets received in a service concession arrangement are reported at acquisition value rather than fair value. Capital assets with limited useful lives are depreciated over their estimated useful liv es. Alternatively, the "modified approach" is used for certain capital assets. Depreciation is not provided under this approach, but all expenditures on these assets are expensed, unless they are additions or improvements. Some capital assets may be acquired using Federal and State grant funds, or they may be contribu ted by developers or other governme nts. These contributions are accounted for as revenues at the time the capital assets are contributed.

The purpose of depreciation is to spread the cost of cap ital assets equitably among all users over the life of these assets. The amount charged to depreciation expense each year represents that year's pro rata share of the cost of capital assets.

Depreciation is provided using the straight-line method which means the cost of the asset is divided by its expected useful life in years and the result is charged to expense each year until the asset is fully depreciated.

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

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

J. Capital Assets (Continued)

The City has assigned the useful lives and capitalization thresholds listed below to capital assets:

Asset Type Useful Lives
Capitalization
Threshold
Land n/a $0
Land improvements n/a $50,000
Buildings 10-30 years $50,000
Building Improvements 5-50 years $50,000
Equipment and vehicles 5-30 years $5,000
Grading, curbs, gutters, sidewalks,
driveway approaches 40 years $50,000
Traffic signals 20 years $50,000
Street drainage 40 years $50,000
Infrastructure 5-40 years $50,000
Intangibles 5 years $5,000
Capital Lease Property Term of contract $5,000
Leasehold Improvements Term of contract $50,000
Works of Art / Historical Treasurers n/a $0
Construction in Progress for Projects to exceed
Year End Reporting n/a $50,000 at completion

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

The City has elected to use the modified approach discussed above with respect to its roads, most of which are relatively new. The City's policy is to maintain these roads at an overall Pavement Condition Index (PCI) level averaging 69, instead of providing depreciation. During the fiscal year 2022, the City expended $5,587,759 to preserve its roads. The City estimates that it will be re quired to expend approximatel y $5,920,343 in fiscal year 2023 to maintain its roads at this condition level. Please see Modified Approach to Reporting Street Pavement Costs section of the Required Supplementary Informa tion section following the Notes to the Basic Financial Statements for more detailed information.

K. Long-Term Debt

Government-Wide Financial Statements and Proprietary Fund Financial Statements

Long-term debt and other financial obligations are reported as liabilities in the appropriate funds. Bond premiums and discounts are deferred and amortized over the life of the bonds using straight line method. Bonds payable are reported net of the applicable premium or discount. Issuance costs are expensed when incurred. Gains or losses on bond refunding are reported as either deferred outflows of resources or deferred inflows of resources and amortized over the term of the related debt.

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

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

K. Long-Term Debt (Continued)

Governmental Fund Financial Statements

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

L. Compensated Absences/Sick Leave Conversion

The City’s policy permits employees to accumulate earned but unused vacation benefits, which are eligible for payment upon separation from service. The liability for such leave is reported as incurred in the government-wide and proprietary fund financial statements. A liability for those amounts is recorded in the governmental funds only if the liability has matured as a result of employee resi gnations or retirements. The liability for compensated absences includes salary-related benefits, where applicable.

Employees hired prior to July 1, 1994, after 10 years w ith the City and only upon re tirement, may convert their accumulated sick leave time to offset the cost of retiree medical insurance premiums under the following options:
bank or conversion. The bank option converts the unused sick leave into a dollar amount that will be placed into a “bank” to be used until the bank is exhausted to offset the cost of retiree medical insurance premiums for the retiree. The conversion option takes the unused sick leave and converts it to days and the City will pay the medical insurance premiums for the retiree for each day after conversion.

Government-Wide Financial Statements

For governmental and business-type activities, compensat ed absences/sick leave conversion are recorded as a liability when earned and as an expense when paid.

Fund Financial Statements

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

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

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

M. Pension Plans

For purposes of measuring the net pension liability, de ferred outflows of resources and deferred inflows of resources related to pensions, and pens ion expense, information about the fiduciary net position of the plans and additions to/deductions from the plans’ fiduciary net position have been determined on the same basis as they are reported by the plans (Note 14). For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with benefit terms. Investments are reported at fair value. The General Fund and Internal Service Funds are typically used to liquidate the pension liability related to the City's governmental activities while the pension liability for Bu siness-type activities is liquidated from the respective Enterprise Funds.

The following timeframes are used for pension reporting:

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

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

N. Other Postemployment Benefits (OPEB)

For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the OPEB plan, the assets of which are held in an irrevocable trust, and additions to/deductions from the OPEB pl an’s fiduciary net position have been determined by an independent actuary (Note 15). For this purpose, benefit payments are recognized when currently due and payable in accordance with the bene fit terms. Investments are reported at fair value. The Enterprise Funds are used to liquidate the OPEB liability.

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

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

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

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

O. Fund Balances

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

 Nonspendable Fund Balance – includes amounts that are (a) not in a spendable form, or (b) legally or contractually required to be maintained intact. The “not in spendable form” criterion includes items that are not expected to be converted to cash, for example: deposits and prepaid items.

 Restricted Fund Balance – includes amounts that are restricted for specific purposes stipulated by external resources providers, constitutionally or through enabling legislation. Restrictions may effectively be changed or lifted with the consent of resource providers.

 Committed Fund Balance – includes amounts that have been limited to specific purposes or through adoption of a resolution or an ordinance by the City Council, the highest level of decision-making authority of the City, and resources that have been specifically committed for use in satisfying contractual obligations, as in agreements with third-parties. Th e City has determined that both a resolution and an ordinance are equally binding. These commitments may be changed or lifted, but only by the same formal action that was used to impose the constraint originally. City Council action to commit fund balance must occur within the fiscal reporting period while the amount committed may be subsequently determined.

 Assigned Fund Balance – includes amounts that are intended to be used by the City for specific purposes.

Intent is expressed by (a) the City Council or (b) a body or official to which the City Council has delegated the authority to assign amounts to be used for a specific purpose. This policy delegates to the Finance Director the authority to assign unassigned fund bala nce amounts where the City’s intent is for those amounts to be used for specific purposes. This delega tion of authority is for the sole purpose of reporting these amounts in the annual financial statements.

 Unassigned Fund Balance – includes amounts within th e General Fund, the residual resources, either positive or negative in excess of what can be properly classified in one of the other four fund balance categories. Unassigned amounts are technically available for any purpose. Other governmental funds may only report a negative unassigned balance that was created after classification of fund balance in the nonspendable, restricted or committed categories.

When expenditures are incurred for purposes where only unrestricted fund balances are available, the City uses the unrestricted resources in the following order: committed, assigned, and unassigned.

General Fund Reserve Policies

The City Council adopted a revised General Fund Reserve (Unassigned Fund Balance) Policy in May 2021 with Resolution 2021-061 that established a minimum fund balance policy for the General Fund in order to mitigate the effect of unanticipated situations such as natural disasters and severe unforeseen events. Reserves also provide the City with stability in times of economic fluctuations and help provide for a smooth transition to changes in service levels caused by changes in the City’s financial situation. The Policy established the following reserves:

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

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

O. Fund Balances (Continued)

Contingency/Emergency Reserve – The Contingency/Emergency Reserve f unds help mitigate the effects of unanticipated situations such as natural disasters an d severe, unforeseen events. The Contingency/Emergency Reserve also serves as back-up liqui dity to self-insured losses if this need were to arise. The Contingency/Emergency Reserve is est ablished with a target goal of 18% of the General Fund’s adopted annual budget for expenditures and recurring transfers out. The C ity Manager will first evaluate the City’s financial condition and make a recomm endation to City Council as to the n eed to make contributions to the Contingency/Emergency Reserve or the possible need to access funds from the Contingency/Emergency Reserve.

This action is done as part of the annual budget adoption; however, these actions can be completed at any time the City Manager deems necessary. The balance of the Contingency/Emergency R eserve was $14,505,000 at June 30, 2022, which is a component of committed fund balance of the General Fund.

Economic/Budget Stability Reserve – The Economic/Budget Stability Reserve is intended to offset quantifiable revenue/expenditure uncertainty in th e multi-year forecast thereby helping to stabilize service levels through economic cycles. The long-term use of this reserve is determined by estimating the level of financial risk associated and may be authorized and expended only when certain specific circumstances exist within the following three areas of uncertainty:

1. Revenue risks: Revenues falling short of budget projections may cause deficits. Transitional funding may be necessary to respond to reductions in major revenues due to local, regional, and national economic downturns. This may be due to a loss in housing values, a loss of a major employer, a loss of a major retailer, a sudden spike in unemployment or inflation, and/or other major economic factors. This may also be due to state and/or voter initiatives; including changes in legislation, revenue sources that sunset or expire, or other political impacts to revenues that are outside of the control of the City Council.

a. Projected General Fund revenue totals in aggregate are anticipated to decrease by 5% (or more) over the prior year or decrease 10% (o r more) cumulative over three years; excluding one-time revenue sources.

b. Projected General Fund revenues from a single revenue source are anticipated to decrease by 10% (or more) over the prior year or decrease by 15% over three years; excluding one-time revenue sources.

2. Expenditure risks: The City may require a source of supplemental funding for uncontrollable costs or contractually obligated costs. Such costs may include maintaining service levels.

a. Projected General Fund expenditure totals (in aggr egate) increase by 10% (or more) over the prior year or increase 15% (or more) over three years; excluding one-time expenditure requests.

b. Projected General Fund expenditures from a single source are anticipated to increase by 10% (or more) over the prior year or increase by 15% over three years.

3. Structural deficit risk: Economic factors may create a structural deficit when revenue growth does not keep pace with expenditure growth. The City may elect to use the Economic/Budget Stability Reserve for up to 24 months while a plan is developed to correct the deficit.

a. Projected General Fund expenditure totals (in aggregate) exceed incoming revenues by 5% (or more) over the prior year or exceed by 10% over three years; excluding one-time expenditure requests.

b. Need funding for an unanticipated major repair, purchase or other maintenance charge creating a deficit of 5% of incoming revenues.

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

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

O. Fund Balances (Continued)

The nature of these reserves is intended to stabilize th e General Fund budget in the short-term to address non- routine or unanticipated changes in economic position. A regular 5-year forecast should be used to identify foreseeable changes in revenues and/or expenditures. However, not all changes in economic and fiscal position are known. In those cases, the City Manager will first ev aluate the City’s financial condition and make a recommendation to City Council as to the need to make contributions to the Economic/Budget Stability Reserve or the possible need to access funds from the Economic/B udget Stability Reserve. This action is done as part of the annual budget adoption; however, these actions can be completed at any time the City Manager deems necessary. The balance of the Economic/Budget Stability Reserve was $11,092,059 at June 30, 2022, which is a component of assigned fund balance of the General Fund.

The City Manager must present a report to the City Counc il to justify the use of the Contingency Reserve and Economic/Budget Stability Reserve and the circumstances of the catastrophic and/or fiscal emergency. All uses of the Contingency Reserve and Economic /Budget Stability Reserve must be approved by Resolution of the City Council with a four-fifths vote. Any such uses are to be repaid to the respective reserve over a period to be determined by the City Council at the time of usage approval, with a target repayment period of no more than three years. Year-end excess and/or one-time revenue under the proposed reserves structure would remain in the General Fund’s committed or assigned fund balance, as applicable. As part of the annual budget adoption process, or at any time the City Manager deems necessary, the City Mana ger would recommend whether the excess funds could be allocated to other reserves, or used as one-time funding with consideration given to economic development and/or capital projects.

P. Net Position

The financial statements utilize a net position presentation. Net position is classified as follows:

 Net Investment in Capital Assets – This category of net position consists of capital assets, net of accumulated depreciation and amortization, and re duced by any debt outstanding and any deferred outflows/inflows of resources related to such borro wings that are attributable to the acquisition, construction or improvement of those assets. If there are significant unspent related debt proceeds at year- end, the portion of the debt attributable to the unspe nt proceeds is not included in the calculation of net investment in capital assets. Rather, that portion of the debt is offset by unspent proceeds.

 Restricted Net Position – This category presents restricted assets reduced by liabilities and deferred inflows of resources related to those assets. Those assets are restricted due to external restrictions imposed by creditors (such as through bond covenants), grantors or laws and regulations of other governments and restrictions imposed through constitutional provisions or enabling legislation.

 Unrestricted – This category represents net position of the City that is not restricted for any project or other purpose.

When both restricted and unrestricted resources are available for use, the City’s policy is to use restricted resources first, then unrestricted resources that are needed.

Q. Revenue Recognition for Utility Funds

Revenues are recognized based on cycle billings rend ered to customers. Utility service accounts receivable are reported net of allowance for doubtful collections and include unbilled receivables using actual amounts billed in July for June services.

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

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

R. Property Tax

Property taxes in the State of California are administered for all local agencies at the county level, and consist of secured, unsecured, and utility tax rolls. The following is a summary of major policies and practices relating to property taxes:

Property Valuations are established by the Assessor of the County of San Joaquin for the secured and unsecured property tax rolls; the utility property tax rolls are valued by the State Board of Equalization. Under the provisions of Article XIIIA of the State Constitution (Proposition 13 adopted by the voters on June 6, 1978) properties are assessed at 100% of full value. From this base of assessment, subsequent annual increases in valuation are limited to a maximum of 2%. However, increases to full value ar e allowed for property improvements or upon change in ownership. Personal prope1ty is excluded from these limitations, and is subject to annual reappraisal.

Tax Levies are limited to 1% of full value which results in a tax rate of $1.00 per $100 assessed valuation, under the provisions of Proposition 13. Tax rates for vo ter-approved indebtedness are excluded from this limitation.

Tax Levy Dates are attached annually on January 1 preceding the fiscal year for which the taxes are levied.

The fiscal year begins July 1 and ends June 30 of the following year. Taxes are levied on both real and unsecured personal property as it exists at that time. Liens against real esta te, as well as the tax on personal property, are not relieved by subsequent renewal or change in ownership.

Tax Collections are the responsibility of the county tax collector. Taxes and assessments on secured and utility rolls which constitute a lien against the property, may be paid in two installments: The first is due on November 1 of the fiscal year and is delinquent if not paid by December 10; and the second is due on March 1 of the fiscal year and is delinquent if not paid by April 10. Unsecured personal prope1ty taxes do not constitute a lien against real property unless the taxes become deli nquent. Payment must be made in one installment, which is delinquent if not paid by August 31 of the fiscal year. Significant penalties are imposed by the county for late payments.

The County of San Joaquin levies, bills, and collects property taxes and special assessments for the City. Property taxes levied are recorded as revenue when received, in the fiscal year of levy, due to the adoption of the "alternate method of property tax distribution", known as the Teeter Plan, by the City and the County of San Joaquin. The Teeter Plan authorizes the Auditor/Controller of the County of San Joaquin to allocate 100 percent of the secured property taxes billed, but not yet paid. The County of San Joaquin remits tax monies to the City in three installments as follows:

50 percent remitted in December
45 percent remitted in April
5 percent remitted in June

Tax Levy Apportionments - Due to the nature of the City-wide maximum levy, it is not possible to identify general purpose tax rates for specific entities. Under state legislation adopted subsequent to the passage of Proposition 13, apportionments to local agencies are made by the county a uditor-controller based primarily on the ratio that each agency represented of the total City-wide levy for the three years prior to fiscal year 1979.

Property Tax Administration Fees - The State of California fiscal year 1990-91 Budget Act authorized counties to collect an administrative fee for collection and distribution of property taxes. Property taxes are recorded as net of administrative fees withheld during the fiscal year.

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

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

S. Use of Accounting Estimates

The preparation of financial statements in conformity with U.S. GAAP re quires management to make estimates and assumptions, in some cases when a pplicable, that affect the amounts in the financial statements and the accompanying notes. Actual results could differ from the estimates.

T. Implementation of New GASB Pronouncements for the Year Ended June 30, 2022

The requirements of the following accounting standards are effective for the purpose of implementation, if applicable to the City, for the year ended June 30, 2022. The financial statements included herein apply the requirements and provisions of these statements, including necessary retroactive adjustments to financial statement classifications and presentations.

GASB Statement No. 87

In June 2017, GASB issued Statement No. 87, Leases (GASB Statement No. 87), to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This statement increases the usefulness of go vernments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were cl assified as operating leases and recognized as inflows of resources or outflows of resources based on the payment pr ovisions of the contract. It also establishes a single model for lease accounting based on the foundational principl e that leases are financings of the right to use an underlying asset. Implementation of this Statement had a signi ficant effect on the City’s financial statements for the year ended June 30, 2022.

GASB Statement No. 89

In June 2018, GASB issued Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period. This Statement establishes accounting requirements for interest cost incurred before the end of a construction period. Such interest cost includes all interest that previously was accounted for in accordance with the requirements of paragr aphs 5–22 of Statement No. 62, Codification of Acc ounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, which are superseded by this Statement. This Statement requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred for fina ncial statements prepared using the economic resources measurement focus. As a result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset reported in a business-type activity or enterprise fund. Application of this statement did not have a material effect on the City’s financial statements for the fiscal year ending June 30, 2022.

GASB Statement No. 92

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

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

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

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

GASB Statement No. 93

In March 2020, GASB issued Statement No. 93, Replacement of Interbank Offered Rates. Some governments have entered into agreements in which variable payments made or received depend on an interbank offered rate (IBOR)—most notably, the London Interbank Offered Rate (LIBOR). As a result of global reference rate reform, LIBOR is expected to cease to exist in its current form at the end of 2021, prompting governments to amend or replace financial instruments for the purpose of replacing LIBOR with other reference rates, by either changing the reference rate or adding or cha nging fallback provisions related to the reference rate. The objective of this Statement is to address those and other accounting and financial reporting implications that result from the replacement of an IBOR. Application of this statement did not have a material eff ect on the City’s financial statements for the fiscal year ending June 30, 2022.

GASB Statement No. 97

In June 2020, GASB issued Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Defe rred Compensation Plans – An Amendment of GASB Statements No. 14 and No. 84, and a Supersession of GASB Statement No. 32 . The primary objectives of this Statement are to (1) increase consistenc y and comparability related to the re porting of fiduciary component units in circumstances in which a potential component unit does not have a governing board and the primary government performs the duties that a governing board typically would perform; (2) mitigate costs associated with the reporting of certain defined contribution pension plans, defined contribution other postemployment benefit (OPEB) plans, and employee benefit plans other than pension plans or OPEB plans (other employee benefit plans) as fiduciary component units in fiduciary fund financial statemen ts; and (3) enhance the rele vance, consistency, and comparability of the accounting and financial reporting for Internal Re venue Code (IRC) Section 457 deferred compensation plans (Section 457 plans) that meet the definition of a pension plan and for benefits provided through those plans. Application of this statement is effective for the City’s fiscal year ending June 30, 2022.

U. Upcoming Government Accounting Standards Implementations

The City is currently analyzing its accounting practices to determine the potential impact on the financial statements for the following GASB statements:

GASB Statement No. 91

In May 2019, GASB issued Statement No. 91, Conduit Debt Obligations. The primary objectives of this Statement are to provide a single method of reporting conduit debt ob ligations by issuers and eliminate diversity in practice associated with (1) commitments extend ed by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. This Statement achieves those objectives by clarifying the existing definition of a conduit debt obligation; establishing that a conduit debt ob ligation is not a liability of the issuer; establishing standards for accounting and financial reporting of additional commitments and voluntary commitments extended by issuers and arrangements associated with conduit debt obligations; and improving required note disclosures.

Application of this statement is effective for the City’s fiscal year ending June 30, 2023.

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

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

U. Upcoming Government Accounting Standards Implementations (Continued)

GASB Statement No. 94

In March 2020, GASB issued Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The primary objective of this Statement is to improve financial reporting by addressing issues related to public-private and publ ic-public partnership arra ngements (PPPs). As used in this Statement, a PPP is an arrangement in which a government (the transferor) contracts with an operator (a governmental or nongovernmental entity) to provide public services by conveying control of the right to operate or use a nonfinancial asset, such as infrastructur e or other capital asset (the underlying PPP asset), for a period of time in an exchange or exchange-like transaction. Application of this statement is effective for the City’s fiscal year ending June 30, 2023.

GASB Statement No. 96

In May 2020, GASB issued Statement No. 96, Subscription-Based Information Technology Arrangements . This Statement provides guidance on the accounting and fina ncial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. Application of this statement is effective for the City’s fiscal year ending June 30, 2023.

Note 2 – Cash and Investments

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

Fiduciary Funds
Governmental Business-Type Component Statement of
Activities Activities Total Unit Net Position Total
Cash and investments 354,578,811$ 65,194,764$ 419,773,575$ 4,080,717$ 12,560,724$ 436,415,016$ Cash and investments with fiscal agent 20,008,617 206 20,008,823 - 45,387,041 65,395,864 Total cash and investments 374,587,428$ 65,194,970$ 439,782,398$ 4,080,717$ 57,947,765$ 501,810,880$ Government-Wide Statement of Net Position

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

Cash:

Cash on hand 3,345 $
Deposits with financial institution 57,643,001
Total cash 57,646,346
Investments:

Investments 378,768,670
Investments held by bond trustee 65,395,864
Total inv estments 444,164,534
Total cash and inv estments 501,810,880$

As part of the City's investment guid elines, the City continually seeks ways to increase investment income while not risking investment principal. One way the City accomplis hes this is by “sweeping”, on a nightly basis, any excess cash held in its non-interest-bearing checking account to an in terest-bearing money market account with the same bank.

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

77 Note 2 – Cash and Investments (Continued)

A. Demand Deposits

The carrying amounts of the City’s demand deposits were $57,643,001 at June 30, 2022. Bank balances were $53,180,789 at that date, the total amount of which w as collateralized or insured with securities held by the pledging financial institutions in the City’s name as discussed below.

The California Government Code requires California ba nks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a se curity interest in such collateral superior to those of a general creditor.

Thus, collateral for cash deposits is considered to be held in the City's name.

The market value of pledged securities mu st equal at least 110% of the City's cash deposits. California law also allows institutions to secure City’s deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits. The City may waive collateral requiremen ts for cash deposits, which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation (“FDIC”). The City, however, has not waived the collateralization requirements.

B. Investments Authorized by the California Government Code and the City’s Investment Policy

The table below identifies th e investment types that are authorized fo r the City by the California Government Code and the City's investment policy. The table also identifies certain provisions of the California Government Code (or the City's investment policy, if more restrictiv e) that address interest rate risk and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees th at are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City's investment policy.

Minim um Max im um Max im um
Max im um Credit Percentage Investm ent
Authorized Investm ent Type Maturity Quality of Portfolio in One Issuer United States Treasury Bills , Bonds, Notes 5 years None 100% No Limit Federal Agency Obligations or U.S. G overnm ent-
Sponsored Enterprise Obligations (GSE) 5 years None 100% 25% Municipal Securities 5 years A 30% 5%
Bankers' Acceptances 180 days A/A-1 or higher 40% 5%
Commercial Paper 270 days A/A-1 or higher 25% 5% (A)
Negotiable Certificates of Deposit (NCDs) 5 years A/A-1 or higher 30% (B) 5% Federally Insured Non - Negotiable Certificates
of Deposit 5 years None 20% (C) (D)
Collateralized Non-Negotiable Certificates of
Deposit 5 years None 20% (C) No Lim it
Certificate of Deposit Placement Service (CDARS) 5 years None 30% (B) No Limit Repurchase Agreements 1 year None 100% 10%
Local Agency Investment Fund N/A None $75 million $75 million Local Government Investment Pools N/A None 100% No Limit Medium-Term Corporate Notes 5 years A 30% 5%
Asset-Backed, Mortgage-Backed, Mortgage Pass-
Through Securities, and Collaterized Mortgage
Obligations 5 years A/AA or higher 20% 5% (E)
Mutual Funds N/A Highest Category 20% 10%
Money Market Mutual Funds N/A Highest Category 20% 20%
Supranational Securities 5 years AA 30% 10%
(A) The City m ay purchase no m ore than 10% of the outstanding com m ercial paper of any single issuer. (B) Combined limit for NCD and CDARS.
(C) Combined limit for Federally Ins ured and Collateralized Non-Negotiable Certificates of Depos it. (D) The am ount per institution is lim ited to the m ax im um covered under federal insurance. (E) No issuer limitation on any mortgage security where the issuer is the U.S. Treasury or a Federal Agency/G SE.

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

78 Note 2 – Cash and Investments (Continued)

C. Investments Authorized by Debt Agreements

The City and Successor Agency must maintain required amounts of cash and investments with trustees or fiscal agents under the terms of certain debt issues. These f unds are unexpended bond proceeds or are pledged reserves to be used if the City or Successor Agency fails to meet the obligations under these debt issues. The California Government Code requires these funds to be invested in accordance with City resolutions, bond indentures or State statutes. The table below identifies the investment types and their minimum cr edit ratings that are authorized for investments held by fiscal agents. The bond indentures contain no limitations for the maximum investment in any one issuer or the maximum percentage of the portfolio that may be invested in any one investment-type.

Minimum
Max imum Credit
Authorized Investm ent Type Maturity Quality
United States Treasury Bill, Bonds, Notes 5 years N/A
United States G overnm ent Agency Obligations or
G overnm ent-Sponsored Enterprise Obligations 5 years AAA Certificates of Deposit 5 years Three Highest Categories Investm ent Agreem ents, Short Term None Two Highest Categories Investm ent Agreem ents, Long Term None Three Highest Categories Repurchase Agreements 1 year A-
Money Market Mutual Funds N/A Hightest Category
Local Agency Investm ent Fund N/A Not rated
California Asset Managem ent Program N/A Not rated
Banker's Acceptances 180 days A-1 or A-1+
Com m ercial Paper 270 days A-1 or A-1+
State Obligations None Highest Category

D. Fair Value Measurement

As of June 30, 2022, the City’s investments had the following recurring fair value measurements:

Investments measured by fair value level: June 30, 2022 Level 1 Level 2 Level 3 U.S. Treasury Notes 115,027,509$ -$ 115,027,509$ -$ Municipal Bonds 87,808,825 - 87,808,825 - Asset-Back Securities 83,124,432 - 83,124,432 - Medium Term Corporate Notes 2,083,136 - 2,083,136 - Federal Agency Obligations 2,101,256 - 2,101,256 - Negotiable CDs 10,175,112 - 10,175,112 - Commercial Paper 3,495,534 - 3,495,534 - Total inv estments by fair v alue lev el 303,815,804 - $ 303,815,804$ - $ Inv estments not subject to the fair v alue hierarchy:

Local Agency Investment Fund 68,679,942
California Asset Management Program (CAMP) 4,040,993
Money Market Funds - Held by City 2,231,931
Money Market Funds - Held by Trustee 65,395,864
Total investments not subject to the fair value hierarchy 140,348,730 Total investments 444,164,534$

Debt and equity securities classified in Level 2 are valued using the following approaches:
• U.S. Treasuries, U.S. Agencies, and Commercial Paper: quoted prices for identical securities in markets that are not active;
• Medium term notes: quoted prices for similar securities in active markets; and • Asset-backed securities: recent appraisals of the asset value.

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

79 Note 2 – Cash and Investments (Continued)

E. Risk Disclosure

Disclosures Relating to Interest Rate Risk

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

Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer-term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity even ly over time as necessary to provide the cash flow and liquidity needed for operations.

Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustee) to market interest rate fluctuations is provide d by the following table that shows the distribution of the City’s investments by maturity. For purposes of the sche dule shown on the next page , any callable securities are assumed to be held to maturity.

12 Months 13 to 24 25 to 36 37 to 48 49 to 60
Inve stme nt Type or less Months Months Months Months T otal Held by City:

U.S . Treasury Notes 28,213,547 $ 22,355,891 $ 11,558,202 $ 20,235,992 $ 32,663,877 $ 115,027,509 $ Federal Agency Obligations 18,919,252 55,453,035 8,384,893 5,051,645 - 87,808,825 Medium Term Corporate Notes 18,116,592 45,322,088 14,343,209 4,243,730 1,098,813 83,124,432 Municipal Bond 978,487 70,312 896,325 138,012 - 2,083,136 Negotiable CD 149,298 813,678 391,338 746,942 - 2,101,256 Asset-Backed Securities - 1,286,095 4,357,583 2,667,822 1,863,612 10,175,112 Supranational - - 3,495,534 - - 3,495,534 Local Agency Investment Fund 68,679,942 - - - - 68,679,942 California Asset Management Program 4,040,993 - - - - 4,040,993 Money Market Funds 2,231,931 - - - - 2,231,931 Held by Trustees:

Money Market Funds 65,395,864 - - - - 65,395,864 T otal inv estments 206,725,906$ 125,301,099 $ 43,427,084 $ 33,084,143 $ 35,626,302 $ 444,164,534 $

Disclosures Relating to Credit Risk

Generally, credit risk is the risk that an issuer of an i nvestment 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.

However, some issuers do not seek a credit rating. For instance, the California Local Agency Investment Fund (LAIF) has not sought or received a credit rating. In these cases, the purchaser is solely responsible for performing their own due diligence before purchasing an investment or participating in an external investment pool.

Certificates of deposit of $250,000 or less are fully insured by the Federal Deposit Insurance Corporation (FDIC), and therefore, do not seek a credit rating.

Presented below is the actual rating as of June 30, 2022, for each investment-type as provided by Standard and Poor's investment rating system.

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

80 Note 2 – Cash and Investments (Continued)

E. Risk Disclosure (Continued)

Disclosures Relating to C redit Risk (Continued)

Inve stme nt Type
AA+/
AA/AA- A+/A/A- AAA/AAAm BBB+/BBB T otal
Held by City:

Federal Agency Obligations 70,876,562 $ - $ - $ - $ 70,876,562$ Medium Term Corporate Notes 12,313,692 64,732,037 - 6,078,703 83,124,432 Municipal Bonds 1,204,617 813,519 - - 2,018,136 Negotiable CDs - 298,541 - 142,985 441,526 Asset-Backed Securities - - 5,158,809 - 5,158,809 S upranationals - - 3,495,534 - 3,495,534 Money Market Funds - - 1,922,250 - 1,922,250 California Asset Management Program - - 4,040,993 - 4,040,993 Held by Trustee:

Money Market Funds - - 65,395,864 - 65,395,864 T otal Rated Investments 84,394,871$ 65,844,097 $ 80,013,450 $ 6,221,688 $ 236,474,106 Not rated:

Federal Agency Obligations 16,932,263
Municipal Bonds 65,000
Negotiable CDs 1,659,730
Asset-Backed Securities 5,016,303
California Local Agency Investment Fund 68,679,942
Money Market Funds 309,681
Exempt from credit rating disclosure:

U.S. Treasury Notes 115,027,509
T otal inv estments 444,164,534$

Disclosure Relating to Concentration of Credit Risk

The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated in the Government Code. GASB Statement No. 40 requires disclosure by amount and issuer, of investments in any one issuer that represent 5% or more of total investments. At June 30, 2022, the City had the followings investments (other than U.S. Treasury securities, mutual funds, an d external investment pools) that represents 5% or more of the City's total investments:

Issue r Amount
Federal Home Loan Mortgage Corporation 38,189,934$
Inve stme nt Type
Federal Agency Obligations

Disclosures Relating to Custodial Credit Risk

Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possessi on of another party.

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

81 Note 2 – Cash and Investments (Continued)

E. Risk Disclosure (Continued)

Disclosures Relating to Custod ial Credit Risk (Continued)

The California Government Code and the City’s investme nt policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk fo r deposits or investments, other than the following provision for deposits: The California Government Code re quires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. At Ju ne 30, 2022, the City’s deposits (bank balances) were collateralized under California Law.

F. Investment in State Investment Pool

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

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

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

As of June 30, 2022, the City had $68,679,942 invested in LAIF, which had invested 1.88% of the pool investment funds in Structured Notes and Asset-Back Securities. LAIF determines fair value on its investment portfolio based on market quotations for those securities where market quotations are readily available and based on amortized cost or best estimate for those securities where market value is not readily available. The City valued its investments in LAIF as of June 30, 2022, by multiplying its account balance with LAIF times a fair value factor determined by LAIF. This fair value factor was dete rmined by dividing all LAIF participants ’ total aggregate amortized cost by total aggregate fair value. The fair value of the City’s position in the pool is the same as the value of the pool shares. The credit quality rating of LAIF is unrated as of June 30, 2022.

G. California Asset Management Program (CAMP)

The City is a voluntary participant in the California Asset Management Program (CAMP). CAMP is an investment pool offered by the California Asset Management Trust (the Trust). The Trust is a joint powers authority and public agency created by the Declaration of Trust and established under the provisions of the California Joint Exercise of Powers Act for the purpose of exercising the common power of its Participants to inv est funds. The investments are limited to investments permitted by California Govern ment Code. The total amount invested by all public agencies in CAMP at June 30, 2022 was $6.5 billion, respectively. A board of five trustees who are officials or employees of public agencies has oversight responsibility for CAMP. The value of the pool shares in CAMP, which may be withdrawn at any time, is determ ined on an amortized cost basis, which is different from the fair value of the City’s position in the pool. At June 30, 2022 the amortized cost approximates the City’s cost.

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

82 Note 3 – Loans Receivable

A. Summary of Loans Receivable and Unavailable Revenue

The former Community Development Agency engaged in programs designed to encourage construction of or improvement to low-to-moderate income housing. Under these programs, grants or loans are provided under favorable terms to homeowners or developers who agree to expend these funds in accordance with the Agency's terms. With the dissolution of the Redevelopmen t Agency as discussed in Note 21, the City agreed to become the successor to the Community Development Agency's housing activities and as a result the Housing Successor Fund assumed th e loans receivable of the Community Development Agency's Low- and Moderate-Income Housing Fund. In addition, other fund s of the City have made loans to third parties.

At June 30, 2022, these loans totaled:

Housing Successor Loans:

Commercial Rehabilitation Program 90,510 $
Mountain View Townhomes 1,056,615
Eden Housing Inc. 2,612,093
Habitat for Humanity 59,364
Down Payment Assistance Program 827,007
Tracy Place Associates 5,011,742
DHI Tracy Garden Associates, LP 2,836,236
Tracy Mall Partners, LP 1,738,309
Total Loans Receivable 14,231,876$

B. Housing Successor Loans

The City administers a residential and commercial rehabilitation program using Housing and Urban Development funds. Federal funds received by the City are deposited with a commercial ba nk. Upon approval of the loans, the funds are disbursed and collected by an outside coll ection agency. The programs are designed to encourage construction or improvement in low- to-moderate income housing or other projects. Under these programs’ loans are provided under favorable terms to homeowners or deve lopers who agree to spend these funds in accordance with the City's terms. The balance of the loan’s receivable arising from these programs was $90,510 at June 30, 2022.

In 1994, the Agency loaned $609,000 in Low- and Moderate-Income Housing funds to Mountain View Townhomes Association, a partnership of non-profit corpor ations, to assist in the construction of thirty- seven residential rental units, thirty-six of which are available to low-income families. As of December 1, 2015, the loan was assigned to Sutter Ville SJC Holding Company, LLC. Th e loan is secured by a third deed of trust on the property, is payable over twenty-eight years beginning in 2026 and accrues interest at 3%. The loan was amended December 2015 and is now repayable from residual receipt s as defined in the amendment. Commencing no later than 120 days following the end of the 2017 calendar year and for each calendar year thereafter until the maturity date, the Association shall make repayments on the loan for the prior calendar year based on the available amount of residual receipts as defined in the amendment. As of June 30, 2022, principal a nd accrued interest totaled $1,056,615.

In 1996, the Agency agreed to loan Eden Housing Inc., up to $2,208,6 91 to assist in the development and construction of seventy-two low-income housing units at Stone Pine Meadows. The loan is payable over seven years beginning forty years after the project was comple te, which was January 11, 2000, and is secured by a subordinated deed of trust on the property. The loan does not bear interest for the first three years, then accrues interest at 1% per year for the next forty years and 3% for the last seven years. As of June 30, 2022, principal and accrued interest totaled $2,612,093.

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

83 Note 3 – Loans Receivable (Continued)

B. Housing Successor Loans (Continued)

In 2000, the Agency agreed to loan Habitat for Humanity up to $100,000 to construct/reconstruct from five to seven properties to ownership housing for very low-income families. The funds are to be used to pay all City fees necessary to develop and build affordable housing under the sponsorship of Habitat for Humanity. The loan proceeds were available for draw down through Decemb er 31, 2005 and Habitat for Humanity drew down only $40,093 of the loan proceeds through that date. The loan is secured by a deed of trust on the property and may be forgiven if the property remains occupied by a low-income family for a period of thirty years. The balance of the outstanding loan, including accrued interest, as of June 30, 2022 is $59,364.

The City loaned 37 individuals from the Low- and Moderate-Income Housing Fund of the Redevelopment Agency.

The loans have been authorized for each of the recipients as part of the housing down payment assistance program.

The City is the beneficiary of the promissory notes issu ed, recorded, and secured by r eal property. The loans are due when the underlying property is sold. As of June 30, 2022, principal and accrued interest totaled $827,007.

In November 2005, the Agency entered into a loan agreement with Tracy Pl ace Associates for an amount not to exceed $4,350,000 to be used as construction and permanent financing costs for the development of a 49-unit affordable senior housing complex, Tracy Place Senior Ap artments. The loan is secured by a deed of trust on the property and bears simple interest of I%. The loan is repayable from residual receipts as defined in the loan agreement starting in April 2008, and is due 55 years from the issuance of the certificate of occupancy, which was December 29, 2008, or if a transfer occurs that is not approved by the City. As of June 30, 2022, the developer owes $5,011,742, including accrued interest.

In November 2007, the Community Devel opment Agency of the City of Tracy (Agency) entered into an Owner Participation and Loan Agreement with DHI Tracy Ga rden Associates, LP (DHI). DHI was to develop and rehabilitate an 88-unit Senior Housing Complex for low-income senior households. The maximum amount of loan from the Agency was $1,975,000. Simple interest accrues annually at 3%. Upon default, the rate will increase to the lesser of 10% or the maximum allowed by law. The loan is secured by a trust deed on the underlying properly.

This trust deed is subordinated to all other loans th at DHI has for the project. Maturity of the loan is November 1, 2064. Payment on the loan is deferred until maturity unless the property is conveyed (other than that approved by the City) or there is a default. Total amount owed as of June 30, 2022 is $2,836,236.

C. Development Loan

In September 2006, the City loaned a property owner $40,000 to assist in the demolition of a structure in order for the property owner to construct new housing units on the site. The loan is secured by a deed of trust on the property, bears interest of 5% and is due and payable when th e property is sold. The balance was paid in full as of June 30, 2022.

D. Tracy Mall Partners, L.P. Loan

The West Valley Mall Revitalization Program provides a financial incentive to the owners of the West Valley Mall (Mall Owner) or a prospective tenant to be used for tenant improvements.

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

84 Note 3 – Loans Receivable (Continued)

D. Tracy Mall Partners, L.P. Loan (Continued)

During fiscal year 2011. the City and the Tracy Mall Partne rs, L.P. entered into an agreement where the City provided a financial contribution of $2,750,000 to the Mall Owner. In exchange, the Mall Owner guarantees that Macy's will lease the anchor tenant location for a minimum of 10 years. Over the 20-year term, the Mall Owner is obligated to repay the City for the financial incentive at the rate of $151,250 a year or $3,025,000 for the 20-year term. The annual repayment will be forgiven to the extent that increased sales tax revenue to the City exceeds $151,250 per year from Macy's or new tenants of the M acy's space. The Mall Owner gets credit for 100% of the Macy's sales tax collected in any one year, and any amount under or over that threshold can be used toward a prior shortage.

The sales tax revenue collected from Macy's in fiscal year 2022 did not exceed the threshold, therefore only $87,381 of the annual repayment was forgiven. The cumulative shortage of sales tax collections was $423,918 as of June 30, 2022 and the balance of the loan is $1,738,309 at that date.

Note 4 – Lease Receivable

A. Governmental Activities

The portion of the City’s property is leased to others. Such property includes special purpose facilities, office and commercial space, and land. Lease receivable consists of agreements with other for the right-to-use of the underlying assets at various locations owned by the City. The terms of the arrangements range from 1 to 30 years.

The calculated interest rates used vary depending on the length of the lease. For the fiscal year ended June 30, 2022, the City recognized $207,572 in lease revenue and $27,704 in interest revenue.

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

Balance Balance Due within Due in More
July 1, 2021 Additions Deletions June 30, 2022 One Year Than One Year Leases receivable 2,424,242$ -$ (190,396)$ 2,233,846$ 193,375$ 2,040,471$ Total 2,424,242$ -$ (190,396)$ 2,233,846$ 193,375$ 2,040,471$ Classification

As of June 30, 2022, the required payments for these leases, including interest, are:

Year Ending
June 30, Principal Interest Total
2023 193,375$ 28,140$ 221,515$
2024 194,343 25,887 220,230
2025 195,353 23,616 218,969
2026 198,436 21,305 219,741
2027 165,816 19,060 184,876
2028-2032 556,390 69,405 625,795 2033-2037 257,453 47,027 304,480 2038-2042 250,347 31,117 281,464 2043-2047 134,410 15,590 150,000 2048-2052 87,923 2,075 89,998 Total 2,233,846$ 283,222$ 2,517,068$
City of Tracy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

85 Note 4 – Lease Receivable (Continued)

A. Governmental Activities (Continued)

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

Year Ending Amortization
June 30, Schedule
2023 207,572$
2024 207,572
2025 207,572
2026 207,572
2027 169,563
2028-2032 608,868
2033-2037 208,822
2038-2042 234,460
2043-2047 116,236
2048-2052 48,433
Total 2,216,670$

B. Business-Type Activities

The portion of the City’s property is leased to others. Such property includes special purpose facilities, office and commercial space, and land. Lease receivable consists of agreements with other for the right-to-use of the underlying assets at various locations owned by the City. The terms of the arrangements range from 2 to 30 years.

The calculated interest rates used vary depending on the length of the lease. For the fiscal year ended June 30, 2022, the City recognized $317,037 in lease revenue and $72,745 in interest revenue.

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

Balance Balance Due within Due in More
July 1, 2021 Additions Deletions June 30, 2022 One Year Than One Year Leases receivable 4,099,660$ -$ (275,335)$ 3,824,325$ 256,315$ 3,568,010$ Total 4,099,660$ -$ (275,335)$ 3,824,325$ 256,315$ 3,568,010$ Classification

As of June 30, 2022, the required payments for these leases, including interest, are:

Year Ending
June 30, Principal Interest Total
2023 256,315 $ 76,454$ 332,769$
2024 242,143 73,571 315,714
2025 178,542 70,735 249,277
2026 114,646 68,194 182,840
2027 117,187 65,654 182,841
2028-2032 626,053 288,149 914,202 2033-2037 698,561 215,642 914,203 2038-2042 779,467 134,735 914,202 2043-2047 369,678 64,524 434,202 2048-2052 271,911 33,262 305,173 2053-2057 169,822 5,158 174,980 Total 3,824,325$ 1,096,078$ 4,920,403$
City of Tracy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

86 Note 4 – Lease Receivable (Continued)

B. Business-Type Activities (Continued)

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

Year Ending Amortization
June 30, Schedule
2023 300,247$
2024 283,459
2025 173,059
2026 140,267
2027 140,267
2028-2032 841,600
2033-2037 561,067
2038-2042 701,333
2043-2047 319,929
2048-2052 214,389
2053-2057 107,007
Total 3,782,624$

Note 5 – Deposits Receivable

The City and the Grow America Fund, Inc. (GAF) established and capitalized the Grow Tracy Fund as an economic development tool designed to assist eligible small businesse s within the City to obtain the financing required to grow their businesses. The City contributed $1 million as its share of the capitalization of the program. Loans made under the program are underwritten by the GAF and guaranteed by the Small Business Administration (SBA) under GAF's Small Business Lending Company License. Therefor e, each loan must comply with SBA guidelines and procedures. In order to qualify for these loans, a business must be a for-profit operating entity; it must be financially healthy and in need of expansion capital. The Grow Tr acy Fund can make loans ranging from $100,000 to $2 million as permitted by the SBA at or below market rates, for terms up to 25 years, depending on the proposed use of funds.

As of June 30, 2022, there were nine loans outstanding in the amount of $2,926,957, under the program. The City has not recorded these loans and inst ead has recorded the capitalization c ontribution that GAF uses to fund the share of the loans that the SBA does not guarantee. The City has recorded its capitalization contribution to the program as a deposit receivable, and the portion of the loans funded with that contribution as of June 30, 2022 was $706,293 and the unused balance of the capitalization c ontribution was $293,707. The total deposits receivable balance as of June 30, 2022 was $1,000,000.

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

87 Note 6 – Interfund Receivables, Payables, and Transfers

A. Due To / From Other Funds

Amounts due to and due from other funds at June 30, 2022, were as follows:

Receivable Fund Payable Fund Amount Purpose
General Fund Business Improvement District Special Revenue Fund 69,670$ Overdrawn Cash General Fund Community Development Block Grant Special Revenue Fund 1,022,692 Overdrawn Cash General Fund Municipal Airport Enterprise Fund 228,038 Overdrawn Cash General Fund Municipal Transit Enterprise Fund 1,297,610 Overdrawn Cash Total 2,618,010$

B. Long-Term Advances

At June 30, 2022 the fund below had made an advance that is not expected to be repaid within the next year.

This long-term interfund advance is expected to be re paid when sufficient cash is available in the borrowing fund.

Advances To Advances From Amount
Water Utility Enterprise Fund Wastewater Utility Enterprise Fund 1,500,000$ Total 1,500,000$

In November 2016 the Wastewater Utility Enterprise Fund advanced funds to the Water Utility Enterprise Fund in order to fund operating expenses, capital costs for mainte nance and replacement of existing water infrastructure, debt payments and to maintain an adequate reserve for any emergency to continue providing uninterrupted service.

The advance bears the interest at the Local Agency Investment Fund (LAIF) rate and was to be repaid in two years.

The advance was amended in October 2017 to extend the repayment additional years to fiscal year 2023. At June 30, 2022, the outstanding principal balance of the advance was $1,500,000. Interest is accrued and paid annually through a cash transfer.

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

88 Note 6 – Interfund Receivables, Payables, and Transfers (Continued)

C. Transfers

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

Transfers In Transfers Out Amount Purpose
General Capital Projects Fund General Fund 39,882,678$ Capital projects Community Development Fees Special Revenue Fund General Fund 2,109,068 Capital projects Municipal Airport Enterprise Fund General Fund 156,045 Capital projects Equipment Replacement Internal Service Fund General Fund 365,802 Capital contribution Landscaping District Special Revenue Fund General Fund 95,950 Engineering costs Lease Revenue Bonds Debt Service Fund General Fund 1,121,406 Debt service Subtotal 43,730,949
State Gas Tax Street Special Revenue Fund TEA Grant Special Revenue Fund 623,472 Capital projects CARES/ARPA Grants Special Revenue Fund TEA Grant Special Revenue Fund 18,234 Capital projects Housing Sucessor Agency Special Revenue Fund TEA Grant Special Revenue Fund 311,006 Capital projects Subtotal 952,712
CARES/ARPA Grants Special Revenue Fund Community Development Block Grant Fund 454,565 Capital projects TEA Grant Special Revenue Fund Community Development Block Grant Fund 3,487 Capital projects Housing Sucessor Agency Special Revenue Fund Community Development Block Grant Fund 323,904 Capital projects Subtotal 781,956
CORE Capital Projects Fund I-205 Area Improvements Capital Projects Fund 9,030,565 Consolidating funds CORE Capital Projects Fund Industrial Specific Plan South Capital Projects Fund 1,265,366 Consolidating funds CORE Capital Projects Fund Infill Projects Capital Projects Fund 5,567,165 Consolidating funds CORE Capital Projects Fund North East Industrial #1 Project Capital Projects Fund 11,545,388 Consolidating funds CORE Capital Projects Fund North East Industrial #2 Project Capital Projects Fund 35,844 Consolidating funds CORE Capital Projects Fund Plan "C" Capital Projects Fund 19,491,801 Consolidating funds CORE Capital Projects Fund Presidio Plan Area Capital Projects Fund 5,561,639 Consolidating funds CORE Capital Projects Fund South MacArthur Plan Area Capital Projects Fund 1,954,930 Consolidating funds Subtotal 54,452,698
Infill Projects Capital Projects Fund CORE Capital Projects Fund 111,740 Consolidating funds Industrial Specific Plan South Capital Projects Fund CORE Capital Projects Fund 1,058,625 Consolidating funds General Capital Projects Fund CORE Capital Projects Fund 1,889,758 Consolidating funds North East Industrial #2 Project Capital Projects Fund CORE Capital Projects Fund 4,678,830 Consolidating funds Program Management Capital Projects Fund CORE Capital Projects Fund 169,341 Consolidating funds Subtotal 7,908,294
Tracy Infrastructure Master Plans Capital Projects Fund South MacArthur Plan Area Capital Projects Fund 9,776,671 Consolidating funds Tracy Infrastructure Master Plans Capital Projects Fund CORE Capital Projects Fund 164,052 Consolidating funds Tracy Infrastructure Master Plans Capital Projects Fund Regional Transportation Impact Capital Projects Fund 335,319 Capital projects Subtotal 10,276,042
Wastewater Enterprise Fund Ellis Area Capital Projects Fund 2,900,000 Capital projects Wastewater Enterprise Fund I-205 Area Improvements Capital Projects Fund 3,050,000 Capital projects Wastewater Enterprise Fund Industrial Specific Plan South Capital Projects Fund 200,180 Capital projects Wastewater Enterprise Fund North East Industrial #2 Project Capital Projects Fund 4,700,000 Capital projects Wastewater Enterprise Fund Plan "C" Capital Projects Fund 5,250,000 Capital projects Wastewater Enterprise Fund Tracy Infrastructure M aster Plans Capital Projects Fund 8,427,882 Capital projects Subtotal 24,528,062
Equipment Acquisition Internal Service Fund COPS Grant Special Revenue Fund 1,544 Capital contributions Equipment Acquisition Internal Service Fund Tracy Infrastructure Master Plans Capital Projects Fund 880,660 Capital projects Subtotal 882,204
Urban Management Plan Facilities Captial Projects Fund Infill Projects Capital Projects Fund 170,572 Capital projects General Capital Projects Fund I-205 Area Improvements Capital Projects Fund 384,800 Capital projects General Fund CFD Services 2018-1 Special Revenue Fund 70,147 Administrative cost Municipal Airport Enterprise Fund Redevelopment Obligations Capital Projects Fund 239,298 Capital contribution Water Enterprise Fund Tracy Infrastructure Master Plans Capital Projects Fund 30,214 Capital contribution Drainage Enterprise Fund Industrial Specific Project Capital Projects Fund 423 Capital contribution Municipal Transit Enterprise Fund Proposition K Transportation Special Revenue Fund 171 Capital contribution Total 144,408,542$

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

89 Note 7 – Due from Component Unit and Due from Fiduciary Funds

Due from fiduciary funds as of June 30, 2022, was as follows:

Receivable Fund Payable Fund Amount
Lease Revenue Bonds
Debt Service Fund
Successor Agency Private Purpose
Trust Fund 4,902,529$

A. Successor Agency Reimbursement Agreement

On December 1, 2008, the Agency en tered into a Reimbursement Agreement w ith the City related to the City’s 2008 Lease Revenue Bonds and the portion of those Bonds that funded improvements that benefitted the Redevelopment Project. Under the terms of the Reimbursem ent Agreement, the Agency reimburses the City for a portion of lease payments made by the City under the pr operty lease for the 2008 Lease Revenue Bonds that are attributable to the Redevelopment Improvements. The City refunded the 2008 Lease Revenue Bonds and amended the Reimbursement Agreement on March 1, 2020. Under the terms of the amendment, the Agency reimburses the City for a portion of lease payments made by the City under the property lease for the 2020 Lease Revenue Bonds.

The terms of the Reimbursement Agreement indicate that the Agency is required to make annual payments to the City, regardless of whether the City’s annual lease payments are abated. The Agency has pledged tax revenues for the repayment of the Reimbursement Agreement, subordinate to other obligations of the Agency. The Reimbursement Agreement does not bear interest and annual principal payments are due through 2038. The balance owed by the Successor Agency to the Lease Revenue Bonds Debt Service Fund as of June 30, 2022 was $4,902,529.

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

90 Note 8 – Capital Assets

A. Governmental Activities

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

Balance
June 30, 2021, Adjustments/ Balance
as restated Additions Deletions Transfers June 30, 2022 Capital assets not being depreciated:

Land 179,310,520$ 1,157,000$ -$ -$ 180,467,520$ Roads accounted for using the
modified approach 320,140,413 4,269,858 - 1,559,418 325,969,689 Construction in progress 33,214,200 13,914,439 (4,871,512) (8,460,123) 33,797,004 Total capital assets not being depreciated 532,665,133 19,341,297 (4,871,512) (6,900,705) 540,234,213 Capital assets being depreciated:

Buildings and improvements 143,615,609 - - 2,481,827 146,097,436 Improvements 49,514,797 883,877 - 606,045 51,004,719 Grading, curb & gutter, sidewalk
and driveway approaches 32,135,175 - - - 32,135,175 Traffic signals and street lights 27,149,923 1,089,732 - 3,648,781 31,888,436 Equipment 35,506,111 2,217,969 (5,567,726) - 32,156,354 Infrastructure and drainage 12,218,531 - - - 12,218,531 Intangibles 973,315 230,009 - 164,052 1,367,376 Total capital assets being depreciated 301,113,461 4,421,587 (5,567,726) 6,900,705 306,868,027 Less accumulated depreciation for:

Buildings and improvements (61,013,076) (4,662,669) - - (65,675,745) Improvements (38,775,598) (1,430,149) - - (40,205,747) Grading, curb & gutter, sidewalk
and driveway approaches (16,458,437) (706,517) - - (17,164,954) Traffic signals and street lights (16,380,276) (944,157) - - (17,324,433) Equipment (21,052,640) (2,043,816) 3,639,550 - (19,456,906) Infrastructure and drainage (4,734,214) (237,175) - - (4,971,389) Intangibles (627,813) (77,222) - - (705,035) Total accumulated depreciation (159,042,054) (10,101,705) 3,639,550 - (165,504,209) Net capital assets being depreciated 142,071,407 (5,680,118) (1,928,176) 6,900,705 141,363,818 Leased assets being amortized
Buildings and improvements 405,958 - - - 405,958 Total leased assets being amortized 405,958 - - - 405,958 Less accumulated amortization for:

Buildings and improvements - (173,982) - - (173,982) Total accumulated amortization - (173,982) - - (173,982) Net leased assets being amortized 405,958 (173,982) - - 231,976 Governmental activities capital assets, net 675,142,498$ 13,487,197$ (6,799,688)$ -$ 681,830,007$

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

91 Note 8 – Capital Assets (Continued)

A. Governmental Activities (Continued)

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

General government 781,852$
Police 250,085
Fire 116,829
Development and engineering 3,997
Public works 6,721,703
Parks and community services 782,775
Internal service funds 1,618,446
Total depreciation and amortization expense 10,275,687$

B. Business-Type Activities

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

Balance Adjustments/ Balance
June 30, 2021 Additions Deletions Transfers June 30, 2022 Capital assets not being depreciated:

Land 19,056,776$ -$ -$ -$ 19,056,776$ Construction in progress 54,686,285 15,262,878 (2,521,130) (19,085,113) 48,342,920 Total capital assets not being depreciated 73,743,061 15,262,878 (2,521,130) (19,085,113) 67,399,696 Capital assets being depreciated:

Buildings 169,887,887 - - 1,277,660 171,165,547 Improvements 3,570,581 - - 4,547,405 8,117,986 Equipment 44,678,269 244,411 (296,826) 3,188,404 47,814,258 Infrastructure 368,706,341 8,099,019 - 9,478,432 386,283,792 Intangibles 72,882,813 - - 593,212 73,476,025 Total capital assets being depreciated 659,725,891 8,343,430 (296,826) 19,085,113 686,857,608 Less accumulated depreciation for:

Buildings (100,409,112) (4,673,018) - - (105,082,130) Improvements (2,443,238) (669,166) - - (3,112,404) Equipment (23,470,274) (1,839,874) 296,826 - (25,013,322) Infrastructure (165,930,815) (7,296,173) - - (173,226,988) Intangibles (32,696) (20,590) - - (53,286) Total accumulated depreciation (292,286,135) (14,498,821) 296,826 - (306,488,130) Net capital assets being depreciated 367,439,756 (6,155,391) - 19,085,113 380,369,478 Busi
ness-Type activities capital assets, net 441,182,817$ 9,107,487$ (2,521,130)$ -$ 447,769,174$

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

Water 4,655,818$
Sewer 5,888,177
Drainage operations 1,715,107
Municipal Airport 1,125,380
Municipal Transit 1,114,339
Total de preciation and amortization expe nse 14,498,821$ City of Tracy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

92 Note 8 – Capital Assets (Continued)

C. Component Unit

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

Balance Adjustments/ Balance
June 30, 2021 Additions Deletions Transfers June 30, 2022 Capital assets being depreciated:

M achinery and equipment -$ -$ -$ 1,701,081$ 1,701,081$ Vehicles - - - 2,659,590 2,659,590 Total capital assets being depreciated - - - 4,360,671 4,360,671 Less accumulated depreciation - (106,796) - (3,132,211) (3,239,007) Component unit capital assets, net -$ (106,796)$ -$ 1,228,460$ 1,121,664$

Depreciation expense for the component unit for the year ended June 30, 2022 was $106,796.

Note 9 – Long-Term Liabilities

A. Summary

Annual Original
Final Interest Principal Issue Outstanding at
Maturity Rate Installments Amounts June 30, 2022
Governmental Activities
Direct Borrowing:

Lease Payable 2024 0.26% $176,425-$59,688 405,958 $ 236,112 $ Public Borrowing:

Lease Revenue Refunding Bonds, Series 2020 2039 3.00% - 4.00% $555,000-$1,295,000 18,190,000 $ 17,040,000 $ Lease Revenue Bonds, Series 2022 2038 5.00% $810,000-$1,615,000 18,275,000 18,275,000 Total Governmental Activities 36,870,958 $ 35,315,000 $ Business-Type Activities
Direct Borrowing:

State of California Department of Public Health 2028 2.34% $394,960-$1,221,886 20,000,000 $ 6,456,524 $ Public Borrowing:

Certificates of Participation, Series 2004
(Wastewater Treatment Plant Upgrade) 2037 2.00% - 4.75% $575,000-$1,050,000 30,955,000 20,260,000 Total Business-Type Activities 50,955,000 $ 26,716,524 $ Successor Agency
Public Borrowing:

Tax Allocation Refunding Bonds, Series 2016 2034 3.00% - 4.00% $380,000-$2,730,000 33,720,000 $ 26,070,000 $ Total Successor Agency 33,720,000$ 26,070,000 $

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

93 Note 9 – Long-Term Liabilities (Continued)

B. Governmental Activities

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

Balance
June 30, 2021, Debt Debt Balance Due within Due in More as restated Issued Retired June 30, 2022 One Year Than One Year Governmental Activities:

Direct borrowings:

Lease payable 405,958 $ - $ (169,846)$ 236,112 $ 176,425 $ 59,687 $ Public borrowings:

Lease revenue bonds:
2020 Lease Revenue Refunding Bonds 17,635,000 - (595,000) 17,040,000 635,000 16,405,000 plus: bond premium 3,455,106 - (46,069) 3,409,037 - 3,409,037 2022 Lease Revenue Bonds - 18,275,000 - 18,275,000 810,000 17,465,000 plus: bond premium - 2,051,917 - 2,051,917 - 2,051,917 Total lease revenue bonds 21,090,106 20,326,917 (641,069) 40,775,954 1,445,000 39,330,954 Total 21,496,064$ 20,326,917 $ (810,915) $ 41,012,066 $ 1,621,425 $ 39,390,641 $ Classification

Lease Payable
The City has entered into leases for building space and equipment use. The terms of the agreements range from 2 to 3 years. The calculated interest rates used was 0.263%.

The annual debt service requirements on the lease payable are as follows:

Year Ending
June 30, Principal Interest Total
2023 176,425$ 410 $ 176,835$ 2024 59,687 33 59,720 Total 236,112$ 443 $ 236,555$

2020 Lease Revenue Refunding Bonds

On February 28, 2020, the City, under the Tracy Operating Partnership (TOP), issued $18,190,000 of 2020 Lease Revenue Refunding Bonds. The proceeds from the bonds were used to refund, on a current basis, the 2007 Lease Revenue Bonds Series A, the 2007 Lease Revenue Bonds Series B, and the 2008 Lease Revenue Bonds. The TOP has pledged revenue pursuant to amended site and facility leases between the City and the TOP for the Fire Station 91, the Police Department Headquarters and the Fire Administration Building.

Interest payments are due semi-annually each November 1 and May 1 at rates of 3% and 4%. Principal is due annually each November 1 through 2038. The refunding resulted in an overall debt service savings of $9,888,414.

The net present value of the debt service savings is called an economic gain and amounted to $8,617,218. The 2020 Bonds maturing on or before November 1, 2029 are not subject to annual redemption prior to maturity. The 2020 Bonds maturing on or after November 1, 2030 are subject to optional redemption prior to maturity on or after May 1, 2030 at the option of the TOP, as a whole or in part on any date at a redemption price equal to the principal amount of 2020 Bonds to be redeemed, plus accrued but unpaid interest to the redemption date, without premium.

In the event of default, the TOP may not terminate the respective lease agreements or release the leased properties, but the City remains liable to pay all lease payments as they come due.

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

94 Note 9 – Long-Term Liabilities (Continued)

B. Governmental Activities (Continued)

2020 Lease Revenue Refunding Bonds (Continued)

The annual debt service requirements on these bonds are as follows:

Year Ending
June 30, Principal Interest Total
2023 635,000$ 668,900 $ 1,303,900$
2024 670,000 642,800 1,312,800
2025 705,000 615,300 1,320,300
2026 750,000 586,200 1,336,200
2027 790,000 555,400 1,345,400
2028-2032 4,735,000 2,245,700 6,980,700 2033-2037 6,230,000 1,154,800 7,384,800 2038-2039 2,525,000 102,300 2,627,300 Total 17,040,000$ 6,571,400$ 23,611,400$

2022 Lease Revenue Bonds

On May 1, 2022, the City, under the Tracy Public Financing Authority (TPFA), issued $18,275,000 of 2022 Lease Revenue Bonds. The proceeds from the bonds are being used to finance the acquisition and constructions of public capital improvements of the City, primar ily consisting of Phase 1E of the Le gacy Fields Sports Complex. The TPFA has pledged revenue pursuant to leases between the City and the TPFA for Phase 1 of the Legacy Fields Sports Complex, consisting of 72 acres of land containi ng 10 baseball fields, 8 soccer fields, restrooms and concessions, and paved parking lots and landscaping.

Interest payments are due semi-annually each November 1 a nd May 1 at the rate of 5%. Principal is due annually each November 1 through 2037. Yields range from 1.79% to 3.650%. The 2022 Bonds maturing on or before November 1, 2032 are not subject to annual redemption pr ior to maturity. The 2022 Bonds maturing on or after November 1, 2033 are subject to optional redemption prior to maturity on or after May 1, 2032 at the option of the TPFA, as a whole or in part on any date at a redemption price equal to 100% of the principal amount of 2022 Bonds to be redeemed, plus accrued but unpaid interest to the redemption date, without premium. In the event of default, the TPFA may not terminate the respective lease agreements or release the leased properties, but the City remains liable to pay all lease payments as they come due.

The annual debt service requirements on these bonds are as follows:

Year Ending
June 30, Principal Interest Total
2023 810,000$ 847,813 $ 1,657,813 $ 2024 800,000 853,250 1,653,250 2025 845,000 812,125 1,657,125 2026 885,000 768,875 1,653,875
2027 930,000 723,500 1,653,500
2028-2032 5,425,000 2,850,125 8,275,125 2033-2037 6,965,000 1,308,875 8,273,875 2038 1,615,000 40,375 1,655,375
Total 18,275,000$ 8,204,938$ 26,479,938$

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

95 Note 9 – Long-Term Liabilities (Continued)

C. Business-Type Activities

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

Balance Debt Debt Balance Due within Due in More
July 1, 2021 Issued Retired June 30, 2022 One Year Than One Year Business-Type Activities:

Direct borrowings:

Loans payable:

State of California
Department of Public Health 7,544,235$ -$ (1,087,711)$ 6,456,524$ 1,113,312$ 5,343,212$ Total loans payable 7,544,235 - (1,087,711) 6,456,524 1,113,312 5,343,212 Public borrowings:

Certificates of Participation:

Wastewater, Series 2004 21,175,000 - (915,000) 20,260,000 955,000 19,305,000 Total certificates of participation 21,175,000 - (915,000) 20,260,000 955,000 19,305,000 Total 28,719,235$ -$ (2,002,711)$ 26,716,524$ 2,068,312$ 24,648,212$ Classification

State of California Department of Public Health Loan Payable

In 2006, the City entered into a loan agreement with the State of California Department of Public Health in the amount of $20,000,000 for assistance in the construction of its new Water Treatment Plant. The proceeds from the loan were drawn down by the City as needed for constructi on. The loan is a fully amortized loan over 20 years at an annual interest rate of 2.34%. The City is obligated to make semi- annual payments of principal and interest in the amount of $628,960 beginning July 1, 2008 with a final maturity date of January 1, 2028.

The annual debt service requirements on the California Department of Public Health Loan Payable are as follows:

Year Ending
June 30, Principal Interest Total
2023 1,113,312$ 144,608 $ 1,257,920$
2024 1,139,516 118,404 1,257,920
2025 1,166,336 91,583 1,257,919
2026 1,193,788 64,131 1,257,919
2027 1,221,886 36,033 1,257,919
2028 621,686 7,274 628,960
Total 6,456,524$ 462,033$ 6,918,557$

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

96 Note 9 – Long-Term Liabilities (Continued)

C. Business-Type Activities (Continued)

Wastewater Certificates of Participation (COPs), Series 2004

The City issued Wastewater Certificates of Participation (COPs) in April 2004 to fund the upgrade of the City’s wastewater treatment plant. The Wastewater COPs are special obligations of the City and are payable solely from and secured by a pledge of net revenues of the Wastewat er Utility System. Principal payments commence on December 1, 2007, and are payable annually on Decemb er 1 through 2036. Interest payments commence on December 1, 2004, and are payable semi-annually on December 1 and June 1, thereafter. The COP’s maturing on or after December 1, 2014 may be prepaid in advance of maturity on any date on or after December 1, 2013 plus accrued but unpaid interest to the prepayment date, without premium. For fiscal year 2022 net revenues amounted to $4,945,126 which represented coverage of 262% over the $1,890,418 of debt service. The pledge of net revenues ends upon repayment of the City’s repayment of the remaining balance of $30,330,191 which is scheduled to occur in 2037.

The annual debt service requirements on the Series 2004 COPs are as follows:

Year Ending
June 30, Principal Interest Total
2023 955,000$ 932,865 $ 1,887,865 $ 2024 1,000,000 887,900 1,887,900
2025 1,050,000 840,750 1,890,750
2026 - 816,600 816,600
2027 - 816,600 816,600
2028-2032 6,025,000 3,375,063 9,400,063 2033-2037 11,230,000 2,400,413 13,630,413 Total 20,260,000$ 10,070,191$ 30,330,191$

D. Fiduciary Fund Private Purpose Trust Funds - Su ccessor Agency to the Former Community Development Agency of the City of Tracy

A summary of changes in the long-term liabilities of the fi duciary fund financial statements for the year ended June 30, 2022, is as follows:

Balance Debt Debt Balance Due within Due in More
July 1, 2021 Issued Retired June 30, 2022 One Year Than One Year Fiduciary Activities:

Public borrowings:

Tax allocation refunding bonds:

Series 2016 27,650,000$ -$ (1,580,000)$ 26,070,000$ 1,660,000$ 24,410,000$ Add: unamortized bond premiums 3,960,912 - (304,686) 3,656,226 - 3,656,226 Total tax allocation refunding bonds 31,610,912 - (1,884,686) 29,726,226 1,660,000 28,066,226 Total 31,610,912$ -$ (1,884,686)$ 29,726,226$ 1,660,000$ 28,066,226$ Classification

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

97 Note 9 – Long-Term Liabilities (Continued)

D. Fiduciary Fund Private Purpose Trust Funds - Su ccessor Agency to the Former Community Development Agency of the City of Tracy (Continued)

Tax Allocation Refunding Bonds, Series 2015A

On January 21, 2016, the Successor Agency issued 2016 Tax Allocation Refunding Bonds in the amount of $33,720,000. The proceeds from the Bonds were used to advance refund and defease the outstanding balance of the 2003 Tax Allocation Bonds Series A and B. The Bonds bear interest ranging from 2% to 5%. Interest is payable semi-annually each August 1 and February 1 and principal is due annually on each August 1, through 2033. The Bonds maturing on or before August 1, 2025 are not subject to optional redemption prior to maturity. The Bonds maturing on and after August 1, 2026, are subject to redemption, at the option of the Successor Agency on any date on or after August 1, 2025, as a whole or in part. The defeased bonds were called on February 22, 2016.

The Successor Agency’s annual debt service requirements on the 2015A Tax A llocation Refunding Bonds are as follows:

Year Ending
June 30, Principal Interest Total
2023 1,660,000$ 1,154,300 $ 2,814,300 $
2024 1,740,000 1,069,300 2,809,300
2025 1,820,000 980,300 2,800,300
2026 1,910,000 887,050 2,797,050
2027 2,000,000 789,300 2,789,300
2028-2032 11,555,000 2,306,375 13,861,375 2033-2034 5,385,000 162,675 5,547,675 Total 26,070,000$ 7,349,300$ 33,419,300$

Pledge of Revenues

The Agency has pledged all future tax increment revenues, for the repaym ent of the Tax Allocation Bonds and Reimbursement Agreement. The pledge of all future tax increment revenues end upon repayment of the remaining debt service of $33,419,300 on the Bonds, which is scheduled to occur in 2034. With the dissolution of the Redevelopment Agency discussed above, Tax Increment is no longer distributed, and instead the Successor Agency receives payments from the County’s Redevelopment Property Tax Trust Fund (RPTTF) that are to be used to fund debt service on the Bonds, with no distinction between housing and non-housing revenues. In addition, under the provisions of the laws dissolving the Redevelopmen t Agency, the Successor Agency only receives the funds necessary to fulfill its approved obligations. Total property taxes available for distribution to the Successor Agency and other taxing entities for fiscal year 2022 calculated by the County Auditor-Controller was $9,015,014, and the total received by the Successor Agency for fiscal year 2022 debt service was $2,628,720, which the Agency used to pay the $2,815,300 of fiscal year debt service.

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

98 Note 10 – Special Assessment Debt with No City Commitment

The City issued special tax and assessment bonds on behalf of property owners, pursuant to the Improvement Bond Act of 1915 and the Mello-Roos Comm unity Facilities Act of 1982, to fina nce the acquisition and construction of certain infrastructure improvements within the assessment districts and community facilities districts.

The City has authorized the formation of the Bay Meadows Community Facilities District No. 2008-1 (Bay Meadows CFD), acting through its eligible landowner voters, and the issuance of bonds under the public improvement act (Mello- Roos Community Facilities Act of 1982) of the State of Calif ornia to finance eligible public facilities necessary to serve developing commercial, industrial, residential and/or mixed-use developments. The bonds are secured by annual special tax levies or liens placed on the property within the district.

Special Assessment Districts in various parts of the City have issued debt to finance infrastructure improvements and facilities within their boundaries. The City is the collecting and paying agent for the debt issued by these Districts, but has no direct or contingent liability or moral obligation for the payment of this debt. Therefore, this debt is not included as debt of the City.

The outstanding balance of each of these issues as of June 30, 2022, is as follows:

Fiscal Year Underlying
Issue Maturity Assessment Outstanding
Description Year Year District Bond s June 30, 2022
1996A Tax Bonds (93-1 Community Facilities District - I-205 Parcel GL-17) 1997 2027 430,000 $ 2002 Special Tax Bonds (93-1 Community Facilities District - 1-205 Parcel GL-17) 2003 2033 1,575,000 2003-01 Assessment District Limited Obligation Improvement Bonds (Berg Avenue) 2003 2029 405,000 2005A TOP JPA Revenue Bonds (Senior Lien) (98-1 Plan C) 2006 2029 27,625,000 2005B TOP JPA Revenue Bonds (Junior Lien) (98-3 Plan C) 2006 2036 765,000 2005C TOP JPA Revenue Bonds 2006 2036 8,935,000
2011A TOP JPA Revenue Bonds:
98-4 Morrison Homes and 2000-02 Heartland Three 2011 2026 940,000 2011-1 Reassessment Bonds 2011 2027 160,000
99-2 South MacArthur Plan Area (2000 and 2002) 2011 2028 4,780,000 Total 2011A TOP JPA Revenue Bonds 5,880,000
2014A Tracy Public Financing Authority Revenue Bonds:
99-1 Community Facilities District - Northeast Industrial Area 2014 2025 1,800,000 2014-1 Reassessment Bonds 2014 2023 220,000
Total 2014A Tracy Public Financing Authority Revenue Bonds 2,020,000 2018 Series Tracy Hills Special Tax Bonds Community Facilities District No. 2016-1 2019 2048 32,385,000 2019 Series Tracy Hills Phase I Special Tax Bonds Community Facilities District No. 2016-1 2020 2050 14,765,000 2019 Series ECFD Special Tax Bonds Community Facilities District No. 2016-2 2020 2050 15,130,000 2019 Series NEI Phase II Special Tax Refunding Bonds Community Facilities District No. 2006-01 2020 2037 7,755,000 2021 Series ECFD Special Tax Bonds Community Facilities District No. 2016-2 2021 2051 13,055,000 2022 Series Hillview Special Tax Bonds Community Facilities District No. 2021-1 2022 2053 6,830,000 Total 137,555,000$

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

99 Note 11 – Sick Leave Conversion

A. Governmental Activities

A summary of changes in the sick leave conversion ba lances for the governmental ac tivities for the year ended June 30, 2022 is as follows:

Balance Balance Due within Due in More
July 1, 2021 Additions Deletions June 30, 2022 One Year Than One Year Sick Leave Conversion 3,926,836$ 1,228,748$ (648,164)$ 4,507,420$ 901,484$ 3,605,936$ Total 3,926,836$ 1,228,748$ (648,164)$ 4,507,420$ 901,484$ 3,605,936$ Classification

Sick leave conversion are liquidated by the fund that has recorded the liability only when matured. The long-term portion of the governmental activities sick leave conversion is liquidated primarily by the General Fund.

Note 12 – Compensated Absences

A. Governmental Activities

A summary of changes in the compen sated absences balances for the governme ntal activities for the year ended June 30, 2022 is as follows:

Balance Balance Due within Due in More
July 1, 2021 Additions Deletions June 30, 2022 One Year Than One Year Compensated absences 4,646,350$ 4,282,127$ (4,893,587)$ 4,034,890$ 1,562,838$ 2,472,052$ Total 4,646,350$ 4,282,127$ (4,893,587)$ 4,034,890$ 1,562,838$ 2,472,052$ Classification

Compensated absences are liquidated by the fund that has recorded the liability only when matured. The long-term portion of the governmental activities compensated absences is liquidated primarily by the General Fund.

B. Business-Type Activities

A summary of changes in the compen sated absences balances for the business- type activities for the year ended June 30, 2022 is as follows:

Balance Balance Due within Due in More
July 1, 2021 Additions Deletions June 30, 2022 One Year Than One Year Compensated absences 943,758$ 936,672$ (1,014,363)$ 866,067$ 296,692$ 569,375$ Total 943,758$ 936,672$ (1,014,363)$ 866,067$ 296,692$ 569,375$ Classification

Compensated absences in the business-type activities are obligations of the following funds:

Water Fund 328,167$
Sewer Fund 372,333
Solid Waste Fund 86,599
Drainage Operations Fund 28,199
Municipal Airport Fund 18,098
Municipal Transit Fund 32,671
Total 866,067$

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

100
Note 13 – Risk Management

The City is exposed to various risks of loss related to tort s; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the City obtains insurance coverage.

Public entity risk pools are formally organized and separate entities established under the Joint Exercise of Powers Act of the State of California. As separate legal entities, those entities exercise full powers and authorities within the scope of the related Joint Powers Agreemen ts including the preparation of annua l budgets, accountability for all funds, the power to make and execute contracts and the right to sue and be sued. Each risk pool is governed by a board consisting of representatives from member municipalities. Each board controls the operations of the respective risk pool, including selection of management and approval of operating budgets, independent of any influences by member municipalities beyond their representation of that board. Obligations and liabilities of these risk pools are not the City's responsibility.

Since 1986, the City has joined together with other cities to form a public entity risk pool known as the Central San Joaquin Valley Risk Management Authority - CSJVRMA (t he Authority), a joint powers authority established in accordance with the California government code. The relationship between the City and the Authority is such that the Authority is not a component unit of the City for financial reporting purposes. Financial statements for the Authority may be obtained from the Authority's management.

The Authority is currently operating as a common risk management and insurance program for 54 member cities. The program's general objectives are to formulate, develop, and administer, on the behalf of the member cities, a program of insurance, to obtain lower cost for that coverage, and to develop a comprehensive loss control program. A member may withdraw from the Authority only by giving six-month notice. Cities applying for membership in the Authority may do so on approval of a two-thirds vote of the board of the Authority.

The latest financial information of the Authority for fiscal year ended June 30, 2022, is as follows:

Total Assets 150,837,823$
Total Liabilities 118,663,929$
Net Position 32,173,894$
Operating Revenues 66,885,024$
Operating Expenses 47,584,363$
Nonoperating Revenues (Expenses) (7,973,544)$
Change in Net Position 11,327,117$

A. Coverage

The City participates in the Central San Joaquin Valley Risk Management Authority (CSJVRMA), a public entity risk pool currently operating as a common risk management and insurance program for 54 cities. The purpose of CSJVRMA is to spread the adverse effect of lo sses among the members and to purchase excess insurance as a group, thereby reducing its expense. The CSJVRMA is governed by a Board of Directors elected by the member agencies; it is not a component unit of the City. Audited financial statements are ava ilable from the Central San Joaquin Risk Management Authority at 1750 Creekside Oaks Drive, Suite 200, Sacramento, CA 95833.

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

101
Note 13 – Risk Management (Continued)

A. Coverage (Continued)

The City participates in the following pooled coverages through CSJVRMA:

Type of Coverage (Deductible) Coverage Lim its
Liability ($100,000) 54,000,000$
Property ($5,000 to $10,000) 1,000,000,000
Worker's Compensation ($200,000) Statutory Limit
Boiler and Machinery ($1,000 to $10,000) 100,000,000
Automobile - for vehicles with values more than $25,000 ($500) 1,000,000,000

The CSJVRMA maintains separate records for each member for each year of participation. The records track cash paid to the CSJVRMA through deposit premium assessments, the C ity’s self-insured retention portion of claims paid, and the City’s allocation of shared risks. Three y ears after the close of the workers’ compensation coverage year and five years after the close of the general liabil ity coverage year, the CSJVRMA assesses the status of all members for the year, then e ither makes a refund to a member if it has positive balance (i.e., payout and reserve experience is less than premiums paid) or collects any deficit.

During the fiscal year ended June 30, 2022, the City c ontributed $6,425,900 for curre nt year coverage. Settled claims have not exceeded insurance coverage in any of the past three fiscal years.

B. Liability for Uninsured Claims

The City provides for the uninsured portion of claims and judgments, including provisions for claims incurred but not reported, in the Insurance Internal Service Fund. Cl aims and judgments are recorded when a loss is deemed probable of asserting and the amount of the loss is reas onably determinable. As discussed above, the City has coverage for such claims, but it has retained the risk for the deductible, or uninsured portion of these claims. The City has estimated that claims will become due and payable in more than one year.

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

102
Note 14 – Pension Plans

A. Summary

Governmental Business-Type
Activities Activities Total
Deferred outflows of resources:

Pension contribution made after measurement date:

CalPERS M iscellaneous 5,020,091$ 1,767,483 6,787,574$ CalPERS Safety 7,549,380 - 7,549,380 Total pension contribution made after measurement date 12,569,471 1,767,483 14,336,954 Difference between expected and actual experience
CalPERS M iscellaneous 1,589,251 559,549 2,148,800 CalPERS Safety 3,692,384 - 3,692,384 Total difference between expected and actual experience 5,281,635 559,549 5,841,184 Total deferred outflows of resources
CalPERS M iscellaneous 6,609,342 2,327,032 8,936,374 CalPERS Safety 11,241,764 - 11,241,764 Total deferred outflows of resources 17,851,106$ 2,327,032 $ 20,178,138 $ Net pension liability:

CalPERS M iscellaneous 18,016,835 6,343,406 24,360,241$ CalPERS Safety 29,624,502 - 29,624,502 Total net pension liability 47,641,337$ 6,343,406 $ 53,984,743 $ Deferred inflows of resources:

Difference between expected and actual experience
CalPERS M iscellaneous 447,398$ 157,523 $ 604,921 $ CalPERS Safety 1,766 - 1,766 Total difference between expected and actual experience 449,164 157,523 606,687 Actual earnings on pension plan investments in excess of projected earnings:

CalPERS M iscellaneous 11,156,073 3,927,853 15,083,926 CalPERS Safety 17,970,224 - 17,970,224 Total actual earnings on pension plan investments in excess of 29,126,297 3,927,853 33,054,150 Changes of assumptions
CalPERS Safety 139,941 - 139,941 Total difference between expected and actual experience 139,941 - 139,941 Total deferred inflows of resources
CalPERS M iscellaneous 11,603,471 4,085,376 15,688,847 CalPERS Safety 18,111,931 - 18,111,931 Total deferred inflows of resources 29,715,402$ 4,085,376 $ 33,800,778 $ Pension expenses:

CalPERS M iscellaneous 1,568,905$ 552,384$ 2,121,289$ CalPERS Safety 5,481,403 - 5,481,403 Total net pension expenses 7,050,308$ 552,384 $ 7,602,692 $ City of Tracy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

103
Note 14 – Pension Plans (Continued)

B. City

Plan Description

Substantially all City employees working the equivalent of 1,000 hours per fiscal year are eligible to participate in the Miscellaneous or Safety Agent multiple-employer de fined benefit plan administered by California Public Employees Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. Benefit Provisions under the Plans are established by State statutes within the Public Employee’s Retirement Law. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website. Copies of the CalP ERS annual financial report may be obtained from the CalPERS Executive Office – 400 P Street, Sacramento, CA 95814.

Employees Covered

At June 30, 2021, the measurement date, the following employees were covered by the benefit terms for the Plan:

Miscellaneous Plan Safety Plan Total
Active employees 323 172 495
Transferred and terminated employees 271 56 327
Retired employees and beneficiaries 358 179 537
Total 952 407 1359

Benefits Provided

CalPERS provide retirement and disability benefits, annual cost-of-living adjust ments, and death benefits to plan members and beneficiaries. Classic CalPERS member becomes eligible for service retirement upon attainment of age 55 with at least 5 years of credited service. PEPRA miscellaneous members become eligible for service retirement upon attainment of age 62 with at least 5 years of service. The service retirement benefit is a monthly allowance equal to the product of the benefit f actor, years of service, and final compensation. The final compensation is the monthly average of the member's highest 36 full-time equivalent monthly pay.

Following are the benefit provisions for each plan:

Miscellaneous
Classic Tier I Classic Tier II PEPRA
Hire date October 9, 2011 October 9, 2011 January 1, 2013 Benefit formula 2.5% @ 55 2.0% @ 55 2.0% @ 62
Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 - 55 50 - 63 52 - 67
Monthly benefits, as a % of eligible compensation 2.0-2.5% 1.426%-2.418% 1.0% - 2.5% Required employee contribution rates 8% 7% 6.25%
Required employer contribution rates 9.560% 9.560% 9.560% Required UAL contribution $4,226,040
City of Tracy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

104
Note 14 – Pension Plans (Continued)

B. City (Continued)

Benefits Provided (Continued)

Safety - Police
Classic Tier I Classic Tier II PEPRA
Hire date April 8, 2012 April 8, 2012 January 1, 2013
Benefit formula 3% @ 50 3% @ 55 2.7% @ 57
Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 50 - 55 50 - 57
Monthly benefits, as a % of eligible compensation 3.0% 2.4% - 3.0% 2.0% - 2.7% Required employee contribution rates 9% 9% 13%
Required employer contribution rates 21.890% 21.890% 21.890% Required UAL contribution (Police and Fire) $4,122,136

Safety - Fire
Classic Tier I PEPRA
Hire date January 1, 2013 January 1, 2013
Benefit formula 3% @ 55 2.7% @ 57
Benefit vesting schedule 5 years service 5 years service Benefit payments monthly for life monthly for life
Retirement age 50 - 55 50 - 57
Monthly benefits, as a % of eligible compensation 2.4% - 3.0% 2.0% - 2.7% Required employee contribution rates 9% 13%
Required employer contribution rates 21.845% 21.845%

On January 1, 2013, the Public Employee Pension Reform Act (PEPRA) went into effect. This State law applies to employees hired on or after January 1, 2013 who ar e new to Public Employee Retirement Systems (PERS).

These employees are termed PEPRA members and employees that were enrolled in PERS (without significant separation) prior to January 1, 2013 are now referred to as classic members. PEPRA miscellaneous members will be enrolled in a 2% at 62 plan and PEPRA safety members will be enrolled in a 2.7% at 57 plan. PEPRA members will be required to pay half the normal cost of their plans.

Contributions

Section 20814(C) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for both 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 duri ng the year (normal cost), with additional amount to finance any unfunded accrued liability (UAL).

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

105
Note 14 – Pension Plans (Continued)

B. City (Continued)

Contributions (Continued)

For the year ended June 30, 2022, the plan’s contributions made for the Plan was as follows:

M iscellaneous Plan Safety Plan
Contributions - employer 6,787,574 $ 7,549,380 $

Net Pension Liability

The City’s net pension liability is m easured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of the Plan is measured as of June 30, 2021, using an annual actuarial valuation as of June 30, 2020 rolled forward to June 30, 2021 us ing standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown on the following page.

Actuarial Assumptions

The total pension liabilities in the June 30, 2020 actuarial valuations were determined using the following actuarial assumptions:

Actuarial Cost M ethod
Actuarial Assumptions:

Discount Rate
Inflation
Payroll Growth
Salary Increases
Investment Rate of Return
Morta l i ty Ra te Ta bl e
Post Retirement Benefit Increase

7.15%
Entry Age Normal in accordance with the requirement of GASB Statement No. 68

2.50%

2.75%
Contract COLA up to 2.75% until Purchasing Power Protection Allowance Floor on Purchasing Power applies, 2.75% thereafter
Derived using CalPERS’ M embership Data for all Funds. The mortality table used was developed based on CalPERS’ specific data. The table includes 20 years of mortality improvements using Society of Actuaries Scale M P-2016.

7.25%
Varies by Entry Age and Service

The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2020 valuation were based on the results of December 2017 actuarial experience st udy for the period 1997 to 2015. Further details of the Experiences Study can be found on the CalPERS website.

Discount Rate

In determining the long-term expected rate of return, CalPERS took into account, bot h short-term and long-term market return expectations as well as the expected pe nsion fund cash flows. Such cash flows were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. Using historical returns of all the funds’ asset classes, expected com pound (geometric) returns were calculated over the short-term (first 10 years) and the l ong-term (11-60 years) using a building-block approach.

Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as th e one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate ca lculated above and rounded down to the nearest one quarter of one percent.

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

106
Note 14 – Pension Plans (Continued)

B. City (Continued)

Discount Rate (Continued)

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

Asset Class
New Strategic
Allocation
Real Return Years
1 - 10
1 Real Return Years
11 +
2 Global equity 50.00% 4.80% 5.98%
Global fixed income 28.00% 1.00% 2.62%
Inflation sensitive assets 0.00% 0.77% 1.81%
Private equity 8.00% 6.30% 7.23%
Real assets 13.00% 3.75% 4.93%
Liquidity 1.00% 0.00% -0.92%
1 An expected inflation of 2.00% was used for this period. 2 An expected inflation of 2.92% was used for this period.

The discount rate used to measure the total pension liability was 7.15% for the plan . To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate.

Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.15% discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of 7.15% is applied to all plans in the Public Empl oyees Retirement Fund (PERF). The stress test results are presented in a detailed report called “GASB Crossover T esting Report” that can be obtained from the CalPERS website under the GASB 68 Section.

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

The following presents the City’s net pension liability, calculated using the discount rate, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:

Discount Rate - 1% Current Discount Discount Rate + 1%
(6.15%) Rate (7.15%) (8.15%)
Miscellaneous Plan 49,213,757$ 24,360,241$ 3,792,272$ Safety Plan 63,157,170$ 29,624,502$ 2,292,309$ Plan's Aggregate Net Pension Liability/(Asset)

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

107
Note 14 – Pension Plans (Continued)

B. City (Continued)

Changes in the Net Pension Liability

The following table shows the changes in net pension liability recognized over the measurement period:

Total Pension
Liability
Plan Fiduciary Net
Position Net Pension Liability
Balance at June 30, 2020 (V aluation Date) 177,707,299 $ 131,301,729 $ 46,405,570 $ Changes in the year:

Service cost 4,423,657 - 4,423,657 Interes t on the total pens ion liabilities 12,514,107 - 12,514,107 Changes in assumptions - - - Differences between ex pected and actual ex perience (813,515) - (813,515) Benefit paym ents, including refunds of m em bers contributions (8,166,291) (8,166,291) - Plan to plan resource m ovem ent - - - Contributions - em ployer - 6,067,470 (6,067,470) Contributions - em ployee - 2,122,136 (2,122,136) Net investm ent incom e - 30,111,134 (30,111,134) Adm inistrative ex penses - (131,162) 131,162 Net changes 7,957,958 30,003,287 (22,045,329) Balance at June 30, 2021 (Measurement Date) 185,665,257 $ 161,305,016 $ 24,360,241 $ Miscellaneous Plan

Total Pension
Liability
Plan Fiduciary Net
Position Net Pension Liability
Balance at June 30, 2020 (Valuation Date) 211,430,889 $ 157,747,183 $ 53,683,706 $ Changes in the year:

Service cost 6,319,026 - 6,319,026 Interest on the total pens ion liabilities 15,086,876 - 15,086,876 C hanges i n assum ptions - - - Differences between ex pected and actual ex perience 470,585 - 470,585 Benefit payments, including refunds of m embers contributions (8,111,466) (8,111,466) - Plan to plan resource m ovem ent - - - Contributions - em ployer - 7,379,587 (7,379,587) Contributions - em ployee - 2,523,099 (2,523,099) Net investment income - 36,190,585 (36,190,585) Adm inistrative ex penses - (157,580) 157,580 Net changes 13,765,021 37,824,225 (24,059,204) Balance at June 30, 2021 (Measurement Date) 225,195,910$ 195,571,408$ 29,624,502$ Safety Plan

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

108
Note 14 – Pension Plans (Continued)

B. City (Continued)

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

For the year ended June 30, 2022, the City recognized pension expense in the amount of $2,121,289 and $5,481,403 for the miscellaneous and safety plans, respectively.

The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is amortized over 5-years straight line. All other amounts are amortized straight-line over the average expected remaining service liv es of all members that are provided w ith benefits (active, inactive and retired) as of the beginning of the measurement period.

The Expected Average Remaining Service Lifetime (“EAR SL”) is calculated by dividing the total future service years by the total number of plan participants (active, inactive, and retired) in the risk pool. For the Miscellaneous Plan, the EARSL for the Miscellaneous Plan for the 2020-21 measurement period is 3.9 years, which was obtained by dividing the total service years of 3,689 (the sum of remaining service lifetimes of the active employees) by 946 (the total number of participants: active, inactive, and retired). For the Safety Plan, the EARSL for the Miscellaneous Plan for the 2020-21 measurement period is 4.7 years, which was obtained by dividing the total service years of 1,858 (the sum of remaining service life times of the active employees) by 392 (the total number of participants: active, inactive, and retired).

At June 30, 2022 the City reported deferred outflows of r esources and deferred inflows of resources related to pensions from the following sources:

Deferred outflows Deferred inflows
of Resources of Resources
Pension contributions made subsequent
to measurement date 6,787,574 $ - $
Difference between projected and actual
earning on pension plan investments - (15,083,926) Changes in assumptions - - Differences between expected and actual experience 2,148,800 (604,921) Total 8,936,374$ (15,688,847) $
Miscellaneous Plan

Deferred outflows Deferred inflows
of Resources of Resources
Pension contributions made subsequent
to measurement date 7,549,380 $ - $
Difference between projected and actual
earning on pension plan investments - (17,970,224) Changes in assumptions - (139,941) Differences between expected and actual experience 3,692,384 (1,766) Total 11,241,764$ (18,111,931)$
Safety Plan

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

109
Note 14 – Pension Plans (Continued)

B. City (Continued)

Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)

Deferred outflows Deferred inflows
of Resources of Resources
Pension contributions made subsequent
to measurement date 14,336,954$ -$
Difference between projected and actual
earning on pension plan investments - (33,054,150) Changes in assumptions - (139,941) Differences between expected and actual experience 5,841,184 (606,687) Total 20,178,138$ (33,800,778)$
Total

For the General Information about Pension, for the Mi scellaneous and Safety Plans, $6,787,574 and $7,549,380, respectively, was reported as deferred outflows of r esources related to pensions resulting from the City’s contributions subsequent to the measurement date and will be recognized as a reduction of the net pension liability in the year ended June 30, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ended June 30, Miscellaneous Plan Safety Plan Tota l 2023 (2,764,783)$ (3,215,028)$ (5,979,811)$ 2024 (2,819,485) (2,730,784) (5,550,269) 2025 (3,809,975) (3,571,869) (7,381,844) 2026 (4,145,804) (4,901,866) (9,047,670) 2027 - - - Thereafter - - - (13,540,047)$ (14,419,547)$ (27,959,594)$ Deferred Outflows/(Inflows)
of Resources

Pension Plan Fiduciary Net Position

Detailed information about the plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

C. Component Unit

As part of the reorganization noted in Note 20, employees of the City have been transferred to the Authority as employees. As this is the first year, the Authority Pension Liability has not yet been calculated as part of CalPERS annual valuations. No pension liability has been reported as of June 30, 2022.

Deferred outflows is the amount of contributions paid by the Authority to CalPERS since January 1, 2022 that will impact the valuation to be prepared for the year ended June 30, 2023.

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

110
Note 15 – Other Postemployment Benefits

A. Summary

Governmental Business-Type
Activities Activities Total
Deferred outflows of resources:

Employer contributions made
subsequent to the measurement date 205,452$ 42,231$ 247,683$ Difference between expected and actual experience 142,716 29,333 172,049 Changes in assumptions 277,000 56,937 333,937 Total deferred outflows of resources 625,168$ 128,501$ 753,669$ Total OPE B liability:

Total OPEB liability 5,852,529$ 1,202,962$ 7,055,491$ Total OPE B liability 5,852,529$ 1,202,962$ 7,055,491$ Deferred inflows of Resources:

Difference between expected and actual experience 242,107$ 49,765$ 291,872$ Change in assumption 609,047 125,187 734,234 Total deferred inflows of resources 851,154$ 174,952$ 1,026,106$ Total O PEB Expe nse 458,322$ 94,207$ 552,529$

B. General Information about OPEB

Plan Description

The City administers a single employer defined benefit (implicit subsidy) healthcare plan. No assets have been accumulated in a trust for the payment of benefits that meets the criteria in paragraph 4 of Governmental Accounting Standards Board Statement No. 75.

The City offers medical, dental, vision and life insurance benefits to its employees, retirees, and their dependents.

However, the City does not explicitly pay for the cost of retiree health premiums. The medical plans consist of a Kaiser HMO, a Kaiser POS, and a Kaiser PPO, all fully insured. Medical premiums for retirees under age 65 are the same as those charged for active employees.

Employees who retire with at least ten years of service may elect to convert all accrued sick leave at the time of retirement to a medical insurance bank that can be used for medical, dent al and vision premiums. Miscellaneous employees except members of the Teamst ers Bargaining Unit can bank their unused sick leave upon retirement.

Members of the Teamsters can also bank their unused sick leave only if they have at least ten (10) years of employment with the City. Safety employees: Police employ ees can bank their unused sick leave if they have at least ten (10) years of employment. Fire employees have a choice to bank their unused sick leave. Fire employees also need at least ten (10) years of employment to receive this benefit. The value of the medical insurance bank is determined by multiplying the number of accrued sick leave hours by the employees’ hourly rate of pay at the time of retirement.

The retired employee and his/her dependents are entitled to continued group health insurance coverage currently in effect with premiums for such coverage being deducted from the medical leave bank until that bank is exhausted.

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

111
Note 15 – Other Postemployment Benefits (Continued)

B. General Information about OPEB (Continued)

Plan Description (Continued)

The cost of retiree health care benefits is recognized as an expenditure as health care premiums are paid. For the fiscal year ending June 30, 2022, those costs for 86 retirees totaled $648,564 and the total liability amount in the medical leave bank is $4,507,420.

After the account is exhausted, the retiree has option either to terminate coverage or elect to continue paying the medical (but not dental or vision) premiums from pers onal funds. Spouses and eligib le dependent children of retirees may also be covered at the retiree’s expense. While the City does not directly contribute towards the cost of premiums for retirees, the ability to obtain coverage at an active employee rate constitutes a significant economic benefit to the retirees, called an “implicit subsidy” under generally accepted accounting principles. The inclusion of the retirees increases the City’s overa ll health insurance rates; it is, in pa rt, the purpose of this valuation to determine the amount of the subsidy.

The ability to participate in the City’s health plan by self-paying the prem iums extends for the lifetime of the retiree; however, upon attaining the age of Medicare eligibility (65), the retiree may enter a plan coordinated with Medicare. Standard actuarial practice assumes that Medicare supplement plan s do not generally give rise to an implicit subsidy, and while the actuarial valuation included Medicare eligible retirees, both their liability and their annual implicit subsidy are both $0.

Eligibility

Employees become eligible to receive City-paid healthcare benefits upon atta inment of age 50 and 5 years of covered PERS service, or by attaining qualifying disability retirement status. The City has selected the unequal contribution method, where it contributes a percent of the amount paid for actives to its eligible retirees. The percent increases each year until the City's contribution for retir ees eventually equals that for similarly stated active employees. The City currently covers 100% of the co st of medical coverage for active employees and their dependents up to, but not exceeding, the dollar amount of the family premium for the lowest cost HMO.

Membership in the plan consisted of the following at June 30, 2020, the date of the latest actuarial valuation:

Active employees 320
Transferred and terminated employees -
Retired employees and beneficiaries 18
Total 338

Contributions

The contribution requirement of plan members and the City are established and may be amended by the City. The required contribution is based on projected pay-as-you-go financing requirements.

Total OPEB Liability

The City’s total OPEB liability was me asured as of June 30, 2021. The total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valua tion as of June 30, 2020. The total OPEB liability at June 30, 2022 was $7,055,491.

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

112
Note 15 – Other Postemployment Benefits (Continued)

B. General Information about OPEB (Continued)

Actuarial Assumptions

The total OPEB liability in the June 30, 2020 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:

Discount Rate
Inflation
Aggregate payroll increases
Actuarial cost method
Expected long-term investment rate of return
Mortality, Termination, and Disability
Mortality Improvement Scale
Healthcare Trend Rate

2.18%

2.50%

3.00%
n/a
CalPERS 2017 Experience Study
Macleod Watts Scale 2020
An annual healthcare cost trend rate of 5.7% initially reduced by decrements to an ultimate of 4.0% in 2076.

Entry Age Normal Cost Method

The actuarial assumptions used in the June 30, 2020 valuation were based on the results of an actuarial experience study for the period July 1, 2019 through June 30, 2020.

Change in Assumption

The City’s discount rate used to measure the tota l OPEB liability decreased from 2.66% to 2.18% for the measurement period ended June 30, 2021.

Discount Rate

The discount rate used to measure the total OPEB liability 2.18%. The City’s funding policy affects the calculation of liabilities by impacting the discount rate that is used to develop the plan liability and expense. The City is currently financing its OPEB liability on a pay-as-you-go basis, the discount rate used is based on the S&P Municipal Bond 20 Year High Grade Index.

C. Total OPEB Liability, OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB

Change in the Total OPEB Liability

Total OPEB
L iability
Balance at June 30, 2020 6,350,859$
Changes recognized for the measurement period:

Service cost 450,489
Interest on the total OPEB liability 178,125
Changes of benefit terms -
Difference between expected and actual experience -
Changes of assumptions 287,043
Benefit payments (211,025)
Net changes during July 1, 2020 to June 30, 2021 704,632 Balance at June 30, 2021 (Measurement Date) 7,055,491$
City of Tracy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2022

113
Note 15 – Other Postemployment Benefits (Continued)

C. Total OPEB Liability, OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB (Continued)

Sensitivity of the Total OPEB Liability to Changes in the Discount Rate

The following presents the total OPEB liability of the City, as well as what th e City’s total OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (1.18 percent) or 1-percentage- point higher (3.18 percent) than the current discount rate:

Discount Rate - 1% Current Discount Discount Rate + 1%
(1.18%) Rate (2.18%) (3.18%)
7,693,570$ 7,055,491 $ 6,471,102 $ Plan's Total OPE B L iability

Sensitivity of the Total OPEB Liability to Changes in the Health Care Cost Trend Rates

The following presents the total OPEB liability of the City, as well as what th e City’s total 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% Trend Rates 1%
6,390,052$ 7,055,491$ 7,854,566$ Plan's Total OPE B L iability

OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB

For the fiscal year ended June 30, 2022, the City reco gnized OPEB expense of $552, 529. At June 30, 2022, 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
Employer contributions made
subsequent to the measurement date 247,683 $ - $ Difference between expected and actual experience 172,049 (291,872) Changes of assumptions 333,937 (734,234) Total 753,669 $ (1,026,106)$

The difference between projected OPEB plan investment earnings and actual earnings is amortized over a five- year period. The remaining gains an d losses are amortized over the expected average remaining service life. The expected average remaining service life is 11.04 years, which was determined as of June 30, 2020, the beginning of the measurement period, for employees covered by the OPEB plan benefit terms as of the valuation date.

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

114
Note 15 – Other Postemployment Benefits (Continued)

C. Total OPEB Liability, OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB (Continued)

OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued)

For the fiscal year ended June 30, 2022, $247,683 was reported as deferred outflows of resources related to OPEB resulting from the City’s contributions subsequent to the measurement date and will be recognized as a reduction of the total OPEB liability in the year ended June 30, 2023. Other amounts repor ted as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

M easurement Period Deferred Outflows/
Ended June 30 (Inflows) of Resources
2023 (76,085) $
2024 (76,085)
2025 (76,085)
2026 (76,085)
2027 (76,085)
Thereafter (139,695)
(520,120)$

Note 16 – Deferred Compensation Plan

The City offers its employees a deferred compensation plan in accordance with Internal Revenue Code Section 457.

The plan was amended so that the assets of the plan are held in trust for the ex clusive benefit of the participants and their beneficiaries. Since the plan assets are administered by an outside party and not subject to the claims of the City’s general creditors, their assets and related liabilities are not on the City’s financial statements in accordance with Governmental Accounting Standards Board (GASB) Stat ement No. 32, “Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans.”

City employees may defer a portion of their compensation under a City sponsored deferred compensation plan created in accordance with Internal Revenue Code Section 457. Under this plan, partic ipants are not taxed on the deferred portion of their compensation until distributed to them; dist ributions may be made only at termination, retirement, death or in an emergency as defined by the plan.

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

115
Note 17 – Other Required Disclosures

A. Deficit Fund Balances/Net Position

At June 30, 2022, the following funds had a fund balances (deficit) or unrestricted net position (deficit), which will be eliminated through the reduction in future expenditures and/or the use of new funding sources:

Fund Fund Type Deficit
Business Im provem ent District Fund Special Revenue Fund 69,670 Com m unity Developm ent Block G rant Fund Special Revenue Fund 77,027 Capital Projects Deposit Capital Projects Fund 102,451
Central Garage Fund Internal Service Fund 502,424
Central Services Fund Internal Service Fund 855,809
Successor Agency Private Purpose Trust Fund Fiduciary Fund 27,472,127

The Special Revenue Funds, Capital Projects Fund and Internal Service Funds deficits are expected to be eliminated by future grant revenues, intergovernmental and charges for services. The Successor Agency to the Redevelopment Agency Private-Purpose Trust Funds deficit which will be eliminated by future revenues.

B. Expenditures Exceeding Appropriations

For the year ended June 30, 2022, expenditures exceeded appropriations in the following funds by function:

Exc e s s Expe ndi tur e s
Fund Function over Appropriations
General Fund Economic development 469,589 $
General Fund General government 521,688
General Fund Finance 280,544
General Fund Non-departmental 1,473,536
General Fund Police 570,680
General Fund Fire 31,214
G eneral Fund Development and engineering 389
General Fund Public works 845,190
Housing Successor Special Revenue Fund Capital Outlay 441,766 Community Development Fees Special Revenue Fund Development and engineering 1,032,085 General Capital Projects Fund Capital Outlay 1,572,296
Tracy Infrastructure Master Plans Capital Projects Fund Capital Outlay 339,828 Asset Forfeiture Special Revenue Fund Police 48,265
Asset Forfeiture Special Revenue Fund Capital Outlay 162 Transportation Development Special Revenue Fund Capital outlay 548,018 Proposition K Street Special Revenue Fund Development and engineering 3,134 State G as Tax Street Special Revenue Fund Non-departmental 449 State Gas Tax Street Special Revenue Fund Capital Outlay 2,364,977 Community Development Block G rant Special Revenue Fund Economic development 240 Landscaping District Special Revenue Fund Non-departmental 306 Landscaping District Special Revenue Fund Public works 1,935,540 COPS G rant Special Revenue Fund Police 271
CFD Services 2016-2 Special Revenue Fund Public works 1,882 CFD Services 2018-1 Special Revenue Fund Non-departmental 30,977 CFD Services 2018-1 Special Revenue Fund Public works 180

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

116
Note 18 – Fund Balance Classification

The City classifies fund balances, as shown on the Balance Sheet – Governmental Funds , as follows as of June 30, 2022:

Community Tracy
Housing Development General Infrastructure Non-major
General Successor Fees CARES/ARPA Capital Projects Master Plans Governmental Fund Fund Fund Fund Fund Fund Funds Total
Restricted
Housing -$ 4,636,384$ -$ -$ -$ 90,869,092$ -$ 95,505,476$ Special area projects - - 7,885,712 - - - 82,753,125 90,638,837 Public safety - - - 1,504,200 - - 132,144 1,636,344 Debt service - - - - - - 21,752,043 21,752,043 Community development - - - - - - 206,073 206,073 Asset forfeiture - - - - - - 793,983 793,983 Streets and roads - - - - - - 14,240,664 14,240,664 Landscaping district - - - - - - 5,470,745 5,470,745 Cable TV - - - - - - 578,285 578,285 Drainage - - - - - - 2,569,288 2,569,288 Tracy GROW - - - - - - 1,000,000 1,000,000 Fire medical leave bank 813,680 - - - - - - 813,680 Medical leave bank 2,361,297 - - - - - - 2,361,297 Total restricted 3,174,977 4,636,384 7,885,712 1,504,200 - 90,869,092 129,496,350 237,566,715 Committed
Contingency/emergency 14,505,000 - - - - - - 14,505,000 Total committed 14,505,000 - - - - - - 14,505,000 Assigned
Animal control trust 22,193 - - - - - - 22,193 Economic/budget stability 11,092,059 - - - - - - 11,092,059 Prior year reapproriations 320,865 - - - - - - 320,865 Capital projects - - - - 79,742,287 - - 79,742,287 Total assigned 11,435,117 - - - 79,742,287 - - 91,177,404 Unassigned 7,761,601 - - - - - (249,148) 7,512,453 Total fund balances 36,876,695$ 4,636,384$ 7,885,712$ 1,504,200$ 79,742,287$ 90,869,092$ 129,247,202$ 350,761,572 $

Note 19 – Net Investment in Capital Assets

Net Investment in Capital Assets at June 30 consisted of the following:

G ov ernm ental Business-typ e
Activities Activities Total
Total capital assets, net 681,830,007 $ 447,769,174 $ 1,129,599,181 $ Less related debt:

Lease payable (236,112) - (236,112) Lease revenue bonds (40,775,954) - (40,775,954) Loans payable - (6,456,524) (6,456,524) Certificates of participation - (20,260,000) (20,260,000) Net investment in capital assets 640,817,941$ 421,052,650 $ 1,061,870,591 $

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

117
Note 20 – South San Joaquin County Fire Authority Joint Powers Agreement

The South County Fire Authority (SCFA) was created in September 1999 by a Joint Exercise of Powers Agreement (Agreement) between the City and the Tracy Rural Fire Protection District (the “District”) to provide fire administration, fire prevention and fire training and safety within the jurisdictional area of the Authority. Under the provisions of the Agreement, as amended, the City and Dist rict split the annual costs of maintenance and operations for Fire Protection Services, Fire Dispatch Services, Fire Prevention Services, certain expenses of the City defined in the Agreement, and insurance premiums paid by the City to insure itself against liability arising out of the Agreement for the provision of Fire Services. The cost split between the City and District is dependent upon the staffing levels at each of the three City stations and three District stations , except Station 92. Under the provisions of the Agreement, the District is to pay 100% of the Station 92 maintenance and operations funding for 7 years and 10 months from the date of issuance of the Certificate of Occupancy of the relo cated Station 92, or July 1, 2015, whichever occurs later.

The Certificate of Occupancy was issued in May 2014.

In February 2018, the City and the District established th e South San Joaquin County Fire Authority (SSJCFA) with an effective date of March 1, 2018 an d an implementation date of July 1, 2018. With the implementation the new authority, the City and the District entered into an agreement to resolve the outstanding financial obligations of SCFA and dissolve SCFA on June 30, 2018.

On January 1, 2022, the City transferred operating assets and employees to the control of SSJCFA. The employees of the City who were providing services under the contract with South San Joaquin County Fire have been transferred to SSJCFA and as of January 1, 2022 are now employees of the Authority. All benefit accruals started accruing from January 1, 2022. Additionally, the employees are covered by CalPERS pension which will start accruing at January 1, 2022.

Under the terms of the agreem ent, the City and the District paid $957,168 and $233,215, respectively, to fund the outstanding balance of the prior comp ensated absences balance of the SCFA, a nd the City agreed to reduce a loan receivable from the SCFA to $1,025,487 and that balance was considered satisfi ed as of June 30, 2018. During fiscal year 2022, the SSJCFA incurred costs of $27.1 million, of wh ich $16.4 million was paid by the City and $9.5 million was paid by the District. The City’s balance Due from the Component Unit as of June 30, 2022, was $3,375,233.

Note 21 – Community Development Agency Dissolution

In an effort to balance its budget, the State of California adopted ABx1 26 on June 28, 2011, amended by AB1484 on June 27, 2012, which suspended all new redevelopment activities except for limited specified activities as of that date and dissolved redevelopment agencies on January 31, 2012.

The suspension provisions prohibited all redevelopment agencies from a wide range of activities, including incurring new indebtedness or obligations, entering into or modifying agreements or contracts, acquiring or disposing of real property, taking actions to adopt or amend redevelopment plans and other similar actions, except actions required by law or to carry out existing enforceable obligations, as defined in ABx1 26.

ABx1 26 and AB1484 created three regulatory authorities, the Successor Agency Oversight Board, State Controller and Department of Finance (DOF), to review former Agency’s asset transfer, obligation payments and wind down activities.

ABx1 26 specifically directs the State Controller to review the activities of all redevelopment agencies to determine whether an asset transfer between an agency and any public agency occurred on or after January 1, 2011. If an asset transfer did occur and the public agency that received the asset is not contractually committed to a third party for the expenditure or encumbrance of the asset, the legislation purports to require the State Controller to order the asset returned to the Redevelopment Agency or, on or after February 1, 2012, to the Successor Agency.

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

118
Note 21 – Community Development Agency Dissolution (Continued)

In fiscal year 2011, the former Community Development Agency transferred $9,967,619 of assets to the City, comprised of cash of $6,306,390 and capital assets of $3,661,229. ABx1 26 and AB1484 contain provisions that such transfers are subject to a review by the State Controller’s Office. According to Health and Safety Code 34167.5, if such an asset is not contractually committed to a third party for the expenditure or encumbrance of those assets, to the extent not prohibited by state and federal law, the Controller sha ll order the available assets to be returned to the former Community Development Agency or, on or after February 1, 2012, to the Successor Agency. During fiscal year 2012, the City returned cash of $1,843,395 and capital assets of $3,661,229 to the Successor Agency.

The City received the results of the State Controller’s asset transfer review in December 2014 that indicates the City is to return the remaining cash in the amount of $4,462,995 to the Successor Ag ency. City management disputed the findings of both the State Controller and the Non-housing DDR discussed below, how ever, to allow the Successor Agency to receive its Finding of Completion, the City tr ansferred $4,462,995 to the Successor Agency in November 2015 and the Successor Agency remitted payment to the County in December 2015. The City and Successor Agency continued to contest the order of the Department of Fina nce and were engaged in litigation on the matter. The Third District ordered $911,495 to be returned to the City of Tr acy as an enforceable obligation on the Successor Agency’s fiscal year 2017 Recognized Obligations Payment Schedule. Furthermore, the State and the City Council have decided not to appeal to the State Supreme Court.

Effective January 31, 2012, the Community Development Agen cy was dissolved. Certain assets of the Community Development Agency Housing Fund we re distributed to a Housing Succ essor; and the remaining Community Development Agency assets and liabilities were distributed to a Successor Agency.

Under the provisions of AB 1484, the City can elect to become the Housing Successor and retain the housing assets. The City elected to become the Housing Successor and on February 1, 2012, certain housing assets were transferred to the City’s Housing Successor Special Revenue Fund.

The activities of the Housing Successor are reported in the Housing Successor Special Revenue F und as the City has control of those assets, which may be used in accordance with the low and moderate income housing provisions of California Redevelopment Law.

On January 17, 2012, the City Council elected to become the Successor Agency for the former Community Development Agency in accordance with AB1484 as part of the City resolution number 2012-021, and on February 1, 2012 the Community Development Agency’s remaining assets were distributed to and liabilities were assumed by the Successor Agency. ABx1 26 requires the establishment of an Oversight Board to oversee the activities of the Successor Agency and one was established in May 2012. The activities of the Succes sor Agency were subject to review and approval of the Oversight Board, which was comprised of seven members, including one member of City Council and one former Redevelopment Agency employee appointed by the Mayor. On July 1, 2018, the duties of the Tracy Oversight Board transferred to a new San Joaquin Countywide Consolidated Oversight Board, which is now responsible for overseeing the winddown affairs of all Successor Agencies in San Joaqui n County, including the Successor Agency to the Tracy Community Development Agency.

The activities of the Successor Agency are reported in the Successor Agency to the Redevelopment Agency Private- Purpose Trust Fund as the activities are under the control of the Oversight Board. The City provides administrative services to the Successor Agency to wind down the affairs of the former Community Development Agency.

AB1484 required the Successor Agency to complete two due diligence reviews – one for the low and moderate income housing assets of the Successor Agency (Housing DDR), and a second for all other balances of the Successor Agency (Non-housing DDR). The due diligence reviews are to calculate the balance of unencumbered balances as of June 30, 2012 available to be remitted to the County for disbursement to taxing entities. The Successor Agency submitted both due diligence reviews to the State Department of Finance for review and approval.

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

119
Note 21 – Community Development Agency Dissolution (Continued)

The Department of Finance approved the Housing DDR in November 2012, which indicated that $3,398,232 was available for distribution and that amount was remitted to the County in November 2012. The Department of Finance did not initially approve the Non- housing DDR, which indicated that the Successor Agency had an available balance of $2,281,467, and the State made adjustments to the Non-housing DDR and instead made a demand for the return of funds totaling $4,618,398, which was remitted to the County in November 2015, as discussed above. The Successor Agency received its Finding of Completion on December 8, 2015 , which means it can now utilize bond proceeds for projects consistent with the original bond covenants.

Note 22 – Commitments and Contingencies

A. Litigation

The City is currently a party to various claims and legal proceedings. Although the outcome of these lawsuits is not presently determinable, it is mana gement’s opinion that the ultimate li abilities, if any, resulting from such claims and proceedings will not materially affect the financial position of the City.

B. Contingent Liabilities

On March 1, 1993, the City issued Certificates of Participation in the aggregate of $10,250,000 for the benefit of Tracy Community Hospital (Hospital), a California nonpr ofit public benefit corporation. The Hospital is not included in the City’s reporting entity. The City is oblig ated to make the purchase payments only from and to the extent that it receives revenue from the Hospital. They are not secured by any pledge of taxes or other revenues of the City. In addition, the purchase payments are insu red by the Office of Statewide Health Planning and Development of the State of California. As of June 30, 2022, the City has not recorded revenues from the Hospital.

C. Federal and State Grants

The City participates in various federal grant programs, the principal of which are subject to program compliance audits pursuant to the Single Audit act as amended. Acco rdingly, the City’s compliance with applicable grant requirements will be established at a future date. The amount of expenditures which may be disallowed by the granting agencies cannot be determined at this time, alt hough the City anticipates such amounts, if any, will be immaterial.

D. Revenue Limitations Imposed by California Proposition 218

Proposition 218, which was approved by the voters in Nove mber 1996, will regulate the City’s ability to impose, increase, and extend taxes, assessments, and fees. Any new, increased, or extended taxes, assessments, and fees subject to the provisions of Proposition 218, require voter approval before they can be implemented. Additionally, Proposition 218 provides that these taxes, assessments, and fees are subject to the voter initiative process and may be rescinded in the future years by the voters.

E. Measure V Sales Tax Revenues

The City receives tax proceeds from the Measure V one-half cent sales tax approved by Tracy voters in November 2016, commencing for a twenty year period beginning Ap ril 1, 2017. The amount of Measure V tax proceeds received and recorded during the fiscal year ending June 30, 2022 was $13,017,279. Measure V is a general tax of the City and the revenues were deposited in the City’s General Fund. Expenditures for a variety of City functions were made from the City’s General Fund utilizing the Measure V and other revenue of the City.

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

120
Note 22 – Commitments and Contingencies (Continued)

F. Location Agreements

In December 2015, the City entered into a Location Agreem ent with a manufacturer and distributor of healthcare products and services to make payments to the Corporation in return for the Corporation establishing, locating and operating a sales office in the City. Under the terms of the agreement, the City has agreed to pay the Corporation fifty per cent (50%) of the quarterly local sales tax revenues attributable to the Corporation's taxable sales for each fiscal quarter, excluding penalty assessments, commencing with the quarter beginning January 1, 2017 and ending on December 31, 2036, unless otherwise extended in accordance with the agreement. The City paid $4,136,089 to the Corporation during the year ended June 30, 2022.

In August 2017, the City entered into a Location Agreem ent with a distributor of precision laboratory equipment to make payments to the Corporation in return for the Corporation establishing, locating and operating a sales office in the City. Under the terms of the agreement, the City has agreed to pay the Corporation fifty per cent (50%) of the quarterly local sales tax revenues attributable to the Corporation's taxable sales for each fiscal quarter, excluding penalty assessments, commencing with the quarter beginning October 2018 and ending on October 2038, unless otherwise extended in accordance with the agreement. The City paid $2,383,541 to the Corporation during the year ended June 30, 2022.

G. Encumbrances and Construction Commitments

The City uses an encumbra nce system as an extension of normal budgetary accounting for governmental funds.

Under this system, purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of applicable appropriations. Encumbrances outstanding at year-end are recorded as restricted, committed or assigned fund balance, depending on the classification of the resources to be used to liquidate the encumbrance, since they do not constitute expenditures or liabilities. Outstanding encumbrances at year-end are automatically reappropriated for the follow ing year. Unencumbered and unexpended appropriations lapse at year-end. Encumbrances outstanding by fund as of June 30, 2022 were as follows:

Balance
General Fund 614,338$
TEA G rant Special Revenue Fund 46,292
Community Development Fees Special Revenue Fund 990,868 General Projects Capital Projects Fund 902,000
Tracy Infrastructure Master Plan Capital Projects Fund 1,264,641 Non-Major Governmental Funds 21,167,103
24,985,243$

H. Housing Successor Excess Surplus

Health and Safety Code (HSC) Section 34176.1(d) defines an excess surplus as an unencumbered balance held by the housing successor that exceeds the greater of $1,000,000 or the aggregate amount deposited into the housing successor fund during the housing successor’s preceding four fiscal years, whichever is greater. If a housing successor has an excess surplus, the HSC Section requires that the housing successor encumber the excess surplus for eligible purposes described in the HSC Section 34176.1(a)(3) or transfer the funds to another local housing successor within three fiscal years. If the housing successor fails to comply with this provision, the housing successor, within 90 days of the end of the third fiscal year, is required to transfer any excess surplus to the Department of Housing and Community Development for expenditure pursuant to the Multifamily Housing Program or the Joe Serna, Jr. Farmworker Housing Grant Program.

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

121
Note 22 – Commitments and Contingencies (Continued)

H. Housing Successor Excess Surplus (Continued)

The Housing Successor Special Revenue Fund serves as the housing successor and as of July 1, 2019 had an excess surplus balance of $137,971. The City is in late stage discussions with two developers related for housing projects and the excess surplus is expected to be encumbered in fiscal year 2023.

I. State Approval of Enforceable Obligations

The Successor Agency prepares a Recognized Obligation Payment Schedule (ROPS) semi-annually that contains all proposed expenditures for the subsequent six-month period. The ROPS is subject to the review and approval of the Oversight Board as well as the Stat e Department of Finance. Although the State Department of Finance may not question items included on the ROPS in one period, they may question the same items in a future period and disallow associated activities. The amount, if any, of current obligations that may be denied by the State Department of Finance cannot be determined at this time. The City expects such amounts, if any, to be immaterial.

122
This page intentionally left blank.

123

REQUIRED SUPPLEMENTARY INFORMATION

124
This page intentionally left blank.

City of Tracy
Required Supplementary Information (Unaudited)
Modified Approach to Reporting Street Pavement Costs
For the Year Ended June 30, 2022

125

Generally accepted accounting principles allow the City to use the Modified Approach with respect to infrastructure assets instead of depreciating these assets. The Modified Approach may be used if two requirements are met:

1. The City must have an asset management system (AMS) with certain features:

 It must maintain an up-to-date inventory of the infrastructure assets.

 It must estimate the annual costs to maintain and preserve those assets at the condition level the City has established and disclosed through administrative or executive policy or legislative action.

 The AMS must be used to assess the condition of the assets periodically, using a measurement scale.

 The condition assessments must be replicable as those that are based on sufficiently understandable and complete measurement methods such that different measurers using the same methods would reach substantially similar results.

2. The City must document that the roads are being preserved approximately at or above the condition level the City has established and disclosed. This documentation must include the results of the three most recent complete condition assessments and must provide reasonable assurance that the assets are being preserved approximately at or above the intended condition level.

The City has elected to use the Modifi ed Approach to report street pavement costs. The City uses the Metropolitan Transportation Commission’s (MTC) Pavement System to track the condition levels of each of the street sections.

The conditions of the pavement are based on a weighted average of seven distress factors found in pavement surfaces. The MTC pavement management system uses a measurement scale that is based on a condition index ranging from zero for a failed pavement to 100 for pavement with perfect conditions. The condition index is used to classify pavement in good or better condition (70-100), fair condition (50-69), and substandard condition (less than 50).

City of Tracy
Required Supplementary Information (Unaudited)
Modified Approach to Reporting Street Pavement Costs (Continued) For the Year Ended June 30, 2022

126
The City’s preservation costs are budgeted to be $5,920,343 in fiscal year 2023. Th e Pavement Condition Index (PCI) for the City’s street pavement for the latest years is as follows:

Maintenance Actual
Y ear PCI Budget Maintenance
2002 76 $1,505,620 $1,389,043
2003 77 1,621,170 1,642,556
2004 77 2,043,580 14,441,690
2005 81 2,303,227 13,943,191
2006 78 2,653,860 14,874,752
2007 76 4,244,964 8,647,067
2008 74 13,605,000 19,466,614
2009 72 1,667,146 19,115,824
2010 73 4,457,510 3,333,185
2011 82 4,355,038 3,096,185
2012 82 1,775,290 1,347,061
2013 77 2,973,800 1,387,484
2014 77 3,183,569 3,350,927
2015 74 3,387,213 2,244,902
2016 71 3,648,840 2,186,853
2017 69 3,565,677 2,238,573
2018 69 2,646,996 2,825,868
2019 69 4,039,845 2,220,870
2020 69 10,810,600 6,666,870
2021 69 9,866,151 7,827,339
2022 69 10,175,540 9,020,417
2023 69 5,920,343

The City’s administrative policy is to achieve a minimum rating of 69 for all street pavement. This rating allows for minor cracking and revealing of payment along with minor roughness that could be noticeable to drivers traveling at posted speed.

The City expended $9,020,417 for street preservation for fiscal year 2022.

City of Tracy
Required Supplementary Information (Unaudited)
Budgetary Information
For the Year Ended June 30, 2022

127
Through the budget, the City Council sets the direction of the City, allocates its resources and establishes its priorities.

The Annual Budget assures the efficient and effective uses of the City’s economic resources, as well as establishing that the highest priority objectives are accomplished.

The Annual Budget serves from July 1 to June 30, and is a vehicle that accurately and openly communicates these priorities to the community, businesses, vendors, employees and other public agencies. Additionally, it establishes the foundation of effective financial pla nning by providing resource planning, performance measures, and controls that permit the evaluation and adjustment of the City’s performance.

The City collects and records revenue and expenditures within the following categories:

• Governmental Activities
• Business-Type Activities

The Governmental Funds include the General Fund, Special Revenue, Debt Service and Capital Projects funds. All funding sources are kept separate for both reporting and u se of the money. The General Fund is where most City services are funded that are not required to be segregated.

The budget process begins as a team effort in January of each year, starting with an annual strategic planning meeting.

Then the individual departments use projected revenue assumptions to prioritize and recommend the next fiscal year’s objectives. The City Manager’s Office and the Finance Department review all budget proposals and revenue assumptions, as well as all current financial obligations before preparing the document that is proposed to the City Council. The City Council reviews the Proposed Budget th rough a series of committees and workshops and the final adoption of the budget is scheduled for June of each year.

Budgeting Procedures

Annual budgets are adopted for all governmental fund types, except capital projects funds, on a basis consistent with accounting principles generally accepted in the Unite d States of America. The City's budget ordinance requires that in June of each fiscal year the City Manager submit a preliminary budget that includes projected expenditures and the means of financing them, to the City Council for the fiscal year commencing the following July 1. As modified during public study sessions, the preliminary budget becomes the proposed budget. Following public hearings on the proposed budget, the final annual budget is adopted by the City Council. After adoption of the final budget, transfers of appropriations within a general fund department, or within other funds, can be made by the City Manager. Budget modifications between funds; increases or decreases to a fund's overall budget; transfers between general fund departments; or transfers that affect capital projects, must be approved by the City Council. Numerous properly authorized amendments are made during the fiscal year.

The City does not adopt budgets for the CARES/ARPA Grant, Grow Tracy, and the FEMA Grant Special Revenue Funds.

Budgetary control is enhanced by integrating the budget into the general ledger accounts. Encumbrance accounting (e.g., purchase orders) is employed by the City.

City of Tracy
Required Supplementary Information (Unaudited)
Budgetary Information (Continued)
For the Year Ended June 30, 2022

128
Budgets and Budgetary Accounting

The City uses the following procedures in establishing the budgetary data reflected in the financial statements:

1. Before the beginning of the fiscal year the City Manager submits to the City Co uncil a proposed budget for the year commencing July 1.

2. A public meeting is conducted to obtain taxpayer comments.

3. The budget is subsequently adopted through passage of a r esolution and is not included herein but is published separately.

4. All appropriations are as originally adopted or as amended by the City Council and all unencumbered budgeted amounts lapse at year-end, except in the General Fund where an expenditure control budget policy allows departments to carryover a portion of the unexpended amounts into the next fiscal year.

5. Continuing Appropriations are re-budgete d by the City Council as part of the adoption of subsequent year’s budgets.

6. Legally adopted budget appropriations are set for the General, Special Revenue, and Debt Service Funds.

7. The legal level of budgetary control is at the department level. A Department Head may transfer appropriations within the department. Expenditures may exceed appropriati ons at this level to the extent that departmental owned revenues are sufficient to offset the excess. Expenditures in excess of departmental owned revenues must be approved by the City Council. The City Council, by the affirmative vote of three members, may amend the budget to add or delete appropriations , transfer between appropriations w ithin a fund or change appropriation transfers between funds.

8. Budgets for General, Special Revenue, and Debt Service Funds are adopted on a basis consistent with accounting principles generally accepted in the United States of America.

Encumbrances

Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of funds are recorded in order to reserve that portion of the app licable appropriation, is employed as an extension of formal budgetary control in the budgeted governmental funds.

Encumbrances outstanding at year-end are reported as a restriction, commitment or assignment of fund balances, since the commitments will be honored through subsequent y ears’ continuing appropriations. Encumbrances do not constitute expenditures or liabilities for US GAAP reporting purposes.

City of Tracy
Required Supplementary Information (Unaudited) (Continued) Budgetary Comparison Schedules – General Fund
For the Year Ended June 30, 2022

129

Variance with
Final Budget
Actual Favorable/
Original Final Amounts (Unfavorable)
REVENUES :

Taxes 70,846,000 $ 99,056,000 $ 107,384,147 $ 8,328,147 $ Licenses, permits and fees 4,022,000 4,022,000 4,149,346 127,346 Fines and penalties 135,000 59,000 168,400 109,400 Investment income (loss) 599,000 599,000 (2,281,888) (2,880,888) Intergovernmental 1,029,000 1,569,000 2,360,007 791,007 Charges for current services 9,252,000 9,438,000 12,485,210 3,047,210 Special assessments 472,000 472,000 468,439 (3,561) Contributions 147,000 147,000 - (147,000) Other revenue 238,000 238,000 7,097,109 6,859,109 Total revenues 86,740,000 115,600,000 131,830,770 16,230,770 EXPENDITURES:

Current:

General government
Economic development 237,000 272,000 741,589 (469,589) General government 8,935,625 8,027,625 8,549,313 (521,688) Finance 4,885,000 5,005,000 5,285,544 (280,544) Non-departmental 434,000 431,000 1,904,536 (1,473,536) Public safety
Police 34,140,341 39,226,306 39,796,986 (570,680) Fire 15,251,000 16,371,000 16,402,214 (31,214) Public ways and facilities
Development and engineering 139,000 212,000 212,389 (389) Public works 6,590,000 7,371,000 8,216,190 (845,190) Community development
Pa
rks and community services 4,060,000 4,098,000 4,041,955 56,045 Capital outlay 4,000 63,000 13,558 49,442 Debt service: -
Principal - - 720 (720) Interest and fiscal charges - - 158,533 (158,533) Total expenditures 74,675,966 81,076,931 85,323,527 (4,246,596) REVENUES OVER (UNDER) EXPENDITURES 12,064,034 34,523,069 46,507,243 11,984,174 OTHER FINANCING SOURCES (USES):

Transfers in 60,000 60,000 70,147 10,147 Transfers out (15,774,001) (18,331,001) (43,730,949) (25,399,948) Total other financing sources (uses) (15,714,001) (18,271,001) (43,660,802) (25,389,801) Net change in fund balance (3,649,967)$ 16,252,068$ 2,846,441 (13,405,627)$ FUND BALANCE:

Beginning of year 34,030,254
End of year 36,876,695$
Budgeted Amounts

City of Tracy
Required Supplementary Information (Unaudited) (Continued) Budgetary Comparison Schedules – Housing Successor Special Revenue Fund For the Year Ended June 30, 2022

130

Variance with
Final Budget
Actual Favorable/
Original Final Amounts (Unfavorable)
REVENUES :

Investment income (loss) - $ - $ (16,730)$ (16,730) $ Other revenue 55,000 55,000 16,018 (38,982) Total revenues 55,000 55,000 (712) (55,712) EXPENDITURES :

Capital outlay 190,000 460,000 901,766 (441,766) Total expenditures 190,000 460,000 901,766 (441,766) REVENUES OVER (UNDER) EXPENDITURES (135,000) (405,000) (902,478) (497,478) OTH E R F I NA NCI NG SOU R CE S (U SE S):

Transfers in - - 634,910 634,910 Total other financing sources (uses) - - 634,910 634,910 Net change in fund balance (135,000)$ (405,000)$ (267,568) 137,432$ FUND BALANCE:

Beginning of year 4,903,952
End of year 4,636,384$
Budgeted Amounts
City of Tracy
Required Supplementary Information (Unaudited) (Continued) Budgetary Comparison Schedules – Community Development Fees Special Revenue Fund For the Year Ended June 30, 2022

131

Variance with
Final Budget
Actual Favorable/
Original Final Amounts (Unfavorable)
REVENUES :

Licenses, permits and fees 2,668,000 $ 4,255,000 $ 9,770,405 $ 5,515,405 $ Investment income (loss) - - (447,737) (447,737) Intergovernmental 43,000 - - - Charges for current services 2,734,000 3,758,000 7,485,271 3,727,271 Other revenue - - 23,966 23,966 Total revenues 5,445,000 8,013,000 16,831,905 8,818,905 EXPENDITURES:

Current:

General government
Non-departmental 820,000 820,000 819,077 923 Public ways and facilities
Development and engineering 11,734,000 10,089,000 11,121,085 (1,032,085) Capital outlay 5,000 - - - Debt service:

Principal - - 11,313 (11,313) Interest and fiscal charges - - 55 (55) Total expenditures 12,559,000 10,909,000 11,951,530 (1,042,530) REVENUES OVER (UNDER) EXPENDITURES (7,114,000) (2,896,000) 4,880,375 7,776,375 OTHER FINANCING SOURCES (USES):

Transfers in 2,109,000 2,109,000 2,109,068 68 Total other financing sources (uses) 2,109,000 2,109,000 2,109,068 68 Net change in fund balance (5,005,000)$ (787,000) $ 6,989,443 7,776,443 $ FUND BALANCE:

Beginning of year 896,269
End of year 7,885,712$
Budge
ted Amounts
City of Tracy
Required Supplementary Information (Unaudited) (Continued) Schedule of Changes in the Net Pension Liability and Related Ratios For the Year Ended June 30, 2022

132

Total Pension Liability 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 1 Service cost 4,423,657$ 4,471,783$ 3,979,362$ 3,700,689$ 3,555,373$ 2,910,705$ 2,892,504$ 3,019,742$ Interest on total pension liability 12,514,107 11,946,424 11,084,143 10,406,741 9,859,228 9,339,655 9,030,774 8,760,895 Differences between expected and actual
experience (813,515) 3,547,669 1,781,080 1,406,163 70,396 (3,013,865) (3,592,113) - Changes in assumptions - - - (1,198,922) 8,362,562 - (2,261,183) - Changes in benefit terms - - - - - - - - Benefit payments, including refunds of
employee contributions (8,166,291) (7,115,731) (6,479,285) (6,628,099) (5,445,878) (4,956,786) (4,804,924) (4,447,727) Net change in total pension liability 7,957,958 12,850,145 10,365,300 7,686,572 16,401,681 4,279,709 1,265,058 7,332,910 Total pension liability - beginning 177,707,299 164,857,154 154,491,854 146,805,282 130,403,601 126,123,892 124,858,834 117,525,924 Total pension liability - ending (a) 185,665,257$ 177,707,299 $ 164,857,154 $ 154,491,854 $ 146,805,282 $ 130,403,601 $ 126,123,892 $ 124,858,834 $ Plan fiduciary net position
Contributions - employer 6,067,470 5,671,613 4,774,139 4,065,966 3,873,007 3,466,879 2,793,345 2,699,952 Contributions - employee 2,122,136 2,054,668 1,907,660 1,720,800 1,552,617 1,461,861 1,346,33 7 1,374,066 Investment income (net of
administrative expenses) 30,111,134 6,301,674 7,724,741 9,323,836 10,997,746 487,393 2,132,844 14,281,310 Benefit payments (8,166,291) (7,115,731) (6,479,285) (6,628,099) (5,445,878) (4,956,786) (4,804,924) (4,447,727) Other (131,162) (175,606) (83,023) (459,215) (144,490) (59,400) (101,304) - Net change in plan fiduciary net position 30,003,287 6,736,618 7,844,232 8,023,288 10,833,002 399,947 1,366,298 13,907,601 Plan fiduciary net position - beginning 131,301,729 124,565,111 116,720,879 108,697,591 97,864,589 97,464,642 96,098,344 82,190,743 Plan fiduciary net position - ending (b) 161,305,016$ 131,301,729 $ 124,565,111 $ 116,720,879 $ 108,697,591 $ 97,864,589 $ 97,464,642$ 96,098,344$ Net pension liability - ending (a)-(b) 24,360,241$ 46,405,570$ 40,292,043$ 37,770,975$ 38,107,691$ 32,539,012$ 28,659,250$ 28,760,490$ Plan fiduciary net position as a percentage
of the total pension liability 86.88% 73.89% 75.56% 75.55% 74.04% 75.05% 77.28% 76.97% Covered payroll 27,962,432$ 27,434,251$ 24,136,362$ 21,560,758$ 20,282,805$ 18,513,576$ 18,046,570$ 18,128,965$ Net pension liability as a percentage of
covered payroll 87.12% 169.15% 166.94% 175.18% 187.88% 175.76% 158.81% 158.64% Notes to Schedule:
1 Historical information is presented only for measurement periods for which GASB 68 is applicable.

Miscellaneous Plan

City of Tracy
Required Supplementary Information (Unaudited) (Continued) Schedule of Changes in the Net Pension Liability and Related Ratios (Continued) For the Year Ended June 30, 2022

133

Total Pension Liability 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 Service cost 6,319,026$ 5,954,133$ 5,341,283$ 5,100,415$ 4,863,739$ 4,239,783$ 4,491,843$ Interest on total pension liability 15,086,876 14,167,518 13,132,663 12,156,431 11,508,306 10,762,768 10,281,540 Differences between expected and actual
experience 470,585 3,242,995 3,440,318 (9,610) 433,771 (2,662,887) (3,530,865) Chang es in assumptions - - - (761,909) 10,655,271 - (2,807,525) Changes in benefit terms - - - - - - - Benefit payments, including refunds of
employee contributions (8,111,466) (7,721,638) (7,378,049) (6,949,949) (6,358,409) (5,917,646) (5,470,177) Net change in total pension liability 13,765,021 15,643,008 14,536,215 9,535,378 21,102,678 6,422,018 2,964,816 Total pension liability - beginning 211,430,889 195,787,881 181,251,666 171,716,288 150,613,610 144,191,592 141,226,776 Total pension liability - ending (a) 225,195,910$ 211,430,889$ 195,787,881$ 181,251,666$ 171,716,288$ 150,613,610$ 144,191,592$ Plan fiduciary net position
Contributions - employer 7,379,587 6,693,746 5,822,621 5,132,782 4,604,350 4,433,276 4,171,390 Contributions - employee 2,523,099 2,355,865 2,104,947 1,985,924 1,590,493 1,421,949 1,380,651 Investment income (net of
administrative expenses) 36,190,585 7,445,354 9,222,427 10,913,236 12,957,627 584,528 2,531 ,449 Benefit payments (8,111,466) (7,721,638) (7,378,049) (6,949,949) (6,358,409) (5,917,646) (5,470,177) Other (157,580) (210,313) (99,235) (615,373) (171,890) (70,678) (130,531) Net change in plan fiduciary net position 37,824,225 8,563,014 9,672,711 10,466,620 12,622,171 451,429 2,482,782 Plan fiduciary net position - beginning 157,747,183 149,184,169 139,511,458 129,044,838 116,422,667 115,971,238 113,488,456 Plan fiduciary net position - ending (b) 195,571,408$ 157,747,183$ 149,184,169$ 139,511,458$ 129,044,838$ 116,422,667$ 115,971,238$ Net pension liability - ending (a)-(b) 29,624,502$ 53,683,706$ 46,603,712$ 41,740,208$ 42,671,450$ 34,190,943$ 28,220,354$ Plan fiduciary net position as a percentage
of the total pension liability 86.85% 74.61% 76.20% 76.97% 75.15% 77.30% 80.43% Covered payroll 19,470,677$ 17,559,035$ 17,559,035$ 16,322,896$ 15,501,462$ 15,245,537$ $15,927,959 Net pension liability as a percentage of
covered payroll 152.15% 305.73% 265.41% 255.72% 275.27% 224.27% 177.17% Notes to Schedule:
1 Historical information is presented only for measurement periods for which GASB 68 is applicable.

Safety Plan
City of Tracy
Required Supplementary Information (Unaudited) (Continued) Schedule of Contributions - Pension
For the Year Ended June 30, 2022

134

Fiscal Year: 2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 Contractually determined
contribution (actuarially determined) 6,787,574$ 6,067,472 $ 5,566,882 $ 4,749,293 $ 4,050,711 $ 3,873,007 $ 3,499,868 $ Contributions in relation to the
actuarially determined contributions (6,787,574) (6,067,472) (5,566,882) (4,749,293) (4,050,711) (3,873,007) (3,499,868) Contribution deficiency (excess) -$ - $ - $ - $ - $ - $ - $ Covered payroll 28,939,453 $ 27,962,432 $ 27,601,313 $ 25,887,652 $ 23,989,506 $ 20,465,522 $ 19,352,925 $ Contributions as a percentage of
covered payroll 23.45% 21.70% 20. 17% 18.35% 16.89% 18.92% 18.08% Notes to Schedule
Methods and assumptions used to determine contribution rates for the fiscal year ended June 30, 2022:

Actuarial cost method
Amortization method/period
Asset valuation method
Inflation
Salary increases
Payroll growth 2.750%
Investment rate of return
Retirement age
M ortality
1 Historical information is presented only for the periods for which GASB 68 is applicable.

Miscellaneous Plan
Varies by entry age and service

7.00% net of pension plan investment and administrative expenses.

The probabilities of retirement are based on the 2017 CalPERS Experience Study for the period from 1997 and 2015.

The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015.

Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% o 2016 published by the Society of Actuaries.

The actuarial methods and assumption used to set the actuarially determined contributions for Fiscal Year 2022 were derived from the June 30, 2019 funding report.

Entry Age Normal
For details, see June 30, 2019 Funding Valuation Report Actuarial Value of Assets. For details, see June 30, 2019 Funding Valuation Report.

2.50%
City of Tracy
Required Supplementary Information (Unaudited) (Continued) Schedule of Contributions – Pension (Continued)
For the Year Ended June 30, 2022

135

Fiscal Year: 2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-151 Contractually determined
contribution (actuarially determined) 7,549,380$ 7,379,603$ 6,437,044$ 5,643,974$ 5,148,037$ 4,604,350$ 4,477,450$ 3,522,006$ Contributions in relation to the
actuarially determined contributions (7,549,380) (7,379,603) (6,437,044) (5,643,974) (5,148,037) (4,604,350) (4,477,450) (3,522,006) Contribution deficiency (excess) -$ -$ -$ -$ -$ -$ -$ -$ Covered payroll 15,292,362$ 17,684,752 $ 19,725,873 $ 18,413,297 $ 16,743,454 $ 15,512,824 $ 15,414,995 $ 15,225,341 $ Contributions as a percentage of
covered payroll 49.37% 41.73% 32.63% 30.65% 30.75% 29.68% 29.05% 23.13% Notes to Schedule
Methods and assumptions used to determine contribution rates for the fiscal year ended June 30, 2022:

Actuarial cost method
Amortization method/period
Asset valuation method
Inflation
Salary increases
Payroll growth 2.750%
Investment rate of return
Retirement age
Morta l i ty
1 Historical information is presented only for the periods for which GASB 68 is applicable.

Varies by entry age and service

7.00% net of pension plan investment and administrative expenses.

The probabilities of retirement are based on the 2017 CalPERS Experience Study for the period from 1997 and 2015.

The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015.

Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP- 2016 published by the Society of Actuaries.

Safety Plan
The actuarial methods and assumption used to set the actuarially determined contributions for Fiscal Year 2022 were derived from the June 30, 2019 funding valuation report.

Entry Age Normal
For details, see June 30, 2019 Funding Valuation Report Actuarial Value of Assets. For details, see June 30, 2019 Funding Valuation Report.

2.50%

City of Tracy
Required Supplementary Information (Unaudited) (Continued) Schedule of Changes in Total OPEB Liability and Related Ratios For the Year Ended June 30, 2022

136

Fiscal year ending: 6/30/2022 6/30/2021 6/30/2020 6/30/2019 6/30/2018 Measurement date: 6/30/2021 6/30/2020 6/30/2019 6/30/2018 6/30/2017 1 Total OPE B liability
Service cost 450,489 $ 443,619 $ 417,193 $ 318,114 $ 343,641 $ Interest 178,125 195,454 192,818 192,889 153,933 Changes of benefit terms - - - - - Differences between expected and actual experience - (356,446) - 273,705 - Changes of assumptions 287,043 (388,970) 101,040 (391,232) (334,977) Benefit payments, including refunds of member contributions (211,025) (209,370) (195,363) (174,114) (138,947) Net change in total OPEB liability 704,632 (315,713) 515,688 219,362 23,650 Total OPE B liability - beginning 6,350,859 6,666,572 6,150,884 5,931,522 5,907,872 Total OPE B liability - ending (a) 7,055,491$ 6,350,859 $ 6,666,572 $ 6,150,884 $ 5,931,522 $ OPEB fiduciary net position
Contributions - employer 211,025 $ 209,370 $ 195,363 $ 174,114 $ 138,947 $ Net investment income - - - - - Benefit payments, including refunds of member contributions (211,025) (209,370) (195,363) (174,114) (138,947) Administrative expense - - - - - Net change in plan fiduciary net position - - - - - Plan fiduciary net position - beginning - - - - - Plan fiduciary net position - ending (b) -$ - $ - $ -$ -$ Plan net OPEB liability - ending (a) - (b) 7,055,491$ 6,350,859$ 6,666,572$ 6,150,884$ 5,931,522$ Plan fiduciary net position as a
percentage of the total OPE B liability 0.00% 0.00% 0.00% 0.00% 0.00% Covered-employee payroll 40,530,944$ 38,076,958$ 36,576,729$ 34,460,922$ 23,997,600$ Plan net OPE B liability as a
percentage of covered-employee payroll 17.41% 16.68% 18.23% 17.85% 24.72% 1 Inform ation only presented from the im plem entation year

City of Tracy
Required Supplementary Information (Unaudited) (Continued) Schedule of Contributions - OPEB
For the Year Ended June 30, 2022

137

2021-22 2020-21 2019-20 2018-19 2017-18 2016-17
1 Actuarially determined contribution 2
-$ - $ - $ - $ 764,705$ 138,947 $ Contractually determined contribution 2
247,683 211,025 209,370 195,363 - - Contributions in relation to the actuarially
determined or contractually required
contribution (247,683) (211,025) (211,025) (195,363) (174,114) (138,947) Contribution deficiency (excess) -$ -$ (1,655)$ -$ 590,591$ -$ Covered payroll 41,746,872$ 40,530,944$ 38,076,958$ 36,576,729$ 34,460,922$ 23,997,600$ Contributions as a percentage of
covered payroll 0.59% 0.54% 0.55% 0.53% 0.51% 0.58%
Notes to Schedule:

Methods and assumptions used to determine contribution rates:

Actuarial valuation date 6/30/2021
Actuarial cost method Entry Age Normal, Level Percentage of Payroll Amortization method Level Percentage of Projected Payroll on an Open Basis Remaining amortization 26 years remaining as of June 30, 2020 Asset valuation method Market value of assets ($0, no OPEB Trust has been established) Inflation 2.50%
Investment rate of return 2.66%
Healthcare cost trend rate 5.7% for 2021, decreasing to an ultimate rate of 4.0% in 2076; Projected salary growth and increase Not applicable
Mortality Based on CalPERS 2017 experience study report using data for the period from 1997 to 2015 1 Information only presented from the implementation year 2 The City did not obtain an actuarially determined contribution in the fiscal years 2019 through 2021, thereforecontractually required contributions are reported.

The actuarial methods and assumptions used to set the actuarially determined contributions for the fiscal year ended June 30, 2021 were as follows:

138
This page intentionally left blank.

SUPPLEMENTARY INFORMATION
139
Special Revenue Funds:

TEA Grant - This fund is used to account for the revenues from State and Federal transportation efficiency act grants that are restricted for specific projects.

Business Improvement District Fund - This fund is used to accumulate revenues from assessments against business properties to support the Downtown Tracy Business Improvement District.

Asset Forfeiture Fund - This fund is used to account for the revenues that occur from asset seizures. They are specifically restricted for the purchase of law enforcement equipment and supplies.

Transportation Development Fund - This fund is used to account for the City’s share of the quarter cent statewide transportation sales tax devoted to street maintenance purposes. The tax first goes to the Transportation Development Fund.

Proposition K Transportation Fund - This fund is used to account for the City’s share of the half cent transportation sales tax of San Joaquin County. It is used for street maintenance and repairs.

State Gas Tax Street Fund - This fund is used to account for the City’s share of State-Imposed motor vehicle gas taxes, which are legally restricted to acquisition, construction, improvement, and maintenance of the City’s streets.

Community Development Block Grant Fund - This fund is used to account for federal grant monies received from the U.S. Department of Housing and Urban Development (HUD) for Community Development Block Grants.

Landscaping District Fund - This fund is used to account for transactions of the City’s landscaping benefit assessment districts.

Residential and Commercial Rehabilitation Loan Fund - This fund is used to account for Department of Housing and Urban Development Fund (HUD) trust monies which are used for low interest loans to qualified borrowers for inner city rehabilitation projects in accordance with HUD agreements.

Community Access CTV Fund - This fund is used to account for fees collected from City cable TV customers to cover expenses for videotaping and broadcasting the City Council meetings.

Grow Tracy Fund - This fund is used to account for assistance to local business owners through the issuance of small business loans.

COPS Grant Fund - This fund is used to account for activities related to the State and federal grant revenues restricted for law enforcement activities. The activities related to these grants were previously reported in the General Fund.

FEMA Grant Fund - This fund is used to account for activities relate to the federal grant revenues restricted for FEMA emergency disaster activities.

CFD Services 2016-2 Fund - This fund is used to account for transactions related to maintenance responsibility of the City for the Community Facilities Services District No. 2016-2 (Ellis).

CFD Services 2018-1 Fund - This fund is used to account for transactions related to the City-wide maintenance responsibility of the City for the Community Facilities Services District No. 2018-1.

North East Industrial Plan Area Storm Drain Fund - This fund is used to account for capital projects to separate development for Storm Drain in the North East Industrial Area of the City.

Non-Major Governmental Funds
140
Debt Service Funds:

Lease Revenue Bonds Fund - This fund is used to accumulate funds for the payment of debt service on the lease revenue bonds, series 2008 and 2022.

Capital Projects Funds:

North East Industrial Plan Area # 1 Fund - This fund is used to account for capital projects to separate development in the North East Industrial area of the City.

North East Industrial Plan Area # 2 Fund - This fund is used to account for capital projects to separate development in the North East Industrial area of the City.

Infill Projects Fund - This fund is used to account for capital projects financed through capital development fees levied upon developers in the City’s infill areas.

I-205 Area Improvements Fund - This fund is used to account for monies received from the sale of bonds for the purpose of construction of various community facilities within a specific area in the City.

Urban Management Plan Facilities Fund - This fund is used to account for expenditures for the planning, design, and construction of capital facilities required for new development beyond the current infill, Residential Specific Plan (RSP), and I-205 development.

Capital Projects Deposits Fund - This fund is used to account for monies received from developers, contractors, and other entities for the purpose of reimbursing the City for expenditures incurred in studies, research, etc., regarding their proposed development.

South MacArthur Plan Area Fund - This fund is used to account for projects to support development in a specific area of the City financed by assessments and/or development impact fees.

Industrial Specific Plan South Fund - This fund is used to account for projects to support development in a specific area of the City financed by assessments and/or development impact fees.

Presidio Plan Area Fund - This fund is used to account for projects to support development in a specific area of the City financed by assessments and/or development impact fees.

Redevelopment Obligations Fund - This fund is used to account for CDA grant proceeds used by the City to complete redevelopment projects.

Tracy Gateway Area Fund - This fund is used to account for projects to support development in a specific area of the City financed by assessments and/or development impact fees.

Plan "C" Fund - This fund is used to account for Plan "C", which is a development area of the City which was approved in 1998. Capital development fees levied on developers in this area and the related expenditures are accounted for in this fund.

Residential Specific Plan Projects Fund - This fund is used to account for capital projects financed by fees levied on developers in the City’s 1987 Residential Specific Plan area.

Ellis Area Fund - This fund is used to account for projects to support development in a specific area of the City financed by capital development fees and/ or assessments.

CORE Fees Fund - This fund is used to account for CORE fees collected by the City and which are to be used for various purposes.

Regional Transportation Impact Fund - This fund is used to account for transportation impact fees collected by the City and which are to be used for transportation mitigation purposes.

Non-Major Governmental Funds (Continued)
141
Business State
TEA Improvement Asset Transportation Proposition K Gas Tax Grant District Forfeiture Development Transportation Street ASSETS
Cash and investments 37,157$ -$ 816,481$ 50,610$ 6,352,582$ 6,620,318$ Cash and investments with fiscal agents - - - - - - Accounts receivable, net - - - - 24,009 - Intergovernmental receivable 329,240 - - 96,222 581,448 343,557 Interest receivable 97 - 2,432 151 18,923 23,097 Deposits - - - - - - Loans receivable - - - - - - Due from Fiduciary Funds - - - - - - Total assets 366,494$ -$ 818,913$ 146,983$ 6,976,962$ 6,986,972$

LIABILITIES, DEFERRED

INFLOWS OF RESOURCES,

AND FUND BALANCES
Liabilities:

Accounts payable 117$ -$ 24,930$ -$ 10,095$ 195,221$ Accrued payroll - - - - 245 31,069 Due to other funds - 69,670 - - - - Deposits payable - - - - - - Total liabilities 117 69,670 24,930 - 10,340 226,290 Deferred inflows of resources:

Unavailable revenue - - - - - - Total deferred inflows
of resources - - - - - - Fund Balances:

Restricted 366,377 - 793,983 146,983 6,966,622 6,760,682 Unassigned (deficit) - (69,670) - - - - Total fund balances 366,377 (69,670) 793,983 146,983 6,966,622 6,760,682 Total liabilities, deferred
inflows of resources,
and fund balances 366,494$ -$ 818,913$ 146,983$ 6,976,962$ 6,986,972$ (Continued)
City of Tracy
Combining Balance Sheet
Non-Major Governmental Funds
June 30, 2022
Special Revenue
142
Residential
Community and Commercial Community
Development Landscaping Rehabilitation Access Grow COPS Block Grant District Loan CTV Tracy Grant
ASSETS
Cash and investments -$ 5,609,471$ 205,461$ 536,864$ -$ 71,212$ Cash and investments with fiscal agents - - - - - - Accounts receivable, net - - - 40,185 - - Intergovernmental receivable 960,244 - - - - 73,060 Interest receivable - 16,714 612 1,599 - - Deposits - - - - 1,000,000 - Loans receivable - - - - - - Due from Fiduciary Funds - - - - - - Total assets 960,244$ 5,626,185$ 206,073$ 578,648$ 1,000,000$ 144,272$

LIABILITIES, DEFERRED

INFLOWS OF RESOURCES,

AND FUND BALANCES
Liabilities:

Accounts payable 12,000$ 112,102$ -$ 363$ -$ -$ Accrued payroll 2,579 43,338 - - - 12,128 Due to other funds 1,022,692 - - - - - Deposits payable - - - - - - Total liabilities 1,037,271 155,440 - 363 - 12,128 Deferred inflows of resources: